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Cite as: [2008] 2 IR 726, [2007] IESC 59

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Judgment Title: Dome Telecom -v- Eircom

Neutral Citation: [2007] IESC 59

Supreme Court Record Number: 374 & 375/06

High Court Record Number: 2001 12996 P & 2002 3560 P

Date of Delivery: 05 December 2007

Court: Supreme Court

Composition of Court: Geoghegan J., Fennelly J., Kearns J.

Judgment by: Kearns J.

Status of Judgment: Approved


Judgments by	Result
Kearns J.
Fennelly J.	Appeal allowed - set aside High Court Order
Geoghegan J.

Outcome: Allow And Set Aside

THE SUPREME COURT

Geoghegan J.
Fennelly J.
Kearns J.

[Nos. 374/375 of 2006]

BETWEEN

DOME TELECOM LIMITED

PLAINTIFF/RESPONDENT

AND

EIRCOM LIMITED

DEFENDANT/APPELLANT

JUDGMENT delivered the 5th day of December, 2007 by Kearns J.

The plaintiff is an Irish company based in Dublin which carries on the business of supplier of call card and other freephone telecommunications services.
The plaintiff’s business operates in the following manner: customers purchase call cards supplied by the plaintiff via retailers. A customer uses a call card to call a freephone (1800) number from any telephone, including a mobile handset or payphone. When the customer calls the plaintiff’s freephone number from a mobile handset, the customer is connected first to the mobile network operator’s network, from there to the defendant’s network, from there to the network of Nevada Tele.com Limited of Hogan Place, Grand Canal St., Dublin 2, a licensed operator pursuant to Section 111(2) of the Postal and Telecommunications Services Act, 1983 which provides services to the plaintiff, and from there to the plaintiff’s network. The customer then makes telephone calls using the plaintiff’s network. The freephone number is assigned to the plaintiff by Nevada from a number range assigned to Nevada by the Director of Telecommunications Regulation (“the Director”). When a customer calls the plaintiff’s freephone number from one of the defendant’s payphones, the customer is similarly connected to the defendant’s network, from there to the Nevada network which provides services to the plaintiff regarding the freephone numbers, and from there to the plaintiff’s switch. The customer then makes telephone calls using the plaintiff’s network of switches and connections, thus benefiting from the competitive call rates offered by the plaintiff.
It is not in dispute that from May, 2000 to date, the defendant has imposed a telecommunications interconnection charge (‘transit charge’) on certain operators in the State for calls to freephone (1800) numbers originating from both mobile handsets and payphones. The imposition of such charges was authorised in 2001 by the Director (by Decision D3/01) to compensate the defendant for charges imposed by network operators on the defendant for originating freephone calls (the ‘MNO origination charges’). The transit charge was thereafter imposed by the defendant on Nevada, which in turn passed the charge on to the plaintiff. The plaintiff has in turn imposed the charge on its own customers by imposing an additional levy on their calls.
The essence of the plaintiff’s claim, in two sets of proceedings concerning, respectively, mobile phones and payphones, is that the defendant failed to impose these transit charges evenly, simultaneously or fairly on all operators in the State for calls to freephone (1800) numbers originating from mobile phones and payphones. In particular Dome contends that for some considerable time following the decision of the Director in March, 2001, the transit charges were not imposed at all on international operators then operating in the State who, as a result, were able to compete in the Irish market to the detriment of Irish call card suppliers given that the latter category were immediately compelled to pay the new charges. In particular it is alleged in the statement of claim in the mobile proceedings that from October 2000 to a date unknown in August, 2001, the defendant failed to impose the transit charges on international operators to whom it provided access via its subsidiary Eircom (UK) Limited in London. Insofar as payphones are concerned, it is alleged that transit charges were imposed on national operators in the State from May, 2000 onwards.
The plaintiff accordingly claims in both proceedings a declaration that the actions of the defendant in imposing a transit charge on certain operators in the State, including the plaintiff, for calls to freephone numbers originated from either mobile phones or the defendant’s payphones, insofar as they fail to impose the same interconnection charges on all other operators, are:-
(a) Contrary to sections 4 and/or 5 of the Competition Act, 1991 (now sections 4 and 5 of the Competition Act, 2002),
(b) Contrary to Articles 81 and/or 82 of the Treaty of Rome
(c) In breach of the terms of the defendant ’s general telecommunications licence of 1st December, 1998,
(d) In breach of the European Communities (Interconnection in Telecommunications) Regulations, 1998 (S.I. No 15 of 1998),
(e) In wrongful interference with the plaintiff’s economic interests,
(f) In breach of the plaintiff’s constitutional rights.

The plaintiff claims to have sustained a loss of sales and profits as a result of the defendant’s allegedly discriminatory behaviour. This is said to have occurred in circumstances where competitors of the plaintiff were able to sell call cards in the Irish market at a flat rate per minute without any surcharge whereas the plaintiff was, in the case of calls to its network from mobile handsets, obliged to pass on a surcharge of 40p per minute on all its customers. The plaintiff asserts that it had been generally known in the Irish marketplace that Dome was the lowest cost provider of international calling time anywhere in the world and its call card (“Century”) was, until the events complained of, regarded as the best value for money.
The plaintiff further contends that it planned to develop its telecommunications business, including mobile and residential services, under the “Century” brand, but has had to put these plans on hold pending resolution of this dispute and an evaluation of the damage suffered by its brand.
In a comprehensive defence, the defendant denies, inter alia, that the plaintiff has any contractual relationship with the defendant and denies that the plaintiff is a licensed operator within the Postal and Telecommunications Act, 1983 or entitled to be treated as such. The nature of the ‘relevant market’ for competition law purposes is also put fully in issue, the defendant asserting that, insofar as the plaintiff claims that the relevant market is either the public fixed telephony network and services market in the State, the leased lines market in the State, the market for payphones in the State or the national market for interconnection in the State, that any such contentions are denied. The defendant pleads that the relevant market is that catering for telecommunications customers who wish to make telephone calls to freephone numbers whilst in transit or on the move, which said market includes users of mobile phones, pay phones and calling card products, and denies that it is in a dominant position in any such market. The defendant further denies that it imposed transit charges in a discriminatory manner or that the matters complained of by the plaintiff constituted an ‘unlawful subsidy’ to international operators. It further denies that was in breach of its Telecommunications License or the relevant regulations, or that any action on its part constituted an infringement of Articles. 81 or 82 of the Treaty of Rome or amounted to breaches of ss. 4 or 5 of the Competition Act, 1991. In particular, it is denied that the matters complained of amount to the application of dissimilar conditions to equivalent transactions by the defendant, or that the matters complained of constitute below cost selling by the defendant and/or the imposition of unfair prices or trading conditions by the defendant. The defendant also contends that if the matters complained of constitute discrimination by the defendant against the plaintiff, the difference in treatment is objectively justified.
The proceedings were commenced in March, 2002. A statement of claim was delivered on 22nd March, 2002 and the defence thereto was delivered on 5th April, 2002. An amended defence was delivered on 17th June, 2005.
Following the delivery of the statement of claim and delivery of the defence, further particulars were exchanged between the parties. On 23rd December, 2003 the plaintiff’s solicitors wrote to the defendant’s solicitors office seeking voluntary discovery of certain categories of documents. A lengthy exchange of correspondence followed which ultimately did not lead to any resolution of the issues between the parties as to the parameters of discovery.
In July, 2005 the proceedings came before the judge assigned to deal with the competition list and a motion for discovery was first brought returnable for 19th July, 2005. In the context of that application, the plaintiff sought discovery of documents under twelve different headings. There were numerous references to court thereafter. For present purposes it is not necessary to state more than that the present dispute ultimately came to be reduced to a single question, namely, whether the discovery which the defendant made under Category 8 is sufficient for the purposes of the present litigation, or whether for the proper disposal of the proceedings, documentation sought by the plaintiff under category 9 is also required. The distinction between these two categories will be evident from the correspondence referred to hereunder.
Detailed submissions were made to McKechnie J. in the High Court in November, 2005 in both the mobile and payphone proceedings. In the aftermath of that hearing, the court invited the parties to set out clearly why they required the court’s intervention in the process of discovery, and, in particular, the category 9 discovery. McKechnie J. invited the parties to set out in writing to him the underlying reasons and arguments to justify their respective positions.
By letter dated 8th May, 2006, the solicitors for the plaintiff wrote to the trial judge explaining why Category 9 discovery was necessary over and above any information furnished under Category 8. Before referring to the letter, it is necessary to recite precisely what was sought by way of Category 9 discovery, which was the following:-

“All documents relating to the 1800 numbers issued by the defendant to licensed operators and/or international carriers and/or other entities from 1 July 2000 to the date hereof to include any and all schedules, lists or database setting out the quantity of 1800 numbers issued per month, the entity to whom they were issued, and the volume of minutes trafficked per month in respect of each 1800 number issued by reference to access method”.

This request was first notified to the defendant by letter dated 7 April, 2005 and the reasons given for the request were as follows:-

“The plaintiff alleges that it has suffered loss as a result of the discriminatory imposition of the MNO origination charge/ MTC by the defendant. Access to call details regarding the quantity of 1800 numbers issued by the defendant , the number of minutes trafficked per number (by reference to access method) and the names of the parties to whom the numbers were allocated would enable the plaintiff to access the manner in which the MNO origination charge/MTC was imposed. In terms of assessing the quantum of its alleged loss, such information would demonstrate how in a market highly sensitive to increases in price, they discriminatory imposition of the MNO origination charge/MTC caused the plaintiff to lose customers to operators who were/are not charged the MNO originators charge/MTC by the defendant.

In short, this category would enable the plaintiff to show a link between its market share and the obligation to pay the MNO origination charge/MTC to the defendant. The plaintiff believes that expert analysis of these figures will establish a direct and conclusive correlation between the discriminatory behaviour of the defendant the loss suffered by the plaintiff.”

“Simply put, the explanation of the reasons for seeking this Category 9, which explanation was given to the court on 1 and 2 November 2005, was that the plaintiff believes that its competitor call card operators, on whom the defendant did not levy the two charges at issue, experienced a huge growth in volumes of minutes over the period of the discriminatory charging. This would be evidenced if the plaintiff can identify the volumes of minutes to each 1800 number used as a method of access on those competing call cards. Our counsel explained to the court that this evidence of volumes of minutes per 1800 number would not only show the level of discriminatory charging, but would greatly inform any analysis of the plaintiff’s losses as a result of the defendant ’s discrimination, which the plaintiff claims is unlawful on a number of grounds including breach of competition law.

The plaintiff included Category 9 as an additional category of discovery to Category 8 in which the plaintiff sought the invoices, because the plaintiff did not believe that the invoices would show the minutes per 1800 number as this would not be the standard documentation in the industry. The breakdown of minutes per number is the back up information from which the invoice is generated. However, the defendant is obviously in the best position to know what information is contained on its invoices, and the plaintiff believes that the court relied on the defendant’s submission that the volumes of minutes per 1800 number would be included in Category 8.

The discovery made to date by the defendant supports this reasoning, and bears out the plaintiff’s belief that its competitors received a huge growth in minutes when the discrimination by the defendant occurred, which grew to a high point and then dropped away (almost completely in some cases) when the defendant took steps to address the discrimination as a result of the plaintiff instituting the two actions that are before the Court.

The court’s attention is drawn to the document included at Appendix 2.1, which was disclosed by the defendant under Category 8 discovery. In particular, we refer to the figures for USA Worldcom MCI, an international carrier which supported a number of the plaintiff’s competitor call cards. At the time that the MAC/MTC was imposed on licensed operators in Ireland only, it appears that the volume of minutes trafficked by the defendant to Worldcom MCI from mobile telephones increased dramatically (from 74,173 minutes in December 2000 to 173,014 minutes in January 2001, to 521,291 minutes in February 2001, to a high of 1,245,256 minutes in July 2001). The volume of minutes trafficked from mobile telephones to Worldcom MCI decreased suddenly after July 2001. The plaintiff first wrote to the defendant complaining about the discriminatory charging on 13 June 2001.

