THE LYING WITNESS: THE APPROACH OF THE CIVIL COURTS

September 2, 2015 · by · in Civil evidence, Uncategorized, Witness statements

Mr Justice Smith has observed that “witnesses can regularly lie”.  How do lies impact upon the judge’s assessment of that witness and the case generally.  Further problems occur when both parties are lying. Here we look at some of the important judgments which set out the judicial approach to witnesses who tell lies and the impact on the case as a whole(as a general rule it doesn’t bode well).

“…witnesses can regularly lie. However, lies are themselves does not mean necessarily that the entirety of that witnesses evidence is rejected”

KEY POINTS

  • In some cases the telling of lies and the forgery of documents can lead to an action being struck out.
  • If both parties are lying then a judge will look at the available evidence outside of the witness evidence which has not been contaminated.
  • If both parties are lying then the judge is likely to determine the issue on the basis of where the burden of proof lies.

EPI TECHNOLOGIES

In EPI Environmental Technologies Inc -v- Symphony Plastic Technologies PLC [2004] EWHC 2945 (Ch) Mr Justice Smith considered issues in relation to credibility.  Part of the judgment is confidential, however there are some important general observations.

THE JUDGMENT

  1. Credibility in this case is important both as regards the non-expert and expert witnesses. My analysis of that evidence is set out in the confidential part of the judgment.

  2. A significant point from EPI’s point of view is the lack of documentation showing how Symphony created BD92384.

  3. Both parties have reminded me of some well-known judicial observations designed to assist trial judges in how they arrive at factual conclusions.

  4. First, EPI referred me to Plowman J in Suhner & Co AG –v- Transradio Ltd [1967] RPC 329 at 333, where he said this:-

“A great deal of the defendants’ evidence seems to me to be really beside the point, first of all, because the confidential nature of the document is not dependent on whether the information which it contains is available elsewhere; but, on the question of whether it contains useful information which has been compiled by the plaintiffs for a particular purpose and, if it does contain such information and if it has been compiled and handed over to the defendants for a particular purpose, then, as I understand the law, that document is confidential and the defendants are not entitled to use it for another purpose”.

  1. In their closing submissions EPI referred me to the (once again well known) observations of Robert Goff LJ in The Ocean Frost [1985] 1 LL Rep 1at page 57, as follows:-

“Furthermore it is implicit in the statement of Lord MacMillan in Powell v. Streatham Manor Nursing Home at p. 256 that the probabilities and possibilities of the case may be such as to impel an appellate Court to depart from the opinion of the trial Judge formed upon his assessment of witnesses whom he has seen and heard in the witness box. Speaking from my own experience, I have found it essential in cases of fraud, when considering the credibility of witnesses, always to test their veracity by reference to the objective facts proved independently of their testimony, in particular by reference to the documents in the case, and also to pay particular regard to their motives and to the overall probabilities. It is frequently very difficult to tell whether a witness is telling the truth or not; and where there is a conflict of evidence such as there was in the present case, reference to the objective facts and documents, to the witnesses’ motives, and to the overall probabilities, can be of very great assistance to a Judge in ascertaining the truth. I have been driven to the conclusion that the Judge did not pay sufficient regard to these matters in making his findings of fact in the present case”.

  1. Not to be out done Symphony in its closing submissions reminded me of the observations of Simon Brown LJ in Biggar –v- London Borough of Havering [2001] EWCA Civ 411:-

“15. The correct approach to the standard of proof and the nature of proof required in the case of grave allegations is to be found in the speech of Lord Nicholls of Birkenhead in In re H (Minors) [1996] AC 563 at 586-587:

“The balance of probability standard means that the court is satisfied an event occurred if the court considers that, on the evidence, the occurrence of the event was more likely than not. When assessing the probabilities the court will have in mind as a factor, to whatever extent is appropriate in the particular case, that the more serious the allegation the less likely it is that the event occurred and, hence, the stronger should be the evidence before the court concludes that the allegation is established on the balance of probability. Fraud is usually less likely than negligence. Deliberate physical injury is usually less likely than accidental physical injury. A stepfather is usually less likely to have repeatedly raped and had non-consensual oral sex with his under age stepdaughter than on some occasion to have lost his temper and slapped her. Built into the preponderance of probability standard is a generous degree of flexibility in respect of the seriousness of the allegation.

Although the result is much the same, this does not mean that where a serious allegation is in issue the standard of proof required is higher. It means only that the inherent probability or improbability of an event is itself a matter to be taken into account when weighing the probabilities and deciding whether, on balance, the event occurred. The more improbable the event, the stronger must be the evidence it did occur before, on the balance of probability, its occurrence will be established. Ungoed-Thomas J expressed this neatly in In re Dellow’s Will Trusts [1964] 1 WLR 451,455: ‘The more serious the allegation the more cogent is the evidence required to overcome the unlikelihood of what is alleged and thus to prove it.’

This substantially accords with the approach adopted in authorities such as the well known judgment of Morris LJ of Hornal v Neuberger Products Ltd [1957] 1 QB 247, 266. This approach also provides a means by which the balance of probabilities standard can accommodate one’s instinctive feeling that even in civil proceedings a court should be more sure before finding serious allegations proved than when deciding less serious or trivial matters.

