CROSS-EXAMINATION: THE DUTY TO PUT A CASE: A GEM OF A DECISION

In W Nagel (A Firm) v Pluczenik Diamond Company NV [2018] EWCA Civ 2640 the Court of Appeal made an important observation about the duty of a cross-examiner to put their client’s case to an opposing witness. This provides an opportunity to look at earlier significant decisions in relation to the need for a party in litigation to “put their case” to a witness being cross-examined.

“In my opinion, it is not permissible for Pluczenik to seek to put forward for the first time on appeal a new factual case, not made or put in cross-examination below, about what was orally agreed between the parties.”

THE CASE

The claimant succeeded in an action for breach of contract. The defendant appealed.  One of the grounds of the appeal was, it transpired, not the way in which the defendant’s case was pleaded or put at trial.

Lord Justice Leggatt dealt with a part of the defendant’s argument about the judge’s findings of fact in relation to an agreement.

1. 1. On behalf of Pluczenik, Mr Clive Freedman QC (who did not appear below) advanced two arguments. First, he submitted that the judge was wrong to find that the sense or thrust of the oral agreement was that Pluczenik would retain Nagel as its broker – rather than merely that Pluczenik would not appoint another broker – for so long as Pluczenik held a sight. Secondly, Mr Freedman submitted that, even if the gist of what was agreed was as the judge found, the judge should have concluded that, as a matter of interpretation, the agreement that Pluczenik would retain Nagel as its broker no longer applied in the changed and unforeseen circumstances that obtained in 2013 when using a DTC broker was no longer compulsory.

The thrust of what was agreed

1. 1. The first submission would be a difficult argument to make at the best of times, involving as it does an attempt to persuade an appeal court to interfere with a finding of fact about what was orally agreed made by the judge who heard the evidence and whose role it was to find the relevant facts. But in the circumstances of this case I do not consider that this argument is even open to Pluczenik. The case which Pluczenik has sought to advance on this appeal about the thrust of what was agreed is not a case which it pleaded or put forward at the trial. Nor was this case put to Mr Nagel, who negotiated the oral agreement on behalf of Nagel, when he was cross-examined. As the judge observed (at para 80 of the judgment):

“Given the passage of time and the fact that neither [Mr Nagel] nor Isaac [Pluczenik] would have identified the distinction here in issue, which did not exist at the time, it may be that [Mr Nagel] could not have convincingly testified that the agreement was in one form rather than the other. He was not, however, afforded the opportunity to do so.”

1. The obligation on a party to put its case in cross-examination to a witness called by an opposing party is not to be taken too far. It is not and has never been the law that every fact asserted in evidence by a witness is deemed to be admitted unless it is challenged in cross-examination. But if on an important disputed factual issue in the proceedings a witness called by one party gives first hand evidence which contradicts a case which the opposing party wishes to invite the judge to accept, procedural fairness requires that this case should be put in cross-examination to the witness so that he has an opportunity to answer it.

2. Mr Nagel’s evidence about the terms of the oral agreement was challenged in cross-examination by counsel for Pluczenik. But it was challenged solely on the basis that, so it was suggested, no commitment at all was given by Pluczenik to retain Nagel as its broker. It was not suggested to Mr Nagel that, if any commitment was given, it was or might have been limited to a commitment not to appoint another broker. It would have been perfectly possible for Pluczenik to advance at the trial and put to Mr Nagel such an alternative case. It may be that a decision was taken for tactical reasons not to do so out of concern that it might undermine Mr Chaim Pluczenik’s evidence. But the fact that a decision is made for what may be good tactical reasons not to advance a case at trial does not relieve a party from the consequences of failure to advance that case. In my opinion, it is not permissible for Pluczenik to seek to put forward for the first time on appeal a new factual case, not made or put in cross-examination below, about what was orally agreed between the parties.

PUTTING YOUR CASE: AN IMPORTANT PRIVY COUNCIL DECISION

In Chen v Ng (British Virgin Islands) [2017] UKPC 27  the Judicial Committee of the Privy Council considered the extent of the duty to put a case to a witness. That case is a reminder of the importance of putting a case to a witness. The Privy Council confirmed the overturning of a decision on witness credibility in circumstances where certain key points were not put to that witness.

