O'Leary -v- Volkswagen Group Ireland Ltd [2015] IESC 35 (28 April 2015)

Judgment

Title:

O'Leary -v- Volkswagen Group Ireland Limited

Neutral Citation:

[2015] IESC 35

Supreme Court Record Number:

310/14

High Court Record Number:

2013 4143 P

Date of Delivery:

28/04/2015

Court:

Supreme Court

Composition of Court:

Murray J., MacMenamin J., Laffoy J.

Judgment by:

Laffoy J.

Status:

Approved


Judgments by	Link to Judgment	Result	Concurring
Laffoy J.	Link		Murray J., MacMenamin J.

Notes on Memo: Claim for discovery fails in respect of all live issues with the exception of
certain issues - refer to judgment.

___________________________________________________________________________

THE SUPREME COURT

[Appeal No. 310/2014]

Murray J.

MacMenamin J.

Laffoy J.

BETWEEN

PAT O’LEARY

PLAINTIFF/APPELLANT

AND

VOLKSWAGEN GROUP IRELAND LIMITED

DEFENDANT/RESPONDENT

Judgment of Ms. Justice Laffoy delivered on 28th day of April, 2015

Background to the appeal
1. This judgment relates to an appeal by the plaintiff appellant (the Plaintiff) against an order of the High Court (McGovern J.) made on 4th June, 2014, wherein the Plaintiff’s motion for an order striking out the defence and counterclaim of the defendant respondent (the Defendant) for failure to comply with an order for discovery made on 7th October, 2013 was refused and the Court made no order as to costs. In his judgment delivered on 4th June, 2014, having referred to the observations of Clarke J. in Thema International Fund Plc v. HSBC Institutional Trust Services (Ireland) Limited [2012] 3 I.R. 528 that much concern has been expressed in recent times about the cost of discovery in complex litigation which, it would appear, can nowadays typically amount to fifty per cent of the total cost of litigation, the trial judge observed that, having heard the submissions on the application before him, and having considered the papers, it seemed to him that these proceedings would make a perfect case study for many of the problems currently surrounding the discovery process. In order to put that observation into perspective, it is necessary to consider the issues in the proceedings as disclosed in the pleadings, the order for discovery made on 7th October, 2013, and the process whereby discovery was made by the Defendant both before and after the Plaintiff’s motion to strike out the defence and counterclaim.

Issues in the proceedings
2. The proceedings arise out of the termination by the Defendant of Volkswagen dealership contracts (the Contracts) for Volkswagen passenger vehicles and Volkswagen commercial vehicles entered into in 2003 between Motor Distributors Limited, as supplier, and the Plaintiff (trading at Lissarda, Macroom, Co. Cork as O’Leary’s Lissarda). With effect from July 2007 the Defendant acquired the interest of Motor Distributors Limited in the Contracts.

3. Under Article 16 thereof, the Contracts were expressed to be “concluded for an indefinite term”. Article 17 provided that the Contracts might be terminated by either party giving twenty four months written notice to the other party. Article 18 provided for termination by the Defendant supplier by giving the Plaintiff dealer twelve months notice of termination in the event that “it is necessary for the [Defendant] Supplier to re-organise the whole or a substantial part of its distribution network”. There was also provision in Article 19 for termination with immediate effect in the circumstances outlined therein, but it is not of relevance. Article 20 provided:

“Notice of termination given by the [Defendant] Supplier must contain a detailed statement of reasons which shall be transparent and objective.”

Article 20 reflects the requirement of Article 3(4) of Commission Regulation (EC) No. 1400/2002, commonly referred to as the Block Exemption Regulation, which provides that the exemption shall apply “on condition that the vertical agreement . . . provides that a supplier who wishes to give notice of termination of an agreement must give such notice in writing and must include detailed, objective and transparent reasons for the termination . . ..”

4. By letter dated 18th April, 2011 the Defendant gave written notice to the Plaintiff of termination of the Contracts under Article 17 thereof, which termination would take effect on 30th April, 2013. In the letter it was stated that -

“. . . it is necessary for [the Defendant] to re-organise its dealer network in light of recent structural changes to the market and due to the significant downturn in the Irish economy. As part of this network re-organisation, it is necessary to terminate all existing Volkswagen Dealer Contracts.”

5. On 25th April, 2013, just five days before the Contracts were due to terminate in accordance with that notice, the Plaintiff initiated these proceedings in which he claimed, inter alia, injunctive relief, including an order restraining the Defendant from terminating, or taking any steps to terminate, the Contracts, and damages, including damages for breach of contract, breach of duty, misrepresentation and intentional interference with the economic interests of the Plaintiff. The Plaintiff’s case as pleaded is that the purported termination of the Contracts was not in compliance with the expressed terms thereof nor was it in compliance with the Block Exemption Regulation. Specifically it is pleaded that the reason given for the termination, namely, the necessity to re-organise the Defendant’s dealer network in light of recent structural changes in the market “was not genuine and/or did not justify termination of the Contracts”. In response to a request from the Defendant to identify what, on the Plaintiff’s case, was the genuine reason for termination of the Contracts, it was stated in replies dated 19th July, 2013 that the Plaintiff contends that the necessity for the Defendant to re-organise its dealer network was not the genuine reason for the termination by reason of the fact that no actual re-organisation of its dealer network took place following the service of notices of termination to its national dealers. Rather, the vast majority of the existing dealers were re-engaged under new contracts, which the Plaintiff contends did not constitute a re-organisation of the Defendant’s dealer network and, as such, the Plaintiff contends that the reasons given in the notice of termination were not genuine. Counsel for the Defendant pointed to that reply as indicating that the Plaintiff’s contention that the reason given by the Defendant for termination was not genuine had nothing to do with what had happened before the notice was given.

6. The Plaintiff’s case as pleaded is also based on the allegation that the purported termination of the Contracts was in breach of the duty of care alleged to have been owed by the Defendant to the Plaintiff and was also contrary to various representations alleged to have been made by agents of the Defendant to the Plaintiff. It is pleaded in the statement of claim that in November and December 2007, in April 2009, in July 2009 and in October 2009 representations were made on behalf of the Defendant to the Plaintiff in relation to the Contracts and that, in reliance on those representations, the Plaintiff acted to his detriment.

7. In broad terms, the Defendant’s position on the pleadings is that it denies each of the allegations of wrongdoing made against it by the Plaintiff, including the allegations of breach of contract, breach of the Block Exemption Regulation, and misrepresentation.

The order for discovery and compliance with it
8. The order for discovery dated 7th October, 2013 was made by Gilligan J. The order provided that the Defendant make discovery of eight categories of documents outlined, which are or have been in the Defendant’s possession or power or procurement. It will be necessary to refer to some of the categories. The order further provided as follows:

“That discovery be made by means of the delivery of a CD Rom in searchable format to the plaintiff on or before 4th November, 2013.”

It was also provided that the affidavit would be sworn by David Hassett. In fact discovery was not made by Mr. Hassett until 11th November, 2013, when the affidavit of discovery was sworn by him. There were undoubtedly serious deficiencies in the original affidavit of discovery, which deficiencies were addressed in correspondence emanating from the solicitors then on record for the Plaintiff between November 2013 and January 2014.

9. Eventually, on 28th January, 2014 the Plaintiff’s motion seeking an order striking out the Defendant’s defence and counterclaim for failure to comply with the order of 7th October, 2013 was issued. The motion was grounded on the affidavit of David Phelan, a partner in the firm of Hayes, the solicitors then on record for the Plaintiff, which comprehensively outlined the deficiencies in Mr. Hassett’s affidavit of discovery. The immediate response of the Defendant was an affidavit sworn on 4th February, 2014 by Roderick Bourke, a solicitor in the firm of McCann Fitzgerald, the Solicitors on record for the Defendant in the proceedings. In that affidavit Mr. Bourke acknowledged that deficiencies in the Defendant’s discovery had been identified by McCann Fitzgerald and expressed regret for the mistakes which had occurred. The possibility of other deficiencies in the discovery was also acknowledged. It was intimated that a full review of the Defendant’s discovery would have to be carried out.

10. The review having been carried out, a supplemental affidavit of discovery was sworn by Mr. Hassett on 28th March, 2014 pursuant to orders of the High Court made on 5th February, 2014 and 5th March, 2014. In the supplemental affidavit, Mr. Hassett outlined the steps taken to check for documents which had not been discovered in the earlier affidavit. He averred that since the 22nd January, 2014 the Defendant had carried out within its organisation a further check for documents, including electronic documents and data, that might be relevant to the categories of discovery ordered, including further searches for documents of relevant employees and former employees held on IT systems, laptops and in other potential locations. Searches carried out and contacts made with agents and third parties were outlined. It was averred that searches and inquiries had been carried out in the Volkswagen organisation in Germany. It was further averred that the Defendant’s solicitors had assisted the Defendant and that the complaints which had been made by the Plaintiff’s solicitors as to the deficiencies in the original discovery had been considered. Mr. Hassett averred that he was satisfied that every effort had been made to locate relevant documents, including relevant electronic documents, by the Defendant. Additionally, Mr. Hassett outlined in the body of the affidavit the additional documents that were identified in the recent searches for the first time and apologised for the late discovery of the documents. He also addressed other issues, for example, the redaction of documents, both in relation to what it was asserted was commercially sensitive non-relevant data, and also legally privileged data. The manner of the listing of the documents was also explained.

