Commercial entities, faced with the obligation to make discovery in legal proceedings, may well have very real concerns arising from the confidentiality or commercial sensitivity of documents, concerns which can be more acute in light of the sheer volume of documentation which is routinely stored electronically.
Commercial law practitioners may well be asked to advise clients on their discovery obligations and how to reconcile these with the understandable desire to protect commercially sensitive information. Numerous questions arise. What approach do the courts take in determining what must be discovered? Are highly confidential documents such as trade secrets immune from discovery? Does the confidential nature of a document impact on the court’s assessment of its discoverability? To what extent are the courts willing to limit access to confidential information which is made available on discovery? Is it permissible to redact commercially sensitive information? What protections exist against the improper circulation of commercially sensitive material? How have the courts explained the interplay between concepts of relevance, necessity, proportionality, fairness, confidentiality and the public interest? What are the solicitor’s, as opposed to his or her client’s obligations? This article looks at such issues, with a view to offering some practical guidance, particularly to non-litigators.
As practitioners will be aware, discovery is the process whereby parties to legal proceedings disclose, in the form of a sworn affidavit, all documents in their possession, custody or power relevant to the subject matter of the dispute in question. This is followed by inspection of the discoverable documentation. Order 31 of the Rules of the Superior Courts (RSC) deals with “interrogatories, discovery and inspection”. Under Ord.31 r.12(3), a discovery order shall not be made unless the court is satisfied that the documents sought are “necessary either for disposing fairly of the cause or matter or for saving costs”. Insofar as inspection is concerned, Ord.31 r.15 entitles a party to legal proceedings to give notice to any other party to produce, for inspection, any documents referred to in pleadings, affidavits or lists of documents. Order 31 r.18(2) makes it clear that an inspection order “shall not be made under this rule if and so far as the Court shall be of opinion that it is not necessary either for disposing fairly of the cause or matter or for saving costs.” Order 31 r.18 is typically used where a party has made discovery of a document but objects to producing it on the grounds that it is privileged or where the applicant wishes to challenge the validity of some redaction made to the document discovered, e.g. a claim that the redacted material is confidential. The failure to comply with an order for discovery can have extremely serious consequences. Order 31 r.21 makes it clear that
"[i]f any party fails to comply with any order … for discovery or inspection of documents, he shall be liable to attachment. He shall also, if a plaintiff be liable to have his action dismissed for want of prosecution, and, if a defendant, to have his defence, if any, struck out …"
In addition to the discovery obligations placed upon parties to legal proceedings, solicitors themselves have obligations, as officers of the court. As Salmon J. put it in Woods v Martins Bank Ltd:
“No doubt the Defendants’ solicitors explained to their clients that they must disclose all relevant documents which were or had been in their possession. The solicitors’ duty, however, does not stop there. It cannot be too clearly understood that solicitors owe a duty to the court, as officers of the court, carefully to go through the documents disclosed by their clients to make sure, as far as possible, that no relevant documents have been omitted from their clients’ affidavit.”
Extent of Obligations
Irish authorities have also described the challenge posed by discovery and the obligations placed on a solicitor. Echoing Salmon J.’s approach two decades earlier, Murphy J. pointed out the following in Irish Nationwide Building Society v Charlton:
“Frequently the deponent will be familiar with the documents in his possession, power or procurement but have little understanding of the manner in which the contents of any such document might advance or damage the case of either party. It is this problem which imposes on the solicitor to the party making discovery the duty to take positive steps to ensure that his client appreciates the extent of the obligation imposed by an order for discovery. The solicitor owes a duty to the Court carefully to go through the documents disclosed by the client to make sure, as far as possible, that no relevant document has been withheld from disclosure … However, the deponent cannot abdicate his duty in relation to disclosure to his legal advisors nor could the lawyers accept the responsibility of inspecting all of the documents in the possession of his clients. Careful consultation between the solicitor and the client should enable the deponent to extract all documents in his possession or procurement which are relevant – in the wide sense to which that word is used in relation to discovery – to matters in issue in the proceedings and to obtain the advice of his lawyers, if necessary, in relation to any particular document the discoverability of which might be in doubt.”
Before discovery is ordered, the court must be satisfied that the documentation in question is relevant to the matters in dispute, relevance being determined by the pleadings. The celebrated dictum of Brett L.J. in Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co defined relevance in the following terms:
"It seems to me that every document relates to the matters in question in the action, which not only would be evidence upon any issue, but also which, it is reasonable to suppose, contains information which may – not which must – either directly or indirectly enable the party requiring the affidavit either to advance his own case or to damage the case of his adversary. I have put in the words ‘either directly or indirectly,’ because, as it seems to me, a document can properly be said to contain information which may enable the party requiring the affidavit either to advance his own case or to damage the case of his adversary, if it is a document which may fairly lead to a train of inquiry"
Well over a century later, in Medtronic Inc v Guidant Corp Kelly J. (as he then was) stated: “On the question of relevance the judgment of Brett L.J. in the Peruvian Guano Case … remains the guiding norm”.
The foregoing raises at least two practical concerns for every commercial entity subject to a discovery order, particularly in an age where so much documentation is available, often electronically stored. First, the wider the definition of relevance, the more scope there would appear to be to require the production of commercially sensitive information on the grounds that it is relevant, however remotely, to issues in the dispute. Secondly, the wider the concept of relevance, the larger the “pool” of documentation which must be examined in the context of properly discharging both the client’s discovery obligations and the solicitor’s duties, as an officer of the court.
