Third Party Procedure – Act fast… but not too fast?

Introduction

Order 16 of the Superior Court Rules sets out the various provisions that govern the procedure for adding a Third Party to proceedings.

Of note, Order 16, Rule 1(1) states:

“1. (1) Where in any action a defendant claims as against any person not already a party to the action (in this Order called “the third-party”):

(a)   that he is entitled to contribution or indemnity, or

(b)   that he is entitled to any relief or remedy relating to or connected with the original subject matter of the action and substantially the same as some relief or remedy claimed by the plaintiff, or

(c)   that any question or issue relating to or connected with the said subject matter is substantially the same as some question or issue arising between the plaintiff and the defendant and should properly be determined not only as between the plaintiff and the defendant but as between the plaintiff and the defendant and the third-party or between any or either of them,

the Court may give leave to the defendant to issue and serve a third-party notice…”

Necessity to act swiftly

However, in circumstances where a Defendant is assessing whether or not a Third Party should be added to proceedings brought against them, it is of vital importance that such a Defendant acts swifty.

In this regard, consideration must be given Section 27(1) of the Civil Liability Act, 1961 which states:

“27. (1) A concurrent wrongdoer who is sued for damages or for contribution and who wishes to make a claim for contribution under this Part:

a)    shall not, if the person from whom he proposes to claim contribution is already a party to the action, be entitled to claim contribution except by a claim made in the said action, whether before or after judgment in the action; and

b)    shall, if the said person is not already a party to the action, serve a third-party notice upon such person as soon as is reasonably possible and, having served such notice, he shall not be entitled to claim contribution except under the third-party procedure. If such third-party notice is not served as aforesaid, the court may in its discretion refuse to make an order for contribution against the person from whom contribution is claimed.”

Accordingly, the onus on a Defendant to act “as soon as is reasonably possible” is significant and it is one which has been the subject of much debate.

Act swiftly, but not prematurely

Having said that, a Defendant cannot move to add a Third Party to proceedings without careful consideration, and any application made simply on a hunch that liability may be offset to a Third Party will not meet the requisite thresholds for a successful application.

In this regard, Mr Justice Quinn considered in Avoncore Ltd v Lesson Motors Ltd [2022] IEHC 415, the Court’s assessment of whether a Third Party Notice was served “as soon as is reasonably possible” under Civil Liability Act, 1961:

“Having considered those and other judgments cited, the following principles inform the court’s assessment in this case of whether the notices were served as soon as reasonably possible.

1)    The purpose of Section 27 is to avoid a multiplicity of legal proceedings arising from the same event or set of events.

2)    The obligation to move as soon as possible is imposed to avoid unnecessary delay to the progression of the plaintiff’s action (see Ryan P in Kenny v. Howard [2016] IECA 243). This principle is essentially about protecting the plaintiff’s position while at the same time ensuring that all appropriate parties are before the court.

3)    The court needs to examine the date at which it can be said that the defendant had sufficient information to enable it to make an informed decision, based on appropriately researched advice as to whether a case for contribution can be made out.

4)    It is not appropriate to join any third party a defendant considers “might” have such a liability. A defendant must have been in possession of sufficient information to make the informed and advised judgment that such a cause of action is credible.

5)    Where the contribution claim arises from an allegation of professional negligence a factor to be taken into account is the long established requirement that such an allegation is made and proceedings commenced only after first ascertaining that there are reasonable grounds for doing so. It is an abuse of process to commence professional negligence proceedings without having followed this course of action and, with certain exceptions, having first obtained an appropriate expert report to inform such a decision. (See Doyle v. Flemco, Mangan v. Dockery [2020] IESC 67, Ashford Castle Limited v. EJ Deacy Contractors and Maintenance Limited [2021] IEHC 549 and Connolly v. Casey (op cit).

6)    The court will be required to balance the statutory imperative in s.27(1) to move as soon as is reasonably possible against the duty of a party and its advisors to first obtain the necessary information and advice, including expert reports.

7)    It is not essential that perfection be achieved in terms of the analysis of a potential claim against a third party and account must be taken of the balance referred to in the preceding paragraph.

8)    An expert consulted for the purpose of this analysis is himself under a duty to have equipped himself with all information and facts required to make an informed report.

9)    The court will take into account what steps have been taken by the relevant parties to obtain the necessary information and to brief an appropriate expert. This will engage a consideration of whether the expert was instructed and briefed on a timely basis.

10) Since the purpose of the section is to avoid a multiplicity of legal proceedings and at the same time to avoid imposing delay on the plaintiff in pursuing its remedy, the question of prejudice to the third party is of limited weight. In certain cases it can be said that a third party may even benefit by participating in the trial.

11) If a third party can demonstrate prejudice this is a factor which can be taken into account. However, a relevant consideration will be whether that prejudice has been caused by the defendant seeking to join him. (see Buchanan v. BHK Credit Union Limited & Ors. [2013] IEHC 439 and Kenny v. Howard [2016] IECA 243)

12) The court will have regard to the question of the utility of setting aside the notice in the context of the overall progress of the case and the objective of the section (see Doyle v. Flemco).”

The above principles demonstrate that while a Court will certainly consider whether or not a Defendant acted “as soon as is reasonably possible”, that statutory obligation must be weighed up against a Defendant having (or making steps to have) obtained sufficient information so as to enable them to make an informed decision to proceed with an application to add a Third Party to proceedings, or otherwise.

As is the case with all applications to join a Third Party to proceedings, the Court has complete discretion as to whether or not such an order is made. However, in order to give a Defendant the best possible chance of success practitioners should move to make such an application “as soon as is reasonably possible”, while also considering the principles set out Avoncore to ensure that sufficient information has been obtained.

For more on this topic, please do not hesitate to contact Liam Collins, Harry Caulfield or Conal McCluskey of our Litigation and Dispute Resolution Team.