Introduction

In legal proceedings evidence is critical, whether the case involves a criminal charge where the guilt of the accused must be established beyond a reasonable doubt or civil proceedings where the onus is on the person bringing the cases (the ‘plaintiff’) to establish his/her case on the balance of probabilities. In many cases, important evidence is not in the form of what a person can testify they directly heard or witnessed, but in the form of relevant documentation. Sometimes, a party to proceedings may know or suspect that vital documents that may help them to make out their case are in the possession of another person, but they cannot obtain those documents on a voluntary basis.

Today’s case review concerns a recent High Court case where the plaintiff sought, for the second time, what the law terms the ‘discovery’ of documentation alleged to be in the possession of the defendant, as a preliminary application in a claim for compensation arising out of his employment as an’ Investment Manager’ with a financial services firm. This claim for compensation arose out of an alleged agreement that he would be entitled to a percentage stake in the realised value of a commercial property investment fund operated by the defendant. These ongoing proceedings are in addition to a successful unfair dismissal claim brought by the plaintiff arising out the termination of his employment on grounds of redundancy in 2016.

This article concludes with an explanation of the witness summons and document discovery processes available in proceedings under employment legislation outside of the courts, namely before the Workplace Relations Commission (WRC) and on appeal to the Labour Court.

Daly v Ardstone Capital Limited [2020] IEHC 200, Judgment of April 30th, 2020

Some background

The plaintiff commenced employment as an Investment Manager with the defendant in September 2013. His employment came to an end on 8 July 2016. Arising out of the termination of his employment, the plaintiff brought an unfair dismissal claim to the Workplace Relations Commission (WRC) and in a decision of 20th February 2019, he was found to have been unfairly dismissal and was awarded €60,000 in compensation. He was also awarded over €9,000 in compensation under the Terms of Employment (Information) Act 1994 (the equivalent of four weeks remuneration) due to his employer’s failure to provide him with a written statement of his core terms of employment.

His former employer argued that he was fairly dismissed on grounds of redundancy as allowed for under the legislation, but Mr Daly contended that the redundancy was contrived for the purpose of depriving him of what he claims is an entitlement to a share of the profits of the investment fund. In summary, the WRC ruled that the respondent had not shown that a redundancy situation existed and that the dismissal was procedurally inadequate. Specifically, the Adjudication Officer (AO) concluded that ‘the lack of a redundancy process and the hastiness of the July meetings mean that the respondent has not shown that a redundancy situation applied to the complainant’s position. It follows that the dismissal was unfair.’

The award of €60,000 was equivalent to six months remuneration, based on the complainant’s annual salary of €120,000. This reflected the AO’s view that the complainant had not made sufficient attempts to mitigate his loss of earnings between the date of his dismissal and the date of the hearing of his claim, as required by the legislation.

In this subsequent High Court application, Mr Daly claims that he is entitled to a 10% share of the defendant’s profits in a commercial investment fund known as the Added Value Fund. This fund was established by the defendant in December 2013 together with other investors, some three months after the plaintiff’s employment began. It consisted of seven large commercial properties in Dublin which were to be acquired, renovated and subsequently sold on at a profit.

The plaintiff says that first he was offered a 5% share of the defendant’s potential profit from the Fund in the course of his interview prior to his appointment and that this was to be paid when the last of the seven properties was sold. He contends that at a lunch meeting in July 2015, the defendant agreed to increase this share of the profit in the fund to 10%. He seeks a declaration from the High Court that he is entitled to this share; an order directing the defendant to pay it to him and damages for breach of contract, breach of duty, and misrepresentation.

By contrast, the defendant denies that there was any agreement to grant the plaintiff a percentage of the profits in the fund. It maintains that in September 2013 the plaintiff was only offered a short-term role and that the fund did not even exist at that time. It says that in July 2015 he was unhappy with an increase in salary offered to him and sought the 10% share in the fund, not on the basis of any alleged prior representation made to him, but because he felt he deserved it. It also claims that while working as their employee, he unlawfully took information concerning the defendant’s business. Arising from this allegation, it counterclaims for relief against the plaintiff.

The first discovery application

By virtue of an Order of 15 March 2018, the High Court (Stewart J.) had already directed that the defendant ‘make discovery’ i.e. provide the plaintiff with the some of the documentation he sought. Some of the categories of documents to be discovered had been agreed; others had to be resolved with the assistance of the Court. Thus the order made by Stewart.J referred to the agreed categories and then in turn to the specific documents to be discovered under four disputed categories. It required the defendant to make such discovery within eight weeks of the making of that order. An affidavit (i.e. a sworn statement) of discovery indicating compliance with the order on behalf of the defendant was sworn on 27 July 2018.

