Third Party Procedure

 

Cases

Boland v. Dublin Corporation

[2002] IESC 69

 

Hardiman J

 

JUDGMENT of Mr. Justice Hardiman delivered the 15th day of October, 2002.

1. This is an appeal by Dublin Corporation, the Defendant in the original action, against the Order of the High Court (O’Higgins J.) made the 20th November, 2000. The High Court directed that the Third Party Notice as against the First Named Third Party be set aside.
2. The application to set aside the Third Party Notice was heard on affidavit, that of Mr. Daniel Oliver Leahy for the First Named Third Party and that of Ms. Deborah Ryan for the Defendant. From these affidavits it emerges that the Plaintiff’s claim is for damages for personal injuries arising out of an accident alleged to have occurred on the 3rd December, 1993. On the 16th November, 1995 the Plaintiff’s solicitors intimated a claim against the Defendants. It appears from the Statement of Claim that the Plaintiff says that he was walking along the public highway at Broombridge Road, Cabra, Dublin when he fell. He claims the fall was due to “the presence of an unreasonable danger and a concealed danger in the nature of a trap, namely a broken down and poorly repaired and reinstated area of the footpath with both raised and damaged/lowered sections” whereby he was caused to trip and fall sideways into a fence.
3. The Plaintiff issued a plenary summons on the 23rd September, 1996. An appearance was entered on the 3rd October of that year, the Statement of Claim was delivered on the 19th January, 1998 and a Notice of Intention to Proceed was delivered on the 5th May, 1998. The Defendant raised a Notice for Particulars on the 17th June, 1998 and replies were delivered on the 23rd July, 1998. The Defence was delivered on the 11th August, 1998. Prior to this exchange of pleadings the Defendant had received from the Plaintiff’s solicitors photographs of the alleged location of the accident. These were received on the 7th December, 1995. The Corporation say that the location of the accident “appears to be adjacent to a broken down chain linked fence” which it believes “was the property of and was supposed to be maintained by the Third Parties, one or other or both of them”.
4. Accordingly, by letter dated the 26th November, 1998 the Defendant wrote to the First Named Third Party informing it of the intention of the Corporation to join it as a Third Party. On the 8th February, 1999 the High Court granted liberty to issue and serve the Third Party Notice. This document was actually served on the 11th February, 1999. On the 22nd March, 1999 the First Named Third Party entered an appearance and required delivery of a statement of claim. On the 4th August, 1999 the First Named Third Party issued a Motion to compel delivery of a Third Party Statement of Claim. This pleading was delivered on the 9th August, 1999. On the 17th August, 1999 the Third Party raised particulars arising out of the Third Party Statement of Claim. On the 11th October, 1999 the Defendant replied to the Notice for Particulars. On the 14th July, 2000 the Motion to set aside the Third Party Notice was issued. It thus appears that some seventeen or eighteen months had elapsed between the service of the Party Notice and the issue of the Motion to set it aside, during which the Third Party made no objection to the procedure adopted by the Defendant.
5. In the course of argument the Defendant emphasised the proposition that it had sent to the First Named Third Party the photographs it had received from the Plaintiff’s solicitor prior to the institution of proceedings. It transpired however that this much emphasised contention was erroneous and that the Third Party had no knowledge of the claim until a few days before the letter of the 26th November, 1998 when its Managing Director was verbally notified by the Corporation’s law agent of the intention to issue the Third Party Notice.
6. The First Named Third Party contends that the spot where the accident occurred is in charge of the Defendant. It also says that the fence was removed and replaced in its entirety between the date of the accident and an unknown date in 1995, following an incident in which a car crashed into it. The Defendant denies this.

The Law.

7. This application is based on the proposition that the First Named Third Party, as occupier of its premises, is a concurrent wrongdoer with the Defendant, either jointly with the Second Named Third Party or individually. Though the term “concurrent wrongdoer” is not used, this basis of the claim seems to emerge clearly from paragraph 4 of the Third Party Statement of Claim dated the 9th August, 1999. This being so, the entitlement to issue and serve a Third Party Notice is governed by Section 27(1) of the Civil Liability Act, 1961 which provides as follows:-

“(1) A concurrent wrongdoer who is sued for damages or for contribution and wishes to make a claim for contribution under this part

(a)

(b) shall, if the said person is not already a party to the action, serve a Third Party Notice upon such person as soon as is reasonably possible and, having served such notice, he shall not be entitled to claim contribution except under the Third Party procedure. If such third party notice is not served as aforesaid, the Court may in its discretion refuse to make an order for contribution against the person from whom contribution is claimed.” (Emphasis added).

8. Furthermore, Order 16 of the Rules of the Superior Courts provides at Rule 1(iii):-

“Application for leave to issue the Third Party Notice shall, unless otherwise ordered by the Court, be made within 28 days of the time limited for delivering the defence or, where the application is made by the Defendant to a counterclaim, the reply”.

9. I agree with the remarks of Kelly J. in SFL Engineering Ltd. v. Smyth Cladding Systems Ltd. (High Court unreported 9th May, 1997) as follows:-

“This provision of the Rules gives expression in a concrete form to the temporal imperative contained in Section 27(1)(b) of the 1961 Act. It is to be noted that the Rules of Court require the application to be made not within 28 days from the delivery of the defence in the proceedings but within 28 days from the time limited for delivering the defence”.

10. It is also to be noted that under Order 16 Rule 8(3) Third Party proceedings may at any time be set aside by the Court. This is the jurisdiction which is invoked on the present application.
11. In The Board of Governors of St. Lawrences Hospital v. Staunton [1990] 2 IR 31 the Supreme Court considered Section of the 1961 Act. Referring specifically to Section 27(1)(b) Finlay C.J. said:-

“I am quite satisfied upon the true construction of that subsection that the only service of a third party notice contemplated by it and, therefore, the only right of a person to obtain from the High Court liberty to serve a third party notice claiming contribution against a person who is not already a party to the action, is a right to serve a third party notice as soon as is reasonably possible. A defendant in an action seeking to claim contribution against a person who is not a party to the proceedings cannot serve any third party notice at any other time, other than as soon as is reasonably possible”.

12. This view has been followed, and its application to various specific circumstances considered, in a number of decisions of the High Court and in particular Ward v. O’Callaghan and Ors. High Court unreported (Morris P.) 2nd February, 1998; Carroll v. Fulflex International Company Limited and Combined Freight Services Limited High Court unreported Morris J. 18th October, 1995; Dillon v. MacGabhann High Court unreported Morris J. 24th July, 1995; Tierney v. Sweeney and Anor. High Court unreported Morris J. 18th October, 1995; and Grogan v. Ferrum Trading Company Limited and Ors. High Court unreported Morris J. 13th February, 1996.
13. In relation to a Motion to set aside a third party notice, in Carroll v. Fulflex, Morris J. (as he then was) said:-

“A motion to set aside the Third Party Notice should only be brought before that Defendant has taken an active part in the Third Party proceedings and I believe that an application of this nature must itself be brought within the time scale identified in Section 27(1) of the Civil Liability Act, 1961, that is to say ‘as soon as is reasonably possible’. While that limitation is not spelt out in the Act, I believe that a fair interpretation of the Act must envisage that a person seeking relief under Section 27 would himself move with reasonable speed and certainly before significant costs and expenses have been occurred in the Third Party procedures”.

14. In Tierney v. Sweeney Morris J. (as he then was) said:-

“I am of the view that where it is intended to make the case that a defendant has failed to move the Court to set aside an order giving a defendant liberty to serve a third party notice, such an application should be brought with reasonable expedition and in accordance with the time scale reflected in Section 27(1)(b) of the Civil Liability Act, 1961, that is as soon as reasonably possible and save in exceptional circumstances should not extend beyond the point where a defence is delivered to the Third Party Statement of Claim”.

15. I respectfully agree that the statutory requirement to move for liberty to issue a third party notice, “as soon as reasonably possible”, should be regarded as applying, also, to the bringing of an application to set aside such a notice. While it is difficult to imagine circumstances in which a delay by a third party until after he has himself delivered a defence to the Third Party Statement of Claim could be justified, it by no means follows that the mere fact that he has not yet delivered a defence means that the application to set aside has been brought as soon as reasonably possible.

The facts of the present case.

16. On the facts of the present case, the First Named Third Party brought its Motion to set aside on the 14th July, 2000, having been served with the Third Party Notice on the 11th February, 1999. This delay is simply not addressed at all in the Affidavit evidence on the hearing of this application. In particular, the nine month period between the delivery of particulars on the 11th October, 1999 and the issue of the Motion on the 14th July, 2000 seems incapable of justification: certainly none has been advanced. Just as the onus of justifying any delay in seeking liberty to issue the Third Party Notice devolve on the Defendant, the onus of justifying delay in bringing the Motion to set such notice aside devolves on the Third Party. Since the First Named Third Party in the moving party here, its delay falls to be considered first.

Conclusion.

17. Since the First Named Third Party has failed to demonstrate that its motion has been brought as soon as reasonably possible, the present application must fail. I would accordingly set aside the Order of the learned High Court Judge and decline the relief sought by the First Named Third Party.

 

 

Connolly v. Casey

 

[1999] IESC 76; [2000] 1 IR 345; [2000] 2 ILRM 226

 

Denham J

 

1. This is an appeal by the defendants/appellants (hereinafter referred to as “the defendants”) from the Order of the High Court (Mr. Justice Kelly) made on 12th June, 1998, and perfected on 23rd July, 1998, which granted the third party’s application for an Order setting aside the third party proceedings issued herein.

 

 

Facts

 

2. The defendants, who are solicitors, are being sued by the plaintiff for professional negligence. The defendants joined the third party, who is a barrister. The third party brought an application (which in its correct form was) to set aside the third party proceedings pursuant to Order 16 Rule 8(3) of the Rules of the Superior Courts. The basis for setting aside the third party application was the alleged failure by the defendants to comply with the obligations imposed upon them by Section 27(1)(b) of the Civil Liability Act, 1961, to serve the third party notice as soon as reasonably possible.

 

 

3. The Plenary Summons was issued on 21st February, 1995. The statement of claim was delivered on 3rd March, 1995. On 16th February, 1996, there was notice of change of solicitor. On 14th March, 1996 the solicitor for the defendants sought further and better particulars. On 22nd April, 1996 the defence was delivered. On 14th January, 1997, the solicitors for the plaintiff replied to the request for particulars. On 6th February, 1997, there was a notice of trial. (In fact there was a second notice of trial on 13th January, 1998.) On 7th April, 1997 the affidavit was sworn grounding the motion seeking liberty to issue and serve a third party notice on the third party. On 25th July, 1997, the motion seeking liberty to issue and serve third party proceedings was issued. On 20th October, 1997, the High Court (Kinlen, J.) ordered that the defendants be at liberty to issue and serve a third party notice

 

 

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herein on Michael Fitzgibbon, the proposed third party. On 19th January, 1998 an appearance was entered for the third party. On 21st January, 1998 the motion seeking relief for the third party’ determined by the High Court to be the relief of setting aside the third party notice, was issued. On 12th June, 1998, the High Court (Kelly, J.) set aside the third party notice. It is against that order that the appeal has been brought.

 

Submissions

 

4. Counsel on behalf of the defendants, Mr. Paul Gallagher, S.C., submitted that there were two net points on the appeal. The first matter was whether the third party notice was served “as soon as is reasonably possible”. I will address this matter first as it was the basis for the High Court decision.

 

 

The Law

 

5. Order 16 Rule 8(3) of the Rules of the Superior Courts states:

 

 

“The third-party proceedings may at any time be set aside by the Court”.

 

Section 27(1) of the Civil Liability Act, 1961, states:

 

“(1) A concurrent wrongdoer who is sued for damages or for contribution and who wishes to make a claim for contribution under this Part-

 

(a) shall not, if the person from whom he proposes to claim contribution is already a party to the action, be entitled to

 

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claim contribution except by a claim made in the said Action, whether before or after judgment in the action;

 

and

 

(b) shall, if the said person is not already a party to the action, serve a third-party notice upon such person as soon as is reasonably possible and, having served such notice, he shall not be entitled to claim contribution except under the third-party procedure. If such third-party notice is not served as aforesaid, the court may in its discretion refuse to make an order for contribution against the person from whom contribution is claimed.”

 

(The underlining is added for emphasis.)

 

6. The case is grounded on s.27(1)(b). In Board of Governors of St. Laurence’s Hospital v. Staunton [1990] 2 IR 31 at p.36 Finlay, C.J., said of s.27(1)(b):

 

 

“I am quite satisfied upon the true construction of that sub-section that the only service of a third-party notice contemplated by it and, therefore, the only right of a person to obtain from the High Court liberty to serve a third-party notice claiming contribution against a person who is not already a party to the action, is a right to serve a third-party notice as soon as is reasonably possible.”

 

7. In the High Court the learned trial judge stated:

 

 

“The net question which I have to decide in the present case is whether the service of the Third Party Notice in the instant case was effected as soon as was reasonably possible.”

 

8. The learned trial judge analysed several periods of delay. The first was that between the delivery of the statement of claim on 3rd March, 1995, and the decision of the defendants’ underwriters confirming they were on cover. I agree with his conclusion that this

 

 

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delay could not be regarded as unreasonable. The next period of delay was between that decision on 30th June, 1995 of the underwriters and service of a notice for particulars on 14th March, 1996. The explanation was one of human error and the learned trial judge held that whilst the delay was significant it did not in all the circumstances appear unreasonable. I am in agreement with his conclusion. Thus the next alleged delay falls to be considered.

 

9. The defence was delivered on 22nd April, 1996. It had pleas in it making it clear that the defendants were alleging negligence and breach of duty on the part of the third party in respect of the advice he gave concerning the institution of proceedings against the Eastern Health Board.

 

 

Kelly, J. stated:

 

“The insertion of these pleas in the defence suggests to me that at the time of its delivery the Defendants were possessed of sufficient information to justify the inclusion of such a plea. An allegation of professional negligence is a serious matter and ought not to be made unless there are reasonable grounds for so doing. I do not believe that either Counsel who signed the defence would have done so unless they were satisfied that such grounds did exist. Given therefore that the Defendants were in a position to make such a plea as far back as April 1996, what is the explanation proffered for the delay between that date and the service of the Third Party Notice on the 29th October, 1997?”

 

10. Two explanations were given:

 

 

(1) that the defendants had to await the delivery of replies to particulars before they could move to join the third party; and

 

(2) the necessity to obtain a statement from Mr. Murphy prior to the bringing of an application to join the third party.

 

11. In relation to the first explanation the learned trial judge stated, having analysed the replies to particulars,

 

 

“I find it difficult to ascertain the information contained in this reply which added to the Defendants’ state of knowledge so as to make

 

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possible what had previously not been possible, namely, the preparation of the application to join the Third Party. I do not see that these replies materially altered the Defendants’ state of knowledge from what it had been before in respect of any matter of relevance concerning the joinder of a Third Party. Accordingly, on this aspect of the matter I do not consider that the Defendants have provided a satisfactory explanation for the delay in question.”

 

12. This was the wrong test. The test is whether it was reasonable to await the replies to particulars. Whether the replies did or did not materially alter the defendants’ state of knowledge is not the test. The queries raised in the notice for particulars were relevant to the claim against the third party and thus it was reasonable to await the replies.

 

 

13. The second reason given for the delay was the necessity to obtain a statement from Mr. Murphy prior to the bringing of the application to join the third party. This is an action for professional negligence. The defendants wished to join the third party, a barrister. Mr. Murphy was the instructing solicitor, the solicitor who instructed the third party. The learned High Court judge considered that the defendants were not justified in waiting for Mr. Murphy to co-operate and give a statement before moving to join the third party. In my view this was an error.

 

 

14. Even though there were pleas in the defence relevant to the third party’ there is a difference between a general plea in a defence and swearing an affidavit setting out the basis on which it is alleged Counsel was negligent. A statement from Mr. Murphy was relevant to this. It was not unreasonable to have sought a statement from Mr. Murphy and awaited its arrival, it was a prudent action.

 

 

15. It is important in professional negligence cases to act reasonably. Proceedings must have an appropriate basis. Counsel have a duty of care. Reference has already been made to the need to develop modern case management in cases relating to professional

 

 

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negligence; Cooke v. Cronin and anor. , (Unreported, Supreme Court, 14th July, 1999) [FL1641]. The determination that the delay of the defendants was not unreasonable in this case does not include an endorsement of a culture of delay. Rather, while determining that it was not unreasonable to seek and obtain a statement from Mr. Murphy, the whole case and the length of the proceedings illustrate the necessity of considering the introduction of modern case management in cases relating to professional negligence.

 

16. Another delay referred to by the learned trial judge was that between the date of swearing of the affidavit to join the third party and the issue of the Notice of Motion. He pointed out that no explanation was given for this delay. In the overall circumstances I am satisfied that this delay alone would not be such as to justify setting aside the Notice of Motion.

 

 

17. In analysing the delay – in considering whether the third party notice was served as soon as is reasonably possible – the whole circumstances of the case and its general progress must be considered. The clear purpose of the subsection is to ensure that a multiplicity of actions is avoided; see Gilmore v. Windle [1967] IR 323. It is appropriate that third party proceedings are dealt with as part of the main action. A multiplicity of actions is detrimental to the administration of justice, to the third party and to the issue of costs. To enable a third party to participate in the proceedings is to maximise his rights – he is not deprived of the benefit of participating in the main action.