No doubt it is this feeling which prompts judicial comment from time to time that grave issues call for proof to a standard higher than the preponderance of probability.”“

  1. Symphony reinforced this by references to two decisions of Laddie J, namely CMI Centres for Medical Innovation, Dr Christoph von Keudel [1998] EWHC PAT 308 at 49 – 50 and Ocular Sciences [1997] RPC 289, 359. Those judgments respectively address allegations of dishonesty in breach of confidence cases and the caution against allowing breach of confidence actions to be used as a method of trade protection, as opposed to genuine actions for infringements of confidential information.

  2. I have borne all of these matters in my mind when assessing the evidence and the result of my assessment is set out in the confidential part of this judgment.

  3. I add a few of my own precautions.

i) First, it is essential to evaluate a witness’s performance in the light of the entirety of his evidence. Witnesses can make mistakes, but those mistakes do not necessarily affect other parts of their evidence.

ii) Second, witnesses can regularly lie. However, lies are themselves does not mean necessarily that the entirety of that witnesses evidence is rejected. A witness may lie in a stupid attempt to bolster a case, but the actual case nevertheless remains good irrespective of the lie. A witness may lie because the case is a lie.

iii) Third, I regard it as essential that witnesses are challenged with the other side’s case. This involves putting the case positively. This is important for a judge to enable him to assess that witness’s response to the other case orally, by reference to his or her demeanour and in the overall context of the litigation. A failure to put a point should usually disentitle the point to be taken against a witness in a closing speech. This is especially so in an era of pre prepared witness statements. A judge does not see live in chief evidence, thereby depriving the witness of presenting himself positively in his case.

  1. None of the above or the helpful assistance provided by the reported authorities is necessarily determinative. All of them provide factors to enable a judge to come to a particular conclusion about the acceptance or rejection of a particular persons evidence.

  2. I should stress also that in my view those points also are equally applicable to experts. A judge is very rarely helped by competing expert reports, which express opinions, which are not tested or not maintainable by reference to supporting material. It is not useful simply to leave the judge to find his own analysis of the reports of experts without the experts themselves being put to the test by cross examination. Finally, in the context of experts, with the CPR they have in my view acquired greater responsibilities to the court. Those responsibilities transcend their perceived obligations to the parties whom they give evidence; see Phillips & Others –v- Symes & Others [2004] EWHC 2330 (Ch).

  3. With those matters in mind I summarise my conclusions.

MASOOD -v- ZAHOOR

The same judge returned to these issues in Masson -v- Zahoor [2008] 1034 (Ch).

  1. I should say something about the general principles of evidence. In my decision of EPI Environmental Technology Inc v Symphony Plastic Technology Inc [2005] 1 WLR 3456 I set out a number of principles which are well established and self evident as to how evidence should be dealt with.

  2. Where cases turn on the credibility of witnesses it is important to consider the evidence as a whole. As I said in EPI whilst a witness’ veracity is challenged successfully by demonstrating that the witness has lied it is important to differentiate between establishing that a witness has lied in respect of a particular point as opposed to whether or not his evidence as a whole is a complete lie. Second it is essential that any allegation of lying or inconsistency in a person’s evidence is put to that witness. The reasons for that are twofold. First it gives the witness an opportunity to deal with any such allegation or inconsistency. Self evidently they cannot deal with it if points are raised in closing speeches for the first time. Second it gives the Judge an opportunity to assess the witness’ performance in response to dealing with these critical issues.

  3. As I have indicated I would not allow generally a witness to be criticised in closing speeches where he had not been challenged in that regard. Of course in a complex case like the present such an approach required careful discrimination by the advocates and the Judge. Not every point needs to be put or challenged because that makes the case unwieldy and fails to give an opportunity for assessment of the witness. One rapidly becomes buried in the thickets of a whole plethora of questions. The witness becomes confused and the Court is deprived of a good opportunity of assessing a witness.

  4. Equally it is important that where a witness’ evidence is inconsistent with documents or needs to be explained or clarified as a result of documents that too needs to be put to the witness. In many cases live testimony is often tested by contemporaneous documents which might show an inconsistency with what is then being said in the witness box possibly in a self serving way many years after the event.

  5. That exercise will of course only be successful if the purportedly contemporaneous documents themselves are genuine.

  6. Equally one has to be careful to make allowances for witnesses. Cross examination is a long and tiring process and it is essential to ensure that witnesses do not become overtired and therefore fall in to the trap of agreeing with a cross examiner at a late stage in the day. A witness does not better his case simply by manfully being cross examined over many hours when he is actually not in a full position fairly to deal with the cross examination.

  7. It is also important to appreciate that witnesses often are at great disadvantage when compared with the lawyers. The lawyers have a vast range of documents before them with which to cross examine on with copious notes written on them to assist and will have prepared a cross examination over a lengthy period of time. Witnesses are in the witness box without notes generally and do not have any assistance to their answers. It is important therefore to appreciate that sometimes answers given in cross examination are inconsistent with answers given in witness statements. That does not necessarily mean that the witness statement is wrong; it can often mean simply that given the pressures and given the period of cross examination the witness’ answer is often confused and hurried.