Helpfully, Irish authorities have made it clear that limitations apply. In Murphy v J Donohoe Ltd Johnson J. cited with approval the statement in Halsbury’s Laws of England that “each case must be considered according to the issues raised; but where there are numerous documents of slight relevance and it would be oppressive to produce them all, some limitation must be imposed”.
More recently, in Framus Ltd v CRH plc, the Supreme Court explicitly approved the High Court’s approach in Hannon v Commissioners of Public Works, where McCracken J. offered guidance on the question of relevance:
- "The Court must decide as a matter of probability as to whether any particular [document] is relevant to the issues to be tried. It is not for the Court to order discovery simply because there is a possibility that documents may be relevant.
- Relevance must be determined in relation to the pleadings in the specific case. Relevance is not to be determined by reasons of submissions as to alleged facts put forward in affidavits in relation to the application for further and better discovery unless such submissions relate back to the pleadings or already discovered documents. It should be noted that Order 31, Rule 12 of the Superior Court Rules specifically relates to discovery of documents ‘relating to any matter in question therein’.
- It follows from the first two principles that a party may not seek discovery of a document in order to find whether the document may be relevant. A general trawl through the other party’s documentation is not permitted under the rules.
- The Court is entitled to take into account the extent to which discovery of documents might become oppressive and should be astute to ensure that the procedure of discovery is not used as a tactic in the war between the parties."
Relevance alone is not the determining factor and, before discovery is ordered, a court must be satisfied that such discovery is also necessary for the fair disposal of the case or to save costs. In his 1995 decision in Taylor v Anderson, Lord Bingham M.R. succinctly set out the necessity test in the context of an application for discovery of documents, in the following terms:
"The purpose of the rule is to ensure that one party does not enjoy an unfair advantage or suffer an unfair disadvantage in the litigation as a result of a document not being produced for inspection. It is, I think, of no importance that a party is curious about the contents of a document or would like to know the contents of it if he suffers no litigious disadvantage by not seeing it and will gain no litigious advantage by seeing it. That, in my judgment, is the test"
In this jurisdiction, Fennelly J., in his Supreme Court judgment of 2 December 2003 in Ryanair plc v Aer Rianta cpt, explained the interplay between relevance, necessity and the interests of justice as follows:
"In the great majority of cases, discovery disputes have revolved around the issue of relevancy. There are fewer cases concerning necessity. There are good reasons for this. If there are relevant documents in the possession of one party, it will normally be unfair if they are not available to the opposing party. Finlay C.J., in his judgment in Smurfit Paribas Bank Ltd. V. A.A.B. Export Finance Ltd.  1 I.R. 469 emphasised, at p. 477, ‘the full disclosure both prior to and during the course of legal proceedings which is in the interests of the common good is desirable for the purpose of asserting the truth and rendering justice’. The overriding interest in the proper conduct of the administration of justice will be the guiding consideration, when evaluating the necessity for discovery"
Expedition and Economy
In Ryanair plc, Fennelly J. made it clear that the obligation placed on an applicant for discovery to demonstrate that the discovery sought is necessary for disposing fairly of the cause or matter “is not a mere formalistic requirement”. The public interest behind the test of necessity, as laid down in the RSC, and being distinct from the test of relevance, was also commented on by the Supreme Court in Ryanair plc. Having referred to the introduction, in 1999, of Ord.31 r.12 RSC in response to growing concern about the burdens on parties and on the courts arising from excessive resort to wide-ranging discovery requests, Fennelly J. made clear that:
"[t]he public interest in the proper administration of justice is not confined to the relentless search for perfect truth. The just and proper conduct of litigation also encompasses the objectives of expedition and economy."
Necessity and Proportionality
The question of necessity for discovery has often arisen in cases involving some other interest, such as the confidentiality of documents, particularly where the interests of third parties arise. More recently, Kelly J. provided a detailed analysis of the necessity test in the context of the Irish court’s approach to discovery in Medtronic Inc v Guidant Corp. He also explained the role played by the concept of proportionality in the court’s decision making:
"The court, in exercising the discretion conferred upon it by O. 31, r. 12, 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. The court should also consider the necessity for the documents having regard to all the relevant circumstances, including the burden, scale and cost of the discovery sought. It should also be willing to confine categories of documents sought to what is genuinely necessary for the fair disposal of the litigation. Alternative means of proof which are open to the applicant should also be considered. In some circumstances an order which is too wide can constitute an obstacle to the fair disposal of proceedings rather than the converse. As was said by Murray J. in the Framus case":
'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. That is not to gainsay in any sense that the primary test is whether documents are relevant to the issues between the parties. Once that is established it will follow in most cases that their discovery is necessary for air disposal of those issues.'"
A decade after his decision in Cooper Flynn, Kelly J. was asked to decide on the discoverability of material concerning a parent patent when its divisional patent was in suit. In Astrazenaca AB v Pinewood Laboratories Ltd, the defendant sought discovery of the prosecution files and documents in relation to the parent patent, a valuation as to the patentability of the patent, documents referring to the infringement and validity of the patent, and documents concerning the consideration of any possible infringement. The court held that the documents sought by the defendant appeared to be both relevant and necessary to the determination of issues arising on the counterclaim, and Kelly J. rejected the submission that the application constituted a “fishing expedition”. During the course of his judgment, Kelly J. emphasised the concept of proportionality as part of the court’s consideration of every discovery application and made reference to the earlier observations of Fennelly J. as follows:
"The court, in considering an application for discovery, must also bear in mind the concept of proportionality. That involves a consideration of the extent or volume of the documents to be discovered and the degree to which the documents are likely to advance the case of an applicant or damage the case of his opponent. The public interest in the proper administration of justice is not confined to the relentless search for perfect truth".
