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You are here: BAILII >> Databases >> Supreme Court of Ireland Decisions >> ECI Chemical Industries Limited -v- McBauchemie Muller GMBH & Company [2006] IESC 16 (14 March 2006)
URL: http://www.bailii.org/ie/cases/IESC/2006/S16.html
Cite as: [2007] 1 IR 156, [2006] IESC 16, [2006] 2 ILRM 19
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Judgment Title: ECI Chemical Industries Limited -v- McBauchemie Muller GMBH & Company Composition of Court: Hardiman J., Geoghegan J., Fennelly J. Judgment by: Geoghegan J. Status of Judgment: Approved
Outcome: Allow And Set Aside | ||||||||||||||
- 13 - THE SUPREME COURT Record No. 285/05 Hardiman J. Geoghegan J. Fennelly J. BETWEEN/ ECI EUROPEAN CHEMICAL INDUSTRIES LIMITED Respondent/Plaintiff and MC BAUCHEMIE MÜLLER GmbH AND COMPANY Appellant/Defendant This is an appeal from an order of the High Court determining two preliminary issues which had been directed to be heard in an action by the respondent against the appellant claiming indemnity/contribution on a concurrent wrongdoer basis in respect of any potential liability on the part of the respondent in an action entitled “The High Court, Record No. 3753P/1995, Between: Vincent Donnelly - Plaintiff and Structural Concrete Bonding Services Limited, Ove Arup Jones Lang Wooten and ECI European Chemical Industries Limited - Defendants”. The respondent had earlier obtained leave to issue and serve a third-party notice on the appellant. After such notice was served, the appellant successfully made an application to have the third-party notice set aside on the grounds that it had not been served “as soon as is reasonably possible” within the meaning of section 27(1)(b) of the Civil Liability Act, 1961. The two issues set down and determined were as follows: 1. Whether in circumstances where the plaintiff has already made a claim for contribution against it in proceedings entitled “The High Court, Record No. 1995 No. 3753P, Between: Vincent Donnelly – Plaintiff and Structural Concrete Bonding Services Limited, Ove Arup, Jones Lang Wooten and ECI European Chemical Industries Limited – Defendants” (“the underlying proceedings”), the plaintiff is disentitled by virtue of section 27(1)(b) of the Civil Liability Act, 1961 to maintain these proceedings against the defendant. 2. Whether the plaintiff’s claim herein ought to be refused by this court in the exercise of its discretion under section 27(1)(b) of the Civil Liability Act, 1961 in circumstances where this court has already determined in the underlying proceedings that the plaintiff failed to serve a third-party notice upon the defendant as soon as reasonably possible as required by the provisions of the Civil Liability Act, 1961. The learned trial judge reluctantly gave negative answers to both questions. The appellant has appealed that decision to this court. To understand how the questions arise it is important that I cite in full section 27(1) of the Civil Liability Act, 1961. That subsection reads as follows:
(b) shall, if the said person is not already a party to the action, serve a third-party notice upon such person as soon as is reasonably possible and, having served such notice, he shall not be entitled to claim contribution except under the third-party procedure. If such third-party notice is not served as aforesaid, the court may in its discretion refuse to make an order for contribution against the person from whom contribution is claimed.” Paragraph (b) however, deals with a different situation. This is where the indemnity or contribution claim is made against somebody who is not a party to the action. The first part of that paragraph mandates the defendant claimant to serve a third-party notice upon the non-party against whom the claim is being made “as soon as is reasonably possible”. Unlike paragraph (a) however, paragraph (b) does not prescribe that the claim for contribution may only be brought by way of third-party proceedings and not by a separate action. If the paragraph had contained only its first sentence, such a requirement might be taken as implied. It has been held in this court, however, that the second sentence in paragraph (b) must necessarily lead to the conclusion that a claimant who does not serve the third-party notice as soon as is reasonably possible and, therefore, does not comply with the first part of the sentence is not necessarily precluded from making an indemnity or contribution claim by separate action but such claim may be refused by the court as a matter of discretion. The first of the two questions determined by the High Court does not present me with any difficulty and I can deal with it quite shortly. Essentially, the issue here is whether even if it is the case that where a third-party notice is not served the claimant is not necessarily precluded from making the claim by separate action depending on the discretion of the court, that is not so if, in fact, a third-party notice was served as in this case but later set aside. I should mention in passing that no appeal was taken from the order setting aside the third-party notice. This precise issue is adverted to in the unreported judgment in the High Court of Barron J., delivered the 30th April, 1997 in McElwaine v. Hughes. At the bottom of p. 278 of his judgment Barron J. having established that while a court should not construe “as soon as is reasonably possible” too liberally, it should not at the same time be too astute to set aside a third-party notice on such grounds and went on to observe as follows: “O’Keeffe J. in Gilmore v. Windle (cited earlier in the judgment as [1967] I.R. 323) suggested a further hurdle by indicating that a defendant who serves a Third-Party Notice subsequently set aside for not having been served as soon as reasonably possible might be barred from bringing separate proceedings. However it seems to me that the provision in the subsection which appears to so provide is intended to apply only where the procedure laid down by that subsection has been followed with a valid Third-Party Notice.” The second issue is much more difficult. However, on a careful combined reading of the second sentence in the subsection and of the interpretation placed on it (with which I agree) by this court in The Board of Governors of St. Laurence’s Hospital v. Staunton [1990] 2 I.R. 31 there can only be one answer in my view. Although in the St. Laurence’s Hospital case, no authority is referred to by Finlay C.J. in his judgment, some cases were referred to in argument, including Gilmore v. Windle cited above. Before treating of the St. Laurence’s Hospital case I think it useful to return briefly to Gilmore v. Windle which was also a decision of this court. The principal majority judgment was delivered by O’Keeffe J. At p. 334 of the report the learned judge said the following: “Sect. 27 of the Act of 1961 is clearly intended to ensure that, as far as possible, all questions relating to the liability of the concurrent wrongdoers (and here I include persons who may be concurrent wrongdoers) should be tried in a single proceeding …” “I must refer here to the terms of s. 27 of the Act of 1961, which I have already quoted. Sub-sect. 3 of s. 27 appears to contemplate that leave to issue a third-party notice is required, although leave should not be refused merely because the issue between the defendant and the third-party will involve a difficult question of law. At the same time a defendant, seeking contribution under the Act, is compelled by sub-s. (1)(b) of s. 27 to serve a third-party notice, and if he does not do so the court may in its discretion refuse to make an order for contribution. The purpose of the provision would seem to be to encourage the bringing of claims for contribution by third-party proceedings, rather than by independent actions, and so to have all questions arising for determination disposed of in a single proceeding.” I will return now to the leading case on this section, that is to say, the St. Laurence’s Hospital case cited above. In that case, an action had been brought against St. Laurence’s Hospital by a patient who had fallen from a window in the hospital and sustained serious injuries. A jury awarded him £90,000 and the hospital appealed on liability and quantum to the Supreme Court. Pending the appeal, the consultant neurologist under whose care the plaintiff had been when in the hospital and who had given evidence at the trial was, with leave of the High Court, served with a third-party notice. He appealed to the Supreme Court against his being joined as a party but pending the hearing of that appeal the Supreme Court dismissed the hospital’s appeal on liability and damages. The Supreme Court allowed the neurosurgeon’s appeal on the grounds that the third-party notice had not been served “as soon as is reasonably possible” as mandated by the subsection cited above. But Finlay C.J. in his judgment with which the other two judges Hederman and McCarthy JJ. agreed went on to observe that having regard to the wording of paragraph (b) of section 27 subsection (1) the hospital although prevented from proceeding by way of third-party notice was not necessarily barred from instituting a separate action claiming contribution against the neurologist as a concurrent wrongdoer and it would then be a matter for the discretion of the adjudicating court as to whether the contribution claim would be permitted or not. In a key passage in the judgment at p. 35 of the report Finlay C.J. said the following: “An interpretation making the service of a third-party notice as soon as possible in the action the only method of claiming contribution from a person not already a party to the action coincides with the general policy of this Part of the Civil Liability Act, 1961, making claims for contribution and indemnity as well as claims for damages all preferably heard together in the one proceeding and at approximately the same time. I am, however, driven to the conclusion that the express vesting in the court of a discretion to refuse to make an order for contribution upon the failure of the claimant for such contribution to serve a third-party notice ‘as aforesaid’ makes it necessary to construe this sub-section as still leaving open the bringing of a substantive claim for contribution which is a statutory right of action, conferred by the terms of s. 21 of the Act, and which can be prosecuted by an action brought by civil bill or plenary summons.” Where, in my opinion, there is undoubtedly room for argument is how the court should approach the question of whether an independent action claiming contribution should be rejected or not. I would have no quarrel with the procedure which was adopted in this case. Pleas that the claim should be rejected were raised in the defence in the plenary action and the matters raised in the pleas relevant to this defence were set down to be tried as a separate issue. There may be other procedural methods by which the issues could be tried but I would have no criticism of what was done here. In this case, the independent action arises in the context of a third-party notice having been set aside. That particular