THE CASE

The action related to a dispute about ownership of shares.  The issue of credibility was central to the case.  The judge rejected Mr Ng’s explanation of what went on. One of the grounds of appeal was that the trial judge rejected Mr Ng’s evidence on the basis of matters that were never put to him in cross-examination.  This ground of appeal was allowed (among others) by the Eastern Caribbean Court of Appeal.  Madam Chen then appealed to the Privy Council.

THE  PRIVY COUNCIL JUDGMENT ON THIS ISSUE

The judgment considered the grounds on which the trial judge had rejected Mr Ng’s evidence.

48.  As explained in paras 13 and 14 above, the Judge based his rejection of Mr Ng’s evidence (summarised in para 8 above) as to the circumstances in which he transferred the Shares to Madam Chen, and in particular his evidence that the Shares would be transferred back to him after six months, on two grounds. The first was that the explanation which Mr Ng gave for this arrangement was unconvincing, as it would have been “self-evidently futile” to expect the Macau and Beijing authorities to believe that Mr Ng had no involvement in the proposed development. The second ground, which appears to the Board to be, and to have been regarded by the Judge as being, of less weight, was that, if Mr Ng’s explanation had been true, the Judge considered that he would have obtained a transfer in blank executed by Madam Chen, so that he could have ensured that the Shares were transferred back to him.

49.  These two grounds are not inherently objectionable as reasons for disbelieving Mr Ng. Recent guidance has been given by the UK Supreme Court in McGraddie v McGraddie [2013] 1 WLR 2477 and Henderson v Foxworth Investments Ltd [2014] 1 WLR 2600 and by the Board itself in Central Bank of Ecuador v Conticorp SA [2015] UKPC 11 as to the proper approach of an appellate court when deciding whether to interfere with a judge’s conclusion on a disputed issue of fact on which the judge has heard oral evidence. In McGraddie the Supreme Court and in Central Bank of Ecuador the Board set out a well-known passage from Lord Thankerton’s speech in Thomas v Thomas[1947] AC 484, 487-488, which encapsulates the principles relevant on this appeal. It is to this effect:

“(1)     Where a question of fact has been tried by a judge without a jury, and there is no question of misdirection of himself by the judge, an appellate court which is disposed to come to a different conclusion on the printed evidence, should not do so unless it is satisfied that any advantage enjoyed by the trial judge by reason of having seen and heard the witnesses, could not be sufficient to explain or justify the trial judge’s conclusion; (2) The appellate court may take the view that, without having seen or heard the witnesses, it is not in a position to come to any satisfactory conclusion on the printed evidence; (3) The appellate court, either because the reasons given by the trial judge are not satisfactory, or because it unmistakably so appears from the evidence, may be satisfied that he has not taken proper advantage of his having seen and heard the witnesses, and the matter will then become at large for the appellate court.”

50.  In Henderson at paras 62 and 66, the Supreme Court said, in shorthand, that an appellate court should only interfere with a judge’s conclusion of fact if it was one which “no reasonable judge could have reached” or the judge’s decision “cannot be reasonably explained or justified”. In Central Bank of Ecuador, the Board, after reciting once again Lord Thankerton’s famous passage (above) and examining other considerations bearing on the matter, pointed out that these principles do not mean that an appellate court should never intervene, that they “assume that the judge has taken proper advantage of having heard and seen the witnesses, and has in that connection tested their evidence by reference to a correct understanding of the issues against the background of the material available and the inherent probabilities” (para 8). In the present case, the Judge made findings of primary fact about Mr Ng’s credibility and case, based on reading his lengthy written material and seeing him in the witness box for one and a half days in the context of the material before him as a whole. Ultimately, however he expressed only two reasons for rejecting Mr Ng’s evidence, so that it is on them that the appeal in this area must focus. It is not suggested that the Judge’s two grounds for rejecting Mr Ng’s evidence were unreasonable or unjustified, and rightly so: his grounds were plainly reasonable in themselves. However, the attack on the Judge’s finding in this case is not based on the merits of his grounds for disbelieving Mr Ng: it is founded on an alleged procedural flaw in relation to each of those grounds.

51.  Mr Parker’s argument is, as it was before the Court of Appeal, that if the two grounds cited by the Judge were to be relied on as reasons for disbelieving Mr Ng, they ought to have been put to Mr Ng in cross-examination. As neither ground was raised with him, runs the argument, it was unfair for the Judge to have relied on either of them as reasons for disbelieving Mr Ng; accordingly, it would be wrong to let the decision of the Judge stand. The Court of Appeal accepted this argument, and, albeit with some hesitation, the Board considers that they were right to do so.