Confidential Documents Relating to Other Employees
In the House of Lords decision in Science Research Council v Nassé, Lord Wilberforce considered an argument to the effect that the confidential nature of a document could operate as a complete defence to an application, before an employment tribunal, for discovery. The case in question involved a complaint by a married woman who was passed over for promotion, in favour of a male colleague and a single woman. The complaint concerned allegations of discrimination on grounds of gender, marital status and trade union membership. A key issue in the case was the extent to whether the employer was obliged to disclose confidential documents relating to other employees. In his judgment, Lord Wilberforce offered the following guidance:
"The ultimate test in discrimination (as in other) proceedings is whether discovery is necessary for disposing fairly of the proceedings. If it is, then discovery must be ordered notwithstanding confidentiality. But where the court is impressed with the need to preserve confidentiality in a particular case, it will consider carefully whether the necessary information has been or can be obtained by other means, not involving a breach of confidence."
Protection from Discovery
Although the House of Lords rejected the proposition that confidentiality alone would prevent a discovery order being made, his Lordship’s analysis makes it clear that confidentiality is certainly a factor which may be weighed in the balance:
"There is no principle in English law by which documents are protected from discovery by reason of confidentiality alone. But there is no reason why, in the exercise of its discretion to order discovery, the tribunal should not have regard to the fact that documents are confidential, and that to order disclosure would involve a breach of confidence. In the employment field, the tribunal may have regard to the sensitivity of particular types of confidential information, to the extent to which the interests of third parties (including their employees on whom confidential reports have been made, as well as persons reporting) may be affected by disclosure, to the interest which both employees and employers may have in preserving the confidentiality of personal reports, and to any wider interest which may be seen to exist in preserving the confidentiality of systems of personal assessments."
As practitioners will be aware, the law has long recognised the existence of certain categories of privileged communication, including without prejudice privilege, legal professional privilege, public interest privilege, sacerdotal privilege and the privilege against self-incrimination. Does confidentiality, simpliciter, ever confer a privilege against discovery? In a separate judgment in Science Research Council, Lord Salmon put the matter succinctly, stating: “It has long been established, however, that no documents which have been acquired in confidence can for that reason be privileged from production or inspection.” Older authorities are consistent on the point. As Lord Cross made clear over four decades ago, in Alfred Crompton Amusement Machines Ltd v Customs and Excise Commissioners (No. 2): “‘Confidentiality’ is not a separate head of privilege, but it may be a very material consideration to bear in mind when privilege is claimed on the ground of public interest.” Thus, it appears to be settled law that, regardless of how confidential or commercially sensitive a document may be, confidentiality alone will be no bar to discovery.
Interfering with the Right of Confidence
The courts have long recognised the tension between ordering the disclosure of relevant documents of a confidential nature and the competing objective of preserving confidentiality. In Independent Newspapers (Ireland) Ltd v Murphy, Clarke J. (as he then was) stated:
"“[I]t seems to me that the balancing of the rights involved also requires the application of the doctrine of proportionality. To that extent, it seems to me to be appropriate to interfere with the right of confidence to the minimum extent necessary consistent with securing that there be no risk of impairment of a fair hearing."
Clarke J.’s decision also illustrates the practical steps a court may be willing to take in order to maintain the confidentiality of information to the fullest extent possible, consistent with ensuring a fair trial. On the particular facts of the case, Clarke J. found that it was unclear whether the disputed documentation, although relevant, would ultimately become necessary for the fair determination of the matters in dispute. In those circumstances, he decided against ordering the immediate discovery of what were “undoubtedly confidential documents” and, instead, directed a modular trial of the issues in dispute. Thus, the trial judge, who would have a much better view of the disputed issues, could determine whether the confidential documentation sought was truly necessary for a fair trial. In an ex tempore ruling, Clarke J. also made provision for securing the relevant documentation to ensure that it would be available, if required, at the trial.
Confidentiality and the Public Interest
In O’Callaghan v Mahon, the Supreme Court considered an application for judicial review of a decision by the Mahon Tribunal of Inquiry which had been set up to investigate irregularities in the planning process. The applicant was a businessman against whom certain serious allegations had been made by a witness at the tribunal who was also a notice party. The applicant sought disclosure of all documents recording prior oral and written statements given by the notice party to the tribunal so that he could be cross-examined in relation to inconsistences between his prior statements and his oral evidence. The tribunal ruled that the applicant was not entitled to disclosure of prior statements on the grounds that they had been furnished in confidence. When the matter came before the High Court, O’Neill J. held that the applicant was entitled to the reliefs sought. The respondents appealed to the Supreme Court, where a five-judge court dismissed the appeal. The appropriate approach to the disclosure of confidential information in the public interest was explained by Hardiman J. in the following terms:
"In the present case one must first look closely at the precise scope and nature of the claim to confidentiality advanced, and determine whether the disputed material is indeed confidential. One must then consider whether such degree of confidentiality as may be found to exist is or is not outweighed by the public interest, based fundamentally on constitutional considerations in according fair procedures to the applicant in the circumstances in which they are claimed."
It is submitted that the term “public interest”, as employed by the late Mr Justice Hardiman in O’Callaghan, encompasses several, sometimes competing, interests. The public clearly has an interest in the efficient running of a tribunal. There is also a public interest in preserving the secrecy of a document furnished in confidence. Similarly, the public have an interest in the proper administration of justice, an essential component of which will often be the disclosure of relevant documents, where necessary. Several years earlier, Lynch J., in National Irish Bank Ltd v RTÉ explicitly referred to the legitimate public interest in maintaining confidentiality, in appropriate cases, for the benefit of society at large.
