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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Kearney & Anor v. Barrett & Ors [2003] IEHC 110 (17 December 2003) URL: http://www.bailii.org/ie/cases/IEHC/2003/110.html Cite as: [2004] 1 IR 1, [2003] IEHC 110, [2004] 2 ILRM 43 |
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Record Number: 2001 No. 17747P
Between:
Plaintiffs
Defendants
Judgment of Mr Justice Michael Peart delivered the 17th day of December 2003:
This is an application made by the plaintiffs by way of Notice of Motion dated 7th November 2003 seeking an order striking out the Notice of a Tender Offer made herein by the defendants on 22nd August 2003.
This notice of motion is grounded upon an affidavit of John Shaw solicitor, sworn on the 9th day of October 2003. In his affidavit Mr Shaw states that some negotiations took place between the parties on 9th June 2003 in an effort to try and reach a settlement of this action. The negotiations were unsuccessful.
However Mr Shaw states that during the negotiations various aspects of the plaintiff's case were weighed between the parties in relation to its strength and/or weakness, and he states that very significant prejudice has been caused to the plaintiffs in this case because of some concessions which were openly made by the plaintiffs' counsel, which concessions concern the value of the case.
The negotiations took place, as I have stated, on 9th June 2003 and on 22nd August 2003 a Notice of Tender Offer in the sum of €100,151 was served by the defendants. Mr Shaw states that it has always been his view that unless the defendants, when they attend settlement negotiations, reserve their position to put in a lodgment or make a tender, they may not do so after unsuccessful negotiations have taken place.
He states in his affidavit that it is one thing to show a party's hand in the course of negotiations, but that it is another thing for that to be used thereafter by the other side for the purpose of calculating a tender and then making that tender. He submits in his affidavit that as a matter of public policy defendants ought not to be allowed to take advantage of the plaintiffs in his manner after settlement negotiations have taken place, but which proved unsuccessful, and states that in this particular case very significant prejudice has been caused to the plaintiffs because of the concessions which were openly made at the negotiations on behalf of the plaintiffs concerning the value of the case and the reasons for that value.
He also states that if the plaintiffs had realised that following the negotiations a tender offer was going to be made, the negotiations would have been much more circumspect in the way they were conducted. He goes on to say that if the defendants, at the negotiations, had specifically reserved the right to make a lodgment or tender following any unsuccessful negotiations, he would have advised the plaintiffs not to proceed with such negotiations and to allow the defendants make whatever settlement proposals they had but without any input from the plaintiffs at the negotiations.
A replying affidavit sworn the 25th November 2003 by Mr Fergal Dennehy has been filed. He is the solicitor acting on behalf of the defendants. He states that in April 2003 he wrote to the plaintiffs' solicitors on a without prejudice basis asking whether they would be interested in meeting with a view to possibly compromising these proceedings, and that the plaintiffs' solicitors responded stating that they had no difficulty with such a meeting provided that they got sight of the defendants' valuer's report and their medical reports. The meeting for the 9th June 2003 was then arranged, and Mr Dennehy states that the meeting proceeded on a without prejudice basis. Prior to the meeting the said reports were furnished to the plaintiffs. However Mr Dennehy states in his affidavit that he had also requested that the plaintiffs' valuer's report and medical reports be furnished to him, but that the plaintiffs' solicitor declined to do so, except that prior to the meeting the plaintiffs' agricultural adviser's report was furnished, but nothing more. In those circumstances Mr Dennehy states that it was the defendants who revealed their hand in this matter and not the plaintiffs.
He denies that the defendants tried to take advantage of the plaintiff in relation to the negotiations and the subsequent tender offer. In fact he states that before the negotiations with the plaintiff took place, the defendants met amongst themselves and determined to make an offer at the negotiations to the plaintiffs in the sum of €100,000. This was done but that offer was refused. He points to the fact that after the negotiations the tender offer was put in at a sum of €100,151, and that it is clear that in fact no advantage was in fact gained or taken as a result of the negotiations.
