Supreme Court allows appeal to vary discovery order in competition law case against airport monopoly operator.

[2002] IESC 62

THE SUPREME COURT

Record No. 2002 No. 324

Denham J.

Fennelly J.

McCracken J.

BETWEEN

RYANAIR PLC

Plaintiff/Respondent

and

AER RIANTA CPT

Defendant/Appellant

JUDGMENT delivered on the 2nd day of December, 2003 by FENNELLY J.

1. This is the defendant’s appeal from the judgment and order of Lavan J dated 31st July 2002, whereby he ordered discovery of

documents by the defendant. The protagonists to the litigation are respectively the airline operator, Ryanair plc and Aer Rianta cpt,

which operates Dublin, Cork and Shannon airports. I will describe the parties as Ryanair and Aer Rianta.

2. The action was commenced in September 1999. In its Statement of Claim, delivered on 22nd November 1999, Ryanair alleges that

Aer Rianta had committed and was continuing to commit various breaches of both national and European Community competition law.

3. In order to consider the appeal from the order of Lavan J and the scope of discovery, if any, which should be ordered, it is

necessary to consider the nature and extent of the allegations of anti-competitive behaviour alleged by Ryanair and the response of

Aer Rianta, as pleaded in its defence filed on 13th July 2000.

4. Ryanair claims that Aer Rianta, as the operator and manager of the three airports mentioned is a monopoly provider of essential

facilities and airline facilities to airlines using those airports. These services include such aspects of airport services, to mention but a

few, as check-in desks, baggage belts and other passenger facilities as well as runways, cargo facilities, hangars and emergency

services. Ryanair says that Aer Rianta occupies a dominant position in the market for the provision of those services in the State, for

the purposes both of Article 82 of the Treaty establishing the European Community and section 5 of the Competition Act, 1991 and

that it has abused and continues to abuse that position.

5. Ryanair also says that, in 1998, Aer Lingus was the largest passenger carrier through Dublin Airport. It says that it competes with

Aer Lingus in the provision of travel services from that Airport. Aer Lingus is its main competitor. In the Statement of Claim, it cites

figures, over the relevant period, of 3,350,000 passengers for itself and 2,300,000 for Aer Lingus, though acknowledging that Aer

Rianta maintains that the correct Aer Lingus figure is 3,450,000.

6. Ryanair says that Aer Rianta and Aer Lingus are owned by the same shareholder, the State, which also acts as regulator of air

transport and airports.

7. Ryanair also alleges that Aer Rianta entered into various agreements, decisions or concerted practices with Aer Lingus, which had

as their object or effect the prevention, restriction or distortion of competition in the State. In effect, Ryanair alleges that Aer Rianta

has used and continues (at least up to the date of the events pleaded) to use its dominant position and its alleged relationship with

Aer Lingus to favour the latter at the expense of Ryanair.

8. Ryanair alleges anti-competitive behaviour against Aer Rianta, effectively in consort with or discriminating in favour of Aer Lingus.

These allegations fall under some six principal headings, as well as a collection of miscellaneous complaints, which I list below as a

seventh group. The following is a broad summary of the allegations:

1. Allocating to Ryanair only 15 check-in desks and a half of a baggage belt, while allowing 56 check-in desks and 3

baggage belts to Aer Lingus, all this without taking account of relevant matters such as relative passenger numbers

carried by each airline and certain spare capacity said to be enjoyed by Aer Lingus;

2. Planning a cut-back of facilities, in order to facilitate construction works in the main terminal building at Dublin Airport

in 1999, so that Ryanair would lose 3 of their 15 check-in desks while Aer Lingus were to be reduced from 56 to 48, (the

poorer quality facilities provide for Ryanair meaning an effective reduction from 15 to 8), all this without any objective

justification or any proper consultation of Ryanair, but after negotiation with Aer Lingus to the exclusion of Ryanair;

3. Introducing a fuel levy at Dublin airport, without any objective justification and, unlike BAA on introducing a similar levy

in the United Kingdom, providing no service in return;

