The Supreme Court allowed an appeal by HSBC Institutional Trust Services (Ireland) Limited and discharged a High Court order requiring it to seek documents held by HSBC group companies in New York and Hong Kong. The Court held that the 2009 amendment to the discovery rules did not extend a party’s obligation to documents it neither possessed nor had a legal right to obtain.
The dispute arose in proceedings brought by Thema International Fund plc against its custodian, HSBC Institutional Trust Services (Ireland) Limited, over alleged failures in the handling of the fund. Thema sought recovery of the notional value of its funds, stated in the judgment as €483,144,279.24 and US$498,799,662.15, plus interest. The Supreme Court did not decide those allegations or the underlying claim.
The discovery dispute concerned documents held by other HSBC companies. HSBC’s affidavit of discovery identified material obtained from four group entities that it said had performed delegated functions. Thema argued that discovered documents showed contacts between additional HSBC entities and Madoff-related entities, and that relevant documents were likely held by those companies. The High Court ordered further discovery in categories 1 and 2, limited to HSBC personnel in New York and Hong Kong.
In a judgment delivered by Mr Justice Clarke on 25 January 2013, the Supreme Court considered whether adding “procurement” to Order 31, rule 12 in 2009 changed the scope of discovery. It concluded that the amendment brought the rule’s wording into line with language already used in court decisions and did not create a wider obligation. The Court said the High Court order would require a separate company outside the Irish courts’ jurisdiction to search its own records and carry out what amounted to delegated discovery. The rules did not permit that order in the circumstances.
The Court noted that discovery may be sought directly from a third-party company that is subject to Irish jurisdiction. It also said a party relying at trial on documents obtained from a related company must make appropriate enquiries and disclose documents it intends to rely on. At trial, a judge may address selective production or unexplained gaps, including by drawing appropriate inferences. Those observations did not alter the limits of formal discovery, and the Court did not decide the separate arguments about necessity and proportionality.
The appeal was allowed and the High Court’s order of 27 July 2012 was discharged. The judgment did not resolve the merits of Thema’s claims against HSBC.