52.  In a perfect world, any ground for doubting the evidence of a witness ought to be put to him, and a judge should only rely on a ground for disbelieving a witness which that witness has had an opportunity of explaining. However, the world is not perfect, and, while both points remain ideals which should always be in the minds of cross-examiners and trial judges, they cannot be absolute requirements in every case. Even in a very full trial, it may often be disproportionate and unrealistic to expect a cross-examiner to put every possible reason for disbelieving a witness to that witness, especially in a complex case, and it may be particularly difficult to do so in a case such as this, where the Judge sensibly rationed the time for cross-examination and the witness concerned needed an interpreter. Once it is accepted that not every point may be put, it is inevitable that there will be cases where a point which strikes the judge as a significant reason for disbelieving some evidence when he comes to give judgment, has not been put to the witness who gave it.

53.  Mr Parker relies on a general rule, namely that “it will not do to impeach the credibility of a witness upon a matter on which he has not had any opportunity of giving an explanation by reason of there having been no suggestion whatever in the course of the case that his story is not accepted”, as Lord Herschell LC put it in Browne v Dunn (1893) 6 R 67, 71. In other words, where it is not made clear during (or before) a trial that the evidence, or a significant aspect of the evidence, of a witness (especially if he is a party in the proceedings) is challenged as inaccurate, it is not appropriate, at least in the absence of further relevant facts, for the evidence then to be challenged in closing speeches or in the subsequent judgment. A relatively recent example of the application of this rule by the English Court of Appeal can be found in Markem Corpn v Zipher Ltd [2005] RPC 31.

54.  The Judge’s rejection of Mr Ng’s evidence, and his reasons for rejecting that evidence, do not infringe this general rule, because it was clear from the inception of the instant proceedings, and throughout the trial that Mr Ng’s evidence as to the basis on which the Shares were transferred in October 2011 was rejected by Madam Chen. Indeed, Mr Ng was cross-examined on the basis that he was not telling the truth about this issue. The challenge is therefore more nuanced than if it was based on the general rule: it is based on an objection to the grounds for rejecting Mr Ng’s evidence, rather than an objection to the rejection itself. It appears to the Board that an appellate court’s decision whether to uphold a trial judge’s decision to reject a witness’s evidence on grounds which were not put to the witness must depend on the facts of the particular case. Ultimately, it must turn on the question whether the trial, viewed overall, was fair bearing in mind that the relevant issue was decided on the basis that a witness was disbelieved on grounds which were not put to him.

55.  At a relatively high level of generality, in such a case an appellate court should have in mind two conflicting principles: the need for finality and minimising costs in litigation, on the one hand, and the even more important requirement of a fair trial, on the other. Specific factors to be taken into account would include the importance of the relevant issue both absolutely and in the context of the case; the closeness of the grounds to the points which were put to the witness; the reasonableness of the grounds not having been put, including the amount of time available for cross-examination and the amount of material to be put to the witness; whether the ground had been raised or touched on in speeches to the court, witness statements or other relevant places; and, in some cases, the plausibility of the notion that the witness might have satisfactorily answered the grounds.

56.  It is also worth an appellate court having in mind in this context what was said by Lord Hoffmann in Piglowska v Piglowski [1999] 1 WLR 1360, 1372:

“If I may quote what I said in Biogen Inc v Medeva Plc [1997] RPC 1, 45:

‘… [S]pecific findings of fact, even by the most meticulous judge, are inherently an incomplete statement of the impression which was made upon him by the primary evidence. His expressed findings are always surrounded by a penumbra of imprecision as to emphasis, relative weight, minor qualification and nuance … of which time and language do not permit exact expression, but which may play an important part in the judge’s overall evaluation.’

… The exigencies of daily court room life are such that reasons for judgment will always be capable of having been better expressed.”

57.  In the instant case, the Board is of the view that it would not be fair to let the rejection of Mr Ng’s evidence stand, given that the two grounds upon which the Judge reached his decision were not put to Mr Ng. The ultimate factual dispute between the parties in the litigation was the basis upon which, and circumstances in which, the Transfer of the Shares took place, and therefore the issue on which Mr Ng was disbelieved was central to the proceedings.

