Microsoft Ireland Operations Ltd v Arabic Computer Systems & Anor (Approved) [2021] IEHC 538 (29 July 2021)

57.              The starting point is O. 28, r. 1 RSC which provides as follows:-

“The Court may, at any stage of the proceedings, allow either party to alter or amend his indorsement or pleadings in such manner and on such terms as may be just, and all such amendments shall be made as may be necessary for the purpose of determining the real questions in controversy between the parties.”

58.              While the plaintiff also referred in its notice of motion to O. 28, r. 12 RSC, no submissions were directed by either the plaintiff or the defendants to the scope of that provision. Order 28, rule 12 RSC provides as follows:-

“The Court may at any time, and on such terms as to costs or otherwise as the Court may think just, amend any defect or error in any proceedings, and all necessary amendments shall be made for the purpose of determining the real question or issue raised by or depending on the proceedings.”

59.              That provision was discussed by Biehler, McGrath and Egan McGrath “Delany and McGrath on Civil Procedure” (4th Ed.) (“Delany and McGrath”). At para. 6-64, the authors observe:-

“A wider jurisdiction to correct errors including errors in the names of parties is conferred by Order 28, rule 12 which provides that the court may at any time, and on such terms as to costs or otherwise as it may think fit, amend any defect or error in any proceedings with all necessary amendments made for the purpose of determining the real question or issue raised by or depending on the proceedings. In O’Brien v. O’Reilly [2017] IEHC 246 this rule was relied on by Herbert J. to amend the title of proceedings to correct an error in the name of the first defendant.”

60.              It is unnecessary for me to consider whether the plaintiff can establish an entitlement to amend its statement of claim under O. 28, r. 12 in circumstances where it has also sought leave to do so under O. 28, r. 1. I would prefer to leave over to a case in which it is necessary to decide the issue as to whether O. 28, r. 12 applies to amendments of the sort which the plaintiff seeks to make here to the statement of claim which, arguably, seek more than merely to amend a defect or error in the proceedings. I propose, therefore, to consider that the plaintiff’s amendment application solely by reference to O. 28, r. 1.

61.              Before referring to the legal principles applicable to amendment applications under O. 28, r. 1, I should briefly address a point which was raised in correspondence, in the written submissions and briefly in the oral submissions at the hearing concerning the possible entitlement of the plaintiff to amend its statement of claim without leave of the court.

62.              Under O. 28, r. 2, it is open to a plaintiff “without any leave” to amend its statement of claim “once at any time before the expiration of the time limited for reply, and before replying” or “where no defence is delivered, at any time before the expiration of four weeks from the appearance of the defendant who shall have last appeared”.

63.              It is common case that the plaintiff could not avail of the second of the two possibilities referred to in O. 28, r. 2. More than four weeks has expired from the appearance entered on behalf of the defendants. Nor can the plaintiff at this point in the proceedings rely on the first of the possibilities referred to in O. 28, r. 2, as the time for the delivery of a reply by the plaintiff has not yet commenced since no defence has yet been delivered.

64.              While the plaintiff might potentially have waited until the time for the delivery of a reply began to run and then amended its statement of claim without the need to seek leave of the court, it decided not to do so but rather to bring the present application. In my view, that was a reasonable and appropriate approach to take. It is obviously desirable that all of the issues in the case are brought forward at the earliest opportunity so that the parties and the court can know at the earliest possible stage what those issues are.

65.              Even if it might have been possible for the plaintiff to have waited until a later stage of the proceedings to amend its statement of claim without seeking leave of the court (and I do not want to be taken as necessarily accepting that that is so), it would not have been consistent with the overriding obligation on the court under O. 63A, r. 5 to ensure “the determination of the proceedings in a manner which is just, expeditious and likely to minimise the costs of those proceedings”. It is much better to have the issue addressed and determined at this relatively early stage in the proceedings. As well as that, if the plaintiff were to have waited and then amended its statement of claim at a later stage in the proceedings in reliance on O. 28, r. 2, it would have been open to the defendants to apply to the court under O. 28, r. 4 to disallow the amendment. If such an application were made, the court would be faced with precisely the same issues as it is faced with on the present application but at a much later stage in the proceedings. It is far better to have the issues determined at this point. In any event, as the plaintiff did not push for an entitlement to amend without leave and, on the contrary, brought this amendment application, there is no need to consider further any possible entitlement the plaintiff might have had to amend without leave under O. 28, r. 2.

66.              The legal principles applicable to amendment applications are well settled. The modern approach derives from the judgments of the Supreme Court in Croke v. Waterford Crystal Ltd [2005] 2 IR 383 (“Croke”) and Moorehouse v. Governor of Wheatfield Prison [2015] IESC 21 (“Moorehouse”). The general principles applicable to the amendment of pleadings were helpfully summarised by reference to the existing case law by Humphreys J. in Habte v. Minister for Justice and Equality [2019] IEHC 47 (“Habte”). Before setting out those principles, I should also refer to the summary of the general principles adopted by Birmingham J. in the High Court in Rossmore Properties Ltd v. Electricity Supply Board [2014] IEHC 159 (“Rossmore”), as they were recently approved of by the Court of Appeal in Persona Digital Telephony Ltd v. Minister for Public Enterprise [2019] IECA 360 (“Persona”) (at para. 12).

67.              In Rossmore, Birmingham J. summarised the principles as follows:-

1.       The parties enjoy complete freedom of pleading. This is a reference to the fact that in the ordinary course of events a plaintiff is at large as to how he pleads his or her case. Absent pleas that are scandalous or vexatious or the like, the plaintiff cannot be dictated to as to how to formulate and present his or her claim.

2.         Order 28 of the Rules of the Superior Courts which is the rule that deals with amendments is intended to be applied liberally.

3.         Amendments shall be made for the purposes of determining the real questions in controversy between the parties.

4.         Amendments should not be permitted when doing so could cause real or actual prejudice to other parties.

5.         Amendments should be allowed if all that is present is litigation prejudice which is capable of being dealt with by orders for costs or other directions by way of case management.

