Court dismisses amendment allowing new cause of action due to prejudice and lack of stateable case.

Neutral Citation Number: [2008] IEHC 274

THE HIGH COURT

2003 No. 9018 P

BETWEEN

MOORVIEW DEVELOPMENTS LIMITED, SALTHILL PROPERTIES LIMITED, VALEBROOK DEVELOPMENTS LIMITED, SPRINGSIDE

PROPERTIES LIMITED, DRAKE S.C. LIMITED, MALLDRO S.C. LIMITED, THE POPPINTREE MALL LIMITED AND BLONDON

PROPERTIES LIMITED

PLAINTIFFS

AND

FIRST ACTIVE PLC AND RAY JACKSON

AND BY ORDER

BERNARD DUFFY

DEFENDANTS

AND LINKED PROCEEDINGS

Judgment of Mr. Justice Clarke delivered on the 31st day of July, 2008

1. Introduction

1.1 These related proceedings have been the subject of a significant number of earlier judgments. In those circumstances I do not

propose to restate the issues which arise in the proceedings or the course of the proceedings to this point. Suffice it to say that the

trial of the action of a number of the related proceedings has now been at hearing for upwards of three months. However, a number

of specific issues have now arisen which are the subject of this judgment. I propose to refer to the parties in the same manner as

they were referred to in my last judgment in this matter. See Moorview Developments and Ors v. First Active and Ors (Unreported,

High Court, Clarke J., 20th May, 2008). I propose referring to the plaintiffs in the proceedings specifically referred to above and all

other connected companies as the “Cunningham Group”. The defendants in the proceedings referred to above will be respectively

referred to as “First Active”, “Mr. Jackson” and “Mr. Duffy”.

1.2 The first two issues to which this judgment is directed arise out of applications concerning evidence made on behalf of the

Cunningham Group. The first motion concerns an application to file a new and more detailed statement of evidence from a witness,

Kieran O’Brien, intended to be led on behalf of the Cunningham Group. The second relates to an application on behalf of the

Cunningham Group to have the evidence of a Michael Lynn taken by video link. Both applications were opposed by First Active. In

addition counsel for Mr. Jackson adopted the opposition put forward on behalf of First Active. The evidence of Mr. O’Brien and of Mr.

Lynn has no relevance to the case as against Mr. Duffy, and on that basis Mr. Duffy was not a party to those contested applications.

The remaining issues concern discovery and a proposed amendment. Those issues concerned, so far as the defendants are

concerned, First Active and Mr. Duffy but not Mr. Jackson.

1.3 However, I propose addressing the two issues concerning evidence first. It will be necessary, in due course, to address the

arguments raised on both sides in relation to both applications. However, it seems to me that some general observations on both case

management and modern developments in the conduct of trials (such as the availability of video link) is appropriate. In that context it

is also important to recall that these proceedings are, by agreement between the parties, being conducted as if the case had been

admitted to the Commercial Court under the provisions of O. 63A of the Rules of the Superior Courts. In fact these proceedings had

commenced, and had advanced to a certain degree, prior to the Commercial Court coming into being and were not, in accordance

with the Rules applicable to the Commercial Court, therefore, available for admission into that court. However, as the case is being

conducted as if it were a case admitted into the Commercial Court, then it follows that the general considerations that would be

applicable to the conduct of litigation in that court are equally applicable to these proceedings. I now turn to the general

observations on which I have touched.

2. Hard Cases

2.1 It seems to me to be appropriate to start by recalling the old but important adage that “hard cases make bad law”. That old

adage is a pithy way of reminding all concerned of the risk that, in attempting to do what might appear to be justice in an individual

case by “bending” the existing rules applicable to that type of case, a court runs the risk that the court may, in the long run, do more

injustice in a wider range of cases by, for example, making the law less certain or more capable of uneven application. In an extreme

case the relevant jurisprudence might be changed in a way which might, superficially, lead to what might appear to be a just solution

in the case under consideration but which might be a recipe for significant injustice in other cases.

2.2 That being said, a court should also, in my view, always be mindful to consider whether an apparent injustice created on the

facts of an individual case, by the application of the existing jurisprudence, may point to an inadequacy in that jurisprudence which

ought properly lead to some refinement of the relevant principles.

2.3 However, for the purposes of the issues now under consideration I refer to the “hard cases make bad law” adage for the purposes

of drawing attention to the fact that an excessive concentration on attempting to do justice in an individual case without reference

to the consequences which the position of the court in that case might have for the generality of similar litigation has the potential to

lead, in the long run, to more rather than less injustice.

2.4 Many examples could be given of areas of law where there are sound policy reasons for the adoption of a position (whether by

Statute or by the jurisprudence of the courts) which might, when viewed on the facts of some individual cases, appear to create a

potential for injustice but which, nonetheless, is not only justified but necessary to achieve a greater degree of justice across the

range of litigation. A couple of examples will suffice.

2.5 It is implicit in any statute of limitations that there is an overriding requirement, for the protection of litigants as a whole, that

cases be brought in a timely fashion. Looked at from the narrow perspective of two individual litigants the application of a statute of

limitations may appear to create an injustice. One plaintiff may have commenced her litigation two years and 364 days after an event

(such as an accident) giving rise to a claim for personal injuries. Another litigant, in almost identical circumstances, might have sought

to commence virtually identical proceedings three years and one day after the same event. It could hardly be said that any defendant

in those circumstances was, to any material extent, save in very unusual and exceptional circumstances, prejudiced by the delay of

two days as and between the two cases. Nonetheless, in the absence of any of the very limited circumstances under which the court

has a jurisdiction to ignore a failure to commence proceedings within the limitation period, the first case will proceed to trial and the

plaintiff will obtain whatever judgment the merits of the case justify, while the second plaintiff will be entirely excluded from their

claim and, indeed, from any redress to which they might be entitled unless, perhaps, the delay could be blamed on advisors and a

claim of negligence pursued as against them.

2.6 From the narrow perspective of the two individuals concerned the situation might appear to be unjust. One can obtain full

redress, the other nothing. There was only two days between them which, in the overall context of a three year limitation period

might be said to be neither here nor there. However, the overriding policy consideration which requires that there be some clear and

unambiguous limit to the time within which certain types of litigation can be commenced is seen, over the range of potential litigation,

to be more important in the promotion of justice as a whole than any apparent injustice that might stem from a consideration of the

facts of the individual case.

2.7 Likewise any area of law (such as driving under the influence of alcohol) which is subject to a threshold will inevitably have the

potential to appear slightly unjust if one compares two almost identical cases. The person who drives with a blood alcohol level of 79

is entirely innocent of any offence. The person who drives with a level of 81 is guilty of an offence which results in an automatic

suspension of his or her driving license. However it is impossible to operate any system of thresholds without there being, inevitably,

some persons who are just the right and some persons who are just the wrong side of any threshold imposed. Indeed, even the

ameliorating measures sometimes adopted in such circumstances of giving a little leeway does not really change the situation. A

policy, for example, of not prosecuting persons who are within two units of the limit would simply mean that the person who measured

83 would be prosecuted while the person who measured 82 would not.

2.8 I would wish to emphasise that there is, of course, a very significant difference between those areas of law, such as those which

I have given as examples, where an absolute and rigid limit or threshold is imposed on the one hand and those, such as the ones with

which I am concerned in this judgment, where the court is given a wider discretion to take into account all relevant factors. It would

be wholly wrong to attempt to cut down on the legitimate widespread discretion given to the courts in certain areas by creating rules

which had rigid force akin to, for example, the statute of limitations or the drink driving limits. Nonetheless it seems to me that both of

those areas (and many other examples which could be quoted) have the merit of demonstrating an overall principle. In an attempt to

do justice in an individual case a court should not lose sight of the fact that its approach in that individual case and its determination

of the principles by reference to which any discretion should be exercised, need to be seen not only in the context of seeking to do

justice in that case, but also against the background of the consequences for the whole range of litigation to which the relevant

discretion may be applicable.

2.9 In the context of the application relating to Mr. O’Brien it will be necessary to refer further to Beachley Property Limited v. Edgar

(Unreported, Court of Appeal, England, 21st June, 1996) and the comment made by Lord Wolfe to the effect that:-

“You have to consider the position not only from the plaintiff’s point of view, but also from the point of view of the

defendant, and with a view to doing justice between other litigants as well.” (Emphasis added).

I respectfully agree. In a consideration of the extent to which it may be appropriate to grant leeway or exercise a discretion in a

particular way in relation to the conduct of litigation it is important to at least pay some regard not just to the individual interests of

the litigants in the case in question but also to the potential consequences for litigation as a whole.

2.10 Modern case management and modern trial techniques (such as the availability of video evidence) have been introduced

precisely because it is felt that such measures have the potential to increase the justice of litigation as a whole. The absence of case

management has been perceived, at least in complex litigation, to have increased the cumbersome nature of the pre-trial process

leading to additional costs and, frequently, significant delay in cases coming to trial. In addition the absence of such techniques,

again at least in complex litigation, can lead to the trial itself being more prolonged and costly. The impact of such factors on access

to justice should not be ignored. If cases take much longer to come to court and are much longer at trial than is reasonably

necessary then that of itself creates an injustice for all concerned. A losing party who may justly have to pay the costs of litigation

should not be burdened with having to pay significantly more costs than was reasonably necessary simply because the pre-trial and

trial process was more cumbersome than it needed to be. To impose such a burden is itself an injustice and one which has the

potential to arise in many cases.

2.11 I have made those preliminary observations because it seems to me that in assessing the weight to be attached to the various

factors which need to be taken into account in deciding the issues which arise in at least some aspects of the applications which are

the subject of this judgment, it is important that appropriate weight be attached to the consequences for litigation generally of an

unduly lax approach to compliance in a timely fashion with procedural requirements. In the context of the jurisprudence concerning

the dismissal of proceedings arising out of undue delay in their prosecution, Hardiman J., in Gilroy v. Flynn [2005] 1 I.L.R.M. 290,

spoke of the need to bring an end to what he described as an era of almost endless indulgence. Where parties come to expect almost

endless indulgence then such parties are likely to act on the not unreasonable assumption that they will be indulged again to the

considerable detriment of the proper functioning of the timely administration of justice and with consequent significant potential

injustice across a whole range of cases. That consequence is a matter which needs to be given all due weight in any consideration.

