Discovery Must Track the Pleadings: No Discovery to Investigate Unpleaded Causes of Action

1. Introduction

Neligan and Ors v Infrared Infrastructure VI Europe Ltd and Anor [2026] IEHC 83 is a High Court (Commercial) discovery decision arising out of an intense shareholder/director dispute within the “Jolt Group”. The plaintiffs (Maurice Neligan, Manuela Neligan, and Merlin One Investments Limited) challenge steps taken in November 2024 that allegedly removed Mr Neligan as CEO and as a director within the group, and which then triggered “Leaver” mechanics under a Subscription and Shareholders’ Agreement (“SSA”).

The immediate application concerned discovery: the plaintiffs sought orders for two disputed categories (Categories 7 and 10) after other categories were agreed (including Categories 1 and 8). The core issues were:

  • Whether documents relating to the instructions for and drafting of corporate documents (served on Mr Neligan on 14 November 2024) were relevant to any pleaded issue (Category 7).
  • Whether documents concerning the decision to serve, preparation of, and valuation work for “Leaver Notices” were relevant on the pleaded case (Category 10), in circumstances where the pleaded attack on the Leaver Notices was essentially that Mr Neligan was not a “Leaver” at all.

2. Summary of the Judgment

Mr Justice Mark Sanfey refused discovery of Categories 7 and 10 as sought, holding that the plaintiffs had not established the necessary link between the requested documents and issues joined on the pleadings. The Court emphasised that discovery is directed to advancing or resisting a viable pleaded claim/defence, and is not available as a mechanism to explore whether some new cause of action might emerge.

The Court noted that the plaintiffs already had the benefit of broad agreed discovery (notably Categories 1 and 8) concerning communications about Mr Neligan’s removal and the November 2024 board meeting, which addressed the pleaded “strategy to surprise” theme. The additional drafting/valuation categories were not shown to be necessary or relevant to the pleaded issues.

Although the defendants had offered narrowed “reformulations” of Categories 7 and 10, the Court did not impose them immediately and listed the matter for further submissions on ancillary orders (including costs).

3. Analysis

3.1 Precedents Cited

Compagnie Financiere du Pacifique v Peruvian Guano & Company [1882] 11 QBD 55 (“Peruvian Guano”)

The plaintiffs relied on the classic, expansive formulation of relevance in discovery, quoted by the Court: documents are discoverable if they “may—not must—either directly or indirectly enable” a party to advance its case or damage the opponent’s case. The Court accepted this as the orthodox starting point and did not question the general principle.

However, the judgment demonstrates a key practical limit on Peruvian Guano: even under a broad relevance test, a party must still identify a live pleaded issue to which the documents relate. The “may assist” test is not a free-standing licence for wide-ranging exploration detached from the pleadings.

Keating v RTE [2013] IESC 22

The Court relied on McKechnie J’s statement (at para. 62) that: discovery “is an aid to further a viable action or defence, or an issue in either, but not a means to establish one”. This authority was used as the decisive control on the plaintiffs’ attempt to obtain material that, on the Court’s view, would at most assist in investigating whether some additional or different complaint could be framed (e.g., about drafting strategy or valuation good faith), rather than proving what was actually pleaded.

3.2 Legal Reasoning

Category 7 (instructions/drafting of the 14 November 2024 document pack)

The plaintiffs alleged that the 11 November 2024 agenda email was “manifestly and deliberately deficient” and part of a strategy to deprive Mr Neligan of adequate notice of what would occur at the 14 November board meeting. They sought discovery of documents evidencing “instructions” and “drafting” of the corporate documents served on him on 14 November, contending these could show pre-planning and concealment.

The Court refused Category 7 because:

  • The defendants had already admitted that the documents were drafted in advance, so discovery directed to proving pre-drafting did not address a real controversy.
  • The requested “instructions/drafting” materials did not meaningfully connect to the pleaded notice/breach issues; the documents themselves “speak for themselves”, and their legal effect was a matter of legal argument, not dependent on drafts or instruction trails.
  • Broad agreed discovery (Categories 1 and 8) already targeted the pleaded issue of communications and decisions concerning removal and the November meeting—i.e., the context and alleged “strategy to surprise”.
  • Applying Keating v RTE, the Court rejected discovery that could function as an attempt to uncover an unpleaded cause of action.