6.         There is no rule that per se precludes radical amendments.

7.         There is no rule against introduction of a new cause of action if it falls within the ambit of the original grievance.” (per Birmingham J. at para. 19) (emphasis added)

68.              While most of those principles are applicable in the context of the plaintiff’s amendment application, perhaps the most relevant for present purposes is that set out at para. 7 in Rossmore.

69.              In Habte, Humphreys J. provided a very helpful summary of the principles emerging from the case law which, to an extent, overlap with those set out and approved by Birmingham J. in Rossmore. I adopt for the purpose of this judgment the principles set out at paras. (i) to (xvi) in para. 32 of the judgment of Humphreys J. in Habte. I do not need to set out all of those principles but confirm that I have taken all of them into account. Rather, I will set out what appear to me to be the most relevant principles in light of the issues in controversy between the parties on the plaintiff’s amendment application. They are:-

“(x)      having to deal with a potentially winning point that was not originally included does not constitute irremediable prejudice…;

(xii)      the fact that the proposed amendment introduces an entirely new cause of action or new ground, or even fundamentally alters the nature of the proceedings, or requires the addition of new parties, is not a bar to allowing the amendment…;

(xiii)     the fact that the amendment involves a new relief, or challenges a different decision including one made after the institution of the original proceedings, is not a bar to allowing an amendment…;

(xiv)     if the proposed new claim is one that could otherwise be pursued by separate proceedings, the potential saving in costs and likelihood of a more just and convenient disposition of the issues by dealing with all related matters in the one set of proceedings is a factor in favour of allowing the amendment…;

(xv)      while amendments that do not substantially enlarge the proceedings, or merely particularise what is implicit, may be readily granted, the fact that the amendment substantially enlarges the proceedings is not a bar to allowing an amendment…;” (case references omitted)

70.              Unfair and irremediable prejudice to the party opposing the amendment will generally lead to the amendment being refused. The defendants have contended that they would be unfairly and irremediably prejudiced if the court were to allow the plaintiff to amend the statement of claim in the manner proposed. They rely on a very specific form of prejudice, namely, that the effect of the proposed amendment would be to deprive them of the benefit of the Statute. This type of claimed prejudice has been the subject of much consideration by the Irish courts.  

71.              The modern approach in this jurisdiction to the consideration of that type of claimed prejudice can first be seen in the decision of Keane J. in the High Court in Krops v. The Irish Forestry Board Ltd [1995] IR 113 (“Krops”). In that case, the plaintiff had issued proceedings arising out of the death of his wife in an accident where the car in which she was travelling was struck by a falling tree. The plenary summons and statement of claim alleged that the tree had fallen as a result of the negligence, breach of duty and breach of statutory duty of the defendants. The plaintiff sought to amend the statement of claim to include a claim for nuisance. It was accepted that the proposed amendment did not involve the pleading of any new facts. The amendment application was opposed by one of the defendants in reliance on the decision of the English Court of Appeal in Weldon v. Neal (1887) 19 QBD 394 (“Weldon”). Keane J. in the High Court considered that case and noted that the plaintiff in Weldon was seeking not merely to add new causes of action to those already pleaded but to make fresh allegations of fact which had never been pleaded in circumstances where the limitation period had expired. Permission to amend was refused in Weldon. In light of subsequent amendments to the applicable rules of court in England and to the relevant English legislation, Keane J. concluded that the application before him had to be determined by reference to principle rather than authority. He stated:-

“…pleadings which initiate an action in this court carry with them from the time they are issued or delivered the potentiality of being amended by the court in the exercise of its general jurisdiction to allow a party to amend his indorsement or pleadings “in such manner and on such terms as may be just”. Where, as here, an amendment, if allowed, will not in any way prejudice or embarrass the defendant by new allegations of facts, no injustice is done to him by permitting the amendment. In that sense, it is true to say that the amendment does not in truth deprive him of a defence under the Statute of Limitations, 1957: since the proceedings were always capable of amendment in such manner as might be just and in order to allow the real question in controversy between the parties to be determined, it cannot be said that the defendant was at any stage in a position to rely on the Statute of Limitations, 1957.”

(per Keane J. at 121)

72.              Keane J. continued:-

“Where, as here, the Plaintiff seeks to add a new cause of action arising out of – to borrow the words of the English rule – ‘the same facts or substantially the same facts’, there seems no reason why this Court, even in the absence of a corresponding rule in this jurisdiction, should be precluded from permitting such an amendment.”

(per Keane J. at 121)

73.              The Supreme Court approved of the decision in Krops in Croke (per Geoghegan J. at pp. 397-398). Having referred to the statements of principle made by Keane J. in Krops, Geoghegan J. in Croke stated:-

“The mere fact that if a new cause of action sought to be included in the statement of claim had been brought by separate action it would be statute barred does not prevent the amendment being granted.” (per Geoghegan J. at 398)

74.              In Mangan v. Murphy [2006] IEHC 317 (“Mangan”), Clarke J. in the High Court had to consider the possible application of Krops in an application to amend a statement of claim. The statement of claim pleaded that, as a result of an agreement, the first defendant was required to hold a percentage of the shareholding in the second defendant on trust for the plaintiffs so that all three would be beneficial owners of a one-third share in the second defendant. The plaintiffs sought to add a claim to the effect that it was also agreed on the same date that the three parties would, in the absence of any other agreement to the contrary, share equally, directly or indirectly, in any royalties that might be paid by the second defendant in respect of certain software development licences. Clarke J. refused to permit the amendment. Having referred to Croke and to a judgment which he had given in Woori Bank & Anor v. KDB Ireland [2006] IEHC 156 (“Woori Bank”), Clarke J. then referred to Krops. He said:-

“It is clear from Krops that an amendment can defeat the Statute, in that the new claim will be taken to have been commenced when the proceedings issued, and thus time will be taken to have ceased running, even in respect of the new claim, backdated to the date of the issuing of the original proceedings.” (p. 4)