  8. A Court has to be alert to all of these potential difficulties in assessing the credibility of a witness especially in a case like this where each side accuses the other of extensive forgery and perjury.

EVERYBODY IS TELLING LIES (AND FORGING DOCUMENTS).

The judge then went on to consider the position in a case where both sides perjured themselves and forged documents.

FORGERY AND PERJURY

  1. Often the most important tool for a trial Judge in attempting to discover the truth of disputed evidence is to look at the contemporaneous documents.

  2. Unfortunately this case made that recourse very difficult because in my judgment both sides presented forged documents to bolster their case and also perjured themselves.

  3. By the time of closing there were 52 documents which it was alleged were forgeries. It is impossible for me as a trial Judge to come to a clear conclusion in respect of each document and I do not propose to do so. I will identify what I consider are the key documents and where they are challenged, determine whether or not those documents are forgeries and if so who forged them. The latter seems surprising but as this judgment will develop it will be seen that both sides accuse the other of forging particular documents.

LEGAL CONSEQUENCES OF FORGERY/PERJURY

  1. As I have already set out in this judgment SM has in my view forged documents. The next section of this judgment will deal with the more serious aspects of his forgery.

  2. It is also the case that MZ and PS have also forged documents. Although in the closings on behalf of MZ it was submitted in effect that his forgery was not too serious, I reject that. In my view the documents MZ and PS forged were done to create a deliberately false impression that documents were contemporaneously executed on the dates put on them. This was done to bolster their case and to deceive the Court. These documents had been put forward initially as being genuine documents. They were referred to in pleadings. For example in paragraph 45 of D1-D5’s Defence reference is made to the Loan documents as being dated 13th December 1996 but the true date of the execution is not revealed. Similarly in paragraph 124 reference is made to the Agreement dated 19th September 2002 whereby PS took over the obligations of KS under the Loan Deed. In fact this document was not executed until 2005. Likewise PS in her Amended Defence whilst referring to the Loan Agreement (paragraph 12) does not identify that it was not executed until May 2002. No mention of that fact is made in the section headed “Developments in 2002” (paragraphs 18-22) either. Finally the 19th September 2002 Agreement was in the initial pleading referred to as an agreement in writing and it is only by amendment dated 18th January 2008 that it is revealed that there was an oral agreement and a later written agreement (2005) but it fails to explain why the document is dated 19th September 2002. In this context it was established in cross examination of PS and MZ that the terms set out in this document could not possibly have reflected an agreement that was struck in September orally.

  3. The relevant documents were of course given false dates in the disclosure list. Under CPR 32.19 a party is deemed to admit the authenticity of a document disclosed to him under part 31 unless he served notice that he wished the document to be proved at trial. It seems to me plain that if the true date of the creation of the document is not set out in the disclosure statement a party will not know that the document is not a genuine document i.e. it has a false date on it and was created on a different date yet he would be deemed to admit the authenticity about something which he does not know. This seems to me to be a plain breach of the obligations of disclosure and has led to a false disclosure statement.

  4. As the rest of this judgment will show the trial in this case took place with the major witnesses all having lied and therefore having delivered perjured evidence. In addition the major witnesses on both sides have sought to bolster their case by forged documents.

  5. This is deplorable. It made my task of evaluating the true facts about the dispute difficult if not impossible in some areas. All the parties have abused the process of the Court by the way in which they have presented their cases. I should say that when I say that I am not criticising any of the lawyers. Save in respect of the joinder of PS about which I shall say further in this judgment I have no criticisms of the way in which the case has been presented by the lawyers as it appears before me.

  6. It is therefore distasteful and unacceptable that I am required to determine the dispute between parties who commit such wanton acts of dishonesty.

  7. I have considered the case of Arrow Nominees Inc& anr v Blackledge [2000] 2 BCLC 167 (C.A.) In that case there was a petition under section 459 of the Companies Act 1985 presented by two minority shareholders Nigel Tobias (“NT”) by his Nominee company Arrow Nominees Inc and Lorraine Blackledge. NT in the course of standard disclosure produced documents which he knew to be forged. An application was made for the petitions to be dismissed on the basis that a fair trial was not possible because of that forgery. The Judge dismissed the application because he was not so satisfied but he emphasised that if further evidence emerged during the trial that documents had been suppressed or fraudulently altered an application could then be renewed and is highly likely to be successful. The petitioner’s case was opened; their evidence led and they were extensively cross examined. During the course of the trial NT was found to have forged diary entries in addition to the letters which he had initially admittedly forged. Despite that the Judge did not strike out the petition as he believed there was no substantial risk that a fair trail could not be held although he acknowledged that the part of the Claimant of the petition which was based on documents could not be fairly tried. The Respondents appealed and the Court of Appeal upheld their appeal. In giving the leading judgment Chadwick LJ said this:-

“The appeal against the judge’s refusal to strike out on the second application

42. The acts or omissions on the part of the Blackledge respondents on which the petitioners rely as conduct of the company’s affairs in a manner which is unfairly prejudicial to their interests are to be found in the amended para 8 of the petition. The paragraph is introduced by an allegation in three parts: that ‘in causing or procuring matters hereunder complained of’ the respondents have acted (i) contrary to the 1994 agreement, (ii) contrary to the legitimate expectations of the parties, and (iii) ‘in any event’ unfairly in the conduct of the company’s affairs so as to prejudice the petitioners. It is alleged, further, that Graham and Margaret Blackledge are ‘in breach of the fiduciary duty of directors’.

