QRD Development Company No.3 Designated Activity Company (Approved)

Factual and Procedural Background

This opinion concerns a motion brought by the Petitioner, an architectural firm, seeking an order to strike out or redact certain parts of an affidavit filed by the Company in response to a winding-up petition. The petition arises from a claimed debt of approximately €299,393.47 owed by the Company to the Petitioner for architectural services related to a development site (the Site). The Company disputes the debt, contending that the services were not requested or rendered to it, that some invoices were addressed to a different party, and that it is entitled to set off losses caused by the Petitioner’s alleged negligence.

Prior to the petition, the parties engaged in negotiations, including without prejudice discussions, to resolve the dispute. These negotiations involved proposals for a solicitor’s undertaking to pay a settlement amount from the proceeds of the sale of the Site, which was in the process of being sold to a third party. The Petitioner agreed to forbear issuing the winding-up petition in reliance on the Company's solicitors’ undertaking to pay €200,000 in full settlement once an unconditional binding contract for the sale was executed and exchanged. However, delays in the sale and the absence of a binding contract led to renewed threats to proceed with the petition and the issuance of a new statutory demand underpinning the petition.

The motion before the Court concerns whether certain material in the Company's affidavit, specifically paragraphs 12-23 and an exhibit (the Relevant Content), should be struck out or redacted on the grounds that it is subject to without prejudice privilege or constitutes an abuse of process.

Legal Issues Presented

1. Whether the Relevant Content in the Company’s affidavit is protected by without prejudice privilege and thus inadmissible.
2. Whether the Court has jurisdiction to strike out or redact material from affidavits on grounds of without prejudice privilege or abuse of process.
3. Whether an agreement to settle the dispute was reached between the parties on or about 28 May 2021, thereby ending the without prejudice protection for subsequent correspondence.
4. Whether the Petitioner is estopped from denying the existence of the solicitor’s undertaking agreement.
5. The appropriate relief regarding the inclusion or redaction of the Relevant Content in the affidavit.

Arguments of the Parties

Petitioner’s Arguments

• An agreement to settle the dispute was reached on or about 27-28 May 2021, evidenced by correspondence accepting a solicitor’s undertaking to pay a settlement amount from the sale proceeds.
• The Relevant Content post-dates this agreement and consists of open correspondence not subject to without prejudice privilege.
• The Relevant Content is probative and admissible to show the existence of the agreement and the Company’s failure to honour it.
• The Company is estopped from denying the commitment due to its failure to provide the undertaking as agreed.
• The justice of the case requires the admission of the Relevant Content.

Company’s Arguments

• The Relevant Content is entirely privileged material arising from without prejudice negotiations and should not be admissible.
• No binding agreement was reached that ended the without prejudice protection of the correspondence.
• The Petitioner’s own correspondence as late as 24 September 2021 refers to ongoing without prejudice negotiations.
• The Petitioner is not relying on any agreement or the solicitor’s undertaking in the petition proceedings.
• The use of the Relevant Content would constitute an abuse of process by gaining a strategic advantage in the petition hearing.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court first confirmed the existence and importance of without prejudice privilege as a substantive legal right designed to encourage settlement negotiations by protecting communications from disclosure. The Court acknowledged its inherent jurisdiction to strike out or redact affidavit material subject to without prejudice privilege, provided no risk of injustice arises.

The Court analyzed the facts and correspondence between the parties. It found that prior to 28 May 2021, the parties’ discussions were properly without prejudice and thus privileged. The critical issue was whether an agreement was reached on or about 28 May 2021, ending the without prejudice protection for subsequent communications.

The Court gave significant weight to the nature of the solicitor’s undertaking negotiated and accepted by the parties. It emphasized that a solicitor’s undertaking is a binding, unequivocal declaration that is enforceable by the court and relied upon by the parties. The Court found that the exchange of correspondence on 27-28 May 2021, including the acceptance of the revised solicitor’s undertaking and the Petitioner’s forbearance from issuing the petition, objectively constituted an agreement to settle the dispute on those terms.

The Court rejected the Petitioner’s estoppel argument, noting no evidence was provided that the Company failed to provide the undertaking, and the preconditions for the undertaking to become operative (execution and exchange of an unconditional sale contract) did not occur before the petition was issued. The Court observed inconsistencies in the parties’ positions: the Petitioner claimed an agreement but later reintroduced without prejudice negotiations and did not rely on the agreement in the petition; the Company denied any agreement but had agreed wording for the solicitor’s undertaking.

Accordingly, the Court ruled that the without prejudice privilege attached to materials prior to 28 May 2021 but not to the correspondence post-dating the agreement. It ordered deletion of the first email dated 26 May 2021 from the exhibit as it was without prejudice, but refused to delete paragraphs 12-23 of the affidavit, which related to non-privileged material. The Court considered that retaining this material and allowing the Company to respond in further affidavits served the interests of justice by fully informing the Court at the hearing of the petition.

Holding and Implications

The Court REFUSED to strike out paragraphs 12-23 of the affidavit sworn by the Company’s representative, but ORDERED the deletion of the email dated 26 May 2021 from the exhibit attached to that affidavit on grounds of without prejudice privilege.

The direct consequence is that the disputed material predating the settlement agreement remains privileged and inadmissible, while the material postdating the agreement is admissible and will be considered at the petition hearing. The Company may respond to this material in further affidavits, ensuring a full evidential record. No new precedent was established; rather, the decision applies settled principles on without prejudice privilege and the binding nature of solicitor’s undertakings to the facts of this case.