BOTH SIDES LATE WITH WITNESS EVIDENCE: BOTH SIDES REFUSED RELIEF FROM SANCTIONS: DEUCE IN A JUICE CASE

There are many interesting aspects of the judgment in  Goknur Gida Maddeleri Enerji Imalat Ithalat Ihracat Ticaret VE Sanati A.S (Goknur) v Organic Village Ltd [2019] EWHC 2201 (QB), not least that both sides were in default in relation to the service of witness evidence, both sides were refused relief from sanctions.

“There can be no doubt that, where (as here) directions are given for the exchange of witness statements by a particular date, an application to rely on a further witness statement after that date – even from a witness who has already served one – requires relief from sanctions.“

KEY POINTS

• A party who serves a witness statement must call that witness to give evidence at trial if they seek to rely on that evidence.
• A party cannot (or should not) simply assume that a witness statement is agreed.
• The fact that the opponent has had the statement for a considerable time is not, in itself, a good reason for granting relief from sanctions to have that statement admitted.
• A party who wants to rely on a witness statement by way of hearsay should serve that hearsay notice at the same time that witness statements are exchanged.
• A party seeking to persuade a court that a witness cannot be found should be able to produce compelling evidence that a proper search for that witness has been made.

THE CASE

The claimant had brought proceedings for unpaid invoices. The defendant counterclaimed on the grounds that the organic juices supplied did not meet the agreed description and contained water. The claimant had been debarred from bringing its action so the matter proceeded on the counterclaim alone.

THE JUDGMENT ON WITNESS EVIDENCE

Both sides of the case made applications in relation to the late admission of witness evidence. Both applications were dismissed.

Procedural matters

OV’s evidence [Organic Village – the Defendant]

1. 1. OV’s factual evidence was from Mr Aytacli and Ms Bilgin. Mr Aytacli had given 13 witness statements over the course of this litigation. He affirmed and adopted them all. OV’s expert evidence was from Mr Christopher Lake, an accountant.

   2. At the conclusion of OV’s factual evidence, Mr Maxwell-Lewis applied to admit a witness statement of Michael Thorpe dated 12 September 2013. Mr Thorpe was the managing director of a company that ran a warehouse in Basingstoke where OV stored its juices. Mr Maxwell-Lewis said that Goknur had been aware of the statement for some 6 years and it had been placed without objection in the trial bundles. OV had not understood its contents to be contentious. I drew the parties’ attention to the general rule in CPR r. 32.2(1) that “any fact which needs to be proved by the evidence of witnesses is to be proved… at trial by their oral evidence given in public”; and to r. 32.5(1), which provides that a party who has served a witness statement and wishes to rely at trial on the evidence of the witness who made it “must call the witness to give evidence unless the court orders otherwise or he puts the statement in as hearsay evidence”.

   3. On 27 June 2019, the fourth day of trial, Mr Maxwell-Lewis produced an application notice seeking relief from sanctions and a hearsay notice pursuant to CPR r. 33.2, supported by a fourteenth witness statement of Mr Aytacli. The application was made on the basis that it was not now possible to locate Mr Thorpe. The application was opposed for reasons contained in a witness statement by Ismail Sik, one of Goknur’s solicitors, and elaborated upon by Mr Bradley. I refused it, for reasons to be given in this judgment. My reasons are these.

   4. By CPR r. 33.2(4)(b), a hearsay notice must be served “no later than the latest date for serving witness statements”. That was as long ago as July 2018, so the hearsay notice was nearly a year late. There is no doubt that relief from sanctions is therefore required. In deciding whether to grant such relief, it is necessary to apply the three-stage test set out by the Court of Appeal in Denton v T.H. White Ltd [2014] 1 WLR 3926.