2.12 Having made those preliminary observations I now turn to the two evidential issues which arise. I propose dealing firstly with the

application in respect of Mr. O’Brien’s witness statement.

3. The O’Brien Witness Statement

3.1 It is important to recall the background to the filing of witness statements on the part of the Cunningham Group in these

proceedings. The Cunningham Group was in significant delay in meeting the time limits which had been agreed by the parties and

directed by the court. That delay applied both to witness statements of potential witnesses of fact and to statements of the

intended evidence of expert witnesses. A number of extensions of time were afforded to the Cunningham Group leading ultimately to

the making of an “unless” order on the 7th March, 2008. It is important to note, therefore, that the filing of witness statements in the

ordinary way in this case on behalf of the Cunningham Group was not done in a compliant or orderly manner.

3.2 I have already noted the importance of attaching due weight to the need to ensure reasonable compliance with procedural

requirements, if case management is to work at all. Beachley Property Limited (to which I have already referred) was a case where

the trial judge had refused to permit evidence to be led from witnesses whose statements of evidence were served approximately two

weeks before the trial date. The explanation given was to the effect that there had been a change in personnel in the plaintiff’s

solicitor’s office. On appeal the case was made that no prejudice had been established by the other side as arising from the late

service of the relevant witness statements, and that in those circumstances, the court should allow the calling of the evidence. In

response to that submission Wolfe L.J. said the following:-

“I would like to make it absolutely clear that I do not accept that submission. The very reason why the order is drafted in

the terms that it is, is to ensure that unless there are circumstances which justify the court exercising discretion in

favour of the party in default, that discretion will not be exercised the party will be deprived of the evidence. It is no use

the party coming forward and saying: ‘The evidence will help our case’. If this is the position the rule may as well not

exist. You have to consider the position not only from the plaintiff’s point of view but also from the point of view of the

defendant, and with a view to doing justice between other litigants as well.

The history of this case illustrates the inconvenience and the disruption to the administration of justice generally that this

approach to the rules creates. The learned judge had to deal with this appeal at short notice because of the delay on the

part of the plaintiff. This Court has had to arrange an extra hearing to suit the convenience of the plaintiff to reconsider

the appeal. I am not in the least concerned with the convenience of the court, but I am concerned that the proper and

regular administration of business in general before the courts should not be disrupted as a result of breaches of the Rules

of the Court which occur without any justification whatsoever.”

3.3 I respectfully adopt the logic of that decision as representing the position in this jurisdiction as well. While prejudice to the party

receiving late statements of evidence (or, as in this case, an amended statement of evidence) is undoubtedly a factor to be taken

into account, it does not necessarily follow that the absence of specific prejudice means that the statement should be admitted.

3.4 Counsel for the Cunningham group suggests that Beachley Property was overruled (if not in express terms) by the decision of the

Court of Appeal in the United Kingdom in Mortgage Corporation v. Sandoes [1996] T.L.R. 751, in which, amongst other things, it was

noted by Millet L.J. that:-

“The court will not look with favour on a party who seeks only to take tactical advantage from the failure of another

party to comply with time limits.”

3.5 On reviewing the authorities in the United Kingdom it does not seem to me that Beachley Property has, in truth, been overruled.

Rather an over application of the point made in Beachley Property so as to lead to a rather rigid policy of excluding evidence where

parties had missed time limits for the filing of the relevant witness statements, was disapproved.

3.6 Whatever may be the position in the United Kingdom, I am satisfied that it is appropriate for a court in this jurisdiction to at least

place some weight on the need to discourage significant non-compliance in the case management process. Otherwise there is no

point in case management in the first place. It is, of course, the case that significant non-compliance (which is the matter to be

discouraged) will only be encouraged where the court indulges individual cases of non-compliance which are very significant indeed. It

is unnecessary to rigidly enforce time limits to encourage broad compliance with case management directives. However it is equally

the case that excessive indulgence can only create a climate where there will be a significant level of non-compliance, thus defeating

the very object of case management in the first place.

3.7 In general terms it seems to me that the court should approach non-compliance in the following way.

3.8 Where there has been material but not very significant non-compliance, and in the absence of any significant prejudice, the court

should attempt to deal with the matter in a way which would not interfere with the entitlement of the party concerned to call

whatever evidence it feels may advance its case. Orders for costs or other procedural measures may be the appropriate remedy.

3.9 Where prejudice is caused then the court should see whether it is possible to remove or significantly ameliorate that prejudice by

any further procedural measures and if it be so possible then the court should refrain from depriving the party concerned of the

entitlement to lead whatever evidence it might wish.

3.10 However, where there is significant failure to comply with case management directives, the court needs to put in the balance

along with whatever excuse may given for that non-compliance and the extent to which there may either be general or specific

prejudice, the need to insure that there is a least broad compliance with case management procedures if the undoubted advantages

for the administration of justice (and indeed justice in individual cases), that comes with case management is to be retained.

3.11 At all times the court should, of course, consider whether any measures short of excluding the relevant evidence might meet the

requirements of the case. However, a point will, necessarily, be reached where to afford any further indulgence to a party would

create a likely expectation among parties generally of a level of indulgence which could only undermine case management.

3.12 Applying that general approach, it seems to me that the following considerations will be likely to apply in a case such as this.

3.13 The first issue does seem to be the question of prejudice to the opposing party. Clearly the fact that a witness statement is

served late in the day has the potential to prejudice the other side. This may occur in a variety of ways. In cases where modern case

management is applied, either under the Rules of the Commercial Court or otherwise, it follows that parties are reasonably entitled to

direct their preparation for trial on the basis of an assumption that the evidence which they will have to meet is, at least in general

terms, as set out in the witness statements. Lines of inquiry may be discontinued where it does not appear that the other side

intends to lead any evidence on a particular point. The later the presentation of additional or new evidence the more difficult it may

be for the party receiving such materials to deal with the new evidence. It may, in some circumstances, be possible to deal with any

prejudice arising by procedural measures or by a short adjournment but that will not always be the case and where the consequences

of prejudice might result in a significant adjournment that, in itself, can give rise to significant prejudice depending, at least in part,

on the nature of the proceedings.

3.14 In addition, and of particular relevance to this case, where additional evidence is proposed after the commencement of the case,

then same has the potential to affect the run of the case from the perspective of the opposing party. Counsel are required to make

many judgment calls in the course of complex litigation. These include whether to pursue particular lines of cross-examination or,

indeed, the manner in which such cross-examination is pursued. A significant shift in the evidence to be presented notified only after

the case has started, can, in many ways, prejudice the opposing party who will have made those judgment calls on the basis of the

witness statements as they then appeared. It would, of course, be wholly inappropriate for the court to invite counsel to indicate

whether any such prejudice had, in fact, occurred. The court should, however, take into account the fact that, generally speaking, a

belated change in witness statements whether by the addition of new witness statements or the alteration of existing witness

statements has the potential to cause prejudice which will largely be incapable of being remedied and to which potential prejudice all

due weight should be given.

3.15 The second important factor seems to me to be to analyse whether there is any justification for the late service of an amended

or new witness statement. There can, of course, be many reasons why a party might legitimately be late in presenting evidence.

Evidence may only come to light at a late stage. Notwithstanding the exchange of witness statements in advance of a hearing it has

been the experience that trials do take their own turns, some of which could not reasonably have been predicted. These and many

other circumstances may readily establish that it is appropriate to allow additional evidence to be furnished to deal with the case as it

has developed, most particularly where it is reasonable to assume that the case developed, to a material extent, in an unexpected

direction.

3.16 The reason why I have emphasised the importance of encouraging broad compliance across the range of cases in the preliminary

observations which I made earlier in the course of this judgment, is that such considerations seem to me to indicate a third factor. In

addition to prejudice to the receiving party and any reasons which might justify the lateness of the statement from the serving

parties point of view, it is also necessary to place all due weight on ensuring broad compliance with procedural requirements. I should

emphasise that this does not mean that there should be a rigid or disproportionate enforcement of time limits. Parties who broadly

comply with their obligations should not be penalised (save as to any costs arising) by failures which do not materially affect the run

of the case. As I indicated earlier it is, in my view, appropriate to have regard to the effect on litigation generally of ensuring

compliance with time limits. However that effect is only truly material to the extent that the giving of excessive indulgence to parties

might create a climate in which significant non-compliance was encouraged. In that context it is appropriate to have regard to the

overall level of compliance by the party concerned. A broadly compliant party should not be unduly penalised for a single failure in the

absence of prejudice.

3.17 Applying those general principles to the facts of this case it is necessary to note a number of factors. The Cunningham Group

were in significant default in relation to the filing of witness statements to the extent that an “unless” order was ultimately made. If

“unless” orders are to mean anything then a party should not lightly be able to depart from the consequences of such an order.

Therefore the filing of an additional statement from a new witness outside the terms of an “unless” order would require a significant

justification from the perspective of the moving party. It seems to me to follow that a significant variation in the evidence proposed

to be tendered by a witness whose statement was filed on foot of an “unless” order should also require such a justification.

3.18 In fairness to First Active (and to the extent to which it was relevant to him, Mr. Jackson) it was not suggested that any

specific prejudice would arise from the proposed additional evidence of Mr. O’Brien. This is particularly so because the evidence seems

to be more in the form of an elaboration of the original witness statement rather than an attempt to touch on wholly new areas. In

that context it is appropriate to note what the Commercial Court Rules say about witness statements. Order 63A, rule 22(1) requires

the service on the other party of “a witness statement outlining the essential elements of” the evidence (whether factual or expert)

intended to be led. It does not seem to me to be the case that a witness statement, therefore, requires to be equivalent, in all

respects, to the evidence in chief of the witness concerned. However, it is equally clear that the intent of the rule is that the

receiving party should not, to any significant extent, be capable of being taken by surprise by the contents of any evidence in chief

to be led. The fact that a party may elaborate on evidence actually included in the witness statement is unobjectionable provided

that the additional evidence can properly be regarded as an elaboration rather than a departure or movement into a new area.

3.19 It seems to me that much of the additional material contained within the proposed new statement of Mr. O’Brien can properly be

described as an elaboration on his previous statement. To that extent it does not seem to me to be necessary to permit an additional

witness statement to be filed as such elaboration is permissible in any event. To the extent that the proposed additional evidence of

Mr. O’Brien goes beyond an elaboration, then a difficulty seems to me to arise.

