WHEN WITNESSES GO “UP HILL AND DOWN DALE” IN AN ATTEMPT TO JUSTIFY THE UNJUSTIFIABLE: TIME TO LOOK AT THE WAY STATEMENTS ARE PREPARED
The judgment of HHJ Stephen Davies (sitting as a judge of the High Court) in Zagora Management Ltd & Ors v Zurich Insurance Plc & Ors  EWHC 140 (TCC) shows why witness statements should be considered carefully prior to service. Here we have honest witnesses giving inaccurate witness statements. Litigants may benefit from more time (or effort) being spent assessing what they actually know and can given evidence about and less time (and effort) spent in using statements to argue their case. (We will look at the costs consequences of this in a later post).
“… many of them were partisan witnesses who, whilst not setting out to lie, sought both in their witness statements and under cross-examination to argue their case and to make assertions which were clearly contrary to the contemporaneous documentation. Their witness statements in my view suffered from the vice of having been drafted so as to advance their case by reference to what they now believed to be their understanding of events, making selective reference to the contemporaneous documentation which supported their case, rather than by setting out their genuine and unadorned recollection in 2018 of what they had done, said and thought many years earlier”
The claimants were a group of leaseholders bringing an action against the defendants in relation to the development of several blocks of flats. The claim was against the defendant that issued building warranties. In addition some of the claimants brought proceedings against Zurich Building Control Services Ltd (“ZBC”) which had inspected and certified approval of the development.
THE CLAIM AGAINST ZBC
To succeed in a clam against ZBC the claimants had to prove (i) “deceit” (there were no reasonable grounds for believing the statements in the certificates were true); (ii) that they relied on the certificates issued by ZBC in circumstances where the certificates were not issued directly to the claimants.
THE CLAIMANTS’ WITNESS STATEMENTS: GENERAL OBSERVATIONS
The claimants against ZBC established deceit but failed on the issue of reliance. HHJ Stephen Davies made the following general observations about the claimants’ evidence.
2.3 As regards the individual leaseholder claimants, all were honest people in my view. However, many of them were partisan witnesses who, whilst not setting out to lie, sought both in their witness statements and under cross-examination to argue their case and to make assertions which were clearly contrary to the contemporaneous documentation. Their witness statements in my view suffered from the vice of having been drafted so as to advance their case by reference to what they now believed to be their understanding of events, making selective reference to the contemporaneous documentation which supported their case, rather than by setting out their genuine and unadorned recollection in 2018 of what they had done, said and thought many years earlier. To take an important example, many claimed to have read and formed a certain understanding of the terms of the sale contracts under which they agreed to acquire their flats from JCS which supported their claim against ZBC when, in my view, most of them had no such genuine recollection and had not done so. Many of them sought to maintain this evidence to support their case under cross-examination even when demonstrated to be inconsistent with the contemporaneous documentation or when it became apparent that in truth they had no real independent recollection of events after the lapse of time. They all struggled at times to provide a clear and detailed recollection of events, not surprisingly given the lapse of time. I give their evidence due weight but make my decision largely by reference to the contemporaneous documentation which, fortunately, is voluminous as well as my assessment of the inherent probabilities.
THE INDIVIDUAL CLAIMANTS
The judge carried out a careful assessment of the evidence of the individual claimants who contended that they had relied on the reports from ZBC.
5.1.6 In his main witness statement he claimed at  that on reading the documents provided by his solicitors he “understood that as the apartment was tenanted the development must have been inspected and approved by the building inspector and ZIP under the new build guarantee scheme and relied upon these facts when proceeding to purchase”. However, it is clear from his witness statement and cross-examination and I am satisfied that any such assumption was based solely on some general understanding of how the building control system worked in Australia rather than upon any knowledge of the system in the UK or any reading of the documents provided by his solicitors.
5.1.7 Under cross-examination he maintained that he had read the sale agreement before exchange and completion, had seen the reference in clause 11 to the Bldg Regs final certificate and had assumed that this was something which had been suitably addressed by his conveyancing solicitors upon whom he had relied when proceeding to exchange and complete. I am afraid that I was unable to accept this evidence which, in my view, was an attempt by him to support a case which he could see was disintegrating in the face of the cross-examination which showed that he had not seen the Bldg Regs final certificate before exchange or completion. I am prepared to accept that he is a careful man and would have looked at the documents supplied by his solicitors. However, I am quite satisfied that nothing about clause 11 or the reference in it to the Bldg Regs final certificate would have had any particular significance to him as a layman. As I have already said it does not even say that a Bldg Regs final certificate has already been issued. Nor does it say that it will be provided at any time, whether before or after exchange or completion. Its only importance is that once issued it prevents the purchaser from maintaining any claim against the buyer in respect of the obligations imposed by clause 11.
