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Third-party notices, timing and prejudice
PRACTICE AREA GROUP: Commercial Litigation and Dispute Resolution
A recent High Court decision dealing with third-party proceedings has addressed the extent to which prejudice is a relevant factor to be taken into account in dealing with applications to set aside third-party notices.(1) On the facts the court felt that there was no prejudice, as such, to justify setting aside the third-party notice, but was careful to impose a strict timetable with regard to the conduct of the third-party proceedings.
Third-party proceedings arise where a defendant may think that another party bears some responsibility and should contribute to whatever the defendant might ultimately be ordered by pay to the plaintiff. In order to ensure that all matters are dealt with in one set of proceedings, and to avoid duplicating judicial time, the third-party procedure permits a defendant to bring that other party into the proceedings. As a general observation, it is desirable for all issues about indemnity or contributions between third parties and defendants to be disposed of at the same time as the issues relating to the defendant's liability to the plaintiff. In the first instance, a third-party notice is issued without being served on the third party, and if joined to the proceedings on foot of that, the third party can apply to have it set aside.
Under the Civil Liability Act 1961, Section 27(1)(b) provides that a defendant that wishes to make a claim for contribution must serve the third-party notice as soon as is reasonably possible. The question of what this means has been the subject of voluminous case law and many decisions can be said to turn on the specific facts before the court as to whether there has been inexcusable delay.
The assembly of materials and the taking of advice, which are necessary to reach a conclusion as to whether it is appropriate to seek to join a third party, are relevant considerations in determining whether third-party proceedings have been pursued with sufficient expedition. The Supreme Court in Molloy v Dublin Corporation(2) noted that: "Proceedings cannot and should not be instituted or contributions sought against any party without assembling and examining the relevant evidence and obtaining appropriate advice thereon".
Citing Robins v Coleman,(3) the court acknowledged that there is a significant difference between the general references and allegations relative to a third party that might be made in a defence, and the specific allegations that might be made in a third-party notice. It further observed that "the decision… to serve a third-party notice is a significant one and it would be unwise to proceed without what is perceived to be reliable evidence of the fault of an intended… third party". Here, the court accepted that it was only through the investigations carried out by an expert instructed for one of the defendants that sufficient information - not available at the time the defence was filed - was obtained to ground proceedings against the third party.
The court went on to look at the rationale behind Section 27 and suggested that:
"not only did the Oireachtas [Parliament] intend to achieve efficiency in litigation by linking cases arising from the same facts, it may also be said that the Oireachtas intended to avoid the problem of conflicting judgments which might arise if cases arising from the same nexus are tried at different times by different courts…. the requirement in Section 27 that a third-party notice be served as soon as is reasonably possible is intended to ensure that the writs between the parties and all procedural steps be completed in a manner that permits the various actions to be tried either together or sequentially, and by the same court. Thus, when one is considering whether a third-party notice has been served 'as soon as is reasonably possible', one may have regard to the effect any delay has on the achievement of joined or sequential trial."
Previous case law(4) had established that the absence or presence of special prejudice affecting the proposed third party is not something that the court must consider in determining whether the third-party proceedings were valid. Here, the court was of the view that the 14-month delay had caused the third party no prejudice. Indeed, in the context of the defence being delivered six years later than the alleged negligence, it felt that "the extra year or so occasioned by the delivery of the third-party notice… does not ground a plea of prejudice".
However, of particular relevance - and described by the court as "noteworthy"- was the fact that the application to issue and serve the third-party notice was served on the plaintiffs and no complaint had been identified to the court by the plaintiffs with regard to any delay the third-party proceedings would cause to its cause of action. In circumstances where the court had highlighted the hearing of related cases together as part of the objective of Section 27, the attitude of a plaintiff to any prejudice it may suffer as a consequence of any delay occasioned by the third-party proceedings is of some consequence.
The court stressed that "the court should strive to achieve the main purpose of section 27 – ie, joined or immediately sequential trials for all parties to avoid duplication of hearings and possibly conflicting results". In order to facilitate that, it directed the parties to engage with the court to establish a strict timetable for exchange of pleadings and any interlocutory matters in the third-party proceedings to ensure that the plaintiffs' action proceeded as planned and the third-party action closely accompanied it.
As a general rule any application to join a third party should be made as soon as possible and a third-party order can be set aside in the event of inordinate delay. Here, the court recited the twin rationales of not duplicating court time and avoiding inconsistent judgments as part of the rationale as to why a court might not set aside a third-party notice. In light of the objective of ensuring 'efficiency in litigation', an important consideration was the impact that permitting third-party proceedings would have on the main proceedings as between plaintiff and defendant, and in circumstances here where the plaintiff raised no prejudice in that regard, the third-party notice was not set aside.
For further information please contact Gearoid Carey at Matheson by telephone (+353 1 232 2000), fax (+353 1 232 3333) or email (email@example.com).
(1) O'Halloran v Fetherton  IEHC 349.
(2)  4 IR 52.
(3)  2 IR 18.
(4) For example, Robins v Coleman  2 IR 180, Murnaghan v Markland Holdings Limited  IEHC 255.