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Time limits and third-party proceedings
PRACTICE AREA GROUP: Commercial Litigation and Dispute Resolution
The High Court recently considered the question of timing in bringing third-party proceedings. In related proceedings, (1) a third party to both proceedings sought to challenge the third-party notices by which it was joined to the proceedings. Having reviewed the authorities applicable to delay and third-party notices, and notwithstanding that he found there was delay in this case, Judge Murphy refused to set the notices aside given the facts of the case and the objective of the third-party procedure to have all matters dealt with in one set of proceedings.
Under Irish procedure, a plaintiff is free to include in its claim those it wishes as defendant(s). However, depending on the nature of the claim, the defendant(s) may think that another party bears some responsibility and should contribute to whatever the defendant might ultimately be ordered to pay the plaintiff. In order to ensure that all matters are dealt with in one set of proceedings and to avoid duplicating court time and resources, the third-party procedure permits a defendant to bring that other party into the original proceedings. As Judge Morris noted in Ward v O'Callaghan, (2) it is desirable for all issues about indemnity or contribution as 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.
Under Section 27(1)(b) of the Civil Liability Act 1961, a defendant that wishes to make a claim for contribution shall serve the third-party notice as soon as is reasonably possible. Ostensibly, under the Rules of the Superior Courts, an application to issue a third-party notice shall be made within 28 days of the time limit for delivering the defence. However, this time stipulation is honoured more in breach than in observance.
Case law has determined that the whole circumstances of the case and its general progress must be considered in determining whether the notice was served "as soon as is reasonably possible". As the High Court noted in this case, it is a "relative concept". The Supreme Court had examined the term in Molloy v Dublin Corporation (3) and noted that:
"The statute is not concerned with physical possibilities but legal and perhaps commercial judgments. 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. It is in that context that the word 'possible' must be understood. Furthermore, the qualification of the word 'possible' by the word 'reasonable' gives a further measure of flexibility."(4)
The High Court also cited Greene v Triangle Developments Limited, (5) in which Judge Clarke held that in considering the period which elapsed, the court should have regard to any steps (eg, the assembly of materials and the taking of advice) which were necessary to reach a conclusion as to whether it was appropriate to seek to join a third party. It is clear from that case that no party should seek to join a third party without a credible basis for doing so. However, it is clear from the decisions of Judge McMahon in Robins v Coleman (6) and Judge Laffoy in Murnaghan v Markland Holdings Limited (7) that the absence or presence of special prejudice affecting the proposed third party is not something to which the court must have regard in determining whether the third-party proceedings are valid.
That notwithstanding, as the Supreme Court noted in Stephens v Flynn, (8) even the most complex of cases must be prosecuted with due expedition and an appropriate sense of urgency. In that case, a period of 20 months before seeking to join a third party was held to be outside the time that might be considered appropriate or reasonable. However, each case must be determined on its facts. The High Court noted that, although of limited assistance, in Robins v Coleman examples of cases were given in which delays of 38, 48, 36 and 21 months were outside the period allowed, while in other cases delays of 15, 18 and 16 months did not result in third-party notices being set aside.
In this case, in two separate proceedings brought against Mount Juliet Properties Limited and other defendants in respect of claims of alleged defective construction, the defendants were given leave to issue and serve third-party notices on the same party in respect of both proceedings. In the two sets of proceedings, the statements of claim were delivered on October 21 2008 and May 21 2009 respectively, with the respective defences delivered on December 22 2008 and August 17 2009. On May 23 2011 and February 14 2011 the defendants were given leave to issue and serve the third-party notices, to which the third party objected on the basis of delay and prejudice.
The defendant contended that the potential liability of the third party was not raised until early June 2010, was confirmed in September 2010 in an expert opinion and was clarified in December 2010. The third party engaged with the defendant at site inspections and subsequently, on June 27 2011, an order extending the time within which to serve any third-party notice was issued, which happened on July 5 2011. The defendant submitted that it had acted to join the third party as soon as it reasonably could, once it had obtained the relevant expert advice.
The High Court held that the delay here was inordinate, but had resulted from the need to have a clear expert report from the consulting engineers, in respect of which it referred to the defendant's obligation to have obtained all appropriate advice in seeking a third-party order. The High Court balanced the objective of the third-party procedure in having all matters dealt with in the main proceedings with the right of a third party to have the third-party proceedings set aside. It was particularly swayed by the fact that liberty to issue a third-party notice outside the time period stipulated in the rules had been made, which by implication extended the time period to apply to issue such a notice. For these reasons, the applications to set aside the third-party notices were refused.
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. Notwithstanding the finding of delay here, the third-party motions were not struck out. However, this finding is exceptional and appears to be primarily based on the fact that leave to issue the third-party notices outside the stipulated time had previously been given. It is likely that, had this not occurred, the third-party notices would have been struck out for delay. Accordingly, it remains the case that third-party issues should be investigated and notices considered – with the benefit of expert advice, if necessary – with expedition.
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'Sullivan & O'Keeffe v Mount Juliet Properties and Enright & Enright v Mount Juliet Properties  IEHC 269.
(2)  IEHC16.
(3)  4 IR 52.
(4) At pages 56-57.
(5)  IEHC 52.
(6)  2 IR 180.
(7)  IEHC 255.
(8) Supreme Court, unreported, February 25 2008, Judge Kearns.