In his affidavit, Mr Dennehy goes on to state that he disagrees with Mr Shaw's contention that once a party enters into without prejudice negotiations with the other side, that party is precluded from thereafter making a lodgment or tender offer, unless they specifically reserve their right to do so. He also points to the provisions of S.I. 391 of 1998 which obliges parties to an action to disclose to each other their experts' reports, and that clearly any rule there may have been that a party could not make a lodgment after without prejudice negotiations no longer applies. He also states that in fact the plaintiffs did not fully comply with their obligations under that Statutory Instrument until the defendants brought a motion to compel such compliance.
The plaintiffs, through Mr James Connolly SC, make two submissions. Firstly he submits that this Tender Offer is defective, as it has not been made in accordance with what he says is the appropriate rule of the Superior Court Rules for an action of this kind. He submits that this is not an action to which Section 1(1) of the Courts Act, 1988 applies, namely what is known as a "personal injury action", and that therefore the appropriate rule under which to make a lodgment is Order 22, rule 1, and not, as in a personal injury action, Order 22, rule 7. There is a distinction between these two rules as to the time at which such a lodgment can be made.
Order 22, rule 1, sub-paragraph (7), applicable to a personal injury action, it is provided as follows:
"A defendant may once, without leave and upon notice to the plaintiff, pay into court a sum of money in satisfaction of any action to which section 1(1) of the Courts Act, 1988 applies, either at the time of the delivery of a Defence or within a period of four months from the date of the notice of trial. A defendant who has not made such payment within the time permitted or who wishes to increase such sum as has been lodged may only do so by leave of the court and upon such terms and conditions as to the court seem fit."(my emphasis)
If this action is a personal injury action, then the lodgment made in this case has been made within this timeframe, on the basis that I have been informed that the Notice of Trial is dated 17th July 2003, and Notice of Tender Offer is dated 22nd August 2003, i.e within 4 months of the date of Notice of Trial. I have some doubt in my mind as to whether that Notice of Trial may have lapsed in fact due to the failure to set the action down for hearing within 14 days of the date of that Notice of Trial (see Order 36, rule 18 of the Rules of the Superior Courts), as having raised the question during argument as to whether the action had in fact been set down following service of the Notice of Trial, I do not recall that question being resolved. Under the rule , strictly construed, it would appear that a defendant making a lodgment in a personal injury action must do so at the time he delivers his Defence, and that if he does not do so at that time, he cannot do so as of right until and if a Notice of Trial is served, and then within 4 months thereof, except by leave of the court.
Accordingly in this case, if indeed it is a personal injury action, and if the Notice of Trial had lapsed at the time the tender offer was made due to the failure of either the plaintiff to set the action down for hearing, the defendants have not complied with the strict letter of the rule, and would have required leave of the court to make the tender offer.
On the other hand, if this is not a personal injury action, and therefore an action to which Section 1(1) of the Courts Act, 1988 does not apply, then the tender offer is governed by Order 22, rule 1, sub-paragraph (1) which provides as follows:
"In any action for a debt or damages (other than an action to which section 1(1) of the Courts Act, 1988 applies) or in an admiralty action the defendant may at any time after he has entered an Appearance in the action and before it is set down for trial, or at any later time by leave of the court, upon notice to the plaintiff, pay into court a sum of money in satisfaction of the claim or (where several causes of action are joined in one action) in satisfaction of one or more of the causes of action)."(my emphasis)
In that event, the tender offer is properly made in this case but only if, as may well be the case, the plaintiff has not in fact set this action down for trial. If the case has been set down for trial following service of the Notice of Trial on or about the 17th July 2003, then the defendants could make their tender offer only with the leave of the court. Mr Connolly has argued this point on the basis that the plaintiffs have set the action down for hearing, and that these proceedings are not in truth a personal injury action, even though there is in the proceedings a claim on behalf of the second named plaintiff for damages in respect of personal injuries arising from the matters complained of against the defendants. He has pointed to the fact that it is a negligence/misrepresentation action against a firm of solicitors, which includes on behalf of one plaintiff a claim for damages for personal injuries in the form of stress and anxiety caused by the negligence/misrepresentation.