4. Introducing a compulsory service called “CUTE” (Common User Terminal Equipment), which is of value only to airlines

using a computer ticketing system, but is of no value to Ryanair, which maintains a low cost system of its own;

5. Discriminating in favour of Aer Lingus by facilitating its building and operation of its own hangars, while refusing like

facilities to Ryanair, and discriminating also in relation to the construction and funding for Aer Lingus of a new check-in

area on favourable terms;

6. Depriving Ryanair of a discount previously enjoyed for the use of Pier A, which is low-cost, inferior and less convenient,

in particular requiring Ryanair to cross-subsidise the newly-constructed Pier C used by high-cost airlines;

7. Discriminating against Ryanair and in favour of Aer Lingus: in relation to VIP lounge facilities; in refusing (prior to1995)

to permit Ryanair passengers to have direct access to Pier A; in refusing to allow Ryanair to employ its own contractors

such as a third-party handling agent, thus compelling it to employ a subsidiary of its competitor, Aer Lingus; employing

Aer Lingus, to the exclusion of Ryanair, for flights by its own staff; by omitting Aer Lingus transfer passengers from its

computation of passenger charges, Ryanair not having any such passengers.

9. The complaint under number 2 above led Ryanair to make an application for an interlocutory injunction in the High Court

immediately upon the issue of the Plenary Summons. The interlocutory proceedings were settled on agreed terms. The fact that the

affidavits then exchanged set out some, at least, of the background facts is relevant to some of the arguments advanced on behalf

of Aer Rianta on this appeal. Ryanair, in its Statement of Claim, gives notice of its intention to rely on these affidavits at the hearing

of the action, but Aer Rianta pleads that it will object to such reliance and says that it will apply to have those references struck out

of the Statement of Claim.

10. The defence of Aer Rianta amounts, in almost every instance, to a traverse and denial of all the allegations, including almost

every material allegation of commercial fact made in the Statement of Claim. One exception is that it pleads that, in order to facilitate

essential construction works at Dublin Airport, it had to relocate and reallocate facilities on a temporary basis, while denying that it

put in place plans such as alleged by Ryanair.

11. There followed two replies by Ryanair to requests for particulars. Some controversy, however, surrounds a letter of 15th

December 2000 in which Ryanair’s solicitors gave notice of intention to rely on “additional information” as additional particulars of the

claim. Aer Rianta maintains that this material, in reality, amounts to an impermissible expansion of the claim, which would require an

amendment of the Statement of Claim. This matter is considered in the judgment of McCracken J. I agree with his account and his

conclusions.

12. Solicitors for Ryanair wrote a preliminary letter on 22nd December 2000 seeking voluntary discovery in accordance with the

provisions of Order 31, rule 12(4) of the Rules of the Superior Courts. The request specified classes of documents under 15 headings,

supported by stated reasons. The letter proposed six weeks for compliance with the request. Aer Rianta, while expressing willingness

to make appropriate discovery, claimed that “many of the categories sought [were] irrelevant and not necessary to decide the

matters at issue .”

13. After the Motion, seeking discovery in the same terms as the letter of 22nd December, had been issued, Aer Rianta wrote a

lengthy response to the request, outlining its objections to the scope of the discovery sought and alleging failure by Ryanair to

comply with the requirements of the relevant rule, in particular by describing the documents sought only in the most general terms

and by failing to pinpoint the categories of documents as indicated in the case law. Ryanair joined issue with these points in a letter

dated 14th March 2001, but accompanied its letter with a new version of its request, containing some minor amendments to the letter

of request for voluntary discovery of 22nd December 2000.

14. Aer Rianta’s objections to the request for discovery were repeated in written submissions made in the High Court. In essence they

were

i. Non-compliance with Order 12, rule 1, as amended in 1999, by failing adequately to specify the documents or categories

of documents sought;

ii. Inclusion of requests relating to matters alleged in the letter of 15th December 2000;

iii. Lack of necessity for discovery where Ryanair were able to establish the facts, as pleaded in the Statement of Claim

and sworn in affidavits;

iv. Failure to give reasons showing necessity for the discovery.