5.1.8 Moreover, as Mr Tarasov had to accept when taken through the documents, even though he was heavily involved in dealing with the complaints about the defects in the development and even though he eventually made a claim against ZIP and separately instructed solicitors to make a claim against Assetz, he never referred to or advanced any claim against ZBC nor did he ever suggest that he had seen or relied upon there being a Bldg Regs final certificate when deciding to purchase the flat. If he had indeed relied on the existence of the Bldg Regs final certificate when exchanging and completing it would have been natural for him to have done so. The most that Mr Selby could do in re-examination was to draw attention to the fact that when, in September 2012, it was (wrongly) suggested to him by Mainstay that there was no Bldg Regs final certificate he clearly regarded its absence as of importance. But that does not assist him, given that he knew nothing about and hence could not and did not rely upon the existence of such a certificate when he did exchange and complete.
5.1.9 Mr Tarasov has not called his conveyancing solicitor to give evidence as to what, if anything, she knew or did or believed in relation to the existence or content of any Bldg Regs final certificate. There is no evidence of any steps being taken by Mr Tarasov or his lawyers to investigate this point with his conveyancing solicitors. As I have already said, there is no reference whatsoever to the Bldg Regs final certificate in the conveyancing file and there is no reason from the content of the conveyancing file to consider that the solicitor concerned did have any conscious knowledge or belief at all in relation to any Bldg Regs final certificate.
ANOTHER WITNESS WHOSE “STATEMENT HAD CLEARLY BEEN DRAFTED ON HIS BEHALF”
5.2.3 It became clear under cross-examination that Dr Ikpeme had left everything to his solicitors during the course of the acquisition of the flats and during the course of the subsequent litigation with JCS resulting in his completing on the flats. He had no genuine understanding or recollection of any of the legal processes by which he had come to acquire the flats. Contrary to the assertions in his witness statement, which I am afraid to say had plainly been drafted on his behalf so as to support his case and which he had not properly read or understood before signing it, I am satisfied that he had never read the sale contract prior to exchange nor had any knowledge or understanding of anything to do with the Bldg Regs final certificate whether before exchange or before completion. Insofar as he relied on anything in relation to ZBG he relied on the fact that ZBG were insuring his flats but he knew nothing of the inter-relationship between ZBG as insurer and the fact – as to which he was entirely ignorant – that ZBG had also undertaken the building control function or that there was a relationship between the insuring obligations undertaken by ZBG and JCS’ compliance with the Bldg Regs or the certification of compliance by the Bldg Regs approved inspector.
5.2.4 In closing submissions the claimant invited me to infer that his conveyancing and/or litigation solicitors must have relied upon the existence of the Bldg Regs final certificate. Given the evidence referred to above, I am unable to accept that argument.
THE WITNESS WHOSE EVIDENCE WENT UP HILL AND DOWN DALE (TO NO AVAIL)
In his witness statement he said that he relied on his solicitors to make sure everything was in place, but there is no evidence from his solicitors, whether from the conveyancing file or in witness statement form, which explains what their purpose was in requesting the Bldg Regs certificate or what, if any, reliance they placed on it. It is plain to me that it was part of a standard form request rather than being specific to this particular transaction. The report on contract and lease referred to the ZBG building warranty but made no reference to the Bldg Regs certificate or there being any inter-relationship between the two. He accepted in his witness statement that his knowledge of Bldg Regs was “incredibly limited”.