43. The judge held that there was a substantial risk that there could not be a fair trial in so far as the complaints of unfair conduct were based on (i) or (ii) – acting contrary to the 1994 agreement or to the petitioners’ legitimate expectations. He did so on the basis that the admitted forgeries, coupled with his finding that Nigel Tobias had continued to lie on oath as to the extent of his fraudulent activity in relation to documents, made it impossible to have confidence in any documents produced by the petitioners unless those documents were corroborated by some other evidence. Further, and this is an important element in his approach, that the existence of the forged documents and the diaries was likely to have infected evidence contained in affidavits and witness statements prepared in reliance on those documents and diaries.

44. The judge’s conclusion as to the extent and effect of Nigel Tobias’ fraudulent conduct is challenged by a respondents’ notice served by the petitioners. But, to my mind, that challenge must fail. There was ample material before the judge to justify his conclusion that Nigel Tobias had continued to lie on oath as to the extent of his fraudulent activity in relation to documents. The judge had the advantage, which this court did not have, of hearing and seeing Nigel Tobias give oral evidence at the trial under cross-examination. There is no basis on which this court could interfere with the judge’s finding of fact. Nor can it be said that the judge was wrong to take the view that the existence of forged documentary material is likely to infect the oral evidence. In a case of this nature it is inevitable that documents will provide the basis for recollection. It is likely to be very difficult for a witness – even for a witness doing his or her best to tell the truth under oath – to accept that what the witness now thinks that he or she recalls from memory may, in truth, be based on a document which has been shown to be false, or in relation to which there is suspicion. The effect of forged documentary material on a trial is pernicious, because witnesses who have, at one stage in the process of preparing for trial, believed that documentary evidence to be genuine are unlikely to be able to evaluate, objectively, the effect which it has had on their recall of the events to which it relates”

  1. After reviewing the surviving allegation Chadwick LJ concluded that the Judge was wrong to allow these to survive for the reasons set out in paragraph 53 as follows:-

“53. In those circumstances I take the view that it was wrong for the judge to allow the petition to proceed once he had reached the conclusion that there was a substantial risk that the allegations in relation to the disputed terms of the 1994 agreement were incapable of a fair trial. He recognised, correctly, that a claim to relief based on allegations of abuse by the Blackledge respondents of their powers as directors and shareholder after 1997 would not require an investigation into what had or had not been agreed in 1994. But, as it seems to me, he failed to appreciate that, on a true analysis, the allegations made in the petition were allegations of oppressive conduct by Blackledge plc as supplier or as lender; and were not allegations of oppressive conduct by Blackledge plc as majority shareholder. In so far as there were general allegations of breach of duty by Graham and Margaret Blackledge as directors, those allegations were not supported by any evidence which the judge identified; and are contradicted by the material which was put before this court. In my view the judge ought to have reached the conclusion that, once the allegations in respect of which there was a substantial risk that Nigel Tobias’ fraudulent conduct had made a fair trial impossible were put on one side and left out of account, there was no case for relief which remained to be tried.

54. It would be open to this court to allow the appeal against the judge’s refusal to strike out the petition on that ground alone. But, for my part, I would allow that appeal on a second, and additional, ground. I adopt, as a general principle, the observations of Millett J in Logicrose Ltd v Southend United Football Club Ltd (1988) Times, 5 March, that the object of the rules as to discovery is to secure the fair trial of the action in accordance with the due process of the court; and that, accordingly, a party is not to be deprived of his right to a proper trial as a penalty for disobedience of those rules, even if such disobedience amounts to contempt for or defiance of the court, if that object is ultimately secured, by (for example) the late production of a document which has been withheld. But where a litigant’s conduct puts the fairness of the trial in jeopardy, where it is such that any judgment in favour of the litigant would have to be regarded as unsafe, or where it amounts to such an abuse of the process of the court as to render further proceedings unsatisfactory and to prevent the court from doing justice, the court is entitled, indeed, I would hold bound, to refuse to allow that litigant to take further part in the proceedings and (where appropriate) to determine the proceedings against him. The reason, as it seems to me, is that it is no part of the court’s function to proceed to trial if to do so would give rise to a substantial risk of injustice. The function of the court is to do justice between the parties; not to allow its process to be used as a means of achieving injustice. A litigant who has demonstrated that he is determined to pursue proceedings with the object of preventing a fair trial has forfeited his right to take part in a trial. His object is inimical to the process which he purports to invoke.

55. Further, in this context, a fair trial is a trial which is conducted without an undue expenditure of time and money; and with a proper regard to the demands of other litigants upon the finite resources of the court. The court does not do justice to the other parties to the proceedings in question if it allows its process to be abused so that the real point in issue becomes subordinated to an investigation into the effect which the admittedly fraudulent conduct of one party in connection with the process of litigation has had on the fairness of the trial itself. That, as it seems to me, is what happened in the present case. The trial was ‘hijacked’ by the need to investigate what documents were false and what documents had been destroyed. The need to do that arose from the facts (i) that the petitioners had sought to rely on documents which Nigel Tobias had forged with the object of frustrating a fair trial and (ii) that, as the judge found, Nigel Tobias was unwilling to make a frank disclosure of the extent of his fraudulent conduct, but persisted in his attempts to deceive. The result was that the petitioners’ case occupied far more of the court’s time than was necessary for the purpose of deciding the real points in issue on the petition. That was unfair to the Blackledge respondents; and it was unfair to other litigants who needed to have their disputes tried by the court.