 

 

18. The defendants brought a motion in the proceedings to adduce further evidence in the form of an affidavit dated 5th August, 1998 by Eugene O’Sullivan. Mr. Rory Brady, S.C., on behalf of the defendants, quite rightly, did not object. A further explanation for the delay is given there in paragraph 4 which states:

 

 

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“I say that there was pressure to file a Defence in this case because the time for filing the Defence had expired. I requested Junior Counsel to draft a Defence and to have it settled by Senior Counsel. Senior Counsel advised that on the basis of the information contained in the brief there was a sufficient basis to justify making a plea regarding the negligence of Counsel. Senior Counsel pointed out that if the plea was not contained in the Defence we would have to apply at a later stage to amend the Defence and that that application would not necessarily be granted. Senior Counsel advised however that while the evidence available justified making the aforesaid plea in the Defence, he thought it appropriate before swearing an Affidavit to seek to join the counsel as a third party, that specific confirmation of the matters contained in the brief should be obtained from Mr. Murphy and that we should be certain that Mr. Murphy would be prepared to stand over the allegations which would be contained in the Affidavit. In that regard he advised that a detailed statement should be obtained from Mr. Murphy as he had had the direct dealings with Counsel. Because of the difficulties in obtaining the statement from Mr. Murphy … there was a delay in joining counsel as a third party.”

 

19. This information confirms my view that it was not unreasonable to await the statement of Mr. Murphy and that it was not an unreasonable delay. Taking the circumstances and the proceedings as a whole I am satisfied that proceedings were served within the time frame permitted as reasonable under Section 27(1)(b) of the 1961 Act. Consequently I would allow the appeal.

 

 

20. Counsel for the plaintiff had a second argument. He raised a query as to the effect, so far as the third party proceedings are concerned, of a failure to serve the third party proceedings “as soon as is reasonably possible”. This matter was not raised or argued in, nor did it form part of the judgment of, the High Court. Nor was it raised explicitly on the Notice of Appeal. Counsel for the defendants submitted that a proper reading of Section 27(1)(b) of the 1961 Act does not require the Court in the event of delay to set aside the third party notice. Rather, the Court has a discretion, he submitted, to refuse to make an Order for contribution. It was argued that it was clear from the wording used that this discretion exists

 

 

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not only where the claim for indemnity/contribution is brought by way of separate proceedings but also where it is brought by way of third party notice. He referred to the last sentence of Section 27(l)(b) of the 1961 Act which begins:

 

“If such third-party notice is not served as aforesaid …“

 

21. Counsel submitted that what is “said before” is that the third party notice should be served “as soon as is reasonably possible”. He submitted that the interpretation contended for is not only consistent with the wording of the subsection but is also consistent with the statutory purpose of avoiding a multiplicity of actions. It is not necessary to determine this second ground submitted by the defendants in light of the decision on the first ground. Nor is it necessary, therefore, to analyse this argument in relation to The Board of Governors of St. Laurence’s Hospital v. Staunton [1990] 2 IR 31.

 

 

22. In conclusion, I would allow the appeal of the defendants on the grounds that the delay of the defendants was not unreasonable and that in the circumstances of the case the third party notice was served “as soon as is reasonably possible”. However, this is a case with particular facts in a suit alleging professional negligence and the decision does not endorse delay – rather it seeks to encourage a modern management of litigation to avoid a multiplicity of suits.

 

 

Clare Taverns t/a Durty Nelly’s v. Gill t/a Universal Business Systems

[1999] IEHC 42; [2000] 1 IR 286; [2000] 2 ILRM 98

 

JUDGMENT of Mrs Justice McGuinness delivered the 16th day of November, 1999.

 

 

 

1. This is a Motion on Notice brought pursuant to Order 16 Rule 8(3) of the Rules of the Superior Courts seeking the setting aside of third party proceedings against the first named third party or alternatively the striking out of these third party proceedings as against the first named third party on the grounds that by virtue of Article 17 of the Brussels Convention 1968, which is incorporated into Irish law by the Jurisdiction of Courts and Enforcement ofJudgments (European Communities) Act, 1988, this Court has no jurisdiction to hear and determine the Plaintiff’s claim against the first named third party.

 

2. The Action itself is brought by the Plaintiff, an Irish company which carries on the business of publican and restaurateur at the licensed premises known as Durty Nelly’s at Bunratty, Co. Clare, against the Defendant, who is also Irish, and who carries on the business of shop and office equipment supplier. In broad outline the Action arises out of the sale and installation of a cash control system at the Plaintiff’s licensed premises which the Plaintiff claims was defective and unfit for the purpose. The Defendant has by Order of this Court (Johnson J.) made the 9th day of November, 1998 served third party notices on three third parties the first of which is TEC (UK) Limited, the mover of the present Motion. It is common case that the said first named third party supplied the Defendant with cash control computer terminals and related equipment for use in the Plaintiff’s cash contol system (the necessary “hardware”). There is an issue between the Defendant and the first named third party as to whether the first named third party had any involvement in the supply and installation of the “software” involved in the cash control system, but this is not relevant to the issues before this Court on the Notice of Motion.

 

3. It is established by the Affidavit of Peter Dodd, manager of the reseller division of the first named third party, that TEC (UK) Limited is a company domiciled in England, and indeed this is not denied by the Defendant.

 

4. The Defendant in his Third Party Notice relies on Articles 5.1, 5.3 and 6.1 and/or 6.2 of the Brussels Convention to establish the jurisdiction of this Court to hear and determine the proceedings.

 

5. The relevant Articles of the Brussels Convention provide as follows:-

 

“Article 2

 

Subject to the provisions of this Convention, persons domiciled in a Contracting State shall, whatever their nationality, be sued in the Courts of that State.

 

 

Article 5

 

A person domiciled in a Contracting State may, in another Contracting State, be sued:

1. In matters relating to a contract, in the Courts for the place of performance of the obligation in question; ….

 

3. In matters relating to tort, delict or quasi-delict, in the Court for the place where the harmful event occurred; ….

 

 

 

Article 6

 

A person domiciled in a Contracting State may also be sued:

1. Where he is one of a number of Defendants, in the Courts for the place where any one of them is domiciled;

 

2. As a third party on an action on a warranty or guarantee or in any other third party proceedings, in the Court seised of the original proceedings, unless these were instituted solely with the object of removing him from the jurisdiction of the Court which would be competent in his case; ….

 

 

Article 17

 

If the parties, one or more of whom is domiciled in a Contracting State, have agreed that a Court or the Courts of a Contracting State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that Court or those Courts shall have exclusive jurisdiction. Such an agreement conferring jurisdiction shall be either in writing or evidenced in writing or, in international trade or commerce, in a form which accords with practices in that trade or commerce of which the parties are or ought to have been aware. ….”

 

 

6. Counsel for the first named third party submitted that Article 17 took priority over and excluded the special jurisdiction provided under Articles 5 and 6. In stating this she relied on the judgment of the European Court of Justice in the case of Galeries Segoura SPRL -v- Bonakdarian [1976] ECR 1851. In that case the Court stated (at page 1860) in relation to Article 17:

 

“The way in which that provision is to be applied must be interpreted in the light of the effect of the conferment of jurisdiction by consent, which is to exclude both the jurisdiction determined by the general principle laid down by Article 2 and the special jurisdictions provided for in Articles 5 and 6 of the Convention.”

 

7. The question has been further considered by the English Courts in the recent case of Hough -v- P and O Containers Limited (Blohm + Voss Holding AG and Others third parties) [1998] 2 All ER 978, in which it was held, as set out in the headnote, that having regard to the use of the word “may”, the special jurisdiction under Article 6(2) of the Convention was merely permissive. However, Article 17 was expressed in mandatory terms and therefore had the effect of excluding that jurisdiction. It followed that, where it applied, Article 17 took priority over Article 6(2). The learned Rix J. in his judgment (at page 986) stated:

 

“In my judgment, however, Mr Melville has confused the relationship between Article 2 and the special jurisdictions within Section 2 of the Convention on the one hand with the relationship between Article 17, under Section 6 dealing with prorogation of jurisdiction, and other jurisdictions under the Convention on the other hand. In the former case, Article 6(2) is indeed a’special jurisdiction’, and where it is properly applied will override the basic rules set out in Article 2. That, however, the upholding of a special jurisdiction is permissive and not mandatory is emphasised by the word ‘may’ which appears in Articles 5 and 6, and is well illustrated by the reasoning in Kinnear’s case itself. Article 17, however, where it applies, is mandatory (‘shall have exclusive jurisdiction’) and the effect of it is to exclude not only the merely permissive jurisdictions under Articles 5 and 6 but even the mandatory (but not of course universal) principle of Article 2 itself (where Article 17 conflicts with Article 2, which in the present case of course, it does not). …. Moreover Dicey and Morris on the Conflict of Laws (12th edition 1993) (4th cumulative supplement 1997) page 51 comments as follows:-

 

 

‘Article 6(2) would not be applicable if the third party claim is subject to an agreement to submit to the jurisdiction of another Contracting State'”

 

 

 

8. Counsel for the Defendant sensibly did not raise any particular issue on this point, so that I conclude that this Court must in the main deal with the application of Article 17 in the light of the facts of this case and of the applicable law.

 

9. The factual background is set out in the Affidavits of Peter Dodd on behalf of the first named third party and Charles Gill, the Defendant. The present dispute between the Defendant and the first named third party arises out of an agreement made in either April or July of 1997 whereby the Defendant agreed to purchase and the first named third party agreed to supply the computer terminals already referred to. MrDodd in his Affidavit claims that this contract was governed by TEC (UK)’s conditions of sale, which appeared on the reverse side of the invoice sent to the Defendant. These conditions of sale provided at clause 19 as follows:

 

“Jurisdiction and Governing Law

 

Any contract of which these conditions form part shall be governed by the laws of England and the buyer hereby submits to the jurisdiction of the English Courts”.

 

 

10. In support of this claim he exhibits the invoice itself, together with a set of standard invoices containing the same clause, which is drawn to the customer’s attention by the statement on the face of the invoice that “ALL TRANSACTIONS ARE SUBJECT TO STANDARD CONDITIONS OF SALE OVERLEAF”.

 

11. It appears that the Defendant and the first named third party began dealing with each during the years 1987 to 1989. There is an issue between them as to why they ceased to deal in 1989 but it is not necessary for me to resolve this issue. In or about 1995 the Defendant again wished to deal with TEC (UK) and forwarded an application for credit terms dated 3rd October, 1995. MrDodd avers that further to this 1995 application the Defendant was sent a printed copy of the conditions of sale which were then applied by TEC (UK). Clause 20 of these conditions of sale provides:

 

“Jurisdiction and Governing Law

 

Any contract of which these conditions form part shall be governed by the laws of England and the buyer hereby submits to the jurisdiction of the English Courts.”

 

 

 

12. The Defendant in his Affidavit states that he has no recollection of being sent a printed copy of these conditions of sale and that he is unable to find any record of having been sent such conditions. However, he accepts that the clause referred to by MrDodd appeared on the reverse side of the invoices which were sent to him in regard to various transactions and that it appeared on the relevant invoices in regard to the sale of the computer terminals in question. Mr Dodd avers that the Defendant had never at any time taken issue with the conditions of sale offered by TEC (UK) and had never sought alternative conditions of sale. Since 1995 the Defendant had on a number of occasions purchased equipment from TEC (UK) and had always received an invoice containing on its reverse side TEC (UK)’s terms and conditions of sale, including the clause dealing with jurisdiction and governing law.

 

13. The Defendant, Mr Gill, in his Affidavit states that he never read the conditions of sale which appeared on the reverse side of the invoices in detail and that he understood in his dealings with the first named third party that if any difficulty arose about products provided by it to him in Ireland he could proceed against the first named third party in the Irish Courts. He claims that the relevant clause should not be interpreted as an exclusive jurisdiction clause but if it is capable of being interpreted as an exclusive jurisdiction clause he says that it did not form part of any agreement between him and thefirst named third party because he did not intend to agree and nor did he agree to such a clause. He would only have accepted a clause which provided an alternative venue for proceedings in the event that the first named third party wished to sue him. Mr Gill also claims that he has a good cause of action against the first named third party in tort for misrepresentation and also for an express or implied indemnity. He states that these claims ought not to be governed by the jurisdiction clause contained in the conditions of sale. He also claims that the first named third party was negligent and in breach of duty in regard to the supply of the system to the Plaintiff. In a second Affidavit MrDodd inter alia denies that TEC (UK) supplied “the system” to the Defendant; it only supplied the computer terminals. However, all these questions fall to be decided at the trial of the action.

 

14. When the matter came on for hearing before me Counsel for the first named third party submitted that the three issues to be decided by this Court were as follows

 

1. Is clause 19, the jurisdiction and governing law clause of the conditions of sale, an exclusive jurisdictional clause?

 

2. Was this clause an agreement within the meaning of Article 17 of the Brussels Convention and could it be shown, in the context of Article 17, that there was sufficient consensus between the parties?

 

3. Did clause 19 cover reliefs in addition to those arising directly from the contract – e.g. tort, indemnity, etc?

 

15. It seems to me that this correctly states the issues to be decided.

 

16. With regard to the first question the clause in question firstly states that the contract is governed by the laws of England. This in itself, of course, does not decide jurisdiction, since it would be open to the Courts of Ireland or of another jurisdiction to interpret the contract in accordance with English law. This procedure may give rise to somedifficulties and complexities but it is by no means impossible. The clause goes on to state in boldly general terms. “And the Buyer hereby submits to the jurisdiction of the English Courts”. The English Courts have dealt with the interpretation of purported exclusive jurisdiction clauses – see, for example British Aerospace plc -v- Dee Howard Company [1993] 1 Lloyds Law Reports 368, and Continental Bank NA -v- Aeokos Cia Naviera SA and others [1994] 2 All ER 540. The Clauses in those cases, however, were considerably more sophisticated and more carefully drawn. It is, of course, obvious that the first named third party intended that clause 19 would confer exclusive jurisdiction on the English Courts, but is that sufficiently clear to the Buyer on the actual wording? Even a simpler clause, such as that dealt with byGeoghegan J. in Holfeld Plastics Limited -v- ISAP OMV Group Sp A (High Court, unrptd, 19th March, 1999) which stated under the heading Competent Courts of Law “In the event of dispute, the parties shall accept as the Competent Court of Law, the Courts in the place where the Vendor has his head office” is much clearer in its intent than clause 19 in the instant case. However, a number of other factors must be taken in to account. Firstly, the relevant clause is headed “jurisdiction and governing law”, which indicates that it deals both with the law governing the contract and also with the jurisdiction to which disputes are to be referred. Secondly, the Defendant asserts in his Affidavit that, although he never read the conditions of sale in detail, he”understood in his dealings with the first named third party” that he could proceed in the Irish Courts. He does not suggest that this was his understanding of clause 19, or that clause 19 conveyed that meaning, or, indeed, that the first named third party ever informed him that he could proceed in the Irish Courts in the event of a dispute. His averment relates solely to his own”understanding” of the matter and not to any basis for that understanding. Thirdly, and perhaps wisely, Counsel for the Defendant did not deal with this as a major point in his submissions. On balance, therefore, and with some hesitation on account of the loose nature of the wording, I accept that clause 19 of thestandard conditions of sale appearing on the invoices and clause 20 of the conditions of sale document are clauses providing for exclusive jurisdiction.

 

17. The second issue is concerned with the interpretation of Article 17 of the Brussels Convention in the context of the facts of the instant case. In Holfeld Plastics Limited -v- ISAP OMV Group Sp A the learned Geoghegan considered somewhat similar situation where the Defendant relied on an exclusive jurisdiction clause which was included in the printed Conditions of Contract. The Plaintiff argued that at the relevant time he had not read the terms and conditions which contained the jurisdiction clause. The learnedGeoghegan J. stated (at page 4 of his judgment)

 

“If it was simply a matter of interpreting the contract in accordance with Irish law, I would have no hesitation in holding in favour of the Defendant. These were two commercial companies dealing at arms length and a company such as the Plaintiff should expect supplier companies such as the Defendant to annex to all its sales its own terms and conditions. Both quotations made it expressly clear that those conditions were to apply and on any reasonably careful reading of them the Plaintiff would have been on notice of the exclusive jurisdiction clause.”

 

 

 

18. Geoghegan J., however, went on to say:

 

“However, I am satisfied that it is not correct to determine this matter by reference to the Irish Law of Contract. In the case of an exclusive jurisdiction clause, the provisions of Article 17 of the Brussels convention must be strictly applied and in the course of that application the clause must be interpreted in accordance with European Community Law”.

 

19. The same approach must, it seems to me, be used in the present case. The Defendant had been, in terms of Irish law, put on notice throughout the history of his trade with the first named third party of the jurisdiction provision contained in clause 19. In addition it seems likely that in 1995 he had received the printed conditions of sale which included clause 20 on jurisdiction. Clause 19 had been printed on the reverse side of the invoice covering the actual transaction whereby the first named third party supplied the computer terminals used in the Plaintiff’s cash control system.

 

20. Turning to European Community Law, a comparable situation was dealt with by the European Court of Justice in the case of Galeries Segoura SPRL -v- Bonakdarian [1976] ECR 1851. In that case the Court was asked to give a ruling on two questions as follows:

 

“1. Are the requirements of Article 17 of the Convention satisfied if, at the oral conclusion of a contract of sale, a vendor has stated that he wishes to rely on his general conditions of sale and if he subsequently confirms the contract in writing to the purchaser and annexes to this confirmation his general conditions of sale which contain a clause conferring jurisdiction?

 

2. Are the requirements of Article 17 of the Convention satisfied if, in dealings between merchants, a vendor, after the oral conclusion of a contract of sale, confirms in writing to the purchaser the conclusion of the contract subject to his general conditions of sale and annexes to this document his conditions of sale which include a clause conferring jurisdiction and if the purchaser does not challenge this written confirmation?”

