Michael O 'Doherty (Fermoy) Ltd v James McMahon Ltd (Approved)

Factual and Procedural Background

The Plaintiff, a building company, constructed a house and garage in 2007 for clients at a residential address in County Cork. The construction involved the use of plywood, which was required to be exterior grade. In 2010, the clients complained that the house was not weathertight. Upon inspection, the Plaintiff attributed the defects to the quality of the plywood, which it alleged had been supplied by the Defendant, a builders provider. The Defendant acknowledged supplying plywood and agreed that remedial work was necessary, which was costed at €140,000 plus VAT.

By written agreement in November 2010, the Defendant agreed to make an interim payment towards the remedial work, capped at €140,000 plus VAT, without admitting liability or defectiveness of the plywood. The remedial work commenced late 2010, with interim payments made by the Defendant. The Plaintiff commenced legal proceedings in January 2013 claiming damages for the balance of the remedial costs and/or an indemnity related to its liability to the house owners.

The Defendant's defence included that it was not the sole supplier of the plywood, that any plywood supplied was merchantable, and that defects were caused by faulty design and ventilation rather than materials. The Defendant counterclaimed for monies already paid under the interim agreement, alleging reliance on the Plaintiff's representation that the Defendant was the sole supplier. The Plaintiff denied making such a representation and stated that approximately 30% of the plywood came from a third party, Cork Builders Providers Limited, whose supplied materials met required standards.

By court order in July 2013, three third parties—Cork Builders Providers Limited, M S Timber Limited, and Timber Marketing Services Limited trading as Wood Concepts—were joined. The Plaintiff and Defendant settled their dispute in November 2014 for €106,000 in addition to interim payments, totaling €186,985.72. The Defendant then pursued claims against the third parties to recover this sum.

The third party claims proceeded slowly with incomplete particulars and documentation. The Defendant sought discovery from the third parties of various categories of documents relevant to the supply, quality, and conformity of the plywood materials involved in the construction and remedial works. The first and third named third parties also sought discovery from the Defendant.

This judgment concerns five contested discovery applications between the Defendant and the third parties, addressing the relevance and necessity of the requested documents for the fair disposal of the third party claims.

Legal Issues Presented

1. Whether the Defendant has established that the categories of documents sought from the third parties are relevant and necessary for the fair disposal of the third party claims.
2. Whether the discovery requests made by the first and third named third parties against the Defendant are relevant and necessary for the fair disposal of the third party claims.
3. The applicability of principles relating to concurrent wrongdoers and the relevance of the settlement between the Plaintiff and Defendant to the third party claims.

Arguments of the Parties

Defendant's Arguments

• The Defendant sought discovery from the third parties of three broad categories of documents: (1) documentation relating to the provision of the plywood materials, (2) documents relating to the sourcing and compliance with European regulations and directives, and (3) documents relating to attestation of conformity and testing of materials supplied over a five-year period.
• The Defendant argued these documents were relevant to establish the quality, specification, and conformity of the materials supplied by the third parties, which the Defendant alleged were defective and caused the defects in the house.
• The Defendant contended that the settlement between the Plaintiff and Defendant was not binding on the third parties and that they were entitled to interrogate the claim and the Defendant’s liability.
• The Defendant maintained that the third parties had responsibility under relevant European directives to ensure proper testing and attestation of conformity of the materials supplied.

First and Third Named Third Parties' Arguments

• The first and third named third parties requested discovery from the Defendant of seven categories of documents, including evidence of supply of plywood, documents relating to the Defendant’s supply to the Plaintiff, and correspondence regarding defects and liability.
• They argued that some categories sought by the Defendant were either irrelevant or overlapped with documents already in possession of the Defendant.
• They contended that the Defendant’s requests for discovery of documents related solely to the Plaintiff-Defendant proceedings, which had been settled, and thus were neither relevant nor necessary for the third party claims.
• They emphasized that the Defendant was best placed to know the details of orders and deliveries and that some of the Defendant’s discovery requests were overly broad and disproportionate.
• They asserted their entitlement to discovery of documents relevant to the origin and circumstances of supply of the plywood to fairly defend the third party claims.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Court analysed the discovery requests in the context of the pleadings and the procedural history. It found the Plaintiff’s claim and the Defendant’s defence to be essentially a straightforward contract case concerning the supply of plywood of a specified quality. The Court noted that the Defendant, as the party ordering and taking delivery of the goods, was best placed to know and have records of what was supplied and delivered. Consequently, requiring the third parties to produce original orders, delivery dockets, and invoices was unnecessary.

Regarding the first category of documents sought by the Defendant, the Court found the request overly broad and not necessary for the fair disposal of the claims, as it was unclear how the third parties could identify materials specifically used in the construction of the Plaintiff’s clients’ house.

For the second category, relating to compliance with European directives and regulations, the Court held that the Defendant’s case was not that the materials lacked certification but that they did not meet the agreed specification. The provenance and paperwork concerning certification were therefore irrelevant to the question of merchantability.

The third category, seeking documents relating to attestation of conformity over a five-year period for all materials supplied by the third parties, was found to be irrelevant and disproportionate, extending beyond the materials at issue in the proceedings.

In contrast, the Court found that the categories of documents sought by the first and third named third parties from the Defendant were relevant and necessary. These categories related directly to the origin and supply of the plywood, correspondence about defects, liability, and the settlement between the Plaintiff and Defendant. The Court rejected the Defendant’s argument that the settlement was res inter alios acta (a matter between others) and emphasized the third parties’ right to know the details of the settlement and the basis of the Defendant’s liability.

The Court also clarified that whether the third parties were concurrent wrongdoers depended on their responsibility for the same damage, not on whether they were joined as parties to the proceedings.

Ultimately, the Court concluded that the Defendant failed to show that the discovery it sought from the third parties was relevant and necessary, whereas the first and third named third parties had established the relevance and necessity of their discovery requests against the Defendant.

Holding and Implications

The Court REFUSED the Defendant’s motions seeking discovery from the third parties, finding that the Defendant had not established the relevance or necessity of the requested documents for the fair disposal of the third party claims.

The Court GRANTED the motions by the first and third named third parties seeking discovery from the Defendant, finding those categories of documents relevant and necessary.

The Court ordered the listing of the motions for mention to address procedural matters including identification of the deponent, timing of discovery, and costs.

The decision directly affects the parties by defining the scope of discovery appropriate in the third party claims, emphasizing proportionality and relevance. No new legal precedent was established.