High Court of Ireland Decisions

1. These proceedings are simply a claim by an insurance customer against an insurer. The customer claims that the insurer wrongfully cancelled or repudiated the cover, and seeks specific performance (including payment in compensation for insured losses) and damages. The insurer disputes the existence of any contract or contracts of insurance partly (but not only) because of alleged misrepresentations on the part of the customer at the outset. The insurer also pleads by way of alternative defence that the customer suffered no insured loss, and/or that the proper construction of the insurance contract is not as the customer contends. Finally, the insurer disputes the extent of any insured loss, in effect putting the customer on proof of his losses.

2. The discovery process is only concerned with the materials available to the parties which may be of assistance in proving or disproving disputed facts. If a legal contention is pleaded, the alleged facts supporting the applicability of the legal principle may also fall within the scope of discovery. I am not concerned with the legal issue itself or with, for example, the true construction of written documents upon which either party relies.

3. What factual issues will the Court be required to determine in these proceedings? They appear to me, after perusal of the pleadings, to be as follows:-

4. In broad terms, these are the issues in this case. Each issue involves disputed allegations of fact upon which the trial judge will adjudicate in due course.

5. Discovery is concerned with the material facts and such other facts as may be probative of the material facts. In this application, the insurer seeks documentation under a number of headings and what must be ascertained in each case is whether the fact in respect of which the documentation is sought by the insurer is a material fact or a fact otherwise probative.

6. As one would expect, there is a significant measure of agreement between the lawyers for both parties as to which of the categories sought by the Defendant are relevant and discoverable. It is only in respect of those categories where relevance is disputed that I must make a determination. Of the fifty two categories sought there is consent to discovery in twenty three, although in a small number of these there may be a limited residual objection to which I will refer later. Of the remaining twenty nine categories most are concerned with one or other of the following two matters:-

7. By far the largest number of categories still in dispute is the group of categories (mostly found at 4) concerning evidence of the terms of and performance of the contracts for the supply of beef to Iraq. Some of these categories are in respect of the sourcing of the beef supplied under the contracts. Even if the performance of the Iraqi contract was not material, the source data would still be discoverable in the context of B below. Other Iraqi contract categories relate to terms of the supply contract other than sourcing.

8. The insurer says: “I may have been insuring against non payment of the letters of credit. But am I not entitled to rely on any ground open to the issuers of such letters, given that the letters stipulated due performance of the contracts as a precondition to payment.”

9. In respect of the September 1987 agreement referred to at (a) above, a policy document issued (EC2436) (incidentally, the only policy document to have issued in respect of the three alleged agreements) and the pertinent term is set out at par. 18 of the Amended Defence and admitted at par. 18 of the Amended Reply. It contains the proviso “that all the terms and conditions of the said irrevocable Letter of Credit have been complied with in full .”

10. Is it necessary for the Defendant to make a specific allegation that the due performance of the Iraqi contracts (which performance is denied by the insurer at par.19) is a condition of the Letters of Credit? The Defendant has not specifically done so but asserts non performance as a stand alone fact (unlinked to the Letters of Credit) joining issue with the Plaintiff’s allegation (in par. 10 of the Statement of Claim) that “ the Plaintiffs duly performed the said contracts”. The Plaintiffs now suggest that this fact, alleged and denied, is not material to their claim - it is a surplus fact. At the discovery stage the Court cannot form any view on this proposition and must proceed on the basis that the Plaintiffs apparently wish to prove the fact (why else would they plead it?) And no doubt its materiality will be adjudicated in due course. The Defendant goes on to plead (par.19) that “ it is denied that the Plaintiff’s duly performed the contracts as alleged in paragraph 10 of the Statement of Claim ”.

11. Although the Plaintiffs claim to have secured insurance cover of US $30m in November 1987, further cover in July 1988 and IR£80m (plus rollover never in fact utilised) in October 1988, no written proposals are alleged, and no policy documents issued. Such premia as were paid were allegedly unsolicited. It was the notification, by Ministerial letter of 11th October 1989, of the avoidance of the September 1987 policy (EC2436) which precipitated these proceedings. Of the Plaintiff’s claim for IR£86m approx., only £27m relates to policy EC2436.