Confidentiality and Securing Justice
Commenting on the interplay between the public interest in preserving confidentiality, on the one hand, and the public interest in ensuring fair procedures, on the other, Hardiman J. offered the following guidance in O’Callaghan, in a decision which also emphasises that confidentiality is not a category of privilege:
"It is a public interest in the proper and efficient running of the tribunal which is the basis of the refusal to disclose the notice party’s prior statements in the present case. Since confidentiality is not a separate heading of privilege it may be regarded as a necessary, but not in itself a sufficient, basis for a claim to the public interest immunity from disclosure. Where the purpose for which disclosure is sought relates to the defence of a person accused in a statutory public tribunal of grave wrongdoing, the element over and above confidentiality which requires to be established is that the public interest in preserving the secrecy of the document overrides the public interest in providing the person impugned with fair procedures in his own defence. Analogously, Lord Templeman said in R. v. Chief Constable of West Midlands. Ex p. Wiley  1 A.C. 274 at p. 280:-
'A claim to public interest immunity can only be justified if the public interest in preserving the confidentiality of the document outweighs the public interest in securing justice.'"
In Warner-Lambert Co v Glaxo Laboratories Ltd, the plaintiff sued for infringement of patents concerning the production of steroid compounds. The defendant argued that commercially valuable trade secrets were involved in manufacturing the steroid in question. The defendant was unwilling to make discovery of its manufacturing process to the plaintiff. However, it agreed to make such discovery to the plaintiff’s in-house counsel, solicitor, patent agent and an expert, on foot of their undertaking not to divulge this information to any other parties, including the plaintiff, and not to use any such information, save for the purposes of the legal proceedings. The court subsequently ordered disclosure to the plaintiff’s chief executive and general legal counsel and the defendant appealed, arguing that no disclosure should be ordered, beyond what had already been provided by agreement.
Disclosure to Selected Individuals
In his judgment in Warner-Lambert, Buckley L.J. focused on the extent to which a defendant should be required to disclose otherwise secret information in the interests of justice. At the level of principle, Buckley L.J. held, inter alia:
"An infringer should not be assisted in protecting himself by nondisclosure of matter which in the normal way would be the subject of pre-trial discovery. In such a case, a controlled measure of disclosure seems best calculated to serve the interests of justice. The course which has been taken in a number of such cases has been to direct disclosure to selected individuals upon terms aimed at securing that there will be not either use or further disclosure of the information in ways which might prejudice the defendant."
Risk of Trade Secrets Leaking
Turning to the specific facts in the case, his Lordship addressed a number of competing issues which the court had to resolve with a view to preventing trade secrets from becoming known to competitors. He expressed the challenges as follows:
"The processes patented by the plaintiff and the process employed by the defendant are such that it is impossible to discern, by analysis or otherwise, from the product of either how it has been made – that is, which of a number of possible chemical processes has been employed. This would make it, as I can see, virtually impossible to police any terms imposed in the use of such information as is disclosed; and this would be even more so, having regard to the fact that the plaintiff operates outside of this country and that the individuals to whom the plaintiff wants disclosure to be made are all resident outside the jurisdiction. This should, in my opinion, make the court particularly careful not to expose the defendant to any unnecessary risk of their trade secrets leaking to any competitors."
Principal and Agent
Drawing on agency law principles as well as common sense, Buckley L.J. in Warner-Lambert offered a practical solution to the question of deciding which parties should have access to commercially sensitive information, in the context of litigation between competitors and the fair determination of the relevant dispute, holding:
"If in a particular case it is right that disclosure of any facts should be made by one party to his opponent’s advisors before trial, it must normally follow as a matter of course that the opponent should be entitled to know the facts so disclosed. His advisors are his agents in the matter, and strong grounds must be required for excluding the principal from knowledge which his agents properly acquire on his behalf. But this principle must be subject to some modification if trade secrets are to be protected from disclosure to possible competitors … Where a matter in question in an action, being that matter upon which inspection or disclose will throw light, is of a technical nature, the parties seeking discovery may well require inspection by, or disclosure to, technical and professional advisors. If the matter be of a kind of which the party will be likely to be able with the aid of those advisors to form some kind of view of his own, it seems to me that he should normally be allowed to know as much about the facts as his advisors. If, however, the case were one of so esoterically technical a character that even with the help of his expert advisors the party himself could really form no view of his own upon the matter in question but would be bound to act merely upon advice on the technical aspects, disclosure to him of the facts underlying the advice might serve little or no useful purpose."
Koger Inc v O’Donnell arose from a claim that the first, second and third-named defendants, who were former employees or contractors of the plaintiffs, set up the fourthnamed defendant and launched a rival software product. The plaintiffs argued that the defendants developed their product using unlawfully obtained confidential and copyrighted information belonging to the plaintiffs. Kelly J. was asked to determine the plaintiffs’ application for discovery, in circumstances where the defendants asserted that the discoverable material should only be disclosed to the plaintiffs’ experts, not to the plaintiffs themselves or to their legal team. The plaintiffs argued that if the material disclosed on discovery was made available only to their experts, it would create a fundamental inequality of arms between the parties in the conduct of the litigation. The defendants’ commercial concerns were summarised by Kelly J. as follows:
"They say that with the best will in the world, it is not feasible for the plaintiffs’ personnel to put from their minds what they will learn from the analysis of the material discovered to them. This is particularly worrying for the defendants because they believe that their … product is far superior to the … product of the plaintiffs. The defendants believe that disclosure … will seriously undermine the position of the fourth named defendant in articular. Disclosure will involve its primary assets being made known to a competitor for detailed analysis by that competitor’s personnel."
