THE CREDIBILITY OF WITNESSES: WHEN THE DEFENDANT’S OWN EVIDENCE AMOUNTS TO A HOME GOAL

January 7, 2018 · by · in Civil evidence, Witness statements

This blog has looked many times at the issue of witness credibility and why the judge prefers the evidence of one witness over another . This was an issue to the fore in the judgment of Mr Justice Green in  Khakshouri v Jimenez & Anor [2017] EWHC 3392 (QB).  This is  a case what comes with its own press release.

“For Mr Jimenez’s alternative version of events to be accepted: (a)  I must find that four senior executives on the Defendant’s side of the Court room  …, all of whom knew better, made a simple yet glaring error when they (variously) drafted, approved and signed the Side Letter; (b) once I have discounted and ignored the Side Letter I must then proceed to prefer the account of a witness who on his own acknowledgement has a serious difficulty in recalling what he actually said and what was said to him; (c) I should then accept Mr Jimenez’s version of what he thinks he said even though his account from the witness box was at variance with his position in pleadings and in his witness statement, all signed by him; and (d), I must also reject the consistently advanced account of a witness (Mr Khakshouri) whose evidence was cogent and consistent with the underlying logic of the case and with the documents.   Viewed thus I do not find the First Defendant’s evidence remotely convincing.”

“…Mr Leech QC accused him of having a “mantra” which he kept repeating.  If it was a mantra then it was because he was asked, repeatedly, more or less the same question, to which he gave the same reply. A mantra can simply be the truth consistently reiterated.”

THE CASE

The claimant brought an action for damages for deceit. He alleged that the defendants had misrepresented their position in inducing him to make a loan to Charlton Athletic Football club in 2013.  The judge’s initial task was to consider whether the defendants had, in fact, made the representations.

THE JUDGMENT ON WITNESS CREDIBILITY

The judge considered the different accounts of what was said in a series of meetings between the claimant and one of the defendants.

  1. “I am bound to accept Mr Khakshouri’s account.  I find that the First Defendant did make the representation alleged.  There are six reasons for this.

  2. First, in choosing between the competing versions of the Los Angeles discussions between 15th – 17th September 2013 I must accept the account of Mr Khakshouri.  He was cross-examined for just short of two court days. He was a calm and thoughtful witness throughout.  He gave an unwaveringly consistent account of events. He had a detailed recollection and memory of what occurred during the meetings.  He was described by other witnesses (for the Defendants) as “meticulous” in his attention to detail, a fact which was evident from many documents before the Court. He demonstrated a command of the details of the documents.  He did not seek to argue around difficult points but accepted several propositions put to him which were not entirely in his favour.  His account was balanced.  His version of events, moreover, was consistent with both the documentary evidence and the essential logic and commercial realities behind the case.  To use the vernacular his case “stacked up”.  So far as Mr Jimenez was concerned, he accepted, as set out above, that his memory of the details of the September meetings was hazy.  He had no clear recollection of who said what, where and when.  His answers to questions were, as he acknowledged, his attempt, some years later, to work out what he would have said and his ability to answer questions about specific documents or aspects of the financing of the sale of the Club was often imprecise.  In a number of critical respects (as I explain in below), I also found his answers to be most unsatisfactory.

  3. Second, the account of Mr Jimenez changed significantly over the course of the proceedings, and in particular from the early days of the litigation when he denied making any representation at all about control (when his memory should have been sharpest) to the later stages of the litigation when he suddenly accepted that he did in fact make a representation about control (but when on his own account his memory was at its least reliable).   In paragraph 11(5) of his Amended Defence Mr Jimenez explained that he had no beneficial interest or direct or indirect shareholding in the Club (paragraph [3]) and he denied representing “…he and Mr Cash controlled the club or that … Mr Cash had an interest in the club”.  Following disclosure, the Claimant sought further and better particulars of the First Defendant’s averment in the light of both the Side Letter and a letter from his solicitors which implied that prior to the sale of the Club Mr Jimenez did exercise control (see paragraph [89] below).  Mr Jimenez responded (29th July 2016) saying that the Side Letter was incorrect and the solicitor’s letter was “imprecise and informal”.   In his witness statement (4th August 2017) Mr Jimenez again denied having told Mr Khakshouri that he and Kevin Cash were the controllers of the Club, though he does state that he believed that Mr Khakshouri would have been aware that “we effectively controlled the Club”.