58.  The two grounds on which the Judge relied were not by any means obscure. The first, that it would have been futile to try and hide Mr Ng’s involvement in the development, was primarily based on the contents of the feasibility study, which was actually put as a document to Mr Ng (albeit not opened, let alone read), and one only has to look at the first few pages to see the significance of Mr Ng to the development. The second ground, that Mr Ng would have taken a transfer back in blank, was a pretty obvious point, not least because he had referred to it in his witness statement, and he had also mentioned taking just such a course in relation to another transaction four years earlier. Both grounds could have been put very easily in the course of a 90-minute cross-examination, even allowing for the other points which Mr McDonnell raised with him and the fact that Mr Ng needed an interpreter – and also allowing for wisdom of hindsight. Put bluntly, these two grounds were simple, self-contained reasons for disbelieving Mr Ng, whereas the bulk of the cross-examination was directed to more peripheral and complicated issues such as whether, at the time of the Transfer, he had criminal connections, he had been in financial difficulties, and he had fallen out with a proposed partner.

59.  It is said that the first ground was raised in Mr McDonnell’s closing submissions, but that was on the basis that Mr Ng’s explanation for the Transfer of the Shares and the alleged agreement to transfer back in six months would have been pointless because the development project had been abandoned. Quite apart from the fact that it was never put to Mr Ng that the project had been abandoned, that was not the basis upon which the Judge rested his ground, which was that Mr Ng’s involvement in the development project would have been apparent to the authorities; indeed, the notion that the project had been abandoned (as Madam Chen said) is in some ways inconsistent with that ground. The second ground was, as mentioned above, specifically addressed in Mr Ng’s witness statement, which is of some assistance to Madam Chen’s case, but was not touched on at any point at the hearing, and it was a secondary reason for disbelieving Mr Ng.

60.  It is not hard to conceive of answers which might have been available to Mr Ng to answer the first ground, and which might have satisfied or at least mitigated the Judge’s concern. Mr Ng had dealt with the second point in his witness statement, but it is not impossible that he might have had more to say about it if it had been raised in cross-examination. Of course, the Judge may very well have had strong reservations about Mr Ng’s evidence for other reasons, but he gave only two specific grounds for disbelieving him, and there is no other material in his judgment which justifies a conclusion that he would have reached the same decision without these two grounds.

61.  In summary, then, (i) the issue concerned was central to the whole proceedings, (ii) neither ground which the Judge gave for disbelieving Mr Ng on that issue was put to Mr Ng, (iii) neither ground was referred to at the hearing at any time, save that the second (less significant) ground had been addressed in Mr Ng’s witness statement, (iv) neither ground was obscure or difficult and so each could reasonably be expected to have been raised in cross-examination, (v) it is quite possible that Mr Ng would have given believable evidence which weakened or undermined those grounds, and (vi) there is nothing in the judgment which can reasonably be invoked to say that it is reasonably clear that the judge would have reached the same conclusion without those grounds.

Conclusions

62.  The Judge’s reasoning for concluding that the Transfer constituted a sale for consideration and his decision to reject Mr Ng’s case therefore cannot stand. The issue as to which of the possibilities identified in para 36 above may apply, whether the Transfer of 4 October 2011 gave rise to a resulting trust, and as to the credibility of Mr Ng’s evidence and case all require further consideration in the light of evidence. It is self-evidently not possible for the Board to reach a conclusion on the issue of Mr Ng’s credibility. The only possible outcome is therefore that this case must be sent back for full re-hearing. Subject to any order which the BVI High Court may give, it would be both unfair and impractical for it to go back on any basis other than that (i) the parties are both free to conduct their respective cases at the re-hearing as if it was the first trial, but (ii) their respective cases should be based on their existing pleadings and witness statements, subject to such amendments and further evidence as the court at first instance may permit, in particular with regard to the new material deriving from the Macau legal proceedings (para 46 above) and (iii) they will be entitled to rely on the transcript of the hearing before Bannister J as cross-examination material.

USEFUL GUIDANCE ON PUTTING YOUR CASE

There is a useful summary of the duty to put the case in  EPI Environmental Technologies Inc -v- Symphony Plastic Technologies PLC [2004] EWHC 2945 (Ch) Mr Justice Peter Smith stated:

“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).”