High Court denies strike-out and cross-examination in defamation case over pilot group document alleging market manipulation.

Neutral Citation: [2016] IEHC 264

THE HIGH COURT

Record No.2013/11363P

Between:-

RYANAIR LIMITED AND RYANAIR HOLDINGS PLC

Plaintiffs

– and –

EVERT VAN ZWOL, JOHN GOSS, TED MURPHY,

CARL KUWITZKY AND SAMUEL GIEZENDANNER

Defendants

JUDGMENT of Mr Justice Max Barrett delivered on 26thMay, 2016.

Part 1

Overview

1. It is claimed that in a document entitled “Pilot Update”, dated 12th September, 2013, and published on the headed notepaper of

the Ryanair Pilot Group under the heading “What the markets are saying about Ryanair”, the defendants and each of them published

or caused to be published the following text concerning Ryanair and Ryanair Holdings:

“The company’s share price fell sharply last week (down 11.54%) as markets reacted to a negative statement issued by

the company management. It has been indicated that profit targets for 2013-2014 may need to be revised downwards

as the autumn-winter outlook remains weak. This is in spite of positive indications to investors in June which encouraged

a share price increase and a sell off of shares by managers in late June, ahead of the winter period.”

2. The plaintiffs claim that (a) this text was defamatory of them, and (b) in its natural and ordinary meaning and/or by way of

innuendo can be construed as meaning that (i) Ryanair is guilty of market manipulation, (ii) Ryanair misled investors, (iii) Ryanair

knowingly facilitated insider dealing, and (iv) Ryanair conspired with its managers to abuse the market for its shares.

3. Whether the plaintiffs are correct or wrong in their various claims is for another court on another day to decide. This Court is

concerned solely with a strike-out and discovery-related application that has taken an unexpected turn.

Part 2

Background

4. By letter dated 3rd June, 2014, the defendants agreed to make discovery in the terms sought in the plaintiffs’ request for voluntary

discovery dated 9th May, 2014. Table 1 below summarises the sequence of affidavits that issued thereafter:

Party Document Date Deponent

Defendant Affidavit of Discovery 21.08.14 Mr Van Zwol

Plaintiff Affidavit (grounding motion) 05.11.14 Ms Moynihan

Defendant Supplemental Affidavit of 16.04.15 Mr Van Zwol

Discovery

Defendant Replying Affidavit 16.04.15 Mr Van Zwol

Plaintiff Second Affidavit 14.05.15 Ms Moynihan

Defendant Replying Affidavit 18.05.15 Mr Goss

Plaintiff Third Affidavit 01.07.15 Ms Moynihan

Defendant Replying Affidavit 23.07.15 Mr Goss

Defendant Second Supplemental 26.02.16 Mr Murphy

Affidavit of Discovery

Table 1: Sequence of Affidavits.

5. As can be seen from Table 1, the defendants have made three attempts through two different deponents, Mr Van Zwol and Mr

Murphy to comply with their discovery obligations. In each supplemental affidavit the relevant deponent has admitted errors and

omissions in previous discovery and made discovery of new documents to the plaintiffs.

6. By 11th November last, the plaintiffs were sufficiently vexed by how matters were progressing discovery-wise that they issued a

notice of motion seeking (i) an order striking out the defendants’ defence for want of discovery, (ii) an order directing the defendants

to make further discovery, and (iii) an order requiring inspection of certain documents of which discovery had been made in redacted

form.

7. That strike-out, etc. motion came on for hearing before this Court on 9th February last. Problems soon emerged at the hearing.

The plaintiffs, through their counsel, and for the first time in the proceedings, identified certain references within documents already

discovered which, it was contended, suggested that there might be further documentation not discovered by the defendants.The

contention aforesaid not having previously been raised by way of inter partes correspondence or on affidavit, the balance of the

motion was adjourned on consent to facilitate the swearing of a further affidavit by the defendants. This further affidavit was sworn

on 26th February.

Part 3

The Plaintiffs’ Concerns

A. Some General Concerns.

8. The plaintiffs come to court claiming that the third affidavit presents some general concerns. These general concerns are five-fold:

[1] that the defendants appear to be of the view that documents which are viewed online but never printed or downloaded are not

documents in their power, possession or procurement and thus are not discoverable;

[2] that the defendants appear to rely on the fact that certain documents are publicly available to suggest that they are not obliged

to discover it;

[3] that the third affidavit has yielded the discovery of documentation which the defendants admit ought to have been discovered in

the first affidavit;

[4] that, convinced it seems that ‘attack is the best form of defence’, the defendants contend that the plaintiffs bear some

responsibility for lapses in the defendants’ discovery to this point;

[5] that, by way of catch-all contention, the manner in which the defendants have dealt with discovery to this point, including the

fact that three affidavits of discovery have to this point been sworn, suggests that the defendants do not understand their discovery

obligations and that they cannot therefore be believed to have made adequate discovery to this time.