3.20 It is also important to emphasise that there are many circumstances in which it may be appropriate to allow a witness to give

evidence in chief which goes beyond what is set out in the witness statement filed from the person concerned. In passing I should

note that it is not an unusual practice, even where very detailed witness statements have been filed, to permit counsel for the side

calling the witness concerned to ask a number of introductory questions not least because it is considered unfair that a witness goes

immediately into cross examination. This latter consideration is of particular importance in cases where it is likely that the witness’s

evidence will be significantly challenged.

3.21 Secondly, and of more relevance to the issues which I have to decide, it is important to note that, at the time when a witness

files his witness statement, the witness concerned may not have had sight of witness statements coming from the other side relating

to the same events. It is entirely appropriate that such a witness be given an opportunity, during evidence in chief, to comment on

the evidence of other witnesses, most particularly those likely to be called by the opposing party.

3.22 In addition, it is inevitable that, as a case progresses, the precise issues of fact which are central to the case and are in

controversy become clarified. Such a process occurs, not least, by virtue of the cross examination of the plaintiffs early witnesses.

Such a situation is all the more likely to arise in a case, such as this, where the parties have agreed that documents emanating from

each respective party can be admitted in evidence as prima facie proof of the contents of the documents concerned. In those

circumstances earlier plaintiffs witnesses may well have documents put to them from which it may be possible to determine the major

areas of factual controversy in the case as a whole. It would be unreal, and in my view a recipe for injustice, if subsequent witnesses

could not have evidence led from them in chief so as to give their account of issues whose controversy has come into particular

focus in the course of the cross examination of earlier witnesses.

3.23 There may, of course, be a whole range of other circumstances where the case has taken one turn or another which would

justify allowing some latitude in relation to the evidence to be tendered. The filing of witness statements is intended to achieve both

an additional degree of efficiency in the conduct of litigation (which, in itself, has the capacity to add to the justice of the case by

diminishing costs) but also, as a contribution to assisting the court to come to a just result in the case by ensuring that factual

issues are, to the greatest possible extent, known in advance so that all relevant evidence in relation to them can be led.

3.24 However, witness statements should not be taken as an end in themselves resulting in an excessive or disproportionate

restriction on the evidence to be given by the witness concerned. Where, therefore, whether for the sort of reasons outlined above

or for other reasons that may arise on the facts of a particular case, it is reasonable to take the view that the case has evolved

since the time that the witness statement concerned was filed, it would be wrong to place any barrier in the way of a witness giving

evidence in chief relating to issues whose existence or importance could not reasonably have been ascertained at the time when the

witness statement concerned was filed. Permission to give evidence of that type should be readily given, even though the evidence

may not be adequately specified in the witness statement. Where, however, on the other hand, it ought to have been clear that

evidence sought to be led was material as of the date of the filing of the witness statement concerned somewhat different

considerations apply. It is in that context that the reason advanced for seeking to add to the witnesses evidence (whether by filing a

more detailed witness statement or otherwise) needs to be considered.

3.25 The only reason put forward at this stage for tendering a more elaborate statement from Mr. O’Brien is the assertion of the belief

on the part of the Cunningham Group’s solicitor that it was unnecessary to go into a great level of detail in the witness statement

concerned. That may well provide an explanation as to why the original statement is somewhat sparse but, for the reasons which I

have already indicated, it does not seem to me that the absence of detail is a barrier to the leading of the relevant evidence provided

that the evidence can properly be regarded as an elaboration on the “essential elements” set out in the witness statement. To the

extent that any new areas are included, no real explanation as to why such areas could not have been included in the original witness

statement is given.

3.26 While there does not appear to be significant prejudice to the defendants beyond the general fact that any significant change,

most particularly after the case has commenced, in the evidence has the potential to affect the run of the case, it is equally so that

no significant basis for materially adding to the evidence of Mr. O’Brien other than by way of elaboration has been put forward. Having

regard, therefore, to the fact that Mr. O’Brien’s witness statement was furnished under an “unless” order, it seems to me that

weighing all of the material factors ought lean against permitting the additional witness statement to be filed. As I have pointed out

that does not mean that any of the materials contained within the proposed additional witness statement cannot be led provided that

those elements can properly be regarded as an elaboration of the existing witness statement. To the extent that the witness

statement may go beyond that, then it seems to me that there is no legitimate explanation for seeking to tender such material now

and having regard to the history of default on the part of the Cunningham Group it would be to trespass upon the “endless

indulgence” noted by Hardiman J. to permit any further indulgence in this case.

3.27 The application in respect of Mr. O’Brien is, therefore, refused.

4. The Lynn Application

4.1 The facts relevant to this application may be briefly stated. Mr. Michael Lynn (“Mr. Lynn”) was solicitor to the Cunningham Group

for most of the period material to these proceedings. A witness statement from Mr. Lynn has been filed.

4.2 It is a matter of some public notoriety that Mr. Lynn’ financial affairs as a solicitor and as a businessman have been subject of

significant controversy in recent times. In particular Mr. Lynn was the subject of an order of the President of the High Court, in his

capacity as the judge dealing with disciplinary matters in respect of solicitors, requiring Mr. Lynn to attend for examination before the

court, to give explanation as to certain matters of controversy which had arisen. Mr. Lynn failed to attend and an order for his

attachment for contempt was made and is outstanding. In addition there appears to be some basis for believing that there are garda

investigations into Mr. Lynn’s affairs although it is, for obvious reasons, impossible to tell the stage that those investigations have

reached.

4.3 Against that background it is hardly surprising that Mr. Lynn does not wish to come to this jurisdiction as he would, undoubtedly,

be called to account for his contempt of court and might, in addition, be the subject of attention from an Garda Síochána. It is as

against that background that the Cunningham Group seek to have his evidence taken by video-link.

4.4 Order 64A, rule 23(1) provides that a judge “may allow a witness to give evidence, whether from within or outside the State,

through a live video-link or by other means”. The rule, therefore, confers a broad discretion on the court. While I am informed that

there may have been cases in which orders under the rule were made, I understand that there is no judgment as yet dealing with the

broad basis upon which the discretion which undoubtedly exists should be exercised. It is appropriate, therefore, to start by a

consideration of those broad principles.

4.5 Clearly in a great many cases the only real issue will be as to the relative convenience of taking evidence by video-link or by, on

the other hand, requiring the witness concerned to attend in court. There is undoubtedly some disadvantage to the taking of

evidence by video-link particularly in cases where the evidence of the witness concerned is likely to be significantly controversial and

where the witness’s credibility is likely to be attacked. Under the Rules of the Commercial Court it is, of course, possible to predict

these matters to a much greater extent having regard to the fact that witness statements from all relevant witnesses will have been

filed in advance and areas of real controversy on the facts will have been identified. There may also be some limited practical

difficulties concerned with witnesses who are required to deal with a large volume of documents. Obviously arrangements can be

made in advance to have books of documents made available to the witness concerned and, in addition, arrangements can be made

to have any documents whose relevance only becomes apparent during the course of the examination of the witness concerned,

electronically transmitted so as to be available to the witness. No such logistical difficulties appear to me to be insurmountable

although that is not to say that such difficulties might not give rise to some degree of inconvenience in even a straightforward case

which would need to be weighed in the balance against the potential inconvenience of requiring a witness to come to court. All in all,

in a straightforward case, it seems to me to be likely that the court would be required to balance the undoubted saving of costs that

would ensue from permitting foreign witnesses to give evidence by video-link with any inconvenience for the run of the case, with

that latter fact, in turn, being likely to be significantly dependent on the importance and complexity of the evidence of the witness

concerned. That balance also needs to be exercised against the background of the fact that the giving of evidence in person in court

remains the default position in the absence of there being some sufficient reason for departing from that course of action.

4.6 A further layer of difficulty, however, may arise where the witness concerned is unwilling (for whatever reason) to come to Ireland

and is not, therefore, in practice compellable. In the past the only means by which the evidence of a witness who did not wish to

travel to Ireland could be secured was either by means of the appointment of a Commissioner under O.39, r.4 to take the evidence of

the relevant witness abroad (which required, in practice, the witness’s agreement) or by the use of the letters rogatory procedure

where, in certain circumstances, a witness might be compelled by the law of a local jurisdiction to attend to give evidence in a court

of that jurisdiction for the purposes of that evidence, in turn, being transmitted to Ireland. A statutory form of the letters rogatory

procedure has, of course, now been introduced by European Regulation. Evidence by video-link is now an additional possibility.

4.7 If it is the case that it would be convenient, in any event, for the witness concerned to give evidence by video-link, then it may

well not be overly important, at least in most cases, to distinguish between a situation where the witness would be prepared to come

to Ireland or one where the witness would not be so prepared. However, in cases where the balance would lie against permitting

evidence by video-link, the question of the weight to be attached to the reason for the party not being prepared to travel to Ireland

is an important factor. There will, of course, be many cases where there are perfectly valid reasons, whether of health or otherwise,

which would make it impossible or difficult for a witness to travel to Ireland. Video-link would seem to me to be an entirely appropriate

way for dealing with such evidence.

4.8 However, this case throws up a very real difficulty of principle in considering the weight to be attached by the court to the fact

that the reason why the witness concerned (Mr. Lynn) is not willing to come to Ireland is by virtue of him being in contempt of court.

4.9 It seems to me that I should, therefore, first consider the question of whether, in the ordinary way, there would be a basis for Mr.

Lynn giving evidence in this case by video-link. He is someone who was, until recent times, based in Ireland. There appears to be no

logistical reason as to why he could not come to Ireland or that it would be difficult for him to do so. The evidence in this case is

undoubtedly complex and document driven. To the extent that the evidence of Mr. Lynn might be important (an issue to which I will

return) then it is reasonable to infer that it may be controversial. If this were an ordinary “convenience” case, then it seems to me

that the balance would favour requiring Mr. Lynn to come to Ireland. That finding leads squarely to a consideration of the appropriate

approach of the court in circumstances where the reason put forward for non-attendance in this jurisdiction is fear of being attached

for contempt of this Court.

