Non-party confidential documents discoverable if necessary for fair disposal of action

Beverly Cooper Flynn (plaintiff) v Radio Telefis Eireann, Charlie Bird and James Howard (defendants)

Practice and Procedure - Libel - Discovery and inspection - Bank confidentiality - Justification - Whether inspection of confidential documents necessary for the fair disposal of the cause or matter - Mitigation of loss of confidentiality - Rules of the Superior Courts 1986, Order 31 rule 18.

The High Court (Mr Justice Kelly); judgment delivered 19 May 2000.

Where the defendants in a libel action have pleaded justification in an adequately particularised manner, they are entitled to non-party discovery and inspection of confidential documents, provided that such discovery is necessary for the fair disposal of the action and confers a definite litigious advantage upon those defendants. However restrictions should be imposed to mitigate the loss of confidentiality.

Mr Justice Kelly so held in ordering inspection by a limited number of persons (legal advisers of the first and second defendants) of documents in the possession of National Irish Bank.

Hugh Mohan SC and David Holland BL for the plaintiff; John Trainor SC, Kevin Feeney SC and Maurice Collins BL for the first and second defendants; Ronan Murphy BL for the third defendant; Richard Nesbitt SC and James O'Callaghan BL for the National Irish Bank.

Mr Justice Kelly said that since 1989 the plaintiff had been an employee of the National Irish Bank ("the bank") and was at the date of judgment on leave of absence, during which she had been serving as a member of the Dail. The first defendant was the national broadcasting organisation and the second defendant was an employee of that body. The third defendant was a retired farmer. The plaintiff alleged that the defendants libelled her in a series of broadcasts in 1998.

The thrust of the allegations in the broadcasts was that the plaintiff advised and encouraged the third defendant and other unnamed investors to participate in an investment scheme designed to evade tax. It was alleged that she advised them inter alia that they need not avail of the tax amnesty as the Revenue would not find out about their money if invested in the scheme. In the reportage the first defendant recounted the plaintiff's categoric denial that she ever encouraged anyone to invest as a means of evading tax.

All the defendants pleaded justification. The application before the court concerned the justification pleas of the first and second defendants ("these defendants"). These defendants had stated that insofar as the words complained of either in their natural or ordinary meaning or by innuendo meant or were understood to mean any of the meanings set out in the defence they were true in substance and fact.

Mr Justice Kelly said that the onus of proof of justification lay upon these defendants. No application had been made to the court however to require these defendants to identify persons other than the third defendant to whom any representations had allegedly been made by the plaintiff.

The first and second defendants had already obtained non-party discovery orders against the bank. These orders were made subject to restrictions. Firstly the documents could be inspected only by legal advisers; and, secondly, they could be discovered only in redacted form, i.e. client names were expunged in recognition of the relationship of confidentiality between banker and customer. The latter restriction applied to the initial inspection which had already taken place. The discovery had disclosed the existence of 65 client files relevant to the issues to be tried.

Mr Justice Kelly said that the application before him sought an order requiring the bank to make available for inspection these documents in an unredacted form. He said that under the relevant rule of court regarding inspection (Order 31 rule 18) an application could be made where inspection had not been agreed between the parties. In such an application the applicant was required to show his entitlement to inspection and also that such inspection was necessary to dispose fairly of the case or to save costs. (The issue of saving costs was not pursued in the application.)

The grounding affidavit for the application set out the information gleaned by the defendants from inspection of the redacted client files. The affidavit was to the effect that the 65 unnamed clients for the most part had not given contact addresses; that the plaintiff had met them in their homes in confidence; that the investments made by them were from undeclared proceeds; that these clients were in a unique position to attest to the advice allegedly given to them by the plaintiff and that these defendants could not know their identities due to the redacted discovery. These defendants stated that full discovery in unredacted form was essential for the proper prosecution of the proceedings and the administration of justice.

The bank's replying affidavit stated that the inspection sought by these defendants was for the sole purpose of obtaining witnesses to substantiate a plea of justification and was a fishing expedition. The affidavit stated that the defendants should have pleaded justification only if they had the necessary evidence to support that plea at the time of delivery of the defence. It was further stated that the bank owed a duty of confidentiality to its clients which required recognition by the court and that, while the duty could be waived in certain circumstances, the present action was not one such circumstance. The replying affidavit went on to state that the grounding affidavit had made assertions concerning the conduct of the bank's customers which were wholly speculative and untested and were prejudicial to the reputation of those customers all of whom were deserving of the protection of the court.