15. Lengthy written submissions were exchanged and there was a three-day hearing of the motion. At that stage, Ryanair sought

discovery in accordance with its amended request of 14th March 2001. A principal legal issue was whether the amendment, in 1999,

of Order 31, rule 12 of the Rules of the Superior Courts had effected a substantive or merely a procedural change in the existing law

regarding discovery. In particular, the judgment of Morris P., in Swords v Western Proteins Ltd. [2001] 1 I.L.R.M. 481, was

considered. Aer Rianta contended that, following this decision, it was necessary for a party seeking discovery to specify the

document or documents sought with precision and also to give such reasons as would demonstrate that their discovery was

necessary. Ryanair, on the other hand, argued that, while a procedural change had been effected, this did not change the basic law

concerning discovery.

16. The learned trial judge gave judgment on 31st July 2002. He held that “the plaintiff’s objections to the perceived views of the

Swords judgment are correct.” He continued: “The defendants have a fundamental obligation as to the strategic and economic use of

Irish facilities given the dominant position of the defendants it seems to me that the Court must look very carefully at the request of

discovery.” Insofar as this passage appears implicitly to determine one of the major issues in the action, it should not have done so.

Furthermore, although it indicates an intention to examine the request for discovery very carefully, the learned trial judge merely

directed Aer Rianta “to answer all of the plaintiff’s requirements for discovery.”

17. In fact, through inadvertence, the order was made by reference to the first request for voluntary discovery, as contained in the

Notice of Motion, and not, as was intended, the amended request of 14th March 2001. It has been agreed that, for the purposes of

the appeal, the latter is the material request.

18. Aer Rianta has appealed to this Court against the entire of the judgment and order of the High Court.

19. Mr Paul Sreenan, Senior Counsel, on behalf of Aer Rianta restated the submissions that Ryanair had not complied with the

requirements of Order 31, rule 12, and that the requests for discovery were too vague and unspecific. The principal basis of his

attack on the High Court order was, however, that Order 31, rule 12 was amended in 1999 with the effect of substantially changing

the law regarding discovery. The rule now requires an applicant for discovery to swear an affidavit verifying that discovery is

“necessary for disposing fairly of the cause or matter” and furnishing “reasons why each category of documents is required to be

discovered.” He relied strongly on the judgment of Morris P. in Swords Proteins as establishing the obligation of the applicant to

specify with precision the precise categories of documents sought. He advanced the further argument that, following amendment of

the rule, discovery is much more difficult to obtain. The applicant has the burden of proving, not only compliance with the rule, and

the relevance of the documents sought but, in addition, that discovery of the documents is necessary for the purpose of fairly

disposing of the cause or matter. Whereas Finlay C.J., in Allied Irish Banks plc v Ernst & Whinney [1993] 1 I.R. 375, at page 388, may

have laid the burden of establishing that discovery is not necessary on the party against whom discovery is sought, and, assuming

that not to be an obiter dictum, the position has been expressly altered by the requirement in the rule, as amended, which obliges

the applicant to verify necessity. He argued that Ryanair had other means of establishing most of the relevant facts, such as the

service of notices to admit facts or documents or calling witnesses from Aer Lingus.

20. Mr Bill Shipsey, Senior Counsel, on behalf of Ryanair submitted that the 1999 amendment did not effect any change in the

substantive law of discovery. It introduced the requirement of a preliminary request for voluntary discovery and of a verifying

affidavit. The effect was to eliminate the right to obtain an order for general discovery or to obtain any discovery without a grounding

affidavit. The existing principles regarding relevance and necessity are unchanged. Counsel cited the judgment of Lynch J in Brooks

Thomas v Impac Limited [1999] I.L.R.M. 171 and its reference to the celebrated dictum of by Brett L.J. in Compagnie Financière v

Peruvian Guano Company [1882] 11 Q.B.D. 55 at 63 (quoted below).

