ASSESSING THE CREDIBILITY OF WITNESSES: PROBLEMS WITH INDEPENDENCE WHEN THE WITNESS REQUIRES A TRANSLATOR

Who is going to be believed? This is the central question in many (if not most) cases that go to trial.  The judgment of Miss Amanda Tipples QC in Frenkel v Lyampert & Ors [2017] EWHC 2223 (Ch) shows many of the issues that can be thrown up at trial. It deals not only with witness credibility but the problems that can arise when a translator is not seen to be independent. It also raises the issue of “witness training”.

“For my part, I simply do not understand why Mr Lyampert, and those advising him, did not apply at the CMC in September 2016 for the witness statement of the oral evidence he intended to rely on at trial to be filed in Russian under CPR Part 23.2 and paragraph 19.13 of the Chancery Guide”

“19.13 If a witness is not sufficiently fluent in English to give his or her evidence in English, the witness statement should be in the witness’s own language and a translation provided. If a witness is not fluent in English but can make himself or herself understood in broken English and can understand written English, the statement need not be in his or her own words provided that these matters are indicated in the statement itself. It must however be written so as to express as accurately as possible the substance of his or her evidence.” (The Chancery Guide).

THE CASE

The claimant’s case was that an oral agreement was made that he was entitled to 25.5% of the shares of the third defendant company. This required the judge to consider evidence as to oral discussions that took place some 13 years before trial.

THE JUDGMENT

The witnesses and the assessment of their evidence

1. 1. The factual findings the Court is required to make in this case concern an oral agreement made 13 years ago. In relation to that agreement, the following points are important:

a. Mr Frenkel was not present, whether in person or by telephone, when the agreement was made. The only people present were Mr Lyampert, Mr Gorban and Mr Bell.

b. There are no contemporaneous documents recording the terms of what was actually agreed in August 2004. The only documents which do exist from August 2004 are the Form 288a appointing Mr Lyampert as a director of the UK Company on 3 August 2004 and the bank mandate signed on 9 August 2004.

c. It is necessary to consider whether the witnesses can actually remember what happened 13 years ago and, to the extent they can recall what happened, whether that recollection is, or is likely to be, true. This is particularly difficult to assess in this case as there no contemporaneous documents recording or evidencing what was or what was not agreed, and everything happened a very long time ago.

d. The arrangements in place after August 2004, and which took effect between the parties in the five years or so before there was any dispute between them, may shed some light on what was actually agreed in August 2004. However, as Counsel rightly reminded me, I need to be cautious in considering the “post contract actions of the parties” (and, in the context of an oral agreement I was referred to Brian Royal Maggs v Marsh [2006] EWCA Civ 1051 at paras 24 to 26). However, in terms of documents there was hardly anything to go on in the period August 2004 to 2010.

e. Given the nature of the dispute, and that Mr Frenkel and Mr Lyampert each claim to be entitled to the shares in their own right, the evidence of each of them is likely to be self-serving.

f. In so far as there was any “neutral” witness before the Court, that was Mr Bell. He is, and always has been, a shareholder in the UK Company and he was not claiming any additional interest in the UK Company. The only other witness was Mr Gorban, who is a very close friend and business partner of Mr Frenkel.

1. 1. I heard evidence from four witnesses. First from Mr Frenkel and then from Mr Gorban. Mr Lyampert gave evidence, and did not call any other witnesses. Mr Bell gave evidence on his own behalf and on behalf of the UK Company. The evidence in chief of all of these witnesses was contained in witness statements, which they were then cross-examined on.

   2. In the circumstances I have identified it is plain that I have to form a view as to the credibility of the witnesses, and decide which of the evidence I have heard is, after such a long passage of time, actually reliable and most likely to be true. In closing I drew Counsels’ attention to the observations, or warnings as to evidence, made by Peter Smith J in EPI Environmental Technologies Inc v Symphony Plastic Technologies plc (Practice Note) [2005] 1 WLR 3456, at 3470H-3471C. The judgment in that case contains a summary of well known judicial observations designed to assist trial judges in how to arrive factual conclusions and which I have had regard to. Having summarised the position, Peter Smith J added this:

“[74.] 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 themselves do not necessarily mean that the entirety of that witness’s 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 again a witness in a closing speech. This is especially so in an era of pre-prepared witnesses statements. A judge does not see live in-chief evidence, thereby depriving the witness of presenting himself positively in his case.

[75.] 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 rejecting of a particular person’s evidence.”