However, to some extent the point which I have just discussed is of academic interest only, because whichever category of case the present proceedings fall into, any defect in the manner in which the tender offer has been made may be cured by order of this court. The criteria for dealing with any such application for an extension of time which might be granted to the defendants would be those identified in cases such as Ely v. Dargan (1967) IR 89, and including a more recent case of Noble v. Gleeson McGrath Baldwin, unreported (Quirke J.) 19th February 2000, in which late lodgments have been permitted by the court, even where some advantage has been gained by the defendants through unsuccessful negotiations, but on terms which limit the prejudice to the plaintiff by such late lodgment, by the court imposing certain conditions in relation to the plaintiff's risk as to costs in the event of him not beating the lodgment. Mr Connolly on the other hand has referred the court to decisions such as those in Brennan v. Iarnrod Eireann (1992) 2 IR 167, and Meehan v. Keane, unreported, Supreme Court (Appeal Number 33/1991) the latter upholding a refusal by O'Hanlon J. on 16th December 1991 to permit a late lodgment following negotiations to settle the case.
These cases are also relevant in relation to the other submission made by Mr Connolly, namely that the tender offer is an invalid one and should be struck out by the court, as sought in the Notice of Motion, on the basis that it is inappropriate that it should have been made after unsuccessful negotiations during which the plaintiffs made concessions and showed their hand in a way they would not have done if they had thought that subsequently a lodgment or tender offer would be made.
Mr Connolly has referred the court to a passage from the judgment of Barr J. in Brennan v. Iarnrod Eireann (supra) at page 169 thereof, where the learned judge states as follows:
"In my view it would be unfair to the plaintiff to accede to that application. Bona fide settlement negotiations in personal injury actions are often in the best interest of the parties and are to be encouraged. They require candour by all concerned and an exchange of medical reports is part and parcel of the process. It seems to me that if such negotiations are unfruitful, the defendant ought not to be allowed to capitalise on the Plaintiff's full disclosure of his or her case as to personal injuries and/or on the liability, and to use the information obtained in such negotiations as a measure for calculating what is intended to be a tight lodgment. If, in the absence of special circumstances, defendants were allowed to make or amend lodgments after unsuccessful settlement negotiations of that sort then two undesirable consequences might follow. First, it may cause the plaintiffs and their advisers not to expose fully their situation as to personal injuries and/or liability in early settlement negotiations with defendants in case they may find themselves providing the basis for lodgments which might be more dangerous from the plaintiff's point of view than otherwise might have been the case. Secondly, it could encourage some defendants or their indemnifiers to enter into a spurious settlement negotiations, the actual purpose of which is to ascertain comprehensive information about the plaintiff's case with a view to making a late lodgment based thereon."
Mr Connolly relies on this passage for his submission that in this case also, the defendants have taken advantage of unsuccessful negotiations in order to assess what the level of their tender offer should be, and that this ought not to be allowed. Ms. Caroline Costello BL on behalf of the defendants, on the other hand, argues that there is no evidence of any mala fides apparent in the defendants' behaviour in relation to the negotiations which took place as is apparent from the affidavit of Mr Dennehy to which I have referred, in which he pointed out that prior to the negotiations themselves the defendants had already decided that the correct level of offer was €100,000, and that after the negotiations this is in effect the amount which was offered by way of tender offer. She also of course argues that this is an action to which Section 1(1) of the Courts Act, 1988 applies, and that therefore their tender offer is in any event within time under the Rules, whether it was made after negotiations took place or not.