This document, and the further invoices and settlements provided under Category 8 give some details (though not complete or accurate) of the volume of minutes per telecommunications operator, rather than per 1800 number. The plaintiff is aware in some instances of which telecommunications operators were supporting its competitor call card operators so that the limited information given to date is of some utility; however the plaintiff nonetheless requires the volumes of minutes per 1800 number, for the reasons above. Counsel for the defendant has already confirmed that the requisite information per 1800 number is contained within call data records held by the defendant . The court’s attention is drawn to sample documents attached at Appendix 2.2 which have been discovered by the defendant and which appear to show that the defendant is capable of producing this data per 1800 number for its own purposes.

The plaintiff notes that the discovery of Categories 2 & 3 in the Mobile Proceedings, and 3 & 4 in the Payphone Proceedings, was originally made with redactions that the defendant confirmed were erroneous redactions before the court on 21 March 2006. Those redactions mainly, although not exclusively, excised all information contained in memos and other internal defendant documents regarding volumes of minutes per telephone number. The plaintiff has now received the unredacted versions of those Categories.

The plaintiff believes that the court recognised the Category 9 (in particular the latter part marked here in bold) is of most significance to the plaintiff, and should be allowed for the reasons set out on 1 and 2 November and in the discovery request itself. The defendant indicated to the court that the invoices/settlements would contain information on the volumes of minutes. The plaintiff believes that it is on this basis that the court deemed it unnecessary to make any order in relation to Category 9 at that stage.

The court stated that:

‘The true benefit sought by the inclusion of this category is to ascertain the volume of minutes trafficked per month. I am informed on behalf of the defendant that the invoices referred to in Category No.8 should include this information. Accordingly, on that basis 1 do not propose to allow this category of documents for the moment.’

Nonetheless, the court recognised the possibility that the invoices/settlements would not include the requisite information, and for this reason, the court simply adjourned Category 9 to 31 January 2006, the date by which Category 8 was originally due to the discovered. Subsequently the defendant was granted extensions to this period, such that discovery of Category 8 was only completed by 25 April 2006.

The plaintiff’s understanding is that the court left the door open for the plaintiff to ask for a formal order in relation to Category 9 in the event that the invoices/settlements did not contain the requisite information on volumes of minutes per 1800 number. The plaintiff does not believe that the court intended that its decision would necessitate a full re-hearing, but rather was a simple matter of avoiding unnecessarily burdening the defendant with production of duplicate sets of documents in Categories 8 and 9, because the defendant had made certain arguments based on its perception of the onerous nature of the discovery requested.

The defendant has adopted an inconsistent and contradictory approach to dealing with the plaintiff’s reasonable inquiries in relation to the content of invoices in Category 8, and appears to have obstructed the plaintiff’s attempts to have the court deal with the information required under Category 9 at an early stage, as illustrated by inter partes correspondence and the defendant ’s submissions to the court on 21 March and 2 May 2006. In particular, the defendant wrote to the plaintiff on 23 February 2006 expressly refusing the plaintiff the information sought in Category 9.

The defendant’s position now appears to be that the court made no order in relation to Category 9, and that the defendant is only required to provide the information in Category 8 insofar as it relates to “the volume of minutes trafficked per month”. The defendant appears to base its position entirely on the words used by the court in summarising that latter part of Category 9 being “the volume of minutes trafficked per month in respect of each 1800 number issued by reference to access method”. The plaintiff does not believe that the court intended to curtail Category 9 (as now alleged by the defendant ) to merely a statement of “volumes of minutes per month” as the court gave no indication of any reasoning for such a curtailment, nor was such a curtailment argued by either party before the court.

The defendant appears to be taking a further step now, by appearing to suggest that the parties have not already engaged in arguments before the court in relation to Category 9. On 2 May 2006, counsel for the defendant’s argued that these matters required to be put on affidavit once more, and then be argued before the court again.

The defendant does not appear to accept that the discovery application for Category 9 has been heard and dealt with by the court, and that the court had ruled that, in principle, the plaintiff is entitled to discovery of the volumes of minutes per 1800 number.

We are concerned that the defendant may be trying to postpone the time when this information must be provided and we believe that this is because the defendant knows that it will greatly assist the plaintiff’s case. As set out above, a certain amount of information has been given to the plaintiff through other categories of discovery, and the plaintiff is satisfied that the information required in Category 9 will show a dramatic increase in traffic flowing to particular 1800 numbers terminating outside Ireland following the discriminatory imposition of both the PAC and the MAC (as demonstrated by the discovered documents included at Appendix 2). In order to prove that these increases are attributable to its call card competitors, the plaintiff needs to know the identity of the 1800 number(s) which received this traffic.

The only alternative to granting discovery is for the defendant to accept, as a matter of evidence, that every increase in freephone traffic to non-Irish carriers in that period relates to call card business.(Emphasis added by me)

The plaintiff wishes to bring it to the court’s attention that the delays by the defendant in making discovery and in particular the provision of erroneously redacted material, even though subsequently corrected, and the provision of very poor copies, had involved the plaintiff in costs and time that it should not have had to incur, and of which the plaintiff has made the defendant aware. The plaintiff has incurred the costs of two days of hearing on discovery of the outstanding categories, including Category 9, on which the plaintiff believed that it had succeeded in its discovery application. The plaintiff is understandably reluctant to incur the costs of another hearing, in particular given that it does not have the resources of the defendant and that this litigation is already imposing such a high level of cost on the plaintiff.

The defendant suggested on 2 May that it would be easier to make discovery if the request was limited to certain operators. In order to facilitate the court and the defendant , the plaintiff is prepared to prioritise its request in relation to particular operators, with liberty for the plaintiff to re-apply in respect of the operators foregone should further analysis of the discovery indicate that one or more of those foregone operators did support competitors of the plaintiff.”

The defendant in turn wrote its own letter to McKechnie J. on 12th May, 2006.
The relevant portion of that reply reads as follows:-

“I refer to the letter of the 8th inst (and selected accompanying documentation contained in appendices 1 to 6 thereto) addressed to you by the solicitors acting for the plaintiff in the above proceedings further to your directions at the most recent hearing of the 2nd inst. concerning the plaintiff’s motions for discovery in the said proceedings.

On behalf of the defendant, we would, in accordance with your directions, judge, respectfully reply as follows to the said letter.

In the interest of brevity, it is our intention to focus on what would appear to be the main reasons advanced by the plaintiff for seeking discovery under ‘Category 9’ in both the within proceedings. However, it is necessary straightaway to contradict the account advanced by the plaintiff of the argument before you judge on 1st November 2005 regarding the said ‘Category 9’ and its interpretation of your judgment of 2nd November 2005 in respect thereof.

In the defendant’s respectful submission, it emerges clearly from the quotation from your judgment cited on page 3 of the plaintiff’s letter that you took the view that the documentation that would be necessary for the plaintiff to advance its claims of discriminatory treatment in these proceedings would be that which would permit it to ascertain the volume of minutes trafficked per month. In this respect, you accepted our counsel’s submission that the documents to be provided under ‘Category No.8 should include this information’. Notwithstanding the assertions to the contrary made in the plaintiff’s letter, this submission was correct and the international settlements and voluminous invoices to national telecommunications operators discovered in the third and fourth affidavits of discovery in the within proceedings of John McKeon sworn on the 20th March 2006 and on the 27th April 2006 (and copies of all of which have been furnished to the plaintiff) are complete and accurate and contain all the said information.

The case that was advanced by the plaintiff at the said hearing on 1st November and that is currently being renewed by it is that such information is not sufficient. Thus, the essential difference between the parties remains whether or not it is necessary for the proper disposal of the within proceedings for the plaintiff to have information on the volume of freephone minutes trafficked per month in respect of each 1800 number in addition to information on the total volume of such traffic. It is and has been the defendant’s consistent position in its correspondence with the plaintiff since your aforesaid judgment of 2nd November 2005 (some but not all of which correspondence is produced by the plaintiff in Appendix 4 to this letter) that you have, as of yet, judge, made no decision or finding as to whether the additional information sought by the plaintiff (essentially electronic call data records) is discoverable, and if so, whether its discovery would be necessary for the proper disposal of these proceedings.

It has been and remains the defendant ’s position that the very extensive documentation provided to the plaintiff in respect of discovery under ‘Category 8’, which contains information regarding the total volume of freephone 1800 minutes trafficked from mobile, payphone and fixed line phones within the State both to national (i.e. domestic) licensed telecommunications operators and international (i.e. non national) operators during the 66-month period running from August 1999 until April 2005 contains all the information that is reasonably necessary for the plaintiff to seek to establish that it suffered any damage as a result of the time gap between the imposition by the defendant on national and international operators, respectively, of the mobile access charge (hereinafter ‘MAC’) and the payphone access charge (hereinafter ‘PAC’).

The plaintiff has been furnished by the defendant , at the latter’s expense, with copies of every invoice issued to national operators during the period from August 1999 until April 2005, all of which invoices were discovered in the fourth affidavit of discovery of John McKeon sworn on the 27th April 2006. The said invoices set out clearly the total volume of freephone (mobile, payphone and fixed line) traffic to each national operator in that period. The information therein contained permits the plaintiff to determine whether the imposition of the MAC on 15th October 2000, and the PAC on 1st April 2000, on national operators was effected in a discriminatory manner (as alleged by the plaintiff) or had any appreciable effect on the volume or pattern of freephone traffic to such operators (as is effectively alleged by the plaintiff by way of its claim of favouritism by the defendant of international operators). The defendant notes that no assertion has been made by the plaintiff in its letter of 8th May to the effect that the said invoices will not suffice to enable the plaintiff to advance its claims in respect of the effect on the imposition of these charges on national operators. It is the defendant’s respectful submission that all the requisite information is contained in the invoices, i.e. they will permit the plaintiff, on proper perusal thereof, to ascertain whether the imposition of the MAC and PAC on national operators was applied in a discriminatory manner, as compared to international operators, or affected, adversely or otherwise, the volume of freephone traffic to them. Nothing further would be added by the disclosure of information regarding traffic per number, i.e. call data records (hereinafter ‘CDRs’).

Contrary to the various assertions to the contrary made by the plaintiff in its letter, the defendant ’s position in respect of ‘Category 9’ has been at all times consistent. The defendant has not denied that the discrepancy between the time when the defendant was able (for technical, regulatory and commercial contractual reasons) to impose MAC and PAC charges on national and international operators may have given rise to an arbitrage opportunity for call card operators (including of course, the plaintiff) to eschew paying the said charges by seeking to obtain freephone services from international operators, i.e. by obtaining 1800 freephone numbers terminating abroad for use as the access 1800 number on the call cards marketed by them in the State. This arbitrage opportunity arose at most during the period when the MAC and PAC were applied to national operators alone, i.e. in the period running, as regards MAC, from 15th October 2000 until 1st October 2001 and, as regards PAC, from 1st April 2000 until 1st December 2002.