1. 1. I am quite satisfied that, of all the evidence I have heard, the most reliable is the evidence of Mr Bell, and I accept the evidence that he gave to the court. The evidence of each of Mr Frenkel, Mr Lyampert and Mr Gorban is unreliable and unsatisfactory in a number of important respects and, where there is a conflict between the evidence they each gave and that of Mr Bell, I accept the evidence of Mr Bell. I should also add that there are certain parts of Mr Frenkel and Mr Lyampert’s evidence which simply cannot be true. I now turn to each of the witnesses, and the reasons I have reached these conclusions in respect of their evidence.

The evidence for the Claimant

1. 1. Mr Frenkel and Mr Gorban gave evidence for the Claimant. They both speak very good English.

   2. In relation to Mr Frenkel’s evidence, the obvious point is that he was not present when the agreement was made in August 2004. He therefore cannot give any evidence himself of what happened. Rather, he relies on the evidence of what he was told by Mr Lyampert and Mr Gorban, as to what happened when they met with Mr Bell in the UK in August 2004. It is therefore necessary for me to decide whether I accept Mr Frenkel’s evidence as to what he says Mr Lyampert told him in relation to what happened when he met with Mr Bell in the UK in August 2004 as being true.

   3. I did not find that Mr Frenkel was a witness who was trying to assist the Court with the answers he gave. There were several occasions when he did not answer the question he was asked, on other occasions he was argumentative or very concerned to get his case across. This may be a function of the fact that he has now given evidence on more than one occasion in the Californian Claims. However, he did admit in cross-examination that he had witness training on the Friday before the start of the trial. This was at a company, which was not Blake Morgan LLP. There is certainly no suggestion that any of his legal representatives who were involved in this trial had anything to do with this training.

   4. In the Californian Claims His Hon. Steven J Kleifield found that Mr Frenkel was “unquestionably secretive in his plans to leave [Inc] and to participate in the formation of ITC [Creations]. The reasons are not entirely clear. Whether it was out of embarrassment, fear, or some other reason …” (page 20, Revised Statement of Decision dated 11 January 2017). In cross-examination Mr Frenkel was asked questions by Miss Ansell QC by reference to his depositions in the Californian Claims. This showed, as the US Judge had found, that he was secretive in relation to ITC and, as Mr Barden conceded in his closing submissions, that this “caginess” was still visible in his evidence to this Court. However, as I made clear to Miss Ansell QC during the course of the trial, I was not sure that this line of questioning in relation to the depositions was necessarily going to assist me in resolving the issues in this particular case.

   5. I watched and listened very carefully to Mr Frenkel when he gave his evidence. Having done so, I do not believe Mr Frenkel’s evidence about what he says Mr Lyampert told him as a result of his meeting with Mr Bell in August 2004. This is because I do not believe Mr Frenkel can actually remember what he was, or was not, told by Mr Lyampert in August 2004. August 2004 is a very long time ago and, at the time, Mr Frenkel was in a successful business relationship with Mr Lyampert through Inc. They were getting on very well and there would have been nothing particularly memorable, or remarkable, about Mr Lyampert entering into negotiations with Mr Bell on behalf of Inc, and therefore no reason for Mr Frenkel to remember the details of any discussions they had between each other.

   6. Further, Mr Frenkel is not a “details man” and as long as he was making money there is nothing to show that he was interested in matters such as directorships or shareholdings. Indeed, in 2005/2006 he had no idea how many shares there were in the UK Company and the first time he made any claim to the shares in the UK Company was in a draft declaration dated May 2010, which was produced after Inc had been dissolved and his dispute with Mr Lyampert had arisen. This, of course, points to the conclusion that it is not credible that in 2004 Mr Frenkel discussed, let alone agreed, with Mr Lyampert that he personally should be entitled to a 25.5% shareholding in the UK Company.

   7. It seems to me that much of what Mr Frenkel now says happened in 2004 in relation to the establishment of the UK Company is what he would have liked to have happened and cannot be true. I give one example. In his second witness statement at paragraph 13 Mr Frenkel says that:

“In late 2003 or early 2004 … Inc sold products all over the world and Mr Lyampert and I believed that a Europe office would help us secure a larger market share. Therefore, we approached Mr Bell. Mr Bell had experience in operating a company in the UK and we had had a long standing business relationship with him. Bstock Ltd [(“Bstock“)] was not doing very well and Mr Bell wanted to make more money. Mr Lyampert and I gave him that opportunity by forming a start up with a recognised name in the industry “LA Micro” at a time when he had limited resources and expenses. Inc was very successful and so this partnership was very much an interesting venture for Mr Bell, therefore it was easy to negotiate on our terms.”