11. The Plaintiff’s response to the filing of the supplemental affidavit of discovery, as contained in a second affidavit sworn by Mr. Phelan on 29th April, 2014, was once again comprehensive. First, it was averred that the majority of the deficiencies which had previously been identified by the Plaintiff’s solicitors remained and a number of examples were set out in the affidavit. Secondly, various other apparent deficiencies which were identifiable in relation to the additional documents discovered for the first time in the supplemental affidavit were outlined. Thirdly, specific documents or groups of documents which it appeared had not been discovered but existed were outlined. Fourthly, issues were raised in relation to the entitlement of the Defendant to redact documents and assert legal professional privilege in respect of documents. Fifthly, a request on behalf of the Plaintiff that he, or an IT specialist nominated by him, be allowed access to the electronic records of the Defendant was reiterated as a requirement. Finally, the deponent averred that the Defendant had not provided any adequate explanation in relation to documents which had been “irretrievably lost”. In that connection and in connection with other aspects of the discovery process, an affidavit to be sworn by an IT expert retained by the Plaintiff, Vivienne Mee, the Managing Director of Rits Computer Forensics, an IT forensics and electronic discovery specialist firm, which was sworn on 30th April, 2014, was referred to.

11. Ms. Mee, in her affidavit, expressed the opinion that the efforts and steps taken by the Defendant in carrying out the review of electronic documents for discovery were unsatisfactory. What follows is a very brief summary of the points she made. She averred that the Defendant had not outlined the steps performed during its discovery exercise and, in particular, she referred to the fact that the Defendant had not provided any “key words used during the searches of its systems” or specified whether “keyword searches were carried out across [its] systems”. She raised issues in relation to various averments contained in Mr. Hassett’s supplemental affidavit of discovery. For example, she averred that no indication of any efforts made to retrieve deleted e-mails had been specified by Mr. Hassett in the supplemental affidavit and no indication of any efforts to retrieve deleted e-mails from back-ups was identified either. In particular, she averred that there was no indication that any efforts had been made to recover deleted data from the laptop of a former employee of the Defendant, Adam Chamberlain. She was also critical of the discovery of e-mails in “bundles”, because of the difficulties it created.

12. Mr. Hassett swore an affidavit on 2nd May, 2014 in response to Mr. Phelan’s affidavit of 29th April, 2014 and Ms. Mee’s affidavit of 30th April, 2014. A useful exercise which was carried out by the Defendant’s solicitors at that stage was that the complaints and contentions raised by the Plaintiff up to that point in time were tabulated. The table was exhibited by Mr. Hassett. The table identified the source of the complaint, it summarised the Plaintiff’s complaint and it summarised the Defendant’s response. In all, at that stage, there were one hundred and eighty complaints. Mr. Hassett addressed Ms. Mee’s criticisms, relying to a large extent on what he had averred in the supplemental affidavit of discovery, and he asserted that it was not accurate to say that the Defendant had not outlined the steps performed. Apart from that, Mr. Hassett set out further information about the steps which had been taken on behalf of the Defendant to check for the relevant documents. In particular, he averred that he had worked alongside the Defendant’s solicitors and that he had led the Defendant’s internal team in their efforts since January 2014 to address the Plaintiff’s complaints. That team included Mr. Tom Murphy, the head of the Defendant’s technology function, who met with the Defendant’s solicitors and received detailed oral and written briefings about the steps necessary to check for any undiscovered relevant documents.

13. Mr. Hassett also outlined the steps that were taken within the Defendant’s organisation to source previously unlocated documents. He reiterated that all central systems (e-mails and shared network drives), individual laptops/desktops and back-up media (tapes and portable drives) had been reviewed by Mr. Murphy and his team, as had any outlook data files, any shared drives, personal drives, local drives on laptops and desktops, back-up tapes and portable media drives associated with any persons possibly relevant to the issues in the case. In addition, Mr. Murphy’s team had checked USB Drive back-up devices, tapes and other back-up media where relevant data might exist. The team searches included searches of large numbers of deleted e-mails which were still searchable on the Defendant’s systems and other sources of electronic data. Mr. Hassett also averred that the Defendant, through its solicitors, had retained GEON E-Discovery Consultants, who had provided deduplicating and other services in preparing the Defendant’s discovery, one example given being that GEON had assisted the Defendant’s solicitors in identifying possibly relevant documents for review among over twenty thousand documents in relation to Mr. Chamberlain on a USB Drive back-up device which had been found in February 2014. Specifically, Mr. Hassett averred that key word searching against words and variations of words settled by the Defendant’s solicitors, who had detailed knowledge of the issues, facts and persons in the case, was employed in searching for relevant documents in the case. Mr. Hassett also reiterated that he had made inquiries of persons in Volkswagen in Germany as to documents that might assist the Defendant is meeting its discovery obligations.

14. The scale of the task undertaken was reflected in an averment that Mr. Hassett was advised by the Defendant’s solicitors that the searches carried out by or on behalf of the Defendant in the case resulted in over 59,700 documents, comprising both electronic and hard copy material, being identified, collected and presented for review by the Defendant’s solicitors. Mr. Hassett concluded by averring that he was satisfied that every effort had been made to locate the relevant documents, including relevant electronic documents, by the Defendant. Having further addressed redaction and privilege issues, Mr. Hassett reiterated, on behalf of the Defendant, his sincere apology that a significant number of documents were not discovered in the original affidavit of discovery.

15. Following one further affidavit sworn by Mr. Phelan on 29th May, 2014, the final affidavit filed on the motion was a second affidavit sworn by Mr. Bourke on 30th May, 2014 (the jurat in which erroneously refers to Mr. Hassett). Mr. Bourke in his affidavit also addressed complaints made by Mr. Phelan in his affidavit following receipt of the supplemental affidavit of discovery and, in particular, concerns raised in relation to the absence of specific documents. Helpfully, Mr. Bourke exhibited an updated version of the table of complaints (the Updated Table) to which there was added complaints made by the Plaintiff’s solicitors by letter dated 15th May, 2014 and the Defendant’s responses. The number of complaints in the table remained at one hundred and eighty.

The High Court hearing and the judgment
16. The Plaintiff’s motion to strike out the defence and counterclaim for failure of the Defendant to comply with the order for discovery was heard by on 3rd June, 2014, on the basis of urgency, the proceedings having been listed for hearing on 18th June, 2014. Of the one hundred and eighty complaints which had been made by the Plaintiff only sixteen, three of which were grouped together, were pursued at the hearing in the High Court. In his judgment, the trial judge dealt with each complaint or group as an issue. As he pointed out in his judgment (at para. 5), in the course of the hearing, counsel for the Plaintiff conceded that the main thrust of the Plaintiff’s application to the Court was for further and better discovery, rather than seeking to have the defence and counterclaim struck out. While the application to strike out the defence was not formally withdrawn, the trial judge considered that the failure to make discovery was not sufficiently serious to warrant striking out the defence, which, in my view, could not be disputed. He then went on to consider whether an order for further and better discovery should be made. The outcome was that the trial judge refused the Plaintiff’s application for further and better discovery. His specific findings in relation to each live issue will be recorded later. He made the following general observations:

“Having considered the remaining discovery issues in dispute, I accept the explanations offered to the court by the [Defendant], both on the issue of the adequacy of its discovery and the issue of relevance. In particular, I accept the affidavit sworn by Mr. David Hassett on 2nd May, 2014 . . . I also accept the evidence of Mr. Roderick Bourke in the affidavits which he has sworn in this matter. The [D]efendant has complied with its obligations with regard to making discovery, having disclosed, insofar as it may be reasonably possible, all documents which come within the categories agreed or directed by the court. It has met its obligations to search its archives, records and files diligently for all relevant materials coming within the ambit of the discovery order, including computer records. I find no evidence that the steps taken by the defendant were not reasonable in that regard.”

17. There was also a separate issue before the High Court in relation to privilege, in that the Plaintiff contended that the Defendant was not entitled to claim legal professional privilege in relation to two specific documents. The Plaintiff’s appeal to this Court relates to only one of those documents. In relation to that document (referred to as Document 0703), the trial judge held that the Defendant was entitled to maintain privilege over it and that it should not be used or referred to at the hearing.