56. In my view, having heard and disbelieved the evidence of Nigel Tobias as to the extent of his fraudulent conduct, and having reached the conclusion (as he did) that Nigel Tobias was persisting in his object of frustrating a fair trial, the judge ought to have considered whether it was fair to the respondents, and in the interests of the administration of justice generally, to allow the trial to continue. If he had considered that question, then, as it seems to me, he should have come to the conclusion that it must be answered in the negative. A decision to stop the trial in those circumstances is not based on the court’s desire (or any perceived need) to punish the party concerned; rather, it is a proper and necessary response where a party has shown that his object is not to have the fair trial which it is the court’s function to conduct, but to have a trial the fairness of which he has attempted (and continues to attempt) to compromise”.

  1. Ward LJ delivered a concurring judgment but in so doing he made reference to the consequences of dishonest conduct in relation to other court users as well:-

“73. The attempted perversion of justice is the very antithesis of parties coming before the court on an equal footing. The matter has become hugely more expensive (to an extent we did not appreciate until we were told when application was made for a freezing order that the amount of the appellants’ costs overall and on a solicitor and own client basis may be in the region of £1.5m). The judge commented at the beginning of his judgment that the hearing had run for 29 days greatly exceeding the parties’ estimate. The original estimate was three weeks and we were told another week to ten days would be required to conclude the matter even on the limited basis that the judge would still permit. The judge did not, however, treat cost and time as elements of the overriding objective. He did not appear to allot to the case an appropriate share of the court’s resources while taking into account the need to allot resources to other cases. In this day and age they are elements of case management which must not only be seen to have been placed in the scales but also given due and proper weight when assessing how justice is to be done to the parties and to other litigants. The balance must be struck so that the case is dealt with in a way which is proportionate to the amount of money involved in the case, its importance and complexity and the financial position of the parties. Mr Tobias stood to gain much had his fraud gone undetected. He was seeking on behalf of the minority shareholders to wrest control of the company from the majority and he persisted in that claim even to the point of his cross-appeal. He bolstered his claim by what the judge found to be a campaign of forgery and, more importantly, the judge was not satisfied with the explanation given for it. He found:

‘In his evidence Nigel sought to give the impression that his forgeries came about as a result of an impulsive moment of madness flowing from his disappointment that his case was not adequately supported by the documents. In my judgment, so far from that being the case, it is apparent that the process of forgery, which Nigel admitted to, was sophisticated and must have taken some time to complete including the special manufacture of headed note paper of the defunct Tobias family company. But for the slip up with relation to the telephone number shown on the headings it would, in all probability, not have been discovered.’

Any notion that this was a petitioner coming to the Court of Equity with clean hands is utterly dispelled by the devastating conclusion in para 44:

‘I am not satisfied that I have received from Nigel a truthful picture of the circumstances of the forgeries which he admits.’

74. This was, therefore, a flagrant and continuing affront to the court. Striking out is not a disproportionate remedy for such an abuse, even when the petitioners lose so much of the fruits of their labour”.

  1. It is not excessive to describe SM’s conduct in producing and relying upon forged documents to the extent that he has and the consequential perjured evidence and false disclosure of documents as being a flagrant and continuing affront to the court.

  2. If I was dealing solely with misconduct by SM I would have had no hesitation in striking out the entirety of his claims. He has not made the case impossible but he has very nearly made it so. To remove from the Judge’s tools for assessing where the truth lies all significant contemporaneous documents is a very serious act of misconduct. He has made my task virtually unmanageable.

  3. That is not however the end of the matter. In this case the Defendants themselves have also been guilty of forging documents and perjury. It is not as extensive as that of SM’s but it is equally pernicious. The difficulty I have is with the application of an appropriate sanction. With regard to a Claimant the sanction is clear; it is the dismissal of the action which it was sought to bring with the use of illegitimate material. If SM’s action is struck out then striking out the Defendants’ Defence does not achieve anything because they have no claim to meet. I could not even if I struck out the Defence prevent a Defendant from having the right to challenge a case without calling any evidence itself. That is a normal consequence when a court strikes out a Defence. The hearing has to be listed so that the Claimant can prove his case.

  4. Where as in this case all the main parties are guilty of forgery and perjury striking out the claim in effect awards victory to a wrongdoer Defendant. It would be unjust (if that is the appropriate word for a forger and a perjurer) if SM’s claim is struck out with no corresponding effective sanction applied to the Defendants. There may be cases where doing that can achieve a fairness as between misconducting parties. It is possible to think of examples where that might be effective. However in the present case the Defendants are in possession of the shares which form the primary claim. Simply putting an end to an action from both sides’ points of view leaves them in possession of the shares. These are particular assets which they have sought to maintain possession of by forgery and perjury. Now it can be said that the reason why they succeed despite their forgery and perjury is because SM fails because of his own forgery and perjury. He is therefore the victim of his own misconduct and one should not weep over it.

