Voluntary Discovery – be crystal clear when agreeing terms

Speed Read 

The Commercial Court has recently delivered judgment in Irish Airline Pilots Pension DAC v Mercer [2022] IEHC 22  which considered the approach that a court will take in interpreting an agreed category of discovery in circumstances where there is a dispute regarding the extent of the relevant category.

• The Defendant argued that the initial reasons given for the category were relevant to how the Court should interpret the scope of the category when considering if it had been complied with.
• The Court distinguished between the relevance of such reasons in applications for discovery and in applications for interpretation of discovery already ordered or agreed between the parties.
• In interpreting agreed categories of discovery the Court will look at the wording agreed and, if it is unambiguous, the reasons originally advanced for the category will not alter the interpretation.
• Categories which use the words "including but not limited to" have the effect of making the language which follows those words subordinate to the primary language preceding those words. Therefore the key wording will be the first words in the category and everything else that follows as being "including but not limited to" must be a sub-set of the original wording and does not create a new category of discovery. 

Twomey J held that in deciding whether the documents are encapsulated by the category, the determination will be made purely by interpreting the court order for discovery. The Court confirmed that this is to be done in accordance with the normal interpretation rules. 

Discussion 

The plaintiff is seeking damages from the defendant company for its alleged failure to promptly sell some €40m worth of shares (which had been held in a pilots' pension scheme) when a decision was made to sell the shares on 14 February 2020. It was alleged that the delay in selling the shares meant that the pilots suffered losses due to the collapse of the stock market in March 2020. 

The parties voluntarily agreed discovery, and recorded their agreement in relation to a particular category of documents ("Category 2") as follows:

“All documents created between 1 January 2018 and 24 November 2020 relating to or recording the discussions and consideration internally or with third parties concerning the [Pilots’] decision to realise €40,000,000 of the Scheme’s global equity holdings with Irish Life Investment Managers (“ILIM”) and to hold the proceeds in cash pending reinvestment in committed infrastructure and long lease vehicles, including but not limited to all advices received by the [Pilots] from Mercer or any other party on the investment strategy for the Scheme, including for the avoidance of doubt any consideration of the risk appetite of the Scheme, and all documents setting out communications, deliberations and consideration of those advices internally and with third parties (including the Pensions Authority), and all attendances/ minutes/notes of the meeting on 14 February 2020 and all documents setting out communications, deliberations and consideration had concerning the decision to disinvest prior to and after the meeting.”

The plaintiff had made discovery of documents directly relating to the decision to sell In February 2020. The defendant argued that documents relating to the investment scheme's long-term strategy fell within the category agreed between the parties, as set out above. It claimed that when the wording of the category was viewed in light of the facts of the case, the pleadings and the reasons put forward by the defendant for seeking that category of discovery, this broader document set fell within scope.

This was significant because "a key defence" of the defendant in the case is a claim that the decision to sell the shares was based on the long-term strategy that had been agreed by the parties and was not an attempt to avoid a short-term risk of a drop in performance. 

Twomey J was of the view that this was an application in which the Court had to interpret the terms of a discovery agreement so as to reveal the extent to which the terms included the documents relating to the investment strategy. Twomey J noted that the time for determining whether a category of documents was relevant or not was over. Instead, the Court engaged in an interpretation exercise to determine whether the category of documents fell within the agreed terms. Citing the judgment of Murray J in Daly v Ardstone Capital Ltd [2020] IEHC 200, a court must apply the "rules generally applicable to interpreting written instruments". Accordingly, the Court considered the natural and ordinary meaning of the words used in the agreement. 

Decision 
Twomey J held that the opening words of the category highlighted that the "primary purpose" of the category was to discover documents that related to the decision to disinvest. The Court indicated that had the defendant wanted a designated category of documents relating to the investment strategy, it could have requested such documents as a subcategory or an additional category. The Court held that what the defendant had sought and agreed to was a category of documents regarding the investment strategy that were relevant to the decision to disinvest. In essence, the primary category was documents relating to the disinvestment decision and a subcategory of that was documents regarding the investment strategy that were relevant to the disinvestment decision. Accordingly, the application for further and better discovery was refused. 

This decision signals an unwillingness by the courts to widen the scope of terms as agreed between parties and sets out clearly the means by which any such disagreement which comes before them will be approached. The case also underscores the central importance of the wording agreed in each category of voluntary discovery. 