5.3.3 He exchanged and completed on 15 April 2010. Despite his evidence as summarised above his witness statement, whilst muddled and confusing in its chronology, appears to have been drafted to seek to give the impression that he had read the sale agreement at that time before committing himself and that as a result he had formed some impression that the Bldg Regs final certificate was in place. I regret to say that Mr Gledhill, rather than admit under cross-examination that this was plainly wrong, attempted to argue his case up hill and down dale so as to seek to maintain his case against ZBC. In particular, he appeared to suggest at times in his written and oral evidence that he had spoken to the solicitors before exchange and completion and that reference had been made to a final certificate as being outstanding but, insofar as he sought to suggest that this was a reference to a Bldg Regs final certificate or even that he had subsequently been shown or told about documents which included the Bldg Regs final certificate, I am unable to accept that evidence. In my view it is retrospective reconstruction which is not supported by any convincing contemporaneous documentary evidence or by any reliable oral evidence or, indeed, by the inherent probabilities. The analysis conducted by Mr Asquith in his written closing submissions and based upon a close examination of the documents and the evidence is to be preferred.
5.3.4 The claimants invite me to infer that Ms Sullivan must have relied upon the Bldg Regs final certificate because she asked for and was provided with a copy. In the absence of any evidence from her file or from her personally to support that inference I am unable to do so.
A FURTHER WITNESS (WHOSE EVIDENCE CONTAINED THE SAME PASSAGES AS THE OTHER WITNESSES)
When witness statements contain identical (or near identical) passages, most judges start to be a little wary. We see this here.
5.9.2 Mr Roberts accepted that he had no recollection of and had not read the sale agreement before purchase. His witness statement contained the same unhelpfully drafted section, seeking to make a case on reliance in a confused and chronologically imprecise manner, as found in the statements of Dr Ikpeme and Mr Gledhill as referred to above, and again I am unable to accept his evidence that he had any positive understanding or belief in relation to the existence or relevance of any Bldg Regs final certificate prior to purchase. Again there is no evidence as to what, if any, understanding or belief his solicitor may have had and there is no reason to believe that the solicitor relied on any Bldg Regs final certificate any more than did those of the other individual leaseholder claimants.
AN UNHELPFULLY DRAFTED STATEMENT
5.11.2 Having decided to purchase the flats in March 2010, exchange and completion took place simultaneously on 6 July 2010. On 5 May 2010 their conveyancing solicitors Birchall Blackburn asked JCS’s solicitors for the buildings insurance policy and cover note but did not at this time request or obtain any Bldg Regs final certificate. There is no evidence that they were asked to or did sign the sale agreement and Mr Spadaro was clearly wrong in his witness statement when he said that he had done so. There is no evidence that they were shown or read the sale agreement prior to exchange or completion and again Mr Spadaro was clearly wrong in his witness statement insofar as it gave the impression that he had done so or that he had acquired any knowledge or opinion as to the significance of Bldg Regs approval at that time. There is no evidence whatsoever that he received a copy of the Bldg Regs final certificate prior to exchange or completion and his witness statement was particularly unhelpfully drafted insofar as it appeared to me to be equivocal as to whether he was saying that he had or had not done so. I am quite satisfied that he did not. Whilst he says, and I accept, that he relied on his conveyancing solicitors to protect his interests in relation to the acquisition of the flats, in reality that is as much as he can say.
5.11.3 There is no evidence from his conveyancing solicitors, whether in such of the documentation as is available or otherwise, as to what if anything they knew or believed so far as any Bldg Regs final certificate is concerned.
A WITNESS THAT HAD ACTED INCONSISTENTLY
In relation to a further claimant who had purchased two flats but only claimed against ZBC in relation to one, the judge pointed out the inconsistency of this claimant’s approach.
5.15.2 As well as pursuing a claim against ZIP they also pursue a claim against ZBC but in respect of flat 139 only. As Mr Asquith observed, the fact that they only make a claim against ZBC in respect of flat 139 is explained by the fact that they completed on flat 84 before any Bldg Regs final certificates had been issued. However, at a more fundamental level, the fact that, advised by their conveyancing solicitors, Shoosmiths, they were perfectly willing to complete on flat 84 without any such final certificate having being issued is itself wholly inconsistent with their case and Mr Creber’s evidence that he relied upon the Bldg Regs final certificate in relation to flat 139. It was quite clear to me from reading his witness statement and listening to his cross-examination, when compared with what was revealed by the contemporaneous conveyancing file, that he had no real recollection of what he was shown or what he believed at the time contracts were exchanged or when they completed. It is also clear, I am satisfied, that he was never provided with a copy of any Bldg Regs certificate prior to exchange or completion and that he had no understanding at any such time of the relevance or significance of any such certificate. He was content to leave all matters to his conveyancing solicitors. He had no knowledge as to what, if any steps, they took in relation to any such certificate. I was unable to accept his suggestion in cross-examination that he had been told by Shoosmiths that a Bldg Regs final certificate had been issued before he completed on flat 139. When he was pressed he admitted that he could not specifically recall this conversation and such suggestion has no support from the conveyancing documents.
