Leahy v OSB Group Ltd & Ors (Approved)

Factual and Procedural Background

In or about 2003/2004, the Plaintiff established a business manufacturing and selling customised laminated worktops. Company A is a provider of kitchen and furniture materials. Company B, based in Germany, manufactures and supplies PVC, ABS, acrylic, and melamine edge-banding for such worktops. The Hospital acts as a distributor and agent of Company B in the State.

In April 2004, the Plaintiff purchased specialised manufacturing equipment known as a BAZ or IMABAZ machine for producing kitchen worktops. The Plaintiff claims to have contracted with Company B and The Hospital for the supply of edgings, relying on representations from all three defendants regarding the fitness for purpose of these edgings and the time for colour matching to laminate worktops. A key event is a May 2004 visit by the Plaintiff to Company B's factory, described by the Plaintiff as a "specification meeting" and by the defendants as an "exploratory meeting".

The Plaintiff alleges the edgings supplied by Company B and The Hospital were not fit for purpose, causing defects and delays in manufacturing in 2004 and 2005. The Plaintiff claims negligence, negligent misstatement, and misrepresentation by all defendants, resulting in losses claimed at €22.7 million (increased from an original claim of €6.5 million).

Proceedings were issued in March 2010. The Plaintiff delivered multiple Statements of Claim, with the relevant pleadings being the Amended Statement of Claim dated 22 October 2018 and the Amended Defence from Company B and The Hospital dated 11 April 2019. The Plaintiff applied to strike out the Defence of Company B and The Hospital on two grounds: breach of a discovery Order dated 22 October 2018 and that the Defence discloses no reasonable answer and is frivolous and vexatious.

Legal Issues Presented

1. Whether the Defence of the second and third-named defendants (Company B and The Hospital) should be struck out pursuant to Order 31 Rule 21 for breach of a discovery Order made on 22 October 2018.
2. Whether the Defence discloses no reasonable cause of action or answer and is frivolous and vexatious, justifying strike out under Order 19 Rule 28.
3. Whether the Court's inherent jurisdiction permits striking out the Defence as bound to fail or frivolous and vexatious.

Arguments of the Parties

Plaintiff's Arguments

• The Defence discloses no reasonable answer and is frivolous and vexatious under Order 19 Rule 28.
• The second and third-named defendants breached the discovery Order of 22 October 2018 by failing to produce key documents, including faxes, meeting notes, correspondence, and test reports.
• Specific documents withheld or undiscovered include a fax dated 11 May 2004, documents related to a May 2004 meeting ("specification meeting"), notes by employees of Company B, correspondence with the machine manufacturer, and reports of lab testing and site visits.
• Documentary evidence, such as an Investigation Report and emails, indicate tests were conducted by a third party ("Homag"), which the defendants allegedly concealed.
• The Plaintiff contends the Defence is bound to fail based on these documents and admissions.

Second and Third-Named Defendants' Arguments (Company B and The Hospital)

• The Defence largely consists of denials or puts the Plaintiff on proof, which constitutes a reasonable answer on the pleadings.
• The Defence pleads failure to mitigate losses and contributory negligence, which are reasonable partial answers.
• The meeting in May 2004 took place but was an "exploratory visit," not a "specification meeting"; thus, no notes or documents relating to specifications exist.
• Regarding discovery, the defendants assert they have disclosed all documents in their possession, power, or procurement. Some documents alleged missing were never in their possession or were not retained.
• The fax of 11 May 2004 was not in their possession nor known to them until 2019 and was not deliberately withheld.
• The defendants' solicitor swore affidavits stating no additional documents exist in relation to many categories complained of, though the court noted this was unsatisfactory and directed further affidavits.
• The defendants maintain that tests referenced as by "Homag" were in fact conducted by an employee of Company B at the Homag factory, and no independent Homag test occurred.
• The absence of certain documents does not prejudice a fair trial, and the Plaintiff can seek discovery from third parties where appropriate.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Delany and McGrath on Civil Procedure (4th Ed, 2018)	Principles governing strike out under Order 19 Rule 28, including the court's caution and approach to pleadings.	Guided the court to assess the Defence on its pleadings alone, assuming facts pleaded are true and that the Defence must disclose a reasonable answer.
Aer Rianta cpt v Ryanair Ltd	Emphasised the court's caution in exercising Order 19 Rule 28 jurisdiction.	Supported the court's sparing use of strike out powers under Rule 28.
McCabe v Harding	Confirmed that vexation or frivolity must appear from pleadings alone for Rule 28 to apply.	Reinforced the court's limitation to pleadings in strike out applications.
Barry v Buckley	Rule 28 applies only when pleadings disclose no reasonable cause of action.	Used to affirm the court's approach to pleadings in strike out.
D.K. King [1994] 1 IR 166	Rule 28 applies only if pleadings disclose no reasonable cause of action or are frivolous/vexatious.	Clarified the standard for strike out under Rule 28.
Salthill Properties Ltd v Royal Bank of Scotland plc	The court must accept facts as asserted in the claim and only strike out if no cause of action arises.	Informed the court's assessment that the Defence discloses a reasonable answer.
Wilkinson v Ardbrook Homes Ltd	Consideration of strike out under Order 19 Rule 28 and inherent jurisdiction.	Referenced for the high threshold in striking out pleadings.
Fox v McDonald [2017] IECA 189	Definition of "frivolous" in the context of Order 19 Rule 28.	Helped define frivolous and vexatious pleadings.
Keohane v Hynes [2014] IESC 66	Clarified the Court's inherent jurisdiction and the limited engagement with evidence.	Distinguished between Rule 28 and inherent jurisdiction applications, limiting evidence use in Rule 28.
Ewing v Ireland and the Attorney General (Unreported, Supreme Court, 11 Oct 2013)	Addressed the Court's ability to hear evidence under inherent jurisdiction.	Clarified that evidence consideration applies to inherent jurisdiction, not Rule 28.
Scotchstone Capital Fund Ltd & anor v Ireland & anor [2022] IECA 23	Principles on inherent jurisdiction to strike out pleadings bound to fail.	Supported the court's approach to limited evidence engagement under inherent jurisdiction.
McAndrew v Launceston Property Finance DAC & anor [2023] IECA 43	Recent authority on inherent jurisdiction and striking out pleadings.	Reinforced principles on inherent jurisdiction strike out powers.
Mercantile Credit Company of Ireland & Anor. v. Heelan & Ors. [1998] 1 I.R. 81	Discretionary nature of striking out Defence for failure to comply with discovery orders.	Informed the court's discretion and requirement of wilful default or negligence for strike out.
Murphy v. J. Donohue Limited [1996] 1 I.R. 123	Discovery orders exist to facilitate justice, not punish parties.	Guided the court to avoid punishing parties for discovery failures unless extreme.
Dunnes Stores v Irish Life Assurance [2010] 4 IR 1	Proper approach to failures in discovery and consequences.	Supported the court's approach to fairness and appropriate remedies over punishment.
Green Pastures (Donegal) v Aurivo Co-operative Society Ltd & Ramsey [2014] IEHC 209	Consideration of strike out for failure to make proper discovery.	Referenced for the threshold to strike out on discovery grounds and distinction from malicious evasion.

