The Court of Appeal has allowed an appeal by J & E Davy and refused Waterford Credit Union access to two Irish Stock Exchange reports about Davy’s sale of investment bonds to credit unions. The court found the reports relevant and necessary to Waterford’s claim, but held that disclosure should be refused because Waterford’s solicitors had used information obtained through discovery in separate proceedings, breaching an implied undertaking to the court.
Waterford had invested more than €5 million through Davy, which it had retained as investment adviser. Waterford alleges that it was led to believe the bonds guaranteed its capital and complied with the Trustee (Authorised Investments) Order 1998. It claims Davy misrepresented the investments and breached contractual, fiduciary and statutory duties, among other claims. Davy denies the allegations. It says it disclosed in meetings in 2006 and 2008 that it acted as principal in bond sales and earned a sum, and argues Waterford’s secret-profit claim is time-barred or otherwise barred.
The High Court ordered discovery of three categories of documents: two reports prepared by the Irish Stock Exchange in 2007 and 2008; documents concerning alleged disclosure that Davy acted as principal; and records of the meetings cited in Davy’s amended defence. On appeal, the Court of Appeal upheld the discovery order for the latter two categories. It said they were relevant and necessary to Waterford’s claim concerning an alleged undisclosed profit, and found no basis to vary the order as excessively wide.
The reports concerned an exchange investigation into Davy’s dealings with a sample of credit unions. Waterford was not in that sample. The Court of Appeal nevertheless agreed with the High Court that the reports were relevant and necessary to the issues in the case, and that Davy’s own confidentiality interest did not outweigh the interest in their use at trial.
The decisive issue was the use of information about the Jyske bond. Waterford’s solicitors had learned that information from discovery in a separate case involving another credit union, where they also acted. They used it in correspondence to support Waterford’s request for the exchange reports. The breach of the implied undertaking was acknowledged at the High Court hearing, after Davy’s solicitors had repeatedly asked about the source of the information.
The Court of Appeal said the High Court had taken too benign a view of the breach. It held that the court should prevent Davy suffering a litigation disadvantage from the improper use of the information and mark the seriousness of the breach. It therefore allowed the appeal and varied the High Court order by refusing discovery of the two exchange reports. The judgment does not state that Waterford’s underlying claims were decided.