It should be noted that the international operators were apprised from July 2001 that the MAC was going to be applied to them. The plaintiff will be aware from documentation already discovered, particularly in respect of ‘Category 3’ in John McKeon’s first affidavit of discovery sworn on 3rd November 2005 in the mobile proceedings, that such operators were given the choice of agreeing to permit the defendant to block calls from mobile handsets in Ireland to their out-of-state terminating freephone 1800 numbers or of paying the MAC. Many opted to have access from mobile handsets blocked, while those who did not were subjected to the MAC with effect from 1st October 2001, i.e. following the amendment of their bi-lateral agreements with the defendant . As regards the PAC, the defendant has not denied that it took it longer to realise that there was an arbitrage opportunity from which some telecommunications operators were benefiting at its expense. Regulatory approval was sought for the blocking of access to internationally terminating 1800 freephone numbers. The international operators were then advised on the 18th April 2002 that PAC would be applied to calls from the Defendant s payphones to internationally terminating freephone 1800 numbers, unless the operators agreed to allow the Defendant to block access to such numbers from its payphones. Following the amendment of the relevant bilaterals, the PAC was introduced on 1st December 2002 and applied retroactivity to 7th June 2002.

Returning to the key periods, i.e. as regards MAC, from 15th October 2000 until 1st October 2001 and, as regards PAC from 1st April 2000 until 1st December 2002, the documents (invoices and international settlements) already discovered under “Category 8” in both sets of within proceedings permit the plaintiff to ascertain total traffic, both national and international, to 1800 freephone numbers by access method (mobiles, payphones or fixed line). The plaintiff can, as a result, calculate the total increase in traffic to international carriers that occurred during the above key periods. It can therefore ascertain the maximum amount of minutes created by the arbitrage opportunity presented by the availability of freephone numbers terminating outside the State to which, in those periods, no MAC or PAC was applied and to which calls could be made from mobile handsets or payphones in the State, an opportunity of which, the plaintiff alleges, some of its competitors choose to avail. Dara O’ Mahony, in paragraph 31 of his affidavit sworn on 6th March 2002 in the payphone proceedings, acknowledges that the plaintiff itself availed, at least as regard World Com, of such an opportunity. The total market potentially lost to its competitors is therefore already known to the plaintiff and the defendant fails to understand why the plaintiff requires more particular information regarding traffic to particular international freephone numbers, when information regarding the traffic to those numbers, and all other such numbers, is a mere subset of the overall information already contained in the documentation made available to it under “Category 8”. Nothing further would therefore be added by the disclosure of the CDRs sought by the plaintiff.

The discovery process to date, involving since last November the swearing of four affidavits and the production of literally thousands of documents, has placed an enormous burden on the defendant and involved the deployment of very considerable resources. As was outlined to you, judge, by our counsel on the second inst., if you were to order our client to make discovery in terms of “Category 9”, even if it is limited to “schedules, lists or database setting out […] the volume of minutes trafficked per month in respect of each 1800 number issued by reference to access method”, a further truly enormous burden would be placed on the defendant .

First of all, as our counsel indicated to you on the 2nd inst., there are, in effect, no ‘schedules, lists or database setting out’ the requested information. Rather, our client has an extremely complex computerised billing system that electronically generates a CDR for every call made, 24 hours a day, seven days a week across its entire network. Second, if CDRs for all traffic to freephone numbers were to be produced for the combined period covered by ‘Category 8’ in both the mobile and payphone proceedings, to wit August 1999 until April 2005, as has been done by the defendant in respect of the invoices and international settlements discovered under ‘Category 8’, every CDR produced by the defendant for each call made during the entire 66 month-period would have to be extracted. To do this, our client’s technical personnel have indicated it would be necessary to restore each month in turn to a shadow database. This would take about two days duration by database. Each month would contain approximately 450 million records and would occupy about 100 GB of disc space: hence only one month at a time could be recreated. In order to restore the entire 66 months in question, this would require an estimated minimum of 132 days, following which data analysis would have to be run on the extracted records in order to identify the freephone traffic and separate it from non-freephone traffic, as only the former would be discoverable and the defendant would plainly be in breach of its obligation of confidentiality to its clients if it were to provide all the estimated 29,700 million CDRs in question to the plaintiff. Our technical personnel estimate that it would take one person working fulltime for six to eight months in order to complete this exercise.

The plaintiff asserts (page 3 of its letter) by reference to some sample documents discovered by the defendant in respect of ‘Category 2’ in the mobile proceedings and in respect of ‘Category 3’ in the payphone proceedings that the defendant is capable of producing data per 1800 number. We are advised by our technical personnel that if a particular number is specified and if the period in respect of which information is required is limited to a single billing period, i.e. a particular month, the IT process involved in requesting of the existing billing system the CDRs and creating a hard copy of the information contained therein is greatly simplified. This process is further simplified if information regarding a particular 1800 number or a series of numbers is required in advance, as occurred in the example sited by the plaintiff in its letter (page 3). However, in the present case, even if the plaintiff were (as it hints at on page 5 of its letter) to specify those numbers in respect of which it particularly wished to obtain CDR copies, as its requests would be likely to straddle several months, the task involved for the defendant in creating the records sought would remain extremely burdensome, especially if, as seems likely, the plaintiff would reserve the right to come back and continue to request further and further CDR copies.

It is for this reason that the defendant submits that, even if the discovery sought under ‘Category 9’ might be viewed, contrary to the submissions made above, as being necessary for assisting the plaintiff to make its case in the within proceedings, it would, in the defendant ’s respectful submission, be wholly disproportionate to order that such discovery be made.

Nevertheless, if you reject this submission Judge, the defendant would be inclined to take up the ‘offer’ made by the plaintiff on page 5 of its letter, where it states:

‘The only alternative to granting discovery is for the defendant to accept, as a matter of evidence, that every increase in free phone traffic to non- Irish carriers in that period relates to call card business.’

Accordingly, the defendant would be prepared to accept, as a matter of evidence, for the purposes of the mobile proceedings, that, during the period running from 1st January 2001 until 30th October 2001, inclusive, all of the increases in freephone traffic,(the increase being measured compared with the average monthly volume of minutes recorded in the quarter prior to the 1st January 2001) from mobile handsets in Ireland to 1800 numbers terminating outside the State, which increases are fully recorded in the documentation already provided to the plaintiff in respect of ‘Category 8’, may be attributable to use by call card customers of their cards. (emphasis added by me)

As regards the payphone proceedings, the matter is more problematic. The defendant does not deny, as the plaintiff in effect in footnote 2 to its letter observes, that the figures for payphone-originating international freephone traffic are included within the figures for fixed-line originating international freephone traffic in the document created by the defendant setting out details of the outgoing international freephone traffic which it trafficked in the period August 1999 to April 2005. This document, to which the defendant refers in the said footnote, was produced by the defendant to assist the plaintiff in analysing the said international freephone traffic. Contrary to the allegations made by the plaintiff in its letter of 8th inst the defendant is satisfied that the information contained in this document is both complete and accurate.

For the reasons set out in paragraph 10 of the affidavit of John Hall sworn on the 22nd March 2002 on behalf of the defendant , the latter was unable to distinguish payphone – originating international freephone traffic from fixed – line originating international freephone traffic prior to June 2002. consequently,

for the purposes of the payphone proceedings, the defendant would be prepared to accept, as a matter of evidence, that, for the period running from 1st September 2001 (when the plaintiff admits, in the affidavit sworn by Dara O’ Mahony on its behalf on 8th April 2002, that it began applying the PAC to its call cards) until 7th June 2002 (when it became possible to identify pay-phone originating international freephone calls) that up to 50% of the increase in the monthly volume of fixed – line originating international freephone traffic above that recorded in the previous quarter, to wit June to August 2001, may be attributable to use by call card customers of their cards. (emphasis added by me)

In the light of the above, the defendant would respectfully conclude that the discovery sought by the plaintiff under “Category 9” in both of the within proceedings is unnecessary.”

I have set out this correspondence in full because it gives a clear picture of the parameters of the dispute between the parties. Further, the defendant’s letter also clarifies the size of the task which category 9 disclosure would place on the defendant. I have also emphasised those portions of the defendant’s letter which contain an extremely important concession specifically offered by the defendant in response to an indication contained in the plaintiff’s letter that such an admission or concession would address their major concerns about disclosure in these proceedings.
It would be wrong to not also record that the plaintiff in turn made a generous concession that it would not press for discovery in respect of the records of national operators, convinced as it was that it could adduce any evidence it required in support of its various claims by calling witnesses from competing firms in Ireland. The plaintiff further agreed at a later stage to limit the number of international operators in respect of whom discovery was sought to the eleven main international operators whose names appear in the schedule attached to the order ultimately made by McKechnie J on the 30th August, 2006.
Having regard to the concessions made by the defendant in relation to the arbitrage period mentioned above, the defendant argued that discovery under Category 9 was not necessary to enable the plaintiff make out its case in the proceedings and was furthermore a wholly disproportionate form of relief having regard to both the concessions on the one hand and the costly and burdensome nature of the discovery under Category 9 on the other.
The competition judge had evidence that call data records (“CDRs”) existed within the defendant’s computer system, but that the same could not now be retrieved without exhuming vast numbers of CDRs from the system. While the defendant did operate a billing system for operators and customers by reference to the CDRs, these bills were generated electronically on a temporary basis only when the charges arose and no longer exist. There was evidence that the retrieval of such information from the system would impose an enormous burden on the defendant. For each month between August 1999 - April, 2005, there would be approximately 450 million records which would occupy about 100 GB of disk space. Only one month at a time could be recreated. In order to restore the entire 66 months in question, this would require an estimated minimum of 132 days, following which data analysis would have to be run on the extracted records in order to identify the freephone traffic and separate it from non freephone traffic, as only the former would be discoverable and the defendant would in addition possibly breach its obligations of confidentiality to its clients if it were to provide all the estimated CDRs in question.
In the course of his ruling on the application for Category 9 discovery, McKechnie J. noted that in November, 2005 he had dealt with Category 9 on the basis that he should not allow that category of documents because he had been informed by the defendant that the information which the plaintiff sought would be obtainable from Category 8. He accepted, however, that the information furnished under Category 8 did not meet the plaintiff’s requirements because it did not enable the plaintiff to trace the actual loss of sales of call cards, and that it was necessary for that purpose to trace the traffic by reference to access method to individual 1800 numbers. He noted that the call data record comprises the duration of the call, the identity number of the telephone from which the call is made, the identity of the number to which it makes a connection. By use of this information, Eircom would be able to attribute the calls in question to different call categories and ultimately to the licensed operators to whom the calls are trafficked. He noted that in essence Dome was seeking to have Eircom use the call data records in such a way as to extract from those records information which when analysed would result in the creation of detail from which the plaintiff could measure any alleged loss or damage suffered.
With regard to the concessions made by Eircom, the learned trial judge did not accept that they provided a sufficient means of reflecting the increases or decreases to specific call cards which may have benefited or may have suffered as a result of the alleged discrimination levelled against Eircom in respect of both payphone and mobile charges.
He further noted that the application for discovery had been opposed on three grounds. The first of one of utility; the second was one of proportionality and the third was that it imposed an obligation to create documents which otherwise a party subject to an order for discovery would not be required to do.
At p. 15 of his ruling, McKechnie J. stated:-

“In addition I have looked at the pleadings, the scope of the issues raised therein, the particulars insofar as these exist and the replies thereto and the concessions which have been offered and made on behalf of Eircom. Having considered all of these matters, I remain of the view that the documents sought in Category number 9 are relevant and are necessary for the purposes of this action.”

