Case Studies
Commercial Litigation: Virtual Client Case
Below is a virtual case, similar to many Commercial Law cases that we would undertake at Malcomson Law. This is not a real case and no real names are used in this article as we believe it would breach our client's confidentiality.
Cormac's Story
Cormac owns a successful development company, called FFTent Ltd which specialises in large scale public projects. The company secures a valuable contract with a local authority for a construction project, in conjunction with an engineering company, Imagineers Ltd, who are to provide the designs for the project to the company.
In the middle of the construction works, a fault is spotted in the plans which results in much of the initial work having to be re-done by FFTent Ltd at a high cost to the company. FFTent Ltd are seeking to re-coup the costs of re-doing the work from the Imagineers Ltd, which are running at over €1m. Cormac approaches his solicitor in order to seek advice on how to proceed in the most efficient and timely manner.
Application to the Commercial Court
The appropriate forum for this type of dispute is the Commercial Court as, under the Commercial Court rules, any case to be allocated to that court must be of a value over €1m.
To issue proceedings under the Commercial Court rules, the solicitors for the company must first issue their proceedings and then seek to have them transferred to the Commercial Court list as soon as possible, as the Courts have the discretion to refuse admission to the Commercial Court. The application is made by Motion to the court and is accompanied by a Certificate of the Solicitor that the proceedings are appropriate to be treated as commercial proceedings. Though it is not required by the rules, this application is often accompanied by an Affidavit, which may set out the basis for the claim for damages.
If the case is admitted to the Commercial Court list, the Judge will make an Order for Directions in relation to the exchange of pleadings, which will set out various timelines for this.
Every time the matter comes before the Judge (most often Mr. Justice Kelly), booklets of papers should be updated and lodged with the registrar of the Commercial Court on the Wednesday before any application is heard.
Mediation
Pursuant to the new rules, the parties may agree to mediate the dispute and the matter will be adjourned if the parties seek to resolve their differences in such a manner. Mediation is not mandatory but the judge may communicate to the parties that mediation would be a suitable option for them. As FFTent Ltd wish to minimise the costs of the action, they instruct their solicitors to seek mediation of the dispute with the engineering company, which essentially forces Imagineers Ltd into mediation. A refusal to participate may have costs implications for the Imagineers Ltd at the end of the hearing of an action.
Mediation means that the matter may be resolved between the parties without having to go to hearing. In that way, the costs of the action will be minimised. This is obviously beneficial to FFTent Ltd as they will to continue on with their business without being tied up in litigation for a considerable time.
The parties agree a mutually acceptable mediator to conduct the mediation. The costs are borne by each party, meaning that there is incentive for both sides to resolve the dispute as efficiently as possible.
Even if mediation does not translate into a satisfactory outcome, a significant benefit of the process is that it will narrow the issues in dispute between the parties and may result in some common ground being established. This, in turn, may result in successful settlement negotiations in advance of any hearing.
Discovery
Both parties may obtain access to limited discovery of relevant documentation in advance of the mediation. This assists each side in assessing the strength of their case, although privileged documentation is not included in the discovery. FFTent Ltd seek voluntary discovery from Imagineers Ltd through their solicitor, which is required under the rules governing discovery. FFTent Ltd need to have sight of the all the draft plans of the construction to pinpoint the occasion of the fault in design. The engineering company's solicitors state that because mediation has been agreed, there is no requirement to make discovery, and therefore refuse. The view of the courts is that in order for the mediation to be successful, certain limited discovery must be made and therefore discovery is granted to FFTent Ltd.
The mediation process commences with a certain degree of pressure on both parties to resolve the issue. FFTent Ltd wish to secure the full amount owing to them but are wary of prolonging any litigation that may have huge cost and time implications for the company. Imagineers Ltd may face a large bill if they do not find some kind of compromise with FFTent Ltd.
Conclusion
Solicitors and barristers on behalf of both parties spend many long hours in talks seeking to resolve the issues. In the end, the mediation is successful. Imagineers Ltd agree to pay an agreed amount of damages for losses suffered by FFTent Ltd, subject to FFTent Ltd waiving any interest entitlements, to which they are agreeable. Imagineers Ltd have avoided incurring significant costs of defending the action. Both parties have finalised a dispute between them in a timely manner which allows them to continue on with their work without being tied up in litigation for years.
Please note that this article is for information purposes only and does not constitute legal advice.
Seeking Commercial Litigation Advice
If you believe that you may have a legal claim relating to this story, please contact Malcomson Law by filling out an Online Enquiry Form or by calling 01 8744422. A solicitor who specialises in this area will contact you to advise you of your legal rights and entitlements.
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