1. 1. There is no foundation for Mr Frenkel’s evidence that Bstock was not doing very well, or that Mr Bell wanted to make more money, and “therefore” it was easy for Mr Frenkel and Mr Lyampert to negotiate on their terms. Mr Bell’s unchallenged evidence was that, in 2003/2004 Bstock was doing well, and was generating a comfortable income for him. Further, he did not have any money worries and would have been considered by many to be well off. He had lost his mother in the Lockerbie air crash and, by 2003, had received a substantial seven figure sum in compensation from the disaster.

   2. In other aspects Mr Frenkel sought to exaggerate his evidence. For example, he said in second witness statement that “at all times Mr Bell and Mr Lyampert referred to and treated me as a director and shareholder of the [UK] Company at any computer shows/conferences we attended. When Mr Lyampert, Mr Bell, Mr Gorban and I attended the Hanover conference … Mr Lyampert, Mr Bell and I referred to each other as directors and shareholders of the [UK] Company” (paragraph 34). However, Mr Frenkel accepted in cross-examination that this was not correct, and when he went to a trade show with Mr Bell “we just call each other business partners”. He also accepted, somewhat tellingly, that he did not understand what the difference was “between business partner and co-owners of the company”.

   3. In these circumstances it seems to me that I must approach Mr Frenkel’s evidence with considerable caution and I cannot accept his evidence unless it is undisputed, or there is other evidence which is independent to corroborate it. In reality that means I can only accept Mr Frenkel’s evidence it if coincides with the evidence of Mr Bell. This is because I do not regard the evidence of Mr Gorban as independent. Mr Gorban is Mr Frenkel’s business partner in Baseline Capital LLC and other LLCs and, as I have already mentioned, a very close friend of Mr Frenkel.

   4. Mr Gorban’s recollection of the events which led up to the trip to the UK in August 2004, and the trip itself, was hazy to say the least. He could not remember whether he had spoken to Mr Bell about the new joint venture in the UK, or how it came about that he went on the trip with Mr Lyampert. It appears that the event he could remember best was attending a bank with Mr Lyampert and the signing of documents so that a bank account could be opened. He did not read the documents that Mr Lyampert signed in the UK, but took them on “good faith” from Mr Bell. However, at one point in cross-examination, he said that the Form 288a, which Mr Lyampert signed to record his appointment as a director of the UK Company, “[had] everything to do with the [UK Company] and Mr Lyampert was signing as a director, and my understanding that was also implying that he is signing for the shares of the company”. That document had nothing whatsoever to do with shares in the UK Company. Further, in his witness statement Mr Gorban asserted that “Mr Frenkel was also not present to sign the necessary documentation to register 25.5% of the shares in his name and therefore those shares were temporarily assigned to Mr Lyampert”. Mr Gorban was asked in cross-examination by Mr Strelitz how he was able to give this evidence. Mr Gorban was unable to explain where he got this understanding from. All he could really say was that he remembered people signing documents that might “pertain” to, or be related to, the shares. In these circumstances, Mr Gorban’s ability to recall what happened when he was in the UK with Mr Lyampert is very limited indeed.

   5. The other point I bear in mind is that there were other aspects of Mr Gorban’s evidence which were unsatisfactory. In 2010 Mr Gorban set up a company called IT Creations Inc, which was his company. He was asked about this company in the evidence he gave in a deposition on 9 September 2010 and, in that deposition, the evidence he gave was that he reported to a Mr Boris Pochtar, who he said was the president of IT Creations Inc. In cross-examination Miss Ansell QC put to him that he could not be reporting to Mr Pochtar as IT Creations Inc was Mr Gorban’s company which was ultimately going to be in his name. Mr Gorban’s answer to that was that he was “reporting to Boris Pochtar in a sense of we were discussing things that I was doing for the company because he was in charge of finances at the time”. That answer does not make any sense. Mr Gorban was asked a straightforward question, yet he could not give a straightforward answer.

   6. Mr Gorban’s evidence must also be approached with caution and I cannot accept it unless it is undisputed, or there is other evidence which is independent to corroborate it.

The evidence for the First Defendant

1. 1. Mr Lyampert gave evidence and he was the only witness in support of his case. Mr Lyampert’s first language is Russian. It is clear that he is capable of understanding English, but he is much more comfortable speaking in Russian and, at the PTR in May 2017, Mr Lyampert was given permission by HHJ Davis-White QC (sitting as a Judge of the Chancery Division) to give evidence and be cross-examined with the services of “an appropriately qualified interpreter”. However, before I turn to Mr Lyampert’s oral evidence at trial, I need to say something about Mr Lyampert’s witness statements.