75.              Clarke J. distinguished the case before him from Krops on the basis the case before him did not involve “the same facts or substantially the same facts”. While there was a sufficient connection between the background to both sets of issues (the claim as originally pleaded and the proposed additional claim) to render it convenient in principle for both claims to be heard together, he stated that the “facts relevant to the issues which arise under both causes of action are… discrete and different” (pp. 5-6). He noted that in Woori Bank, he had taken the view that it was not appropriate for the court to attempt to resolve arguable issues under the Statute at an interlocutory hearing such as an amendment application. He continued:-

“It is, therefore, clear that there is a possibility that allowing the amendment would cause prejudice to the defendants by excluding them from reliance upon the Statute of Limitations in circumstances which go much beyond those in which such a course was permitted in Krops.” (p. 6)

76.              For that reason, Clarke J. refused the plaintiff’s application to amend the statement of claim but made provision for the possibility of fresh proceedings being issued by the plaintiffs to include the new cause of action to be linked with the existing proceedings. It is significant that in that case Clarke J. concluded that the amendment should be refused on the basis that the new cause of action did not arise out of “the same facts or substantially the same facts” but, rather, the facts relevant to the new cause of action and the old cause of action were “discrete and different”.

77.              The defendants place some reliance in opposing the amendment application on the judgment of the Supreme Court in Smyth v. Tunney [2009] 3 IR 322 (“Smyth”). That involved a claim for damages for defamation and for various other causes of action arising out of telephone calls allegedly made by the defendants to English police authorities making allegations against the plaintiff. A statement of claim setting out those claims was delivered by the plaintiff. The plaintiff sought to amend the statement of claim by including claims arising from similar telephone calls allegedly made to the Revenue Commissioners and the Phoenix magazine. The plaintiff obtained liberty to deliver an amended statement of claim in the High Court but that order was reversed by the Supreme Court. In his judgment for the Supreme Court, Finnegan J. observed that the plaintiff was seeking to plead new facts and on foot of those new facts to recover damages on the basis of the original causes of action pleaded as well as two additional causes of action (para. 25, p. 332). Having referred to the leading cases, such as Krops and Croke, Finnegan J. summarised the law in relation to amendments to proceedings and then sought to apply the principles he summarised to the application before the court.

78.              At para. 29, Finnegan J. stated:-

“In summary the law as to amendment now is that an amendment will be allowed if it is necessary for the purposes of determining the real issues in controversy between the parties. The addition of a new cause of action by amendment will be permitted notwithstanding that by the date of amendment the Statute of Limitations had run if the facts pleaded are sufficient to support the new cause of action. Facts may be added by amendment if they serve only to clarify the original claim but not if they are new facts. Simple errors such as an error in date or an error as to location which do not prejudice the defendant and enable the real questions in controversy between the parties to be determined will be permitted.” (para. 29, p. 334)

79.              Finnegan J. then applied those principles to the amendments at issue in that case. At para. 30, he stated:-

“The amendment sought here by way of the addition of causes of action does not satisfy these requirements. In order to sustain the new causes of action additional facts are required to be pleaded and indeed the notice of motion sought amendment of the statement of claim by the addition of the necessary pleadings of fact. These amendments should be disallowed. Similarly the amendment of the statement of claim by pleading additional facts relating to additional publication to the Revenue Commissioners and Phoenix magazine should be disallowed. The Statute of Limitations may well have run and the defendants would be prejudiced by the amendments sought as to additional publication.” (para. 30, p. 334)

80.              Delany and McGrath summarise the position with respect to the principles to be applied when a party opposes an amendment on the basis that it would be unfairly prejudiced by being deprived of a defence under the Statute. The authors state at para 5-237 as follows:-

“In summary, the position would seem to be that it is not fatal to an application to amend that the cause of action sought to be introduced would be statute barred if pursued in separate proceedings. Given the potential for pleadings to be amended, no genuine prejudice or unfairness to the defendant will be considered to arise if the new cause of action is one which arises out of the same, or substantially the same, set of facts. However, an application for leave will be refused on the basis that it would be unfair to a defendant to deprive him of a defence under the Statute if the cause of action is entirely new and is not based on facts already pleaded.”

(para. 5-237, p. 294)

81.              Reference was also made by the parties at the hearing of the amendment application to the judgment of the Court of Appeal (Donnelly J.) in Persona. In that case, the Court of Appeal refused to allow certain amendments to the statement of claim which would amount to a claim of “ordinary irregularities” in the process of the evaluation of applications for a digital mobile communications system licence as the court was satisfied that that would amount to a new claim to which the Statute would apply and that no useful purpose would be served by permitting the amendment. The court did, however, permit amendments insofar as they provided particulars of the “corrupting of the process” as they were necessary for the purpose of determining the real questions of controversy in the litigation.

82.              At para. 44 of her judgment for the Court of Appeal, Donnelly J. noted that the plaintiffs were relying on the approach in Rossmore that “unless it is obvious that a claim is statute barred so that no useful purpose would be served in permitting the amendment, then the appropriate course of action is to permit the amendment while making it clear that the defendant is entitled to rely upon the Statute of Limitations”. The plaintiff submitted in the present case that Rossmore is not in fact authority for that proposition. However, the defendants contended, and the plaintiff did not disagree, that O. 28, r. 1 does provide scope for the court to allow an amendment on terms, including on terms that the effect of the amendment takes place from the date the order permitting the amendment is made rather than from the date of the commencement of the proceedings (which, as the authorities make clear, is the normal position). The plaintiff and the defendants pointed to the words of O. 28, r. 1 that the court can allow amendments “on such terms as may be just”. The defendants submitted that, if the court were uncertain of the position, it could permit the plaintiff to amend the statement of claim but direct that the amendments take effect from the date the court permits the amendments. Alternatively, they submitted that the court could permit the plaintiff to amend the statement but expressly leave over to the trial judge the issue as to whether the matters the subject of the amendment gave rise to claims which were statute barred. While accepting that the words of O. 28, r. 1 suggested that the court did have a discretion with respect to the terms on which amendments may be permitted, the plaintiff strongly objected to the court taking either of the courses put forward by the defendants. As we shall see in a moment, the plaintiff contended that the defendants had not even established an arguable case that the matters the subject of the amendments were statute barred.