In a supplemental affidavit these defendants said that if the limited evidence regarding justification available to them proved insufficient at trial then it would be invidious and unreasonable if the plaintiff could defeat a defence of justification by reason of the defendants not having been given full inspection. If these defendant were precluded from inspecting the bank's documents in full they would be significantly disadvantaged in advancing their claim of justification even to the extent of being denied a fair trial. The procuring of the names of the 65 clients would confer a definite litigious advantage on the defendants and their continued concealment would confer a significant litigious advantage on the plaintiff.

The plaintiff opposed the application, stating that it would confer an unfair advantage on the defendants and that she would be subject to an "ambush" at the trial.

In regard to bank confidentiality, Mr Justice Kelly quoted from National Irish Bank Limited v Radio Telefis Eireann [1998] 2 IR 465 in which the duty and right of confidentiality between a banker and his customer was recognised. This extended to third parties obtaining confidential information. However the public interest in maintaining such confidentiality could be outweighed by the public interest in defeating wrongdoing.

In the absence of Irish case law on the relevant rule of court, Mr Justice Kelly turned to English authorities. In Wallace Smith]Trust Company Limited v Deloitte Haskins and Sells (a firm) [1996] 4 All ER 403, five principles were set out. First, the burden of showing necessity for fair disposal of the action rests upon the party seeking inspection. Secondly, in the absence of a claim of confidentiality or public interest immunity, the courts follow the criterion of relevance in deciding inspection. Thirdly, if confidentiality is asserted, relevance is assumed and it then becomes necessary to decide whether inspection is necessary for the fair disposal of the action. Fourthly, disclosure is necessary if: (a) it will confer litigious advantage on the party seeking inspection; (b) the information sought is not otherwise available to that party by some other form of proceeding or from some other source; and (c) such order for disclosure would not be oppressive (perhaps because of the sheer volume of documents). Fifthly, if a prima facie case is made out for disclosure the court will first inspect the documents (a) to ensure that inspection is necessary, and (b) if disclosure is necessary to see if the loss of confidentiality can be mitigated by blanking out parts of documents or by limiting disclosure to legal advisers only. Mr Justice Kelly said that these principles were applicable in this jurisdiction and therefore these defendants had to show that full disclosure was necessary for the fair disposal of the action.

Mr Justice Kelly turned to the meaning of "necessary". In Taylor v Anderton [1995] 2 All ER 420 it was decided that the purpose of the rule was to ensure that one party does not enjoy an unfair advantage or suffer an unfair disadvantage in the litigation as a result of a document not being produced for inspection. In Science Research Council v Nasse [1979] 3 All ER 673 it was noted that the law has never accorded privilege against discovery and inspection of documents merely because they are confidential. The issue is whether the documents are necessary for the fair disposal of the action. "Necessary" means not only a case where the party applying for inspection could not possibly succeed without such inspection, but would also include a situation where a party had only a slim chance of success without inspection but a very strong chance of success with inspection.

Applying the foregoing principles, Mr Justice Kelly said that inspection of customer files in an unredacted form by these defendant would confer a litigious advantage upon them. The revealing of the names to the defendants might make such persons available to these defendants for the giving of evidence to support the justification plea. To deny the disclosure of the names to the defendants would not be conducive to the fair disposal of the action. The plaintiff had full knowledge of such persons whereas the defendants had only a limited knowledge.

Recognising the duty of confidentiality in the circumstances of this case, Mr Justice Kelly sought to take appropriate steps to mitigate the loss of confidentiality. In Associated Leisure Limited v Associated Newspapers Limited [1970] 2 All ER 754, at pages 757-8, it was held that a plea of justification must not be made unless there was clear and sufficient evidence to support it. Mr Justice Kelly said that although these defendants had adequately particularised the plea of justification (since there had not been an application brought by the plaintiff seeking better particulars), they were still entitled to support their case from discovered documents: McDonalds Corporation v Steel [1995] 3 All ER 615, at page 621. The mere fact that inspection would identify the names of potential witnesses was not a ground for resisting the application. The making of an inspection order would not be unfair or oppressive to the plaintiff in this case as she had full knowledge of the customers involved whereas these defendants had very limited knowledge and failure to allow inspection would imperil their entitlement to a fair trial. The obligation of confidentiality owed by the bank to its customers must therefore yield to the rights of these defendants to a fair trial.

Mr Justice Kelly made an order allowing inspection in an unredacted form, but limited disclosure to a number of persons (legal advisers). He cited Ambiorix Limited v Minister for Environment (No 1) [1992] 1 IR 277, at page 286, and stated that the discovered documents could be used only for the purposes of the action and for no other purpose. Mr Justice Kelly said that this was for the purpose of mitigating the loss of confidentiality.

Solicitors: McCann Fitzgerald (Dublin) for the plaintiff; Eugene F. Collins (Dublin) for the first and second defendants; O'Donovan (Dublin) for the third defendant; Matheson Ormsby Prentice (Dublin) for the National Irish Bank.