Category 10 (decision/preparation/valuation of Leaver Notices)

The plaintiffs pleaded that the Leaver Notices were “unjustified, unlawful and in breach” of the constitution and/or SSA, and sought a declaration that they were void. When pressed for particulars, they responded in substance that if the November 2024 steps were invalid, Mr Neligan was not a “Leaver”; therefore, the Leaver Notices necessarily failed.

The plaintiffs’ discovery argument attempted to pivot to Schedule 11 good faith obligations in valuation. The Court refused Category 10 because:

  • On the pleadings, the attack on the Leaver Notices rested “entirely” on the proposition that the plaintiffs were not “Leavers” (because the 14 November 2024 decisions were invalid), not on how the valuation was conducted.
  • While the reply included a denial that the notices identified the correct “leaver price/leaver fair market value”, there was no pleaded factual basis that the “nil” valuation was not made in good faith, nor any pleaded valuation case requiring exploration of internal deliberations.
  • Seeking internal communications about the decision to serve notices and valuation discussions therefore looked like an attempt to find material to support a possible new line of case (e.g., lack of good faith), which Keating v RTE forbids.

Procedural nuance: reformulated categories

The defendants offered narrower formulations (with temporal limits and a focus on “calculation of value” only). The Court indicated an inclination to order discovery in those terms but reserved the issue pending further submissions. This underscores that even where an overly broad category fails, the Court may still facilitate proportionate discovery if it can be tied to pleaded issues and appropriately confined.

3.3 Impact

  • Pleading discipline in commercial discovery: The decision reinforces that parties must plead the factual and legal basis of a complaint (e.g., lack of good faith in valuation) before seeking discovery aimed at proving it. General assertions that documents “may help” will not suffice if the issue is not properly joined.
  • Limits on “draft trails”: Requests for drafting instructions, iterations, and internal document-production chains will be vulnerable where the operative documents are undisputed and the pleaded controversy turns on legal validity rather than drafting provenance.
  • Discovery proportionality through agreed categories: The Court’s reliance on the breadth of agreed Categories 1 and 8 signals a practical approach: where negotiated categories already capture the pleaded issues, additional categories must be justified as genuinely necessary.
  • Guidance for “leaver” disputes: Where leaver provisions include good faith valuation mechanics, litigants seeking valuation-related discovery should expect to plead a concrete valuation challenge (and the factual basis for alleged bad faith or error), not merely deny the price.

4. Complex Concepts Simplified

Discovery
A pre-trial process requiring a party to disclose relevant documents. It is not automatic; categories must be justified by relevance to the pleaded issues.
“Peruvian Guano” relevance
A broad test: documents are relevant if they may help prove your case or undermine the other side’s case. But the “help” must relate to an issue that actually arises on the pleadings.
Pleadings / issues joined
The statement of claim and defence define what the case is about. Discovery is confined to what is in dispute within those documents, not what a party hopes to discover might become a dispute later.
“Leaver” and “Leaver Notices”
Contractual mechanisms in shareholder agreements that can force a departing executive/shareholder to transfer shares, often at a contract-defined price or “fair market value”.
Good faith valuation obligations
Where an agreement requires a board to act “in good faith” when determining value, a party alleging breach typically must plead facts indicating bad faith or improper valuation methodology before seeking extensive internal valuation communications on discovery.

5. Conclusion

The central contribution of Neligan is its firm restatement—by reference to Keating v RTE—that discovery is not a tool to search for new causes of action: it must be anchored to relevant, contested, pleaded issues. While Peruvian Guano supports broad disclosure where documents may assist, that breadth operates within the boundaries set by the pleadings.

Practically, the judgment is a roadmap for commercial litigants: plead the real complaint first (including any good faith/valuation challenge), then seek tightly drawn discovery aimed at proving it—especially where extensive contextual communications have already been captured by agreed categories.