 

21. In that case, on handing over the goods, the vendor delivered to the purchaser a document described as “confirmation of order and invoice”, which stated that the sale and delivery had taken place “subject to the conditions stated on the reverse”. This document was not confirmed by the purchaser. In its ruling the Court held that the way in which the first paragraph of Article 17 of the Convention was to be applied

 

“must be interpreted in the light of the effective but confirmative jurisdiction by consent, which is to exclude both the jurisdiction determined by the general principle laid down in Article 2 and the special jurisdictions provided for in Articles 5 and 6 of the Convention. In view of the consequence that such an option may have on the position of the parties to the action, the requirements set out in Article 17 governing the validity of clauses conferring jurisdiction must be strictly construed.”

 

 

 

22. In regard to the second question the Court held that a subsequent notification of general conditions of sale is not capable of altering the terms agreed between the parties, except if those conditions are expressly accepted in writing by the purchaser. The Court, however, went on to distinguish the situation where the contract in question formed part of a course of trading between the parties, stating (at page 1862)

 

“However, it would be otherwise where an oral agreement forms part of a continuing trading relationship between the parties, provided also that it is established that the dealings taken as a whole are governed by the general conditions of the party giving the confirmation, and these conditions contain a clause conferring jurisdiction

 

Indeed, in such a context, it would be contrary to good faith for the recipient of the confirmation to deny the existence of the jurisdiction conferred by consent, even if he had given no acceptance in writing.”

 

 

 

23. The Court concluded that

 

“the fact that the purchaser does not raise any objections against a confirmation issued unilaterally by the other party does not amount to acceptance on his part of the clause conferring jurisdiction, unless the oral agreement comes within the framework of a continuing trading relationship between the parties which is based on the general conditions of one of them, and those conditions contain a clause conferring jurisdiction.”

 

24. The European Court returned to the question of the interpretation of Article 17 in the case of Mainnschiffahrts – Genossenschaft eG (MSG) -v- Les Gravières Rhénanes SARL [1997] ECR 1-911. By this time Article 17 had been amended by the 1978 Accession Convention so as to include the phrase “or, in international trade or commerce, in a form which accords with practices in that trade or commerce of which the parties are or ought to have been aware.” As a consequence of this, therefore, the Court held (at page 940) “It must therefore be considered that the fact that one of the parties to the contract did not react or remained silent in the face of the commercial letter of confirmation from the other party containing a pre-printed reference to the Courts having jurisdiction and that one of the parties repeatedly paid without objection invoices issued by the other party containing a similar reference may be deemed to constitute consent to the jurisdiction clause in issue, provided that such conduct is consistent with the practice in force in the area of internationaltrade or commerce in which the parties in question are operating and the parties are or ought to have been aware of that practice.”

 

25. In the submissions made before this Court it was not seriously suggested that the practice of printing general conditions of sale on the reverse side of invoices and similar documents, with a reference on the face of the document to the said conditions, was not a common commercial practice in the type of international trade with which we are concerned here. Indeed, from the point of view of practical experience every ordinary consumer, and still more anyone engaged in trade or commerce, must be familiar with this type of document.

 

26. In the instant case the Defendant had regularly traded with the first named third party both from 1987 to 1989 and subsequently from 1995 onwards. It is established by the Affidavit of Mr Dodd and the exhibits thereto that the Defendant had repeatedly received invoices which included clause 19, the jurisdictional clause. At no stage had the Defendant even raised a query in regard to this clause. Still less had he refused to be bound by it. It seems to me, therefore, that the contract entered into by the Defendant and the first named third party, whether it be a written contract or a contract partly in writing and partly oral, incorporated the terms and conditions set out repeatedly on the invoices sent out by the first named third party in the course of trade. In these circumstances the Court must hold that there was consensus between the parties as to the jurisdictional clause and that it came within the terms of Article 17 of the Convention.

 

27. The third question which arises is whether the exclusive jurisdiction of the English Courts referred to in clause 19 extends to reliefs other than that of breach of contract. In his third party notice the Defendant claims negligence and breach of duty against the third parties and also claims an indemnity against them. In his Affidavit of the 7th May, 1999 the Defendant refers to a claim of misrepresentation, and this also forms part of the Plaintiff’s original Statement of Claim. Counsel for the Defendant argued strongly that these claims fell outside the scope of clause 19. They fell to be litigated in this Court and, in order to avoid the undesirable situation of having differing claims as between the same parties litigated simultaneously in two jurisdictions, the entire of the Defendant’s claim as against the first named third party should be dealt with by this Court which was the Court first seised of the matter.

 

28. Counsel for the first named third party submitted that all the claims by the Defendant against the first named third party arose in reality from the same transaction – the contract to supply computer terminals – and that all aspects of the matter should come under the jurisdiction of the English Courts. She referred to the case ofContinental Bank NA -v- Aeokos Cia Naviera SA and Others [1994] 2 All ER 540. In that case a loan agreement between an American bank and a number of Greek shipping companies contained a clause which, the Court held, conferred exclusive jurisdiction on the English Courts. Clause 21.01 of that agreement provided that the agreement was to be governed by and construed in accordance with English law and that each of the borrowers irrevocably submitted to the jurisdiction of the English Courts. It was argued on behalf of the borrowers that the proceedings which they had commenced in the Greek Courts fell outside the scope of the agreement. The Greek proceedings were based on Article 919 of the Greek Civil Code which provided:

 

“Whoever intentionally in a manner which violates the commands of morality causes damages to another is bound to make reparation to the other for any damage thus caused.”

 

29. Steyn L.J. held that clause 21.01 of the agreement contemplated the submission of disputes to the English Courts. He went on to say

 

“But what disputes does it cover? The answer is not to be found in the niceties of the language of clause 21.02. It is to be found in a common sense view of the purpose of the clause. We are emboldened to adopt this approach by the observation of LordDiplock in Antaios Cia Naviera SA -v- Salen Rederierena AB, The Antaios [1984] 3 All ER 229 at 233 that – ‘if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business common sense, it must be made to yield to business common sense …’ The only sensible construction of clause 21.02 is that it is a submission of disputes in connection with the loan facility to the jurisdiction of the English Courts.

 

Prima facie, therefore, clause 21.02 covers the Greek proceedings. But Miss Dohmann submits that the clause cannot be construed as extending to a claim in tort. It seems to us to be useful on this point to consider the approach adopted nowadays in the closelyanalagous field of arbitration clauses. In Empresa Exportadora de Azucar -v- Industria Azucarera Nacional SA [1983] 2 Lloyds Reports 171 the arbitration clause covered any dispute arising out of this contract. The question was whether it covered only contractual claims or also a claim in conversion. In giving the judgment of the Court Ackner L.J. concluded (at 183): ‘… the contractual and tortious claims were so closely knitted together on the facts, that the agreement to arbitrate on one can properly be construed as covering the other.’ Moreover, if Miss Dohmann is right, it would mean that a claim for damages for negligent misrepresentation inducing the contract (a tort) would be outside clause 21.02 but a claim seeking rescission of the contract on the ground of the same misrepresentation (a contractual claim) would be covered by it. Ifthe Appellant’s contention is accepted, it follows that the two claims might have to be tried in different jurisdictions. That would be a forensic nightmare.”

 

30. Steyn L.J. went on to conclude

 

“The complaint in the Greek proceedings makes clear that the thrust of the Appellant’s case is that the bank performed the loan agreement in a manner which is contrary to business morality. The issue in the Greek proceedings is inextricably interwoven with the contractual rights and duties of the parties. In our judgment the judge rightly concluded that all disputes in connection with the loan facility are covered by the jurisdiction clause, and, so construed, clause 21.01 is apt to cover the disputes in the Greek proceedings.”

 

31. It seems to me that this is the correct approach and is, indeed, in accordance with business common sense. The Defendant’s claims of negligence, of misrepresentation, and indemnity are “closely knitted” to the contractual claim, and indeed it appears that very much the same evidence would be used in support of all the claims. If, as I have held, the contractual claim falls to be decided by the English Courts under clause 19, it would be extremely difficult and costly to pursue separate proceedings in tort before the Irish Courts. In my view all theseinter-related claims must be tried together.

 

32. Accordingly, this Court has no jurisdiction to hear and determine the Defendant’s claim against the first named third party, and this Court must set aside the service of the third party notice upon the first named third party.

 

 

 

 

 

 

.

 

Golden Vale plc v. Food Industries plc

 

McCracken J.      [1996] 2 IR  223

H.C.

McCracken J.

13th June 1996

 

 

This is an application by the third parties in these proceedings to set aside a third party notice dated the 9th August, 1995, pursuant to s. 27 of the Civil Liability Act, 1961, and for further and other relief. To understand the basis of this application, it is necessary to give a short history of the proceedings to date.

The plenary summons herein was issued on the 14th February, 1992 and claimed:

“Damages for breach of contract, breach of warranty, misrepresentation and negligence arising out of an agreement entered into by the plaintiff and the defendant herein in or about the 26th day of September, 1990, whereby the defendant agreed to transfer to the plaintiff the dairy division of the plaintiff Company”.

The statement of claim was delivered on the 13th April, 1992, from which it is quite clear that the plaintiff’s claim is based on the terms of a lengthy agreement between the plaintiff and the defendant which runs to some 41 pages, and which contains a number of specific warranties and representations. On the 13th October, 1992, a detailed notice for particulars was served by the defendant on the plaintiff, which was not replied to until the 12th November, 1993. Arising out of these replies, a notice for further and better particulars dated the 11th March, 1994, was served on the plaintiff’s solicitors, which was replied to on the 20th April, 1995, and ultimately a defence was delivered on the 25th July, 1995.

In the meantime, the defendant applied to the court on the 21st October, 1993, for an order giving liberty to issue and serve a third party notice on the third parties and an order was duly made on the 15th November, 1993. Under the terms of that order, the defendants were given twelve weeks to serve the third party notice and it appears that the lengthy time given was due to the fact that the particulars had only been furnished a few days before the order was made. In fact the third party notice was not served within the twelve weeks, although the third parties were notified that the order had been made. Ultimately, on the 26th July, 1995, an order was made extending the time for serving the third party notice, and it was ultimately served on the 9th August, 1995. The reason given in the affidavit grounding the application to extend the time for service of the notice was the delay on the part of the plaintiff in replying to the notice for further and better particulars, which reason was obviously accepted by the High Court (Carroll J.) in making the order.

The third party notice itself claims an indemnity or contribution against the third party on the grounds that:

“Any damages or costs as may be awarded to the plaintiff arise by reason of the breach of contract, breach of warranty and misrepresentation on the part of you, the third parties hereto, in and about the sale to the plaintiff herein by the defendant herein of the said dairy division of its business in and about the month of May, 1988.”

It is accepted by the parties that there is an error in this notice, and that it should in fact refer to the sale to the defendant herein by the third parties.

The agreement referred to in the third party notice is in fact an agreement dated the 31st May, 1988, and made between the first third party of the first part, the defendant under its then name of Merchants Warehousing plc of the second part and the second third party of the third part. This agreement was for the sale by the first third party to the defendant of the first third party’s dairy business and the second third party joined for the purpose of giving certain warranties and representations, and indemnifying the defendant, jointly and severally with the first third party. These warranties and representations were largely the same as those contained in the agreement of the 26th September, 1990, which is the subject matter of these proceedings. These warranties are specifically given to the defendant, and the indemnity is an indemnity against any loss or damage suffered by the defendant, but the agreement contains a rather strange provision at clause 20.2, namely that:

“This agreement shall be binding upon and inure for the benefit of the successors of the parties but shall not be assignable”.

The present application is based upon a claim that the defendant is in breach of the provisions of s. 27 of the Civil Liability Act, 1961. The relevant provisions of s.27, sub-s. 1 are as follows:

“A concurrent wrongdoer who is sued for damages or for contribution and who wishes to make a claim for contribution under this part . . . (b) shall, if the said person is not already a party to the action, serve a third party notice upon such person as soon as is reasonably possible and, having served such notice, he shall not be entitled to claim contribution except under the third party procedure. If such third party notice is not served as aforesaid, the court may in its discretion refuse to make an order for contribution against the person from whom contribution is claimed.”

The third parties here claim that the notice was not served “as soon as is reasonably possible”, and therefore I should exercise my discretion and refuse to make an order for contribution, and indeed should at this stage strike out the third party notice. Although there is no specific claim in the notice of motion before me, the third parties are also asking that in the alternative I should exercise my discretion under O. 16, r. 8, sub-r. 3 to set aside the third party notice.

The first issue which arises is whether s. 27 is applicable to this third party notice at all. Its application is limited to claims against “a concurrent wrongdoer”. Section 11, sub-s. 1 of the Act defines “concurrent wrongdoers” as follows:

“For the purpose of this Part, two or more persons are concurrent wrongdoers when both or all are wrongdoers and are responsible to a third person (in this Part called the injured person or the plaintiff) for the same damage, whether or not judgment has been recovered against some or all of them.”

It can be seen, therefore, that there are three elements which must be present if this definition applies, firstly the proposed third party must be a wrongdoer, secondly he must be responsible to the same person as the defendant is responsible to, and, thirdly, he must be responsible for the same damage. Section 11, sub-s. 2 then provides that without prejudice to the generality of sub-section 1:

“. . . persons may become concurrent wrongdoers as a result of vicarious liability of one for another, breach of joint duty, conspiracy, concerted action to a common end or independent acts causing the same damage.”

I think that the only heading in this subsection under which the present claim could be brought is that there were independent acts causing the same damage. In the third party notice, the defendant clearly limits its claim against the third party to matters arising under the 1988 agreement and accordingly the defendant’s claim is, and can only be, a claim that the third party was in breach of the warranties or representations given to the defendant. The meaning of the phrase “concurrent wrongdoer” was considered by Costello J. in the case of  Staunton v. Toyota (Ireland) Ltd.

(Unreported, High Court, Costello J., 15th April 1988). At p. 5 of the judgment, he said:

“The Act of 1961 created a new statutory right which enables one ‘concurrent wrongdoer’ to claim contribution or indemnity from another ‘concurrent wrongdoer’ in circumstances laid down in the Act. Two persons are ‘concurrent wrongdoers’ (a) when both are ‘wrongdoers’ (as defined) and (b) when both are responsible (that is legally responsible) to a third party for the same damage (section 11). The statutory right conferred by the Act to claim an indemnity or contribution is only given when one concurrent wrongdoer can show that the other concurrent wrongdoer is, or if sued at the time of the wrong, would have been, liable in respect of the same damage (section 21). This means that the statutory claim by a defendant against a third party for a contribution or indemnity will only succeed if it can be shown that the third party committed a ‘wrong’ in respect of which the injured plaintiff could have sued the third party.”

On the following page he then dealt with the question of a breach of contract by the third party and said:

“In opening this case, the defendant’s counsel submitted that the defendants should be indemnified by the third party because (a) Flogas’s (the third party) negligence or (b) Flogas’s breach of contract had made them concurrent wrongdoers. I do not think the claim based on breach of contract is sustainable. It is based on the breach of an implied term of the supply agreement of the 25th May, 1982, but even if such a breach was established, the plaintiff, not being a party to it, had no right of action against the third party in respect of it. So Flogas were not ‘concurrent wrongdoers’ within the meaning of the section if the claim was based solely on a breach of contract entered into between the defendant and the third party.”

I think this is the correct approach and applying this test, the plaintiff in these proceedings has no right of action against either of the third parties, and therefore they can not be considered to be concurrent wrongdoers with the defendants. It has been argued on behalf of the third parties that clause 20.2 of the 1988 agreement, which provides that the agreement shall inure for the benefit of the successors of the parties, should be construed as meaning that the plaintiff is the successor of the defendant, and therefore is entitled to the benefit of the agreement and the warranties and representations contained in it. I do not think that this is a correct interpretation of the word “successors”. While the plaintiff may have purchased the defendant’s dairy business and in turn the defendant had purchased the third party’s dairy business, I do not see how this could make the plaintiff a successor of the defendant. The defendant is still in being, and the reference in the agreement is to a successor of the defendant, not to a successor of the defendant’s business. If it were the latter, it could give rise to quite absurd situations if, for example, the defendant had sold off its business in sections to a number of different purchasers. I think a successor in this context must mean a successor to the legal entity which is the defendant.

In any event, if the plaintiff were to sue the third parties directly, it would have to show that the loss it suffered was caused by a breach of warranty or representation on the part of the third party. There is no suggestion that the plaintiff relied upon any warranty or representation on the part of the third parties, and such reliance would be essential if the plaintiff were to have a valid cause of action against the third parties. Accordingly, the third parties are not concurrent wrongdoers within the meaning of section 27.

This does not mean, of course, that the third party procedure is not open to the defendant. Order 16, r. 1 of the Rules of the Superior Courts provides for a third party procedure which is not in any way limited to concurrent wrongdoers, and indeed the present case is a classic example of where the third party procedure can be used by a defendant against a party who is not a concurrent wrongdoer, but who has some contractual obligation to indemnify the defendant. Such a contractual indemnity is clearly given in the 1988 agreement.

Order 16, r. 1, sub-r. 3 provides that application for leave to issue a third party notice shall, unless otherwise ordered by the court, be made within 28 days from the time limited for delivering the defence. The application in the present case was clearly not made within that 28 day period, and indeed in my experience, this is a provision which is frequently breached. The court did not in fact expressly extend the time, but the court did make an order on foot of the application well over a year later. I think the court, by implication, extended the time, but if it were necessary to do so, I would be prepared to make an order at this stage extending the time and deeming the application good, as, whatever about the ultimate service of the third party notice, in my view the defendant had ample reason to postpone the application for the third party notice.