21. On the question of necessity, counsel referred to the judgment of Kelly J, in the High Court in Cooper-Flynn v RTE [2000] 3 I.R.

343. None of the authorities, in particular none of the Irish authorities, support the Aer Rianta argument that the right to discovery is

contingent on the exhaustion of other procedures. An applicant is entitled to discovery even if the facts in question could be

established by other means.

Conclusion

22. It is appropriate to commence by setting out the terms of Order 31, rule 12. Statutory Instrument No. 233 of 1999 substituted, so

far as relevant, the following for the existing text of Order 31, rule 12:

"(1) Any party may apply to the Court by way of notice of motion for an order directing any other party to any cause or

matter to make discovery on oath of the documents which are or have been in his or her possession or power, relating to

any matter in question therein. Every such notice of motion shall specify the precise categories of documents in respect

of which discovery is sought and shall be grounded upon the affidavit of the party seeking such an order of discovery

which shall:

(a) verify that the discovery of documents sought is necessary for disposing fairly of the cause or matter or for

saving costs;

(b) furnish the reasons why each category of documents is required to be discovered.

(2) On the hearing of such application the Court may either refuse or adjourn the same, if satisfied that such discovery is

not necessary, or not necessary at that stage of the cause or matter, or by virtue of non-compliance with the provisions

of sub-rule 4(1), or make such order on terms as to security for the costs of discovery or otherwise and either generally

or limited to certain classes or documents as may be thought fit.

(3) An order shall not be made under this rule if and so far as the Court shall be of the opinion that it is not necessary

either for disposing fairly of the cause or matter or for saving costs.

(4) (1) An order under sub-rule 1 directing any party or under rule 29 directing any other person to make discovery shall

not be made unless:

(a) the applicant for same shall have previously applied by letter in writing requesting that discovery be made

voluntarily, specifying the precise categories of documents in respect of which discovery is sought and furnishing

the reasons why each category of documents is required to be discovered; and

(b) a reasonable period of time for such discovery has been allowed; and

(c) the party or person requested has failed, refused or neglected to make such discovery or has ignored such

request.

Provided that in any case where by reason of the urgency of the matter or consent of the parties, the nature of the case

or any other circumstances which to the Court seem appropriate, the Court may make such order as appears proper,

without the necessity for such prior application in writing.

(2) Any such discovery sought and agreed between parties or between parties and any other person shall, subject to

sub-rule 4 below, be made in like manner and form and have such effect as if directed by order of the Court.

23. The changes effected by the 1999 amendment fall into three parts. Firstly, each applicant must, prior to applying to the court,

write seeking the opposing party’s agreement to make voluntary discovery within a reasonable time. Secondly, both the letter and

any ensuing notice of motion must specify the precise categories of documents in respect of which discovery is sought. Thirdly, the

Applicant may no longer apply, as formerly, “without filing any affidavit,” but must file an affidavit verifying that the discovery of

documents sought is necessary for disposing fairly of the cause or matter. Sub-rules 2 and 3, which deal, inter alia, with the

necessity for discovery are taken unaltered from the old rule.

24. Morris P. interpreted the object and effect of these changes in his judgment in Swords v Western Proteins Ltd:

“I am satisfied that the amendment to Order 31 Rule 12 was made for the purpose of addressing a problem which had

given rise to delays and potential injustices over a number of years. A practice had developed whereby Orders for

Discovery were obtained unnecessarily and such Orders delayed litigation. As has been pointed out by the Courts on a

number of occasions Discovery before the advent of the photocopying machine, fax, e-mail and word processors would

probably involve the Discovery of a dozen documents. In recent years the number of documents discovered can amount

to many thousands and the process has become unmanageable.