The appeal
18. As I stated at the outset, the order of the High Court simply ordered that the Plaintiff’s motion be struck out and the Court made no order as to costs. In his notice of appeal dated 25th June, 2014, the Plaintiff has outlined the reliefs which he seeks on the appeal as follows:

(a) an order setting aside the decision of the High Court;

(b) an order directing the Defendant to properly comply with the order for discovery made on 7th October, 2013;

(d) an order setting aside the decision of the High Court determining that Document No. 0703 be withdrawn on the grounds of legal privilege; and

(e) an order setting aside the decision of the High Court making no order as to costs.

The decision of the High Court on each of the specific live issues or the group of issues is challenged in the grounds of appeal.

19. On the hearing of the appeal submissions were made in relation to the jurisprudence governing alternatives to making an order for further and better discovery, for example, where the Plaintiff is the applicant, making an order striking out the defence or, alternatively, on rare occasions, leaving the matter to be addressed by way of cross-examination in the course of the trial of the deponent on the affidavit of discovery. In reality, as was the case in the High Court, the whole thrust of the Plaintiff’s appeal is that the order of the High Court should be set aside and an order for further and better discovery should be made by this Court, as, indeed, is reflected in the reliefs sought in the notice of appeal. Notwithstanding the fact that each party made submissions on the alternative remedies, in the circumstances, in my view, that is the only remedy which is required to be addressed by this Court.

20. Having said that, however, the Plaintiff, in the course of the process on the motion and also on the appeal has argued for the intervention of the Court in two ways to ensure that the Plaintiff gets proper further and better discovery, having regard to what the Plaintiff contends was an insufficient methodology adopted on the part of the Defendant. First, it is submitted that questions arise as to the adequacy of the search terms used by the Defendant in conducting electronic discovery, which search terms have not been disclosed to the Plaintiff by the Defendant. As I understand it, the Plaintiff’s position is that this Court should make an order requiring the Defendant to furnish a list of the key words used by it to the Plaintiff. By way of example, in pursuing its complaint under Issue 8 that, inter alia, e-mails from Mr. Chamberlain, which should have been discovered had not been discovered, the Plaintiff sought that the Defendant identify the key words used to conduct the search and the devices searched. Secondly, the Plaintiff complains about the lack of access by the Plaintiff to information communication technology systems used by the Defendant. Specifically, in pursuing Issue 66, the Plaintiff contends that a specialist, presumably an IT specialist, nominated by the Plaintiff should be permitted access to the electronic records of the Defendant in order to inspect them. The position of the Plaintiff on the appeal is that those two matters are central to the appeal, not merely to Issue 8 and Issue 66, but to all the issues. In other words, the Plaintiff is converting the issue of disclosure of key search terms and the issue of an IT specialist being given access to the Defendant’s electronic records into overarching issues. Whether that approach is justified, I think can best be assessed by considering the live issues and the decision of the trial judge in relation to them first.

The live issues

Issue 4
21. The Plaintiff complains that some documents discovered are very long e-mail chains, which are not complete or continuous in sequence and in some cases are separate from the attachments which accompanied them, which it is contended are not properly identified. The position of the Defendant is that any long e-mail chains, strings or bundles are documents in their own right and have been discovered in the format originally provided and that the Defendant cannot alter or interfere with such documents in a manner which would constitute an unauthorised modification of the documents. Specifically, insofar as that complaint relates to documents produced by GMAP, which is an independent consultancy based in United Kingdom which advised the Defendant on network re-organisation, the Defendant’s position is that, in the supplemental affidavit of discovery, Mr. Hassett outlined the extensive efforts undertaken by the Defendant’s solicitors to address the GMAP documents, which were put into the electronic discovery platform in the manner in which they were provided by GMAP.

22. The finding of the trial judge on Issue 4 was that the chain of correspondence discovered satisfies the obligation to make best efforts with regard to discovery in accordance with the judgment in the Thema case. Further, he accepted the Defendant’s contention that it cannot alter the documents.

Issue 8

23. Issue 8, which is at the core of the overarching issue in relation to key search terms, concerns the adequacy of the discovery of e-mails generated by two employees of the Defendant: Mr. Chamberlain, a former employee, and Martin Conlon, who continues in the Defendant’s employment. In the supplemental affidavit of discovery Mr. Hassett specifically addressed Mr. Chamberlain’s e-mails from July 2009, when he took over Mr. Conlon’s position, to December 2012. He referred to the newly identified documents which were located in February 2014, which had previously been on Mr. Chamberlain’s laptop, and which were, as counsel for the Defendant remarked, fortuitously retained on the USB Drive back-up device referred to at para. 13 above, which have now been discovered. Mr. Hassett also addressed in some detail the searches which had been conducted in relation to the involvement of Mr. Conlon and outlined the results thereof. He averred that following the review, no additional source of relevant documents of Mr. Conlon was identified, although there was some newly identified relevant material from other sources included e-mails to and from Mr. Conlon. The upshot of the review was that eighteen e-mails, which had not been discovered in the original affidavit of discovery, because one was inadvertently marked privileged and the others were considered to be irrelevant, were discovered in the supplemental affidavit. Further, the Defendant relies on the averment of Mr. Hassett in his affidavit sworn on 2nd May, 2014 that key word searching settled by the Defendant’s solicitors was employed in searching for the relevant documents.

24. In relation to Issue 8, the trial judge stated that he was satisfied that the issue of e-mails had been exhaustively dealt with.

Issue 9

25. The Plaintiff’s complaint relates to the absence of discovered e-mails of Christiane Friese over the period from 2007 to 2011. Ms. Friese was employed by Volkswagen in Germany and was the Area Manager Ireland. In response to an assertion in Mr. Phelan’s affidavit of 29th May, 2014 that the “Defendant appears to dispute that individuals such as Christiane Friese . . . were central to the issues, which the Plaintiff rejects”, her limited role in relation to the re-organisation in Ireland was explained in Mr. Bourke’s affidavit sworn on 30th May, 2014. In his affidavit Mr. Bourke recorded that Ms. Friese had been contacted in connection with the preparation of the supplemental affidavit of discovery and she confirmed that she did not have any relevant documents other than the documents previously produced.

26. On Issue 9, the trial judge found that the role of Ms. Friese was a limited one, as set out in Mr. Bourke’s affidavit, and he accepted the evidence in the affidavit.

Issue 18

27. This issue specifically relates to the discovery of documents generated by GMAP, in particular, the absence of working documents referenced in other documents. The position of the Defendant is that the working documents of GMAP are the property of GMAP and that the Defendant has complied with its discovery obligations in respect of GMAP documents.

28. The finding of the trial judge was that the GMAP working papers are not relevant and were not part of the termination notice. Having regard to a suggestion on behalf of the Plaintiff that it would have to seek third party discovery, the trial judge observed that it was too late for the Plaintiff to obtain third party discovery and, in any event, it would not be able to get third party discovery from a party outside the jurisdiction.

29. In addressing Issue 4 above, reference has been made to the averments by Mr. Hassett in the supplemental affidavit of discovery in relation to the GMAP documents. It is important to emphasise that in his affidavit sworn on 30th May, 2014, Mr. Bourke has set out his belief that the Defendant has discovered all the documents in relation to GMAP that were or are in the power, possession or procurement of the Defendant. He has averred that approximately three hundred and seventy eight GMAP documents have been discovered.

Issue 21

30. The Plaintiff’s complaint is that there are deficiencies in relation to the discovery of correspondence between the Defendant and GAMMA. Like GMAP, GAMMA is mentioned in category 1 of the order dated 7th October, 2013, which relates to:

“All documents relating to the purported re-organisation of the defendant’s dealer network, including but not limited to all reports prepared for the defendant by Independent Network Planning Consultants, GMAP and GAMMA; documents relating to network strategy and market analysis falling in the date range from 1 January, 2007 to 30 May, 2011”.

31. The position of the Defendant is that, while the GAMMA reports fall to be discovered, as they have been, no other GAMMA material is relevant to category 1, as GAMMA was not involved in the network re-organisation in any way, so that there is no further document which falls to be discovered.

32. As regards Issue 21, the trial judge found that GAMMA was not involved in the re-organisation and that the correspondence sought is not relevant.

Issue 31

33. This issue is no longer a live issue and is merely referred to for completeness. The Plaintiff’s complaint that the draft settlement agreement between the Plaintiff and the Defendant which had been discovered is not the version executed by the Plaintiff was not pursued on the hearing of the appeal. In any event, the position of the Defendant in the High Court was that the document related to the Plaintiff in his capacity as an Audi dealer and the matter is not in dispute in these proceedings. That was the basis on which the trial judge found that it was not relevant.