83.              The final case to which it is necessary to refer is the judgment of Simons J. in Stafford v. Rice [2021] IEHC 235 (“Stafford”). Having referred to many of the leading cases on the amendment of pleadings, and having helpfully summarised the particular issues which arise when a defendant seeks to oppose an amendment application on the basis that it would be deprived of a defence it might otherwise have under the Statute, Simons J. proceeded to analyse that objection by reference to the particular facts of the case before him. He noted that while there was no prohibition on allowing an amendment in such a situation, a court “will exercise restraint where it is alleged that a defendant would be prejudiced in this way” (para. 18). However, he went on to state:-

“Crucially, no such issue arises in respect of the Statute of Limitations in the present case. The proposed amendments do not give rise to the type of mischief with which the Supreme Court were concerned in Smyth v. Tunney. This is because, on the Defendants’ own analysis, the breach of contract claim was already statute-barred by the time the within proceedings were instituted in November 2013. The Defendants contend that any obligation on their part to deliver deeds of assurance would have arisen in 2006, when the lands were partitioned and taken into separate folios. The six year limitation period would have expired prior to the institution of these proceedings. Thus, again on the Defendants’ own analysis, there is no benefit to the Plaintiff in pegging the date of the contractual claim to the date of the initiation of these proceedings in November 2013.” (para. 19)

84.              A similar point was made by analogy by the plaintiff in the present case in response to the defendants’ objection which I address below. Simons J. continued:-

“(I hasten to add that this judgment makes no finding on the question of whether the contractual claim is actually statute-barred. This is a matter for the trial judge. For present purposes, the point is that the Defendants’ position is not prejudiced by the amendments in that their arguments on the Statute of Limitation are the same irrespective of whether the contractual claim is advanced in these proceedings or in fresh proceedings with a later date of institution).” (para. 20)

85.              Simons J. held that the case before him was distinguishable from Smyth on two grounds. First, he held that the proposed amendments do not cause any prejudice to the defendants in terms of the Statute (for reasons just outlined). Second, he held that, in any event, the proposed amendments did not involve the introduction of “‘new’ facts in the strict sense”. He held that the amendments arose out of “substantially the same facts” as those already pleaded in the statement of claim (per Keane J. in Krops) or fell within the “ambit of the original grievance” (per Birmingham J. in Rossmore). Simons J. held that the breach of contract claim was predicated on a contract for sale of the lands, that the existence of the contract was pleaded in the initial statement of claim and the new claim was rooted in that contract and that it arose out of facts already pleaded. He also distinguished the case from Mangan and concluded that, unlike the position in Mangan, it was not arguable that an issue arose under the Statute.

86.              Those are the relevant cases and principles applicable to the first objection raised by the defendants.

The Defendants’ First Ground of Objection

87.              I am satisfied that the first ground of objection raised by the defendants to the amendment application must be rejected. I have reached that conclusion for the following reasons.

(a)   No New Cause of Action/Same or Substantially Same Facts

88.              First, I agree with the Plaintiff that the amendments sought to be made to the statement of claim by the plaintiff do not introduce any new cause of action. If the amendments are allowed, the plaintiff will still be seeking judgment in precisely the same amount as it sought in the original statement of claim on foot of the invoices referred to in the summary summons and in the statement of claim, including the ten invoices relevant to the amendment application. The plaintiff sought judgment in the amount set out in the summary summons and in the statement of claim in an amount which included the sums referred to in those ten invoices and based its claim in those pleadings, in part, on the fact that “licensed offerings” had been supplied to ACS on foot of orders placed which were the subject of those invoices.

89.              Even if it could be said that the plaintiff does seek to introduce a new cause of action in respect of those invoices, namely, a cause of action for breach of contract, being the 2013 Agreement, it would be an additional cause of action in respect of the same ten invoices already relied upon by the plaintiff in its original pleadings. Even on the assumption that the amendments sought by the plaintiffs do introduce a new or additional cause of action with respect to the ten invoices, the amendments clearly arise, in my view and exercising the appropriate judicial restraint, from “the same facts or substantially the same facts” as were pleaded in the summary summons and in the original statement of claim (to use the phrase adopted by Keane J. in Krops and by several of the other courts in the judgments discussed earlier, including Clarke J. in Mangan and Simons J. in Stafford as well as by the authors of Delany and McGrath); they also “fall within the ambit of the original grievance” (to use the phrase adopted by Birmingham J. in Rossmore and by Simons J. in Stafford); and the facts already pleaded in the statement of claim are, in my view, “sufficient to support the new cause of action” and “serve only to clarify the original claim” (to use the terms adopted by Finnegan J. in Smyth). The facts, such as they are, as are sought to be included in the amended statement of claim and the facts included in the statement of claim originally delivered are in no sense “discrete and different” (to use the phrase adopted by Clarke J. in Mangan).

90.              The invoices giving the total sum claimed of US$31,539,677.95 in the summary summons for which judgment was sought against both defendants included the ten invoices relevant to the amendment application. Those ten invoices were specifically listed in the particulars at schedule 1 to the summary summons. The ten invoices were specifically referred to and exhibited to several of the affidavits sworn by Mr. Moran on behalf of the plaintiff including (a) Mr. Moran’s affidavit sworn on 17th August, 2018 grounding the plaintiff’s application for liberty to issue and serve notice of the proceedings on the defendants outside the jurisdiction; (b) Mr. Moran’s affidavit sworn on 5th December, 2018 for the purpose of grounding the plaintiff’s application to enter the proceedings in the Commercial List and for summary judgment; and (c) Mr. Moran’s affidavit sworn on 1st February, 2019 in response to the defendants’ application to set aside service of the proceedings.

91.              As well as that, the 2013 Agreement was among the agreements between the plaintiff and ACS referred to and exhibited by Mr. Moran to his affidavit sworn in connection with the defendants’ jurisdiction application which were referred to at para. 26 of my judgment on that application.

