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27 March 2012
While the traditional approach under the Court Rules was that trials of preliminary issues might be directed in limited circumstances – specifically where the matters to be determined involved questions of law that could be addressed before any evidence is given or questions of fact are tried (1) – the adoption of the Commercial Court rules have represented the genesis of the 'modular trial'. (2) This is where a particular module of the proceedings might be tried in and of itself, in isolation from the balance of the proceedings. The case law has defined the circumstances where this is permissible and the recent decision of Weavering Macro Fixed Income Fund Limited (In Liquidation) v PNC Global Investment Services (Europe) Limited (3) has set out a useful restatement of the circumstances where it is appropriate to make such directions.
In Weavering Justice Charleton noted that the defendant sought a modular hearing in advance of the main trial of certain key issues on the basis that the advance disposal of aspects of the claim would shorten the trial and reduce expense. The court noted that no estimate had been given as to how ordering a modular hearing might save in time at trial, in pre-trial discovery and in expense, but observed that there was no precedent requiring evidence to that effect and it was not minded to set one. Rather, it felt that to direct a modular hearing on particular issues before the main hearing requires the judge to apply good sense and experienced assessment. Here, the defendant sought a modular hearing on 12 individual issues, which the court then proceeded to consider in their specific context. In observing that the focus should be on the core decisions that a court must make, he tentatively set out six core items as being central to the trial and noted that they may require a considerable volume of evidence.
Before looking at the tests applicable as to whether a modular trial should be ordered, the court set out the rationale of the courts in making such directions in the first place and the modern development of modular trials, noting that:
"The time and expense of litigation are undoubtedly burdens on the constitutional right of the people of Ireland of access to the courts for the settlement of disputes... Courts have limited resources in personnel and in sitting days. Litigants draw on these resources, as is their right."
However, it observed that litigation has become increasingly complex, with increasing reliance on expert evidence, the citation of greater numbers of authorities and with alternative remedies being pleaded lest omission be deemed to constitute negligence. As against that, it suggested that pre-trial procedures do not necessarily have the effect of focusing attention on the core issues and it lamented that unwieldy hearings, resulting in the occlusion of central matters, mean that trials can cease to involve the fair disposal of the case. In that context, it asked rhetorically whether the courts should be entitled to structure hearings so that a focus on the real issues aids the disposal of litigation in a time and cost-effective manner.
The court cited at length from the case management provisions of the Commercial Court rules (4) and observed that, even in the absence of such rules, 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," (5) which might be "drawn upon as necessary wherever it is just and equitable to do so". (6)
The court also referred to Justice Clarke in Cork Plastics (Manufacturing) v Ineos Compound UK Ltd, (7) where it was acknowledged that the default position was that the trial should take place in the normal way, such that all questions as to the facts, the applicable law and the matter of liability and damage should be determined at a single hearing. However, in discussing the circumstances in which a modular trial might be ordered, Clarke relied on the inherent jurisdiction of the court to order its own business. The court suggested that, in appropriate circumstances, a modular hearing may be required to try a case fairly and in a manner consistent with the duty of the courts towards the parties in litigation before it and in the public interest. It further commented that directing a modular trial is one of the essential instruments at a court's disposal for the proper structuring of a complex trial.
Having outlined the general rationale and importance of modular hearings, the court then considered the appropriate test. The starting point, it noted, would be the default position of a full trial on all issues. In considering a motion for a modular hearing, the court must balance between a diffuse and lengthy hearing on multiple issues on one hand or a "preliminary and much shorter hearing on particular central questions that may be determinative of the ultimate issues at trial or which, at the least, will introduce focus and concision to the trial process".
The determining test in such a balancing process is necessarily the interests of justice and the court suggested that litigants can be directed by the court to concentrate on what is essential to their case.
The court referred to McCann v Desmond (8) where it had identified four tests which it suggested had been widely adopted "as a reasonable guide" for dealing with such motions. (9) Moreover, it felt that these tests would "naturally occur to the mind of a judge" in dealing with such motions. The four tests posited by the court are as follows:
"(1) Are the issues to be tried by way of a preliminary module, readily capable of determination in isolation from the other issues in dispute between the parties? A modular order should not be made if the case could be characterised as an organic whole, the taking out from which of a series of issues would tear the fabric of what the parties need to litigate so that the case of either of the plaintiff or the defendant would be damaged through being seen in the isolated context of a hearing on a number of limited issues.
(2) Has a clear saving in the time of the court and the costs that the parties might have to bear been identified? The court should not readily embark on a modular hearing, simply because of a contention that a saving in time and costs has been identified, but rather it should view that factor in the context of the need to administer justice in the entire circumstances of the case.
(3) Would a modular order result in any prejudice to the parties? If, for instance, the issue as to what damage was occasioned by reason of the wrong alleged by the plaintiff was so intricately woven in to the proofs that were necessary to the proof of liability for the wrong, so that the removal of the issue of damages would undermine the strength of the plaintiff's case, or the response which a defendant might make to it, then the order should not be made.
(4) Is a motion a device to suit the moving party or does it genuinely assist the litigation by being of help to the resolution of the issues? I return to the idea that a judge should always be aware that tactical decisions are made, often out of an abundance of enthusiasm, by parties to litigation, who may seek to put the other party at a disadvantage through the obtaining of an order under the Rules of the Superior Courts 1986 or one capable of being made within the inherent jurisdiction of the court. Obvious examples of pre-trial motions that may merely be tactical are motions to strike out proceedings as being vexatious or frivolous or to seek an order for security for costs under s. 390 of the Companies Act 1963. Other instances include the lengthy arguments that can sometimes ensue in relation to discovery. If the removal of issues in to a modular hearing is likely to disadvantage the proper process of pre-trial preparation that discovery orders, notices for particulars and notices to admit facts, involve, then such a motion should be refused as resulting not from a genuine process that will assist the trial but for tactical reasons related to wrong footing the other party."
The court then confirmed that it would apply those principles in considering the matter before it. In doing so, it ordered that of the 12 items in respect of which the defendant sought a modular trial, it would direct that a modular trial take place in respect of eight of them. The consequence of this was that the discovery ordered by Justice Kelly in the matter was restricted, as the plaintiff was not entitled to the discovery it had sought (and to which the defendant agreed) which would be relevant to the overall trial. However, the order made by the court has been appealed and it remains to be seen what approach the Supreme Court will adopt.
The decision of the court in Weavering has again set out the principles that it previously enunciated regarding the test for directing a modular trial. This test, and the very prospect of modular trial, has received support from other High Court authorities. The modular trial is becoming a more recognisable feature of complex litigation in Ireland, particularly before the Commercial Court. However, preliminary issue principles under Orders 25 and 34 aside, there is no Supreme Court authority on the more modern concept of the 'modular trial' and the proper test applicable to same. Although there is no doubt that the default position of a full trial on all issues cannot be the best and most efficient way to proceed in all cases, it remains to be seen whether the conception of the 'modular trial', and the test applicable to the ordering of same, will be varied by the Supreme Court in due course.
(2) See Rules of the Superior Courts, Order 63A, which permit the Commercial Court to be more proactive in the manner in which proceedings are conducted, and which have been taken in conjunction with the inherent and residual discretion of the court to order its own business – see PJ Carroll & Co Ltd v Minister for Health  3 IR 457.
"A Judge may, at any time and from time to time, of his own motion and having heard the parties, give such directions and make such orders, including the fixing of time limits, for the conduct of proceedings entered in the Commercial List, 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."
See also Order 63A, Rule 6(1)(ii), pursuant to which the court may give directions "fixing any issues of fact or law to be determined in the proceedings".
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