New court may slash legal costs in business cases

On Monday next the first case on the commercial list of the High Court will be heard in the new specially designed courtroom …

On Monday next the first case on the commercial list of the High Court will be heard in the new specially designed courtroom situated beside the Bar Council's Distillery Building. It is an application for an interlocutory injunction against the Minister for the Marine, seeking to prevent him from imposing new regulations on fishing vessels, which, it will be claimed, could lead to losses of €26 million being suffered.

This case was accepted onto the commercial list of the High Court by the presiding judge, Mr Justice Peter Kelly. "There is huge discretion to allow cases in or out," he told The Irish Times. "This case got in under the provision allowing the judge to admit cases with a major commercial aspect."

The Commercial Court resembles the Central Criminal Court in that it is a division of the High Court, presided over by a High Court judge. But it differs from it in that the cases going to the Central Criminal Court are defined by statute, and are limited to rape and murder cases, while there is a huge discretionary element in the admission of cases onto the commercial list.

The separate commercial list was set up in response to the need for a more specialised approach to commercial cases, and was recommended by the seventh interim report of the Committee on Court Practice and Procedure. It recommended a Commercial Court on a pilot basis in Dublin, with the designation of specific judges, the establishment of separate offices to manage its administration and the introduction of specific pleadings or procedures for such a court.

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Mr Justice Kelly's public profile is associated with instructing Government ministers to make provision for out-of-control children, and he was trenchant in his criticisms of health boards and Government Departments that had failed in their duty under the Constitution in this regard.

Eventually one of his judgments was appealed to the Supreme Court, which ruled that the courts could not make orders regarding the allocation of resources.

But the bulk of his work in the High Court had been in the commercial area, and when the report of the committee was published, he was asked for his views on how best to implement its recommendations. He suggested that amendments to the rules of court, rather than legislation, as this would be quicker and more efficient. Following consultation with an expert committee, including representatives of the Bar Council and the Law Society, the rules were drawn up and were signed into law by the Minister for Justice in January. They are Statutory Instrument No 2 of 2004, and Order 63 (a) of the Rules of the Superior Courts. He was then asked to preside over the new court.

According to the new rules, commercial cases are defined as claims in contract or tort arising out of business transactions, where the value of the claim is not less than €1 million; intellectual property cases; certain types of arbitration claim; and other cases, including judicial reviews, where the judge in charge of the list considers they should be admitted, having regard to the commercial or any other aspect of the application. The only type of case specifically excluded is that involving damages for personal injuries.

However, the fact that a piece of litigation falls within the definition does not guarantee it a place on the list. "There is a very wide discretion conferred upon the judge in charge of the list," said Mr Justice Kelly.

The new rules are designed to set a framework for a very different culture of litigation than that which has operated in the past. "A wide variety of pre-trial procedures are prescribed in the rules," he said. "The object of all of these is to ensure early identification of the matters which are truly in issue between the parties. Once that is achieved, the parties will be apprised of the evidence on each side. All of this will have to be done within a specific timeframe." He added: "Trial by ambush will be a thing of the past." He said that the experience of other jurisdictions was that this process resulted in a very high settlement rate, with only a small proportion of cases actually going to trial. This will mean greater expenditure on legal costs at the preparatory stage of the case, but major savings, in most cases, at the much more expensive trial stage.

Even where trials do go ahead, they will be much shorter, because the trial judge will have knowledge of the case and the issues will have been identified.

There will be no room in these cases for the vague pleadings and blanket denials that are often a feature of litigation at present, according to the judge. "Claims are often general, rambling and deliberately designed to obfuscate rather than clarify," he said. "These lead to blanket denials by way of defence. Sometimes this occurs because of a reluctance on the part of the drafter to commit to paper precisely what his client's case is, for fear that making such a commitment will restrict him in keeping all options open at trial." The judge in the Commercial Court has considerable powers to cut this out. He (or she, Ms Justice Finlay Geoghegan is also sitting in this court), can direct the defining of the issues by, for example, the exchange of memoranda. They have the power to require the parties to produce a list of their witnesses, and can direct expert witnesses to consult with each other and where possible reach agreement on the evidence they intend to give.

The judge can also bring his or her own motion to adjourn the proceedings for up to 28 days to allow the dispute to be referred to a process of mediation, conciliation or arbitration.

Another new element in this court will be the involvement of the judge from an early stage. This includes case management, in the form of a conference chaired by the judge. "This conference will ensure that the proceedings are prepared for trial in a manner which is just, expeditious and likely to minimise the costs of the proceedings," said Mr Justice Kelly.

A timetable will be fixed for the completion of the preparation of the case, and the judge has the power to punish the side which fails to comply when the issue of costs comes up for decision.

Another innovation will be a guarantee that a judge will always be there to hear the case, so there will never be a situation where the parties turn up, with their legal teams, to find that there is no judge. New judges would be drafted in if necessary, he said.

Asked if this system of dealing with litigation could, in time, be extended to other areas, he said: "Yes. This is a pilot scheme. If it works, there is no reason why aspects of it could not be introduced into other areas. It is intended to bring about a change of climate in the conduct of trials."