This being so, the only question which remains is whether I should exercise the power which appears to be given under Order 16, r. 8, sub-r. 3 to set aside the third party proceedings. I know of no authority as to when such discretion should be exercised, but I must have regard to the general principle which is quite clear from both the Rules of the Superior Courts and the Civil Liability Act, that disputes involving a third party should, as far as possible, be determined at the same time as, or immediately after, the dispute between the plaintiff and the defendant. There may, of course, be circumstances in which a plaintiff would be seriously prejudiced by delay if this were to happen, or there might be cases in which the claim over against the third party was vexatious or was bound to fail. In such circumstances, the court quite clearly would be entitled to set aside the third party proceedings. In the present case, it is not claimed by any party that there would be prejudice due to the delay in serving the third party notice, and there is clearly a statable cause of action by the defendant against the third parties, and I can see no reason why, in those circumstances, I should strike out the third party proceedings.

 

Molloy v. Dublin Corporation

 

[2001] IESC 53; [2001] 4 IR 52; [2002] 2 ILRM 22

 

Judgment of Murphy J. delivered on the 28th day of June 2001, [Nem Diss].

1. The issue in this appeal is whether a third-party notice dated the 9th July, 1999, and served by Clonmel Enterprises Ltd., the above named second defendant on the above named third party, Ashworth Frazer Ltd. (Frazer), was served “as soon as is reasonably possible” within the meaning and for the purposes of s. 27 of the Civil Liability Act, 1961.

 

2. On the 14th December, 1994, Thomas Molloy died in a tragic accident. At the time of his death Mr. Molloy was in the employment of the second defendant. It is alleged that the second defendant had installed a water valve in an underground chamber at Lower Drumcondra Road for Dublin Corporation (the Corporation). At the time of his death Mr. Molloy, in company with fellow employees of the second defendant, was investigating and attempting to open the valve when the accident occurred. It appears that the accident arose because the spindle on the valve which was not protected by a collar, shot from its casing while Mr. Molloy was working on it. The valve in question was manufactured by the third defendants, Bestobell Valves Ltd. and supplied to the second defendant by the third party.

 

3. On the 20th May, 1996, Mary Molloy, the widow of the late Thomas Molloy, instituted proceedings by way of plenary summons claiming damages against each of the above defendants by reason of negligence and breach of statutory duty on their behalf. The statement of claim was delivered on the 7th April, 1997, setting out the history of the matter as already described and furnishing particulars of negligence which included the failure.-

 

“To ensure that the valve was fitted with a suitable spindle collar or other protective restraint so as to ensure that it was incapable of being ejected with force from the body of the valve.”

4. Defences were delivered on behalf of each of the defendants, that on behalf of the second defendant being delivered on the 4th June, 1998. By motion on notice dated the 20th May, 1999, the second defendant sought leave to serve a third party notice on the third party. That leave was duly granted by order of Johnson J. made on the 28th June, 1999, and in pursuance thereof, the notice was duly issued on the 9th July, 1999. By notice dated the 8th November, the third party applied – as it had advised the second defendant it would – for an order striking out the third-party notice on the grounds that the same had not been served in accordance with the Civil Liability Act, 1961, as amended. By order of the High Court (Butler J.) made on the 7th June, 2000. the third-party notice was struck out for the reasons set out in the agreed note of the ex tempore judgment of the learned judge delivered on that date. It is from that judgment and the order made thereon that the second defendant appeals to this court.

 

5. The right to serve a third-party notice and the time limit within which the same is to be served is set out in s. 27(1) of the Civil Liability Act, 1961, in the following terms:

 

“A concurrent wrongdoer who is sued for damages or for contribution and who wishes to make a claim for contribution under this Part: –

(a) shall not, if the person from whom he proposes to claim contribution is already a party to the action, be entitled to claim contribution except by a claim made in the said action, whether before or after judgment in the action; and

(b) shall, if the said person is not already a party to the action, serve a third-party notice upon such person as soon as is reasonably possible and, having served such notice, he shall not be entitled to claim contribution except under the third-party procedure. If such third-party notice is not served as aforesaid, the court may in its discretion refuse to make an order for contribution against the person from whom contribution is claimed.”

6. The regulatory provisions concerning the service of third-party notices set out in the Rules of the Superior Court, 1986, at O. 16, r. 2(2) are in the following terms:-

 

“The notice shall, unless otherwise ordered by the Court, be served within twenty eight-days from the making of the order, and with it there shall be served a copy of the originating summons and of any pleadings delivered in the action.”

7. Having regard to the fact that the defence of the second defendant was delivered on the 4th June, 1998 and the notice served on the 9th July, 1999, the issue which fell for consideration by Butler J. was whether the second defendant had complied with the statutory requirement of serving the third-party notices “as soon as is reasonably possible” as required by the express provisions of s. 27 of the Civil Liability Act, 1961.

 

8. Much of the written submissions and the oral argument to this court was directed to the scheme and purpose of the relevant provisions of the Act of 1961. There can be little doubt as to what that scheme and purpose was. The legislature was understandably desirous of avoiding a multiplicity of actions. Instead of defendants against whom awards had been made instituting further proceedings against other parties liable to them in respect of the same set of facts – and indeed those defendants in turn perhaps instituting even more proceedings against others – the Oireachtas sought to establish a situation in which the rights and liabilities of all parties arising out of a particular set of circumstances would be disposed of in the same proceedings. It is for that reason that a defendant was given the right, with the approval of the court, to serve a third-party notice on a potential defendant so that any claim against him could be disposed of at the same time as that of the claim against the actual defendant. This procedure had attractions for all of the parties and was desirable in the public interest. Nevertheless, the legislature did not preclude an unsuccessful defendant in the original proceedings from instituting a substantive action against some other party who the actual defendant contended was liable to him either in tort or in contract. What the Act of 1961 did provide, was that where the actual defendant in the original proceedings failed to avail of the third-party procedure by serving the third-party notice “as soon as is reasonably possible” and resorted to his original cause of action, the relief which he might have claimed therein was subject to the statutory discretion of the court to refuse to make an order for contribution in his favour.

 

9. The effect of the section was explained by Finlay C.J. in delivering judgment in Board of Governors of St Laurence ‘s Hospital v. Staunton [1990] 2 I.R. 31 at p. 36, with which the other members of this court agreed, when he said:-

 

“I am quite satisfied upon the true construction of that sub-section that the only service of a third-party notice contemplated by it and, therefore, the only right of a person to obtain from the High Court liberty to serve a third-party notice claiming contribution against a person who is not already a party to the action, is a right to serve a third-party notice as soon as is reasonably possible. A defendant in an action seeking to claim contribution against a person who is not a party to the proceedings cannot serve any third-party notice at any other time, other than as soon as is reasonably possible.”

10. The terms in which the time limit was expressed do appear severe. The use of the word “possible” rather than the word “practicable”, as is invoked elsewhere, suggests a brief and inflexible time limit. It might suggest that if it is physically possible to serve the appropriate notice within an identified period, that any further delay would be impermissible. However, such a draconian approach would be inconsistent with the nature of the problems to be confronted by a defendant and of the decisions to be made by him or his advisors. The statute is not concerned with physical possibilities but legal and perhaps commercial judgments. Proceedings cannot and should not be instituted or contributions sought against any party without assembling and examining the relevant evidence and obtaining appropriate advice thereon. It is in that context that the word “possible” must be understood. Furthermore, the qualification of the word “possible” by the word “reasonable” gives a further measure of flexibility. As Barron J. pointed out in McElwaine v. Hughes (Unreported, High Court, Barron J., 30th April, 1997) at p. 6 of the unreported judgment:-

 

“Clearly the words ‘as soon as reasonably possible’ denotes that there should be as little delay as possible, nevertheless, the use of the word ‘reasonable’ indicates that circumstances may exist which justify some delay in the bringing of the proceedings.”

11. The onus is on the person seeking leave to serve the third-party notice to prove the application is brought within the statutory time limit. Again, it was Barron J. who pointed out in McElwaine v. Hughes also at p. 6 that:-

 

“Since the obligation is on the defendant to serve the notice within a reasonable time, it seems to me that the onus of proof of showing that the delay, if delay there is, was not unreasonable is upon the defendant.”

12. The second defendant sought to explain and justify the delay which has occurred by reference to criminal proceedings which were instituted on the 4th August, 1995, against the first defendant, the second defendant and the third party under the Safety. Health and Welfare at Work Act, 1989. Those proceedings were heard in November, 1998 and the two defendants and the third party were duly convicted by Judge Malone in the District Court on the 9th February, 1999. One of the offences of which the third party was convicted was described in the summons in the following terms:-

 

“That you, the said accused, being a person who imported and supplied an article, namely a Bestobell gate valve, for use at work, did, on the 14th December, 1994. fail to take such steps as were necessary to secure that the persons supplied by you with the said article, namely Clonmel Enterprises Ltd. and Dublin Corporation, were provided with adequate information about the use for which it was designed or had been tested, and about any conditions relating to the said article so as to ensure that, when in use, dismantled or disposed of, it would be safe and without risk to health.”

13. The District Judge found as a matter of fact that the third party had not furnished to the first defendant or the second defendant what the judge described as the “crucial document known as WP4” which contained the installation and maintenance instructions in relation to the valve. In the affidavit grounding the application for leave to serve the third-party notice Ms. Margaret M. Carey, the solicitor for the second defendant, explained the relevance of the criminal proceedings and the finding aforesaid of the judge of the District Court in the following terms:-

 

“I say and am instructed that the second defendant awaited the outcome of these criminal prosecutions before deciding whether to seek leave from this honourable court to issue a third-party notice. I say and believe that if the third party had succeeded in making out a defence of a substantive nature to the charges made against it in the aforesaid criminal proceedings, the service of a third-party notice would have served no purpose. I accordingly, say that it was both reasonable and prudent for the second defendant to have waited between the date of the delivery of the defence herein on the 4th June, 1998 and the outcome of those proceedings before making this application.”

14. In the written and oral submissions to this court, counsel for the second defendant repeated that argument and drew attention to the fact that the postponement of an application for leave to issue third-party proceedings because of outstanding litigation – and that litigation between other parties -was upheld by this court in Gilmore v. Windle [1967] I.R. 323 and that a delay which was explained by defendants awaiting a reply to a notice for particulars and a statement of evidence was likewise held by this court to explain adequately the time which had elapsed before the application for leave was made (see Connolly v. Casey [2000] 1 IR 345). Counsel for the third party did draw certain distinctions between the facts of those cases and the instant case. Gilmore v. Windle was readily distinguished on the basis that the outstanding proceedings in that case related to the interpretation and application of the relevant provisions of the Civil Liability Act, 1961, which was then still a comparative novelty and had caused difficulties for practitioners unfamiliar with its operation. A significant feature of Connolly v. Casey was the identification of an error in the approach by the High Court to the decision of the defendant to await replies to the notice for particulars. It was not, as Denham J. pointed out, essential or even material to ascertain whether the replies to the notice were significant. The issue was whether it was appropriate in the circumstances of that case to await the replies, whatever material they might provide. In any event, the question whether a defendant has discharged the onus imposed upon him of proving that the application for leave is brought “as soon as reasonably possible” will depend upon the examination of the facts of each particular case as was pointed out in Connolly v. Casey.

 

15. In the present case, all of the defendants obviously investigated the cause of the accident to enable them to defend the criminal and civil proceedings against them. There is no doubt that by 1995, at the latest, they were fully familiar with the condition of the Bestobell valve and the fact that it had not been fitted with a spindle collar It was that fact which formed the greater part of the particulars of negligence alleged against the third party in the third-party notice.

 

16. Apart from the information obtained by the examination of the valve, its own inquiries would have advised the second defendant as to the material furnished to them by the third party in relation to the equipment. However, insofar as the District Court criminal proceedings were helpful or relevant to the second defendant in determining whether to institute proceedings against the third party, the fact is, as Mr. Peter Lennon set out in para. 6 of the affidavit sworn by him on the 19th January, 2000, that the summonses and books of evidence and statements of the prosecutor were available to all of the parties not later than October, 1995. The second defendant itself was aware or should have been aware that it was not provided with appropriate information concerning the special features of the valve. Its belief in that regard was supported by the investigations made by the inspector on behalf of the National Authority for Occupational Safety and Health, Fionan de Barra, who prosecuted the third party for its failure to supply such information. The statement of Mr. de Barra’s evidence was available to the second defendant. The application for leave to issue third party proceedings was not postponed because of any want of information or evidence.

 

17. In the affidavit of Margaret M. Carey, sworn on the 4th February, 2000, she explained the effect of the District Court proceedings in the following terms:-

 

“As a result of the District Court proceedings, the second defendant’s state of knowledge with regard to the evidence of the third party’s involvement was considerably enhanced and, whilst Mr. Lennon takes exception to my referring to the criminal case. I do so to illustrate that, prior to those hearings, the second defendant was very much in the dark as regards the precise involvement of the third party and would not have been justified, in my view, in initiating third-party proceedings on a speculative basis. Following the hearing, it was in no doubt that a strong case could be made out and I believe it was reason able to await the outcome of the prosecution in all of the circumstances.”

18. Ms. Carey is clearly correct in saying that the District Court proceedings “enhanced” the second defendant’s state of knowledge and, following those proceedings, the second defendant was in a position to make a “strong case”. These were advantages which accrued to the second defendant by postponing its decision to institute the third party proceedings but the quest for certainty or verification must be balanced against the statutory obligation to make the appropriate application “as soon as reasonably possible”. In my view, it was indeed possible for the second defendant, on the information available to it, to make a prudent and responsible decision several months before the application was brought before Johnson J. In those circumstances the second defendant failed to comply with the statutory requirement and the trial judge was correct, in my view, in setting aside the third party order. I would dismiss the appeal.

 

Murnaghan -v- Markland Holdings Ltd & Ors

[2007] IEHC 255

 

 

Laffoy

 

The law

There was really no dispute between counsel for McElroy and counsel for Markland as to the legal principles by reference to which an application to set aside third-party proceedings should be determined where, as here, the basis of the application is that the third-party notice was not served in time.

Order 16, r. 1(3) of the Rules of the Superior Courts, 1986 provides that application for leave to issue a third-party notice shall, unless otherwise ordered by the court, be made within 28 days from the time limited for delivering the defence or, where the application is made by the defendant to a counterclaim, the reply. It was held by the Supreme Court in Board of Governors of St. Laurence’s Hospital v. Staunton [1990] 2 I.R. 31 that that provision and the discretion vested in the court by it must be exercised subject to the statutory provisions which give rise to the jurisdiction, namely, s. 27(1)(b) of the Civil Liability Act, 1961. Sub-section (1) of s. 27 provides:

“A concurrent wrongdoer who is sued for damages or for contribution and who wishes to make a claim for contribution under this Part –

(a) …

(b) shall, if the said person is not already a party to the action, serve a third-party notice upon such person as soon as is reasonably possible and, having served such notice, he shall not be entitled to claim contribution except under the third-party procedure. If such third-party notice is not served as aforesaid, the court may in its discretion refuse to make an order for contribution against the person from whom the contribution is claimed.”

As to the construction of that provision, Finlay C.J. stated as follows (at p. 36):

“I am satisfied upon the true construction of that sub-section that the only service of a third-party notice contemplated by it and, therefore, the only right of a person to obtain from the High Court liberty to serve a third-party notice claiming contribution against a person who is not already a party to the action, is a right to serve a third-party notice as soon as is reasonably possible. A defendant in an action seeking to claim contribution against a person who is not a party to the proceedings cannot serve any third-party notice at any other time, other than as soon as is reasonably possible.”

The rationale of the provision was considered by the Supreme Court in Molloy v. Dublin Corporation [2001] 4 IR 52. Murphy J., with whom the other judges agreed, stated as follows (at p. 55):

“There can be little doubt as to what that scheme and purpose was. The legislature was understandably desirous of avoiding a multiplicity of actions. Instead of defendants against whom awards had been made instituting further proceedings against other parties liable to them in respect of the same set of facts – and indeed those defendants in turn perhaps instituting even more proceedings against others – the Oireachtas sought to establish a situation in which the rights and liabilities of all parties arising out of a particular set of circumstances would be disposed of in the same proceedings. … Nevertheless, the legislature did not preclude an unsuccessful defendant in the original proceedings from instituting a substantive action against some other party who the actual defendant contended was liable to him either in tort or in contract. What the Act of 1961 did provide was that where the actual defendant in the original proceedings failed to avail of the third-party procedure by serving the third-party notice ‘as soon as is reasonably possible’ and resorted to his original cause of action, the relief which he might have claimed therein was subject to the statutory discretion of the court to refuse to make an order for contribution in his favour.”

The discretion referred to is the discretion conferred in the last sentence of para. (b) of s. 27(1).

As to the meaning of “as soon as is reasonably possible”, having quoted the passage from the judgment of Finlay C.J. quoted earlier, Murphy J. continued (at p. 56):

“The terms in which the time was expressed do appear severe. The use of the word ‘possible’ rather than the word ‘practicable’, as is invoked elsewhere, suggests a brief and inflexible time limit. It might suggest that if it is physically possible to serve the appropriate notice within the identified period, that any further delay would be impermissible. However, such a draconian approach would be inconsistent with the nature of the problems to be confronted by a defendant and of the decisions to be made by him or his advisers. The statute is not concerned with physical possibilities but legal and perhaps commercial judgments. Proceedings cannot and should not be instituted or contributions sought against any party without assembling and examining the relevant evidence and obtaining appropriate advice thereon. It is in that context that the word ‘possible’ must be understood. Furthermore, the qualification of the word ‘possible’ by the word ‘reasonable’ gives a further measure of flexibility. As Barron J. pointed out in McElwaine v. Hughes (Unreported, High Court, Barron J., 30th April, 1997) at p. 6 of the unreported judgment:-

‘Clearly the words “as soon as reasonably possible” denote that there should be as little delay as possible, nevertheless, the use of the word “reasonable” indicates that circumstances may exist which justify some delay in the bringing of the proceedings.’”