Ms. Costello also submits that Brennan v. Iarnrod Eireann was decided before the introduction of S.I. 391/1998, being the so-called 'disclosure rules', under which parties are obliged in any event, in personal injury actions, to make disclosure of their expert reports, including medical reports, and that this has in any event changed the climate in which personal injury litigation is conducted, and this distinguishes the present climate from that which prevailed when the Brennan case was decided, as well as the case of Meehan v. Keane to which I have already referred.
Ms. Costello has also referred to the fact that there is no rule contained in the Rules of the Superior Courts or elsewhere which states that a lodgment or tender offer may not be made after unsuccessful negotiations have taken place, as is contended by Mr Shaw in his affidavit, and by Mr Connolly in his submissions. She maintains that the Rules therefore contemplate the making of lodgments and tender offers after negotiations have failed to resolve the proceedings. She submits that the purpose of the Rules relating to lodgments and tender offers is to facilitate the resolution of proceedings, and that there is no question of it being to prejudice or take advantage of plaintiffs. She submitted that if it was intended that a tender offer could not be made after a plaintiff had made concessions during settlement negotiations, the Rules would have to say that specifically, and they have not done so.
The first matter which I should address is the question as to whether this is an action which comes within the class of action set forth in Section 1(1) of the Courts Act, 1988. That section provides as follows:
"Notwithstanding section 94 of the Courts of Justice Act, 1924, or any other provision made by or under statute or any rule of law, an action in the High Court:(a) claiming damages in respect of personal injuries to a person caused by negligence, nuisance or breach of duty (whether the duty exists by virtue of a contract or a provision made by or under a statute or independently of any such contract or any such provision);(b) under section 48 of the Civil Liability Act 1961; or(c) under section 18 (inserted by the Air navigation and Transport Act, 1965) of the Air Navigation and Transport Act, 1936,or any question of fact or an issue arising in such an action shall not be tried with a jury."
That section in effect meant that thenceforth no personal injury action could be tried with a jury. That definition of that category of case was also used for the purpose of determining the manner and timing of a lodgment or tender offer in personal injury actions. The fact that the present case includes claims other than personal injury claims does not appear to me to take the case outside section 1(1) of the Courts Act 1988 for the purpose of determining whether the tender offer must be made under Order 22, rule 1 (1), or under rule 1(7). It is beyond dispute that the present case is "an action in the High Court claiming damages in respect of personal injuries to a person caused by negligence, nuisance, or breach of duty…….."
The fact that only one of two plaintiffs in the action may be so claiming, or the fact that other claims may be included in the proceedings, does not take the case out of the section. It follows in my view that the action comes within Order 22, rule 1(7), in the same way as the action is covered by the disclosure rules provided by S.I. 391/1998. This makes sense given the purpose of those rules, namely that parties should make known to the other side the contents of their expert reports if the experts are to be called to give evidence, in order to avoid trial by ambush. There is a clear intention that in so far as possible each side should be made aware of the other side's case, both in terms of liability and in terms of quantum prior to the trial hearing, in an effort to effect a saving in costs and in court time by not having cases heard which do not need to be heard. In other words, the rules are designed to encourage, or at least facilitate settlement of cases which can be settled prior to trial. It also means that any such settlement negotiations take place in an atmosphere where each side knows or ought to know what the other's experts are going to say if they are called to give their evidence. That is, of course, provided that those negotiations take place after Notice of Trial has been served, since it is only in that event that the disclosure rules apply, unless there has been voluntary earlier disclosure.
In those circumstances, the shroud of secrecy is lifted somewhat, so that it is no longer possible for a party to hold its cards close to its chest so to speak in order to possibly gain a better settlement for a party than the real merits of his/her case might justify. It seems to me that the plaintiffs' submissions are predicated on the idea that if the defendant is kept unaware of the weaknesses of the plaintiffs' case it may be possible to obtain for the plaintiff an amount of damages which exceeds the true value of the case, were the plaintiffs' case, warts and all, to be disclosed to the other side.