However, on 18 January 2019, solicitors for the plaintiff issued their first correspondence complaining of inadequacies in the defendant’s discovery. In the course of further correspondence between solicitors for the parties, the defendant delivered two ‘supplemental’ affidavits of discovery of 27 February 2019 and 14 June 2019. Nonetheless, the plaintiff continued to maintain that the defendant’s discovery was inadequate and applied to the Court seeking ‘further and better discovery’.

The second discovery application – Some guiding principles

Further discovery in legal proceedings in the High Court is provided for in the Rules of the Superior Courts (RSC) since 2011, and by virtue of the established principles set down in decisions of the Court over time. Paragraphs 7-18 of the judgment of Murray.J in the second discovery application contain a detailed exploration of these rules and principles, from which it is suggested the following points might be noted:

• ‘Further and better discovery’ will only be directed by the Court where it is shown that there are documents which the party was ordered to discover that have not been provided; or that the party has misunderstood the issues in the action; or his/her view was wrong that certain documents are outside his discovery obligation.
• Such an order will not be granted where the application is based solely on an affidavit asserting that the other party has documents in his possession that ought to have been, but were not, disclosed in the first affidavit of discovery. There is an onus on the applicant to provide some evidence to raise ‘a reasonable suspicion that the party who had already made an affidavit had other documents relating to the matters in question in his possession’.
• Where each party presents a different factual account of matters, the Court must try to resolve the issues in such a way that the agreed or directed categories of discovery work. However, it is not within the capability nor function of a court to resolve those disputed issues of fact, though it may favour the evidence submitted by one party over the other where it is corroborated by independent documentation. Where evidence is ‘equal and opposite’, the onus of proof will be on the party seeking further and better discovery.
• In order to help determine these issues, the Court may direct the respondent to swear an affidavit to specifically address issues raised in the application.
• An application for further and better discovery, which concerns the enforcement of categories of discovery which have already been agreed or directed, must be distinguished from an application for additional discovery. The latter is an application to the court to vary the terms of a discovery order or agreement and is determined in accordance with Order 31, Rule 12(11) RSC.
• In relation to additional applications, the Court sounded a cautionary note in stating that ‘the interests of all in the efficient disposition of proceedings requires that a party has one chance to seek discovery and having agreed to or obtained orders for discovery of particular categories of documents must have good reason for coming again’.
• The Court also has the jurisdiction to ‘ensure that categories of discovery, where they prove ambiguous or give rise to contentious (and as sometimes happens, semantic) disputes of construction, can be resolved by the Court in a way that sensibly implements the intention of the parties’.

The second discovery application – The disputed categories

The judgment then turned to deciding whether the defendants had failed to make adequate discovery in connection with specific categories of documents that the previous judgment of Stewart.J had ordered. Firstly, it focused on documentation relating to an entitlement to a share of the profit from the fund alleged to have been promised to the plaintiff as a term or condition of employment, both prior to the commencement of his employment with the defendant and throughout that employment.

It was submitted on behalf of the plaintiff that in the course of his unfair dismissal claim in May 2018 the defendant company had produced a spreadsheet which referred to him having, on one sheet, a 5% share and on another a 10% share, of the profit from the fund, quantifying it as ‘275,000’ and ‘550,000’ respectively. The plaintiff also maintained that he himself had previously attached this spreadsheet to an email he had sent to an employee of the defendant following a meeting in July 2015, for the purpose of illustrating his entitlement and comparing it with that of a colleague to a share in a different fund operated by the defendant. However, following the termination of his employment, access since to his email account and files had been immediately cut off.

It was accepted by the defendant that it had not made available either of these documents – the spreadsheet or the email from the plaintiff attaching the spreadsheet – in response to the order for discovery. However, it argued that these documents did not come within the first relevant category ordered by Stewart.J because there was no entitlement to or promise of a share of the profits in the fund in the first place. Indeed, by extension therefore, it argued that there were no documents in this category.

Murray.J ultimately dismissed this argument in finding that the language relating to this category of the order for discovery should be interpreted sensibly and in accordance with its context. He ruled on this basis that ‘the defendant is required to make discovery of documents relating to the entitlement alleged by the plaintiff, so that to come within the category documents must touch or concern the entitlement alleged by the plaintiff and, in particular, the allegation of such a promise’.

The Plaintiff’s quest proved less successful in respect of the next disputed category. These related to documents relevant to funds in the Defendant’s power, possession or procurement which concerned promises or payments made to other employees of the same category or position as the Plaintiff during the period of his employment.

The defendant made discovery of only one contract of employment under this heading. It was argued by the Plaintiff that there were other employees who are ‘of the same category or position’ as him and that the contracts of those persons – if relevant to promises or payments concerning funds – should be discovered. The defendants on the other hand argued that the employees identified by the plaintiff were not in fact of the same category or position as the plaintiff. In deciding that the Plaintiff had failed to discharge the onus imposed upon him in seeking further and better discovery under this heading, Murray.J noted that the Plaintiff’s affidavit seeking better discovery here had identified six employees who are at ‘a similar level or carried out similar work to our client with Ardstone’. However, the order made by Stewart.J was addressed not to persons at a ‘similar´ level or carrying out ‘similar’ work but to persons of the ‘same’ category or position.