He then considered the submissions by Eircom to the effect that the imposition of such an obligation would in effect require them to create a document, and then proceeded to consider precisely what constituted a document, holding that the use of existing raw data in the manner sought was still within the required parameters of Order 31 rule 12 of the Rules of the Superior Courts and did not go beyond same. To the extent that any order did go beyond same, then in the view of the learned trial judge such an extension was so merited.
He also considered the question of proportionality. In this regard he frankly conceded it was “quite difficult” to make a definitive ruling on that particular point because one would not fully know whether the utility benefit of the information gleaned would be such as to justify the effort involved. However, having decided the issues of relevance and necessity in favour of the plaintiff he came to the conclusion that any resulting requirement for discovery under Category 9 could not be regarded as disproportionate. In so directing, he readily accepted that the order placed a burden and “perhaps a heavy burden” on Eircom.
Having so concluded, McKechnie J. directed that the defendant do within six months from the date of his order make discovery on oath of the following documents:-

“The volume of minutes trafficked per month from 31st day of August 1999 to 23rd day of December 2003 in respect of each 1800 number by reference to access method by the defendant to international carriers and/or other entities (to be limited for the time being to those identified and set forth in the schedule hereto) where the volume of minutes trafficked to that international carrier and/or other entity in any given month exceeded 5,000 minutes- the documents within the power of the defendant to be created from the defendant ’s raw data and databases and using the defendant ’s own database.”

The learned trial judge further directed that the defendant do pay the plaintiff the costs of the motion and order when taxed and ascertained. Attached to the order, as already noted, was schedule 1 which listed a number of international operators who had been identified as the principle operators of relevance to the issues in the proceedings.

In bringing this appeal the defendant argues that the learned High Court judge erred in law or in fact, or on a mixed question of law and fact, in holding:-

(1) That the power of the High Court to order discovery of documents extends to directing a party to create documents for the purpose of the within proceedings

(2) That the power of the High Court to order discovery of documents extends to directing a party to create documents that do not exist at the time the said order is made.

(3) That the creation of the documents directed by the High Court does not impose a disproportionate burden on the defendant /appellant where in order to comply with the said order it would be required:

· To extract in excess of 20 billion call data records from the tapes on which they are currently stored
· To record the said records onto a parallel database
· To collate and analyse the records on the parallel database in order to collate them with the 1800 freephone numbers the subject matter of the said order for discovery
· To create therefrom a document containing a report of the total monthly volume of freephone minutes trafficked per month from 31st day of August 1999 to 23rd day of December, 2003, in respect of each 1800 number by reference to access method by the defendant to international carriers- limited for the time being to those identified and set forth in the schedule hereto where the volume of minutes trafficked to that international carrier in any given month exceeded 5,000 minutes;

notwithstanding that the defendant /appellant has made discovery on oath of all invoices raised and issued by the defendant /appellant to licensed operators, international carriers (including Eircom UK) where the monthly volume of minutes trafficked to each operator exceeded 5,000 minutes (thereby providing the plaintiff/respondent with details of any significant traffic movements during the relevant period) and that it concedes (for this purpose alone) that 100 percent of the monthly increase in such mobile originating traffic between 1st September 2001 and 31st September 2002 compared with the average monthly volume of minutes trafficked in the quarter part to 1st September 2001 is attributable to an increase in such freephone traffic to card based products or services.

SUBMISSIONS OF THE PARTIES

Mr. Anthony Collins, senior counsel on behalf of the defendant, contended that the Rules of the Superior Courts do not confer any power upon the High Court to require a party to bring documents into existence for the purpose of the proceedings. The terminology of Order 31, rule 12 of the Rules of the Superior Courts was clear and the unheralded extension of the scope of the rule contended for by the plaintiff could not be made without breaching the principles of legal certainty and fair procedures. This was all the more so where the Superior Courts Rules Committee overhauled the rules governing discovery in the relatively recent past without seeing fit to change this aspect of the rules.
What was being sought in the instant case was not limited to the extraction of database backup disks and discovery of relevant information contained thereon but the compilation, analysis and presentation of information in a form which it is not, and never was, available.
On the issue of proportionality, it was accepted that the material was relevant. However, even though Dome had limited its request to the eleven principle international operators to which Eircom trafficked international freephone traffic during the relevant period, the defendant for the purpose of complying with any order for discovery under Category 9 would require the purchase of additional computer hardware costing in the region of €150,000, the creation and/or purchase of bespoke software to carry out the analysis required and the dedication of at least three to four specialised information technology technicians from Eircom’s IT department to work at the project over a period of at least six months.
It was further submitted that the fons et origo of the concession made by the defendant in the course of discovery was the assertion by Ms. Whittaker in her letter of 8th May, 2006, to the High Court regarding the alleged “huge growth in minutes when the discrimination by the defendant occurred, which grew to a high point and then dropped away” and the further statement that “the only alternative to granting discovery is for the defendant to accept, as a matter of evidence, that every increase in freephone traffic to non Irish carriers in that period relates to call card business.”
By way of response to this assertion Eircom was prepared to concede that during the period 1st January, 2001 to 1st October, 2001, the entire increase in mobile originating traffic to such carriers could be attributed to use by call card customers of their cards.
While it was submitted on behalf of Dome that the failure to apply the MAC continued to be felt after 1st October, 2001, Mr. Collins submitted that any “slippage” was relatively minor after the main arbitrage period had been closed off as a result of the extension of MAC to international telecommunications operators with effect from October 2001, since when the majority of numbers carrying most of the traffic were either closed to access from mobiles or were subjected to the MAC.
Mr. Collins submitted that, as any differential charging dropped away almost completely at the conclusion of the arbitrage period and having regard also to the time, effort and expense required to obtain the discovery sought, it was unnecessary and disproportionate to order discovery under Category 9 having regard to the concessions offered by Eircom.
Finally, Mr. Collins submitted that in lieu of discovery of the information sought by Dome, his clients were willing to make the data in question - once retrieved from its backup disks - available for inspection by Dome. Mr. Collins submitted that the learned High Court judge had not given any, or any adequate, consideration to the alternative of inspection of the data as retrieved and as offered by the defendant.
In reply, Mr. Paul McDermott B.L. argued that the learned trial judge had correctly concluded that the discovery sought was relevant, necessary and proportionate.
Given that there was no dispute about the relevance of the material, Mr. McDermott submitted that the information obtained from the appellant in documents discovered under Category 8 was of limited value, not only because it provided limited information, but also because the information therein did not appear to be accurate, consistent or reliable. It had been conceded by Mr. John McKeon in his affidavit sworn 29th May, 2006 that the invoices or settlements provided to international operators (i.e. under Category 8) constituted “a highly aggregated invoice” and therefore it was clear that they could not provide the information required under Category 9. He submitted that in reality there was no substance or foundation to the central objection raised by Eircom, because the court was only concerned with the retrieval of information that had previously been calculated by the computer.
Without prejudice to this submission, Mr. McDermott urged the Court to take the view that if what the trial judge ordered was to be seen as an extension of the law, then it was justified. Discovery was not created by primary legislation but rather was “judge - made law” so that, as with any common law principle, it was open to the court to extend it so as to reflect changing technology.

DECISION

The relevant portions of Order 31, rule 12 of the Rules of the Superior Courts (No. 2) (Discovery) 1999 (S.I. No 233 of 1999) which are of relevance to this dispute read as follows:-

“(1) Any party may apply to the Court by way of notice of motion for an order directing any other party to any cause or matter to make discovery on oath of the documents which are or have been in his or her possession or power, relating to any matter in question therein. Every such notice of motion shall specify the precise categories of documents in respect of which discovery is sought and shall be grounded upon the affidavit of the party seeking such an order of discovery which shall:

(a) verify that the discovery of documents sought is necessary for disposing fairly of the cause or matter or for saving costs;
(b) furnish the reasons why each category of documents is required to be discovered

(2) On the hearing of such application the Court may either refuse or adjourn the same, if satisfied that such discovery is not necessary,

or not necessary at that stage of the cause or matter

…(emphasis added)

(3) An order shall not be made under this rule if and so far as the Court shall be of the opinion that it is not necessary either for disposing fairly of the cause or matter or for saving costs….”

I have emphasised the linking in subparagraph 2 of the concept of ‘necessity’ to the particular stage of the proceedings at which discovery is sought because it is of particular relevance to my decision as detailed hereunder. Before proceeding further, however, it is important to refer to other Rules of the Superior Courts which have a particular relevance in this matter.
Special rules in relation to competition proceedings were introduced in this jurisdiction by the Rules of the Superior Courts (Competition Proceedings) (S.I. 130 of 2005) and the same were opened to the Court during the hearing of this appeal. In many respects the Competition Rules reflect and acknowledge the complexity of competition proceedings and are clearly designed to simplify to the greatest extent possible the resolution of issues arising in such cases.
Thus the Competition Rules provide a definition of “competition proceedings” and rule 4, paragraph (1) requires that competition proceedings, “and any motions or other applications in competition proceedings” shall be heard in the competition list by the judge assigned by the President of the High Court to hear and determine proceedings in the competition list. That judge will invariably be a judge with some experience of the arduous demands of competition law.
The Rules provide for various pre-trial procedures which emphasise efficiency and the requirement to keep costs down. Thus rule 5 provides:-

“A Judge may, at any time and from time to time, of his own motion and having heard the parties, give such directions and make such orders, including the fixing of time limits, for the conduct of proceedings entered in the Competition List, as appears convenient for the determination of the proceedings in a manner which is just, expeditious and likely to minimise the costs of those proceedings”

Rule 4, para. (2) provides that either party may, prior to the close of pleadings, in the case of plenary proceedings or prior to the completion of the filing of affidavits in the case of proceedings to be heard on affidavit, bring an application to the judge in charge of the competition list to fix a date for an initial directions hearing in the case. At any such initial directions hearing, rule 6 provides that the judge may give various directions to “facilitate the determination of the proceedings”, including directions for the defining of issues, directions for the delivery of interrogatories, or discovery or inspection of documents, directions that experts consult with each other for the purpose of identifying the issues in respect of which they intend to give evidence and possibly agreeing on evidence which they intend to give on those issues. Rule 6 (x) also provides for the exchange of documents or information between the parties or for the transmission by the parties to the registrar of documents or information electronically, on such terms and subject to such conditions and exceptions as a judge may direct.
The Rules further provide that the judge may direct that the proceedings be subject to case management, fix a date for a case management conference, and give any further directions for the completion prior to such conference of such steps in the proceedings as he considers appropriate, including the preparation of a case booklet which contains an agreed outline of the case and events and issues that are not in dispute.
Rule 27 also provides that the parties before trial should serve upon the other party or parties a written statement outlining the essential elements of the evidence of any witness either as to fact or of an expert. The Rules under rule 20, para (1) (b) also impose upon the parties an obligation to file a case summary comprising an agreed outline of the case and sequence of relevant events not in dispute, a list of issues which are not in dispute, a list of the persons principally involved in the matters or events the subject of the proceedings and, where appropriate, a glossary of technical terms which are likely to be used in the course of the trial.
Put shortly, the Rules are designed to expedite and facilitate the speedy resolution of competition proceedings. By obvious and necessary implication, an ancillary purpose must be to minimise costs.
If these are appropriate control mechanisms for competition proceedings, it seems clear to me that the first question to be addressed in this case, which concerns a case assigned to the Competition list, is whether or not discovery of Category 9 documentation, either by the creation of a document or otherwise, is in fact necessary and/or proportionate bearing in mind in particular that the disputed category 9 material seems now to relate only to the quantification of the plaintiff’s damages having regard to the factual concessions made by the defendant to facilitate disposal of the core issue of liability and having regard also to the undoubtedly burdensome nature of the form of discovery sought.
Of particular relevance to the facts of this case are the observations of Fennelly J. in Ryanair p.l.c. v Aer Rianta c.p.t. [2003] 4 IR 264 when he stated as follows at 277:-

“The court, in exercising the broad discretion conferred upon it by O. 31, r. 12 (2) and (3), must have regard to the issues in the action as they appear from the pleadings and the reasons furnished by the applicant to show that the specified categories of documents are required. It should also consider the necessity for discovery having

regard to all the relevant circumstances, including the burden, scale and cost of the discovery sought. The court should be willing to confine categories of documents sought to what is genuinely necessary for the fairness of the litigation. It may have regard, of course, to alternative means of proof, which are open to the applicant. These may, no doubt, include the possible service of notices to admit facts or documents. But there are two sides to litigation. The behaviour of the opposing party is relevant. That party may, for example, have made or may offer to make admissions of facts, and thus persuade a court that discovery on some issues is not necessary”

These comments in relation to necessity and other relevant considerations received further approval from this Court in Framus Ltd & Ors v CRH plc & Ors 2 I.R. 20. In the course of his judgment in that case Murray J also stressed that the notion of proportionality must attach to the concept of necessity, stating as follows (at p 38):-

“It seems to me that in certain circumstances a too wide ranging order for discovery may be an obstacle to the fair disposal of proceedings rather than the converse. As Fennelly J. pointed out (ie. in Ryanair plc v Aer Rianta [2003] 4 IR 264), the crucial question is whether discovery is necessary for “disposing fairly of the cause or matter”. I think it follows that there must be some proportionality between the extent or volume of the documents to be discovered and the degree to which the documents are likely to advance the case of the applicant or damage the case of his or her opponent in addition to ensuring that no party is taken by surprise

by the production of documents at a trial”.

