PROVING THINGS 44: FINDINGS OF FACT, WALTER MITTY AND WITNESS TRAINING

December 12, 2016 · by · in Uncategorized, Witness statements

The judgment today of Mr Justice Coulson in Harlequin Property (SVG) Limited -v- Wilkins Kennedy [2016] 3188 EWHC (TCC) shows the importance of the judge’s assessment of  witnesses. The judge made a clear and robust assessment of the witness evidence, the difficulties posed by witness training, the difficulties posed by missing witnesses and the (virtual irrelevance) of witness evidence when the witnesses did not attend court.

“I was unsurprised to learn that Mr MacDonald had had witness training. For the same reasons outlined by Flaux J (as he then was) in Republic of Djibouti v Boreh and Others [2016] EWHC 405 (Comm) at paragraphs 64-67, I consider it to be a practice “to be discouraged since…it tends to reflect badly on the witnesses who…may appear evasive.” In my view, the training he received exacerbated Mr MacDonald’s natural tendency to avoid answering any difficult question.”

 THE CASE

The claimant property developers brought an action against their former advisers. The case had “startling features”, including an ongoing Serious Fraud Office investigation against the claimant.

THE JUDGE’S ASSESSMENT OF THE WITNESSES

The case rested on the facts and the assessment of the witnesses. The judge’s difficulty was that he found that the witnesses for both sides were unreliable.