4.10 In that context the Cunningham Group places significant reliance on the decision of the House of Lords in Polanski v. Condê Nast

Publications Limited [2005] 1 W.L.R. 637. Polanski concerned the celebrated film director who had pleaded guilty, in 1977, in a

Californian court to unlawful sexual intercourse with a thirteen year old girl, but had fled from the United States of America to France

from where, being a French citizen, he could not be extradited to the United States. The action concerned defamation proceedings

brought by Mr. Polanski in the United Kingdom. Mr. Polanski feared that were he to travel to the United Kingdom for the purposes of

giving evidence in those proceedings he would be arrested and extradited to the United States. In those circumstances the question

of whether he should be permitted to give evidence by video-link arose. The High Court permitted such evidence to be given. The

Court of Appeal reversed the decision on appeal [2004] 1 W.L.R. 387, which decision was in turn appealed to the House of Lords. The

decision of the House of Lords, by a majority of 3:2, allowed the appeal and thus permitted Mr. Polanski to give evidence by video-

link.

4.11 In substance the decision of the House of Lords was to the effect that, at least generally, a person should be permitted to give

evidence by video-link in circumstances where the person concerned feared arrest on travelling to the United Kingdom. Counsel for

First Active makes four points concerning that decision:-

1. Firstly it is suggested that the facts of this case (being a case where the party concerned is not fearful of arrest in

the criminal context but rather is in contempt of court and in particular in contempt of court for declining to give evidence

in another case) would, in any event, amount to one of the exceptions identified by the House of Lords in Polanski;

2. In the event that the decision in Polanski also covers cases of persons in contempt of court then it is suggested that

the reasoning of the majority in Polanski is not persuasive and should not form part of the law of this jurisdiction. Rather it

is suggested that the reasoning of the unanimous decision of the Court of Appeal and the minority in the House of Lords

should be preferred.

3. Thirdly it is suggested that the court retains a broad discretion which should have regard to factors such as the

importance of the evidence sought to be led, the circumstances surrounding the bringing and timing of the application,

the extent to which permitting the witness concerned to give evidence by video-link might amount to an affront to the

public conscience and other factors that might arise on the facts of individual cases.

4. Fourthly it is suggested that some assistance can be gained by a consideration of the authorities which had built up

over the years concerning the ordering of evidence on commission.

4.12 It also important to note that the issue raised in Polanski came to be considered by the European Court of Human Rights

(“ECHR”). Subsequent to the decision of the House of Lords to permit Mr. Polanski to give evidence by video-link, the proceedings

were ultimately heard and Mr. Polanski succeeded. The defendants brought proceedings (Condé Nast Publications and Another v.

United Kindgdom) before the ECHR which issued its decision on the 8th January, 2008, (application 29746/05)

4.13 It is important to recall the role of the ECHR as stated at p. 6 of the judgment in the following terms:-

“Article 6 of the Convention is intended to provide procedural guarantees relating to the proceedings as a whole and the

admissibility of evidence is primarily a matter for regulation by national law and, as a general rule, it is for the national

courts to assess the evidence before them. The Court’s task under the Convention is not to give a ruling as to whether

evidence was properly admitted but rather to ascertain whether the proceedings as a whole, including the way in which

evidence was taken, were fair.”

4.14 The specific relevant finding of the court is to be found on p. 7 where the court noted that it:-

“…considers that the State cannot be condemned under Article 6 of the Convention for providing a particular litigant with

facilities that were available to other litigants simply because of his status as a fugitive from justice. The deprivation of

such facilities would run counter to the Convention guarantee of equal treatment that is inherent in the principle of

equality of arms. For the Court, there is no scope for a rule on fugitive disentitlement in the Convention legal system.

(see, mutatis mutandis, Poitrimol v. France Judgment of 23rd November, 1993, Series A No. 277-A, p. 15 etc.)”

4.15 The court also went on to note that it did not think that allowing Mr. Polanski to give evidence by video link operated as a

breach of the defendants entitlement to equality at arms.

4.16 It should be noted that Polanski does not appear to have been followed as yet in any other common law jurisdiction and the

question to its applicability in this jurisdiction has not yet been considered. The decision of the ECHR is, of course, relevant, in that

this Court is required, in the exercise of any discretion which it might have, to attempt to insure that Ireland is not in breach of its

obligations under the Convention.

4.17 However, it seems to me that the ECHR was principally concerned with considering whether, from the prospective of the

defendant, it could be said that the proceedings as a whole were fair. To the extent to which the ECHR commented on the equality of

arms issue, it is possible to infer that an exclusion of an entitlement which would be available, in the circumstances, to every other

litigant, solely on the basis that the litigant concerned was a fugitive might amount to a breach of that principle. I do not read the

decision of the ECHR as implying that a person is necessarily entitled, in all circumstances, to a facility which would enable them to

give evidence where they are unwilling to travel to the country concerned for fear of arrest.

4.18 I have come to the view that it is not necessary to reach any concluded view as to whether the decision of the House of Lords

in Polanski represents the law in this jurisdiction. It is of some interest to note that, in the speech of Lord Nicholls, attention was

drawn to possible assistance being obtained from the established jurisprudence relating to permitting persons in contempt of court

being heard in court. Lord Nicholls quoted with approval from the test set out by Lord Bingham in Arab Monetary Fund v. Hassin

(Unreported, Court of Appeal, 21st March, 1997), to the following effect:-

“Whether, in the circumstances of an individual case, the interests of justice are best served by hearing a party in

contempt or by refusing to do so, always bearing in mind the paramount importance which the court must detach to the

prompt an unquestioning observance of court orders.”

4.19 It is worth noting that the question of giving audience to persons in contempt involves the exercise by the court of a discretion

in which ensuring obedience to court orders is afforded a very significant weight.

4.20 In addition significant reliance was placed in Polanski on the fact that a refusal to make an order in favour of Mr. Polanski would

not mean that he would, in any event, come to the United Kingdom and be amenable to extradition to the United States. It would, it

was said, simply mean that he would not be able, in practical terms, to advance his case effectively. Thus, it was further said, the

refusal of the order would not aid in the bringing of Mr. Polanski to justice. While that point is true as far as it goes, it is arguable that

it does not place sufficient emphasis on the fact that, at a general level, the removal of one downside attaching to persons who are

in contempt of court (i.e. the fact that they may not be able, in practice, to give evidence in court) has the potential to generally

diminish the extent to which parties may be encouraged to obey court orders. It must surely be the case that to remove at least one

element of the perceived disadvantages of being in contempt of court and leaving the jurisdiction to avoid enforcement could, across

the range of the cases, encourage at least some parties to be less fearful of being in contempt of court and thus more inclined to

breach court orders.

4.21 Reliance is placed by counsel for First Active on the jurisprudence which had developed over the years in respect of the

appointment of a Commissioner to take evidence abroad. Counsel for the Cunningham Group suggested that that jurisprudence was of

little or no assistance. I would adopt an intermediate position.

4.22 The appointment of a Commissioner to take evidence abroad was, of course, the main way in which evidence from foreign

witnesses who were either unwilling or unable to travel to Ireland could be secured. There seems little doubt in reviewing the

authorities (some of them going back more than a century) that there was a significant evolution in the way in which evidence on

commission was, in practice, put into effect over that period of time. It would appear that in the latter part of the nineteenth century

the practice was that questions would be written out at the suggestion of counsel and would be brought to the location where the

witness concerned was available and put to the witness by the Commissioner. The obvious disadvantages of such a procedure from

the point of view of a party wishing to challenge the witnesses’ evidence by cross examination hardly need to be stated. However,

doubtless, the expense and difficulty at that time of bringing all of the relevant legal teams to the location where the witness was

willing to give evidence was considered disproportionate.

4.23 Thereafter, a practice seems to have evolved whereby the Commissioner would conduct a hearing at the foreign location at

which representatives of each relevant legal team would be present and where the witness was questioned in much the same way

(whether in chief, cross or re-examination) as the witness would have been questioned had they come to court to give evidence. This

was obviously an improvement on the original situation, although there remained difficulties, not least the fact that the judge of fact

(whether it be a judge or jury) would not see the witness and would not, therefore, be able to assess the credibility of the person

concerned by observing the witnesses demeanour. In addition the fact that the witness was not, in practice, compellable in the

foreign jurisdiction could lead, at least in certain cases, to difficulty in securing appropriate answers from the witness concerned.

Such factors, coupled with the undoubted expense of moving at least parts of the relevant legal teams to the foreign jurisdiction,

obviously led to a situation where courts were reluctant to order evidence on commission, save in cases where the relevant evidence

was important and could not otherwise be secured. (See for example McSweeney v. Kavanagh (Unreported, High Court, Hamilton J.,

5th March 1984)).

4.24 In a final refinement there were a number of cases in this jurisdiction (and doubtless in others) where the judge having carriage

of the case appointed him or herself as Commissioner in cases where the credibility of the witness concerned was likely to be of some

significant relevance.

4.25 Against that background it is fair to say that the disadvantages of taking evidence by video-link are significantly less than the

disadvantages of taking evidence on commission. Few (or in some cases no) persons need to travel to where the witness is located.

The witness appears (albeit on a screen) before the decider of fact, be it judge or jury. While there are, as I have identified,

undoubtedly potential difficulties in relation to cases where the witness concerned is likely to give highly controversial evidence or

evidence which is very complex, those difficulties should not be overstated. The fact that it may not be possible to control a witness

giving evidence by video-link in the same way as a witness who is physically present in court is, of course, an additional factor to be

taken into account.

4.26 In my view those authorities which were concerned with the taking of evidence on commission must, therefore, be viewed

against the background that the downside of permitting evidence by video-link is likely to be significantly less than that which would

have applied to the taking of evidence on commission.

4.27 Nevertheless, it remains worthy of note that the Court of Appeal in Northern Ireland in Duffy v. Minister for Defence [1979] N.I.

120, decided that it would be inappropriate to allow a plaintiff who feared arrest in Northern Ireland to give evidence on commission

where the only basis put forward for seeking to give evidence on commission was that fear of arrest.