Issue 38

34. The Plaintiff’s complaint is that Document 690 only contains pages 12 to 15. Indeed, Document 690 as discovered is a four page document, the pages being designated 12, 13, 14 and 15. It bears the date 2nd February, 2011 and is described as a “Network Presentation”. The pages discovered concern Dublin market areas, sales distribution, distribution for the year 2010 in various parts of Dublin and the West Dublin Business Plan. The position of the Defendant is that the document presents as it appears on the Defendant’s hard copy file. The possibility that the remaining pages may not have been lost but may never have existed on hard copy is posited by the Defendant. In the submissions in this Court, Document 690 was one of the two examples cited as demonstrating the need to examine the key word searching conducted for soft copies of pages 1 to 11 and pages subsequent to page 15 of this document. On that point, the Defendant points again to, and relies on, what Mr. Hassett has averred to in his affidavit of 2nd May, 2014 as to the key word searching conducted by the Defendant and referred to at para. 13 above.

35. In relation to Issue 38, the trial judge stated that, while there may be a few pages missing, it seems that the Defendant discovered the documents as presented on hard copy file.

36. In the course of pursuing his complaint in relation to Issue 38, the Plaintiff identified other documents discovered which appeared to have pages missing. The Defendant’s position consistently has been, and is, that the hard copy was discovered in the condition in which it was found and that the key word searching for any soft copy was properly conducted.

Issue 45

37. This issue relates to Document 2859, which is an e-mail from Ian Buckle of Pulman Volkswagen located in Durham, England, dated 28th January, 2010 to Mr. Chamberlain who was employed at the time by the Defendant as Head of Sales and Marketing for Volkswagen Passenger Cars. There are two tables attached to the e-mail, which appear to be assessment forms of retailers in the United Kingdom and in Ireland and which are described in the body of the e-mail as “the latest effort”. That, the Plaintiff suggests, means that there were earlier drafts which fall to be discovered. The Court was informed that the document mentions Blackwater Motors, which will be referred to later, although it is not clear that it does, unless it does so by reference to the proprietor of that entity, and that is why it was discovered. The position of the Defendant is that no other correspondence or documentation from Mr. Buckle is relevant to any of the categories of discovery.

38. As regards Issue 45, the trial judge found that none of the “correspondence” relates to the issues in dispute. While the trial judge used the word “correspondence” it can be assumed that he meant the documentation sought by the Plaintiff.

Issue 47

39. This relates to a PowerPoint presentation of what is described as “Dealer Meeting” held at Cashel, County Tipperary on 16th April, 2009. The Plaintiff’s position is that it was at this meeting at Cashel that representations were made to him. He discovered the presentation in his affidavit of discovery on foot of an order for discovery made against him, but it was not discovered by the Defendant. The position of the Defendant is that the meeting in question was called to address stock issues, so that the presentation does not relate to any issue in dispute and is not relevant.

40. The finding of the trial judge on Issue 47 was that the presentation dealt with stock issues, although that was contested by the Plaintiff, because it included a sheet entitled “Average Throughput per Outlet”, which obviously related to sales. However, the trial judge made the point that the document did not require discovery, as it was clearly in the Plaintiff’s possession. On the appeal, counsel for the Plaintiff submitted that the fact that the Plaintiff has it does not render it non-discoverable.

Issues 49, 50 and 51

41. Category (3) in the order of 7th October, 2013 relates to:

“All documents relating to or touching upon the Blackwater Motors Cork city dealership, including, but not limited to, documents relating to the appointment of Blackwater Motors as the successful tenderer.”

By way of explanation, Blackwater Motors is a commercial entity which successfully tendered with the Defendant for a dealership in Cork City in 2011, in a process in which the Plaintiff was a rival tenderer. Unlike many of the other categories in the order for discovery, category (3) does not include any temporal limitation, although the Plaintiff’s position is that the Defendant sought to have the 2008 tender process excluded from its discovery obligation, but the High Court ordered no such limitation. The complaints in relation to this group of issues have three elements, as outlined in the Updated Table:

(a) that no documents were discovered relating to the appointment in 2008 of Blackwater Motors as a sales dealer for the Defendant in Cork City, the appointment having arisen from a tendering process;

(b) that contracts by Blackwater Motors with the Defendant in 2009 and a supplementary agreement had not been discovered; and

(c) that fewer than ten documents from 2008 to April 2011 relating to Blackwater’s contract signing or the site acquisition of what is referred to as “the new VW/LCV dealership” had been discovered.

42. The position of the Defendant in relation to the point made at (a) in the next preceding paragraph is that documents relating to the appointment of Blackwater Motors as a sales dealer for the Defendant in 2009 do not fall within any category of discovery, because that appointment is not relevant to any issue in the proceedings. The appointment of Blackwater in 2009 is not relevant under category (3), having regard to the main reason advanced by the Plaintiff’s solicitors for seeking the documents in category (3), namely, to establish whether the reasons given for the termination of the Contracts of the Plaintiff were in fact genuine and objective and justified the termination of the Contracts. A response in similar terms was given in relation to the point made at (b). As regards the point made at (c), the Defendant’s position is that all documents falling within category (3) for the period referred to have been discovered.

43. In relation to this group of issues, the trial judge held that the Blackwater documents were only relevant to the 2011 re-organisation in which the Plaintiff also tendered and these documents have been discovered. He held that, as the 2008 documents pre-date the re-organisation, they are not relevant.

44. On the appeal, it is submitted on behalf of the Plaintiff that documents in relation to the 2008 tender process and the 2009 contracts are relevant because, given that the Defendant was soliciting tenders from third parties in Cork, such as Blackwater Motors, and subsequently entered into new contracts with third parties, such as Blackwater Motors, the tendering and contracting process is relevant as to the intentions and plans of the Defendant in 2009. It is suggested that it is to be expected that the tendered documents would set out the plans of the Defendant into the future. Further, it is suggested that, given that a relatively short period later the Defendant announced a re-organisation, documents that are probative of its medium to long-term intentions in 2008/2009 are clearly relevant to the issues in these proceedings. Indeed, counsel for the Plaintiff pointed to a document (referred to as Document 0761), which was in fact discovered and which is entitled: “Blackwater Motors Cork Market Presentation - March 2013”, which obviously emanated from Blackwater Motors, in which it was stated:

“Both our applications were based on [the Defendant’s] strategy at the time of having one large dealer in Cork city with three surrounding dealers to cover the county (Newmarket, Fermoy and Skibbereen).”

As the two applications referred to related to the period September 2008/January 2009 and May 2011, it is suggested that, as far as Blackwater Motors was aware, the Defendant contemplated in the period September 2008 to March 2009 a rationalisation of the dealership network in Cork.

45. The response of counsel for the Defendant to the foregoing submissions is that Blackwater Motors was the successful tenderer in the 2008 tender process, in which the Plaintiff did not participate. The tender was not part of, nor relevant to, the re-organisation that took place in 2011, so that there is no issue in these proceedings relating to the 2008 tender process. However, as part of the 2011 re-organisation, there was a further tender for the dealership in Cork City, in which the Plaintiff did participate and in which, once again, Blackwater Motors was the successful tenderer. The Defendant’s position is that the 2011 tender process is of “marginal relevance”, it being emphasised that the issue in the proceedings is the net one of whether the notice of termination was sufficiently detailed, objective and transparent. The wording of category (3) is emphasised and it is submitted that the reference to the appointment of Blackwater Motors as “the successful tenderer” refers to a single tender process and that the only tender process that concerns the Plaintiff is the tender process which followed the announcement of the re-organisation in 2011. The Defendant’s position as regards Document 0761, which was generated by a third party (Blackwater Motors), is that it cannot support the Plaintiff’s contention that the documents from a 2008 tender process, in which the Plaintiff did not participate, are within the scope of category (3).

Issue 52

46. The Plaintiff’s complaint is that no correspondence was discovered to or from “the PR company” engaged by the Defendant in relation to the re-organisation. The Defendant’s position is that no relevant documents were identified by the Defendant. In this connection the Defendant relies on Mr. Hassett’s affidavit, which appears to be reliance on general averments, rather than on a specific averment as to “the PR company”.

47. On Issue 52, the trial judge stated that no relevant documents had been identified by the Defendant.

Issue 53

48. The Plaintiff’s complaint on this issue is that the documentation in relation to a matter which was referenced in a document actually discovered, being what is referred as “the Mach 18 strategy”, had not been discovered, although it pre-dated the termination of the Contracts of the Plaintiff with the Defendant. The Defendant’s position consistently has been, and is, that, where relevant, the Mach 18 documents have been identified and have been discovered. In Mr. Bourke’s affidavit of 30th May, 2014, it was averred that, on the information he received from officials of the Defendant, the Mach 18 strategy has nothing to do with the network re-organisation carried out by the Defendant in Ireland post 2008. Mr. Bourke has averred that the Mach 18 strategy was a strategy developed by Volkswagen Europe-wide concerning its international sales ambitions for selling cars in the coming years and most of the documents in relation to it have no relevance to the matters in dispute in these proceedings. Mr. Bourke has specifically averred that the Defendant’s solicitors examined each document concerning the Mach 18 strategy identified by the Defendant and included in the discovery any of those that were discoverable in the litigation.