Limited Disclosure and a Fair Trial
Having considered a number of authorities, including Warner-Lambert, Kelly J. recognised that the type of restrictions contended for by the defendants could be ordered by the court. However, these would only be ordered in exceptional circumstances. The judgment emphasises that the interests of justice will be the paramount concern. Although restrictions could be made in relation to what persons had access to discoverable material, with a view to preventing commercially sensitive information becoming known to a competitor, the court made clear that such limitations will not be permitted at the expense of a fair trial. Although the court permitted disclosure to a wider list of persons than the defendants had been willing to agree in a proposed confidentiality agreement, Kelly J.’s judgment set out, in quite granular detail, strict conditions which would govern the making of such discovery.
The final passage of Kelly J.’s judgment sets out the court’s conclusions and the conditions applying to the disclosure permitted. Once again, one sees that the guiding principle is to ensure a fair trial and the court’s order was a bespoke one aimed at securing this:
"The case is a finely balanced one but I have to come to the conclusion that the interests of justice require limited disclosure of the material in question. The very limited disclosure contemplated in the confidentiality agreement is not sufficient to permit of a fair trial. I propose, subject to hearing counsel, to make an order permitting disclosure to the plaintiffs’ legal advisors (counsel and solicitor) and to a nominated officer of the plaintiffs under strict conditions. These conditions will include:-
(i) An undertaking on oath from the nominated officer of the plaintiffs that the material disclosed will not be used for any purpose other than the conduct of this litigation.
(ii) That the documentation will at all times remain within the custody of the plaintiffs’ solicitors who must give an undertaking to the court that they will not part company with such material or allow it to be copied in any way without the defendants’ consent or leave of the court. They must also undertake on oath that the material will not be used for any purpose other than the conduct of this litigation.
(iii) The access to be had by the named officer of the plaintiff to the material will have to be in the presence of the plaintiffs’ solicitors.
(iv) That a record be kept of the material examined by that officer and the dates, times and duration of such examination.
(v) At the conclusion of the litigation, the material will be returned in its entirety to the defendants’ solicitors."
In Koger Inc, Kelly J.’s judgment explicitly required undertakings to be given by the plaintiffs’ counsel and solicitor, as well as by a nominated officer of the plaintiffs, that the material disclosed would not be used for any purpose other than the conduct of the litigation in question. It is worth remembering that the party who receives an affidavit of discovery or inspects documentation which is made available by way of discovery, is held to give an implied undertaking not to use the documents for any purpose unconnected with the conduct of the relevant litigation. In a recent decision by the Court of Appeal in O’Brien v Red Flag Consulting Ltd,the court held:
"The overriding principle is that discovery is a procedural device designed to promote fairness in litigation by making relevant documents equally available to the parties to the action. The party who receives the affidavit of discovery impliedly undertakes not to use the documents or the information in them for any purpose not connected with the proper conduct of the proceedings in which they are discovered."
The foregoing principle was made clear a quarter of a century earlier in Ambiorix Ltd v Minister for the Environment (No. 1). In Ambiorix the trial judge had ordered discovery of certain documents and memoranda which had come into existence for the purpose of reaching a cabinet decision. Counsel for the defendants challenged the court’s ruling on the grounds of cabinet confidentiality in that disclosure could prejudice the operation of the government. The Supreme Court held, inter alia, that the executive could not prevent the courts from examining documents relevant to any issue in a civil trial for the purpose of deciding whether they should be produced in evidence, but there was no obligation on the courts to examine any such document and a claim of privilege could be upheld by the courts on the basis of a description of the nature or contents of the document. The court (Finlay C.J.) also went on to hold:
"As a matter of general principle, of course, a party obtaining the production of documents by a discovery in an action is prohibited by law from making any use of any description of such documents or the information contained in them otherwise than for the purpose of the action. To go outside that prohibition is to commit contempt of court. Furthermore, the court has an inherent jurisdiction, I am satisfied, to take such steps as are necessary to regulate the production of documents so as to prohibit any infringement of this restriction."
Confidentiality and Necessity
In his judgment the following year, in Thema International Fund plc v HSBC Institutional Trust Services (Ireland), Clarke J. made it clear that the confidentiality attaching to documents is a factor which the court should take into account when striking a balance between the discovery sought and its value to the determination of the dispute. The judgment also emphasises the test of necessity, particularly with regard to confidential documents, making it clear that discovery of same will not be ordered if evidence in question is available by other means:
"[I]t has already come to be recognised that there must be some proportionality between the breadth of discovery sought and the likelihood of the discovered category of documents having some meaningful bearing on the proceedings. Likewise, similar considerations have led to the view that where documents which have a significant confidentiality attaching to them are sought, same should only be discovered (again on the basis of proportionality) where it is necessary that they be discovered, both from the point of view of there being no other means for the party concerned obtaining the same evidence (see for example, Ryanair plc v Aer Rianta) or, so as to avoid immediate discovery in circumstances where it is only possible that the relevant documentation might become important at trial (see Independent Newspapers v Murphy Junior  IEHC 276, YAP v Children’s University Hospital Temple Street  IEHC 308 and Hartside Limited v Heineken Ireland Ltd (unreported, High Court, Clarke J., 15th January, 2010)."