It seems to me that these observations apply a fortiori where factual admissions which may permit the resolution of the case in its most significant aspects are made by the party from whom discovery is sought. To put it another way, the assessment of what is necessary or proportionate must take account of any factual admissions or concessions made by either or both the parties, notably where liability is totally in dispute and where that issue can conveniently be first determined as a result of admissions or concessions made.
Insofar as the judgment of the learned High Court judge is concerned, it does not indicate why the concession offered by the defendant was not regarded as sufficient to allow liability in this matter to be determined - at least insofar as the mobile telephone proceedings are concerned. It will be borne in mind in this regard that the concession offered by the defendant in respect of the period from January to October, 2001 concedes that “100%” of the increase in freephone traffic invoiced to the international operators is attributable to the imposition of the MAC charge. This is as much as the plaintiff could ever establish in evidence, be there discovery under Category 9 or not in respect of this period. It is true that the situation with regard to payphone usage remains open having regard to the fact that payphone charges are conflated with fixed line charges in the Category 8 discovery and those elements have not yet been segregated from each other. However, no such difficulty arises in the mobile proceedings and the period of the concession (i.e., ten months) strikes me as more than adequate to allow the plaintiff make out its case on liability if it can. I am also unhappy that the order in question appears to have been made without any clear indication being given to the judge as to the cost and expense involved in so doing, although in the course of the hearing before him and perhaps more particularly in the hearing before this Court, the defendant put forward estimates for the huge amount of time, effort and cost involved in complying with Category 9. It would be quite wrong in my view not to acknowledge the cost and time/effort involved in the gargantuan task which an order under Category 9 would impose on the defendant, notably when that task is weighed against the limited fruits which might emerge from compliance, confined as those fruits would be to quantum of loss only and then only to a period when Eircom was ‘closing off’ the problem. In this context one must also bear in mind that on the evidence Dome itself placed before the High Court, only a small proportion of its customers used the 1800 freephone number from mobile and payphone in order to access stored telephone credit, that the vast preponderance of user was on fixed line calling where no charges were imposed. Thus while the material sought under Category 9 is undoubtedly relevant, can it be described as ‘necessary’, or can it be so described at this stage in the proceedings?
It can not always be the case that relevance creates necessity, because otherwise there would be no need to have the two separate concepts of relevance on the one hand and necessity on the other. Necessity is the true threshold where issues of proportionality must be assessed and clearly the more necessary the document is the more proportionate it will be for the requesting party to obtain discovery. It seems to me that the facts and circumstances of the particular case must then also be considered. Is it a case which conveniently lends itself to be decided in modules in the interests of efficiency and cost-saving? Examples of litigation which lend themselves to such division might typically include, for example, medical negligence cases where liability is hotly contested. The resolution first of the liability issue may well dispose of the entire proceedings. In such circumstances – which also arise here – can cumbersome discovery which now relates only to a certain aspect of quantum be regarded as necessary and proportionate at this point?
It would in my view be wrong to assess issues of necessity and proportionality separately from the liability issue. Liability must be determined before any question of damages arises. While there has to date been no agreement between the parties thus far as to what constitutes the relevant market for the purpose of these proceedings, the liability issue itself appears, despite the technical issues, relatively straightforward – and all the more so having regard to the admitted facts in the mobile proceedings. If there is no finding of anti-competitive behaviour against Eircom in respect of the admitted conduct, that will effectively dispose of the entire case.
I see no good reason why the plaintiff should not proceed to seek a determination of the liability aspects of those proceedings on foot of the important concession which the defendant has made (at the express instigation of Dome itself), namely, that over a ten month period in 2001, 100% of the increase in traffic through the major international operators (again, as identified by Dome) in respect of mobile phone traffic is attributable to the imposition of the MAC on national operators. If the plaintiff is successful in establishing a breach of competition law and, more particularly, an alleged abuse of a dominant position by Eircom, then that will be the appropriate time to apply for more wide ranging discovery to enable quantum of damages to be assessed. If the plaintiff is unsuccessful, the requirement to turn up information about what occurred at the expiration of the arbitrage period, when any problem was being progressively closed off, will simply not arise.
Accordingly, and making my decision on essentially pragmatic grounds, I would defer any decision on discovery of Category 9 documentation herein until the issue of liability in the mobile phone case has been determined. In reaching this view, I would not wish to be taken as resiling in any way from the commonsense views expressed by McCracken J. in Ryanair p.l.c. v Aer Rianta c.p.t. [2003] 4 IR 264 to the effect that competition cases generally may have the special feature that anti-competitive practices may be kept secret and that any documents relating to anti-competitive behaviour are more likely to be in the possession of the party engaging in that behaviour. I simply just do not see any particular disequilibrium arising on the facts of this case given that the facts alleged to be anti-competitive are known and not disputed – at least not in the mobile proceedings over the period of the concession.
One is of course extremely reluctant to trespass on the discretion of a judge who makes rulings in the course of case management. However my decision is in no way critical of anything McKechnie J said or did and is intended solely to facilitate the High Court by reducing the burden on the trial judge when the matter comes to trial.
I would therefore favour allowing the appeal on the basis that the relief granted by the High Court was, in the particular circumstances, both unnecessary and disproportionate at the stage of the proceedings at which it was granted. In the event that the plaintiff succeeds on liability in the mobile proceedings, it should then be at liberty to renew the application for Category 9 discovery in the High Court if same is required for the purpose of assessing damages either in those proceedings or in the payphone proceedings. In the circumstances I think it is appropriate to allow the appeal in the payphone proceedings also.
Having regard to the considerations underpinning this judgment, I do not find it necessary at this point to decide whether or nor the granting of discovery in respect of Category 9 involves the ‘creation’ of a document or whether discovery in the form sought goes beyond what is envisaged or is permissible under Order 31 of the Rules of the Superior Courts. Given that the process of inspection appears also to raise huge technical and other problems, including not only the retrieval and processing of data, but also the policing, supervision and editing involved in the exercise, I would thus also refrain from making a decision now on whether the offer of inspection by Eircom could provide a viable alternative to the discovery sought.

JUDGMENT delivered the 5th day of December, 2007 by Mr Justice Fennelly.

1. I have had the opportunity of considering the judgments of Geoghegan J and Kearns J, before writing my own.

2. The first issue raised by the Appellant is that the form of order made by the High Court has the effect of directing a party to create documents for the purposes of the action. For all the reasons given by Geoghegan J, I would reject this ground of appeal.

3. It is, of course, axiomatic that a court will only order discovery of documents or records which exist. If no record has been made of a relevant conversation, meeting or event, a court will not, for the purpose of discovery, require a party to make one.

4. That is not what is required by the High Court order in this case. Undoubtedly, the order obliges the Appellant to take very elaborate, complex and costly steps in order to make information available in a form in which it has not previously existed. But the call data records (CDR’s) exist and are capable of being retrieved. The order is not equivalent to requiring a party to make a record, where one has never existed.
5. The rules of court have not been adapted so as to make their objectives conformable to modern technology. The courts have, nonetheless, been astute to ensure that genuine discovery can be ordered even when advances in technology have the effect that discovery takes a very different form from that of documents as traditionally understood. In former times, there would have been a written record of every commercial transaction. Old methods of record-keeping could not have coped with the sheer volume of traffic generated by the new means of communications. I accept that failure by the courts to move with the times by adapting the rules to new technology might encourage unscrupulous businesses to keep their records in a form which would defeat the ends of justice. I would, therefore, like Geoghegan J reject this ground of appeal.

6. The question which remains is whether the High Court order should be set aside as amounting to a disproportionate measure, having regard to the balance between the necessity, from the Respondent’s point of view, of discovery of the Category 9 documents, and the burden placed on the Appellant of complying with the order.

7. I gratefully accept the very comprehensive summary which Kearns J has given of the facts and the history of the two cases and the background facts. Since I agree with most if not all of the conclusions of Kearns J, I can be brief.

8. I will consider: a) the issue in the action to which the Category 9 discovery is said to be relevant; b) the reason advanced to justify the necessity for the order for its discovery; c) the burden placed on the Appellant of complying with the order.

9. I can commence with c). McKechnie J accepted that the order would place “perhaps a heavy burden” on the Appellant. The nature of that burden is described in the judgment of Kearns J and I do not propose to rehearse the evidence. The Appellant has described the technical measures necessitated, the length of time to be taken, the additional staff to be engaged, the need for additional computer equipment and programmes and the expense. Kearns J referred “to the undoubtedly burdensome nature of the form of discovery sought…” and to “the gargantuan task which an order under category 9 would impose on the defendant……”

10. I accept that it should be only in unusual cases that a court will decline to order discovery of relevant and necessary documents, but I think that the unusual scale and extent of the burden placed on the Appellant requires the Court to examine whether what is sought is likely to produce genuinely useful evidential material.

11. One then looks at the issues as pleaded and, in particular, any admissions made.

12. Firstly, it does not appear that the category 9 material is required to establish liability. The Respondent’s complaint is that the Appellant engaged for certain periods in unlawful and discriminatory pricing of its services. The Appellant is alleged to enjoy a dominant position in the market for public fixed telephony network and services markets in the State, the leased lines market in the State and the market for payphones in the State. It is claimed that it is obliged by law to adhere to the principle of non-discrimination with regard to interconnection and to ensure that charges for interconnection follow principles of transparency and cost orientation imposed by a European Community directive and that the Appellant’s license prohibits it from engaging in cross-subsidising or unfairly subsidising any service or in discrimination between persons regarding the provision of any licensed service or access to any telecommunications network.

13. The statement of claim alleges that from specified dates the Appellant imposed a telecommunications interconnection charge. Kearns J explains the MAC (mobile access charge) and the PAC (payphone access charge) imposed on all operators in the State between certain dates. The essence of the claim is that these charges were imposed on the Respondent and other operators in the State, but not on telecommunications operators outside the State. It is claimed that these actions constituted breaches of Articles 81 and 82 of the Treaty Establishing the European Community, sections 4 and 5 of the Competition Act, 1991 and of the licensing conditions pleaded as well as various regulations and a Council Directive.

14. It is not claimed that the category 9 documents will assist in establishing any of these complaints. Moreover, the Appellant does not dispute the facts constituting the basic complaint. It accepts that MAC and PAC were applied to national operators alone, in the period running, as regards MAC, from 15th October 2000 until 1st October 2001 and, as regards PAC, from 1st April 2000 until 1st December 2002. Furthermore, the Appellant accepts that this situation presented an arbitrage opportunity to certain operators, which would enable them better to compete with the Respondent. The Appellant does not, of course, accept that its MAC and PAC charges were unlawful. It claims that they were made necessary by regulatory and technical constraints. That is, however, irrelevant at this stage. For present purpose, it must be presumed that the Respondent’s claim is maintainable in law.