Suggesting that the claim against McElroy is akin to a claim for professional negligence, counsel for Markland place particular reliance on the judgment of the Supreme Court in Connolly v. Casey [2000] 1 IR 345. In that case the defendants, being solicitors against whom the plaintiff was seeking damages for professional negligence, although having delivered a defence on 22nd April, 1996 in which they had pleaded negligence and breach of duty on the part of the third party, a barrister, in respect of advice he had given, awaited the delivery of replies to particulars sought and advanced that as one of the explanations for not having obtained leave to issue and serve a third-party notice until 20th October, 1997 on foot of a motion issued on 25th July, 1997. The Supreme Court reversed the decision of the High Court to set aside the third-party proceedings. In her judgment, with which the other judges agreed, Denham J. stated that the wrong test had been applied at first instance and continued (at p. 350):

“The test is whether it was reasonable to await the replies to particulars. Whether the replies did or did not materially alter the defendants’ state of knowledge is not the test. The queries raised in the notice for particulars were relevant to the claim against the third party and thus it was reasonable to await the replies.”

Denham J. also held that it was not unreasonable for the solicitors conducting the defence, presumably on behalf of an indemnifier, to have sought a statement from the solicitor who had briefed the third-party barrister and to have awaited its arrival. In this connection, Denham J. observed (at p. 350):

“It is important in professional negligence cases to act reasonably. Proceedings must have an appropriate basis. Counsel have a duty of care. Reference has already been made to the need to develop modern case management in cases relating to professional negligence: Cook v. Cronin (Unreported, Supreme Court, 14th July, 1999).”

Later in her judgment, Denham J. set out the approach which should be adopted to analysing delay in the context of s. 27(1)(b) and stated as follows:

“In analysing the delay – in considering whether the third-party notice was served as soon as is reasonably possible – the whole circumstances of the case and its general progress must be considered. The clear purpose of the sub-section is to ensure that a multiplicity of actions is avoided: see Gilmore v. Windle [1967] I.R. 323. It is appropriate that third-party proceedings are dealt with as part of the main action. A multiplicity of actions is detrimental to the administration of justice, to the third party and to the issue of costs. To enable a third party to participate in the proceedings is to maximise his rights. He is not deprived of the benefit of participating in the main action.”

Counsel for McElroy submitted that Denham J. emphasised that the decision was specific to the facts before the court, and was not to be seen as diluting the requirements of s. 27(1)(b), in the following passage at 352:

“In conclusion, I would allow the appeal of the defendants on the grounds that the delay of the defendants was not unreasonable and that in the circumstances of the case the third-party notice was served ‘as soon as is reasonably possible’. However, this is a case with particular facts in a suit alleging professional negligence and the decision does not endorse delay – rather it seeks to encourage a modern management of litigation to avoid a multiplicity of suits.”

It is well settled that on an application to set aside third-party proceedings, the onus of proof of showing that the delay at issue was not unreasonable is on the defendant.

While arguing that it is not necessary for the applicant to establish prejudice, it was submitted on behalf of McElroy that, where it is present, the court should be all the more willing to strike out the third-party proceedings. As the commentary in Delany & McGrath on Civil Procedure in the Superior Courts, 2nd Edition, at paras.

9-18 and 9-19 indicates, there is something of a divergence of opinion on the authorities as to the relevance of prejudice, in that in Ward v. O’Callaghan (Unreported, High Court, Morris P., 2nd February, 1998) Morris P. appeared to countenance consideration of prejudice, whereas Kelly J. in S.F.L. Engineering Limited v. Smyth Cladding Systems Limited [1997] IEHC 81 (9th May, 1997) stated at para. 12:

“In considering applications of this sort, the court is not concerned with any question of prejudice arising as a result of the delay in applying for liberty to join the third party. This was accepted by counsel appearing on behalf of the defendants in the present case and it seems to follow from the interpretation given to the relevant provision by Finlay C.J. in the St. Laurence’s Hospital case.”

Section 27(1)(b) makes the service of a third-party notice “as soon as is reasonably possible” mandatory. In my view, the absence or presence of special prejudice affecting the proposed third party is not something the court is required to have regard to in determining whether the third-party proceedings are valid. Apart from that, in my view, it would be inherently dangerous for a court on an application to set aside third-party proceedings to examine, and express a view on, the type of issues which it is asserted constitute special prejudice affecting McElroy in this case, where the entitlement of the unsuccessful defendant, in this case, Markland, to institute a substantive action against the third party remains, even if the third party proceedings are set aside.

 

Application of the law to the facts – submissions

McElroy argued that the third-party notice was not served as soon as was reasonably possible on two alternative bases. The first was that McElroy should have been brought in as a third-party before the trial of the action between the plaintiff and the defendants so that it could have participated in that trial. The alternative argument was that, even if Markland was entitled to await the outcome of the trial of the plaintiff’s claim against the defendants, there was unreasonable and unexplained delay between the service of Cantier’s points of defence and counterclaim on 28th April, 2005 and the service of the third-party notice twelve months later and, even the issue of the third-party application some nine months later.

Counsel for McElroy submitted that support for the proposition that Markland should have brought in McElroy as a third party when it became aware of the claim being made against it by the plaintiff is to be found in the decision of the Supreme Court in the St. Laurence’s Hospital case. The facts in that case were that the plaintiff had been admitted to St. Laurence’s Hospital under the care of Mr. Staunton, a consultant neurologist. In July, 1981 he fell from a window in the hospital and sustained serious injuries. In September, 1983 he issued a plenary summons in the High Court against the defendant hospital. The statement of claim was filed in November, 1983 and replies to the defendant’s notice for particulars of negligence were delivered in July, 1984. A full defence was filed and the action was set down for trial in 1985. It was heard in July, 1987, during which Mr. Staunton was called as a witness for the defendant. At the conclusion of the trial the jury awarded the plaintiff £90,000. The defendant appealed on liability and quantum and the appeal was ultimately dismissed. However, while the appeal was pending, the defendant obtained an order for liberty to serve a third-party notice on Mr. Staunton. On those facts, Finlay C.J. concluded that the serving of a third-party notice on the third party after the conclusion of the plaintiff’s claim was not serving it as soon as reasonably possible. He stated (at p. 36):

“In my view, the application brought after the conclusion of the action by the plaintiff against the defendants for liberty to serve a third-party notice could not, under any circumstances, be construed as an application to serve a third-party notice as soon as was reasonably possible. It is clear from the facts which I have outlined that probably from the month of July, 1984, when particulars were filed, the defendants were aware of the nature of the claim which was being brought against them by the plaintiff. They may have been unaware as to whether that claim would succeed or not, but they were aware of what the nature of the claim was, and it must follow, it seems to me, that they were also aware at the time of any potential claim for contribution they might have against the third party.”

In this case, McElroy contends, Markland was in a position to consider and decide whether a claim for contribution arose against it at the latest towards the end of 2003. By September, 2003 it was common knowledge that there was no separation joint between No. 70 and No. 5 at foundation level. That, of itself, was sufficient to put Markland on notice of a potential claim, which clearly warranted immediate investigation and inquiry, it was submitted. McElroy went further and submitted that the existence of the e-mail suggests that Markland was aware that the position Cantier would adopt was that the foundations as constructed were in accordance with the construction details issued by McElroy. It was submitted that Markland’s strategy, as is to be gleaned from the letter of 19th January, 2005 from its solicitors, was that Markland was prepared to allow the plaintiff’s claim to proceed to a hearing on the basis that, if it was found by the court that the absence of a separation joint did cause structural damage to No. 5, it could pursue a claim against one or more of its professional advisers, including McElroy, after the court determination. It was submitted that that was an inappropriate approach, in that it prevented McElroy from deciding whether to participate in the trial of the plaintiff’s action or to elect to have the claim for indemnity or contribution against it held over. Joinder of McElroy as a third party would have avoided a multiplicity of proceedings.

On the alternative argument, it was submitted on behalf of McElroy that Markland could have taken steps to compel Cantier to reply to the notice for particulars dated 10th May, 2005. It was further submitted that, in any event, the particulars ultimately furnished on 23rd March, 2006 had no relevance because they post-dated the decision to seek to join McElroy as a third party.

Markland’s explanation for not seeking to join McElroy as a third party prior to the determination of the action between the plaintiff and the defendants was that there was no allegation against McElroy by Cantier until after the determination of that action. Its explanation for not having moved more expeditiously after receipt of Cantier’s defence and counterclaim was that, because of the lack of clarity in Cantier’s pleading, it was necessary for Markland to seek particulars from Cantier and to engage in its own process of investigation to ascertain whether it has a claim against McElroy. If it had not adopted that approach, it was submitted, the consequence might have been the joinder of a multiplicity of parties because the allegations made by Cantier implicated not merely McElroy but also Markland itself and its architects. On the authorities (Connolly v. Casey and Cook v. Cronin) Markland was obliged to identify the existence of a clear cause of action before initiating proceedings against its professional advisers for professional negligence, it was submitted.

Markland also sought to attach some significance to Cantier’s limited participation in the plaintiff’s action because it was in liquidation at the time of the discovery, in September, 2003, of the absence of a separation joint at foundation level between No. 70 and No. 5 and to the fact that, when its participation was permitted in May, 2004, it did not deny liability. Of course, it could not have denied liability because of the existence of the judgment. As I understand Markland’s argument, it is that, given those circumstances, Markland could not reasonably be expected to have concluded that some fault was then, or could be, attributed to McElroy by Cantier.

Counsel for McElroy countered this last point on the basis that it was nihil ad rem. The proposition that it is necessary for some other party to make a specific allegation of wrongdoing against a prospective third party before an obligation exists to move speedily and without delay to institute third-party proceedings, it was submitted, is not supported by authority.

 

Conclusions

The issue which the court has to determine is whether Markland served the third-party notice dated 27th April, 2006 on McElroy as soon as reasonably possible.

As was recognised in the affidavit of Aidan Scully sworn on 25th January, 2006, which grounded Markland’s application for leave to serve the third-party notice on McElroy, the principal issue as between the plaintiff and the defendants was the failure to achieve separation between No. 70 and No. 5. The absence of a separation joint at foundation level between the two properties was common knowledge from September, 2003. The plaintiff’s contention was that that factor had caused, and probably would in the future cause, structural damage to No. 5. While Markland put in issue the existence of damage and causation, it must have been obvious to it that, if the court were to find that structural damage existed and that it was caused by the absence of the separation joint, to adopt the terminology adopted by Finlay C.J. in the St. Laurence’s Hospital case, there was a potential claim for contribution against McElroy, on the basis that the absence of the separation joint must have been attributable either to Cantier not having followed McElroy’s instruction or McElroy having given no instructions to ensure separation of the two buildings at foundation level. It was at that stage that Markland should have conducted an investigation of the role of McElroy, which was the retained professional responsible for the structural aspects of the building operations on the site of No. 70, with a view to assessing whether it was appropriate to seek leave to join McElroy. The evidence indicates that it would have been reasonably possible to make the necessary professional judgment by the end of 2003.

The fact that Cantier’s participation in the plaintiff’s action was dormant between July, 2003 and May, 2004 and the fact that its defence of the plaintiff’s claim was circumscribed by the existence of the judgment in default of defence, are not matters which justify Markland’s failure to pursue a claim for contribution against McElroy until after the conclusion of the plaintiff’s claim. Nor does the fact that Cantier did not articulate that the construction of No. 70 at foundation level without a separation joint was carried out on the express instructions of Markland, its servants or agents, including, McElroy until 28th April, 2005 justify that failure. It was the plaintiff’s claim against Markland and Cantier for damages which triggered the obligation under s. 27(1)(b) of each of the defendants to serve a third-party notice if either wished to claim a contribution against a non-party, not the formal pleading of the defendants’ claims for indemnity and contribution inter se.

The approach adopted by Markland in this case with the concurrence of Cantier has given rise to, not obviated, a multiplicity of actions. The trial of the plaintiff’s claim against both defendants took place over twelve days in 2004. The fact that the issues between the defendants were left over means that there will be a second trial to determine those issues. Even if the court were to reject McElroy’s application to set aside the third-party proceedings, a beneficial outcome to the system of administration of justice and to the third party of the type envisaged by Denham J. in Connolly v. Casey cannot be achieved here.

For the foregoing reasons, I consider that the third-party notice was not served as soon as reasonably possible and, therefore, the third-party proceedings must be set aside. I am not oblivious to the fact that this decision may result in a third trial: the trial of a substantive action by Markland against McElroy. Whether, in that event, the court should exercise its discretion to refuse to make an order for contribution, as provided for in the last sentence of para. (b) of s. 27(1), is a matter for another day.

 

Order

There will be an order setting aside the third-party proceedings.

 

 

SFL Engineering Ltd. v. Smyth Cladding Systems Ltd.

[1997] IEHC 81 Kelly J

THE RULES OF THE SUPERIOR COURTS

4. Order 16 of the Rules of the Superior Courts governs third party procedure. Order 16.1(iii) provides:-

 

 

“Application for leave to issue the third party notice shall, unless otherwise ordered by the Court, be made within 28 days from the time limited for delivering the defence or, where the application is made by the defendant to a counterclaim, the reply”.

 

5. This provision of the Rules of the Superior Courts gives expression in a concrete form to the temporal imperative contained in Section 27(1)(b) of the 1961 Act. It is to be noted that the Rules of Court require the application to be made not within 28 days from the delivery of the defence in the proceedings but within 28 days from the time limited for delivering the defence . That time is fixed by Order 21 of the Rules of the Superior Courts. In a case where a defendant does not by notice require a Statement of Claim, the defence must be delivered within 28 days from the entry of appearance. In any other case it must be delivered within 28 days of the date of delivery of the Statement of Claim or from the time limited for appearance, whichever shall be later. It is clear, therefore, that the Rules of Court contemplate an application for the joinder of a third party being made at quite an early stage in the proceedings.

 

6. Under Order 16 Rule 8(3) third party proceedings may at any time be set aside by the Court. It is this jurisdiction which is invoked on this application.

 

 

THE JURISPRUDENCE ON THE TOPIC

In The Board of Governors of St. Laurence’s Hospital v. Staunton [1990] 2 I.R. 31 the Supreme Court considered the proper construction to be given to Section 27(1) of the Civil Liability Act, 1961. The facts in that case were as follows. In July 1981 the plaintiff whilst a patient in the defendant’s hospital fell from a window and was injured. In September 1983 he commenced proceedings against the hospital as a sole defendant alleging that his injuries were due to the negligence of the hospital, its servants or agents. In November 1983 the Statement of Claim was delivered in the action. Particulars were sought and were eventually delivered in July 1984. The defence to the proceedings was delivered on the 8th November, 1984 and it disputed both liability and damages. The action was set down in 1985. It was tried before a judge and jury in July 1987. The plaintiff obtained judgment for £90,000 damages against the defendants. The defendants appealed and the plaintiff cross-appealed. After the service of the notices of appeal and cross-appeal, the defendants served a notice of motion together with a third party notice on the third party who was the consultant under whose care the plaintiff had been admitted to the hospital. That was served in November 1987. The third party had been called by the defendants as a witness at the hearing of the plaintiff’s action but there was no evidence that any claim had been made formally or informally against him by the defendants prior to the service of the notice of motion and the third party notice in November 1987. The Supreme Court upheld the decree which had been granted to the plaintiff in the High Court.

7. The third party appealed against the order made in the High Court in November 1987 adding him as a third party to the proceedings.

 

8. In the course of his judgment, Finlay C.J. expressed his view as to the true meaning of the first sentence in Section 27(1)(b) of the 1961 Act. He said:-

 

 

“I am quite satisfied upon the true construction of that subsection that the only service of a third party notice contemplated by it and, therefore, the only right of a person to obtain from the High Court liberty to serve a third party notice claiming contribution against a person who is not already a party to the action, is a right to serve a third party notice as soon as is reasonably possible. A defendant in an action seeking to claim contribution against a person who is not a party to the proceedings cannot serve any third party notice at any other time, other than as soon as is reasonably possible.

 

In my view, the application brought after the conclusion of the action by the plaintiff against the defendants for liberty to serve a third party notice could not, under any circumstances, be construed as an application to serve a third party notice as soon as was reasonably possible. It is clear from the facts which I have outlined that probably from the month of July, 1984, when particulars were filed, the defendants were aware of the nature of the claim which was being brought against them by the plaintiff. They may have been unaware as to whether that claim would succeed or not, but they were aware of what the nature of the claim was, and it must follow, it seems to me, that they were also aware at that time of any potential claim for contribution they might have against this third party.

 

In these circumstances, serving a third party notice on the third party after the conclusion of the plaintiff’s claim is not serving it as soon as is reasonably possible.

 

In these circumstances, I take the view that the learned High Court judge was in error in giving liberty for the service of a third party notice pursuant to Order 16, Rule 1 of the Rules of the Superior Courts, and that he should have refused this application. I would therefore allow this appeal and set aside the order of the High Court”.