49. On issue 53, the trial judge found that the Defendant “has produced the Mach 18 strategy document”.

Issue 66

50. This is the issue on which the Plaintiff has sought the overarching entitlement that his IT specialist should be allowed to access the electronic records of the Defendant in order to inspect them. The position of the Defendant consistently has been, and is, that the Plaintiff’s request is unjustified and that there is no legal basis for it. Further, the Defendant relies on the fact that in the supplemental affidavit of discovery and in his affidavit sworn on 2nd May, 2014, Mr. Hassett has explained the methodology deployed by the Defendant and has rejected the allegations of deficiencies raised in the affidavit of Ms. Mee.

51. In dealing with issue 66, the trial judge stated that, having regard to the evidence given by the Defendant on the issue of the methodology used to make discovery, he was satisfied that it was not necessary, in the interests of justice, “to permit the Plaintiff’s IT specialists to become involved in the agreement of key words used in the search”. It is implicit that he was also refusing the Plaintiff’s request that their IT specialist should have access to the electronic records of the Defendant.

Relevant legal principles
52. The legal principles applicable to the determination of the issues on this appeal require to be considered, first, by reference to the jurisprudence as to the circumstances in which the Court may order further and better discovery, and, secondly, by reference to the developing jurisprudence in relation to discovery of electronically stored material.

53. In Sterling Winthrop Group Limited v. Farbenfabriken Bayer A.G. [1967] I.R. 97, Kenny J., having reviewed the authorities, summarised the circumstances in which it is appropriate to make an order for further and better discovery as follows (at p. 100):

“Such an order will not be made when the application is based solely on an affidavit alleging that the other party has documents in his possession relevant to the action which have not been disclosed by the first affidavit. The Court will, however, order a further affidavit of documents when it is satisfied (a) from the pleadings, (b) from the affidavit of discovery already filed, (c) from the documents referred to in the affidavit of discovery, or (d) from an admission by the party who has made the affidavit of discovery that the party against whom the order is sought has other documents in his possession relating to the issues in the action which have not been disclosed by the first affidavit. The Court will also order a further affidavit when there are grounds, derived from the documents discovered, for suspecting that there are other relevant documents in the possession of the party who has made the affidavit or where there are reasonable grounds for believing that the person making the affidavit of discovery has misunderstood the issues in the case and has, in consequence, omitted documents from it.”

In this Court, delivering a judgment in Phelan v. Goodman [2000] 2 I.R. 577, Murphy J. quoted the final paragraph of the judgment of Kenny J. (at p. 105), where he concluded as follows:

“The authorities which I have mentioned establish that the Court should not order a further affidavit of documents unless it has been shown that there are other relevant documents in the possession of the defendants or that the person making the affidavits has misunderstood the issues in the action or that his view that the documents are not relevant is wrong. None of these matters has been established and I must therefore, refuse to make the order sought.”

54. In Phelan v. Goodman, Murphy J. considered two situations which frequently arise and, indeed, which arise on this appeal, namely, where the deponent of the affidavit of discovery avers that the party ordered to make discovery has documents but they do not require to be discovered on the grounds of irrelevancy and where the deponent avers that the party against whom discovery has been ordered has no documents.

55. In relation to the first situation, Murphy J. quoted the following passage from the judgment of Finlay C.J. in Bula Limited (In Receivership) v. Crowley [1991] 1 I.R. 220 in which he stated (at p. 223):

“I accept that a court should be satisfied, as a matter of probability, that an error has occurred in an omission from an affidavit of discovery of documents on the basis of irrelevancy before making any order for further discovery and that it should not, in particular, permit the opposing party to indulge in an exploratory or fishing operation.”

As is recorded in the judgment of Murphy J., in the Bula case, the Court rejected the proposition that the averment by the deponent that the documents were irrelevant was effectively conclusive and held that in relation to the question of relevance the Court must be satisfied on the balance of probabilities that an error has occurred.

56. In relation to the second situation, Murphy J. stated (at p. 584):

“Difficulties obviously arise in directing the discovery of documents or a particular range or class of document which the deponent denies are in his possession. To order the first defendant to swear a further affidavit of discovery presumably would result in his repeating the statements made and sworn by him on several occasions, namely, that he has not and never had any documents in addition to those already discovered in his power or possession relating to the matters in issue in the present proceedings. In those circumstances the court would have to be satisfied on the evidence before it that it was making a meaningful order.”

It follows, that the test for this Court, formulated on the subsequent observations of Murphy J., is whether the evidence presented to the High Court was insufficient to satisfy the Court that relevant documents are or have been in the possession of the Defendant which should have, but have not, been discovered in its original affidavit of discovery or its supplemental affidavit of discovery.

57. Turning to the jurisprudence which has evolved in recent years in which the practical difficulties which are encountered in making discovery of electronically stored material have been considered, the most recent of the authorities cited by the parties and, in my view, the most apposite to the issues to be addressed on this appeal, is the decision of the High Court (Clarke J.) in Thema Intl. Fund v. HSBC Inst. Trust Services (Ireland) [2012] 3 I.R. 528. That judgment is of particular assistance because it addresses (at paras. 14 to 17 inclusive) the search stage in the process of making discovery against the backdrop of a large amount of electronically stored material. As explained by Clarke J., the so-called search stage involves the use of keywords and the like to search through electronic materials that have been assembled for the purpose of attempting to narrow down the range of documents that are to be subjected subsequently to physical review by trained lawyers. While he observes (at para. 14) that any search by keywords has the potential for getting things wrong, Clarke J. emphasises (at para. 15) that the obligation on a party making discovery is to disclose, insofar as it may be reasonably possible, all documents which come within the categories agreed or directed by the Court.

58. Clarke J. took an overview of the search stage in para. 17 stating:

“It needs to be recalled that there is, in reality, a balancing exercise involved here. The whole reason for a search, of the type with which I am concerned, is that the most time consuming and costly part of the process is the physical review of the remaining documents (that is those remaining after the selection process) by trained lawyers on a document by document basis. Clearly, the selection process will not have achieved its end if it does not significantly reduce the number of documents that need to be subjected to that costly direct review. If too many documents remain for review which turn out not to need to be discovered (so called false positives), then the cost and time of discovery will unnecessarily be lengthened. The whole point of narrowing the universe by means of key word searches is to reduce the number of documents that require direct personal review. If the key words are too wide, then the selection process will not do that job. If the key words are too narrow (or, perhaps, deliberately or inappropriately skewed), then same is likely to enhance the risk of false negatives. Some reasonable balance has to be achieved between those two ends. Provided that a party acts

bona fide

, and that the approach to the use of search tools is along the lines which I have described, it does not seem to me that a party should face criticism or adverse consequences if it should transpire that, despite those best efforts, some documents slipped through the net. In addition, I should note, in that context, that if truly key documents were to slip through the net that might, of itself, lead to real questions as to whether anyone could reasonably have believed that the methodology was right in the first place.”

While Clarke J. had recognised that sometimes the parties to litigation reach agreement on key words, he stated that it had not been possible to reach agreement in the Thema case.

59. In considering, in subsequent paragraphs, the obligations on those making discovery, Clarke J. reiterated (at para. 21) that -

“. . . the basic obligation on any party is to comply, to the best of its ability, with any order for discovery made.”

He went on to consider a number of factors, including proportionality stating (at para. 23):

“Since the decision of the Supreme Court in

Framus Ltd. v. CRH plc.

. . .[2004] 2 IR 20, it has been clear that the court must pay attention to the principle of proportionality in deciding on the breadth of discovery to be ordered.”

I will now consider the application of the foregoing principles to the live issues in accordance with the structure of the Plaintiff’s submissions.

Overarching issues
60. It seems logical to apply those legal principles to what I have referred to as the overarching issues first in order to determine whether it is appropriate that the Defendant be ordered to furnish a list of key search terms to the Plaintiff or that the Defendant be directed to permit an IT specialist nominated by the Plaintiff to have access to its electronic records in order to inspect them.

61. It was submitted on behalf of the Plaintiff that, absent disclosure of the key search terms deployed by the Defendant and its advisers, the methodology adopted by the Defendant cannot be scrutinised and the Court cannot be satisfied that the discovery made by the Defendant adequately complies with the order for discovery. In those circumstances, it was submitted that the trial judge erred in concluding that the discovery made by the Defendant was adequate and that the error had a “knock on” effect in his finding that, in the interests of justice, it was not necessary that the Plaintiff’s IT expert have access to the Defendant’s IT systems. Further, it was submitted that the trial judge did not have sufficient regard for the provisions of Order 31, rule 12 (as amended) of the Rules of the Superior Courts 1986 (the Rules).