9. As to [1], the court entertains considerable doubt as to whether a document viewed online but never printed or downloaded can

properly be describedas a documentin the possession, power or procurement of the viewer. The mere act of having viewed the

document does not mean that the viewer hasthe documentor has an enforceable legal right to obtain it.Even if one gets over this

hurdle, proportionality is an unfailingly relevant consideration when the court has to determine the way in which a party is to comply

with its discovery obligations.It is perhaps conceivable that circumstances might arise in which discovery of what was seen online

might be available and proportionate; those circumstances do not present here. Nor has any case-law been identified to the court

that would suggest that some contrary proposition ought to apply.

10. As to [2], the fact that certain documents are publicly available does not mean that a person can escape discovery of same,

provided they otherwise satisfy the pre-requisites for discovery.

11. As to [3], such is life. In any human endeavour, error is to be expected. Even the most scrupulous of discovery processes – and

no little scruple is required[a] in the discovery process –likely involve some element of inbuilt error. Discovery is a means to an end,

not an exercise in perfection.

[a]As Charleton J. notes in IBB Internet Services Limited v. Motorola Limited [2013] IEHC 541, para.2, “[T]he parties [to

a case] are under a duty to the court to prepare a case for hearing through cooperating with each other in aid of the

fundamental obligation of identifying the issues to be tried and making the case ready for hearing.” Cooperation, not

coyness, is the watchword of discovery.

12. As to [4], it is for the defendants to make proper discovery, not for the plaintiffs to prompt them as to what is required.

13. As to [5], this is the mainstay of the within application and the court returns to this aspect of matters below.

B. Redaction.

14. It would be fair to say that a central concern of the plaintiffs revolves around the fact that, in the documentation of which

discovery has thus far been made by the defendants, the names of people who have provided information to the Ryanair Pilot Group

Interim Council (of which the defendants are member) have been redacted. This, the defendants maintain, is because:

(a) each redacted person has been given firm commitments of confidentiality,

(b) the Pilot Group could not function if it did not give assurances of confidentiality to persons who volunteer information to it, and

(c) any obligation to hand over such details would have a severe chilling effect on such information as is made available to the Pilot

Group.

15. Ryanair has invoked various arguments in correspondence with the defendants as to why the defendants should provide the

redacted names, the principal contention being that it may assist them in proving malice. But the defendants are not for turning: they

maintain that they have given assurances of confidentiality and will not disclose the redacted information.

Part 4

The Present Application

16. By the time of the second hearing-date on 4th May, the plaintiffs had served the defendants with two notices to cross-examine

the deponents to the defendants’ affidavits of discovery. Following the service of these notices, an argument broke out between the

parties as to whether the leave of the court ought first to have been sought before the notices were served.It is clear, from the

relatively recent decision of the Court of Appeal in Bank of Ireland & anor v. O’Donnell & anor [2015] IECA 73, para.82, itself drawing

on the earlier authority of the Supreme Court in Bula Limited v. Crowley (No.4) [2003] 2 I.R. 430,459 that such leave is required. It is

equally clear that in this case, nothing much turns on this fact. Any error arising, which seems to the court to be more technical than

terrible, can be resolved by treating the within application to order attendance for cross-examination as an application forleave to

serve the notices, with the court being free to make such related orders as it considers appropriate. In truth, it is not even clear that

by serving the notices and then coming to court, any more costs will have been incurred than would have arisen by the plaintiffs

coming to court first and getting leave to proceed. Either way, practically the same substantive arguments and counter-arguments

would have been raised by the parties.

17. At the heart of the plaintiffs’ application is their claimed concern that the manner in which the defendants have dealt with

discovery thus far suggests that the defendants do not understand their discovery obligations and so cannot be believed to have

made adequate discovery to this time. The defendants’ reply, in essence, is that the application to cross-examine is premature, that

such defects as the defendants purport to identify in the discovery process thus far may yet be resolved (if they require to be

resolved) by way of the application to strike-out and for further discovery. In any event, the defendants claim, cross-examination on

an affidavit of discovery is a rare occurrence and the facts here do not justify same.