Further decisions were reached by the Court in relation to disputed categories as follows:

• Documents detailing the work carried out by the Plaintiff in relation to the fund, limited to the period of his employment, were ordered to be discovered. These included not just documents that itemise his work but also documents that evidence it, including input into slide presentations, for example.
• A further disputed category of documents arose not from the plaintiff’s claim, but from the defendant’s counterclaim. Here, the plaintiff suggested that by showing that other members of staff engaged in ‘ancillary projects’ his defence to the counterclaim will be advanced. The Court noted here that no documentation of any kind was exhibited by either party in support of the position they adopted, so that the dispute presented here could not be resolved. Again, the onus was on the Plaintiff on this issue and it had not been discharged.

The final and arguably most significant heading upon which the Court delivered its conclusions concerned the deletion of the Plaintiff’s work emails by the Defendant. Here it was noted that the defendant had already argued in the course of the Plaintiff’s unfair dismissal claim before the WRC that at the meeting on July 8 2016 at which his employment had been terminated, the plaintiff had said ‘see you in court’, although he appears to deny ever making this statement. In a letter dated 30th April 2018, the plaintiff’s solicitor’s record that on 18th August 2016 they formally requested the defendant to retain all correspondence relating to their client’s employment. Thus, at the very latest upon receipt of the letter dated 18th August 2016 and potentially earlier when he was dismissed on July 8th, the defendants knew that there was a prospect of litigation arising from their relationship with the plaintiff.  Once they knew this, the Court firmly held that the relevant documents should not have been destroyed.

In addition, the Court noted that no reference of any kind was made to deleted e-mails in the affidavit of discovery delivered by the defendant on 27 July 2018 to comply with the order made by Stewart.J pursuant to the first discovery application. Again, Murray.J was unequivocal on this point that ‘reference should have been made to the deleted e-mails, and an explanation tendered as to when they had been deleted and what attempts had been made to reconstitute them’.Having made a number of further observations critical of the manner in which the defendant and its solicitors addressed these issues, the Court ordered the defendant to swear an affidavit which addresses:

• The exact date on which (a) the plaintiff’s e-mail account was shut down and (b) the plaintiff’s e-mails were deleted.
• The date on which the defendant began a retrieval process in relation to the emails.
• The identity of the person or persons engaged to retrieve those mails, and how that task was undertaken.
• How many emails were successfully retrieved and how many were not.
• The nature of the emails which were not successfully retrieved including how they relate to the categories of discovery ordered by the Court on 25 May 2018.

Conclusion

Two High Court applications for discovery down and the subject matter of the principal contention between the parties in this case – the right or not to a percentage of the defendant’s profit in the fund – remains to be directly considered and decided. Legal costs in such scenarios mount and with them, the stakes arguably get higher.

In conclusion, it is also important to note that in addition to Court discovery rules, the importance of discovery (and witness summons) procedures in employment rights cases outside the courts has been acknowledged in a number of legislative provisions namely:

In relation to the Labour Court, S.21 (1) of the Industrial Relations Act 1946 provides that:

The Court may for the purposes of any proceedings before it under this Act do all or any of the following things—

(a) summon witnesses to attend before it,

(b) examine on oath (which a member or the registrar of the Court is hereby authorised to administer) the witnesses attending before it,

‘An adjudication officer may, by giving notice in that behalf in writing to any person, require such person to attend at such time and place as is specified in the notice to give evidence in proceedings under this section or to produce to the adjudication officer any documents in his or her possession, custody or control that relate to any matter to which those proceedings relate’.In relation to the WRC, S.41 (10) of the Workplace Relations Act 2015 provides that:

It would appear that the scope of s.41 (10) of the 2015 Act did not extend to the unfair dismissals legislation, leaving a situation where witness summons and discovery powers did not apply to unfair dismissals cases being considered by the WRC[1]. This omission was recently remedied in the Employment (Miscellaneous Provisions) Act 2018 by the addition of the following sub-section to Section 8 of the Unfair Dismissals Act 1977 (as amended) providing that:

‘An adjudication officer may, by giving notice in that behalf in writing to any person, require such person to attend at such time and place as is specified in the notice to give evidence in proceedings under this section or to produce to the adjudication officer any documents in his or her possession, custody or control that relate to any matter to which those proceedings relate’.

The cumulative effect of these provisions constitutes a significant tool in the armoury of an advocate, particularly one representing a complainant, to compel not just witness attendance but also the production of documentary evidence that may be vital to the success of employment rights claims brought by or on behalf of client.