Court's Reasoning and Analysis

The Court first addressed the application under Order 19 Rule 28, which allows striking out pleadings that disclose no reasonable cause of action or are frivolous and vexatious. The Court emphasized the strict and sparing use of this jurisdiction, noting it must consider the pleadings alone, assuming the facts pleaded are true and that the Defence must disclose a reasonable answer. The Defence primarily consists of denials and pleas that put the Plaintiff on proof, which suffices as a reasonable answer. Additionally, the Defence pleads contributory negligence and failure to mitigate losses, which also constitute reasonable answers.

The Court rejected the Plaintiff's attempt to rely on documentary evidence outside the pleadings to establish that the Defence is bound to fail, explaining that such engagement with evidence is not permitted under Order 19 Rule 28 but only under the Court's inherent jurisdiction. The Court distinguished between documents that govern legal relations (which may be considered at this stage) and documents that merely illuminate underlying facts (which require fuller trial examination). The documents relied upon by the Plaintiff fall into the latter category, and the Court found the Plaintiff's interpretation of these documents as admissions to be speculative and insufficient to strike out the Defence.

Regarding the inherent jurisdiction to strike out a Defence bound to fail, the Court acknowledged the limited scope of this power and the necessity for incontrovertible facts. The Plaintiff failed to establish such facts, and the Court declined to strike out the Defence on this ground.

On the application under Order 31 Rule 21 to strike out the Defence for breach of a discovery Order, the Court reviewed the Plaintiff's complaints about non-discovery of various documents. The Court found that while some documents, such as a fax dated 11 May 2004, were not discovered, the defendants were unaware of their existence and did not deliberately withhold them. The Plaintiff was in possession of that fax and was not prejudiced by its non-discovery.

The Court identified conflicts between the parties regarding the existence of notes and documents related to the May 2004 meeting and other categories. The Plaintiff did not cross-examine defendants' deponents who swore affidavits denying possession of such documents. The Court found the Plaintiff had not discharged the burden to prove culpable breach of the discovery Order.

The Court noted deficiencies in affidavits sworn by the defendants' solicitor rather than an employee or officer, directing that confirmatory affidavits be sworn addressing the discovery issues and making further and better discovery where appropriate.

The Court concluded that the alleged discovery failures did not prejudice a fair trial and that striking out the Defence on this basis was not justified. Instead, further affidavits and discovery were ordered to clarify outstanding issues.

Holding and Implications

The Court REFUSED the Plaintiff's application to strike out the Defence of the second and third-named defendants under Order 19 Rule 28 on the grounds that the Defence discloses no reasonable answer or is frivolous and vexatious.

The Court also REFUSED the application to strike out the Defence under the Court's inherent jurisdiction as bound to fail or frivolous and vexatious.

Further, the Court REFUSED the Plaintiff's application under Order 31 Rule 21 to strike out the Defence for breach of the discovery Order. However, the Court directed that an affidavit be sworn by or on behalf of an employee or officer of the second and third-named defendants to address discovery matters and to make further and better discovery as appropriate.

The direct effect of this decision is that the Defence remains extant and the proceedings will continue. No new precedent was set, and the Court underscored the importance of sparing use of strike out powers and ensuring fairness in discovery compliance.