Accordingly I believe that Statutory Instrument 223 of 1999 imposed a clearly defined obligation upon a Party seeking

Discovery to pinpoint the documents or category of documents required and required that Party to give the reasons why

they were required. Blanket Discovery became a thing of the past. The new rule was brought into being to ensure in the

first instance that the Party against whom Discovery was being sought would, upon receipt of the preliminary letter, be in

a position to know the document or category of documents referred to and be able to exercise a judgment on whether

the reasons given for requiring these documents to be discovered was valid. He would then be in a position to know if he

was required to comply with the request. If he disputed his obligation to make Discovery the court would know by

reference to this letter precisely why the Moving Party sought the documents in question and the grounds upon which the

Moving Party believed that the documents sought to be discovered might help to dispose fairly of the cause or save

costs.”

25. This passage was subsequently approved in express terms by Keane C.J., with the concurrence of the other members of the

Court, in Burke v DPP [2001] I.R. 760. However, it does not seem to me that the judgment of Morris P goes any further than to

identify the mischief which the amendment was intended to remedy, namely the automatic and unnecessary resort to blanket

discovery, without sufficiently specifying the documents sought and the reasons for which their discovery was sought. In particular,

neither Morris P., nor Keane C. J., in approving his dictum, expressed any intention of introducing a new or higher standard of proof of

some objective necessity as a precondition to the grant of an order for discovery.

26. Mr Sreenan contends, nevertheless, that, principally because of the amendment of the rule, there is a burden on the applicant for

discovery to prove the necessity of the discovery sought for the purpose of fairly disposing of the cause or matter. As already

indicated, the 1999 amendment did not change the parts of the rule dealing with the necessity for discovery. Rule 2, whose wording

formerly formed part of rule 1, gives the court a broad discretion to refuse discovery where it considers it not necessary or not

necessary at that stage. Rule 3 is expressed in mandatory terms:

“An order shall not be made under this rule if and so far as the Court shall be of the opinion that it is not necessary either

for disposing fairly of the cause or matter or for saving costs.”

27. In Allied Irish Banks plc v Ernst & Whinney, Finlay C. J., having cited the terms of both Order 31, rule 12(1) and (2) in the form in

which they then stood, proceeded to rule that “it would appear that the court should only adjourn or refuse such an application if it is

satisfied that it is not necessary, either at all or at the time at which it is made, either for disposing fairly of the cause or matter or

for saving costs.” He added: “The onus of establishing that would appear, prima facie, to lie upon the party against whom discovery

is sought and who resists it.” While Mr Sreenan has contended that this passage is obiter, it is interesting that it seems consistent

with contemporaneous English authority (see Dolling-Baker v Merrett [1990] 1 W. L. R. 1205, per Parker L. J. at page 1209).

Moreover, it seems logical that at a time when the applicant was not required to file any affidavit to ground his application for

discovery and rule 3 was formulated negatively, the burden would rest on the respondent.

28. It is impossible to resist the conclusion, however, that the amendment to the rule has shifted the primary burden of proof. The

applicant must, under the present rule, discharge the prima facie burden of proving that the discovery sought “is necessary for

disposing fairly of the cause or matter.” This is not a mere formalistic requirement: the affidavit must, in addition, “furnish the reasons

why each category of documents is required.” In context, there is no meaningful distinction between the words, “necessary” and

“required.” The latter term is implicitly referable to the objective of the fair disposal of the cause or matter. The nature of this burden

is considered further below.

29. Apart from this alteration of the prima facie burden of proof, it is clear that the rule made no serious or fundamental change in the

law regarding discovery of documents. The definition by Brett L. J. remains the universally accepted test of what is the primary

requirement for discovery, namely the relevance of the documents sought:

“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 him to a train of inquiry .”

30. As already mentioned, this passage was cited with approval in the judgment of Lynch J, pronouncing the unanimous decision of

this court in Brooks Thomas Ltd v Impac Limited. It has long been accepted as laying down the appropriate test of relevancy.

31. 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 nor available to the opposing party. Finlay C. J., in his judgment in Smurfit Paribas Bank Limited v. A.A.B. Export Finance

Limited. [1990] 1 I.R. 469 emphasised “the full disclosure both prior to and during the course of legal proceedings which in the

interests of the common good is desirable for the purpose of ascertaining 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.