12. It is unclear from the pleadings whether the same insurance policy conditions are alleged to have been agreed in the case of the cover allegedly agreed in November 1987 and October 1988. Paragraph 36 of the Amended Defence asserts, in the case of the second agreement, that “ if there was an agreement ... the Plaintiffs were at all material times aware that insurance cover would be provided ... on the basis of terms similar to those which applied to policy EC2436”. Paragraghs 61 and 62 state that the Defendants “ would have insisted upon ... the terms given made and forming part of EC2436 ... in connection with ” the cover allegedly agreed in November 1987 and October 1988. These are not the clearest of pleas.

13. I cannot, however, disregard them or deprive them of all effect. The Plaintiffs clearly accept that they are not devoid of effect, joining issue with them in pars. 33 and 48 of the Amended Reply.

14. The reality of the situation is that we will never know why the letters of credit were dishonoured by the Iraqi Bank. It is generally assumed that war and geo-politics were the causes, rather than that the Iraqi importers learnt of the non-Irish origins for some of the beef. Is it now open to the insurer to plead, in answer to the insured’s claim, a breach of contract of which the importer was, perhaps, unaware?

15. Fortunately, that’s not for me to decide. All I know is that a party is asserting as a fact that the supply contract was performed. The other denies this. In answer, the first party now says that such fact is not material i.e. has no bearing on the question of the insurer’s liability concluded by reference to non-payment of bank’s letters of credit. It is a matter of disputed materiality, to be ultimately determined by the proper construction of the insurance contract. Documents concerning performance of the Iraqi contracts are discoverable.

16. In the course of my dealing with this application an Amended Reply was filed by the Plaintiff in which, at paragraph 5 (b), the Plaintiff’s admitted that they “ were at all material times aware that the beef exported was in fact sourced in the Republic of Ireland and elsewhere ” (my emphasis).

17. It was confirmed to me in Court that this admission covered inter alia , the Plaintiffs’ knowledge at the various dates on which they are alleged to have represented otherwise in the course of pre-contractual or contractual dealings with the State insurer. It is for another Court to determine whether such an admission is fatal to the insured’s claim in these proceedings: clearly the insurer asserts as much in its defence but it is ultimately a matter of construction of the contractual relationship between the parties.

18. In parallel to this admission the Plaintiffs in paragraph 5a of the Amended Reply plead a formal acceptance of the data in app. M of their Particulars furnished in July 1997 and other statistical evidence, referred to as the Fisher Report, as to how much beef was sourced in this jurisdiction and how much elsewhere. This report formed part of the working documents of the Beef Tribunal. The Plaintiffs’ admission is carefully drawn. Is it an admission of the full material fact which the Defendant alleges, namely that the meat exported was “ not exclusively produced or manufactured in Ireland ” (pars. 21(a), 22(a)/(b); a “considerable proportion was not the produce of the Republic of Ireland” (par. 36)? These facts are asserted not merely as facts constituting breach of the insurance contract, but also as the basis of the falsity of various representations and warranties made by the company to the insurer at various stages including the usual insurance contract proviso that full disclosure would be made by the customer (par. 11 (e)) and that the customer provided false written declarations to like effect by letter of 18th February, 1988 (the date on which policy EC2436 issued) and again on 16th and 19th December, 1988.

19. A perusal of the figures listed in the particulars now admitted as fact shows a considerable proportion of non Irish beef as having been exported. I append the said appendix M for ease of reference. It will be seen that of the £125 million still due to the insured under the supply contracts allegedly covered by the two informal insurance contracts (November 87 and October 88) over £50 million pertains to beef sourced in Uruguay and Brazil, and over £30 million to Northern Irish and “ other EU ” beef. The Plaintiffs’ non Irish beef claim is only in respect of the latter.