  5. Putting it another way if both sides have their ability to adduce evidence removed because of their misconduct one falls back on the principle that the case is decided on the basis that the party on whom the burden of proof lay has failed to satisfy that burden see Rhesa Shipping SA v Edmunds[1985] 1WLR 948 at 951 B-D.

  6. The easy course given the parties conduct would be simply to decline to adjudicate the case and strike out all the pleadings and then leave SM with no remedy. I have come to the reluctant conclusion that that in itself would not be an appropriate action in the present case. At the end of the day everybody (however badly they perform) is entitled to have access to the courts to have disputes resolved. If they abuse their right to access then the court has sanctions. However when all abuse their access as in the present case punishing one to a greater extent than the other would itself in my view create an injustice. I have accordingly therefore come to the reluctant view that despite all my misgivings and (I have to say) the great distaste I feel about this that I must attempt to resolve all the issues doing the best I can but without a great deal of assistance from testimony of the main players and with the need to adopt an extremely cautious approach to contemporaneous documents. Ultimately if I am unable to decide an issue on the uncontaminated material that is left to me that issue will be decided on the burden on proof. The parties will then suffer the consequences of their actions. I have made clear to the parties during the course of the trial that it is extremely likely that I will take further action over their misconduct and I intend so to do.

THE JUDGMENT IN BSKY B

In BSky B -v- HP Enterprises Ltd [2010] EWHC 86 (TCC) Mr Justice Ramsey considered the implications of this but came to the conclusion that a witnesses lies were so far reaching as to render the evidence totally useless. The witness had lied about his education past, that he had an MBA, and made an elaborate story as to his attendance at college.

  • EDS submit that it does not follow that all his evidence was false. They referred to the decision of Flaux J in Grosvenor Casinos v National Bank of Abu Dhabi [2008] EWHC 511 (Comm) where the claimant relied on other incidents of wrongdoing on the part of the bank’s officer as evidence suggesting that he was prepared to tell lies. Flaux J said at [113] and [126] that there was force in a submission that the evidence demonstrated a propensity to act dishonestly “but I consider the court must guard against merely concluding on the basis of this material that he was also dishonest on 8 February 2000 unless there is other cogent evidence to support that conclusion.” He said that whilst the other acts of dishonesty are obviously of some relevance in assessing whether he was a rogue banker, “I do not regard the subsequent dishonesty in relation to the letter and the guarantees as cogent evidence that he made a knowingly false statement on 8 February 2000. There is no material before the Court to suggest that any such false statements were made to assist, let alone at the behest of, the Ruler.”

  • They also referred me to the decision of Peter Smith J in Masood and others v Mohammad Zahoor and others [2008] EWHC 1034 (Ch)at [130] where he said: “Where cases turn on the credibility of witnesses it is important to consider the evidence as a whole. As I said in EPI whilst a witness’ veracity is challenged successfully by demonstrating that the witness has lied it is important to differentiate between establishing that a witness has lied in respect of a particular point as opposed to whether or not his evidence as a whole is a complete lie ….”

  • I was also referred to the familiar Lucas direction in criminal cases and what Lord Taylor said in R v Goodway [1993] 4 All ER 894 that a jury “must be satisfied that there is no innocent motive for the lie and [they] should be reminded that people sometimes lie, for example, in an attempt to bolster up a just cause, or out of shame, or out of a wish to conceal disgraceful behaviour.”

  • EDS submit that, Joe Galloway’s evidence on the relevant issues was credible and he did not try to gloss the facts in favour of EDS.

  • EDS accept, though, that in the light of his evidence concerning his MBA degree, Joe Galloway’s evidence on other matters had to be treated with caution. They accept that the court will not be as reluctant as it normally would be to accept that he is wrong or even knowingly wrong in his evidence on other matters. However they submit that his evidence should, nevertheless, be accepted where it is supported by other evidence or appears inherently likely and indeed it should be accepted unless there is an objective reason to reject it. They say that, as in Grosvenor, the Court should guard against merely concluding on the basis of the evidence that Joe Galloway was dishonest in relation to his degree that he was also dishonest in relation to the making of representations to Sky in relation to the bid unless there is other cogent evidence to support that conclusion.

  • This is not a case where there was merely a lie as to the MBA degree. Such a lie might have had a limited effect on credibility and might be explicable on the basis that Joe Galloway wished to bolster his academic qualifications and was embarrassed about the way he did it. However his dishonesty did not stop at that. He then gave perjured evidence about the MBA, including repeatedly giving dishonest answers about the circumstances in which he gained his MBA and worked in St John on a project for Coca Cola. In doing so, he gave his evidence with the same confident manner which he adopted in relation to his other evidence about his involvement in the Sky CRM Project. He therefore demonstrated an astounding ability to be dishonest, making up a whole story about being in St John, working there and studying at Concordia College. EDS properly distance themselves from his evidence and realistically accept that his evidence should be treated with caution.