   2. Mr Lyampert served three witness statements. The first witness statement contained the evidence in support of Mr Lyampert’s case and was dated 9 March 2017. It was 38 pages long with 74 paragraphs. The second witness statement was dated 15 May 2017, and was 17 pages long with 38 paragraphs. This witness statement was filed in answer to the witness evidence served by and on behalf of Mr Frenkel.

   3. Mr Lyampert’s first two witness statements were written entirely in English. They did not contain any indication that Mr Lyampert might not be sufficiently fluent in English to give his evidence in English, or indeed pay any regard to paragraph 19.13 of the Chancery Guide which provides that:

“If a witness is not sufficiently fluent in English to give his or her evidence in English, the witness statement should be in the witness’s own language and a translation provided. If a witness is not fluent in English but can make himself or herself understood in broken English and can understand written English, the statement need not be in his or her own words provided that these matters are indicated in the statement itself. It must however be written so as to express as accurately as possible the substance of his or her evidence.”

1. 1. Mr Lyampert’s third witness statement, dated 19 May 2017, was filed for the purposes of the PTR and in answer to “the suggestion that I do not require the assistance of an interpreter when I give my oral evidence at trial”. This statement was again written in English and Mr Lyampert’s statement explained:

“I am capable, given sufficient time, of understanding written English and expressing myself. However, I struggle to follow and to understand oral conversations, especially if they involve complex matters. My spoken English is very poor. I also find it difficult to articulate myself in a clear and timely manner. This is well known to all parties in the present proceedings. For these reasons, I used an interpreter throughout the US proceedings. I have always communicated orally with my English legal advisors, O’Melveny & Myers, with the help of an interpreter. To clarify, I can generally make myself understood in broken English, and my previous witness statements have been written with the assistance of my legal advisors so as to express the substance of my evidence. I then had sufficient time to read, digest and understand the written statements… I did not think it necessary to address this point in my previous evidence as I thought this was known by all parties involved in these proceedings, and I have never understood it to be an issue until I saw Blake Morgan’s letter dated 17 May 2017”.

1. 1. Mr Lyampert’s oral evidence was given through an interpreter. This, unfortunately, was not without incident. Mr Lyampert’s evidence started on the afternoon of Thursday 22 June 2017, and the interpreter was sworn. There was no issue between the parties that the interpreter was appropriately qualified to interpret and translate Russian, although I did ask about this before he was sworn and was provided with a copy of his CV. It became clear at the start of Mr Lyampert’s cross-examination that Mr Lyampert had been using the interpreter during the course of the trial to communicate in meetings with his solicitors. Before that Mr Lyampert had used a different interpreter, who appears to have been his daughter. At the end of the afternoon I gave the usual warning that, as Mr Lyampert was in the course of giving his evidence, both Mr Lyampert and the interpreter should not contact anyone about the case overnight, and they should not contact each other.

   2. However, first thing on the Friday morning, Miss Ansell QC informed me that overnight her instructing solicitor had received an email from the interpreter in which he had set out his view about Mr Lyampert’s evidence and said this: “From today (sic) experience, [Mr Lyampert] has to concentrate more and to disperse (sic) his attention between English and Russian. He loses the essence of the question asked.” In the absence of both Mr Lyampert and the interpreter I discussed this development with Counsel as, on the face of the email, it gave rise to a concern about the interpreter’s independence. I decided to discharge the interpreter, and directed the First Defendant’s solicitors to find a new interpreter who had no previous connection with the case. There was no objection from Counsel to this course, and a new interpreter was found quickly. The hearing resumed on Monday 26 June 2017, with Ms Elena Khorishko, AIIC as the interpreter. There was no suggestion by Counsel that, in the circumstances, Mr Lyampert had to start his evidence again, and Mr Barden’s cross-examination picked up where he had left off on the afternoon of Thursday 22 June 2017.

   3. Returning to Mr Lyampert’s witness statements, in cross-examination he was, unsurprisingly, asked by Mr Barden how he managed to put together his witness statements in English which contained expressions that Mr Lyampert did not understand. Mr Lyampert explained that his wife and his daughter had assisted him in writing these statements. He said that he spoke to his wife and daughter in Russian. However, his daughter, who is a Californian lawyer, has difficulty understanding him, as she was only two and a half years’ old when Mr Lyampert moved to the USA, and Russian was not her first language. Mr Lyampert said that the statements were then translated into English by a Mr Mogilyanskiy, who he said was a “good acquaintance” of his (and also of Mr Frenkel) and he had known Mr Mogilyanskiy since 2004 or 2005. Mr Lyampert described the process by which these two statements were prepared in these terms: “First, I explained everything to my wife, who made notes, and then after that I made telephone calls to Mr Mogilyanskiy and I explained to him in Russian what I meant, how it was, and he also made some notes”.