  4. Under cross-examination Mr Jimenez changed his position. He now accepted that the question of control was “for sure” material to Mr Khakshouri’s decision to make the Loan.  He was interested in control because “…Darius would have wanted to know that he was going to get his money back”.  He accepts that he gave that assurance by reference to control. Mr Khakshouri says that the need for clarity over legal ownership was because he needed certainty that a linked Land Deal could be secured on sale of the Club. He did not accept that the need for certainty over control was related to the repayment of the Loan.  But it suffices, for present purposes, that Mr Jimenez accepted that there was a powerful reason for him to satisfy Mr Khakshouri about the control structure and it follows that for both parties legal control / ownership was an issue.  Mr Jimenez’s evidence has thus been inconsistent on this key issue throughout the litigation.  By contrast Mr Khakshouri’s evidence has been wholly consistent, to the point whereby Mr Leech QC accused him of having a “mantra” which he kept repeating.  If it was a mantra then it was because he was asked, repeatedly, more or less the same question, to which he gave the same reply. A mantra can simply be the truth consistently reiterated.

  5. Third, compelling corroborative evidence is found in the Side Letter (see paragraph [28] above).  This was drafted for the Defendants by their own employees and colleagues upon the express basis that it accurately reflected the discussions which had occurred between Mr Khakshouri and Mr Jimenez during the September 2013 meetings.  In it both Mr Jimenez and Mr Cash represent, as fact, that they were the majority shareholders in the Club.  These express representations are consistent with the evidence of Mr Khakshouri.  For Mr Jimenez’s alternative version of events to be accepted: (a)  I must find that four senior executives on the Defendant’s side of the Court room (Messrs Muir, Deeley, Cash and Jimenez), all of whom knew better, made a simple yet glaring error when they (variously) drafted, approved and signed the Side Letter; (b) once I have discounted and ignored the Side Letter I must then proceed to prefer the account of a witness who on his own acknowledgement has a serious difficulty in recalling what he actually said and what was said to him; (c) I should then accept Mr Jimenez’s version of what he thinks he said even though his account from the witness box was at variance with his position in pleadings and in his witness statement, all signed by him; and (d), I must also reject the consistently advanced account of a witness (Mr Khakshouri) whose evidence was cogent and consistent with the underlying logic of the case and with the documents.   Viewed thus I do not find the First Defendant’s evidence remotely convincing.

  6. Fourth, Mr Khakshouri’s evidence makes commercial sense.  The Side Letter makes it expressly clear that the Loan was in consideration for the Land Deal. If the Land Deal was to be delivered, it is entirely credible that Mr Khakshouri would have asked Tony Jimenez to guarantee to him how he was to bring it about. If the answer had been merely “I will do my best but no promises …” then that is a very far cry from “I promise to you that I will ensure the coming into being of the Land Deal by refusing to sell the Club without a Land Deal being in place”. Counsel for the Defendants argued that there was very little between the parties and it was a question of “nuances” only.  I disagree. Even on the Defendant’s own best endeavours only case, they were seeking to secure a sale of the Club simultaneous with securing participation in a Land Deal which would survive the sale. They proposed to do this through the joint SPV structure described at paragraph [44] above. I have also set out above (paragraph [62]) the email exchange during which Kevin Cash and Tony Jimenez both expressed the view that without a linked sale (the Land Deal) they had no leverage at all. And they were right. For the Defendants to remain “with skin in the game” (as it was put) they simply had to have an agreement in place which outlived the sale of the Club.  And they could only do this through a linked Land Deal.  There is also evidence before the court which shows that as of September 2013 the Defendants were extremely confident that they would secure a linked sale, i.e. a Land Deal (see eg the duration of the evidence of Michael Slater set out at paragraph [114] below). It stands to reason that Tony Jimenez would have been confident in putting to Darius Khakshouri that he (and Kevin Cash) had the legal power to ensure that the Club would not be sold absent a linked Land Deal. There was a sound commercial reason why the first representation would be made, even on the Defendant’s own case.