4.28 It seems to me that the general consideration of the reason why the witness concerned is unwilling to give evidence in court in

the ordinary way remains an important factor to be taken into account. The weigh to be attached to such factor is likely to be

significantly greater where the person concerned is a plaintiff who has chosen to bring proceedings in this jurisdiction. Less weight

may attach in the case of a defendant who has not, after all, chosen the venue for the proceedings. Less weight still must be applied

in the case of a mere witness. I would prefer to approach this matter at the level of principle, not on the basis of suggesting that

there is any necessary barrier to a fugitive from justice, even as a plaintiff, from obtaining an entitlement, in an appropriate case, to

give evidence by video-link. Rather it seems to me to be the case that where, as here, the witness ought ordinarily be expected to

give evidence in person in court, the court is entitled to assess the merits of the reason given for the refusal or stated inability of the

witness to attend. Where there is no good reason (and it seems to me that in reality a situation where there is no good reason is

much the same a situation where a bad reason is put forward), then the court is entitled to take that factor into significant account,

most especially where the person unwilling to come to the jurisdiction and give evidence in person is a party (and particularly the

moving party). Viewed in that way, there is no breach of the equality of arms identified by the ECHR. The person refused video-link in

those circumstances is not being treated any differently to any other potential witness who has not shown a good reason for being

unwilling or unable to attend.

4.29 However, it seems to me that the situation which arises in this case is significantly different from that which arose in Polanski.

Here the person who fears arrest is not a party wishing to bring proceedings before the court but rather is a witness whom a third

party wishes to give evidence on their behalf. To take an extreme, but illustrative, example one could envisage an entirely innocent

victim of catastrophic injuries whose case on liability (and thus whose prospect of receiving monies to give them a comfortable life)

was dependent wholly or substantially on the evidence of someone who was a fugitive from the criminal law of this jurisdiction but

who had managed to escape to a country which did not have extradition arrangements with Ireland. Could it be said that the

innocent plaintiff should be deprived of his damages because evidence could not be obtained either on commission or by video-link

from the witness concerned because that witness was a fugitive from the law of this jurisdiction. I think not.

4.30 Returning to the facts of this case it seems to me that a significant weight needs to be attached to the fact that Mr. Lynn is

not either directly or indirectly a party to these proceedings. While he was solicitor to the Cunningham Group, it is clear that, for at

least most of the period of time with which these proceedings are concerned, Mr. Lynn was, far from being a close associate of Mr.

Cunningham personally, at odds with Mr. Cunningham’s view of things. Mr. Lynn is not, therefore, in any real sense a connected

person to Mr. Cunningham or the Cunningham Group as currently constituted. While some attempt was made to draw inferences from

the fact that the firm of London Solicitors currently acting for the Cunningham Group have also acted for Mr. Lynn, it does not seem

to me that the facts of this case disclose anything that ought materially affect the judgment on this issue arising from that

connection.

4.31 While, therefore, there are serious questions as to whether Mr. Lynn would be entitled to give evidence by video-link in

proceedings in which he was a party or was closely connected to a party, (especially a moving party) I believe different

considerations apply in a case where he is purely a witness.

4.32 Counsel for First Active urges that I should take the view that Mr. Lynn is not, in fact, a very important witness and that this

case is not, therefore, remotely like the example cited above where an innocent plaintiff’s claim might be entirely dependent on the

evidence of a fugitive. There is no doubt but that this is so to some extent. However it does not seem to me that I could take the

view at this stage that Mr. Lynn’s evidence might not be material to a reasonable extent to some of the issues which I will ultimately

have to determine. It, therefore, remains possible that the failure to have his evidence available could lead to an injustice to the

Cunningham Group which would not stem from any action on their part but rather from Mr. Lynn’s status. It would seem to me that

such a consequence would be disproportionate.

4.33 In the circumstances I am satisfied that it would be appropriate to allow Mr. Lynn’s evidence to be given on video-link and will

hear counsel further as to the precise process that needs to be put in place to allow this to occur.

5. Discovery - Background

5.1 As indicated earlier the two remaining issues concern discovery and a proposed amendment. In relation to both of these matters

the Cunningham Group is the moving party and seeks certain orders in relation to discovery, both as against First Active and Mr. Duffy

together with a further amendment to the proceedings which has an effect on, and is resisted by, both First Active and Mr. Duffy. Mr.

Jackson was not, therefore, a party to these aspects of the applications.

5.2 As will become clear there is, in fact, a relatively close connection between the underlying basis for much of the discovery

application and for the amendment. I propose addressing the discovery application first but the factual background to the

circumstances in which further discovery is now sought is also relevant to the amendment application.

5.3 The application in relation to discovery as against First Active seeks:-

(a) An order striking out First Active’s defence in relation to all issues concerning the sale of Bailey Point, because of an

alleged failure to make proper discovery in accordance with my previous order of the 29th November, 2007;

(b) Further and better discovery arising out of certain categories included in that order;

(c) Discovery of various categories of documents relating to negotiations on and agreements entered into between Mr.

Duffy and First Active over approximately the last eighteen months. I will refer to the context of the relevant negotiations

and agreements in due course;

(d) An order which would require First Active to review its claim to privilege in its affidavit of discovery of the 15th

February, 2008; and

(e) Orders concerning the alleged privileged status of one particular memorandum (to which I will refer in due course)

arising in the context of the negotiations between Mr. Duffy and First Active to which I have already referred.

5.4 As against Mr. Duffy there is a similar application to that made in respect of First Active which seeks to have to Mr. Duffy’s

defence struck out in its entirety (the case as against Mr. Duffy only relates to Bailey Point). In addition further and better discovery

is sought in relation to arrangements between Mr. Duffy and First Active or connected companies and other documentation arising out

of any revised arrangements entered into between Mr. Duffy and First Active and its connected companies concerning either the

financing of Bailey Point or the sale of Bailey Point by First Active to Mr. Duffy.

5.5 It is clear that the central background facts which underly much, if not all, of the current discovery application (and indeed, as

will become clear, the amendment application) centre on negotiations which led to a concluded agreement between Mr. Duffy and

First Active in or about April of this year. It would appear that the background to those negotiations stemmed from difficulties in

progressing the Bailey Point project encountered by virtue of the existence of these proceedings and, in particular, the fraud claim

introduced by amendment in September of last year. Up to that time there did not appear to be any claim in the proceedings which

could have had the effect of interfering with the title of Mr. Duffy to what has become known as the residential portion of the Bailey

Point site.

5.6 It is important to recall that the Bailey Point development was one of two significant construction operations which were

conducted by the Cunningham Group prior to the receivership which is at the heart of these proceedings. Bailey Point was partly

constructed as of the time of the receivership. It would also appear that subsequent to the receivership, negotiations ensued

between Mr. Jackson, as receiver, and Mr. Duffy, designed to lead to Mr. Duffy buying the partially constructed Bailey Point site.

Subsequently Mr. Duffy entered into a contract with First Active whereby he would purchase the relevant property from First Active

as mortgagee in possession rather than from Mr. Jackson as receiver. While it is true to say that the Cunningham Group made

complaint about aspects of that sale, it is important to emphasise that, as originally constituted, none of these connected

proceedings made a claim which could have affected the title of Mr. Duffy to the residential portion of Bailey Point. There were claims

maintained by Porteridge Trading Limited (“Porteridge”) (a company controlled by Mr. Brian Cunningham) which could, if substantiated,

have had an effect on title to the commercial portion of the Bailey Point development.

5.7 However, as a result of the amendments permitted in September of last year, claims were put forward on behalf of the

Cunningham Group which, if substantiated, could have the effect of depriving Mr. Duffy of title to the residential portion. It should be

noted in that context that some but not all of the apartment units within that residential portion had, at the relevant time, been sold.

However, what I understand to be eighteen such units remained for sale. As a result of the proceedings as then constituted (after

the relevant amendment was allowed) a number of lites pendentes were filed in respect of the property concerned and the existence

of such lites pendentes and of the proceedings generally had the practical effect of freezing any further sales by Mr. Duffy of the

apartments. Furthermore, the existence of the proceedings operated as a practical barrier to progressing the sale of the commercial

units which completion had, of course, already been interrupted by virtue of the existence, in those connected proceedings brought

by Porteridge as originally constituted, of claims which could have affected the title of First Active to sell.

5.8 Finally, by way of background, it should be noted that when the sale of the residential portion of Bailey Point was completed,

same was financed by a loan to Mr. Duffy from First Active. Indeed it is the interaction between the terms of that loan and the terms

of the relevant sale, that gave rise to the allegation of the making of a secret profit which was, in part, permitted to be introduced

into the case by virtue of an amendment which I allowed (see Moorview Developments and Ors v. First Active and Ors (Unreported,

High Court, Clarke J., 20th May, 2008)). There was, however, further building work to be done in preparing the apartments for sale on

to third parties and it would appear that some of the funding for those works came not from First Active but from Bank of Scotland

Ireland (“BOSI”). It should also be noted that the sale of the commercial units from First Active to Mr. Duffy remains uncompleted at

this stage and is, for practical reasons, highly unlikely to complete, if at all, until after these proceedings have been completed.

5.9 Against that background it seems clear on the affidavit evidence that Mr. Duffy raised questions as to the status of the existing

contractual arrangements between the parties and, it is clear to me, sought to pursue in correspondence headed “Without Prejudice”,

an alleged entitlement to either an indemnity or compensation arising out of the significant delays to the completion and sale of Bailey

Point which resulted from the existence of these proceedings. While I have not had sight of the relevant correspondence it is clear,

on the affidavit evidence that Mr. Duffy sought to assert that he was entitled either to an indemnity or compensation by reason of

the inability of First Active to provide him with clear title in a timely fashion.

5.10 In any event it would seem that negotiations took place resulting in an agreement on 22nd April, 2008, whereby a number of

adjustments to the existing arrangements between First Active and Mr. Duffy were put in place. The principal adjustments seem to be

the following:-

1. First Active agreed to a substantial write down in Mr. Duffy’s liabilities to it to a sum in excess of €1.1m.

2. It will be recalled that Mr. Duffy was also indebted to BOSI on foot of funding for the development of the apartments.

First Active agreed, in effect, to pay Mr. Duffy’s interest payments for a period of two years in relation to his liabilities to

BOSI which, in substance, is likely to cost First Active a sum of the order of €750,000.00.

3. On foot of the revised lending arrangements between Mr. Duffy and First Active, it was also agreed by Mr. Duffy that in

the event of the apartments realising in excess of certain specified thresholds additional sums would be payable to First

Active.