Telefonica O2 Ireland Ltd v Commission for Communications Regulation concerned an application by O2 to quash a determination made by “ComReg” fixing the price at which emergency telephone calls, free to the public, were to be charged as between service providers. The challenge in the underlying proceedings concerned the price fixed by ComReg. O2 sought disclosure of documents relating to the process whereby the charge was fixed and to the contractual arrangements under which BT Communications Ireland Ltd provided the relevant service. ComReg opposed the application as did the Minister for Communications and BT, who were both joined as notice parties to the application. The basis of the objection was the confidential nature of the information sought to be disclosed.
In his judgment of June 2011, Clarke J. made it clear that the status of confidential documentation, in the context of discovery or disclosure, will only arise where the materials sought are relevant to the proceedings. If the documentation is not relevant, there is no basis for its disclosure in the first place. He then went on to set out with clarity principles governing the proper approach to the disclosure of confidential material, emphasising the court’s willingness to fashion a bespoke order designed to protect confidentiality insofar as this can be done while ensuring a fair trial:
- "In order for discovery or disclosure to be appropriate the documents or materials sought must be shown to be relevant.
- If the documents are relevant, then confidentiality (as opposed to privilege) does not, of itself, provide a barrier to their disclosure.
- The court is required to exercise some balance between the likely materiality of the documents concerned to the issues which are anticipated as being likely to arise in the proceedings, and the degree of confidentiality attaching to the relevant materials. In that context, the confidence of third parties may be given added weight for it must be accepted that those parties who become embroiled in litigation will necessarily have to disclose information about their confidential affairs when that information is necessary to the fair and just resolution of the relevant litigation...
- In attempting to balance those rights, the court can seek to fashion an appropriate order designed to meet the facts of the individual case so as to protect both the legitimate interests of the parties seeking disclosure to ensure that all relevant materials potentially influential on the result of the case are before the court and, to the extent that it may be proportionate, the legitimate interests of confidence asserted..."
Confidentiality and Proportionality
The role of proportionality, with regard to the discovery of confidential information, was emphasised by Clarke J. in his judgment, delivered in October 2011, in Thema International Fund plc v HSBC Institutional Trust Services (Ireland) Ltd. Referring to his earlier decision in Telefonica O2, Clarke J. stated:
"[P]roportionality can also play a role in relation to the disclosure of confidential information, at least in circumstances where documents are sought to be disclosed which are highly confidential (and, in particular, where the confidence of third parties is involved) and where the relevance of the documents concerned to the case may be at best marginal. It remains, of course, the case that, as Kelly J. pointed out in Cooper Flynn v. Radio Telefís Éireann  3 I.R. 344, the requirement that justice be administered fairly will trump any obligation of confidence in ordinary circumstances so that confidentiality will not, ordinarily, provide a basis for the non-disclosure of materials which are of real relevance to the proceedings."
A decade earlier, in Cooper Flynn v RTÉ, Kelly J. approved the decision in Wallace Smith Trust Co v Deloitte in which Simon Brown L.J. addressed the question of whether the inspection applied for in that case was “necessary for disposing fairly of the cause or matter”. The analysis endorsed by Kelly J. explains the interplay between the principles of confidentiality, relevance and necessity, in the context of whether justice requires the disclosure sought. In Wallace Smith, Simon Brown L.J. stated:
2. "The burden lies on the party seeking inspection to show that that is necessary for the fair disposal of the action...
3. If no element of confidentiality … is asserted in the documents, routinely they will be produced for inspection without the need for a r.13 hearing on the issue of necessity. As Lord Scarman said in Air Canada v. Secretary of State for Trade  2 A.C. 394, 444:
'It may well be that, where there is no claim of confidentiality or public interest immunity or any objection on the ground of privilege, the courts follow a relaxed practice, allowing production on the basis of relevance. This is sensible bearing in mind the extended meaning given to relevance in [the Peruvian Guano case … ] '
4. If, however, confidentiality is asserted or any other ground of objection arises, r.13 assumes relevance and it becomes necessary to decide whether inspection is necessary for the fair disposal of the action. As Lord Scarman had earlier said in Science Research Council v. Nassé  A.C. 1028, 1089:
'The only complicating factor is the confidential nature of relevant documents in the possession of the party from whom redress is sought. The production of some of these may be necessary for doing justice to the applicant’s case. If production is necessary, they must be produced. The factor of confidence however mitigates against general orders for discovery and does impose upon the tribunal the duty of satisfying itself, by inspection if need be, that justice requires disclosure.'
5. Disclosure will be necessary if: (a) it will give litigious advantage to the party seeking inspection … and (b) the information sought is not otherwise available to that party by, for example, admissions, or some other form of proceeding (e.g. interrogatories) or from some other source … and (c) such order for disclosure would not be oppressive, perhaps because of the sheer volume of the documents...
6. If a prima facie case is made out for disclosure, then as several of the speeches in Science Research Council … make plain, the court will first inspect the documents: (a) to ensure that inspection is indeed necessary (that very safeguard of itself making the court generally readier to accept that the threshold test for disclosure is satisfied); and (b) assuming it is, to see if the loss of confidentiality involved can be mitigated by: (i) blanking out parts of the documents, and/or (ii) limiting the disclosure to legal advisors only."
