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14 August 2012
The Commercial Court recently considered the applicable test in relation to discovery in related cases which were proceeding before it. Judge McGovern, in considering the applications before him, addressed the relevant test for determining whether particular categories of discovery should be ordered by the court. In doing so, he also had to consider whether to order discovery of confidential and commercially sensitive documents.
In Flogas Ireland Limited v Tru Gas and Flogas Ireland Limited v Langan Fuels Limited (1) the Commercial Court was dealing with claims, among other things, for injunctions, damages and other forms of relief against the defendants, arising out of their alleged use of the plaintiff's gas cylinders, constituting infringement of the plaintiff's registered trademarks and passing off. The defendants in each case sought broad categories of discovery, not all of which were agreed by the plaintiff.
While some objections with regard to discovery were specific to the matters in dispute, and related to whether the requests were grounded on the pleadings, the plaintiff made a general complaint that the nature of the discovery sought required it to provide sensitive market information in circumstances where the parties were competitors. Therefore, the court had to consider whether to order discovery of the categories sought and, if that test was met, how to deal with the confidential or commercially sensitive documentation.
In determining whether to direct discovery of the categories sought, the court cited at length from the decision in Hartside Ltd v Heineken Ireland Ltd. (2) In the course of that judgment, Judge Clarke cited other authority to the effect that the principles to which a court should have regard are as follows:
"(1) The court must decide as a matter of probability as to whether any particular document is relevant to the issues to be tried. It is not for the court to order discovery simply because there is a possibility that documents may be relevant.
(2) Relevance must be determined in relation to the pleadings in this specific case. Relevance is not to be determined by reason of submissions as to alleged facts put forward in affidavits in relation to the application for further and better discovery unless such submissions relate back to the pleadings or to already discovered documents. It should be noted that O. 31, r. 12 of the Rules of the Superior Courts 1986 specifically relates to discovery of documents 'relating to any matter in question therein'.
(3) It follows from the first two principles that a party may not seek discovery of a document in order to find out whether the document may be relevant. A general trawl through the other party's documentation is not permitted under the Rules.
(4) The court is entitled to take into account the extent to which discovery of documents might become oppressive, and should be astute to ensure that the procedure of discovery is not used as a tactic in the war between the parties."
Importantly, he noted that competing considerations, which could include information which is highly confidential, may need to be considered on the facts of a particular case.
In this case, on the sensitive documents, the court also referred to Independent Newspapers v Murphy (3) where the treatment of discovery of confidential documents was considered more specifically. The court cited from that judgment as follows:
"I am satisfied that the court should only order discovery of confidential documents (particularly where the documents involve the confidence of a person or body who is not a party to the proceedings) in circumstances where it becomes clear that the interests of justice in bringing about a fair result of the proceedings require such an order to be made.
It is clear that confidential information (which is not privileged) must be revealed if not to reveal same would produce a risk of an unfair result of proceedings. The requirements of the interests of justice would, in those circumstances, undoubtedly outweigh any duty of confidence. There is ample authority for that proposition which now may be taken to be well settled. Where, therefore, it is clear that the materials sought will be relevant, then discovery must be made notwithstanding any confidentiality.
However, it seems to me that the balancing of the rights involved also requires the application of the doctrine of proportionality. To that extent, it seems to me to be appropriate to interfere with the right of confidence to the minimum extent necessary consistent with securing that there be no risk of impairment of a fair hearing."
The court noted that, in seeking confidential information, the authorities indicate that a party may need to specify legitimate bases for seeking such information, since it is undesirable that mere allegation might entitle a party to access such information. It opined that:
"Where contested documentation is confidential, then the courts should exercise special care to ensure that a party is not given free access to such information without having satisfied the court that there is some basis on which the documentation is likely to be relevant and necessary."
Ultimately, the court allowed certain categories but refused others on the bases, among other things, that the documentation sought was commercially sensitive and that insufficient reason had been furnished to require their discovery.
The case represents a welcome restatement of the principles applicable to discovery. However, the decision is perhaps more important because it identifies that for confidential – or at least commercially sensitive – documents, a party seeking them should take particular care to explain why those documents are relevant and necessary to matters in dispute. The danger is that if a party fails to do so, depending on the documentation involved, the court may determine that the balancing of rights mandates not ordering discovery.
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