15. Kearns J has described the nature of the debate before the High Court in some detail, citing from a number of key documents. I agree with him that the category 9 documents are essentially sought only in order to assist the Respondent in the assessment of the damages it seeks. That is, of course, perfectly legitimate. It is thus necessary to refer to the reason given for the request for Category 9 discovery.

16. What is sought is information relating to “the volume of minutes trafficked per month in respect of each 1800 number issued by reference to access method…” Thus, as is stated in the letter written by the Appellant’s solicitors to the learned High Court judge, which is quoted more fully by Kearns J, “the essential difference between the parties remains whether or not it is necessary for the proper disposal of the within proceedings for the plaintiff to have information on the volume of freephone minutes trafficked per month in respect of each 1800 number in addition to information on the total volume of such traffic.” That was indeed the ambit of the debate at the hearing of the appeal.

17. The reason advanced to justify the need for the breakdown into individual 1800 numbers was:

“The plaintiff alleges that it has suffered loss as a result of the discriminatory imposition of the MNO origination charge/ MTC by the defendant. Access to call details regarding the quantity of 1800 numbers issued by the defendant , the number of minutes trafficked per number (by reference to access method) and the names of the parties to whom the numbers were allocated would enable the plaintiff to access the manner in which the MNO origination charge/MTC was imposed. In terms of assessing the quantum of its alleged loss, such information would demonstrate how in a market highly sensitive to increases in price, the discriminatory imposition of the MNO origination charge/MTC caused the plaintiff to lose customers to operators who were/are not charged the MNO originators charge/MTC by the defendant.

18. The second sentence only refers to “minutes trafficked per number,” which I take to relate to individual number. But that sentence refers only to the “manner” in which the charge was imposed, which does not appear to be an issue in the case at all. In any event, the category 9 information would cast no light on the manner in which the charge was imposed. The other sentences refer more generally to loss of customers to operators who were not required to pay the charges. Leaving aside the language actually used by the Respondent’s solicitors one must examine, in concrete terms, the need to break the information down into individual numbers. The Respondent refers, and is entitled to refer, in general terms to loss of market share, an entirely legitimate approach to establishing loss. It also accepts that it will be able to call witnesses in order to establish the effects of the alleged discriminatory pricing on other operators in the State. The Respondent’s solicitors’ letter to the learned judge contained the following sentence:

“The discovery made to date by the defendant supports this reasoning, and bears out the plaintiff’s belief that its competitors received a huge growth in minutes when the discrimination by the defendant occurred, which grew to a high point and then dropped away (almost completely in some cases) when the defendant took steps to address the discrimination as a result of the plaintiff instituting the two actions that are before the Court.”

19. That is precisely the sort of case I would expect the Respondent to wish to establish: contemporaneously with the Appellant’s allegedly discriminatory pricing policy, its sales dropped and those of its more favourably treated competitors rose sharply. A court would, quite obviously, be concerned at the possibility that it was not sufficiently facilitating a litigant’s access to information which was essential to establishing the level of damage it has suffered. However, I fail to see, in the present context, that the Respondent, as plaintiff in the High Court action must undertake the burden of proving the level of telephone traffic on individual 1800 numbers. Mr Paul Anthony McDermott, on behalf of the Respondent explained at the hearing that, since his client’s case was based on damage to its call-card business, the breakdown into individual 1800 numbers was necessary in order to establish the extent to which each 1800 number was used in connection with call-cards. In view of the statement, already cited, that the category 8 discovery enabled it to establish that the international operators had benefited from “a huge growth in minutes when the discrimination by the defendant occurred…” and that this fell off when the alleged discrimination ceased, I cannot see that more is needed. Mr McDermott expressed concern that, even if the plaintiff produces strong statistical evidence of differential movements in traffic, explanations might be put forward based on single, unusual or idiosyncratic events. All of this seems to me rather far-fetched. It would be for the defendant to produce evidence of such events and to discover any documents in its possession in relation to them. It seems to me that, if such an issue were to arise during the trial, the trial judge would be able to deal with it as it arose and make an ad hoc order for discovery. However, even if there is a technical issue here which I have not fully grasped (and it is a highly technical case), it becomes relevant to consider the concessions offered by the Appellant.

20. The Appellant has offered to concede that during the period during which it is agreed that the Appellant imposed what are claimed to be discriminatory charges, the entire of any growth in 1800 traffic to mobiles and half of that growth in the case of payphones to international operators related to the use of phone cards. Mr McDermott accepted that this concession solved the problem, insofar as the agreed periods was concerned. He claimed that the concession was insufficient in two respects. Firstly, there was evidence (an internal e-mail was examined in detail at the hearing) from the Appellant’s discovery that the policy of imposing charges was not immediately and effectively implemented by imposition of charges on all international operators. The extent of this “slippage” was not quantified, but I refer to the suggestion of the Respondent quoted above that this growth dropped away (almost completely in some cases) when the defendant took steps to address the discrimination. I am not satisfied that this limitation in the concession takes away significantly from its value. Secondly, the Appellant limits its concession in the payphones case. It accepts that fifty percent of any increase is related to call cards. The situation in that case is less clear cut. In the circumstances of the case generally, I agree with the proposal of Kearns J regarding that case. I prefer to reserve my final position regarding the order in that case until the eventuality mentioned by Kearns J.

I return to consider the proportionality issue. It is worth repeating the language used by Murray J, as he then was, when, following a review of the authorities, in his judgment in Framus Limited and others v CRH plc and others

[2004] 2 IR 20 at 38:

“

I think it follows that there must be some proportionality between the extent or volume of the documents to be discovered and the degree to which the documents are likely to advance the case of the applicant or damage the case of his or her opponent in addition to ensuring that no party is taken by surprise by the production of documents at a trial.”

McGuinness J and Geoghegan J agreed with that judgment. One of the authorities cited was

Ryanair plc v Aer Lingus c.p.t.

[2003] 4 IR 264. In my own judgment in that case, at page 287, I said:

“

The court, in exercising the broad discretion conferred upon it by O. 31, r. 12(2) and (3), must have regard to the issues in the action as they appear from the pleadings and the reasons furnished by the applicant to show that the specified categories of documents are required. It should also consider the necessity for discovery having regard to all the relevant circumstances, including the burden, scale and cost of the discovery sought. The court should be willing to confine categories of documents sought to what is genuinely necessary for the fairness of the litigation. It may have regard, of course, to alternative means of proof, which are open to the applicant. These may, no doubt, include the possible service of notices to admit facts or documents. But there are two sides to litigation. The behaviour of the opposing party is relevant. That party may, for example, have made or may offer to make admissions of facts, and thus persuade a court that discovery on some issues is not necessary.”

21. I have come to the conclusion that the very unusual burden and heavy cost of the discovery in this case requires the Court to have a clear view of the litigious benefit to the plaintiff from obtaining the extremely detailed breakdown of information which is the only remaining issue. The Respondent has already had the benefit of discovery on a huge scale. It accepts that this enables it to establish that the alleged discriminatory pricing had a very significant market effect. I do not believe that it is established, at this stage of the litigation, that the likely benefit, if any, to the Respondent of obtaining the category 9 discovery is sufficient to justify the highly unusual and burdensome form of discovery sought.

22. For these reasons, I would allow the appeal. I agree, however, with Kearns J that the Respondent should be at liberty to make a fresh application for discovery of the material covered by category 9, following determination of the issue of liability. I agree with the form of order proposed by Kearns J in the penultimate paragraph of his judgment.

JUDGMENT of Mr. Justice Geoghegan delivered the 5th day of December 2007

These are two appeals from discovery orders in which essentially the same issues arise. Both parties are telecommunications companies the nature of whose business is (to use the wording in the respondent’s written submissions) “the generation and recording of millions of pieces of telecommunications data on a continuous basis.” Both cases are concerned with alleged anti-competitive practices affecting the sale of call cards. The respondent which is plaintiff in both actions sought extensive discovery from the appellant much of which has been agreed or furnished but a dispute arose over one particular category, the nature of which I will be explaining.

In a dispute over discovery, it is important that the court should not enter into the merits of the case though there must be a clear understanding as to the nature of the issues. I have come to the conclusion that the best way of describing the respondent’s case for obtaining the disputed category of discovery (which was acceded to by the High Court (McKechnie J.)) is to quote from the succinct summary contained in the respondent’s written submissions to this court. The relevant passage reads as follows:

“The respondent’s business is, inter alia, the sale of call cards, through which it offers its customers telecommunications services such as cheap telephone calls to international destinations. Customers access these services by dialling one of the numbers printed on its call cards. 1800 (freephone) numbers are used to allow customers to access the services without incurring an initial access charge. The respondent obtains its telecommunication services from a national telecommunications operator which is licensed by the Office of Director of Telecommunications Regulations (ODTR), referred to herein as a

‘licensed operator’.

In turn the licensed operator obtains its services from the appellant. The principal basis of the respondent’s claim is that the appellant imposed certain charges on licensed operators for the use of 1800 (freephone) numbers where the numbers were dialled by customers from mobile telephones (referred to herein as the

‘mobile access charge’

) and from public payphones (referred to herein as the

‘payphone access charge’

). The appellant did not impose said charges on telecommunications operators located outside Ireland, referred to herein as

‘international operators’,

who obtained the same telecommunication services from the appellant. The respondent alleges that this constituted discriminatory pricing which benefited international operators (and in turn, the appellant’s competitors who obtained services from such international operators) and discriminated against licensed operators (and in turn, the appellant who obtained its services from a licensed operator). It has been accepted by the appellant that for certain periods of time it failed to apply the charges to all operators (referred to by the appellant in affidavits filed in the court as the

‘arbitrage period’

) but it pleads an objective justification with respect to those periods. The respondent disputes that the discrimination was limited to the so called

‘arbitrage period’

admitted by the appellant.”

A much fuller factual account of the business workings is given in the judgment of Kearns J. which I gratefully adopt. The mobile access charge is generally abbreviated to MAC and the payphone access charge to PAC. The appeal number 374/2006 relates to MAC and the appeal number 375/2006 relates to PAC. The disputed discovery order made the 30th August, 2006 in the case to which appeal 374 relates reads as follows:

“That the defendant do within six months from the date hereof make discovery on oath of the following documents which are or have been in its possession, power or procurement.

The volume of minutes trafficked per month from the 1st day of July 2000 to the 7th day of April 2005 in respect of each 1800 number by reference to access method by the defendant to international carriers and/or other entities (to be limited for the time being to those identified and set forth in the Schedule hereto) where the volume of minutes trafficked to that international carrier and/or other entity in any given month exceeded 5,000 minutes – the documents within the power of the defendant to be created from the defendant’s raw data and data bases and using the defendant’s own database.”

“All invoices raised and issued by the defendant to licensed operators and/or international carriers and/or other entities relating to the operation of 1800 freephone numbers from the 1st July 2000 to the date hereof.”

More accurately, I should state that that particular wording related to appeal 374. The corresponding category 8 in respect of the case to which appeal 375 relates contained a different date i.e. 31st August 1999.