9. The view expressed by Finlay C.J. in this case is clearly authority for the proposition that the obligation to serve a third party notice as soon as is reasonably possible is mandatory in nature and a failure to comply with that temporal obligation may lead to the application for liberty to issue and serve the third party notice being refused or, if granted, being set aside on the application of the newly joined third party.

 

10. The topic was considered by Morris J. in Dillon v. MacGabhann (unreported judgment 24th July, 1995). In that case he set aside a third party notice which had not been served or indeed even sought as soon as was reasonably possible. He relied upon the decision of the Supreme Court in the St. Laurence’s Hospital case.

 

11. The same judge considered the matter again in the case of Carroll v. Fulflex International Company Limited (unreported judgment 18th October, 1995). That again was an application to set aside the third party proceedings. On that occasion he declined to make the order but in so doing made it clear that he was not in any way departing from the principles enunciated by the Supreme Court in the St. Laurence’s Hospital case. He declined to set aside the third party proceedings because there had been an exchange of pleadings as between the defendants and the third party and the issue as between them was actually listed for trial. He took the view that it would be entirely inappropriate that having pursued that course and with the action ready to be heard, the third party should come to Court seeking to set aside a procedure in which they had taken an active part. He held that a motion to set aside a third party notice should only be brought before significant costs and expenses had been incurred in the third party procedures. A third party who wishes to have a third party notice set aside should move as soon as is reasonably possible.

 

12. In considering applications of this sort, the Court is not concerned with any question of prejudice arising as a result of the delay in applying for liberty to join the third party. This was accepted by Counsel appearing on behalf of the Defendants in the present case and seems to follow from the interpretation given to the relevant provision by Finlay C.J. in the St. Laurence’s Hospital case.

 

 

THE PRESENT CASE

13. The third and fourth third parties to the instant proceedings, namely, Plannja Limited and Plannja A.B. apply pursuant to Order 16, Rule 8(iii) of the Rules of the Superior Courts to have the Third Party Notices served upon them on the 26th April, 1996 set aside. They do so on the grounds that they were not served with such notices as soon as was reasonably possible pursuant to and within the meaning of Section 27(1)(b) of the Civil Liability Act, 1961. They also do so on the grounds that the application was not made within the time limit provided for in Order 16, Rule 1(iii) of the Rules of the Superior Courts but the principal thrust of their argument was founded on the Defendant’s failure to comply with the statutory provisions.

 

14. The action as between the Plaintiff and the Defendant was commenced by the issue of a Plenary Summons on the 10th February, 1994. In that summons the Plaintiff claimed damages for breach of agreement, negligence, breach of duty, breach of statutory duty, negligent misstatement and/or negligent misrepresentation against the Defendant. The Defendant is a limited company which has its registered office at Coleraine in Northern Ireland.

 

15. On the 29th March, 1994 a firm of solicitors carrying on practice at Ballymoney, Co. Antrim wrote to Plannja Korrugal Limited on behalf of the Defendant. The letter was in the following terms:-

 

 

 

 

“Dear Sirs,

Re: Our Clients: Smyth Cladding Systems Limited

We have been instructed by our above-named clients in relation to complaints they have received in respect of allegedly defective aluminium sheeting which they supplied to SFL Engineering Limited.

 

We understand that you are aware of the nature of the problem and that our client has been in direct contact with yourselves regarding same.

 

Our clients have now been served with a High Court Plenary Summons (copy enclosed).

 

It is clear from our instructions that the alleged defects are a manufacturing defect and in the circumstances must hold you responsible for same.

 

We would ask you to please confirm that you are prepared to indemnify our client against all claims and take over conduct of the proceedings. In the event of us not receiving confirmation of same within seven days then we will make an application to have you joined as party to the proceedings. In addition we will hold you responsible for all costs incurred in connection with the application.

 

We await hearing from you”.

 

16. That letter was replied to on the 31st March, 1994 by Plannja Korrugal. The letter was written by David J. Baker, the General Manager of Plannja Limited. The letter was in the following terms:-

 

 

“Further to your letter dated 29th March 1994, we write to advise that the contractual chain relating to this matter is as follows.

 

Materials were purchased by SFL Engineering Systems Limited from Smyth Cladding Systems Limited who in turn purchased from Korrugal Limited who were supplied with material manufactured by their parent company Korrugal A.B. in Sweden.

 

Our company is Plannja Limited which is not involved in any way with the above transaction and no such company as Plannja Korrugal Limited exists. Korrugal Limited still exists but in a dormant non-trading state without assets; Korrugal A.B. exists in a similar manner.

 

We cannot at this stage confirm whether or not Korrugal Limited is willing to indemnify your client since neither the extent nor the basis of the claim forms part of the Plenary Summons.

 

In closing, we as Plannja Limited deny that we have any responsibility in this matter and will not consider any costs in connection with these proceedings. Please ensure that all future contact regarding the above is made via our solicitors in writing to the following address:

McNamara Ryan

Ashburton House

3 Monument Green

Weybridge

Surrey KT13 8QR

 

Attention Mr P Summers”.

 

 

17. On the 15th April, 1994 the solicitors for Smyth Cladding Systems wrote to McNamara Ryan, the firm of solicitors nominated by Plannja Limited. The letter is in the following terms:-

 

 

“Dear Sirs

Re: Your Client: Plannja Limited

Our Client: Smyth Cladding Systems Limited

 

We enclose herewith copy letter which we forwarded direct to your above-named clients together with their reply thereto dated the 31st March 1994.

 

We were somewhat surprised at the contents of your clients’ letter given the fact that your clients Plannja Limited have corresponded direct with our client Smyth Cladding Systems Limited regarding the subject of these proceedings. In the circumstances we would be grateful if you could please explain the connection if any between Plannja Limited and Korrugal Limited. In particular if Plannja Limited have acquired the liabilities and/or assets of Korrugal Limited.

 

Furthermore, we find the statements in your clients’ letter inherently contradictory. On the one hand they state Korrugal Limited have no assets yet on the other hand mention a possible indemnity by Korrugal Limited. In addition, our client advises us that Mr. Baker of Plannja Limited indicated to our client, on several occasions, that they would be indemnified in full in respect of these proceedings.

 

We would be grateful if you would please take your clients’ further instructions and await hearing from you.

 

Finally, we enclose herewith copy letter which we have forwarded direct to Korrugal Limited for your information”.

 

18. For the sake of completeness, I should record that prior to the writing of the letter of the 15th April, 1994 the Defendant’s solicitors, on the 12th April of that year, wrote to Korrugal Limited directly in precisely the same terms as they had written to Plannja Korrugal Limited on the 29th March, 1994. Korrugal Limited responded on the 22nd April, 1994 making it clear that it was not prepared to indemnify the Defendant against the claim nor was it in a position to take over conduct of the proceedings. This letter is also signed by Mr. David J. Baker and again the letter nominates the firm of solicitors in Weybridge to whom all future correspondence should be directed.

 

19. Insofar as Plannja Limited was concerned, the firm of McNamara Ryan replied to the Defendant’s solicitor’s letter of the 15th April by a letter of the 22nd April, 1994. It reads as follows:-

 

 

“Our Client: Plannja Limited

Your Client: Smyth Cladding Systems Limited

 

Thank you for your letter of 15th April.

 

We are instructed to say that Plannja Limited did not acquire the liabilities and/or assets of Korrugal Limited.

 

We are further instructed that Plannja have not agreed to indemnify your clients in this matter. The contractual position was, we believe, set out fully by our clients in their letter of the 31st March 1994”.

 

20. On the same day that that letter was written, namely, the 22nd April, 1994, a conversation took place between Mr. Smyth of the Defendant Company and Mr. Baker of Plannja Limited. It is alleged that Mr. Baker informed Mr. Smyth that Plannja Limited would stand behind the Defendant and would not allow it to suffer loss but that he was not willing to commit his company in writing to provide an indemnity. This much is averred to in the affidavit of James Smyth which grounded the application seeking liberty to issue the Third Party Notice. Mr. Smyth went on to aver that he took Mr. Baker at his word and forbore from taking any further steps against Plannja Limited. Mr. Baker has sworn an affidavit on this application in which he expressly denies that he informed Mr. Smyth that Plannja Limited would stand behind the Defendant and would not allow it to suffer loss. He says that he remembers the telephone conversation with Mr. Smyth very well and the only assurance which he gave to him was that Plannja Limited, which had an ongoing business relationship with the Defendant, was willing to render technical assistance to ascertain the degree of problem associated with the petrol station canopies.

 

21. It is impossible for me at this juncture to decide which of these two versions of the conversation is the more probably correct. In approaching this application, I will therefore assume, but will not decide, that the version deposed to by Mr. Smyth is correct.

 

22. Following this exchange of correspondence, the action proceeded as between Plaintiff and Defendant. A Statement of Claim was delivered on the 26th May, 1994. A Notice for Particulars was served on the 30th August, 1994. An amended Statement of Claim was delivered on the 7th February, 1995. An amended Notice for Particulars was served on the 15th February, 1995.

 

23. On the 10th November, 1995 the solicitors on record for the Defendant wrote to Plannja Limited and Plannja A.B. calling upon each of those entities to admit liability and to undertake to indemnify the Defendant in respect of the proceedings and all damage/loss which might be incurred arising therefrom.

 

24. These letters were responded to on the 16th November, 1995 by McNamara Ryan, Solicitors, acting on behalf of Plannja Limited only. They refused to offer the admission of liability or the indemnity which was sought.

 

25. On the 27th November, 1995 a response was received from the Corporate Legal Department of Swedish Steel which rejected liability on behalf of Plannja A.B.

 

26. There was some further correspondence between the 7th December, 1995 and the 7th February, 1996 between the solicitors for the Defendant and the Legal Department of Swedish Steel.

 

27. Ultimately a Notice of Motion was issued seeking the joinder of the Third Parties who are now before the Court. That motion was dated the 8th February, 1996 and was heard on the 4th March, 1996 when Morris J. made orders joining as Third Parties both Plannja Limited and Plannja A.B.

 

 

THE DELAY AND ITS EXPLANATION

28. From the foregoing chronology it can be seen that by the end of April 1994 Plannja Limited was making it plain, through its solicitors, that it had no intention of providing the indemnity sought by the Defendant. Notwithstanding that, no application was made to join that entity until the motion of the 8th February, 1996 was issued.

 

29. The explanation which is tendered for this delay was the continued reliance by the Defendant upon the oral assurance of Mr. Baker given on the 22nd April, 1994. That continued reliance apparently came to an end in November 1995 when the Defendant was advised by solicitor and Counsel that it would be more prudent in the circumstances to obtain a formal written indemnity from Plannja Limited and/or Plannja A.B. It has not been made clear why it was only in November 1995 that such counsel of prudence was forthcoming.

 

30. I do not think that it was at all prudent of the Defendant to rely upon the oral assurance allegedly given by Mr. Baker on the 22nd April, 1994. It must be remembered that that alleged assurance was preceded by the letter of the 31st March, 1994 in which Plannja Limited denied any responsibility in the matter and indicated that it would not consider any costs in connection with the proceedings. Furthermore, that letter nominated the firm of McNamara Ryan, Solicitors, to act on its behalf and directed that all future contact should be made through that firm. The verbal assurance, even on the version of events given by the Defendant and which I am prepared to accept for the purposes of this exercise, was a most circumspect affair. Although Mr. Baker is alleged to have indicated that Plannja Limited would stand behind the Defendant and would not allow it to suffer loss, he was not willing to commit the company in writing to provide an indemnity. I would have thought that such an approach would have caused the Defendant to be suspicious of Plannja Limited rather than cause it to be lulled into relying on such assurance. In any event, on the same day as the conversation took place, the solicitors nominated by Plannja Limited wrote the letter of the 22nd April, 1994 which made it crystal clear that Plannja had not agreed to indemnify the Defendant. That letter, being dated the same day as the telephone conversation, was presumably received subsequent thereto and, in my opinion, put the matter beyond doubt.

 

31. I find no justification for the delay of one year and ten months which occurred between this correspondence and the application to join the Third Parties. Such delay was, in my view, unreasonable. It follows that the Defendant did not join and serve the two Third Parties with which I am concerned in this application as soon as was reasonably possible. It therefore follows that the Third Parties are entitled to the order which they seek and the Third Party Notices will be set aside.

 

32. In addition to relying upon the oral assurance of Mr. Baker given in April 1994, the Defendant also seeks to rely upon correspondence and dealings between the parties prior to the institution of proceedings. This is done in an attempt to demonstrate that the Third Parties are not prejudiced by the delay. But I am not here concerned with any question of prejudice. That is so having regard to the decisions which I have cited and, indeed, Counsel for the Defendant quite properly accepted that that was not a matter with which I ought to be concerned on this application. The sole issue which I have to decide is whether the Defendant served the relevant Third Party Notices as soon as was reasonably possible. In my view, it did not and consequently the Third Party Notices must be set aside.

 

 

Tuohy -v- North Tipperary County Council

[2008] IEHC 63 Peart J

 

Section 27 of the Civil Liability Act, 1961 provides;

 

“(1) A concurrent wrongdoer who is sued for damages or for contribution and who wishes to make a claim for contribution under this part

 

(a) …

 

(b) shall, if the said person is not already a party to the action, serve a third party notice upon such person as soon as is reasonably possible and, having served such notice, he shall not be entitled to claim contribution except under the third party procedure. If such third party is not served as aforesaid, the court may in its discretion refuse to make an order for contribution against the person from whom contribution is claimed.”

 

 

Order 16, rule 1 (3) RSC provides:

 

“Application for leave to issue the third party notice shall, unless otherwise ordered by the Court, be made within twenty eight days from the time limited for delivering the Defence or, where the application is made by the defendant to a counterclaim, the reply.”

 

Cormac Clancy BL for third party submits that the defendant has failed to comply with either section 27 of the Act or the provisions of O.16, r.3 RSC. It will be recalled that the Statement of Claim in this case was delivered on the 28th March 2006, and the application to join the third party was not made until the 16th July 2007. In order to comply with the time specified by the O.16, r. 3 RSC, that application would have to have been made not later than 25th April 2006. The affidavit grounding the present application, which has been sworn by Jennifer O’Riada, the solicitor acting for the third party, refers to the fact that the defendant did not make the application for leave to issue and serve the third party notice as soon as possible following delivery of the Statement of Claim, and that no explanation for that delay has been provided. She states also that the third party notice which was served upon her client discloses no cause of action against her client, who was completely unaware of this claim being made against her until she received the purported third party notice.

 

Mr Clancy has informed the Court that no claim of prejudice arising from the delay is being made by the third party; and he submits on the basis of authority that it is unnecessary that he should do so. He submits that delay simpliciter is sufficient to justify the setting aside of the order dated 16th July 2007. He submits that the onus of justifying the delay is upon the defendant and that this onus has not been discharged.

 

Mr Clancy has referred the judgment of Hardiman J. in Boland v. Dublin City Council [2002] 4 IR 409, in which at p. 413 he refers with approval to a passage from a judgment of Kelly J. in SFL Engineering Ltd v. Smyth Cladding Systems Ltd, unreported, High Court, 9th May 1997 where it is stated:

 

“This provision [O.16, r.1(3) RSC] of the Rules of the Superior Courts gives expression in a concrete form to the temporal imperative contained in s. 27(1)(b) of the Act of 1961. It is to be noted that the Rules of the Superior Courts require the application to be made not within 28 days from the delivery of the Defence but within 28 days from the time limited for delivering the defence.”

 

Mr Clancy has referred also to the judgment of Finlay CJ in Board of Governors of St. Laurence’s Hospital v. Staunton [1990] 2 IR 31 where in reference to s. 27 (1)(b) of this Act, he stated:

 

“I am quite satisfied upon the true construction of that sub-section that the only service of a third party notice contemplated by it and, therefore, the only right of a person to obtain from the High Court liberty to serve a third party notice claiming contribution against a person who is not already a party to the action, is a right to serve a third party notice as soon as reasonably possible. A defendant in an action seeking to claim contribution against a person who is not a party to the proceedings cannot serve any third party notice at any other time, other than as soon as reasonably possible.”

 

Murphy J. in his judgment in Boland states that this view has been followed in a number of subsequent cases as set forth therein.

 

Roland Budd BL for the defendant has submitted firstly that the proposed third party has not demonstrated any prejudice, and that in order to succeed in her application to set aside the order on grounds of delay she has to do so. In support of that submission he has referred the Court to a judgment of Morris J. (as he then was) in Ward v. O’Callaghan, unreported, High Court, 2nd February 1998. That was a case where an application was made to set aside an order granting leave to issue and serve a third party notice. However, as the judgment notes, all parties were agreed that the third party in that case was not “a concurrent wrongdoer” and accordingly that s. 27(1)(b) of the 1961 Act was not applicable. The application was dealt with only under the provisions of O.16, r. 8 (3) RSC. It was therefore in the context of that rule only that Morris J. (as he then was) was satisfied that a delay of one year and four months in the service of the third party notice was not, of itself, of such significance as to constitute a ground for setting aside the third party order, and that in order to constitute such a ground “it would be necessary for the delay of this length to be coupled with circumstances which amounted to prejudice suffered by the third party based on this delay.”

 

As I have said already, Mr Clancy makes no claim that the third party has suffered prejudice arising from the delay.

 

Secondly, Mr Budd submits that the replying affidavit sworn in this application by Duncan Hodgins, the solicitor acting for the defendant adequately explains and excuses the delay which occurred, and that in the absence of inordinate and inexcusable delay, the order permitting the issue and service of the third party notice ought not to be set aside, and that time should be extended thereunder for the issue and service of that notice.