Speed Read 

The Commercial Court has recently delivered judgment in Irish Airline Pilots Pension DAC v Mercer [2022] IEHC 22  which considered the approach that a court will take in interpreting an agreed category of discovery in circumstances where there is a dispute regarding the extent of the relevant category.

• The Defendant argued that the initial reasons given for the category were relevant to how the Court should interpret the scope of the category when considering if it had been complied with.
• The Court distinguished between the relevance of such reasons in applications for discovery and in applications for interpretation of discovery already ordered or agreed between the parties.
• In interpreting agreed categories of discovery the Court will look at the wording agreed and, if it is unambiguous, the reasons originally advanced for the category will not alter the interpretation.
• Categories which use the words "including but not limited to" have the effect of making the language which follows those words subordinate to the primary language preceding those words. Therefore the key wording will be the first words in the category and everything else that follows as being "including but not limited to" must be a sub-set of the original wording and does not create a new category of discovery. 

Twomey J held that in deciding whether the documents are encapsulated by the category, the determination will be made purely by interpreting the court order for discovery. The Court confirmed that this is to be done in accordance with the normal interpretation rules. 

Discussion 

The plaintiff is seeking damages from the defendant company for its alleged failure to promptly sell some €40m worth of shares (which had been held in a pilots' pension scheme) when a decision was made to sell the shares on 14 February 2020. It was alleged that the delay in selling the shares meant that the pilots suffered losses due to the collapse of the stock market in March 2020. 

The parties voluntarily agreed discovery, and recorded their agreement in relation to a particular category of documents ("Category 2") as follows:

“All documents created between 1 January 2018 and 24 November 2020 relating to or recording the discussions and consideration internally or with third parties concerning the [Pilots’] decision to realise €40,000,000 of the Scheme’s global equity holdings with Irish Life Investment Managers (“ILIM”) and to hold the proceeds in cash pending reinvestment in committed infrastructure and long lease vehicles, including but not limited to all advices received by the [Pilots] from Mercer or any other party on the investment strategy for the Scheme, including for the avoidance of doubt any consideration of the risk appetite of the Scheme, and all documents setting out communications, deliberations and consideration of those advices internally and with third parties (including the Pensions Authority), and all attendances/ minutes/notes of the meeting on 14 February 2020 and all documents setting out communications, deliberations and consideration had concerning the decision to disinvest prior to and after the meeting.”

The plaintiff had made discovery of documents directly relating to the decision to sell In February 2020. The defendant argued that documents relating to the investment scheme's long-term strategy fell within the category agreed between the parties, as set out above. It claimed that when the wording of the category was viewed in light of the facts of the case, the pleadings and the reasons put forward by the defendant for seeking that category of discovery, this broader document set fell within scope.

This was significant because "a key defence" of the defendant in the case is a claim that the decision to sell the shares was based on the long-term strategy that had been agreed by the parties and was not an attempt to avoid a short-term risk of a drop in performance. 

Twomey J was of the view that this was an application in which the Court had to interpret the terms of a discovery agreement so as to reveal the extent to which the terms included the documents relating to the investment strategy. Twomey J noted that the time for determining whether a category of documents was relevant or not was over. Instead, the Court engaged in an interpretation exercise to determine whether the category of documents fell within the agreed terms. Citing the judgment of Murray J in Daly v Ardstone Capital Ltd [2020] IEHC 200, a court must apply the "rules generally applicable to interpreting written instruments". Accordingly, the Court considered the natural and ordinary meaning of the words used in the agreement. 

Decision 
Twomey J held that the opening words of the category highlighted that the "primary purpose" of the category was to discover documents that related to the decision to disinvest. The Court indicated that had the defendant wanted a designated category of documents relating to the investment strategy, it could have requested such documents as a subcategory or an additional category. The Court held that what the defendant had sought and agreed to was a category of documents regarding the investment strategy that were relevant to the decision to disinvest. In essence, the primary category was documents relating to the disinvestment decision and a subcategory of that was documents regarding the investment strategy that were relevant to the disinvestment decision. Accordingly, the application for further and better discovery was refused. 

This decision signals an unwillingness by the courts to widen the scope of terms as agreed between parties and sets out clearly the means by which any such disagreement which comes before them will be approached. The case also underscores the central importance of the wording agreed in each category of voluntary discovery. 

For further information, please contact Eileen Roberts, partner, Orla Clayton, Knowledge lawyer or any member of ALG's Disputes & Investigations team.

Date published: 3 February 2022