  7. Fifth, the identification of Messrs Jimenez and Cash as the majority shareholders, and not anyone else, was also critical. The short point is that a representation that it was Messrs Jimenez and Cash who jointly legally controlled the Club was, in my judgment, the sole permutation of legal ownership that would have satisfied the Claimant and induced him to make the Loan. Had the representation been that other natural or legal persons or entities (for example Mr Slater and/or the Cavansa Trust and/or a slew of unknown Spanish minority shareholders) were in legal control of the Club then the all-important personal dynamic would have evaporated from the equation. There is a plethora of evidence to support this proposition. Mr Jimenez in his witness statement said: “… our discussion about the loan was informal and relaxed, it was a discussion between close friends, with Darius eager to help and support.  It was not like a business negotiation – Darius’s attitude was that he was happy to provide whatever we needed, as he trusted Kevin and me totally”.  He repeated as much in oral evidence, as did Mr Cash. Mr Khakshouri also considered trust to be pivotal.  He was being invited to raise funds and lend them on (more or less) 48 hours notice, with no documentation, and he did so because of his personal relationship with the Defendants and their stated ability to control the Club via their joint majority shareholdings.  Mr Khakshouri made this clear on multiple occasions in his evidence.  For instance:

(1)          “I was committed to this project, the project being the land deal, the land deal being that, you know, originating from the fact that the club wouldn’t be sold without it, and the people that could make that possible were the owners.  The owners were Tony and Kevin.  So everything was, in my mind, lined up the way it should have been, and so now we’re generating paperwork and it’s after the fact and I still don’t bring in an attorney and try to change anything because I trusted and believed that we were all working towards that same goal.”

(2)          “Yes, I asked him “Who is the owner of — how is the club owned?” and he was very specific in telling me that, you know, he and Kevin owned the football club.  There wasn’t anybody else involved in this.  I needed to know that I was loaning this money to Kevin and Tony, and that there was nobody else involved and that it was — that had to be very clear in my mind because there was very little time.  Very little time and no documentation.”

(3)          “That was part of it, but also I wanted to make sure that, you know, Tony was telling me exactly — when he was telling me that they were the owners I was sure that that would be the same thing that I would hear back from Kevin Cash if I needed to confirm that.”

I accept the evidence of Mr Khakshouri.

  1. Sixth, it is also relevant that the Defendants repeated or made, or at the least authorised the making or repetition of, similar representations, including to third parties.  The representations were that either they collectively or Tony Jimenez on his own were majority shareholders or owners. The following are contemporaneous illustrations:

  2.             In July 2013 both Defendants were copied in on an email drafted by Mr Deeley to a prospective purchaser of the Club which said that the First Defendant “…owns 90% of Charlton Athletic” as he is “…the majority Shareholder at Charlton Athletic controlling 90% of the share capital.” The representation as to ownership was quite plainly false. This was just two months prior to the meetings in September 2013 in Los Angeles.

  3.             In addition, there is an email from Mr Cash to Mr Jimenez and to Mr Deeley in December 2013 which contains suggested answers to questions from a potential purchaser of the Club which also states, again inaccurately, that the First Defendant is the 90% controller of the Club.

                                        iii.            In addition there is an email from the Defendant’s solicitor to the Claimant sent on 30th January 2014 (after the sale of the Club) explaining that the reason for switching the borrower on the Loan was that the Defendants (i.e. Mr Jimenez and Mr Cash) “…no longer control” the Club. The clear implication intended to be drawn was that Mr Jimenez and Mr Cash had been the controllers, but were no longer.

  1.             This position was repeated subsequently in a letter from the Defendants themselves to the Claimant’s solicitors dated 31st July 2015 where the Defendants explained that the switch in the borrower was again because “we no longer controlled” the Club.”

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