In respect of both category 8 and category 9 and in each of the two cases, reasons for the requests were set out in the relevant requesting letter. In respect of the case the subject of appeal 374 the reasons for requiring category 8 were stated as follows:

“The defendant has claimed that it applies the MNO originating charge/MTC in a non-discriminatory manner and/or that differences in treatment are objectively justified, contrary to the allegation of discrimination made by the plaintiff. Discovery of invoices raised by the defendant in respect of the provision of 1800 numbers can reasonably be expected to demonstrate the veracity of its denial in this regard. In addition to demonstrating whether the charges are in fact imposed at all, the invoices may demonstrate the credit periods afforded to operators in relation to payment of the charges. To the extent that certain operators are afforded a longer credit period in which to discharge the MNO origination charge/MTC invoices discovered by the defendant may confirm this particular form of discrimination.”

In respect of the case to which appeal 375 relates the wording is identical except that “PAC” is substituted for “MNO origination charge/MTC”.

The reasons given for requiring category 9 in the case to which appeal 374 relates read as follows:

“The plaintiff alleges that it has suffered loss as a result of the discriminatory imposition of the MNO origination charge/MTC by the defendant. Access to full details regarding the quantity of 1800 numbers issued by the defendant, the number of minutes trafficked per number (by reference to access method) and the names of the parties to whom the numbers were allocated would enable the plaintiff to assess the manner in which the MNO origination charge/MTC was imposed. In addition, in terms of assessing the quantum of its alleged loss, such information would demonstrate how in a market highly sensitive to increases in price, the discriminatory imposition of the MNO origination charge/MTC caused the plaintiff to lose customers to operators who were/are not charged the MNO origination charge/MTC by the defendant. In short, it will enable the plaintiff to show a link between its market share and the obligation to pay the MNO origination charge/MTC to the defendant. The plaintiff believes that expert analysis of these figures will establish a direct and conclusive co-relation between the discriminatory behaviour of the defendant and the loss suffered by the plaintiff.”

Again, the reasons given for the equivalent request in the action to which appeal 375 relates are in identical terms except for the substitution of “PAC” for “MNO origination charge/MTC”.

I think it fair to say that the respondent was not initially opposed to the postponement if, as promised, the relevant information which the respondent sought to obtain from category 9 was in fact furnished with the discovery under category 8. The preparation and delivery of the discovery under category 8, however, took quite some time and it was furnished in instalments. At a certain stage, the respondent on an assessment of the partial discovery made came to the conclusion that the information it sought under category 9 and which it considered necessary for its proofs was not in fact going to be furnished. Acrimonious correspondence ensued, the upshot of which was that the appellant objected in principle to complying with the request for the discovery of category 9. The respondent, therefore, decided to re-enter the matter before the court. A further dispute then broke out, in as much as the appellant interpreted the earlier decision and order of the learned High Court judge as a postponement of all consideration of request No. 9 whereas the respondent contended that only the decision had been postponed. Although the learned judge agreed with the respondent he, nevertheless, permitted the matter to be argued afresh, which it was. As already mentioned, the learned judge subsequently made the requested order. Some days before the final order was made, the respondent made the significant concession that it was prepared to limit its request in respect of category 9 to 11 of the 56 telecommunications companies referred to. These eleven were subsequently specified. I will, in due course, deal with the grounds of appeal and, therefore, the specific objections in principle on the part of the appellant to making the discovery ordered. But I think it useful to continue first with background material. It is the contention of the respondent that merely to receive the invoices referred to in category 8 is not sufficient or at the very least may prove itself not to be sufficient to establish its case against the appellant. In order to demonstrate the alleged discrimination it is not sufficient to prove total volumes of minutes trafficked to particular operators as opposed to individual 1800 numbers. As pointed out in (inter alia) the affidavit of Alice Whittaker sworn the 22nd May 2006, “total volumes of minutes trafficked to particular operators (as opposed to individual 1800 numbers) do not provide the plaintiff with the means of relating such increases and decreases to specific call cards that benefited or suffered as a result of the discriminatory imposition of the MAC and the PAC.” This is because there may be a particular or special reason for an increase which would have no relevance to the alleged discrimination. Such relevance, in the contention of the respondent, can only be established by reference to the individual numbers. Furthermore, these actions are all about sales of call cards rather than phone call minutes. In this connection it is worth quoting paragraph 16 of the same affidavit:

“Consumers access Dome’s Telecommunication services by calling the access number on the Dome card then entering their PIN number (to verify the level of credit), then entering the telephone number they wish to call, i.e. the Dialled Number. In this regard I beg to refer to a sample Dome Global Caller Card above which marked with

‘AW5’

I have signed my name prior to swearing hereof. This sample call card has three different access numbers (as described more fully at paragraph 9) depending on the access method used by the customer. Based on its own call card sales, the plaintiff knows that only a small proportion of customers use the 1800 freephone number from mobile and payphone in order to access the stored telephone credit. The loss of 1800 minutes to each of the operators that receive preferential treatment represents only a small proportion of the plaintiff’s loss on the sale of its call cards.”

In other words, as I understand it, the case being made by the appellant is that even though an 1800 freephone number will not normally be accessed from mobile phones or payphones, if in fact the charges for such calls are more expensive than those of competitors, this is a disincentive to purchasing the card.

In paragraph 19 of the same affidavit an alternative approach was suggested on behalf of the respondent namely, that the appellant would accept as a matter of evidence that “every increase in freephone traffic to non-Irish carriers” in the relevant period “relates to call card business”. At a certain stage, the learned trial judge, to save time, requested letters from each side written to him setting out their respective arguments. In the appellant’s letter, the appellant submitted to the judge that even if the discovery under category 9 might be considered “necessary” it would still be “wholly disproportionate”. But the letter went on to state that if the judge rejected that submission the appellant “would be inclined” to adopt the alternative suggestion offered by the respondent as set out above. However, it is the respondent’s case that the appellant attached conditions to the acceptance which were wholly unacceptable. What the appellant in this connection said in the letter was the following:

“Accordingly, the defendant would be prepared to accept, as a matter of evidence,

‘for

the purposes of the mobile proceedings’

, that, during the period running from the 1st January 2001 until 30th October 2001, inclusive, all of the increases in freephone traffic, (the increase being measured compared with the average monthly volume of minutes recorded in the quarter prior to the 1st January 2001) from mobile handsets in Ireland to 1800 numbers terminating outside the State, which increases are fully recorded in the documentation already provided to the plaintiff in respect of

‘category 8’

, may be attributable to use by call card customers of their cards.”

The appellant then adopted a rather different position in relation to the payphone proceedings i.e. the action to which appeal 375 relates. What the appellant said in the letter in that respect was as follows:

“As regards the payphone proceedings the matter is more problematic. The defendant does not deny, as the plaintiff in effect in footnote 2 to its letter observes, that the figures for payphone-originating international freephone traffic are included within the figures for fixed-line originating international freephone traffic in the document created by the defendant setting out details of the outgoing international freephone traffic which it trafficked in the period August 1999 to April 2005. This document, to which the defendant refers in the said footnote, was produced by the defendant to assist the plaintiff in analysing the said international freephone traffic. Contrary to the allegations made by the plaintiff in its letter of the 8th inst. the defendant is satisfied that the information contained in this document is both complete and accurate.

For the reasons set out in paragraph 10 of the affidavit of John Hall sworn on the 22nd March 2002 on behalf of the defendant, the latter was unable to distinguish payphone originating international freephone traffic from fixed-line original international freephone traffic prior to 2002. Consequently, for the purposes of the payphone proceedings, the defendant would be prepared to accept, as a matter of evidence that for the period running from the 1st September 2001 (which the plaintiff admits, in the affidavit sworn by Dara O’Mahony on its behalf on the 8th April 2002, that it began applying the PAC to its call cards) until the 7th June 2002 (when it became possible to identify payphone originating international freephone calls) that up to 50 per cent of the increase in the monthly volume of fixed-line originating international freephone traffic above that recorded in the previous quarter, to wit June to August 2001, may be attributable to use by call card customers of their cards.”

As Ms. Whittaker makes clear in her same affidavit, it was the view of the respondent that “by limiting and re-defining the concession the defendant renders it of no assistance to the plaintiff in advancing its cause”.

This is a suitable juncture in which to make the observation that, subject to one qualification to which I will refer, at no stage in the affidavits or in the letter to the judge or in the submissions, written or oral, does the appellant make any worthwhile concession to the effect that a trial judge would be entitled to draw inferences of discrimination from the category 8 discovery. In fairness, of course, the appellant has made one significant concession in respect of particular periods to which I will refer in more detail later in the judgment and that is the qualification to which I have referred. It is a concession that in respect of different particular periods relating respectively to MAC and PAC, distortion in card sales can be attributed to non-imposition of the transit charges though the appellant will claim that there was objective justification for it. The contention of the appellant is that as of the terminal date in respect of each period, the charge was imposed. However, it is the contention of the respondent that the decision did not correspond in date with the implementation of the decision and that for the purposes of the respondent’s claim the alleged unlawful discrimination must be taken to have continued long after the terminal date. Detailed reasons as to why the conditions attached by the appellant to the acceptance of the respondent’s alternative offer were unacceptable are set out in the paragraphs 20 and 21 of the same affidavit.

At this stage I turn to the grounds of appeal of which there are three.

1. That the power of the High Court to order discovery of documents does not extend to directing a party to create documents for the purposes of the action.
2. That the power of the High Court to order discovery of documents does not extend to directing a party to create documents that do not exist at the time that the order for discovery is made.
3. That the creation of the documents directed by the High Court imposes a disproportionate burden on the appellant where an order to comply with that order it would be required

(a) to extract in excess of 20 billion call data records from the tapes on which they are currently stored;

(b) to record the said records onto a parallel data base;

order to correlate them with the 1800 freephone numbers the subject matter of the order for discovery;

(d) to create therefrom a document containing a report of the total monthly volume of freephone minutes traffic per month from the 1st July 2000 to the 7th April 2005 in respect of each 1800 number by reference to access method by the appellant to international carriers – limited for the time being to those identified and set forth in the Schedule where the volume of minutes trafficked to that international carrier in any given month exceeded 5,000 minutes.

For my own part, I have no difficulty with the first two grounds of appeal. I am satisfied that they are ill-founded.

It would seem to me that I can usefully treat of the first two grounds of appeal together. My starting point would be that I would reject any idea that the right to discovery of documents should be exclusively based on an interpretation (literal or otherwise) of the relevant rule of court. According to Halsbury’s Laws of England, 4th ed. Vol. 13 para. 1 footnote 3, the discovery of documents “was originally an equitable device employed in the Court of Chancery for obtaining the disclosure and inspection of relevant documents as well as the disclosure and admissions of relevant facts.” It had a more limited history in the common law courts but from and after the Judicature Act, the chancery practice applied in all courts though of course ever since the Judicature Act, there has been a rule of court regulating discovery. In modern times, courts are not necessarily hidebound by interpretation of a particular rule of court. More general concepts of ensuring fair procedures and efficient case management are frequently overriding considerations. The Rules of Court are important and adherence to them is important but if an obvious problem of fair procedures or efficient case management arises in proceedings, the court, if there is no rule in existence precisely covering the situation, has an inherent power to fashion its own procedure and even if there was a rule applicable, the court is not necessarily hidebound by it. It is common knowledge that a vast amount of stored information in the business world which formerly would have been in a documentary form in the traditional sense is now computerised. As a matter of fairness and common sense the courts must adapt themselves to this situation and fashion appropriate analogous orders of discovery. In order to achieve a reasonable parity with traditional documentary discovery it may well be necessary to direct a party “to create documents” within the meaning of the notice of appeal. It may indeed also be necessary to direct a party “to create documents” within the meaning of the notice of appeal even if such “documents” “do not exist at the time the order is made”. I am deliberately using quotation marks because I do not intend to adjudicate on the quasi-metaphysical argument of Mr. Paul Anthony McDermott, counsel for the respondent, that the “documents” do in fact “exist”. At any rate that matter can probably be argued both ways but I would be firmly of opinion that an order of discovery can be made which involves the creation of documents which do not exist, made in the kind of context in which it is sought in this case. Otherwise, potential litigants could operate their business computers in such a way that they would be able to evade any worthwhile discovery. In expressing the above views, I accept that superficially I am perhaps going a step further than the English authorities have done in so far as their rule of court can apparently be interpreted to cover computer discovery. I have no hesitation, however, in making that extension.