 

It remains to consider therefore the said replying affidavit, and another affidavit sworn by the defendant’s engineer, David Fahy, and to consider in the light of these, and all the facts and circumstances, and the law applicable, whether there has been such a non-compliance with the provisions of s. 27 of the Act, and O. 16(1)(3) RSC that the claim for contribution or indemnity being made by the defendant against third party should be barred by the setting aside of the said order.

 

Mr Hodgins in his affidavit has stated that the application to join the third party in this case was made a soon as reasonably possible in the context of delays outside the control of the defendant. He refers to the fact that the plaintiff’s accident occurred on the 19th May 2004, that the Plenary Summons was served on the defendant nearly a year later on the 14th March 2005, that an Appearance was entered by him less than a month after that on the 5th April 2005, and that he sought details of the locus of the accident by letter dated 4th April 2005 to the plaintiff’s solicitor so that he could arrange for an engineer to inspect same, and also asked that he be given information as to the circumstances in which the accident happened. As already noted the Statement of Claim was served on the 28th March 2006, and Mr Hodgins has exhibited a letter from him to the plaintiff’s solicitor dated 4th April 2006 in which he asks for any available photographs of the locus to be sent to him so that the defendant’s engineer can prepare a report and so that he himself might prepare “a proper Notice for Particulars”. By the 7th April 2006 he received a photograph because he wrote back on that date to the plaintiff’s solicitors acknowledging receipt of same, and going on to request that the plaintiff make contact with the defendant’s area engineer so that she could clearly point out the locus to him. That letter concludes by saying that until such time as his client’s engineer can prepare a report on the scene of the accident he could not advise his client fully in relation to the matter. Five days later on the 12th April 2006, the plaintiff’s solicitor wrote back to Mr Hodgins asking him to request his engineer to contact the plaintiff’s engineer in relation to any queries he might have in relation to the location of the accident. On the 27th April 2006, which would already be outside the period for delivery of the defendant’s defence for the purpose of O.16, r.1(3) RSC, Mr Hodgins wrote to his client’s area engineer sending him the photograph of the locus and asking him to make contact with the plaintiff’s engineer and let Mr Hodgins have a report. On the 5th July 2006, Mr Hodgins wrote to the plaintiff’s solicitors, referring to the fact that they had requested Mr Hodgins to arrange for the defendant’s engineer to make contact with the plaintiff’s engineer, and that having done so, the engineer identified by the plaintiff’s solicitor had stated that he was unaware of any claim being made by the plaintiff. Mr Hodgins requested these solicitors to get back to him as soon as possible as a matter of urgency as he needed to have a report prepared by the defendant’s engineer. On the 10th July 2006 the plaintiff’s solicitors replied by apologising for the error and gave the name of a different engineer to be contacted. That information was passed on promptly by Mr Hodgins on the 17th July 2006 and he requested a report from his engineer, David Fahy “as soon as ever possible”. He sent an e-mail to Mr Fahy also on the 6th September 2006 informing him that if he would contact the plaintiff’s engineer again, the latter would show him the locus. It would appear that there must have been some difficulties encountered in setting up the meeting with the two engineers. The meeting took place on the 15th September 2006

 

Apart from this correspondence it would appear that Mr Hodgins served a Notice for Particulars on the 27th April 2006, which was not replied to until the 11th January 2007.

 

From the book of pleadings provided to the Court on this application it appears that on the 20th April 2007 the defendant’s engineer, David Fahy, swore an affidavit for the purpose of grounding an application to join the proposed third party. In that grounding affidavit he states that he inspected the locus on the 15th September 2006 and he stated also that “in all the circumstances there is a reasonable case to be made against the proposed third party”.

 

There was some delay between the swearing of Mr Fahy’s affidavit to ground the application for leave to issue the third party notice because the Notice of Motion in that regard was not issued in the Central Office until the 20th June 2007, returnable for the 16th July 2007.

 

It seems to me at this stage that it must be considered reasonable that the defendant could not reasonably be expected to have been in a position to know that there was a concurrent wrongdoer in the form of the proposed third party until after the meeting of the engineers at the locus on the 15th September 2006. Thereafter some reasonable time would have to be allowed to Mr Fahy for the preparation of his report for the defendant’s solicitor, and in this regard Mr Hodgins has sworn in his replying affidavit that he received that report on the 10th January 2007, whereupon papers were sent to counsel in order to have the necessary documents drafted for the purpose of the third party notice application. As I have said, the grounding affidavit was sworn on the 20th April 2007, and in that regard Mr Hodgins has stated in his affidavit that he encountered difficulties in making contact with Mr Fahy in order to arrange for the swearing of the grounding affidavit, but he does not set forth what efforts he had to make in that regard or the nature of the difficulties.

 

He goes on to say that papers were sent by him to his Dublin Agents in early May 2007, and that when they went to the Central Office to file the motion papers, they had been informed that first of all one month’s Notice of Intention to Proceed under O. 122 RSC had to be filed since more than one year had elapsed since the last step taken in the action according to the Central Office records. That matter was then attended to, and in June the Notice of Motion was duly issued and made returnable for the 16th July 2007, on which day the order was made giving the defendant leave to issue and serve the Third Party Notice.

 

These facts are submitted for the purpose of excusing the passage of time from the date on which Mr Hodgins first received the engineer’s report on the 10th January 2007 until the date of the making of the order on the 16th July 2007.

 

Further delay occurred because, as I have set forth already, on the 25th July 2007 the Notice was served on the third party, but unfortunately this Notice had not been issued in the Central Office prior to service as is required, and therefore did not technically exist as a document. The order of the Court was for the issue and service of the Notice. Ms. O’Riada in her grounding affidavit herein has stated, as already set forth, that when she attempted to enter an Appearance to the Third Party Notice which had been served on her client on the 25th July 2007, she was unable to do so because the Notice had never been issued. Mr Hodgins has stated in this respect that this problem arose through what he describes as “failures of communication between my firm and our town agents”. Without giving any details of what those difficulties consisted of, he goes on to state:

 

“I say and believe that on the basis of an understanding that there had been a difficulty at the Central Office with the perfection of the Order of Mr Justice Charleton granting liberty to issue and serve the third pary notice but conscious that a time limit had been placed on the service of the order and anxious to ensure that the third party should be notified without delay I arranged for the service of the unissued third party notice on the third party within the prescribed time.”

 

The records of the Central Office for this case have been produced, and it is clear from that record that the order dated the 16th July 2007 was perfected by the Registrar of the Court on the following day the 17th July 2007. The reference by Mr Hodgins to the difficulty about the order being in respect of its perfection could not be complete. It is more likely in my view that there was a failure for whatever reason to take up the perfected order promptly. It is unclear to me what exactly may have been the real difficulty, if any, in that regard. At any rate that is the reason given for the failure to actually issue the Third Party Notice ahead of the service of same. Given that the served Notice actually refers to it having been “issued” pursuant to the order, it seems more likely that the issue of same was simply overlooked, but I cannot be certain about that either. Some suggestion is obliquely made that the fault in that regard may lie with the firm of Dublin agents retained by Mr Hodgins at that time, but again there is a lack of specifics in that regard also.

 

Conclusions:

 

There are two aspects to the present application. The first arises under s. 27 of the Act. Given that the proposed third party is a concurrent wrongdoer that provision applies. That section requires that the defendant “shall, if the said person is not already a party to the action, serve a third party notice upon such person as soon as is reasonably possible”. In the present case, I am satisfied that Mr Hodgins could not have been expected to have advised his client, the defendant, that the liability might rest with a third party until such time as there was evidence to support such a possibility. I have set out what he did in that regard, and while it is clear that in an ideal world the joint inspection of the locus by the engineers, and the subsequent provision of Mr Fahy’s report to him could all have been achieved more swiftly, I am satisfied that Mr Hodgins, and therefore the defendant on whose behalf he was acting, acted with reasonable dispatch. It is difficult to see how any failure on the part of Mr Hodgins or his client has caused unreasonable delay such as should exclude the defendant from the provisions of s. 27 of the Act. The phrase “as soon as reasonably possible” cannot in every case be restricted to a period of 28 days from the time limited by the Rules for the delivery of a Defence, since it must be construed in the light of the facts of any one particular case. In the present case it can be construed as meaning that the defendant was obliged to serve the third party notice as soon as reasonably possible after it became known that the defendant might reasonably claim an indemnity or contribution from the proposed third party.

 

I accept, and respectfully agree, as Kelly J. concluded in SFL Engineering Ltd v. Smyth Cladding Systems Ltd [supra], that the subsection contains “a temporal imperative”, but that imperative in the present case must be seen as applying from the time when the defendant was first in a position to know that the claim against the proposed third party was possible to pursue.

 

In this case, in my view, it was necessary for the defendant to move with reasonable dispatch in all the circumstances following the receipt by Mr Hodgins of Mr Fahy’s report on the 10th January 2007. If Mr Hodgins had delayed in commencing the task of obtaining Mr Fahy’s inspection of the locus and his report, and had otherwise taken no active steps regarding the Defence of the claim, then it would be an easy task to conclude that time had passed beyond what is provided for in s. 27 (1)(b) of the Act in respect of a third party claim.

 

He has set out the steps which he took. The Court is entitled to have regard to the experience of daily practice as a solicitor, and in my view Mr Hodgins has taken appropriate and timely steps following the receipt of that report. He instructed Counsel, as would be usual, to draft the necessary papers. If he was not in a position to have the grounding affidavit sworn by Mr Fahy until April 2007, it would suggest some delay drafting same occurred, but on the other hand he has not stated the date on which he received the papers back from counsel. Nevertheless some period of time must be reasonably permissible for that drafting to be completed. Matters proceeded at a somewhat leisurely pace, it must be accepted, but in my view while that is so, the delay is not of such magnitude that the defendant should as a result be found to be outside the scope of the phrase “as soon as reasonably possible”, given the facts and circumstances of this particular case.

 

The defendant served what purported to be a third party notice on the 25th July 2007. Mr Hodgins has stated that he did so in order to put the third party on notice of the claim as soon as reasonably possible. Given that the order was obtained on the 16th July 2007, the service of the notice some nine days thereafter can be seen as prompt service, overlooking for the moment the technical problem arising from the fact that it had not been issued. If it had been issued in the Central Office prior to service on the 25th July 2007, I would be of the view that it was served “as soon as reasonably possible”, even though matters could have proceeded somewhat more promptly. The phrase “reasonably possible” is to be distinguished from phrases such as “as soon as possible” or “forthwith” which do not permit of much deviation. But the insertion by the Oireachtas of the word “reasonable” allows this Court to permit some tolerance for delay which actually occurs and which is explained and appears excusable, given one’s knowledge of the reality of legal practice. That is not to be taken as a tolerance of unexplained or inexcusable delay where a solicitor has clearly done nothing when he/she was in a position to do something. The third party is entitled to be on notice of the claim as soon as reasonably possible, according to the subsection. In my view that occurred in this case, given that the Statement of Claim by the plaintiff was only delivered on the 28th March 2006. It is not solely the defendant’s fault that it is some three years and four months after the plaintiff’s accident that the third party learns of a potential liability on her part. It is relevant to note at this point again that no claim of prejudice is being made. I am not satisfied therefore that the order itself should be set aside.

 

It is unnecessary for me in this case to reach any conclusion in relation to s. 27 of the Act as to whether a claim of prejudice would affect how the Court would look at a defendant’s delay. No such claim is being made. But I remark again that the case referred to by Mr Budd, namely Ward v. O’Callaghan, was one involving only O.16 RSC and not s. 27 of the Act.

 

Having found that the claim against the third party has not been served outside the time contemplated by s. 27 of the Act, it is necessary to address the implications of O.16 RSC principally in the context of the delays which have occurred subsequent to the making of the order dated 16th July 2007, and the application by the defendant for an extension of time for the issue and re-service of the third party notice.

 

The third party notice has not yet been issued in the Central Office, although it has been served. In order to issue it now, the time for doing so under the order dated 16th July 2007 needs to be extended. The question now is whether that time should be extended. This matter is to be considered under O.16 RSC as was the application which was the subject of the judgment of Morris J. in Ward v. Fitzpatrick to which Mr Budd has referred. In that case, as already described, the learned judge was of the view that the applicant to set aside the order in that case would have to show that a prejudice had resulted from the delay. In my view, for the purpose of the present case, once the Court is satisfied that there have been shown to exist certain reasons as to why the time passed for issuing the notice, and that they excuse the delay, time ought to be extended, that being within the discretion so to order pursuant to the provisions of O.122, r.7 RSC.

 

O.16, r.2 (2) provides that unless the Court otherwise orders, a third party notice shall be served not later than 28 days from the date of the order granting leave to issue and serve same. In the present case, that means that unless following the making of the order dated 16th July 2007 the notice was not issued and served on the third party by the 13th August 2007, an application for an extension of time would have been necessary. In this case it was served by the 25th July 2007. The purpose of the rule requiring the notice to be issued and served within 28 days of the making of the order has been fulfilled by what occurred in this case if one considers that purpose, as I do, to be that the third party be on notice of the claim against her as soon as reasonably possible. I am not sure that the reasons for difficulties in communication between Mr Hodgins and his Dublin agent have been made sufficiently clear to be relied upon as excusing the delay in taking up the perfected order and issuing the third party notice, but I am satisfied, especially in the absence of any prejudice being asserted by the third party that no injustice arises if the time for issuing the third party notice is now extended in order to regularise the third party claim procedures and so that this case, including the third party issue can be set down for hearing and heard without further delay.

 

I will therefore refuse the order sought by the third party in her Notice of Motion, and on the application of the defendant extend the time for issuing and serving the third party notice until the 19th March 2008.

Clúid Housing Association -v- O’Brien & ors

[2015] IEHC 398

High Court Record Number:

2012 9797 P

Date of Delivery:

06/30/2015

Court:

High Court

Judgment by:

Murphy Deirdre J.

 

Submissions

14. The parties are largely in agreement as to the relevant legal principles to be applied in this case, namely, O.16, r.1(3) of the Rules of the Superior Courts and s. 27 of the Civil Liability Act, 1961. The applicant/third party states that the two provisions “while separate” are:

 

“to a certain extent related in that it has been held that when determining whether a defendant has moved to serve a putative third party notice as soon as is reasonably possible, the court should first identify by what date the application should have been brought in accordance with Order 16, Rule 1(3) RSC and then ask whether the explanation which has been offered for not meeting that deadline is reasonable”.

15. The applicants cite both S. Doyle & Sons Roscommon Limited v. Flemco Supermarket Limited & Ors [2009] IEHC 581 and Greene v. Triangle Developments Limited [2008] IEHC 52, as authority for the above proposition. In both cases, the Court held that the starting point, by reference to which any delay can be assessed, is the time within which the application should have been made in accordance with O.16 r.1(3), while the cut-off point is when the notice is actually served following the granting of leave. The respondent contends that there is some disagreement as to whether the measure of any delay should stop from the date of the issue of a motion for leave to issue a third party notice as was the case in McElwaine v. Hughes [1997] IEHC 74 or only from the date of service of the third party notice itself, as held in Greene v. Triangle Developments Limited. In any event, Clarke J., at p. 59 of his decision in Greene noted that the interval between the issue of the motion and the perfection of the order, due to court process delay, “needs to be taken into account as part of the natural timescale within which an entirely compliant defendant would ultimately serve a third party notice”. Furthermore, the delay in this case between the issuing of a motion and the service of third party notice, was little over a month.
16. The applicant first notes that the filing of the application for leave to issue third party notice on 13th March, 2014, does not comply with O.16, r.1(3) of the Rules of the Superior Courts which provides that:

 

“An application for leave to issue the third-party notice shall, unless otherwise ordered by the Court, be made within twenty-eight days from the time limited for delivering the defence or, where the application is made by the defendant to a counter-claim, the reply.”

It contends therefore, that the application ought to have been issued by the 17th January, 2013 since the statement of claim was delivered on 22 November, 2012. The respondent contends that the twenty eight day period specified in O.16 r.1(3) is far more honoured in the breach than the observance and points to the remarks of Kelly J. in Connolly v. Casey [1998] IEHC 90, wherein he states “it would, in my view, require very exceptional circumstances for the Court to accede to an application of this sort if the only complaint related to a failure to observe strict compliance with the provisions of this rule”. While the applicant accepts that it would not be reasonable to strike out the notice simply because the respondent failed to issue its motion by 17th January, 2013, it argues that it is up to the respondent to explain why the motion was not issued until over a year after that date and further to demonstrate that it was reasonable to wait until 23rd April, 2014 before serving third party notice, a motion having been issued in this respect on 13th March, 2014.

17. Thus, it is at this point that s. 27(1) of the Civil Liability Act 1961 becomes relevant for the purpose of the application to set aside the third party notice at issue in this case. Section 27(1) provides:

 

“A concurrent wrongdoer who is sued for damages or for contribution and who wishes to make a claim for contribution under this Part—

(a) …

 

(b) shall, if the said person is not already a party to the action, serve a third-party notice upon such person as soon as is reasonably possible and, having served such notice, he shall not be entitled to claim contribution except under the third-party procedure. If such third-party notice is not served as aforesaid, the court may in its discretion refuse to make an order for contribution against the person from whom contribution is claimed.”