In our adversarial system of litigation, it is right and even natural that advisers to a plaintiff should want to achieve as high an award as possible for their client. In the past when disclosure was not the order of the day, this was easier to achieve when a plaintiff and a defendant could play their game of poker right up to the steps of the courtroom in the hope that the other party would blink first. Those days are over now since the introduction of .I. 391/1998, at least in actions coming within the category of action set forth in Section 1(1) of the Courts Act, 1988.
When the court as in this case is examining the situation that has arisen and is considering whether a tender offer which has been made, should be allowed to remain in being or whether it should be struck out on the basis that it ought not to have been put in after unsuccessful without prejudice negotiations, the court cannot look at the situation in the same way as the plaintiff, who naturally feels that he has made some concessions during those negotiations which he would not have made had he known the defendant was going to make the tender offer. The court must consider the matter from the point of view of justice, and from the point of view of the purpose of the lodgment and tender mechanism, including the public interest identified by O'Dalaigh CJ in Ely v. Dargan (supra).
Can it seriously be suggested that from the court's perspective as opposed to the plaintiffs' that it is wrong or unjust or unfair that a defendant should be permitted to make, within the time permitted by the Rules, a lodgment or tender offer in the light of the true facts of the case, including the weakness in his opponent's case? I think not. The purpose of the lodgment procedure is to facilitate an earlier settlement of a case, as well as reducing the costs of the action, and helping to ensure that as far as possible cases do not get heard by a court which need not be heard.
In the present case, even if some advantage had been gained during negotiations by way of concession, I can hardly imagine that those concessions were made too easily or against the factual reality of the plaintiffs' case as known by the plaintiffs' own advisers. While there may be some tactical advantage lost to the plaintiffs, the court must take a wider view and see whether any injustice can flow from the revelation of perhaps the real quality of the plaintiffs' case.
I am not concerned with whether from a tactical point of view it was correct for the plaintiffs to enter negotiations in the way they did. From the court's perspective it is desirable that all efforts to resolve disputes without incurring the high cost of a court hearing should be explored before the trial, but there is little purpose in those discussions if they take place in the atmosphere of a poker room, with one or perhaps each side negotiating on an unreal or exaggerated set of facts. In the case at hand, negotiations took place. They were said to be without prejudice negotiations. Presumably that means that if the case went to court nobody would be tied to anything that was said at the negotiations. But there is nothing in the Rules which says that a lodgment cannot be made after such negotiations, subject if necessary to an application for leave being made. In the present case the defendants believed that they did not require leave since they were doing so within four months of the date of service of the Notice of Trial, since in their view this is an action to which Order 22, rule 1(7) applies.
Equally the plaintiffs could have postponed taking part in any negotiations until such time as the defendants could not, without leave of the Court, make a tender offer.
In my view this is an action to which Section 1(1) of the Courts Act, 1988 applies, and therefore one to which Order 22, rule 1(7) applies, and therefore the tender offer has been made in accordance with the Rules of the Superior Courts. The Rules permit to be done what was done. The cases to which I was referred by Mr Connolly on behalf of the plaintiffs were decided on applications for leave to make a lodgment in circumstances where the time permitted by the Rules for so doing had expired. Different considerations would apply in such cases than in a case such as the present one where the court is being asked to strike out a tender offer which has been properly made, and on the basis that it ought not to be permitted since it was done after without prejudice negotiations. But as I have said I believe that the Brennan v. Iarnrod Eireann, and Meehan v. Keane cases to which I have referred were decided before the climate change brought about by the disclosure rules in S.I. 391/1998 in any event, and can be distinguished.
I therefore refuse the application sought. But I grant liberty to apply in the event that the Notice of Trial in this case had lapsed by the action not being set down for hearing. There may be an argument to be advanced to the effect that the defendants under the Rules ought to have applied for leave to make the lodgment in those circumstances, and that they could not do so as of right. Nothing I have said in this judgment should be taken as dealing with that discreet issue should it arise.