The plaintiff in Cooper Flynn brought a libel action against the first-named defendant concerning allegations reported by the second-named defendant to the effect that she had induced the third-named defendant and others to participate in a tax evasion scheme. The first and secondnamed defendants sought disclosure of documents relating to the alleged scheme, including the names of participants, in circumstances where the names had been redacted from documents which had been furnished on foot of prior discovery orders made by Johnson J. The bank, against which discovery was being sought, argued, inter alia, that such discovery would lead to an unwarranted breach of the confidentiality of the bank’s customers. Kelly J.’s decision is a further example of the practical measures which the court is willing to put in place, in appropriate circumstances, to protect confidentiality by limiting inspection. Kelly J. held:
"The obligation of confidentiality, owed by the bank to its customers must … yield to the rights of the first and second defendants to a fair trial. I therefore make an order directing the bank to permit inspection by the first and second defendants of the 65 client files in an un-redacted form. This will mean that the names, addresses and other details of the customers will become known but only to a limited number of persons. I propose (and indeed I am not asked to do otherwise) that the information should be made known only to the same persons as were permitted by Johnson J. Accordingly, the inspection may be carried out by:
- the solicitors on record for the first and/or second defendants, their servants and/or agents;
- counsel retained by the first and/or second defendants;
- the following members of the legal department of the first defendant..."
The underlying claim in the recent case of Maye v Adams was that, insofar as the plaintiff incurred any liability to NAMA, which she was required to settle, the defendants were responsible. On 31 July 2015, Kennedy J. delivered her judgment in relation to an application by the defendants who sought the production of documents pertaining to a settlement agreement entered into between the plaintiff and NAMA. The plaintiff’s solicitors had provided a redacted copy of the settlement agreement. In resisting the defendants’ application, the plaintiff argued that the redacted material included confidential information in relation to: the plaintiff’s personal finances; co-obligors of the plaintiff who were not party to the proceedings; and the agreement concluded between the plaintiff and NAMA concerning the conduct of the present proceedings and the application of any proceeds. In her decision of 31 July 2015, Kennedy J. referred to the lesser protection from disclosure available to documents in respect of which confidentiality, as opposed to privilege, is asserted. Her judgment also emphasised the court’s role in reconciling competing interests and, where necessary, directing steps to minimise the loss of confidentiality:
"I accept … that the courts afford a lesser form of protection to assertions of confidentiality in contradistinction to privilege. Therefore, if the court is satisfied that it is necessary for the information to be disclosed and inspected in order to dispose fairly of the proceedings, and where issues of confidentiality arise; the court must engage in a balancing exercise, that is to reconcile the competing interests of the parties and, if appropriate, to take steps to mitigate the loss of confidentiality."
Inspection by the Court and Practical Steps
The judgment also makes clear that where a prima facie case is made out for disclosure, the court can, and in that case did, inspect the documents in question. As to the practical steps which the court may take where it considers that the discovery of confidential information is necessary for a fair determination of the matters at issue, Kennedy J. stated:
"The courts may, and have taken, steps to address the loss of confidentiality by redacting portions of a document or restricting disclosure in an appropriate manner"
The foregoing statement of principle is reflected in the specific order made in the case, which directed the plaintiff to permit inspection by the defendants and copies to be taken of certain clauses, subject to the condition that reference should be made to “a reconciliation figure”, rather than actual figures. Furthermore, to mitigate any loss of confidentiality regarding co-obligors, the court ruled that the names of each should not be used in the pleadings or in court, but reference could be made to them by the initials “AB”, etc., or as agreed between the parties. The judgment also made it clear that the permitted disclosure was “subject to an implied undertaking that the material will not be used for any collateral purpose, but will be confined for use in the proper conduct of these proceedings".
We saw that in Maye, Kennedy J. made specific reference to “redaction”. As Hoffmann L.J. explained 20 years before, in G.E. Capital Corporate Finance Group Ltd v Bankers Trust Co :
"It has long been the practice that a party is entitled to seal up or cover up parts of a document which he claims to be irrelevant. Bray’s Digest of the Law of Discovery, 2nd ed. (1910), pp. 55–56, puts the matter succinctly: Generally speaking, any part of a document may be sealed up or otherwise concealed under the same conditions as a whole document may be withheld from production; the party’s oath for this purpose is as valid in the one case as in the other. The practice is either to schedule to the affidavit of documents those parts only which are relevant, or to schedule the whole document and to seal up those parts which are sworn to be irrelevant..."
Redacting Parts of a Document
A party subject to discovery obligations has no duty to furnish documentation which is not relevant. Therefore, commercially sensitive material may be redacted to the extent that it is not relevant. Just as an entire document which is both commercially sensitive and irrelevant may be excluded from discovery, parts of a document which are both irrelevant and commercially sensitive may safely be redacted. In separate judgments by Leggatt and Dillon L.JJ. in G.E. Capital, the entitlement to redact and the extent of that right was put with clarity. As Leggatt L.J. stated:
"The plaintiffs are obliged to disclose the relevant parts of documents, but not the irrelevant. There can be no argument that in doing so they were in some way waiving any right not to disclose each of the documents as a whole. For over a century litigants have been permitted to cover up or black out irrelevant parts of documents. The court will not ordinarily disregard the oath of the party that parts concealed do not relate to the matters in question."
What of a situation where a client redacts part of a document because the commercially sensitive information which it contains is irrelevant, yet the other side objects to such redaction? To what extent has the other side an entitlement to see the whole of the document in order to ascertain for themselves whether the redacted parts, containing the commercially sensitive information, are truly irrelevant? One can readily imagine that in a dispute between competing commercial entities, the foregoing could be of very real concern. Dillon L.J. addressed that very issue in a separate judgment in G.E. Capital:
"The history over the last 100 years of the practice of sealing up or covering over parts of documents which are disclosed on discovery on the ground that those parts are irrelevant is strongly against the other party having any automatic right to see the whole of the document in order to determine for himself whether the parts covered are indeed irrelevant to the issues in the action. Indeed the established practice of sealing up or covering over parts of documents would hardly have developed if the other party could immediately break the seal or tear away the cover to see the contents for himself."
