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10 August 2010
The rules applicable to the High Court Commercial List permit the court to make such order as appears convenient for the determination of the proceedings in a manner which is just, expeditious and likely to minimise the costs of those proceedings.(1) A recent High Court decision has clarified the basis upon which, by reference to the jurisdiction afforded by Order 63A, Rule 5, modular trials may be ordered in cases proceeding in the Commercial List.
In McCann v Desmond,(2) Justice Charleton had to consider a motion to have a series of preliminary issues tried on oral evidence, with the remainder of the issues between the parties to be decided later. The plaintiff and defendant had entered into an arrangement whereby together they would promote outdoor rock and pop concerts in Ireland. The relationship proceeded profitably from the late 1970s until 2006, when both parties agreed to terminate their relationship. The nature of the agreement to terminate was at issue between the parties in the instant proceedings.
The court noted that assertions and counter-assertions had been made with regard to:
Charleton commented that every issue raised seemed to have a response in fact as well as in law, and that each party raised opposing points of view on the main and subsidiary issues.
The plaintiff contended that, within the terms of the arrangement, the profits of the partnership would be distributed in agreed shares as between them after a prior allocation of 10% of the profits to the defendant. The defendant disagreed and claimed that all overheads in relation to the concerts and the promotion work were to be valued and subtracted before a profit could be assessed. At the time that the agreement to terminate was reached, a multiplier of 4.66 of the profits was agreed for a buy-out. However, because each side understood the profit differently, the ultimate figures came out at variables of between €4 million and €16 million.
The defendant sought an order from the court to resolve three issues in advance of assessing the precise calculation in monetary terms resulting from the multiplier:
The court noted that the determinations sought were not simply legal and suggested that the application might more accurately be termed a motion seeking an order of the court for a modular hearing, as opposed to an order for the trial of a preliminary legal issue. In considering its jurisdiction to make such an order, the court cited the Rules of the Superior Courts, Order 63A, Rule 5 and the decision in PJ Carroll & Co Ltd v Minister for Health (No 2),(3) in concluding that where it is just to do so, the court may make an order such as that sought.
Charleton also referred to Cork Plastics v Ineos Compounds,(4) where the circumstances in which a modular trial might be ordered were discussed. There, Justice Clarke identified that the default position is that the trial should take place in the normal way, with all questions regarding the facts, the damages resulting therefrom and the applicable law being disposed of at a single hearing. However, in appropriate circumstances, a different view can be taken. In this regard, if, because of the complexity of the case and the ease with which issues might be separated, questions as to liability and damages might be heard separately, it was suggested that consideration ought be given to a modular trial where there is the potential for saving the parties costs and the court time. Whether the trial of an issue by way of a preliminary module would be worthwhile must be judged in part on the length and complexity of subsequent modules. If subsequent issues were dependent on the disposal of a clearly defined and readily separable issue, it was suggested that the court would incline towards a modular trial; although that would not be the case where significant overlaps in relation to the evidence and witnesses that would be need to be heard would occur.
In the case before the court, Charleton set out his view that a court, in considering an application such as this for a modular hearing as against the default position of a full hearing, should address the following questions:
The plaintiff contended that the order, if granted, would be likely to delay the determination of the issues and lengthen the discovery process. The defendant argued that the issues were readily capable of being decided upon by being isolated, and that huge savings on the quantum of costs would result. Ultimately, Charleton was convinced that the order sought should be made. He concluded that he could see no injustice in terms of the disposal of the matter through a modular hearing, and that large savings could be made in terms of time and costs without appreciable prejudice to the parties or disadvantage to the plaintiff.
This decision affirms and clarifies the possibility of holding modular hearings pursuant to the rules applicable to cases proceeding in the Commercial List of the High Court. While the default position is, and will remain, a full trial on the merits, circumstances may exist in which a modular trial might be an efficient and effective way to resolve certain issues germane to the dispute without having to incur unnecessary costs – in both time and money – by proceeding to a full trial. Such cases are likely to be rare, but parties to Commercial List litigation should not disregard the potential for, and effectiveness of, a modular trial. However, the possibility of an appeal to the Supreme Court and the implications thereof should not be forgotten and, depending on whether the balance of proceedings are stayed pending appeal of the modular trial, seeking a modular trial could result in an increased delay in the ultimate resolution of the matter or to increased costs.
For further information please contact Gearoid Carey at Matheson Ormsby Prentice by telephone (+353 1 232 2000), fax (+353 1 232 3333) or email (firstname.lastname@example.org).
(1) Rules of the Superior Courts, Order 63A, Rule 5.
(2)  IEHC 164.
(3)  3 IR 457, per Justice Kelly: "There is a jurisdiction inherent in the court which enables it to exercise control over process by regulating its proceedings, by preventing the abuse of process and by compelling the observance of process. It is a residual source of power which the court may draw upon as necessary wherever it is just and equitable to do so."
(4)  IEHC 93.
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