4. An amendment was agreed to the outstanding portion of the contract for sale (being that relating to the commercial

elements of the property) whereby it was also agreed that First Active would share in any proceeds of sale above certain

specified thresholds.

5.11 Against that background the matters currently in controversy were first mentioned in court in circumstances where counsel for

First Active indicated that certain refinancing arrangements had been entered into between First Active and Mr. Duffy and further

indicated that relevant documentation was in the course of being handed over to the Cunningham Group’s legal advisors.

Subsequently, in circumstances which it will be necessary to address in due course, a memorandum of the 15th April, 2008, (“the RBS

memo”) came to the attention of the Cunningham Group. The document was an internal Royal Bank of Scotland memo (Royal Bank of

Scotland are now the parent of First Active) dealing with the proposed revised terms of the sale of the commercial elements of Bailey

Point to Mr. Duffy and also the revised financing arrangements as and between First Active and Mr. Duffy, both of which I have

outlined in the previous paragraph. While in form (and to some extent in substance) the document was a paper submitted to obtain

approval of the relevant officials for the revised arrangements (including the financing concerned) the document also records the

thinking within First Active and its parent as to the arrangements agreed and also notes certain other arrangements that had been

entered into relating to the conduct of these proceedings. The document was found in a box of papers belonging to First Active

which, it is said by the Cunningham Group, was taken by mistake from the court by a member of the Cunningham Group legal team.

While the evidence in that regard is not fully satisfactory, I am prepared, for the purpose of this judgment, to assume that the

document concerned was so obtained by inadvertence.

5.12 Having obtained the relevant memorandum the Cunningham Group now assert that an entitlement arises to full discovery relating

to the negotiations leading to the arrangements entered into between Mr. Duffy and First Active in April 2008, and further assert that

the circumstances surrounding the coming to light of those arrangements, entitle the Cunningham Group to further orders in respect

of discovery. It should also be noted that the revised arrangements concerning the sale of the commercial element of Bailey Point to

which I have referred and in particular the potential for First Active, in certain circumstances, to receive an uplift on the sale price

forms the basis for the proposed amendment to the proceedings in which, if the amendment were permitted, the Cunningham Group

would seek to allege that those arrangements disclose an agreement on the part of First Active whereby First Active would make a so

called secret profit.

5.13 However, as indicated earlier, I propose to deal firstly with the discovery issues though it is important in that context to note

that at present I am dealing with the entitlement, if any, of the Cunningham Group to any order in respect of discovery on the

existing pleadings. Clearly if the amendment were to be permitted it would follow that additional discovery directed towards the issues

which would then be before the court, would be required. However it is important to emphasise that the discovery issues which I am

now about to address are concerned with the case as currently pleaded rather than any possible alteration in that case. I, therefore,

turn to the specific issues which arise.

6. The Discovery Application – Analysis and Conclusion

6.1 It seems to me that the starting point for any consideration of the discovery applications currently before the court has to be to

determine the status of the RBS memo. Firstly, it should be noted that that memo came into existence after First Active had complied

with its discovery obligations. As is clear from the decision of the Supreme Court in Bula Limited v. Tara Mines Limited (No.5) [1994] 1

I.R. 487, the law in this jurisdiction is clear and is to the effect that there is no continuing obligation on a party to make discovery of

documents coming into existence after the party concerned has sworn their affidavit of discovery. It should be emphasised that there

remains a clear obligation on a party to remedy any failure to make proper discovery in the first place so that a document that was

within the power or procurement of the party concerned at the time of swearing the relevant affidavit as to discovery but which was,

for whatever reason, not included in the schedules to that affidavit, must nonetheless be subsequently discovered. However it is

clear that the RBS memo did not exist at the time of making discovery and there was, therefore, no obligation on First Active (and

there remains to this date no obligation on First Active) to make discovery of the document concerned. It has to be noted that the

Cunningham Group and its advisors appear to have been under an unfortunate misapprehension as to the law of this jurisdiction in

relation to a continuing obligation to make discovery such that in much of the correspondence leading to these applications it was

asserted, quite wrongly, that First Active had an existing obligation to make discovery of the documents concerned.

6.2 It should be noted that Bula(No.5) is also authority for the proposition that the court retains a jurisdiction in an appropriate case

to direct further discovery of documents coming into existence after the principal affidavit of discovery has been sworn. I will turn to

the principles by reference to which that jurisdiction should be exercised in due course. However, what is absolutely clear is that

unless and until a court makes an order requiring a party to make any such further discovery, the party concerned is under no

obligation to disclose any documents coming into existence after the date of discovery. It is important, therefore, to make clear that

there is no evidence to the effect that First Active have been in any way in breach of their obligations in respect of discovery. There

was no discovery obligation to disclose the documents surrounding the arrangements entered into with Mr. Duffy. That remains the

case up to now and will continue to remain the case unless I am to determine in these applications that is appropriate to make an

additional order requiring discovery on foot of the jurisdiction identified in Bula (No.5). To the extent, therefore, that suggestions were

made both in correspondence and at the hearing to the effect that documents may have been suppressed, it seems to me that any

such suggestion is without foundation.

6.3 The second issue which arises is as to the privileged status of the RBS memo. First Active assert that the memo would, in any

event, be privileged. The Cunningham Group contest this. It is common case that if the RBS memo (and indeed any other

documentation concerning the negotiations entered into between Mr. Duffy and First Active) are privileged, then there could be no

basis for directing their discovery in any event as same would be a futile exercise.

6.4 First Active assert that the document is covered by either or both of common interest privilege or without prejudice privilege.

6.5 I propose addressing without prejudice privilege first. In an affidavit sworn on behalf of First Active by Richard Willis, it is deposed

that on the 3rd August, 2007, Mr. Duffy wrote to the bank complaining about the delays in bringing Bailey Point to a conclusion which

had resulted from this litigation. The letter was headed “without prejudice” and indicated that in the absence of reaching an

arrangement with First Active, it was Mr. Duffy’s intention to seek an indemnity or compensation from the bank.

6.6 I am satisfied that, as of the receipt of that letter, First Active was dealing with Mr. Duffy in contemplation of potential litigation

whether that litigation might have arisen by Mr. Duffy raising indemnity issues within the existing proceedings or by Mr. Duffy

maintaining separate proceedings seeking compensation. It seems to me, therefore, that the negotiations which followed and the

agreement ultimately reached between Mr. Duffy and First Active were in contemplation of potential litigation between those parties

and are, prima facie, covered by “without prejudice” privilege.

6.7 In those circumstances the question arises as to whether, as is urged on behalf of the Cunningham Group, the position is altered

by what are said to be the principles identified in Muller v. Linsley [1996] 1 P.N.L.R. 74. In that case Hoffman L.J. sought to identify a

single principle to underlie the various established exceptions to the general rule that without prejudice negotiations designed to

settle existing or potential litigation are privileged. That such exceptions exist is well settled. The most common example arises where

it is asserted that a concluded agreement was reached as a result of the negotiations concerned. In those circumstances evidence

relating to any aspect of the negotiations necessary to determine whether a concluded agreement was reached is excluded from the

scope of without prejudice privilege. There are, of course, other examples which it is not necessary to deal with here. Hoffman L.J.

sought to define a single principle behind all of the exceptions by reference to the underlying justification for the privilege in the first

place. It is clear that without prejudice privilege stems from the need to permit parties to negotiate in a frank manner with a view to

encouraging the resolution of potential litigation. Hoffman L.J. sought to identify each of the established exceptions as being governed

by a principle which confined privilege to only those aspects of the negotiations where the party concerned may have made

admissions against their interest.

6.8 In McGrath on Evidence (2005 Ed.) the author describes the viewpoint articulated by Hoffman L.J. in Muller as being a narrower

view of the ambit of without prejudice privilege. The author notes the alternative or broader view as endorsed by the United Kingdom

Court of Appeal in Unilever v. Proctor and Gamble [2000] F.S.R. 344. In that case Walker L.J. noted that the underlying reason for the

rule was as stated by Lord Griffiths in Rush & Tomkins Ltd v. Greater London Council [1989] A.C. at 1300, so as to enable the parties

“to speak freely about all issues in the litigation both factual and legal when seeking compromise and, for the purposes of establishing

a basis of compromise, admitting certain facts”. Walker L.J. expressed the view that “parties cannot speak freely at a without

prejudice meeting if they must constantly monitor every sentence, with lawyers or patent agents sitting at their shoulders as

minders”. The relevant passage follows on from a statement to the effect that, while the protection of admissions against interest is

the most important practical effect of the privilege, there would be huge practical difficulties which would be contrary to the

underlying protection if it were necessary, save in special cases, to dissect out identifiable admissions.

6.9 McGrath, at para. 10-128, summed up the authorities in the following way:-

“It is submitted that, ultimately, the question is one of policy and the parameters of the privilege should be dictated by

the balance of public interest. In general, it is submitted that the balance of public interest will favour giving an expansive

interpretation to the privilege. The privilege achieves its objective of promoting settlements by guaranteeing non-

disclosure of the contents of the negotiations. This guarantee fosters the candour which is critical to the settlement

process and which is undermined by disclosure for any purpose. It is only where parties can be sure that they can speak

their minds and give their views in confidence that nothing said can be used to their prejudice that the necessary candour

can be forthcoming. Thus, the privilege should be applied to exclude evidence of without prejudice negotiations except

where it can be clearly shown that greater damage to the interests of justice would be effected by non-admission than

by disclosure.”

6.10 I agree that that passage from McGrath represents the law in this jurisdiction. The overriding principle is that a very heavy

weight indeed needs to be attached to without prejudice privilege. The only circumstances where, therefore, evidence of without

prejudiceness negotiations can be admitted is where, in the words of McGrath, “It can be clearly shown that greater damage to the

interests of justice would be affected by non-admission than by disclosure”. The exceptions to the general rule can be seen as

deriving from that principle. For example the whole purpose behind the privilege is to encourage negotiation and settlement of

litigation. That purpose would hardly be achieved if parties were precluded from leading evidence as to, at least, aspects of the

negotiations, in circumstances where it was contended that the negotiations had achieved the desired end of settling the litigation.