As G.E. Capital makes clear, the fundamental test, when it comes to redaction, is whether the information is relevant, rather than confidential. A decade later, in Irish Press Publications Ltd v Minister for Enterprise and Employment, Carroll J., having referred to G.E. Capital, went on to state:
"The test would appear to be whether the information contained in the part which is withheld is relevant rather than that the information was confidential. In Cooper Flynn v. Radio Telefís Éireann  3 I.R. 344, Kelly J. held that where discovery could confer a litigious advantage on one party, it should be made notwithstanding the fact that the documents were of a confidential nature. Confidentiality may be a motive for blanking out portions of the document but the real test is whether the blanked out portion is relevant."
A commercial entity which is involved in legal proceedings may also find itself required to put confidential information before the court as part of a preliminary application. In IBRC Ltd (in Special Liquidation) v McCaughey Costello J. considered an interlocutory application to substitute “Deutsche Bank AG” as plaintiff. Part of the action, relating to monies owing on foot of credit agreements, had been disposed of, leaving “a claim in excess of 2 million euro”. The debts which were the subject of the proceedings had been assigned by IBRC to Deutsche Bank AG. Affidavits before the court confirmed that the assignment took place by way of a Loan Sale Deed and a Deed of Transfer. The applicant’s affidavit went on to say that “certain terms of the Loan Sale Deed are confidential and commercially sensitive to the Vendor and Purchaser … Terms which are confidential and commercially sensitive and/or are considered to be irrelevant to the within application have been redacted”. As Costello J. observed:
"It is undoubtedly the case that a considerable portion of both the Loan Sale Deed and the Deed of Transfer were heavily redacted. There was no order of the court authorising this redaction. The plaintiff argued that all the operative parts of the deeds remained un-redacted and that the court had sufficient evidence before it to conclude that a case had been made out for the relief sought in the notice of motion."
In opposing the application, the defendant argued that “the widespread redaction of the crucial documents is constitutionally impermissible” and amounted to unfair procedures. In allowing the application and substituting Deutsche Bank AG as plaintiff in the place of IBRC, Costello J. made it clear that it was not impermissible for the plaintiff to rely, in the context of a procedural motion, upon documents which had been quite heavily redacted in order to conceal confidential and commercially sensitive information. Distinguishing the situation from one where discovery obligations arose, Costello J. stated:
"The defendant placed reliance upon a number of cases concerning the withholding of confidential information in the context of discovery. This clearly is not relevant to the issues in this case. If discovery is subsequently sought in this case then these authorities may become relevant. They certainly are not relevant for the proposition that documents redacted on the basis of concealing confidential and commercially sensitive information cannot be relied upon in a procedural motion such as currently at issue."
No Explanation for Redaction
A similar issue arose in IBRC v Comer, where Kelly J. considered an application brought by Launceston Property Finance Ltd to be substituted as plaintiff in the proceedings. Affidavits grounding the application referred to a “loan sale deed” and a “deed of transfer”. Commenting on an affidavit sworn by a director of Launceston, which exhibited redacted documents, Kelly J. observed:
"A good deal of the difficulty which has arisen here comes from the copy redacted document which accompanies her affidavit. It is correct to say that nowhere in the affidavit evidence is there any reason or justification given for the redaction of this document. It would have been more helpful if there had been an explanation indicating that the redaction had taken place for whatever reason it did. The reason why there was redaction is probably because there is commercially sensitive material in the exhibit but I will not speculate on that."
Prior to making the order substituting Launceston as plaintiff in the proceedings, Kelly J. made it clear that, however unhelpful, it was entirely permissible for redacted documentation to be relied on in what was a procedural motion to substitute one plaintiff for another. In contrast to a discovery situation, wholesale redactions, even without explanation, can be permissible:
"accept that there is some justification for the criticism which is made concerning the selfediting of the documents which were the subject of redaction without any explanation being given as to why that editing took place. But subject to that, I cannot perceive how any other criticism can be made. I am certainly unable to discern any disadvantage which flows to the defendant..."
The public interest in the preservation of confidentiality has been recognised by the courts, despite the fact that confidentiality alone does not amount to a privilege against disclosure. The confidential or commercially sensitive nature of a document is certainly something the court will weigh in the balance when considering an application for discovery or inspection. It is settled law that commercially sensitive and confidential material which is not relevant to the matters in dispute may be redacted without leave of the court. Where the relevance of confidential documents to the matters at issue is only slight, the court may refuse to order the discovery sought. The courts have made clear that discovery shall not be ordered merely because there is a possibility that documents may be relevant. Where discovery of confidential documents is necessary, the court will not be slow to fashion a bespoke order designed to preserve confidentiality, to the extent that this is possible, consistent with the aims of securing justice. A practical example may be to permit inspection by lawyers and experts but not by the party to the dispute, who has sought discovery. Furthermore, an added layer of protection is always afforded to a party required to disclose confidential information, namely the implied undertaking furnished by the party receiving it, to the effect that such material may not be used for any purpose other than the conduct of the litigation in question. The breach of such an undertaking could hardly be more serious, in that it would constitute a contempt of court. Given that the public interest in preserving the confidentiality of documentation created on that basis, or containing commercially sensitive material, will sometimes have to give way to the public interest in securing justice, the common law seeks to protect confidentiality to the fullest extent. The jurisprudence and principles examined above aim to show how the courts have struck the balance between the sometimes competing aims of preserving confidentiality and securing justice. It is hoped that this analysis will be of some practical assistance to commercial lawyers and their clients when faced with discovery obligations, particularly with regard to confidential information.