20. The Goodman companies now admit that they knew this was so at “ all material times ”. It would obviously be time saving for these proceedings to be able to accept as fact the pattern of sourcing of beef reported by Fisher, and by contrast, difficult and exasperating to have to start the investigative work afresh. Now, the Plaintiffs point to their admission at paragraph (5)b: what more is there to prove?

21. To this the State Defendant has two answers, firstly, that the evidence it seeks is evidence of fraud and as such ought not be lost or diminished to the status of an admission. Secondly, the Fisher Report, they say, only went a certain distance in time (to end 88) and in data retrieval. There may be another even more extensive level of dishonesty to be proved when the Court has all the facts. These were the arguments advanced but the matter of discovery has to be anchored in the issues raised by the pleadings.

22. In my view the Defendant’s case cannot be improved by proof of the actual quantities involved - whether the Fisher figures (for 1987 and 1988) understated or overstated the position matters not: the Defendant is home and dry on this allegation.

23. While I am satisfied that the falsity of the representations made by the insured to the insurer is clearly material to the issue of whether any contract can be enforced, and that the same dishonesty breached the terms of the contracts with the Iraqis, the allegation is nowhere a stand alone claim of fraud, advanced as an alternative basis upon which the Defendant seeks the Court’s protection against the Plaintiffs’ claims in contract. (For example, paragraph 25 refers to misrepresentations, nondisclosure etc. as entitling the Defendants to avoid liability, but not to fraud in the same context.)

24. Even if I am wrong in that, it seems to me that the true extent of the falsity is not a material fact still in dispute given the clear admission now made (after this Discovery Application was commenced) by the Plaintiffs. It is relevant, certainly, but no longer material in the sense that extensive non Irish sourcing of beef is now admitted. The precise measure of the extent of non Irish beef is not material. The fact of inclusion of non Irish beef is admitted: the consequences, in law, of such inclusion are not variable by reference to the actual quantities.

25. Except, that is, for one consequence, in the context of the Plaintiff’s claim, at par. 26 of the Amended Statement, to the effect that if they are to suffer as a result of the inclusion of non Irish beef, that should not disentitle them from recovering, on foot of the insurance policy, in respect of such of the beef as was in fact sourced within the Republic or alternatively within the island as a whole. If the Plaintiffs wish to pursue that particular avenue then I cannot see how the Defendant can be denied discovery of the records of beef sourcing for the Iraqi market, the Plaintiff’s admission notwithstanding. At the very least, the Defendant must surely have an opportunity to probe the accuracy of the figures set out in the Schedule to the Amended Statement of Claim. If the Defendant insists on seeing the underlying documentation, rather than accepting the particulars of the Fisher Report as the basis for computing the figures, I believe there is an entitlement to discovery.

26. The following categories are accepted by the Plaintiff as discoverable: 3A, 3B, 3C, 3D, 3E, 3G, 3I, 4D, 5A, 5B, 9A, 10A, 11A, 11B, 11C, 12A, 13A, and 16A.

27. The Plaintiff is agreeing “ without prejudice ” to its view that the categories are irrelevant to discover “ relevant” documents in the following categories: 1B, 3F, and 4A. I am not particularly happy about leaving undefined what is and what is not relevant in these categories, leaving the legal decision to the Deponent. Instead of using the word “ relevant”in the Order, I will focus the discovery by referring to the facts proof of which the Defendant, in its grounding affidavit, states that discovery will assist.

28. In three categories 1A, 1C, and 1D objection is taken to discovering materials relating to non party associated companies. I believe the objection is well founded.

29. A category partially accepted by the Plaintiff is 3H - again, it appears to me that the objection is well taken.

30. Categories 2A and 2B concern matters which are not material to the cases made by either party.

31. Categories 11D, 15A and 15B concern other material facts. It appears to me that in each case the Defendants are correct in asserting that the documents may contain probative material.

32. Twenty two categories remain to be dealt with. Categories partially conceded are 4E and 21A - the portion thereof where discovery is refused is an aspect to the Iraqi contracts issue. (see above). The other twenty categories relate either to the performance of the Iraqi contracts or to the sources of the beef supplied, or to both issues, and are discoverable by reason of the above analysis.