92.              In the event that the amendments sought by the plaintiff are permitted by the court, the plaintiff will be seeking judgment for precisely the same sum in the summary summons and original statement of claim on foot of precisely the same invoices (including the ten invoices relevant to the amendment application). No additional sum is sought to be claimed on foot of the amendments and no additional invoice is sought to be added to the particulars pleaded in schedule 1 to the summary summons and in schedule 1 to the statement of claim. Insofar as the plaintiff relies as one of its causes of action on an alleged breach of contract by the defendants, the plaintiff is not proposing to change or alter its claim in respect of the contracts pleaded but rather seeks to add reference to the 2013 Agreement which does not fundamentally change the case as pleaded by the plaintiff.

93.              In light of these significant factors, I am satisfied that, even if the claim involves a new cause of action by specifically relying on the 2013 Agreement, it is an additional cause of action based on the same invoices in respect of which the plaintiff has sought judgment from the very outset of the case. The amendments should nonetheless be permitted as they arise essentially out of the “same facts or substantially the same facts” and fall within the “ambit of the original grievance”.

(b)   Not Arguable that Statute Barred

94.              Second, I do not accept that the defendants have established an arguable case that the plaintiff’s claim in respect of the ten relevant invoices is statute barred on the basis that those invoices were issued within the term of the First Microsoft Channel Partner Agreement but on foot of purchase orders submitted by ACS during the currency of the 2013 Agreement. A review of the contractual material put before the court by the plaintiff which was not contested by the defendants has persuaded me that the defendants’ claim that it has a good or even arguable defence under the Statute of which it will be deprived if the amendments were permitted is incorrect and is not even arguable for the purposes of my consideration of the plaintiff’s amendment application.

95.              It is necessary to refer to some of the relevant contractual material here. At clause 6b of the 2013 Agreement, under the heading Ordering, the parties agreed as follows:-

“Company [i.e. ACS] will submit orders to Microsoft [i.e. the plaintiff] on a regular basis. Company should review the ‘Program Guide’ for complete information about the ordering process. The ‘Program Guide’ outlines how to order ‘licensed offerings’ from Microsoft. Microsoft can only provide ‘licensed offerings’ to customers within specific geographic regions. As a result, Company must sign an Agreement with the appropriate Microsoft entity for the Territory in which Company’s Customers are located.”

96.              Clause 8 of the 2013 Agreement dealt with Reporting and payment. It stated, “each ‘Program Guide’ specifies the reporting and payment requirements for the “licensed offerings”. The term “Program Guide”, which appears in clause 6b and clause 8, is itself defined in clause 2 as meaning:-

“the information about specific licensing programs that is available on the Channel Partner website. The ‘Program Guide’ may include several handbooks, including an operations academy handbook.”

97.              Clause 8b provided under the heading Payment Due Date, as follows:-

“Payments are due on the date and in the currency stated in the applicable ‘Program Guide’. If Company does not receive an invoice within ten (10) days after placing its order, it must promptly notify Microsoft, and Microsoft will promptly send a new invoice. Company must manage its own credit risk. Company’s payment to Microsoft is not dependent on receipt of payments from Customers even in the case of Customer insolvency.”

98.              I noted earlier that Mr. Moran explained that the 2013 Agreement was in substantially the same form as the First Microsoft Channel Partner Agreement. He also explained that the plaintiff was not in the position to locate a copy of the 2013 “Program Guide” but stated that ACS had access to it on a particular website at the time. A copy of the 2012 version of the “Program Guide” was provided to the defendants “for the purposes of illustration”. Since no witness on behalf of the defendants (apart from Ms. Cotter, the defendants’ solicitor) swore an affidavit in response to the amendment application, I am entitled to proceed on the basis that the 2012 “Program Guide” is illustrative of the relevant terms and conditions of the 2013 “Program Guide” and that there are no significant differences between the two documents.

99.              Clause 7 of the 2012 “Program Guide” (which I accept is illustrative of the position under the 2013 “Program Guide”) dealt with Payment and Credit Terms. Clause 7.1 dealt with Payment Terms. The relevant part provided as follows:-

“Payments are due with a value date on or before the due date of Microsoft’s invoice unless otherwise agreed in writing by Microsoft.

 

An overview of the standard payment terms by region/country is attached to this Guide as Schedule A. If Company does not receive an invoice within ten (10) days after placing its order, it must promptly notify Microsoft, and Microsoft will promptly send a new invoice. For confirmation of the Company’s payment terms, the Company will be notified in writing. Company must manage its own credit risk. Company’s payment is not dependent on receipt of payments from Customers even in the case of Customer insolvency…”

Schedule A (contained in an appendix to the 2012 “Program Guide”) provided that the standard payment terms for the relevant licensing programme “unless otherwise agreed upon in writing” was, in the case of the Middle East and Africa “Net 60 days calendar days”.

100.          As I observed earlier, Mr. Moran, at para. 7 of his second affidavit sworn for the purpose of this amendment application, explained in some detail the invoice and payment cycle relevant to the invoices at issue here. This evidence was not considered by any witness on behalf of the defendants. Each purchase order submitted by ACS sought the supply of products specified in the purchase order over the course of a three-year cycle. Copies of the relevant purchase orders and invoices were exhibited by Mr. Moran. Each relevant purchase order was placed by Mr. Moran behind each relevant invoice in the exhibit. Each purchase order specified the “term of agreement” as being three years and under the “summary” referred to a total deal value over three years and total annual payments for years 1, 2 and 3 of those years. Each purchase order then contained the following:-

“Unless otherwise indicated on the Channel Price Sheet and in a signed customer amendment, Microsoft will invoice Reseller in three equal annual instalments. The first instalment will be invoiced upon acceptance of the Enrolment and thereafter on the anniversary of the Enrolment.”