  • In my judgment, Joe Galloway’s credibility was completely destroyed by his perjured evidence over a prolonged period. It is simply not possible to distinguish between evidence which he gave on this aspect and on other aspects of the case. My general approach to his evidence has therefore to be that I cannot rely on the truth of his evidence unless it is supported by other evidence or there is some other reason to accept it, such as it being inherently liable to be true.

  • Having observed him over the period he gave his evidence and heard his answers to questions put in cross-examination and by me, which have been shown to be dishonest, I also consider that this reflects upon his propensity to be dishonest whenever he sees it in his interest, in his business dealings. Whilst, of course, this does not prove that Joe Galloway made dishonest representations, it is a significant factor which I have to take into account in assessing whether he was dishonest in his dealings with Sky.”

THE LOTTERY TICKET

A similar problem faced HH Judge Gosnell in Kucukkoylu -v- Ozcan [2014] EWHC 1972 (QB)  where the judge was faced with parties who, admitted, they had lied on occasions.

“40.  This is a troubling case. Both counsel have agreed that the law is very straightforward and for the Defendant to succeed he would effectively have to prove that a contract existed with the Claimant for the purchase of a lottery ticket jointly and that the terms of the contract would give rise either expressly or impliedly to an equal share of the beneficial interest, in the form of the prize money. The case will turn on its facts and the standard of proof is on balance of probability. I have heard a number of witnesses give evidence over a period of six days. Cases are often easy to determine where one witness or group of witnesses are far more convincing than the other. This is not one of those cases. I have the choice between the Defendant and his witness who both concede that they have stated certain things to certain people in the past which they knew were untrue but now contend that that their current version represents the actual truth, and the Claimant and his witnesses who claim to have been truthful throughout but in fact appear less than truthful in the witness box. On occasions of course parties and their witnesses are tempted to bolster a truthful case by lies and exaggerations to make their case more convincing and that may well be happening in this case. It will be clear from my analysis of the evidence that there were number aspects that I was and remain dubious about. I intend to treat all the witnesses evidence with some caution as none of them were entirely convincing with the possible exception of Ms Pichykaranan whose evidence was marginal at best in terms of relevance.

41. I therefore need to search for some empirical evidence which is not dependent on witnesses’ oral evidence alone.

  1. At the end of the day the case comes down to a comparative assessment of the Claimant and Defendant as witnesses. Neither of them was particularly impressive. The Claimant was confident throughout but despite having the assistance of an interpreter had grave difficulty directly answering straightforward questions. It was however significant that the questions he had difficulty answering were those which called for an explanation where there was some inconsistency in his case. The introduction of new evidence about the discarding of the play slip , the forgery of the play slip and the new date of birth were all clearly efforts to deal with difficulties which had become evident to him in the run up to the trial and where wholly unconvincing as a result. The Defendant had the difficulty of dealing with the fact that he was an admitted liar in that he had told both Camelot and the Police that the ticket had been stolen. He also had to deal with the fact that he appeared to think initially that the Claimant had made no contribution to the ticket purchase when he then had to concede at a later stage that he had ( presumably after watching the CCTV footage). These were significant problems for his case but he at least attempted to deal with the questions head on. He contended that he had lied to Camelot and the police in desperation to prevent the Claimant stealing from him. He also claimed that he could not remember at first whether the Claimant had in fact made a contribution hence the change in his evidence. Whilst these explanations may not have been wholly convincing they at least were theoretically plausible whereas the Claimant’s tactic of avoiding answering the questions at all was wholly unhelpful.

  1. As I have concerns about the reliability of virtually all the witnesses’ evidence I am constrained to place more reliance on the evidence which cannot be manipulated. The play slips which I accept are genuine very strongly suggest that Boards A and B were played by two different people. The CCTV footage very strongly suggests that the Defendant was making selections of numbers himself rather than merely going over the Claimant’s numbers. These are both strongly supportive of the Defendant’s case. I also feel that the Defendant’s case is inherently more plausible. If the Claimant is right and the Defendant had a dream the previous night depicting the Claimant winning the lottery why would the Defendant spend approximately three hours (which a number of witnesses appear to accept) persuading the Claimant to play. There is no evidence to suggest they were particularly close prior to this incident. I cannot see why the Defendant would be so determined to make his employer play if he was not directly to benefit. It is much more likely that he would badger his employer for hours if his dream was that they had played together and he needed his employer to play for the dream to come true. It would also then be necessary for them both to choose numbers and both to contribute to the price of the ticket. Having weighed all of the evidence in the balance, and taking into account the strengths and weaknesses in both parties’ cases I find I prefer the evidence of the Defendant on the determinative issues.

  1. I make the following findings of fact on balance of probability. On the night of 29th /30th January 2012 the Defendant had a dream which involved him and the Claimant and a large sum of money. The Defendant pestered the Claimant into playing the lottery with him on the evening of 30th January 2012. The Claimant completed Board A of both games and the Defendant completed Board B choosing the Lucky Dip for Board C. The Defendant suggested and the Claimant agreed that they would play the game “50/50” or “half and half” or words to that effect. They both contributed equally to the purchase price of the ticket. The Defendant went to the shop to play the lottery and gave the Claimant the tickets, he retaining the receipt and the play slips. The Claimant discovered he had won on 8th February 2012 and the Defendant challenged him about the ticket later that evening. The Claimant became angry and threatening and swore at the Defendant. Subsequently, through intermediaries the Claimant attempted to persuade the Defendant to drop his claim.