Subject to the qualification which I have just mentioned, I accept the broad thrust of the English, Australian, American and other authorities in common law jurisdictions relied on by the respondent. But I do not intend to review them in detail as it seems to me it is sufficient to express approval of the judgment of Vinelott J. in Derby v. Weldon (No. 9) [1991] 1 W.L.R. 652. In that case, it was held by the English High Court that the data base of a computer, in so far as it contained information capable of being retrieved and converted into readable form, and whether stored in the computer itself or recorded in backup files was a “document” within the meaning of the relevant English rule of court and that there was, therefore, power to order discovery of what was in that database with the proviso that the discretion to order production for inspection and copying would not be exercised so as to give an unrestrictive access to another party’s computer and such inspection would be ordered only to the extent that the parties seeking it could satisfy the court that it was necessary for disposing fairly of the cause or matter or for saving costs, in the light of any evidence as to what information could be made available, how far inspection or copying of the database was necessary or whether the provision of printouts would suffice and what safeguards were required to avoid damage to the database and minimise interference with its everyday use. Essentially, Vinelott J. was applying by analogy a judgment of Walton J. in Grant v. South Western and County Properties Limited [1975] Ch. 185 where the question arose of whether a tape-recording of a telephone conversation was a document. Two judges in that case took opposite views but Walton J. considered it an absurdity that if two parties to litigation recorded a conversation, one on a tape recorder and one in shorthand the one would and the other would not be discoverable and he said the following:

“The mere interposition of necessity of an instrument for deciphering the information cannot make any difference in principle. A litigant who keeps all his documents in microdot form could not avoid discovery because in order to read the information extremely powerful microscopes or other sophisticated instruments would be required. Nor again, if he kept them by means of microfilm which could not be read without the aid of a projector.”

Vinelott J. agreed with Walton J. and applied the same principle to computers. It is important to observe that the judgment in Derby and Co. Limited v. Weldon has already been cited with approval by this court in the judgment of Denham J. in Keane v. An Bord Pleanála [1997] 1 I.R. 184.

In the respondent’s written submissions there is included the following apposite paragraph.

“The appellant’s submissions accept that a database is a document. However they seem to be suggesting that it is only what is at the forefront of the database on the date on which discovery is ordered that is discoverable. Thus if you delete one version of a letter and type up a fresh one, the earlier version is not discoverable because to download it from the hard drive of the computer would be to create a new document. This does not reflect the reality of how computers operate. Once a particular calculation has been done on a computer then the only issue is one of retrieval and this is not the same as creating a new document. It is submitted that a confusion between these two concepts lies at the heart of the appellant’s submissions.”

As I have already indicated, I do not intend to rest my judgment on whether new documents are “created” or not as it may lead to unnecessary confusion. Indeed the paragraph which I have just cited from the respondent’s submissions needs considerable qualification. If, for instance, in the pre-computer days “one version of a letter” was replaced by a fresh version, the earlier version would probably have been torn up and destroyed. Strictly speaking, it would have been necessary under an order for discovery to have included the torn up letter in the affidavit of discovery as a document which had been in the possession of the discovering parties but there would obviously have been no obligation to produce it. It would seem to me that the court’s discretion in ordering discovery of matters buried in a computer should be directed towards confining the information obtained as far as possible to what should reasonably have been available under traditional documentary storage. It is clear also from the authorities that the discretion must take into account the other factors mentioned in Derby.

I would not, therefore, allow the appeal on either of the first two grounds. I now turn to consider the third ground which is altogether more difficult. The key question that arises under this ground of appeal is whether in all the circumstances the discovery sought is oppressive to an extent that it is unreasonable to order it. Terminology is important in this context and for the purposes of this judgment at least, I intend to distinguish between the concept of discovery being “necessary” and discovery being “proportionate”. In some of the case law and at times in the oral and written submissions, the issue of whether the discovery is disproportionate or not is treated under the heading “necessary”. I suspect that is because the Rules of Court in this and other common law jurisdictions provide that discovery must be relevant and necessary. They do not expressly provide that it must be, say proportionate or reasonable or that it must not be oppressive. However, I think that the distinction is helpful. Although what is meant by “necessary” in Irish law, and particularly as explained by Fennelly J. in Ryanair v. Aer Rianta [2003] 4 IR 264, a clear case, in my view, has been made out on behalf of the respondent that the discovery sought is “necessary” in that sense. But discovery may be “necessary” and yet so disproportionate as to render it unreasonable for a court to benefit the party seeking such discovery by making the order. For example, one could conceive of cases where the expense of what might otherwise be “necessary” discovery would put the party out of business. That might not necessarily prevent the order being made but a court would have to weigh up that factor quite heavily in considering whether it should make the order. The distinction which I am making seems to me to be particularly important in the light of what was clearly held in the Ryanair case. At p. 272 of the report, Fennelly J., in his judgment, said the following.

“On the question of necessity, counsel referred to the judgment of Kelly J. in the High Court in

Cooper Flynn v. Radio Telefís Éireann

[2000] 3 I.R. 344

. None of the authorities, in particular none of the Irish authorities, support the defendant’s argument that the right to discovery is contingent on the exhaustion of other procedures. An applicant is entitled to discovery even if the facts in question could be established by other means.”

I think that it is a reasonable corollary from this passage that if a party had a legitimate concern as to whether a particular category of discovery more limited than what he was seeking might not be sufficient or even might not give him sufficient comfort in attempting to prove his case, the fuller discovery being sought would be regarded as “necessary”. It has often been pointed out also that in most cases if documents are relevant they are also necessary. This does not always apply however.

It would seem to me that a legitimate concern as to a gap in its proofs, if it had to rely only on category 8 in the discovery has been demonstrated on behalf of the respondent. The only question, therefore, that has to be considered is whether in all the circumstances the discovery of category 9 would be disproportionate and by that I more or less mean oppressive and unreasonable.

In considering this issue, the first question which I must ask myself is, in what circumstances should this court set aside the discovery order of the High Court on this particular ground and in the general context in which the order was made. I have added those last few words because, in my view, it is appropriate to take into account that the learned High Court judge was not just dealing with an isolated discovery motion but was also conducting overall management of the case. This was a case assigned to the competition court. Case management in that court and in the commercial court is particularly important and is directed towards the efficient and speedy completion of the litigation. It has been stated more than once in judgments of this court that this court should be slow to set aside any management ruling made in that context.

Quite apart from the special reluctance which this court would have in interfering with an order made in the course of case management by the intended trial court, there are other universal principles which must also be considered. This court can only concern itself with whether the learned trial judge applied the correct principles of law in making the discovery order now in controversy. On an issue such as whether a particular discovery order is disproportionate or not, there may well be two perfectly legitimate points of view.

I do not think, therefore, that the question which I have to consider is whether I agree with the order made or not but rather whether the learned trial judge applied the correct principles in arriving at his decision and whether on the basis of those principles it was open to him to make that decision. If I had been the High Court judge hearing this application for discovery, I would have had great difficulty deciding whether I should make the order or not particularly in the light of the sound argument put forward on behalf of the respondent that there was a gap or at least a potential gap in its necessary proofs if the full discovery sought was not made. I am, therefore, unable to find that there was an error in legal principle in the view adopted by McKechnie J. and I am quite satisfied from the transcript that he understood and considered the arguments on both sides. Just to take one simple example, if one reads the transcript of the hearing on the 16th May, 2006 (which was one of a number of hearings) at p. 11 there is the following bit of dialogue between McKechnie J. and Mr. Travers, counsel for the appellant.

“Mr. Justice McKechnie: How is the plaintiff going to differentiate between the 1800 numbers, which that may have had on a direct bearing on the allegation of discriminatory pricing and the use of 1800 numbers, which will not. Let me repeat that: How is the plaintiff going to differentiate, how is he going to make use of the documentation in a meaningful way to support the allegation, whether it is right or wrong, of discriminatory pricing on behalf of Eircom when, in fact, the 1800 numbers can be used for more than one purpose?

Mr. Travers: Well, what we are accepting, if you like, by way of an alternative to our main submission that really this discovery is not necessary, is that we would accept in principle all of whatever increases that were attributable to, if you like, this arbitrage opportunity. Therefore the plaintiff has to come into court and demonstrate that the potential cake lost to it is so large, and come into court to prove how much of that cake it might reasonably have expected to have obtained.”

There was further extensive discussion and Mr. McDermott explained in detail to the judge why the concession already referred to was not attractive to the respondent and was not really in the last analysis a concession. At that hearing on the 16th May, 2006, the learned High Court judge was at pains to point out that he had clearly understood that the appellant’s case on the previous occasion had been that there was no need to make an order in relation to category 9 because the information would be included under category 8. He, effectively, cross-examined Mr. Travers about this, citing parts of an earlier transcript which Mr. Travers was forced to disown. All Mr. Travers could say was that it was never the understanding of the appellant that it would provide all of the information regarding the total volume of traffic, at which point he was interrupted by McKechnie J. who pointed out that category No. 9 was meaningless in that event. At that point, Mr. Travers referred to the letter written to the judge at his request on behalf of the appellant a few days earlier in which it was stated that there would be “26 billion call data records”. Like the trial judge, I do not find myself impressed by these kind of figures as they are meaningless unless properly interpreted to the court. From the general tone of the affidavits and correspondence, I do not get the impression that the appellant from the beginning regarded the discovery under category 9 as being so extreme that it would be impossible to comply with it. The major emphasis on alleged disproportionality seemed to emerge at the later stages. The appellant’s argument that the discovery sought was wholly disproportionate would have been more impressive if, from the beginning, there was clear evidence as to why that was so giving very precise details of the time involved, the number of personnel involved, the confidentiality aspect etc., all of which could have been dealt with in reply by the respondent’s own experts. It was stated in the written and oral submissions of the appellant in this court that complying with an order for discovery under category 9 would require the purchase of additional computer hardware costing in the region of €150,000. The respondent, in its written submissions, claims that that figure was never adduced in evidence and has been “plucked out of the air”. The respondent legitimately complains that “evidence” of that kind ought not to be put forward by way of submission. It must be adduced in the ordinary way with an opportunity to have it tested in court and responded to, if necessary, by counterevidence. My overall impression is that essentially, the appellant was trying unsuccessfully to frighten the court by the mention of what superficially at least would be large figures but figures unsupported by solid evidence. I see nothing perverse in the non-acceptance of this argument by the learned High Court judge.

Finally, there is another aspect of the case which dissuades me from advocating any interference with the order of the learned High court judge. Whilst it is perfectly obvious that on any view, considerable time and expense will be involved in furnishing the category 9 discovery, there must be offset against that the potential saving in time and cost which may well materialise when the discovery is completed. It would seem to me that at that stage it is likely that each party will be in a strong position to form a view as to who in reality is going to win this case or if there is to be a win to what extent. At best, the case may more easily settle. But short of settlement there would be every probability, in my view, of considerable narrowing of issues either by agreement or as a consequence of case management.

For this reason also, I would not favour some kind of partial hearing of the case based perhaps on the concession and/or one type of phone call. I think that would add to the litigation and to the appeals and possibly, render it even more uncertain as to the ultimate outcome of the action. At any rate, it does not seem to me that any compromise position was really argued for. Having considered all the options and for the reasons which I have clearly indicated, I would dismiss the appeal.