Preference for Unitary Trials Confirmed

A recent High Court judgment reaffirms the strict criteria for modular trials, where specific issues are decided separately from the main case. The decision highlights the challenges in securing modular hearings and the courts’ preference for full trials. Our Commercial Disputes team provides expert analysis on the key takeaways and implications.

A recent High Court judgment has revisited the law applicable to ordering modular trials.[1] A modular trial occurs when a particular issue, or possibly multiple issues, is determined by the court in a stand-alone trial. All other matters in dispute are set aside for a separate, subsequent hearing. As a general rule, courts hear all disputed issues together in a single hearing. Ordering a modular trial to determine a specific issue is unusual and only happens in exceptional cases. The judgment confirms that a court will only allow a modular trial in certain circumstances. The issue(s) must be something that can be determined in isolation from the other issues in the case. A modular hearing must also assist the overall litigation, especially through saving time and costs. The process should not result in any prejudice to the parties.

Background

The applicant, Mr Vakiy, claimed that the way two companies were being run was unfair to him and ignored his rights as a member of the companies. As a result, he brought proceedings seeking relief under Section 212 of the Companies Act 2012. That claim was denied by the respondent, Mr Bulgakov. Mr Bulgakov maintained that Mr Vakiy was no longer a member of either company, having sold his interest to a third company. Mr Bulgakov therefore argued that Mr Vakiy did not have the legal right to bring the case. He claimed that only a member of the company could do so, and Mr Vakiy was not a member.

Mr Vakiy denied that he had ever sold his interest. The transfer was “not consummated” and he maintained that, if he did sign the relevant form, the nature of the document must have been misrepresented to him. Mr Bulgakov filed a motion to have the case dismissed, arguing that it was certain to fail. However, he later withdrew the motion because the disputed facts made it unsuitable to be decided as a preliminary issue. However, he subsequently issued a fresh motion seeking a modular hearing regarding Mr Vakiy’s standing to bring the proceedings.

Decision

The issue to be determined, as a separate and specific issue in the overall dispute, was whether Mr Vakiy had standing to bring an application under Section 212 of the Companies Act 2014. In Re Via Net Works (Ireland) Ltd.[2] the Supreme Court dismissed an oppression claim because the applicant was already contractually required to transfer his shares when the petition was filed. Mr Bulgakov relied on this to say Mr Vakiy had no standing where he had already transferred his shares. Mr. Bulgakov also argued that limiting the trial to that single question of fact would resolve the case. This would make a full trial on all the alleged oppression issues unnecessary. Mr Vakiy disputed that the issue was suitable or appropriate for a modular hearing as the evidence regarding the balance of the case was relevant to the question of standing. He also relied on academic commentary that explained how the Re Via Net Works decision was different in cases where the alleged unfair treatment involved taking away the petitioner's shares.

Before addressing the substantive question of whether to direct a modular hearing, Mr Justice Mulcahy rejected Mr Vakiy’s additional claim that the second motion was an abuse of process. The court agreed that the request for a modular trial was not an attempt to raise the same issue as the previous motion again. The withdrawal of that prior motion could not have been understood as a concession of the argument that the applicant lacked standing. The court found that testing the relevant evidence was necessary to determine the issue. This was fully in line with the decision to bring the second motion.

Mr Justice Mulcahy then looked at the law relating to modular trials. The power to order a modular trial arises under Order 39, rule 6 of the Rules of the Superior Courts and under the court’s inherent jurisdiction.[3] The default position, however, is that there should be a single trial of all issues at the same time. The principles to be applied in deciding whether it is appropriate to depart from that and direct a modular trial are well known. Both sets of submissions in this case referred to Mr Justice Charleton’s summary in McCann v Desmond.[4] There, he identified four questions to be considered. Mr Justice Mulcahy described these as a “useful guide for the exercise of the court’s discretion”:

1. Can the issues being considered in a preliminary module be decided separately from the other disputes in the case?
2. Has it been clearly shown that handling the issue this way will save the court’s time and reduce costs for the parties?
3. Would a modular order result in any prejudice to the parties?
4. Is the motion being used for the benefit of the party requesting it, or does it genuinely help resolve the issues in the case?

Mr Justice Mulcahy accepted that the parties should be encouraged to try and achieve efficiencies. However, he was not convinced that this case was suitable for a modular trial on the proposed issue. In considering Mr Justice Charleton’s questions, he held regarding the first question that it was “far from clear that the question of standing… can be fairly determined in isolation from all the other issues raised in these proceedings.” He went on to say that “it would be an exaggeration to assert that separation of the issue of standing would ‘tear the fabric of what the parties need to litigate’”. This meant that the issue of standing cannot, or at least might not, be readily capable of being decided in isolation from the other issues. Mr Justice Mulcahy was also of the view regarding the third question that the decoupling of the issue of standing from the case might operate to prejudice Mr Vakiy. This was because the court would not otherwise hear the evidence on behalf of Mr Bulgakov generally, but especially regarding his conduct in the management of the companies, and to assess its credibility. Mr Justice Mulcahy therefore refused to grant the requested order. As a result, all issues in the case would be heard together in a full trial.[5]

Conclusion

The decision involves a useful restatement of the principles applicable to the ordering of modular trials. It also shows that the rules for deciding whether certain issues should be heard separately are well established. However, meeting these requirements to obtain a modular hearing is difficult. A unitary trial of all issues is the default position and the preference is not to carve out individual items to modular hearing. A party seeking a modular hearing should be aware that they are difficult to obtain. Whether an issue is suitable for a modular trial, based on Mr Justice Charleton’s questions, should be very carefully considered before bringing the application.

For more information and expert advice on commercial disputes, contact a member of our Commercial Disputes team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.

[1] Vakiy v Bulgakov [2025] IEHC 11

[2] [2002] 2 IR 47

[3] The High Court has its own implied power to regulate its own processes – recognised in the specific context of modular trials in Cork Plastics (Manufacturing) v Ineos Compound UK Ltd [2008] IEHC 93

[4] [2010] 4 IR 554

[5] He did, however, express his strong encouragement that the parties mediate their dispute.