101.          Each of the ten invoices relevant to this application referred to the purchase order date, the date of the invoice and the “payment due date” calculated on the basis of the net 60 calendar day period referred to in Schedule A in the Appendix to the 2012 “Program Guide”. It will be recalled that clause 7.1 of the 2012 “Program Guide” (which I accept on the evidence is illustrative of the position applicable during the currency of the 2013 Agreement) provided that payments were due “on or before the due date of Microsoft’s invoice unless otherwise agreed in writing by Microsoft”. There is no evidence of any agreement to the contrary between the parties. Mr. Moran’s uncontested evidence (at para. 7 of his second affidavit) is that consistent with the detail contained in the purchase orders and in the invoices themselves, once ACS submitted the purchase order, the plaintiff invoiced ACS annually in three yearly tranches throughout the three-year course of supply in respect of each purchase order and that the invoices relevant to the amendment application all relate to the third (and final) invoicing period in respect of each of the purchase orders.

102.          Against that factual background, the defendants sought to argue that the obligation on the part of ACS to make payment to the plaintiff arose once the purchase order issued and that any cause of action in favour of the plaintiff arose “immediately (or within a reasonable period after the purchase orders issued)”. It relied in support of that argument on the terms of clause 8a of the 2013 Agreement and, in particular, on the reference to the fact that payments were due on the date and in the currency stated in the applicable “Program Guide” and that if ACS did not receive an invoice within ten days after placing its order, it had to promptly notify the plaintiff and Microsoft would promptly send a new invoice. It relied on similar wording in the 2012 “Program Guide” (subject to its complaint that the 2013 “Program Guide” was not provided). The defendants contended, therefore, that payment fell due as soon as, or very soon after, the product was ordered.

103.          I do not accept that the defendants have raised an arguable case for the purpose of this amendment application as to when the obligation to pay arose and as to when the cause of action accrued. The defendants’ argument ignores or significantly understates the provisions of clause 8a of the 2013 Agreement and clause 7.1 of the 2012 “Program Guide” (which I accept is illustrative of the position under the 2013 Agreement). Clause 8a incorporates the provisions of the relevant “Program Guide”. Clause 7.1 of the “Program Guide” makes clear that the payments are due on the due date on the invoice unless otherwise agreed in writing. The purchase orders all make clear the terms of the relevant agreement in respect of the “licensed offering” ordered by ACS, the total annual payments required to be made for each year of that three-year period and the fact that the plaintiff would invoice ACS in three equal annual instalments, the first being invoiced on the acceptance of the enrolment and, thereafter, on the anniversary of that date. The invoices themselves contain reference to the date of the purchase order and the date of the invoice itself as well as a “payment due date”. The “payment due date” in respect of each invoice relevant to the application is within six years of the date of the commencement of the proceedings.

104.          In light of those clear provisions of the contractual documentation, it seems to me that the defendants’ attempt to rely on parts of clause 8a of the 2013 Agreement and on clause 7.1 of the “Program Guide” concerning invoices is misplaced. In any event, on the defendants’ case, if ACS did not receive an invoice within ten days of placing its order, it had to “promptly notify” the plaintiff and the plaintiff would then “promptly send a new invoice”. There is no evidence from the defendants that ACS ever did so and, in light of the clear provisions to which I have referred, I do not see how the defendants could rely on any failure by the plaintiff to issue an invoice within ten days in light of the evidence set out by Mr. Moran and the clear terms of the 2013 Agreement, the 2012 “Program Guide”, the purchase orders and the invoices themselves.

105.          In those circumstances, I do not accept that the defendants have raised any arguable case on the Statute. That conclusion is copperfastened by the fact that all of the ten invoices relevant to the amendment application were included in the plaintiff’s claim from the date of the commencement of the proceedings in August 2018. Leaving aside altogether the fact that the position of the second defendant, NTG, was not addressed at all by the defendants in their submissions, I am, in any event, satisfied that the defendants would not be unfairly prejudiced if the amendments were to be permitted.

(c)   No Unfair Prejudice Due to Amendments

106.          Third, if I am wrong in my conclusion that the defendants’ contention that they would or could be deprived of a defence under the Statute is not arguable on the basis that the plaintiff’s claim in respect of the ten invoices relevant to the amendment application is not arguable, there is another reason why the defendants would not, in any event, be unfairly prejudiced if the court were to allow the amendments sought by the plaintiff. That reason is that if, contrary to the view I have reached, the defendants’ contention based on the Statute is arguable and if there is an arguable case that the plaintiff’s cause of action arose at or very shortly after the purchase orders were submitted by the defendants, that was an argument which was open to the defendants to make prior to the amendment as the ten invoices were referred to and were the subject of the plaintiff’s claim in the summary summons and in the original statement of claim. The defendants did not make the point before now.

107.          I agree with the plaintiff that somewhat by way of analogy with the approach taken by Simons J. in Stafford, the defendants cannot say that they are unfairly prejudiced as a result of the amendments when the amendments do not introduce any new purchase orders or invoices into the plaintiff’s claim. The purchase orders and invoices are precisely the same after the amendment as they were before the amendment. The total amount claimed is the same. The relevant provisions of the First Microsoft Channel Partner Agreement are also the same as those in the 2013 Agreement on which the defendants seek to rely in opposition to the amendment application. I do not agree, therefore, that any unfair prejudice arises for the defendants by virtue of the amendments sought by the plaintiff.

(d)   Qualification or Saver

108.          Finally, I have given consideration as to whether I should adopt one of the alternative courses of action suggested by the defendants. The alternatives proposed were that I could allow the amendments but direct that the amendments take effect as of the date of the order permitting them or, alternatively, I could allow the amendments and expressly leave over to the trial judge the question as to when the cause of action was deemed to commence.

109.          Without expressly deciding that I have jurisdiction to attach such terms to an order permitting an amendment, although I am tentatively of the view that I do having regard to the wide terms in which O. 28, r. 1 is expressed (“on such terms as may be just”), I do not believe that I should make any special direction in this case in light of the view I have expressed that the defendants’ contention based on the Statute is, for the purpose of this amendment application, at least, not arguable. I am not inclined, therefore, to introduce any qualification or saver into the order permitting the amendment.