context may not have been particularly within the contemplation of the Oireachtas when the section was enacted even though it necessarily follows. What in all probability was primarily contemplated by the Oireachtas is the situation where no third-party notice is served at all. In order to determine what the nature of the court’s secondary discretion is, it would seem prudent to consider first what would happen if no third-party notice had ever been served. Since the clear purpose of the legislation is to ensure that as far as possible third-party issues would be heard in the original plaintiff’s action, I find it difficult to accept that the court would only be entitled to reject the independent action if prejudice to the defendant in that action is proved. This does not necessarily mean that the issue of prejudice does not come into play at all. I will return to it in due course. First and foremost, however, it would seem to me that the court would have to consider was there a good reason why the statutory requirement of serving a third-party notice as soon as is reasonably possible was not complied with. This consideration must include not merely the failure to serve a third-party notice but the failure to serve one as soon as reasonably possible. The court, therefore, would have to consider what was the latest date on which a third-party notice ought to have been served. If there was no good reason why a third-party notice could not have been served in accordance with the Act, then, I would take the view that in most cases, irrespective of any question of prejudice, the new proceedings should be rejected. There may be exceptional cases in which as a matter of justice the action should not be rejected on that account alone. Otherwise, a clear obligation to adopt a third-party procedure could become hopelessly weakened to the point of being meaningless. In considering for the purposes of the first part of the subsection whether a third-party notice has been served as soon as is reasonably possible it is clear on the authorities now that the surrounding circumstances may be taken into account. This is dealt with in some detail in paragraphs 9-20 to 25 in the second edition of Delany and McGrath Civil Procedure in the Superior Courts. As the authors point out, the relevance of surrounding circumstances has been clearly established by two decisions of this court namely, Connolly v. Casey [2000] 1 IR 345, 351 in which Denham J. delivered a judgment with which Hamilton C.J. and Keane J. concurred and Molloy v. Dublin Corporation [2001] 4 IR 52 in which this view was confirmed by Murphy J. when delivering a further judgment in this court with which Hardiman J. and Fennelly J. concurred. It must be assumed that the surrounding circumstances which might be relevant to the delay issue were taken into account by Kearns J. when hearing the original application to set aside the third-party notice especially as no appeal was ever brought from that decision. The fact that surrounding circumstances are relevant to the issue of whether a third-party notice has been served as soon as reasonably possible creates a difficulty in the way of an independent action claiming contribution in a case where the third-party notice has been set aside, as happened here. Issues of “reasonableness” which must necessarily have arisen in the application to set aside the third-party notice and were determined by the judge hearing that application may not in some instances be reopened in the independent action on the basis of res judicata. The reasonableness issue however for the purposes of the first sentence in the subsection relates to the time aspect only and there may in any given case be other non-temporal issues giving rise to a good reason why a third-party notice was not served in accordance with the Act. Again, before any issue of prejudice could conceivably arise (and I am by no means sure that it can arise) that issue would have to be determined by the court, that is to say, the issue of whether there was a good reason why the third-party notice was not served. Since prima facie there would be no good reason the onus of proof, in my opinion, is on the defendant claimant for contribution. If the claimant fails in that onus the discretion ought normally to be exercised against permitting him to pursue the claim for contribution by separate action. If the claimant does discharge that onus, a further question then arises whether the action can still be rejected on grounds of prejudice to the defendant in the new action. If prejudice is relevant, I think that the onus of proving it should be on the party asserting it but the question of whether prejudice is relevant at all is debateable. At the end of his judgment in the St. Laurence’s Hospital case Finlay C.J. referring to the discretion vested in the court in the independent action says the following: “It would seem clear that this discretion is part of the general policy of the provisions of the Act of 1961 seeking to have all claims determined at the same time and is also a potential protection to a person against whom a claim for contribution is made by unfair or prejudicial procedure. The issue as to whether or not this third party was, by a claim for contribution now made, seriously prejudiced was not fully argued before this court and on this appeal and I express no view as to what the decision of the High Court should be were the defendant now to institute an action for contribution.” circumstance which would render such refusal unjust. ECI European Chemical v. Müller & anor. | ||||||||||||||