Irish Permanent Building Society (plaintiff/ respondent) v Utrecht Consultants Ltd, Edmund Farrell, Kelvin Smythe and Trivo Ltd (defendants/ appellants).

Practice - Discovery - Documents relating to service provided by third named defendant - Whether documents relevant to issues in case - Whether discovery of such documents could advance the defendants' case or damage the plaintiffs case or put the defendants on a train of enquiry which would have either consequence.

The Supreme Court (before the Chief Justice, Mr Justice Hamilton; Mr Justice Keane and Mr Justice Murphy); judgment delivered 31 October 1996.

WHERE the defendants sought additional discovery of documents relating to matters pre dating the incorporation of the defendant company, such documents were not material as they could not advance the case of the defendants or damage the plaintiff's case or put the defendants on a train of enquiry which would have either consequence.

The Supreme Court so held in dismissing an appeal from an order of the High Court refusing such further discovery.

Paul Gallagher SC and R. John McBratney BL for the plaintiff/ respondent Daniel O'Keeffe SC and Patrick McCann BL for the first, third and fourth named defendants/ appellants.

MR JUSTICE MURPHY said that this was an appeal from an order of the President of the High Court refusing an application for additional discovery by the first, third and fourth named defendants. The plaintiff (the Society) alleged that by agreement dated 5 November 1990 between the Society and Trivo Ltd, the latter had agreed to provide certain commercial and financial advice for a fee plus an additional fee (a success fee) in the event of Trivo introducing certain schemes, plans or partners for mergers. The agreement provided that the Society should be entitled to pay up to one third of the success fee in advance of the completion of the transaction but that in the event of the failure of the particular enterprise the advance should be set off against the annual fee. The agreement provided that it should be null and void if Dr Farrell ceased to hold a senior executive position in the Society or if the third named defendant, Mr Smythe, ceased to hold his consultancy position in Trivo.

Mr Justice Murphy said that, in the statement of claim, the Society alleged that the second named defendant, Dr Farrell, had acted negligently and in breach of contract and of trust in procuring the Society to enter into the said agreement when the true purpose of the agreement was alleged to have been the procurement of a means by which Dr Farrell and/or Utrecht was to receive funds from the Society" in order to purchase certain property.

It was further alleged in the statement of claim that Dr Farrell, purporting to act on behalf of the Society, agreed with Mr Smythe that a success fee of £300,000 should be paid by the Society in respect of the merger or acquisition arrangements introduced by Mr Smythe and that one third, thereof be and was paid in advance. It was then alleged that the sum of £100,000 so paid to Trivo was ultimately made available to the first named defendants, Utrecht, who used £90,000 thereof to purchase a property, Portcarron Lodge, a single storey house in County Galway. It was asserted by the Society that Utrecht was under the direct or indirect control of Dr Farrell or alternatively that Utrecht was beneficially owned directly or indirectly by him. It was further claimed that Dr Farrell used Portcarron Lodge as a holiday home.

Referring to the defence Mr Justice Murphy said that the defendants claimed that the sum of £100,000 was paid as an advance success fee in connection with the proposed merger of the Society and the Irish Nationwide Building Society. However, the merger never occurred and it was accepted that the sum fell to be set off against the annual consultancy fee. By agreement of 1 July 1991 the Society, in consideration of Trivo entering into a fresh contract, purported to agree to pay Trivo £125,000 as compensation for the termination of its rights - under the prior agreement of which the said sum of £100,000 had already been paid to Trivo. In effect, Mr Justice Murphy said, by further agreement terminating the original agreement, the requirement that it be set off against the consultancy fee was waived.

On 24 May 1993 the High Court ordered the parties within 8 weeks of the close of the pleadings to make discovery on oath of all their documents relating to the purchase of the lands in Co Galway and the execution of the agreement of 5 November 1990. Further and additional discovery had been subsequently ordered by Mr Justice Geoghegan on 10 July 1995.

Mr Justice Murphy said that in these proceedings the defendants sought a general order of discovery against the Society and the defendants solicitor averred that Mr Smythe had provided services to the Society pursuant to the agreement or in contemplation of it or alternatively, that services rendered either before the execution of the agreement or after its termination would be material as being consistent with the defendants' contention that valuable services were provided pursuant to that agreement.

The Society submitted that the documents which related to services provided before 20 June 1990 could have no relevance as Trivo had not been incorporated prior to that date and likewise documents relating to service's prior to 5 November 1990 as the agreement of that date expressly related to services provided after that date.

It was submitted by the defendants that the services had been rendered, not merely in anticipation of the November agreement but in anticipation of the incorporation of Trivo itself and that the agreement was subsequently ratified by Trivo. Alternatively, it was argued that the provision of services in accordance with a particular pattern was relevant to the contention that such services were indeed provided after November, 1990 by Trivo and were recognised by the Society as being of value. However, Mr Justice Murphy noted that the High Court had found in favour of the contentions of the Society and refused the application.

The Society focused attention on the fact that it was common case that the £100,000 was purportedly paid by the Society to Trivo as a proportion of the advance success fee already referred to and was claimed to have been paid in respect of services rendered in relation to the merger or takeover of the Irish Nationwide Building Society. Mr Justice Murphy said that both parties agreed that in so far as that contention was material the documents in relation to that transaction had already been fully discovered.

As to the general consultancy fee, Mr Justice Murphy said that the Society did not dispute that commercial and financial services were provided by Mr Smythe to the Society pursuant to an agreement of 29 January 1990 by which such services were to be provided by Quasar Corporation Ltd through the medium of Mr Smythe. The Society were already entitled to obtain these services from Mr Smythe acting on behalf of Quasar and it was accepted that such services were provided.

Mr Justice Murphy said that it was not in dispute that Mr Smythe did render those services, however, it was contended that the documents showing services having been rendered by Mr Smythe pursuant to the agreement between the Society and Quasar could not advance the defendants case or damage that of the Society or put the defendants on a train of enquiry which would have either consequence, invoking the well known test adopted in Compagnie Financiere du Pacifique v Peruvian Guano Co (1882 83)11 QBD 55.

In agreeing with that submission, Mr Justice Murphy said that none of the documents were material or relevant to any of the issues to be determined in these proceedings and the appeal was dismissed.

THE CHIEF JUSTICE and MR JUSTICE KEANE agreed with the judgment of Mr Justice Murphy.

Solicitors: Cathal MacCarthy (Dublin) for the plaintiff/ respondent; Branigan Cosgrove (Dublin) for the first, third and fourth named defendants/ appellants.