62. On the last point, while counsel for the Plaintiff did not identify the precise rule which was being invoked in support of that point, counsel for the Defendant surmised that the reference was to rule 12(2)(c) (as inserted by the Rules of the Superior Courts (Discovery) Order 2009 (S.I. No. 93 of 2009)). Sub-rule (2) provides:

“On the hearing of [an application for discovery] the Court may:

(a) . . .

(b) . . .

(c) where the discovery ordered includes electronically stored information and the Court is satisfied that such electronically stored information is held in searchable form and can be provided in the manner hereinafter referred to without significant cost to the party from whom discovery is requested:

(i) further order that the documents or classes of documents specified in such order be provided electronically in the searchable form in which they are held by the party ordered to make discovery, or

(ii) where the Court is satisfied that such documents or classes of documents, or any information within such documents, could not, if provided electronically, be subjected to a search by the party seeking discovery without incurring unreasonable expense, further order that the party ordered to make discovery make available inspection and searching facilities using its own information and communications technology system, so as to allow the party seeking discovery to avail of any search functionality available to the party ordered to make discovery.”

As is clear from the terms of the order for discovery made in this case, an order in the terms of para. (c)(i) was made in that, as recorded earlier, it was provided that discovery be made by means of the delivery of a CD-ROM in searchable format. Paragraph (c)(ii) of sub-rule (2) was not invoked and, as was correctly submitted on behalf of the Defendant, it could not be invoked as a means of enabling the Plaintiff to scrutinise the Defendant’s compliance with the order for discovery. The reference to rule 12(2) of Order 31 is wholly misconceived.

63. The foundation of the Plaintiff’s claim to be entitled to have the key search terms used by the Defendant in complying with the order for discovery disclosed to him and that access be provided for his IT specialist to the Defendant’s IT system is the suspicion on the part of his advisers that the search terms used by the Defendant and its advisers could have excluded important documents that the Defendant is obliged to discover. As is discernible from the observations of Clarke J. in the Thema case, the process of searching by key terms is not a perfect or foolproof process or, indeed, a villain proof process. Recognising that, and adapting the test derived from the judgment of Murphy J. in Phelan v. Goodman to making discovery of electrically stored material by deploying key search terms, the question for this Court is whether there was evidence before the High Court that it was probable that the key search terms used by the Defendant and its advisers had failed to identify documents which should have been discovered, thus giving rise to the inference that the appropriate key terms had not been utilised.

64. As has been recorded, the trial judge was impressed, justifiably in my view, by the evidence put before him of the manner in which the defendant and its advisers set about complying with the order for discovery after the deficiencies in the original affidavit were recognised and addressed. In the light of the comprehensive evidence contained in the supplemental affidavit of discovery, in the affidavit of Mr. Hassett sworn on 2nd May, 2014 in response to the affidavits of Mr. Phelan and Ms. Mee, and Mr. Bourke’s two affidavits, in my view, the trial judge was correct in concluding that the Defendant had complied with its discovery obligation insofar as was reasonably possible and in finding that there was no evidence that the steps taken by the Defendant were not reasonable in that regard. It is patently obvious that, if the trial judge had expressly addressed the question posited in the next preceding paragraph, he would undoubtedly (and correctly) have stated that it could not be inferred from the evidence that the appropriate key terms had not been utilised by the Defendant.

65. Accordingly, I am satisfied that, as regards the Plaintiff’s claim for an order directing proper compliance with the order for discovery or seeking an order for further and better discovery through the medium of an order directing the Defendant to disclose the key search terms to the Plaintiff and an order that the Defendant give the Plaintiff’s IT specialist access to its electronic records and systems, the Plaintiff has established no grounds whatsoever for making any such order. There is nothing in the evidence to suggest that the Defendant has acted other than bona fide and to the best of its ability to comply with the order for discovery. That being the case, the fact that the Plaintiff seeks such relief has the semblance of seeking to be permitted to indulge in an exploratory or fishing operation.

66. That conclusion disposes of Issue 8 and Issue 66. The Plaintiff has drawn Issue 4 into the key search terms argument by suggesting that, by the Plaintiff’s IT expert being permitted to have the inspection facilities sought, reconstruction of e-mails necessitated by the state of the discovery would be obviated. The response of the Defendant is that the finding of the trial judge was that the Defendant has satisfied the obligation to make best efforts, as outlined earlier, and there is no basis for interfering with that decision. On the appeal, the Plaintiff relies on correspondence which postdates the decision of the trial judge, namely, a letter of 3rd July, 2014 from the Plaintiff’s solicitors to the Defendant’s solicitors which concerned “GMAP e-mail strings”, in which the Plaintiff sought that the Defendant have the alleged deficiency in linkage of relevant attachment to e-mails rectified. Having considered the evidence contained in the supplemental affidavit of discovery as to how, on the review of the discovery, the GMAP documents was addressed, I can see no basis for interfering with the finding of the trial judge in relation to Issue 4. Moreover, the Defendant’s solicitors’ response dated 7th July, 2014 to the letter of 3rd July, 2014, in which the Defendant’s solicitors, without prejudice to their position that their discovery obligations had been fully complied with, but with the objective of obviating an adjournment of the substantive action, clearly demonstrated a very reasonable and constructive approach on the part of the Defendant.

Alleged irretrievable e-mails
67. The Plaintiff also contends that the approach adopted by the Defendant in relation to what are described as “allegedly irretrievable e-mails” is also an aspect of the Plaintiff’s requirement for disclosure of search terms and the availability of inspection and searching facilities for his IT expert. Specifically, the Plaintiff’s arguments are stated to relate to “missing/irretrievable” e-mails of Mr. Chamberlain (Issue 8), Ms. Friese (Issue 9) and Mr. Buckle (Issue 45). It is suggested that it is implicit in averments made by Mr. Hassett that the Defendant did not undertake specialist techniques to attempt to recover documents and, by way of example, it is stated that there is no averment that the Defendant deployed specialist tools on the hard drive of the system to carve out or recover or rebuild deleted documents from unused space on the hard drive. The explanations given by Mr. Hassett in the supplemental affidavit of discovery and in his affidavit sworn on 2nd May, 2014, the contents of which have been outlined in some detail earlier, as to the steps taken by the Defendant and its advisers to ensure that the order for discovery is complied with contradict that assertion. In particular, the Plaintiff’s advisers do not appear to have taken on board the significance of the manner in which the Defendant was in a position to make discovery of the material on Mr. Chamberlain’s laptop, which has already been characterised as “fortuitous”. In general, I am satisfied that the Plaintiff has not established any ground on which this Court should interfere with the finding of the trial judge that the Defendant had complied with its obligation to make discovery of the material now being considered. Having said that, it is to be noted that the Defendant advanced other reasons for the absence of e-mails: in the case of Ms. Friese, her limited involvement; and in the case of Mr. Buckle, the absence of relevant documentation. The Plaintiff has not established any basis on which the Court should disregard those reasons.

Blackwater Motors (Issues 49, 50 and 51)
68. As will be clear from the position adopted and the submissions made by the respective parties as outlined earlier (in paras. 41 to 45 inclusive), the issue here is whether the documents in relation to the tender process and the contractual arrangements in which Blackwater Motors was involved with the Defendant in late 2008 and 2009 are relevant to any of the issues which arise in these proceedings. The nub of the argument advanced on behalf of the Plaintiff is that the interaction and arrangements entered into between Blackwater Motors and the Defendant in late 2008 and 2009 in relation to the dealership in Cork City were based on the strategy of the Defendant in relation to the re-organisation of the Defendant’s dealerships at the time, particularly, in the City and County of Cork. In essence, the Defendant’s response is that what happened between Blackwater Motors and the Defendant in late 2008 and in early 2009 had nothing to do with the proposed re-organisation of the dealer network which precipitated the letter of termination of 18th April, 2011. The question for this Court is whether, in the light of that conflict, the trial judge was correct in concluding that the documents dating back to 2008 and 2009 are not relevant to the issues in the case. That in turn, leads to the question whether the Plaintiff has satisfied the Court on the balance of probabilities that the Defendant is wrong in contending that the documents in question are irrelevant.

69. The only evidence the Plaintiff has produced which could be regarded as a “smoking gun” against the Defendant’s assertion and its underlying reasoning that the documents in question are not relevant is the document referred to earlier in para. 44 (Blackwater Motors Cork Market’s Presentation - March 2013). However, the Defendant submits that, having emanated from Blackwater Motors, that document does not support the Plaintiff’s argument.