6.11 I am, therefore, satisfied that it is unnecessary, in the context of negotiations which seek to resolve existing or potential

litigation, for a party asserting privilege to identify that admissions against interest had been made in the course of those

negotiations. The criticism of the affidavits filed on behalf of First Active to the effect that same do not so identify admissions against

interest is, therefore, in my view, misplaced and is based on a mistaken view as to the law of this jurisdiction in that regard.

6.12 It follows, therefore, that all of the negotiations which took place between Mr. Duffy and his representatives on the one hand

and First Active and their representatives on the other hand (including the parent company) leading to the arrangements for an

adjustment in both the lending and sale contracts between those parties, are privileged. Obviously the result of those negotiations,

once same gave rise to a concluded agreement between the parties, is not, of itself, privileged. Therefore, the revised lending

arrangements themselves and the revised contractual arrangements concerning the sale of the commercial elements of Bailey Point

and documents evidencing those matters are not privileged.

6.13 It is obvious that that finding in itself is sufficient to dispose of much of the discovery issue with which I have to deal. However,

lest I be wrong in those conclusions I should also consider the question of whether the negotiations and documents evidencing them

may have been covered by common interest to privilege. It is clear to me that common interest privilege arises in relation to

documentation or materials which would be the subject of either legal professional privilege or litigation privilege in the hands of one

person or body but where the relevant materials are given to a third party who may be said to have a common interest in either the

legal advice or the litigation concerned. See for example Svenska Handelsbanken v. Sun Alliance & London Insurance plc [1995] 2 L.R.

284. Two questions therefore arise. The first is as to whether the documents would, in the hands of a single party, have the benefit

of privilege in the first place. If not, then no question of common interest privilege could arise. If, however, the materials pass that

first test but have been released by one party to a second party then it follows that it is also necessary to ask whether the release

was on foot of a common interest in either the relevant litigation or advice. If so then the documents will remain privileged,

notwithstanding their release, by virtue of the doctrine of common interest. If not, then the release may be taken to be a waiver of

any privilege which would otherwise have attached to the documents concerned. I should note that documents passing to other

companies within a group or connected companies where those companies have an interest in the advice or litigation concerned are

also covered, as would documents informing such connected entities of such advice or the progress of such litigation.

6.14 It seems to me to be the case that there is likely to be an overlap, in practice, between the circumstances in which co-

defendants may be able to rely on, on the one hand, without prejudice privilege and, on the other hand, common interest privilege in

the context of litigation. In many cases it is likely that the defendants will have a potential common interest in minimising or defeating

the plaintiffs claim. Likewise the defendants may wish to come to some arrangement between themselves as to how any issues which

arise between them as defendants are to be resolved such as, for example, agreeing a basis upon which any liability established by

the plaintiff is to be met by the defendants, agreeing on how proceedings are to be conducted, or the like. It is more than possible in

practice that a single set of discussions will address both matters. The defendants will be concerned with how best to collectively

meet the plaintiffs claim but may also wish to seek to resolve issues as and between themselves. In that context it does not seem to

me that the accusation made on behalf of the Cunningham Group to the effect that First Active have purported to wrongly rely on

common interest privilege in respect of the negotiations between Mr. Duffy and First Active is well made. It seems entirely likely that

the negotiations between those parties touched on their common interest in defending the proceedings against the Cunningham

Group. Amongst the issues which were dealt with in the arrangements ultimately entered into between First Active and Mr. Duffy was

the situation that was to prevail as and between them in the event that the Cunningham Group succeeded in these proceedings to

the extent that title in respect of the some or all of the property at the heart of these proceedings was impaired. Any assessment of

such arrangements would necessarily have involved a consideration of the strength of the Cunningham Group’s case and the weight

to be attached in the negotiations to the risk that those proceedings might succeed. Likewise the extent to which it may have been

considered appropriate on behalf of Mr. Duffy to seek and on behalf of First Active to concede, financial ground in those negotiations

must have been influenced, at least in part, by the respective parties views, in which they had a common interest, on the prospects

of successfully defending the proceedings. It may well be the case that the RBS memo itself might not attract common interest

privilege, not being a document which is concerned with the mutual interests of the parties in defending the plaintiffs claim. However

that is not to say that the general reliance on common interest privilege might not have significant relevance to much of the other

documentation which may have evidenced the negotiations between Mr. Duffy and First Active which gave rise to the concluded

arrangements in April of this year.

6.15 Against those findings it is necessary, therefore, to address the specific issues which arise. Firstly, for the reasons which I have

set out, it seems to me that the RBS memo is, in itself, privileged. It follows that all copies of the document must be returned to First

Active.

6.16 Secondly, it does not seem to me that any inference can be drawn from the events surrounding these discovery issues to the

effect that First Active have misconstrued their discovery obligations. Indeed insofar as any party has misconstrued First Active’s

discovery obligations it is the Cunningham Group. The Cunningham Group was wrongly of the view that First Active was under a

continuing obligation to make discovery which post-dated the affidavit of discovery itself. It was, as I found, wrongly of the view that

“without prejudice” privilege could only attach to aspects of negotiations which involved admissions against interest. In general terms

I am satisfied that there is no basis for inferring that there is any infirmity in the discovery already made by First Active attributable

to the failure on the part of First Active’s advisors to properly understand First Active’s discovery obligations. The application to strike

out part of the defence is, therefore, manifestly unfounded. Likewise there is no proper basis for requiring First Active to revisit

privilege already claimed.

6.17 The remaining issues concern whether First Active should be required to make any additional discovery. The first basis upon

which such a contention is made seeks to rely on the jurisdiction identified in Bula (No.5) which allows the court to order that specific

documents should be discovered notwithstanding that the relevant documents only came into existence after the party concerned

had complied with its discovery obligations. That such a jurisdiction exists is not contested. However reliance is placed on behalf of

First Active on those passages from the judgment of Finlay C.J. which emphasise that the jurisdiction is one to be rarely exercised

and should involve only documents which are likely to be important (rather than tangentially relevant) to the case and which can be

readily identified.

6.18 I have no doubt that it would have been appropriate, under that test, to direct discovery of the documents evidencing the

amended arrangements actually agreed between First Active and Mr. Duffy both in relation to Mr. Duffy’s financing arrangements and

the amended arrangements for the sale of the commercial elements of Bailey Point. Such documents seem to me to represent a very

clear example of the sort of situation where the court should exercise the jurisdiction identified in Bula (No.5). Clearly in many cases

the question of the precise entitlements of a plaintiff (should he or she succeed) will continue to evolve up to the time of trial.

Special or calculateable damages will normally change as time passes. Events may occur which may have the effect of either

mitigating or exacerbating loss. Where a significant or material alteration occurs in the factual basis upon which the court might

reasonably be expected to approach the question of the remedy should the plaintiff succeed, and where such alteration occurs at a

time after discovery has been made, then it seems likely that the court would ordinarily be persuaded to make a discovery order in

respect of documentation relating to such alteration because it would, of course, be necessary for the court, in any event, to have

the relevant information in order to properly assess damages or decide the appropriate remedy.

6.19 However, the documents evidencing the agreement between Mr. Duffy and First Active have already been disclosed and no

purpose would be served by directing further discovery in that regard. There are a number of reasons why additional discovery under

the principle identified in Bula (No.5) ought not be allowed. Firstly, for the reasons which I have set out, it seems to me that all such

documents are privileged. Secondly the additional discovery sought is in far too general terms to comply with the requirements

identified by Finlay C.J. in Bula (No.5). While I appreciate that it may not always be possible to specify the exact identity of

documents concerned (a party that does not know exactly what the documents are may not be able so to do) nonetheless it seems

to me to be clear that the jurisdiction is intended to be exercised in a narrow and focused way. Even had I not been persuaded that

the relevant documentation was privileged I would have been of the view that the discovery sought was far too wide and unfocused

so as to meet that test.

6.20 In addition it seems to me that First Active were correct when they argued that much of the relevant matters had already been

relied upon, without objection, by First Active in their existing affidavits as to discovery. Privilege was claimed in respect of

discussions with Mr. Duffy which post-dated his letter of the 3rd August, 2007, intimating a claim for indemnity or compensation. If it

had been intended to contest that reliance then same could readily have been done at any time since the claim to privilege was

made. I am satisfied that, with the case now at hearing for almost three months, it is far too late to revisit such issues.

6.21 For all of those reasons it seems to me that no order should be made based on the jurisdiction identified in Bula (No.5).

6.22 The final point made, so far as discovery against First Active is concerned, relates to the fact that it is said that there should,

at least, be updated discovery in respect of documents coming into existence prior to the affidavit of discovery sworn on behalf of

First Active which was dated the 15th February, 2008. The scheduled documents identified in that affidavit appear to end at some

time towards the end of November 2007. It seems to me that a realistic position has to be adopted in respect of the swearing of

affidavits of discovery in complex litigation. In such cases it is almost inevitable that the process of considering documents for

relevance, privilege and the like and the scheduling of such documents will take some significant period of time and, in many cases,

involve a significant number of personnel. It would be wholly impractical to fix such a party with having to constantly update those

schedules on a daily basis as the process neared its end particularly when, in virtually all cases, any additional documentation coming

into existence in the latter stages of the discovery process and in the immediate lead up to the swearing of the affidavit of discovery

concerned, will be almost certainly privileged.

6.23 It seems to me, therefore, that provided there is no evidence of the system being abused, a party should be entitled to some

reasonable leeway between the cut off date up to which the relevant schedules are prepared and the actual date of swearing the

affidavit of discovery. I am satisfied that the court would have ample jurisdiction to deal with any case of abuse. If it could be shown

that important and non-privileged documents came into existence, between a cut off date adopted by the party concerned and the

date of swearing of the relevant affidavit, then any leeway which otherwise was properly allowed would be lost. However, on the

facts of this case I can see no evidence for any suggestion that there was any abuse of the legitimate leeway between the compiling

of the schedules of documents and the actual date of swearing. Nor am I satisfied that there is anything unreasonable about the gap

between those dates having regard to the complexity of the discovery involved.

6.24 Finally, so far as the discovery application against Mr. Duffy is concerned, it seems to me that much of what I have said

concerning discovery as against First Active applies equally to his case. His side of the relevant negotiations is as protected by either

or both of without prejudice privilege or common interest privilege as the First Active side. While it was accepted on behalf of Mr.