The Defendants’ Second Ground of Objection

110.          The second ground of objection to the plaintiff’s amendment application advanced by the defendants is related to the first. It was put in various ways in Ms. Cotter’s replying affidavit and in the defendants’ written submissions. It was refined considerably in the concise and helpful submissions advanced on behalf of the defendants at the hearing.

111.          The point essentially made in Ms. Cotter’s affidavit and in the defendants’ written submissions was that the plaintiffs did not seek and obtain leave to serve out of the jurisdiction any claim advanced “under” the 2013 Agreement. Ms. Cotter asserted that the plaintiff should be required to apply for leave to serve the proposed amended statement of claim on the defendants outside the jurisdiction. In their written submissions, the defendants contended that, where a party wishes to add a new claim or to plead new facts which would, if pleaded when the proceedings were commenced, have required the leave of the court under O. 11 to permit service abroad, it would be improper to allow a party to circumvent the requirements of O. 11 by way of an application for an amendment brought after the proceedings were issued and after the initial application for leave was granted. Reliance was placed in the defendants’ written submissions on an English decision, Beck v. Value Capital Ltd [1975] 1 W.L.R. 6 (“Beck”) in support of that contention. The defendants also contended that the plaintiff had not sought any relief under O. 11 in respect of the proposed amended statement of claim and had not adduced the type of evidence which would usually be required on an application for leave to issue and serve proceedings outside the jurisdiction. In particular, it was submitted that the plaintiff’s evidence on the amendment application did not address the matters required to be addressed under O. 11, r. 2 (concerning the comparative cost and convenience of proceedings in Ireland when compared with the place of residence of the defendants) or under O. 11, r. 5 (concerning the requirement of the deponent of an affidavit sworn in connection with an application for leave to serve out of the jurisdiction to state his or her belief that the plaintiff has a good cause of action). The defendants submitted that, based on the evidence put forward by the plaintiffs in the amendment application, the court “would probably have refused [the plaintiff] leave to issue and serve proceedings outside the jurisdiction on the basis that the requirements of Order 11 have not been satisfied”. (para. 36 of the defendants’ written submissions)

112.          This objection was refined considerably in the course of the defendants’ submissions at the hearing. As refined the objection was that, based on the decision in Beck, the defendants would be prejudiced in that, if the plaintiff had applied for leave to serve the amended claim outside the jurisdiction, the plaintiff would have had to state that it had a good cause of action in respect of that claim and the defendants would have been entitled to object to that and to argue that the plaintiff did not have a good cause of action on the basis that the defendants would have a good defence under the Statute. Since the plaintiff did not apply for such leave, the defendants did not have the opportunity of making that case and that unfairly prejudices the defendants. It can be seen, therefore, that the second ground of objection is very closely related to the first and is predicated on the defendants having a good defence or at least an arguable defence under the Statute in respect of the matters sought to be raised in the proposed amended statement of claim.

113.          The plaintiff had a number of points to make in response to that objection. First, the plaintiff asserted that the court has already considered extensively the question of jurisdiction in the course of the jurisdiction judgment in which it was found that the plaintiff had demonstrated the necessary jurisdictional gateway for leave to issue and serve the proceedings out of the jurisdiction under O. 11, r. 1(e)(iii). When determining the defendants’ objection to jurisdiction, the court had before it not only the First and Second Microsoft Channel Partner Agreements but also the earlier agreements, including the 2013 Agreement which contained precisely the same terms as to choice of law and jurisdiction as in the two subsequent agreements.

114.          Second, the plaintiff pointed out that O. 11 provides for service out of the jurisdiction of an originating summons, in this case, the summary summons issued by the plaintiff and not subsequent pleadings such as the statement of claim or the amended statement of claim.

115.          Third, having regard to the fact that the court has already covered this territory in the jurisdiction judgment, and having regard to what Clarke J. said in IBRC v. Quinn [2016] 3 IR 197 (“IBRC”) as to the “low bar” which must be established by the plaintiff to obtain an order permitting service outside the jurisdiction, it would be a meaningless exercise to require a further application to be brought on the same basis on foot of the matters sought to be included in the proposed amended statement of claim.

116.          Fourth, the plaintiff disagreed with the interpretation and effect of the Beck case. The plaintiff relied on the decision of the UK Supreme Court in NML Capital Ltd v. Republic of Argentina [2011] 3 WLR 273 (“NML”) in support of its submission on this point.

117.          I am also satisfied that this second ground of objection advanced by the defendants should not be sustained. I agree with the submissions advanced by the plaintiff, as I have summarised them above. Insofar as the central plank of this objection is the defendants’ belief that they have or at least may have a good defence under the Statute in respect of the matters sought to be introduced in the proposed amended statement of claim, I have already set out my views on that question for the purposes of this amendment application. Like Simons J. in Stafford, it is my view, for the purposes of this amendment application, that it is not arguable that an issue arises under the Statute in respect of the matters sought to be introduced in the proposed amended statement of claim. The removal of that central plank removes any support for this ground of objection.

118.          As well as that, I accept that O. 11 applies to service out of the jurisdiction of an originating document and not subsequent pleadings such as a statement of claim or an amended statement of claim. The plaintiff did obtain leave to issue and serve the originating document, the summary summons, on the defendants outside the jurisdiction. The defendants’ application to set aside that order and the service effected on foot of it was unsuccessful.

119.          Further, the ten invoices relevant to the amendment application were included in the sum claimed in the summary summons and listed in the particulars in the schedule to the summons. The 2013 Agreement was in the material put in evidence before the court on the defendants’ jurisdiction challenge and was, as noted earlier, referred to in the context of the prior agreements between the parties before the First and Second Microsoft Channel Partner Agreements. There is no dispute about the fact that the 2013 Agreement contains precisely the same choice of law and jurisdiction clauses as the First and Second Microsoft Channel Partner Agreements. Whether or not the proposed insertion of a reference to the 2013 Agreement in the amended statement of claim raises a new cause of action (or not), having regard to the territory covered in the jurisdiction challenge which included in the relevant invoices and the earlier agreements, including the 2013 Agreement, it would, in my view, be an entirely meaningless exercise to require the plaintiff to adduce the same evidence as it put before the court on the application previously made by it for leave to issue and serve the summary summons on the defendants outside the jurisdiction. I have addressed the burden which was on the plaintiff to establish one of the jurisdictional gateways under O. 11, in the jurisdiction judgment and it is unnecessary to repeat here what I said in that judgment.