32. The issue of “necessity” for discovery has, consequently, usually been debated in cases where some other interest is involved,

particularly the confidentiality of documents, especially where they involve the interests of third parties. To that extent, the

arguments advanced on behalf of Aer Rianta on this appeal, effectively that Ryanair does not need the documents, because they

have alternative means of establishing the relevant facts, has rarely arisen.

In order to establish that discovery of particular categories of documents is “necessary for disposing fairly of the cause or matter,”

the applicant does not have to prove that they are, in any sense absolutely necessary. Kelly J considered the matter in his judgment

in Cooper Flynn v Radio Telefís Eireann [2000] 3 I.R. 344. He derived the useful notion of “litigious advantage” from certain English

cases. He adopted the following statement of Bingham M.R. in Taylor v Anderton [1995] 1 W.L.R. 447 at 462:

“The crucial consideration is, in my judgment, the meaning of the expression 'disposing fairly of the cause or matter'.

Those words direct attention to the question whether inspection is necessary for the fair determination of the matter,

whether by trial or otherwise. 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 would gain no litigious advantage by seeing it. That, in my judgment,

is the test.”

33. It may not be wise to substitute a new term of art, “litigious advantage,” for the words of the rule. Nonetheless, the discussion

gives guidance as to the context in which the matter has to be considered. Within that context, the court has to reach a conclusion

as to the likely effect of the grant or refusal of the discovery on the fair disposal of the litigation.

34. The change made in 1999 exemplifies, however, growing concern about the dangers of unnecessarily costly and protracted

litigation and, in particular, the burdens on parties and the courts arising from excessive resort to automatic blanket discovery. The

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.

35. The court, in exercising the broad discretion conferred upon it by Order 31, rule 12, sub-rules 2 and 3, 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. It should also consider the necessity for discovery having regard to all the relevant

circumstances, including the burden, scale and cost of the discovery sought. The court should be willing to confine categories of

documents sought to what is genuinely necessary for the fairness of the litigation. It may have regard, of course, to alternative

means of proof, which are open to the applicant. These may, no doubt, include the possible service of notices to admit facts or

documents. But there are two sides to litigation. The behaviour of the opposing party is relevant. That party may, for example, have

made or may offer to make admissions of facts, and thus persuade a court that discovery on some issues is not necessary. This is,

perhaps, axiomatic. Those facts will no longer be in issue. On the other hand, it is difficult to see how a party, such as Aer Rianta in

the present case, which contests all the relevant facts on the pleadings and has formally objected to the right of its opponent to

resort to affidavit evidence, can plausibly ask the court to deprive its opponent of access to documents which will enable it prove

matters which it disputes.

36. In the present case, I am satisfied that Ryanair has sufficiently specified the categories of documents in respect of which it seeks

discovery, for the purpose of compliance with the rule. It does not follow that the court will not cut down the categories specified. It

has also sufficiently verified that discovery of these categories is necessary for the fair disposal of the action and has complied with

its obligation to give reasons why each category is required. I do not accept that Aer Rianta has shown that their discovery is not

necessary. In particular, I reject that contention that Ryanair has sufficient alternative means of proving the relevant facts to deprive

it of its right to discovery. A notice to admit facts or documents is not a means of proof. It does not, I think lie in the mouth of a

party, which has denied almost all of the pleaded facts, and put the opposing party to proof, to evade discovery by claiming that the

facts can easily be proved. Competition cases have, as McCracken J suggests in his judgment, the special feature that any

documents relating to anti-competitive behaviour, whether by being party to agreements or concerted practices or protecting a

dominant position, are likely to be in the possession of the party engaged in that behaviour. Anti-competitive agreements or practices

will be kept secret.

37. I agree with the judgment of McCracken J with regard to the analysis of the requests for discovery and the order he proposes. In

the result, the appeal should be allowed but only to the extent to which the order for discovery is to be varied in the manner

proposed by McCracken J.