Part 5

Applicable Law

A. Overview.

18. As ever counsel have laboured hard in the legal vineyard and gathered a rich crop of helpful precedents. The court has been

referred to Duncan v. Governor of Portlaoise Prison [1997] 1 I.R. 558, Bula,op. cit.,Director of Corporate Enforcement v. Seymour

[2006] IEHC 369, IBB Internet Services Limited v. Motorola Limitedop. cit., (though a case concerned largely with interrogatories some

of the more observations are nonetheless of interest and can be applied by analogy;plusIBB does, at para.12 contain a passing

genuflection in the direction of Duncan and the “exceptional” jurisdiction identified therein) , XL Fuels Group Limited (in receivership) &

anor v. Curran and ors [2015] IEHC 715, Bank of Ireland & anor v. O’Donnell and anor [2015] IECA 73 and Lehane (as Official Assignee

in Bankruptcy in the Estate of Sean Dunne) v. Dunne [2016] IEHC 96. What principles can be derived from these various cases?

B. An Attempted Synthesis of Applicable Principle.

19. It seems to the court that the following principles of relevance can be identified, inter alia, from the above-mentioned cases:

I

Cross-Examination on Affidavit (General)

1. Under O.40, r.1 of the Rules of the Superior Courts (1986), as amended, where evidence is given by affidavit, the court may, on

the application of either party, order the attendance for cross-examination of the person making any such affidavit.

2. The extent of the entitlement to cross-examine depends on the nature of the proceedings or the application in which the affidavit

has been sworn. (Lehane, para.10).

3. Where procedures are by way of summary summons or special summons or, in the case of proceedings commenced by plenary

summons, a trial on affidavit has been directed, a party who wishes to cross-examine a deponent can serve a notice to cross-

examine on the party who filed the affidavit requiring that the deponent be produced for cross-examination at trial. Leave to serve

such notice is not required. (Lehane, para.10).

4. On interlocutory applications and proceedings commenced by petition or originating notice of motion, a notice to cross-examine

may only be served with leave of the court. (Lehane, para.10).

5. There is no absolute right to cross-examine a deponent even if the relief sought is dismissal of the proceedings. (Lehane, para.11).

6. A trial judge has a discretion in relation to an application to cross-examine on an affidavit; in general, leave will only be granted if

there is a conflict of fact upon the affidavit that it is necessary to resolve in order to determine the proceedings. (Lehane, para.11).

7. The party seeking the order directing cross-examination of a deponent must demonstrate (i) the probable presence of some

conflict on the affidavits relevant to the issue to be determined, and (ii) that such issue cannot justly be decided in the absence of

cross-examination. It is not necessary that the conflict be one of fact. (Lehane, para.12).

8. There is no general proposition that a deponent may be cross-examined to deal with factual matters which were not covered in his

or her affidavit to fill an ‘information deficit’. (Lehane, para.14).

9. When, in the course of applications to the court which are required to be heard and determined on affidavit, it becomes apparent

from the affidavits sworn that there are material conflicts of fact between the affidavits, the court must (if requested to do so)

consider whether to direct (a) a plenary hearing of the proceedings, or (b) that one or more deponents should be cross-examined on

his or her affidavit. (Seymour, 5;XL, para.3).

10. Where it is debatable as to whether or not the cross-examination of a deponent on her or his affidavit is necessary or desirable,

the court should tend towards permitting the cross-examination, provided that (i) ultimately the decision on cross-examination is a

discretionary matter for the court, and (ii) the court considers it is necessary for the purpose of disposing of the issues which it has

to determine. (Seymour, 5).

II

Cross-examination on Affidavit of Discovery

11. The administration of justice, as vested by the Constitution in the courts, requires that the courts have the ability to adjudicate

fully upon the adequacy and accuracy of an affidavit of discovery. (Duncan, 573)

12. There are circumstances in which it may be permissible to cross-examine on an affidavit of discovery. (Duncan, 574).

13. The court may exercise a judicial discretion as to whether there may be cross-examination on an affidavit, including an affidavit of

discovery. (Bula, 459; Duncan, 574).

14. Because of the variety of other remedies available with a view to testing matter contained in an affidavit of discovery (e.g.

further and better discovery, interrogatories, court inspection) the circumstances in which cross-examination on an affidavit of

discovery will be allowed are very rare. (Duncan, 574).

15. It is wholly undesirable that, save in the most exceptional cases, the court should be called upon to deal with questions such as

the existence or non-existence of a document in circumstances where such a question might impinge to a serious extent on the

issues in the action. (Duncan, 574).

