The Supreme Court has directed discovery of two Irish Stock Exchange reports in Waterford Credit Union’s damages case against stockbrokers J & E Davy, ruling that refusing access to the reports would be an inappropriate sanction for a solicitor’s breach of an undertaking in separate proceedings.
The Court allowed Waterford’s appeal and dismissed Davy’s cross-appeal. It held that the lower courts’ conclusions that the reports were relevant and necessary fell within the range of decisions reasonably open to them. The order directs discovery of the two reports; it does not determine the underlying claim for damages. The Court proposed that the parties agree the terms of the order, including costs, and said it would address any disputed matters if they could not agree.
Waterford alleges that it invested more than €5 million in perpetual Constant Maturity Swap bonds in 2005 and 2006 on Davy’s advice, and that the bonds did not guarantee capital or comply with the applicable 1998 investment order. Davy denied the allegations and denied breaching its statutory duties. The reports arose from Irish Stock Exchange disciplinary proceedings concerning Davy’s conduct with some credit union clients. A 2009 public statement said the investigation found rule breaches concerning disclosure and steps to ensure compliance with the 1998 Order; it also described remedial action and a settlement arrangement with credit unions.
Waterford sought the reports because its claim included alleged breaches of statutory duty and because it said the reports related to similar bonds and issues. Davy argued that the investigation covered a sample of credit unions that did not include Waterford, and challenged the reports’ relevance, necessity and disclosure in light of their confidentiality.
The discovery request was also affected by Waterford’s solicitor’s use in these proceedings of information obtained through discovery in separate litigation involving another client. The Supreme Court accepted that this breached the implied undertaking limiting the use of discovery material to the proceedings in which it was obtained. It said the breach was serious and could warrant significant action. However, the Court held that the proper way to prevent Waterford gaining an improper litigation advantage was to assess discovery without relying on the misused information. Refusing reports already found relevant and necessary would instead punish Waterford for a breach primarily attributable to its solicitor.
The Court concluded that the reports’ confidentiality did not, on the findings below, outweigh the interests of justice. Its decision concerns access to the reports at the discovery stage; the judgment does not decide whether Davy is liable for Waterford’s alleged losses.