Duffy that certain documentation passing between him and his advisors and First Active and its advisors was originally omitted from

his discovery, that omission needs to be seen in the context of the fact that the counterpart of each of the relevant documents had

already been discovered so that no new documents were, in truth, made available. It does not seem to me to be appropriate,

therefore, to draw any inference adverse to Mr. Duffy such as would justify making any further order for discovery arising from that

undoubted failure. The failure itself has been remedied. No further discovery is, therefore, justified. Likewise the application to strike

out Mr. Duffy’s defence is unfounded.

6.25 For all of those reasons it seems to me that I should reject all of the claims in relation to discovery now made, whether they be

against First Active or Mr. Duffy. It is now appropriate to turn to the amendment application.

7. The Amendment

7.1 As would be clear to those who had occasion to read some of the previous judgments given by me in this case, there have been a

number of attempts on the part of the Cunningham Group to amend their proceedings. However this latest application comes at a time

when the case has been at hearing for three months. In substance the Cunningham Group now seeks to add a further claim alleging

that both First Active and Mr. Duffy were engaged in action designed to give First Active a secret profit arising out of the sale of the

commercial units at Bailey Point to Mr. Duffy. The basis for that allegation is said to be the documents which have recently come to

the attention of the Cunningham Group concerning the revised arrangements for the sale of the commercial units concerned which

contain a provision for an uplift in favour of First Active in the event that certain thresholds are exceeded. That such an arrangement

has been entered into is not in dispute. Likewise it is accepted on behalf of First Active, and indeed on behalf of Mr. Duffy, that any

such arrangement would be in breach of duty if the uplift in the sale price were not to go to the credit of the Cunningham Group as

mortgagor. The issue is as to whether the uplift was intended to go to First Active in its capacity as vendor as mortgagee in

possession or not. If the former, then there can be nothing, in itself, objectionable about a commercial arrangement for sale providing

for such an uplift subject always to the overall considerations which may apply as to the obligation to achieve an appropriate price.

7.2 Because I have already, in proceedings between these parties, set out on a number of occasions the general principles relevant

to the granting of amendments to pleading, I do not find it necessary to repeat them here. However, there is one additional factor

which looms very large at this stage. This is not an application in advance or at the commencement of a hearing but rather one which

is made when the case has been at hearing for almost three months. The general approach of the court to an amendment in such

circumstances will, necessarily, be different. In addition the cause of action sought to be litigated by virtue of the amendment did not

exist as of the time of the service of the original plenary summons. In those circumstances First Active argues that there is no

jurisdiction to allow such an amendment.

7.3 However, it seems to me that the appropriate starting point should be to analyse the claim sought to be made and the evidence

which, it is suggested, might sustain it.

7.4 One aspect of the most recent previous application for an amendment was, in many ways, similar to this application. I ruled on

that matter on the 20th May, 2008 (Moorview Developments and Ors v. First Active and Ors (Unreported, High Court, Clarke J., 20th

May, 2008)) and permitted an amendment which allowed the Cunningham Group to plead a limited claim in respect of an allegation of

secret profit as against First Active. As is clear from the judgment which I delivered at that time, a significant part of my reasoning in

coming to the view that the relevant claim was not bound to fail stemmed from the fact that in certain bank documentation the

relevant uplift in the price was described as an arrangement fee. As I pointed out, in the normal course of events an arrangement fee

will go to a bank in its capacity as lender rather than to the bank in its capacity as vendor as a mortgagee in possession. For that

reason it seemed to me that there was, at least, a possible basis for inferring that the bank intended to keep the relevant uplift for

itself in its capacity as lender. Any such inference was, of course, capable of being displaced by the oral evidence with the bank

might tender.

7.5 However the position in relation to the current intended allegation of secret profit is entirely different. The uplift is included in a

document which amounts to an amendment of a contract of sale. The basic consideration provided for in the contract of sale is

obviously to go to First Active in its capacity as vendor as mortgagee in possession and thus be credited to the Cunningham Group.

There is nothing in the documents to suggest that the uplift is to be treated in any different way. There is, therefore, an immediate

and significant difference between this case and the one dealt with in my previous judgment. Here there is nothing in the

documentation itself which could give rise to an inference of secret profit. In the previous case there was.

7.6 The only other basis put forward on behalf of the Cunningham Group for suggesting that there is a stateable claim in respect of

secret profit stems from inferences which it is said should be drawn from the circumstances in which the Cunningham Group became

aware of the existence of the varied contract concerned.

7.7 It would appear that the relevant sequence of events was that First Active made available documents relating to the revised loan

arrangements between itself and Mr. Duffy on a voluntary basis. For the reasons which I have already analysed in some detail, First

Active was not under any obligation to disclose those documents. The description of First Active as having “suppressed” the

arrangements seems to me, therefore, to be misplaced. Be that as it may the relevant banking documentation made reference to

amendments to the contract for sale. By virtue of that reference the Cunningham Group sought and obtained a copy of the

amendment to the sale agreement. It does not seem to me that any inference could possibly be drawn from those circumstances to

the effect that there was anything underhand about the way in which First Active dealt with the relevant information. If First Active

had not wished the Cunningham Group to become aware of the relevant information then it could, quite legitimately, have refrained

from making available the voluntary disclosure of the banking documents which in turn would have caused the Cunningham Group not

be become aware of the amended sale terms. There would have been nothing improper in such a course of action.

7.8 Secondly reliance is placed on some questions asked in cross examination by counsel on behalf of Mr. Duffy of Mr. Brian

Cunningham. Mr. Cunningham was questioned concerning the sale price of the relevant commercial units from First Active to Mr.

Duffy. There is no doubt but that it was not suggested in the course of the questioning concerned that there had been a revised

arrangement between Mr. Duffy and First Active providing for a potential uplift of the sale price should the relevant threshold be

exceeded. However, as always, cross examination has to be seen against the background of the evidence given by the relevant

witness in chief and the case as made to the court on behalf of the party concerned. The relevant cross examination has to be seen

against the background of a tentative contention on the part of the Cunningham Group to the effect that there had been a further

reduction in the purchase price for the commercial units agreed as and between First Active and Mr. Duffy so as to bring it below the

level originally fixed. For reasons which it is unnecessary to go into here, the question of variations in the purchase price at various

times is in itself an issue in the proceedings. The relevant cross examination was directed towards that contention. It is, in addition,

said that First Active allowed the cross examination concerned to go ahead without intervening to draw attention to the fact that

there had been a revised arrangement providing for an uplift and, furthermore, that any such arrangement, if genuine and intended for

the potential benefit of the Cunningham Group, would have been immediately brought to the attention of the court because it would

be a point favourable to the defendant’s case. However, all of those matters need to seen against the background of the fact that

First Active voluntary disclosed a document which made specific reference to the sale variation leading to the disclosure of that

document to the Cunningham Group. On that basis I can see no reason on the evidence currently available for drawing any inference

adverse to First Active or Mr. Duffy.

7.9 On the basis of the evidence currently available I could not, therefore, conclude that the Cunningham Group’s case on the issue

sought to be raised by the proposed amendment could have any chance of success.

7.10 The only other question which arises concerns the possibility that if discovery were to be directed, additional evidence might

emerge. However, it is in that context that it seems to me that the timing of the application is of particular relevance. Whatever

might be the situation that would pertain if an application to amend were made at an early stage in the process, it seems to me that

all of the authorities (see for example, the judgment of the Supreme Court in Wildgust v. Bank of Ireland [2001] I.L.R.M. 24) indicate

that an amendment during hearing is not a desirable practice and should not frequently be permitted. The reason, of course, is that

the risk of prejudice is all the greater where the amendment occurs while the case is at hearing. This is not the occasion to attempt

to analyse all of the principles relevant to the limited jurisdiction to allow an amendment during the course of the hearing. It may well

be that what might loosely be called “technical” amendments can more easily be allowed. Where, for example, a flaw in the case as

pleaded emerges in the course of the hearing but where that flaw can be remedied without any significant prejudice, it would hardly

be surprising that a court would allow such an amendment rather than see a party lose on a narrow pleading point.

7.11 On the other hand an amendment which would have the effect of allowing an entirely separate cause of action (even one which

may bear some resemblance to at least some of the other claims already pleaded) is in a very different category. For the reasons

which I have already sought to analyse there does not seen to me to be a stateable case on the evidence currently available for the

proposition sought to be advanced by virtue of the amendment. The case could only go to trial if, therefore, full discovery was

ordered, additional witness statements from all concerned were directed, and on the assumption that something emerged in the

course of such a process which might afford the Cunningham Group a stateable case. To impose on these proceedings, which have

already been at hearing for upwards of three months, such an additional claim would, in my view, be an inappropriate exercise of the

court’s jurisdiction to allow amendments. If the Cunningham Group wish to run such a case then it seems to me that it is more

appropriately run in separate proceedings which can take their own course. Just because it cannot be demonstrated that a claim

proposed to be included by amendment is bound to fail is not, in my view, a sufficient reason for permitting the amendment concerned

when the case has been at hearing for a prolonged period. To permit such a practice on such a test has the potential to cause chaos

for litigation.

7.12 In those circumstances it seems to me to be unnecessary to address the interesting issue raised on behalf of First Active to the

effect that no jurisdiction exists to permit an amendment which would allow a new and separate cause of action to be raised where

the cause of action concerned arose after the date of the original plenary summons. The question seems to turn on whether the

undoubted rule to the effect that amendments of that type should not be allowed is a rule of law (in which case the court would have

no jurisdiction to depart from it) or is a rule of practice (in which case the court would have a discretion, in an appropriate case, to

allow such an amendment). I would prefer to leave over to a case in which the issue was decisive, a final view as to the law on this

topic. My tentative view is to the effect that the rule is a rule of practice rather than a rule of law and that there would, therefore,

be a discretion which would permit the court, in an appropriate case, to depart from the rule. I have come to that tentative view

primarily because it is well settled that issues concerning remedies (as opposed to the causes of action giving rise to those remedies)

can be revised in proceedings, even though the facts relevant to the availability or otherwise of a particular remedy or the extent of

same may only have occurred subsequent to the proceedings being commenced.

7.13 However, I will conclude on this issue by stating that it would not seem to me that this case is one in which it would have been

appropriate to exercise any such discretion (if it exists). For those reasons the amendment application must also fail.