70. In general, the picture which emerges from the discoverable documentation before the Court is that it is probable that the strategy in relation to organising the Defendant’s network of dealerships was being considered by the Defendant going back to 2009, which is hardly surprising given the factors which were referred to in the termination letter of 18th April, 2011, including the “significant downturn in the Irish economy”, the impact of which was being felt in 2009. I think it is probable that the documents in relation to the involvement of Blackwater Motors in the tender process in late 2008 and its contractual arrangements with the Defendant in 2009 are reflective of the strategy of the Defendant for the following years and, as such, are relevant. In the circumstances I consider that it is appropriate to make an order for further and better discovery in relation to the Category 3 documents to encompass these documents.

Other live issues
71. As regards the other live issues (Issues 18, 21, 38, 47, 52 and 53), I am not satisfied that the Plaintiff has established that the trial judge erred in the findings he made on any of those issues which I have outlined earlier, other than Issue 47. In relation to Issue 47, as counsel for the Plaintiff points out, the items on the agenda for the meeting in Cashel included “Strategic Goal”, on the basis of which it is submitted that it is relevant. Of course, the reason the Plaintiff is in a position to argue that the document is relevant is because he has it in his possession, because he attended the dealer meeting at Cashel. While, in the circumstances, the Plaintiff is going to gain very little from an order directing discovery of that document, nonetheless, in principle, I think the Plaintiff is entitled to an order for further and better discovery in relation to that document, because I consider that it has been established that it is probably relevant.

Privilege
72. It is necessary to consider the factual circumstances from which the privilege issue has emerged, as established in the evidence before the High Court, in some detail. The document referred to as Document 0703 was discovered in the original affidavit of discovery sworn by Mr. Hassett on 11th November, 2013. Subsequently, an unredacted copy of the document was furnished to the Plaintiff’s then solicitors. The Defendant’s solicitors later realised that copies of a number of privileged documents were furnished to the Plaintiff’s then solicitors in error either unredacted or inadequately redacted by the Defendant’s solicitors. The only dispute between the parties in relation to those documents which has become an issue for this Court relates to Document 0703.

73. Document 0703 is an e-mail dated 9th September, 2010 from Ms. Friese, as Area Manager Ireland for Volkswagen AG, sent internally to a colleague, Thorsten Jaede, and copied internally to another colleague and also copied to Joerg Krems and Dr. Marcus Erdman, both of whom are in-house lawyers in K-GL-V, Volkswagen’s internal legal function. The e-mail recorded in seven paragraphs the minutes of a telephone conference which had occurred on the previous day, 8th September, 2010, involving Ms. Friese and her colleagues and the two in-house lawyers.

74. Document 0703 was listed in First Schedule First Part of the original affidavit of discovery, which was in tabular form. It was correctly described as an e-mail dated 9th September, 2010 from Ms. Friese to Mr. Jaede. Under the heading “Privilege” in the table it was stated: “Part Privilege”. The document was dealt with differently in the First Schedule First Part of the supplemental affidavit. There, opposite “0703” no description of the document was given. It was merely stated: “This document has been removed due to privilege”.

75. From the time the Plaintiff’s then solicitors received the original affidavit of discovery, they raised a considerable number of queries in relation to redaction of documents and assertion of privilege in relation to documents. In response to a letter dated 21st November, 2013 from the Plaintiff’s then solicitors raising such queries, by letter dated 28th November, 2013 the Defendant’s solicitors stated:

“We have also identified approximately 6 documents which are marked as redacted but which have not in fact been redacted and again we will send you a table setting these out.”

76. During the week before the motion was issued, by letter dated 22nd January, 2014 the Plaintiff’s then solicitors raised the following query in relation to redaction and privilege with the Defendant’s solicitors:

“You then say in your letter of 28 November that there are ‘approximately 6 documents’ which are marked as redacted but which have not in fact been redacted. You stated that you would send us a table identifying those 6 documents, but again have failed to do so. Rather than 6 such documents, there are in fact at least 39. A table of the 39 such documents is attached as Schedule B to this letter. Given that these 39 documents are marked in your client’s Affidavit as having been redacted, we require confirmation from your client on oath either that those documents have not in fact been redacted or alternatively identifying the redactions which have been made.”

Schedule B includes the document referred to as “703”. It is impossible to form the view that at that stage the Plaintiff’s solicitors were aware of the contents of Document 0703.

77. In his first affidavit sworn on 4th February, 2014, Mr. Bourke averred that following receipt of the letter of 22nd January, 2014, his firm was concerned that at least 7 documents which appeared to have been copied by his firm to the Plaintiff’s then solicitors were “either privileged in whole or, being part privileged, had not been redacted”. He averred that a solicitor in his firm had raised the issue in a telephone call with a solicitor in the Plaintiff’s then solicitors’ firm on 31st January, 2014. Having identified other deficiencies in the original affidavit of discovery, as outlined earlier, Mr. Bourke indicated that a full review of the Defendant’s discovery was necessary. That led to the filing of the Defendant’s supplemental affidavit as to discovery.

78. In the supplemental affidavit of discovery Mr. Hassett averred as follows:

“The fact that privileged documents or unredacted part-privileged documents were inadvertently given on discovery to the plaintiff’s solicitors was drawn to the plaintiff’s solicitors’ attention by [the Defendant’s] solicitors on 31 January, 2014. In any event it would have been obvious to the plaintiff’s solicitors on inspection that these documents or data were privileged.

[The Defendant] asserts its privilege over these document and data and relies on the plaintiff’s and the plaintiff’s solicitors’ legal obligation not to use these documents or data in these proceedings or in any other manner.”

79. Those averments were responded to in Mr. Phelan’s affidavit sworn on 29th April, 2014. Mr. Phelan disclosed that there had been correspondence between the two firms of solicitors after 31st January, 2014, which he exhibited. In a letter of 11th February, 2014 the Defendant’s solicitors referred to the telephone conversation on 31st January, 2014. It was stated that the Defendant’s solicitors would revert as soon as possible with a list of “part privileged” documents, which it had been intended to redact, but which had not in fact been redacted, and “any other documents where privileged material was inadvertently disclosed to your firm”. The letter further stated in the final paragraph:

“In the meantime we are sure that your firm will appreciate the necessity to ensure that material disclosed which pertains to legal advice sought or given to our client or material created for the dominant purpose of preparing for litigation should not be copied or used in any way by your firm or by your client.”

The specific response in the Plaintiff’s then solicitors’ next letter, which was dated 19th February, 2014, to that was that their client, the Plaintiff, had reviewed all of the documents discovered sometime previously, despite the difficulty in navigating the discovery. However, in his affidavit, Mr. Phelan averred that he had identified in the letter of 19th February, 2014 the basis on which it had been almost impossible, in reviewing the original affidavit of discovery, to ascertain the position being taken by the Defendant in relation to its entitlement to redact documents and to assert privilege. As regards the claim for privilege made in the supplemental affidavit of discovery, Mr. Phelan averred as follows:

“. . . the plaintiff disputes the claim for privilege which is now being made by the defendant and that there is a legal obligation on the plaintiff or on this firm not to use the documents or data in these proceedings.”

Mr. Phelan also suggested that the issue might be determined by the Court in the context of the hearing of the motion.

80. In his affidavit sworn on 2nd May, 2014 Mr. Hassett addressed the stance adopted by the Plaintiff in relation to privilege. He commented that no reason had been given by Mr. Phelan for that stance except a statement that it remained “extremely difficult to understand the position adopted by the defendant in terms of the basis upon which it is claiming privilege”. He also commented that Mr. Phelan did not say that “it was not evident to the plaintiff or to the plaintiff’s solicitors when they read the discovery that the disclosure of the privileged documents and data was inadvertent”, nor did he say either that “objectively, it would not have been obvious to a reasonable solicitor or an experienced businessman like the plaintiff that the disclosure was inadvertent”. He further commented that “it would have been obvious to the plaintiff and to his legal advisers that the documents and data in question were matters recording professional legal advice and thus were confidential and privileged”. Mr. Hassett reiterated that the Defendant wished to continue to assert privilege.

81. That concludes the evidence in relation to the privilege issue. It was not subsequently addressed either in Mr. Phelan’s final affidavit sworn on 29th May, 2014 or in Mr. Bourke’s second affidavit, save that Mr. Bourke exhibited a letter dated 30th May, 2014 from the Defendant’s solicitors to the Plaintiff’s then solicitors. In that letter Document 0703 was mentioned in the final paragraph in conjunction with seven other documents and it was noted that the Plaintiff had no objection to the Defendant’s assertion of privilege in respect thereof and accepted that the documents must be returned to the Defendant’s solicitors. In other words, that reflected the Defendant’s position that the document was formally withdrawn from discovery on the ground that it is privileged. However, the Plaintiff’s position was not accurately reflected.