INACCURATE MEMORY: THE WITNESS THAT “CONVINCED HERSELF”
5.17.2 In her witness statement she said that she was provided with and read an information sheet produced by JCS in November 2009, including the statement that: “Zurich Municipal has been appointed as an approved inspector for the purpose of building regulations. The issue of the cover note will accordingly provide confirmation of compliance with these regulations”. Her evidence that she had read and noted this at the time was inconsistent with her evidence later in her witness statement that in March 2010, when she received a report on lease and a report on contract from her conveyancing solicitors, it made reference to the insurance policy issued by Zurich, who she said she had not heard of at that time. In my judgment she is mistaken when she now claims that she can specifically remember the statement in the information sheet or that she relied upon it when deciding to purchase the property. The same is true, in my judgment, of her evidence that she read the sale agreement before exchange, since her basis for saying so initially was founded upon her assumption that she had signed the contract before exchange when, as the conveyancing file makes clear, in fact she had not done so. There is no confirmation in the conveyancing file that the sale agreement was forwarded to her by her conveyancing solicitors and no indication that any advice as to its terms, specifically any reference to the issue of any Bldg Regs final certificate, was provided to her by her conveyancing solicitors. Nor is there any evidence that the Bldg Regs final certificate was obtained by her conveyancing solicitors either, let alone that they sent her a copy. In my view she has convinced herself now that she was provided with and carefully read all of these documents in order to establish or support her case on reliance, when the facts simply do not bear out her evidence on this point.
ANOTHER UNRELIABLE WITNESS
5.21.6 Ms Bedi was, I am afraid, another unreliable witness as regards her evidence as to what, if anything, she was told or understood about any Bldg Regs final certificate prior to exchange or completion. It was clear to me that she had no real recollection as to what she had read and what she had signed at the different stages of the transaction. It is quite clear in my view that she did not read the sale contract nor form any understanding of clause 11 as regards Bldg Regs inspection or approval either before purchase or completion. As with many of the other of the individual claimants, it is clear that she had not properly appreciated the difference between the cover note or insurance certificate issued by ZIP in relation to the building warranty and the Bldg Regs final certificate issued by ZBC in relation to the statutory approval process. There is no evidence that her conveyancing solicitors had obtained a copy of the Bldg Regs final certificate before either exchange or completion, still less that they provided her with a copy. I quite accept her evidence that she relied upon her conveyancing solicitors in a general sense to ensure that everything was in place, but I am also quite satisfied that she had no knowledge, belief or reliance specifically in relation to the Bldg Regs final certificate.
5.21.7 There is no evidence that her conveyancing solicitors received a copy of the Bldg Regs final certificate at any stage or that they relied upon its existence in any way.
THE MISTAKEN WITNESS
5.22.2 The conveyancing file shows that he was provided by his conveyancing solicitors with a copy of the cover note in March 2010 and that he signed the sale contract in May 2010 although completion did not take place for a further three months. As with many of the other individual claimants, I am satisfied that he does not now have the recollection which he believes he has as to what he read or understood in relation to any Bldg Regs final certificate or its effect. In particular, I am unable to accept his evidence that he read the sale contract clause by clause before signing it or that he read and formed an understanding of clause 11 of the sale contract to the effect that, as he put it in his witness statement, inspection by an approved inspector would be confirmation that JCS had completed its works in accordance with the Bldg Regs.
5.22.3 It is clear that he is also mistaken in his recollection in his witness statement that he was provided, whether directly or through his conveyancing solicitors, with a copy of the Bldg Regs final certificate applicable to his flat, as opposed to the insurance cover note and final certificate. I reject the claimants’ invitation that I should infer that he was sent a copy of the Bldg Regs final certificate because pre-exchange they had written to him saying: “Details of the cover are set out in a comprehensive but straightforward manner in the package of documents relating to the scheme which will be sent for your attention shortly”.
5.22.4 Whilst I am prepared to accept that he had a general understanding of the Bldg Regs scheme and that the development would need to be signed off by a building control inspector, I do not accept that he had any more detailed a recollection than that.