 

18. In this respect, the applicant firstly argues that at the time of issuing of the third party notice the respondent had been aware for more than a year and a half of the detailed nature of the plaintiff’s claim as set out in the statement of claim filed on the 22nd November 2012. Further, the respondent as consultant engineer to the project had conducted investigations into the nature and cause of the problem when they arose in 2010, almost four years before the issuing of the third party notice. Therefore, the applicant contends that the respondent has not brought proceedings to join the applicant to the underlying proceedings “as soon as reasonably possible” within the meaning of s. 27(1) of the 1961 Act.
19. The respondent in this regard cites the observation of Delany and McGrath, Civil Procedure in the Superior Courts, 3rd Ed., (Dublin, 2012) that the “general approach of the courts has been to focus on the question of whether a defendant had acted reasonably rather than on the question of whether it was possible to join a third party earlier”. The respondent further points out that in the Supreme Court decision of Connolly v. Casey [2001] 1 IR 345, the Court placed the emphasis of the analysis squarely on the reasonableness of a defendant in allowing time to lapse before joinder of a third party. In this case Denham J., in delivering the judgment of the Court held that “the test is whether it was reasonable to await the replies to particulars” and that in considering whether the third party notice was served as soon as reasonably possible “the whole circumstances of the case and its general progress must be considered”. Therefore, the respondent claims that it acted reasonably and responsibly, by waiting to receive replies to particulars which were delivered on 28th June, 2013, conducting an inspection and investigations in August, 2013, and awaiting expert reports in November 2013, before seeking to join the applicant to the proceedings in March, 2014. The respondent points out that the time period for delivery of defence would have expired in June, since the amended statement of claim was delivered in May, and further points out that the near universal practice in relation to complex construction disputes is for a defence not to be filed until replies to particulars have been received.

 

20. The applicant on the other hand argues that in considering the meaning of the phrase “as soon as is reasonably possible” the courts have repeatedly laid emphasis on the obligation which rests on the party claiming contribution to move with proper speed. Both parties refer to the Supreme Court decision in Molloy v. Dublin Corporation [2001] 4 IR 52 in which Murphy J. stated at p. 57:

 

“The statute is not concerned with physical possibilities but legal and perhaps commercial judgments. Proceedings cannot and should not be instituted or contributions sought against any party without assembling and examining the relevant evidence and obtaining appropriate advice thereon. It is in that context that the word ‘possible’ must be understood. Furthermore, the qualification of the word ‘possible’ by the word ‘reasonable’ gives a further measure of flexibility.”

In Molloy, Murphy J. stated that the concept of what was “reasonable” would be considered in accordance with what steps it had been necessary to take in order to assemble the relevant materials for commencing the third party action and how quickly those steps had been taken. In this regard, the respondent points to the decision of Robins v. Coleman [2010] 2 IR 180 in which MacMahon J. stated at 188-189:

“It must be appreciated that “as soon as reasonably possible” is a relative concept and, in construing it, one must have regard to all the relevant circumstances. The case law continuously emphasizes this. What might appear as a long period when stated in the abstract might nevertheless, when all of the circumstances are taken into account, attract the protection of the phrase.”

The applicant however, points to the decision of Clarke J. in Greene v. Triangle Developments Limited [2008] IEHC 52, at para 2.7, in which he stated that “on the basis of the authorities it seems to me clear…that the court should adopt a strict approach to the time within which a third party application is brought”. It further points to EBS Building Society v. Leahy & Ors [2010] IEHC 456, in which Hogan J. held, at para 11, that while “the question thus becomes whether, having regard to all the circumstances, it was reasonable for a defendant to wait for the period in question before applying to join the third party…any such permissible delay will generally be measured in weeks and months and not years”. However the respondent contends that in more complex litigation, greater time is typically tolerated and in Connolly v. Casey [2001] 1 IR 345; O’Halloran v. Fetherston [2012] IEHC 349 and Murphy v. Patrick Brock & Sons [2012] IEHC 438, the courts declined to set aside third party notices where the decision was taken to defer joinder until receipt of particulars or expert reports. In the case of construction disputes the courts have regularly refused applications to set aside third party notices with comparable or greater periods of delay. For example in O’Halloran there was a delay of two years following delivery of the statement of claim, fourteen months following delivery of defence and of five to six months following the receipt of an expert report. In Murphy v. Brock the delay was three years after the plenary summons and fourteen months after the statement of claim. The respondent argues that the present facts are concerned with a complex construction dispute and it acted reasonably and with appropriate prudence before taking the decision to join the third party.

21. The applicant on the other hand contends that the respondent has been aware of the subject matter of the action for over four years. It was involved when the complaints of damage first arose in June, 2010, it investigated them and in September, 2010 it reached a conclusion as to how the damage was caused. The respondent has been aware of the detail of the wrongdoing alleged against it since 22nd November, 2012 and yet did not seek to join the applicant to the proceedings until 13th March, 2014 and did not serve third party notice until 23rd April, 2014, over a year after the respondent was required to act by the provisions of O.16 r.1(3). In this regard the applicant contends that the respondent’s explanations for the delay are wholly insubstantial.

 

22. In his affidavit of 4th November, 2014, Eugene Kelly, a director of the respondent, states that it was necessary to await the plaintiff’s replies to particulars dated 28th June, 2013 because “the substance of the plaintiff’s claim was only capable of expert review when particulars were delivered and it was this that the third named defendant focused on next”. However, the applicant argues that there are two difficulties with this statement.

 

23. The first difficulty is that Mr. Kelly’s statement suggests that the detail of the plaintiff’s claim was not made clear until 28th June, 2013, when replies to particulars were delivered. However the applicant contends that Mr. Kelly does not make it clear in his affidavit that the plaintiff’s statement of claim was delivered on 22nd November, 2012 and the third named defendant did not serve a notice for particulars until over six months later on 5th June, 2013. The plaintiff argues that no explanation has been offered for this delay. In addition, Mr. Kelly refers to the amended statement of claim of 17th May, 2013 without referring to the fact that this amended version in no way alters the substantive detail of the commissions of wrongdoing made against the third named defendant in the original statement of claim of 22nd November, 2012 and concerns only changes to the figures claimed for special damages. The applicant further argues that the respondent has been aware of the events which form the subject matter of this action for over four years because it was involved in them and conducted an investigation into their cause. It should be noted in this regard that the notice for particulars did not raise queries concerning the plaintiff’s core allegations. The applicant contends that the reason for this is that the respondent was already aware of the detail of the plaintiff’s claim.

 

24. The second issue raised by the applicant in respect of the statement of Mr. Kelly is that such statement suggests that on receipt of the plaintiff’s replies to particulars the respondent moved with all reasonable speed to join the applicant as a third party. In this regard, the applicant points to the fact that third party notice was not filed until 23rd April, 2014, almost a year after replies to particulars were furnished to the respondents on 28th June, 2013.

 

25. In response to the respondent’s contention that the extent of the applicant’s responsibility only became apparent following the inspection of August, 2013 and the reports of November, 2013 which followed and that it was in reliance on such reports that the application was made to seek leave to issue third party notice in the first instance, the applicant argues that the respondent was under an obligation to progress its investigations with speed, in light of the fact that the case was by that time a year old. The applicant states that the respondent could hardly be said to have discharged such obligation in circumstances where it allowed experts over three months to prepare and deliver their reports without any apparent objection or attempt to intervene. The respondent claims that the delay between the August inspection and the provision of the November reports was due to the extensive nature of the documents furnished in response to its notice for particulars and the advent of the holiday period.

 

26. The applicant further claims that, pursuant to the decision of Clarke J. in Greene v. Triangle Developments Limited, the Court should consider how quickly the respondent moved to apply to join the third party to the proceedings following receipt of an expert’s report. In Greene a period of seven months elapsed between the request for the expert’s report and its receipt but the motion to join issued within eight weeks of that receipt. The applicant claims that this should be contrasted with the present case wherein the respondent delayed for a period of four months before issuing the application.

 

27. Both parties agree that it is by now well-established that the question of whether the defendant’s delay in serving third party notice has caused prejudice to the third party concerned is not a relevant consideration in considering whether the defendant complied with the obligation to serve notice as soon as reasonably possible, as outlined by the Court in the decisions of S.F.L. Engineering Limited v. Smyth Cladding Systems Limited [1997] IEHC 81 and Murnaghan v. Markland Holdings Limited [2007] IEHC 255.

 

28. Finally, the respondent points to the decision of the Supreme Court in Boland v. Dublin City Council [2002] 4 IR 409 in which Hardiman J., delivering the judgment of the Court, affirmed that the requirement under s. 27(1) of the 1961 Act to move for liberty to issue a third party notice “as soon as reasonably possible” also applied to the bringing of an application to set aside such notice. The respondent argues therefore that the Court should have regard to the fact that the applicant first entered an appearance in the proceedings on 20th June, 2014 and expressly solicited a third party statement of claim, which was not a requirement of the order of 24th April, 2014, and thereby put the respondent to cost and expense and reasonably caused it to understand that no challenge would be made to the third party notice. The applicant did not issue its motion to set aside the third party notice until almost two months following delivery of the statement of claim. In those circumstances, the respondent argues that the applicant has failed to seek to set aside the third party notice as soon as reasonably possible.

Decision of the Court

29. On the authorities the law is clear. A third party notice must be served as soon as is “reasonably possible”. What is “reasonably possible is to be assessed in the context of the facts of each particular case. As the respondent has pointed out a lapse of years before service of a third party notice may be excusable depending on the circumstances of a particular case. The more complex the case the more forgiving a Court may be in determining when it was “reasonably possible to issue a third party notice.

 

30. The respondent asserts that this is a complex construction dispute involving allegations of professional negligence in which it was proper and appropriate to await the plaintiff’s replies to particulars and receipt of expert reports allocating blame to the third party prior to seeking indemnity and contribution against it. The respondent contends that there was no undue delay on their part and that they moved promptly from receipt of expert reports in mid-November 2013. On the particular facts of this case, the Court does not agree.

 

31. The Brettstapel slabs at the core of the underlying proceedings were installed between 22nd March and the 3rd. May 2010. Within weeks problems manifested when a gable wall in the relevant housing unit was found to be off plumb. This was, according to the statement of claim as averred to in the affidavit of Brendan Flanagan, first noted on the 8th June 2010. Initially it was considered that the applicant who had designed and installed the timber frames of the building was at fault. The relevant wall was demolished and reconstructed but within weeks the same wall was again off plumb. There followed a major investigation by the four defendants including the respondent. According to the evidence it was found that the Brettstapel slabs had expanded in the horizontal plane, damaging the floor, the timber frame, the windows and the external cladding of Block A. At that time the respondent and the first and second defendants formed the view that the expansion was due to moisture absorption by the Brettstapel slabs with consequent swelling. According to the statement of claim this was subsequently confirmed by testing and specialist surveys. The source of the moisture was identified as atmospheric humidity and/or rain ingress. It is inconceivable to the Court that the role of the third party as installer of the Brettstapel slabs was not fully considered at the time of this investigation which took place in the summer of 2010.

 

32. There followed a protracted dispute with the fourth defendant building contractor as to the appropriate resolution of the problem which had arisen. The respondent was centrally involved in that process as engineering consultants to the project. Again the role of the third party as subcontractor to the builder must have been considered even though the third party was not a participant in that dispute resolution process.

 

33. In the course of 2011, the fourth defendant’s building contract was terminated and the company was put into liquidation pursuant to a High Court Order on 4th July 2011. Again as consulting engineers to the project the Court is satisfied to draw the inference that the respondent was aware of this development and that it had the opportunity to consider any consequences which might flow from that event.

 

34. By reason of the foregoing events, when the plaintiff issued proceedings by way of plenary summons against the architects, the respondent engineers and the construction company (in liquidation) on the 21st September 2012, the respondent was in the Court’s view, well placed to assess its situation so as to decide whether or not it was appropriate to seek to join the applicant/third party to the proceedings. The Court cannot overlook the fact that the respondent holds itself out as an expert in engineering and therefore itself possesses the expertise to assess the issue of responsibility for the problems which arose from the use of Brettstapel slabs in the construction of block A of the project. This respondent is not in the same position as a defendant who may be dependent on obtaining independent expert advice before taking a decision to issue third party proceedings.

 

35. The plaintiff’s statement of claim was delivered on the 22nd November, 2012. As already noted it is an extensive pleading running to twenty pages in which every aspect of its claim against each defendant is specifically pleaded. There are twenty one particulars of negligence and breach of duty including statutory duty and breach of contract alleged against the respondent in the statement of claim. They include the following particulars of relevance to this application:

 

(g) Did not sufficiently advise the Employer or the Architect of the need to employ a specialist subcontractor to design and/or install the Brettstapel flooring;

(h) Did not check and superintend the engineering design and workmanship of all parties providing engineering design;

 

(j) Failed adequately to specify the means of protecting the wood from moisture ingress, both before the slabs are incorporated into the works and afterwards, until the building is sealed and heated;

 

(k) Failed adequately to cater in the design for the Project for the effects of the expansion that could be expected to occur in the event of the Brettstapel slabs absorbing environmental and atmospheric moisture, thereby causing the slabs to damage the structure when they expanded;

 

(i) Failed to produce a dedicated specification for the installation and/or protection of the Brettstapel slabs, and instead produced general specifications for internal timber and the timber frame, without indicating which category applied to the Brettstapel flooring, and in partial conflict with the specification produced by other professionals;

 

(m) Specified that internal timber should be erected with a moisture content of not less that 21%, without specifying a moisture content for the timber frame;

 

(n) Specified an unsuitable moisture content for internal timber flooring;

 

(o) Failed to specify that the slabs should be maintained, post-installation, at the moisture content at which they were installed;

 

(p) Specified how timber frame units were to be protected from the weather, but failed to specify how to protect internal timber generally or the Brettstapel flooring specifically;

 

(q) Did not carry out site inspections, in particular inspections of the Contractor’s work on and protection of the Brettstapel flooring, as often as was necessary.

 

36. If the issue of the subcontractor’s potential liability to the respondent was not sufficiently clear from these particulars the respondent also had sight at this point of the particulars of negligence and breach of duty and breach of contract pleaded against the Contractor. They are eight in number and include:

(a) Did not ensure that the Brettstapel timber was properly protected from atmospheric and environmental moisture during it’s travel to the Project site, after arrival on the site, during installation, or after installation;

(b) Did not execute and complete the installation of the Brettstapel flooring in accordance with the requirements in and to be reasonably inferred from the Building Contract;

 

(c) Did not execute and complete the installation of the Brettstapel flooring in a proper and workmanlike manner and using good practice;

 

(d) Did not recognize sufficiently quickly, and take any or sufficient measures to stop the expansion of the Brettstapel flooring.

 

37. In the Court’s view the statement of claim contained sufficient particulars to permit this respondent to decide whether to join the subcontractor as a third party having regard to;
38. a) its particular knowledge arising from its involvement in the project and the problems which arose;
39. b) its expertise as consulting engineers;

 

1. c) the detailed particulars pleaded in the statement of claim.

 

38. In the circumstances of this case the Court is not persuaded that the respondent needed anything more than the statement of claim to decide on the appropriateness of joining the third party. Indeed the Court goes so far as to suggest that this may be one of the few cases in which a requirement to comply with the twenty eight day time limit set out in O. 16 r. 1(3) might be warranted.
39. While the respondent has asserted that it required sight of the replies to particulars in order to brief independent experts to advise it in relation to the third party’s liability, it has adduced no evidence to support that assertion. The Court has not been directed to any replies which were crucial or even material to the respondent’s decision to issue third party proceedings. The experts retained by it have not been identified nor has the nature or scope of their examination been disclosed. In this regard the Court also notes that the particulars of negligence pleaded against the third party both in the third party notice and the third party statement of claim do not differ materially from those pleaded by the plaintiff in the underlying proceedings, all of which suggests that the respondent was never in fact dependent on the assessment of an independent expert to inform its decision to join the third party/applicant. In these circumstances, the Court is satisfied that the third party notice in this particular case was not issued as soon as reasonably possible within the meaning of s27(1)(b) of the Civil Liability Act 1961.

 

40. Finally the respondent submitted that the applicant has itself been guilty of delay in bringing its application to set aside the respondent’s third party notice and for that reason the court should not set it aside. It is clear from the decision of the Supreme Court in Boland v Dublin City Council [2002] 4 IR that just as a defendant must act as soon as “reasonably possible” in applying to join a third party so must a third party act as soon as “reasonably possible” in seeking to set it aside. Again in the context of the facts of this particular case the court is satisfied that the third party/applicant acted reasonably. An appearance to the third party notice was entered on the 20th June, 2014 and a third party statement of claim was requested. The Court considers that it was reasonable for the third party to seek a statement of claim in circumstances where the claim related to events which had occurred four years previously and where the third party, unlike the respondent, had not been a participant in the dispute resolution process which had taken place over a number of months in early 2011.

 

41. The mere request for a statement of claim is not such a step in the proceedings as would estop the third party from challenging the issuing of the third party proceedings. It seems to the Court that a party is entitled to know the claim against it before deciding on the approach it adopts to those proceedings. Had the applicant filed a defence before bringing this application, different considerations would apply. In such circumstances a Court might well hold that having opted to defend the proceedings the third party could not then resile from that position by seeking to set them aside. Further the delay involved in taking such a step could also mean that the application had not been brought as soon as “reasonably possible”

 

42. The third party statement of claim was delivered on the 8th August 2014 and following a change of solicitor, the notice of motion seeking an order setting aside the third party proceedings was issued six and a half weeks later on the 24th September 2014. In the Court’s view, having regard to the information which required to be digested and the inquiries which required to be made, this was not an unreasonable period for the completion of such work, particularly as the entire period fell within the long vacation. The Court is therefore satisfied that the applicant brought its application as soon as reasonably possible.

 

43. For the foregoing reasons the Court will set aside the third party proceedings brought by the third named defendant/respondent on the grounds that in the circumstances of this case those proceedings were not brought as soon as reasonably possible as required by s. 27(1)(b) of the Civil Liability Act 1961.