2. THE WITNESSES OF FACT
  1. This is not a case in which, save for one issue about the disclosure of confidential information, the law has loomed large. Instead, it is the court’s findings of fact which are of paramount importance. In consequence, it is necessary for me to express, at the outset, my views on the two critical witnesses in this case, Mr Ames of the claimants, and Mr MacDonald of WK. I also make some other observations/rulings on the factual evidence.
  2. Mr Ames candidly admitted lying on various occasions during the course of the development of the resort. In addition, I find that, on a number of matters, he was less than candid with the court. I consider that the Harlequin business model was, at least potentially, dishonest from start to finish. On the other hand, I do not consider that Mr Ames lied about everything important in issue in this case: on some matters, he was plainly telling the truth. Moreover, there was at least an element of Mr Ames’ dishonesty which was rooted in his stubborn desire to believe that everything would somehow turn out for the best.
  3. Mr Ames described himself as a visionary. In my view, that is not an apt description. I consider that he was more of a Walter Mitty-type figure who, through an unhappy mixture of dishonesty, naivety and incompetence, has caused irreparable loss to thousands of people. But I consider that one of the reasons for this disastrous chain of events was that no-one reined him in or explained to him the basic commercial realities of what he was undertaking. The only consultant that he employed who appeared to be involved in every important element of the Harlequin business model was Mr MacDonald of WK. This case centres on the extent (if at all) to which Mr MacDonald should have advised Mr Ames to take a different course.
  4. I believe that Mr MacDonald was aware of his vulnerability to that central allegation. In consequence, he was a singularly evasive witness. It you open the transcript of his cross-examination at a random page, the chances are that you will find at least one important question which Mr MacDonald is deliberately failing to answer. Despite the fact that I warned him that his failure to answer the questions was giving the impression that he was being thoroughly evasive, he maintained that stance. To describe him, as WK do at paragraph 88 of their closing submissions, as “fair-minded and thorough” is, with respect, hopelessly unrealistic.
  5. I was unsurprised to learn that Mr MacDonald had had witness training. For the same reasons outlined by Flaux J (as he then was) in Republic of Djibouti v Boreh and Others [2016] EWHC 405 (Comm) at paragraphs 64-67, I consider it to be a practice “to be discouraged since…it tends to reflect badly on the witnesses who…may appear evasive.” In my view, the training he received exacerbated Mr MacDonald’s natural tendency to avoid answering any difficult question.
  6. Mr MacDonald’s other defence mechanism was repeatedly to minimise his involvement in any given event. Thus, perfectly straightforward documents, with text (often written by Mr MacDonald himself) which set out what he was doing or saying at any given time, were the subject of agonising attempts by Mr MacDonald either to suggest that he was not really involved or to rewrite the document. Of his 45 overseas trips undertaken on behalf of Harlequin, most of which were to SVG, Mr MacDonald would have the court believe he was there just ‘to pass on my business card’ or ‘to carry the bags’. Such attempts to distance himself from the relevant events were, at times, almost risible.
  7. Mr Taylor, whom I consider to be one of the few entirely credible Harlequin witnesses, gave compelling evidence about Mr MacDonald’s nature and attitude. He said that when Mr MacDonald was with Mr O’Halloran (who the documents indicate was a large and imposing presence), Mr MacDonald went from being placid to being a bully, and he would mock the individuals who worked for Harlequin. Mr Taylor said he was “like the kid at school who was quiet and nerdy but then became best friends with the biggest bully. It was then that his ego changed”. From what I observed in court, I consider Mr Taylor’s description to be accurate.
  8. For these reasons, I consider that Mr MacDonald was as unsatisfactory a witness as Mr Ames. Thus the court is in the unenviable position of having to tell the story, and make findings of fact, in circumstances where the evidence of the two critical witnesses was fundamentally flawed. But this can come as no surprise to the parties because I warned them at the end of the factual evidence in July (Day 15, page 52) that neither side’s principal witnesses would emerge well from this Judgment.
  9. Harlequin called a number of other factual witnesses. In their written submissions, WK made extensive criticisms of each and every one of them. Although sometimes those criticisms were justified, often they were unthinking and unfair. My views in brief are:
  10. Mrs Carol Ames: Mrs Ames was not a particularly good witness, being far too anxious to criticise Mr MacDonald whilst minimising the involvement of both her husband and herself. Her knowledge of Harlequin Management Services (South East) Ltd (“HMSSE”), the important Harlequin company of which she was the director and principal shareholder, was embarrassingly thin, particularly given the large sums it paid out to her and her family, and to other Harlequin companies. She was sometimes evasive. But her understandable emotional reaction to, amongst other things, ICE’s wholesale failures, and the subsequent internet attacks on the Ames family, confirmed the extent to which she genuinely felt let down by Mr MacDonald and WK.
  11. Mr Michael Withey: I deal with his evidence at paragraph 32 below.
  12. Mr Simon Taylor: In my view, WK’s suggestion that he was not a reliable witness and was focused only on ‘pushing the Harlequin line in support of Mr Ames’ was completely wide of the mark. Mr Taylor had no reason blindly to support Mr Ames, since he no longer worked for him or had any commercial relationship with him. I can only conclude that WK’s attempt to belittle his evidence betrayed the fact that they were aware of the potentially damaging effect of his evidence, particularly about Mr MacDonald’s overall role within Harlequin.
  13. Mr Sam Commissiong: I deal with his evidence generally at paragraph 45 below. On matters where he felt professionally exposed – and there were many of them – I find that he was an untruthful and unreliable witness. Some of his evidence on other, more mundane matters, was consistent with the contemporaneous documents and therefore more reliable.
  14. Ms Shona Quammie: I deal with her evidence at Section 8.6.1 below. She was an honest and compelling witness. Even WK were obliged to accept at paragraph 51 of their submissions that Ms Quammie “was clearly keen to give straight forward honest evidence”. In my view, that is precisely what she did.
  15. Mr Andrew Smith: Mr Smith’s evidence was of some assistance on the detail, although I accept WK’s suggestion that part of it may have been tailored to meet the requirements of the litigation.
  16. Mr Sean O’Connor: My views in relation to Mr O’Connor are similar to those views I formed about Mr Smith.
  17. Mr Paul McTaggart: Mr McTaggart was an honest witness but his recollection of the important schedule which he produced was so vague that I derived little assistance from his oral evidence.
  18. Mr David Campion: Mr Campion’s evidence was of variable quality but, as noted below, he provided some assistance to the court on matters of detail.
  19. Miss Sarah Tricker: WK accepts that Miss Tricker had an honest demeanour, which she plainly did. I do not accept the criticism that she was not a wholly reliable witness: I take the view that she was reliable and was always doing her best to assist the court.
  20. Mr Royd Smurthwaite: Mr Smurthwaite was a reasonably reliable witness. It was not suggested that he had any reason to provide untruthful or misleading evidence to support Harlequin.
  21. WK called very few factual witnesses in addition to Mr MacDonald, and they failed to call one major witness. Thus:
  22. The other witnesses called: Mr Kevin Walmsley was a relatively straightforward witness, although I felt throughout that he was unwilling to accept points which he should have conceded. Sometimes he suggested that something was only clear in hindsight when I consider that it was (or should have been) painfully clear at the time. Mr Garside worked for Mr MacDonald and was relatively helpful although his recollection was, perhaps understandably, poor. Ms Coia had little to say that was of any relevance to the issues before me.
  23. The witnesses not called: There were a number of witnesses who WK did not call, but the principal witness in this category was Mr Jeremy Newman, who had agreed to provide any evidence required of him by WK, but who was conspicuous from the trial by his absence. He worked for WK, he advised Harlequin, and he was later to describe himself as ICE’s Chief Financial Officer (“CFO”). In Harlequin’s opening submissions, relying on the case of Wisniewski v Central Manchester Health Authority [1998] P.I.Q.R. 324, Mr Davidson QC suggested that the court was entitled to infer that any truthful evidence from Mr Newman would have assisted Harlequin, not WK. I agree with that submission, although I consider that many of the contemporaneous documents are so damning of Mr Newman that the inference is hardly necessary.
  24. Harlequin served four hearsay notices (in respect of Paul Jacobs, David Wallerson, Gilbert Aquino and Garrett Ronan) and four witness statements from witnesses who were not called at trial (Hayley Byatt, Bernard Punnett, Dan Dalligan, and Stephen Lea). In respect of the hearsay notices, WK had successfully applied to cross examine those four individuals. They were not subsequently called to give evidence. In consequence, in relation to these eight notices and statements, WK submit that the court should have no regard to them at all and/or to place no weight upon them. In broad terms, I accept that submission. Thus, in the pages that follow, I only refer to or rely on the notices/statements from these eight individuals if they support other evidence which I accept, or unequivocal material in the contemporaneous documents. No element of Harlequin’s case can be advanced if the only material that supports it is some part of these eight notices/statements.

THE RESULT

The claimant succeeded (but to a limited degree) with a reduction of 50% for contributory negligence. The judge held that the money should not be paid to the claimant but paid into an escrow account pending resolution of matters between the creditors, the company and the liquidators (the company having become insolvent after the conclusion of the case).

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