16. Cross-examination on an affidavit of discovery should only be permitted where it is necessary and other remedies (e.g. further and

better discovery, interrogatories, court inspection) prove inadequate. (Duncan, 574; IBB, para.13).

III

Unitary Trial and Other Guiding Factors

17. The unitary trial is in general the mode of disposal of a case, unless a preliminary issue of law or a modular issue will genuinely help

in disposal and not cause irremediable prejudice. (IBB, para.12).

18. Departure from the basic rule of a unitary trial must be genuinely helpful in terms of saving court time, minimising costs and truly

helping, not hindering, the ultimate trial. (IBB, para.12).

19. Examination of a party or of a witness prior to trial, should not become the trial itself. (IBB, para.12).

20. As with interrogatories, it is difficult to conceive of any circumstances where a party would be granted leave to engage in a

general cross-examination on an affidavit of discovery in advance of a trial: any such procedure is properly to be confined to trial.

(IBB, para.12).

21. As with interrogatories, any order allowing cross-examination on an affidavit of discovery should not only be directed rarely but

should always be specifically directed to one or more particular issues. (IBB, para.13).

22. Interrogatories and discovery and replies to particulars are methods whereby a fair appraisal of opposing claims may be made prior

to trial. Their existence depends on the probability of their being of assistance, relevance to the claim as pleaded and the requirement

that oppression through use of pre-trial procedures is avoided. (IBB, para.12).

23. New procedures that are not of assistance should not be allowed to spring up whereby the courts’ resources are used to split up

trials unnecessarily or to impose burdens that do not help litigation. (IBB, para.12).

Part 6

Application of Principle

20. It seems to the court that the principles identified at II and III in Part 5 are most applicable to the within proceedings. The court

turns now to apply those principles to the facts before it.

21. Re.11-13. Noted.

22. Re.14. Noted. None of these other remedies have been attempted, albeit that, in fairness to the plaintiffs, it does not appear that

interrogatories or inspection would be of assistance. However, the adjourned hearing concerning strike-out and further discovery

stands part-heard and should proceed to completion. If inadequate discovery is considered ultimately to have been made, the remedy

of further and better discovery will be available to the plaintiffs. As to the fact that a certain number of affidavits of discovery have

been sworn, this is not evidence per se that the process of discovery is flawed. It may just be evidence that, as here, certain

objections or queries raised were considered by the recipient of such objections or queries to require the swearing of a further

affidavit of discovery. To demand perfection in any affidavit of discovery is to demand too much.

23. Re.15. Not applicable.

24. Re.16. See comments re.14. It does not seem that necessity can be established unless the other remedies have proven

inadequate and this has not yet been proven.

25. Re.17-18. The court considers that the within application may be unnecessarily protracting matters and is not truly helpful. The

application for strike-out and further discovery stands part-heard and ought to proceed to completion, rather than the seeking of

cross-examination of deponents where the unavailing nature of all other remedies has not yet been established.

26. Re.19-20. Noted. In fairness to the plaintiffs, this risk of a violation of an essentially unitary process could be curtailed by the

court constraining the extent of the cross-examination to occur.

27. Re.21. Noted; this buttresses the last point made by the court.

28. Re.22. See comments re.17-18.

29. Re.23. Noted. In a similar vein, a process that has hitherto been expressly contemplated as exceptional and rare must not be

allowed to become regular or common, thereby giving rise (in effect) to a new standard stage in the process of discovery.

30. Finally, if one has regard to Principle 9 above, there is suggestion by the plaintiffs here that there are material conflicts of fact

between the affidavits in terms of the justifications offered for the redaction of informants’ names. But there is no such conflict.

Instead there is, in truth, a difference as to the basis on which confidentiality is offered and enjoyed, depending on whether one has

approached the Ryanair Pilot Group via its website or not. But that this difference exists is a matter of fact, not a conflict of fact.

The consistent, non-conflicting testimony of the deponents is that firm commitments of confidentiality have been given to the

individuals whose names were redacted from the documents. It is true, as the plaintiffs claim, that they have not been told where

these assurances were given but that seems an irrelevance to the fact that they were given. The mere fact that the plaintiffs may

not believe the deponents offers no basis for acceding to the present application in light of all the circumstances arising and the

factors considered above.

Part 7

Conclusion

31. For the reasons stated above, the court declines: (1) to grant leave to the plaintiffs to serve the notices to cross-examine

previously served; and (2) to order the attendance for cross-examination of the deponents who have sworn the affidavits of

discovery to this time.