   4. Mr Lyampert could not remember how his third witness statement dated 19 May 2017 had been prepared. During the course of his evidence I asked him to read this short statement to himself, and then explain to me in his own words what it said. He was able to do this, and I was satisfied that he understood that that statement explained that he could not give oral evidence without the assistance of an interpreter, and the reasons for that.

   5. For my part, I simply do not understand why Mr Lyampert, and those advising him, did not apply at the CMC in September 2016 for the witness statement of the oral evidence he intended to rely on at trial to be filed in Russian under CPR Part 23.2 and paragraph 19.13 of the Chancery Guide. Looking at the concluding paragraph of Mr Lyampert’s third witness statement, the reason would appear to be that no one thought about it. That, of course, is not good enough. It seems to me that the manner in which Mr Lyampert’s witness statements have been prepared is deeply unsatisfactory. The content of all Mr Lyampert’s witness statements must therefore be approached with a considerable degree of caution and, before accepting what Mr Lyampert has said in these statements, it is necessary to look to see whether is any corroboration for what he has said elsewhere in the evidence.

   6. In cross-examination, Mr Lyampert did, on the whole, try to answer the questions he was asked. He was at times animated, particularly if he did not agree with points that were put to him. However, he was not argumentative, or at pains to try and get particular points across and I therefore found him to be a more straightforward in his oral evidence than either Mr Frenkel or Mr Gorban. Nevertheless, given the passage of time and the problems with his evidence-in-chief, I consider that his evidence also needs to be treated with caution. However, what was interesting about Mr Lyampert’s oral evidence was that, as the cross-examination progressed, the evidence he did give in relation to his recollection of events in August 2004 did not support his own case, but corresponded with the evidence of Mr Bell and the case of the other defendants.

   7. For example, in re-examination, he gave this evidence in answer to questions from his Counsel, Miss Ansell QC:

“Q: … Final Question: I think you’ve been asked, if not two, maybe three or even four, times about the deposition of Mr Bell in 2012. You’ve described Mr Bell’s answer as his “visualisation”. I want to ask you the same question, but I want you to put yourself back in 2004, so winter 2004/beginning of 2005. Who were the owners of LA Micro (UK) at that time?

A: We had two directors at the time and at the time there was only one issued share in the company.

Q: Was there any agreement at that time about ownership of the company?

A: We have a verbal – we had a verbal agreement that the votes would be 49 to 51 in the company.

Q: Who had the 51?

A: It belonged to the company, by which I mean Inc.”

1. 1. Mr Barden, Counsel for the Claimant, said these answers were of concern as Mr Lyampert had had a “sudden change of evidence (and style) over the weekend”. The evidence I have set out at paragraph 57 above was given on Monday 26 June 2017, through the new interpreter. I would agree with Mr Barden, that Mr Lyampert’s evidence certainly needs to be treated with caution for the reasons I have already identified. Mr Barden also maintains that Mr Lyampert is further discredited by the Californian Claims which he has “lost to the tune” of more than US$2 million, and gives the impression that “he will say or doing anything to stop [Mr] Frenkel getting anything.” However, if the evidence that Mr Lyampert has given is corroborated by other evidence which I do consider to be reliable, then it seems to me that I can accept it. The fact that other parts of his evidence are unreliable, unsatisfactory or untrue, does not mean, when I consider his evidence as a whole, that I should reject the entirety of his evidence.

The evidence for the Second and Third Defendants

1. Mr Bell gave evidence on his own behalf and on behalf of the UK Company. In cross-examination Mr Bell answered the questions he was asked clearly, and he was not argumentative in his answers. His approach was entirely straightforward and he readily accepted when he could not remember something or could not recall what had happened. The closest I got to understanding what had actually happened between the parties in this case in relation to the establishment of the UK Company was from the evidence I heard and read from Mr Bell. This is perhaps not surprising given that, in relation to this dispute, Mr Bell and the UK Company are, in effect, neutral. Nevertheless, having listened carefully to Mr Bell giving his evidence, and watched him doing so, I am quite satisfied that he was trying to assist the court in the answers he gave and that he was a truthful witness. His evidence was therefore by far and away the most reliable evidence before the court and, where there are disputes between the witnesses as to what did or did not happen, I have no hesitation in preferring and accepting the evidence of Mr Bell, over the evidence of Mr Frenkel, Mr Lyampert and Mr Gorban.”

THE RESULT

The claimant was not successful.