  1. I find that the effect of these conversations was that the Claimant and Defendant entered into a contract to jointly play the lottery on an equal basis. I find that either it was a term of the contract that any winnings should be shared equally or alternatively that such a term should be implied. I find that this term represents the obvious, but unexpressed intention of the parties and that it is also necessary to give business efficacy to the contract. The whole point of playing the lottery jointly is to hopefully share the winnings jointly. The phrase “50/50” or “half and half” both of which the Defendant repeated several times in his evidence were clearly intended to convey an equal right to the beneficial interest in any winnings. It follows from my findings of both fact and law that the Defendant succeeds in this case. There should be a declaration that the prize money from this winning lottery ticket should be shared equally between the Claimant and the Defendant.”

 A GORGEOUS BEAUTY

 This issue was also considered by Arnold J in Gorgeous Beauty Ltd -v- Liu (and others) [2014] EWHC

2952 (Ch)

“General comments on the factual evidence

  1. In this case both sides accuse the other of dishonesty. Accordingly, as counsel for the Defendants submitted, it is necessary to adopt the approach to finding the facts articulated by Robert Goff LJ in a well-known passage in The Ocean Frost [1985] 1 Lloyd’s Rep 1 at 57:

“Speaking from my own experience, I have found it essential in cases of fraud, when considering the credibility of witnesses, always to test their veracity by reference to the independent facts proved independently of their testimony, in particular by reference to the documents in the case, and also to pay particular regard to their motives and to the overall probabilities. It is frequently very difficult to tell whether a witness is telling the truth or not; and where there is a conflict of evidence such as there was in the present case, reference to the objective facts and documents, to the witnesses’ motives, and to the overall probabilities, can be of very great assistance to a judge in ascertaining the truth.”

  1. In this case, I have been particularly cautious in relying upon the demeanour of the witnesses, for three reasons. First, all of them except Irene, Mana, Michael and William Liu gave evidence through an interpreter. It was clear that, despite the skill of the interpreter, this led to difficulties in understanding. For example, as the interpreter explained, Mandarin does not have tenses and thus there was sometimes difficulty between distinguishing between what a witness knew at a particular time and what the witness knew now. Irene, Mana, Michael and William Liu all gave evidence in English, but their English was not perfect and they all resorted to assistance from the interpreter at times. Again, it was clear that there were difficulties in comprehension. Secondly, a number of witnesses gave evidence by videolink from Taiwan. Thirdly, there are significant cultural differences between this country and Taiwan.

  2. For the same reasons, I accept the submission made by counsel for Gorgeous Beauty that it is necessary when analysing the evidence of the witnesses to be cautious about relying on the phraseology of particular answers as being indicative of an untruthful witness, and rather to consider the general thrust of that witness’ evidence. I also bear in mind the point made by counsel for the Defendants that the fact that a witness had lied about one matter does not necessarily mean that he or she has lied about another.

  3. In attempting to determine where the truth lies, I have faced five further difficulties. The first is that, as will appear, I consider that both sides’ cases have implausible features.

  4. The second is that the documentary evidence is incomplete and unsatisfactory. It is not possible for me to attribute blame for this state of affairs. The Defendants accused Gorgeous Beauty of deliberately withholding disclosure, but I am not satisfied that this charge has been made out. Gorgeous Beauty certainly gave late disclosure of certain documents, including some just before and some during the trial, but since it did disclose documents which can be regarded as damaging to its case, it does not appear that it suppressed such documents. Moreover, the late disclosure can be at least partly explained by the fact that certain issues were only clearly raised at trial. No doubt for the same reason, the Defendants also gave late disclosure during the trial. Above all, by the end of the trial, it was common ground that, because YSC was a family business and because it was run in a way which might appear unusual to English eyes, some things were not simply documented in the way that an English court would expect.

  5. The third difficulty is that, although the key factual issue lies within a narrow compass, both sides raised a considerable number of other issues as supporting their respective cases or as casting doubt on the opposing party’s case or as undermining the credibility of one or more of the opposing party’s witnesses. As I have already indicated, some of these issues were only clearly raised at trial. As a result, both the witness and documentary evidence on such issues is not as complete as it might have been. Indeed, at least one issue has been raised which it was more or less common ground between counsel in closing submissions that the court was not in a position to resolve.

  6. The fourth difficulty is that, with one solitary exception, each side accused all the other side’s witnesses of lying. The exception is Eric Wu of GenPro, whom counsel for the Defendants accepted was an honest witness, albeit one he characterised as defensive and the accuracy of whose recollection he challenged.

  7. The fifth difficulty is that most of the witnesses have a personal interest in the outcome. The most independent witness was Eric Wu. The next most independent was Ming-Zhen Xu, but as discussed below he accepted that he was a friend of Lien-Sheng Liu and Ching-I Yang. The next most independent was Shu-Ying Yang, given that she is no longer a shareholder in YSC, but she was a shareholder at all the relevant dates, including when she signed her witness statement.

  8. As a result, the one conclusion about which I am certain is that I cannot be certain what the truth is. Rather, I can only decide where I consider that the balance of probabilities lies having regard to the evidence before the court.”

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