82. It appears from the judgment of the trial judge (at para. 14) that, when the matter was before the High Court, the Plaintiff had offered redaction in respect of portions of the e-mail although an unredacted copy of the document was apparently put before the High Court. In his judgment, the trial judge considered the judgment of the High Court (Clarke J.) in Byrne v. Shannon Foynes Port Company [2008] 1 IR 814. The trial judge quoted the following passages from the judgment of Clarke J.:

“15. . . . the inclusion of a privileged document in the first part of the relevant schedule should not be treated as a waiver of privilege. It follows that if a document is mistakenly so included, the court should ordinarily permit the party whose document it is to amend the schedule at any time before inspection has taken place.

16. However after inspection has taken place the general rule is that the privilege has gone: . . . The authors of Matthews and Malek on Disclosure (3rd ed., 2007) suggest, correctly in my view, that that position is a fortiori if copies have been supplied.”

83. The trial judge then quoted part of para. 17 of the judgment of Clarke J., in which it was pointed out that the proposition in para. 16 is not absolute, as noted in Matthews and Malek, and Clarke J. then quoted the following passage from Matthews and Malek (at p. 400) which, in his view, correctly states the law:

“Thus where such circumstances occur in the context of an inspection of documents, such as procuring inspection of the relevant document by fraud, or realising the mistake on inspection but saying nothing, the court will in effect allow the mistake to be corrected and refuse to permit the opposing party to use the privileged document. The test is in two stages:

(1) Was it evident to the solicitor seeing privileged documents that a mistake had been made?

(2) If not, would it have been obvious to the hypothetical reasonable solicitor that disclosure had occurred as a result of a mistake?”

84. In his judgment, the trial judge applied the foregoing principles to the two documents in respect of which privilege was in issue before the High Court. In relation to the document in respect of which the privilege point was not pursued on the appeal, the trial judge, after quoting the two stages of the test put forward by Matthews and Malek, stated at para. 16:

“Applying this test, it seems to me that it would not have been obvious ‘. . . to the hypothetical reasonable solicitor’ that Document 0666, in its entirety, was legally privileged. Undoubtedly, there are three comments which express a view on the legal risks associated with taking certain steps. The rest of the document, however, is not so obviously privileged.”

85. In relation to the document in issue on the appeal, he stated at para. 17:

“So far as Document 0703 is concerned, it would have been obvious to ‘. . . the hypothetical reasonable solicitor’ on the balance of probabilities that this document had been disclosed by mistake and contains legal advice throughout substantial portions of the email. A reading of the document makes it clear that there is no point in simply redacting three paragraphs (as suggested by the plaintiff), but that the entire document comes within the scope of legal professional privilege as it is almost impossible to separate out the legal advice given from the other contents of the email.”

86. On the hearing of the appeal there was put before this Court a copy of the document with the three paragraphs which the Plaintiff proposes should be redacted actually redacted, and also an unredacted copy. In each of the three paragraphs that the Plaintiff proposes be redacted there is reference to McCann Fitzgerald, the solicitors on record for the Defendant, who had previously advised the Defendant on the issue under discussion in the telephone conference. Counsel for the Defendant conducted an analysis of the contents of the portions of the e-mail which the Plaintiff proposes should be left unredacted and, on the basis of that analysis, has made a very convincing submission that those paragraphs are privileged of themselves. Even if that is so, the issue is whether the circumstances are such that, as it was put by Clarke J., “the privilege has gone”, because an unredacted copy of the e-mail were furnished to the Plaintiff, or whether the privilege is preserved by reason of the Plaintiff realising the mistake on inspection of the document but saying nothing. The issue for this Court is whether the trial judge applied the correct test and whether he applied it correctly.

87. Before applying the test identified by Matthews and Malek to the facts here, it is useful to quote a very helpful observation made by Clarke J., when applying the test to the facts before him, in Byrne v. Shannon Port Foynes Company. He stated (at para. 28):

“While accepting that there was, in fact, an error, the test, for the reasons which I have set out, is not to that effect. Rather the test is as to whether, objectively speaking, a solicitor receiving the documents concerned would have obviously realised that they had been included by mistake. It is against that background, and to assist in answering that question, that the explanation for the mistake needs to be assessed. If there is an obvious explanation for the mistake (which should, itself, have been obvious to a receiving solicitor) then the objective test would be met and the documents would have to be returned. If, even with the benefit of affidavit evidence, there is no satisfactory explanation for the mistake, then it follows that the thinking of the hypothetical objective solicitor would necessarily have been influenced by that absence.”

88. The first question which has to be considered against the evidence outlined earlier is whether it was evident to the Plaintiff’s solicitors on seeing the copy of the e-mail that a mistake had been made in furnishing it to them unredacted. As Mr. Hassett commented, Mr. Phelan did not say that it was not evident. On the other hand, it is reasonable to infer that the Plaintiff’s solicitors were concerned with the manner in which redaction, where “part privilege” was claimed, and privilege were addressed in the original affidavit of discovery, rather than the content of the documents in question. It is implicit in para. 17 of the judgment of the trial judge that he answered that question in the negative, because he moved on to the second question, which is whether it would have been obvious to the hypothetical reasonable solicitor that disclosure had occurred as a result of a mistake.

89. Following the guidance given by Clarke J. in Byrne v. Shannon Foynes Port Company, which I have quoted earlier, it is appropriate first to assess the explanation for the mistake. In his first affidavit Mr. Bourke averred that the errors he had referred to had “occurred as a result of mistakes which occurred in the course of the carrying out of the organisation of the discovery by my firm”. If that averment is intended to refer back to the problem that was identified following receipt of the letter of 22nd January, 2014 from the Plaintiff’s then solicitors, it is not very informative and says no more than that the task was not properly performed. In the subsequent letter of 11th February, 2014 from the Defendant’s solicitors it was stated that they were investigating why the non-redaction of the “part-privileged” documentation occurred, but there is no further evidence of why that occurred before the Court. As regards the privileged material disclosed to the Plaintiff’s solicitors it was merely stated that it was “inadvertently” disclosed. That is not very informative either. Notwithstanding that, taking an overview of the matter and, in particular, having regard to the multitude of issues which the Plaintiff’s solicitors were raising at the time in relation to discovery, I do not think that the explanation for this mistake would have weighed with the hypothetical reasonable solicitor one way or the other.

90. The hypothetical reasonable solicitor, in my view, would be influenced by the content of the document and its connection with the issues in the proceedings in assessing whether disclosure had occurred as a result of a mistake, rather than because of intention on the part of the Defendant to waive privilege. I am satisfied that it is probable that, in observing the two main issues which were the subject of the conference, the advice the Defendant obtained from McCann Fitzgerald as recorded, the consideration by the Defendant’s personnel of that advice and of a possible alternative approach, in the context of reviewing discovery made by the Defendant on the order for discovery which was founded on the issues in the proceedings, the reaction of the hypothetical reasonable solicitor would be that it was obvious that the document had been furnished by mistake. That, in my view, would be the reaction even if he or she was unaware that two of the participants in the telephone conference were in-house lawyers in the Defendant’s organisation. Accordingly, I am satisfied that the trial judge, in applying the second test, came up with the right answer, so that the Defendant is entitled to maintain the claim for privilege in relation to Document 0703.

91. As outlined earlier, the trial judge recorded in his judgment (at para. 14) that the Plaintiff had offered redaction in respect of portions of both of the documents in issue. That obviously gave rise to the consideration by the trial judge as to whether the entirety of each document was privileged. I am satisfied that he was correct in determining that, as regards Document 0703, “the entire document comes within the scope of legal professional privilege”. The minutes of the telephone conference are a record of discussions which are unquestionably privileged in the context of these proceedings. The paragraphs which the Plaintiff propose should be redacted are an integral part of the record of the discussions as a whole and I can see no basis for segregating them from the other paragraphs. Apart from that, as has been observed, counsel for the Defendant advanced very convincing arguments that the paragraphs themselves are privileged, but that is not the basis for my conclusion that the entire document is privileged. I agree with the conclusion of the trial judge that it is impossible to separate out the legal advice from the other contents of the e-mail.

Summary of conclusions
92. The Plaintiff’s claim for further and better discovery fails in relation to all of the live issues considered other than Issues 49, 50 and 51 and Issue 47. There will be an order varying the order of the High Court to the extent that the Defendant will be directed to make further and better discovery in relation to the documents the subject of Issues 49, 50, and 51 and Issue 47. The Court will hear submissions from counsel for the parties as to the precise terms of the order for discovery.

93. The decision of the trial judge on the privilege issue is upheld.

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You are here: BAILII >> Databases >> Supreme Court of Ireland Decisions >> O'Leary -v- Volkswagen Group Ireland Ltd [2015] IESC 35 (28 April 2015) URL: http://www.bailii.org/ie/cases/IESC/2015/S35.html Cite as: [2015] IESC 35

Supreme Court of Ireland Decisions