120.          Finally, I agree with the plaintiff that the decision in Beck does not afford a good basis for this ground of objection advanced by the defendants.

121.          In Beck, an issue arose as to the interaction between the court’s discretion to allow an amendment of a writ under a provision of the then English rules roughly equivalent to O. 28, r. 1 and its discretion to allow service out of the jurisdiction under the English equivalent of O. 11. Goulding J. stated:-

“It seems to me manifestly unfair to a foreign defendant, and it would often enable a plaintiff to circumvent the court’s discretion under [O. 11 RSC], by the familiar device of throwing a sprat to catch a mackerel. I do not know that it is necessary to formulate the contrary proposition in quite the way that I have just stated it. It is enough to say that the discretion to allow an amendment under [the relevant English rule] will not be exercised if an injustice to the opposite party will result, and that it is in general unjust to amend a writ served under [O. 11] by adding something which the court would probably have refused to sanction under [O. 11]…”

(per Goulding J. at p. 15)

122.          The court then proceeded to look at the proposed amended claim through the lens of O. 11 and concluded that it fell within the scope of one or more of the subparagraphs of O. 11, r. 1 but only on “narrow and highly technical grounds”. The court held that the claim would not be allowed to be made as it would be within the letter but not within the spirit of the rule for various reasons, including a lack of connection with England and the fact that the agreements at issue were expressly stated to be governed by Bahamian law. What the court there was saying was, first, that the discretion to amend would not be exercised if an injustice would be caused to the opposing party. That is the approach also taken in this jurisdiction. The court then said that it would, in general, be unjust to permit the amendment of a writ which was served outside the jurisdiction under O. 11 by adding something in respect of which the court would have refused to grant leave under O. 11. In my view, neither point can avail the defendants here. There is no injustice to the defendants in that I do not accept that they have raised an arguable defence under the Statute for the purposes of this application. Nor would the court have refused an application for leave to issue out of the jurisdiction were the matters sought to be included in the proposed amended statement of claim included in the summary summons at the outset.

123.          The decision of the UK Supreme Court in NML also undermines this aspect of the second ground of objection advanced by the defendants. That was a complex case involving issues of international law and state immunity. However, one of the points dealt with in the case is relevant. In NML, the UK Supreme Court disapproved of the decision of the English Court of Appeal in Parker v. Schuller (1901) 17 T.L.R. 299 (“Parker”) in which the English Court of Appeal had refused to permit the plaintiff to amend its writ where leave had been granted to serve the writ outside the jurisdiction and where the defendant sought to discharge the order for the purpose of relying on a different cause of action to that relied on at the ex parte stage. The UK Supreme Court preferred the approach taken by the English Court of Appeal in the earlier case of Holland v. Leslie [1894] 2 QB 450 (“Holland”) where the court could see no reason why an amendment should not be made in the case of proceedings which were served outside the jurisdiction. In his judgment in the UK Supreme Court, Lord Phillips PSC noted that a number of courts followed the approach of Lord Esher MR in Holland to the effect that there was “in principle, no objection to amending a pleading which has been served out of the jurisdiction unless the effect will be to add a claim in respect of which leave could not, or would not, have been given to serve out…” (per Lord Phillips at para. 77, p. 297). Lord Phillips continued:-

“While most of these cases involved proceedings which had progressed beyond the initial leave stage, I can see no reason for adopting a less generous approach to amendment at the earlier stage. While amending to add a cause of action is not the same as amending to substitute one, in either case the amendment involves subjecting the overseas party to a claim other than the one that he entered an appearance to meet, and similar principles should apply in each case.”

(per Lord Phillips at para. 77, p. 297)

124.          Lord Phillips concluded that the ruling in Parker should no longer be applied. He stated:-

“The same approach should be taken to an application to amend a pleading that has been served out of the jurisdiction as is adopted to any other application to amend a pleading.” (para. 78, p. 297)

125.          I agree. Adopting that approach here leads one back to a consideration of the general principles concerning amendments which I addressed in the context of the first objection raised by the defendants. In my view, there is nothing in the second ground of objection advanced by the defendants and I reject it.

 

Conclusions

126.          In conclusion, I have considered the two grounds of objection advanced by the defendants in response to the plaintiff’s amendment application. I have decided that neither ground of objection should be sustained. In doing so, I have concluded that, for the purposes of this amendment application, and bearing in mind the requirement to exercise judicial restraint, the defendants’ contention that a claim based on the matters sought to be inserted in the proposed amended statement of claim would, or might, be statute barred is just not arguable. I have concluded, therefore, that the defendants would not be unfairly prejudiced if I were to permit the plaintiff to amend the statement of claim in the manner proposed. I am satisfied that it is appropriate to do so without making any special provision or direction as to the time or circumstances in which such an amendment should come into effect. In my view, it is appropriate for the normal rule or practice that the amendment takes effect from the date of the commencement of the proceedings to apply. I believe that it is appropriate for me to adopt that course of action in light of the particular facts of this case and that there is no reason for me to depart from the normal approach. Having regard to my conclusions in relation to the first ground of objection raised by the defendants, the central plank of the second ground of objection falls away. However, for various additional reasons, I have concluded that the second ground of objection should also be rejected.

127.          I will, therefore, make an order giving the plaintiff liberty to deliver an amended statement of claim in the terms of the draft amended statement of claim exhibited at tab 7 of the booklet comprising exhibit “JDPM1” to the affidavit sworn by Mr. Moran on behalf of the plaintiff on 20th April, 2021. I will also vary the directions made by the court on 13th November, 2020 to make provision for the delivery of the amended statement of claim and for the delivery of further pleadings by the defendants. I will discuss with counsel the precise further directions to be made.

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