   5. First, to permit this evidence to be given in written form now would be to countenance a serious and significant breach of the time limit imposed by r. 33.2(b). I did not accept that Mr Maxwell-Lewis could draw any comfort from the fact that Goknur has had the statement for over 6 years. As he fairly accepted, he could point to no document from or on behalf of Goknur indicating that its contents were admitted; and in those circumstances, the natural assumption (given CPR rr. 32(1) and 32.5(1)) would be that Mr Thorpe would be giving evidence orally and would be available to be cross-examined. To admit his evidence as hearsay would deprive Goknur of the opportunity to test it.

   6. Second, the explanation for delay was (essentially) that the matter was overlooked until a relatively late stage. That was regrettable, but it was not the fault of Goknur; and it was not a good reason to deprive Goknur of the opportunity to challenge this evidence.

   7. Third, looking at all the circumstances, there was considerable force in the point made in Mr Sik’s witness statement, and by Mr Bradley, that OV’s efforts to trace Mr Thorpe appear to have been rudimentary at best. They did not include obvious avenues, such as searches of the records at Companies House or on publicly accessible websites. Even if the hearsay application had been made on time, I would not have granted it without considerably better evidence demonstrating that more strenuous efforts had been made to contact him.

Goknur’s evidence

1. Goknur’s factual evidence was from Mr Aslanali. On quantum, its expert evidence was from Mr David Rabinowitz, an accountant.

2. At the start of the trial, on the afternoon of 24 June 2019, Mr Bradley sought to rely on a second witness statement of Mr Aslanali, together with an exhibit running to some 114 pages of document, some in Turkish and without translations. These had been filed at court and supplied to OV’s representatives just before the start of the hearing. Mr Maxwell-Lewis was initially minded to consent to its admission, but I indicated that any application to rely on the statement would have to be properly explained and would require relief from sanctions, given that the date set for exchange of witness statements of fact was as long ago as July 2018. On the morning of the second day, 25 June 2019, Mr Bradley handed up a witness statement from his instructing solicitor Mr Zafer Armutlu, in support of his application for relief from sanctions and for permission to rely on the second statement of Mr Aslanali. Having considered this, Mr Maxwell opposed the application. I refused it and indicated that I would give reasons in this judgment. They are as follows.

3. There can be no doubt that, where (as here) directions are given for the exchange of witness statements by a particular date, an application to rely on a further witness statement after that date – even from a witness who has already served one – requires relief from sanctions. Applying the three-stage approach in Denton, there is no proper basis for granting such relief.

4. First, this was a serious and significant breach. The statement is not just a few days late: it is nearly a year late. The admission of this new evidence on the first day of trial would have been likely to cause serious prejudice to OV. The evidence went to Goknur’s case that OV could have mitigated its loss. It identifies particular companies from whom, Goknur says, OV could have sourced alternative supplies of juice. If I were to admit that evidence at this stage, OV would be prejudiced because it would be unable to make its own enquiries with the companies concerned with a view to rebutting the evidence. The difficulties are compounded by the fact that some of the documents exhibited are in Turkish. This is in breach of a specific direction made by Master Kay on 13 July 2012. Even if it were not, although Mr Aytacli and Ms Bilgin speak Turkish, I do not. It would be necessary for the documents to be translated if reliance were to be placed on them. This would add further delay and cost.

5. Second, the explanation proffered for the delay in producing this statement was unimpressive. Mr Armutlu says that the late application has come about “primarily because of our late instruction in the case”, which he explains was on 12 June 2019. He adds: “Whilst it is a little early for me to say with confidence that the failure to adduce this evidence was attributable to the fault of my client’s previous representatives, I know that my clients changed representation because of their general dissatisfaction with how the case had been run.” Mr Armutlu is (properly) careful not directly to impugn the conduct of Goknur’s previous representatives. There was certainly nothing before me on the basis of which I could find them to be at fault. No adequate explanation was given as to why, if Goknur was dissatisfied with them, it waited until 12 days before the start of the trial to instruct Mr Armutlu and his firm.

6. Third, I considered all the circumstances of the case. There was nothing to stop Mr Bradley from exploring in cross-examination OV’s case that it could not have sourced alternative supplies of juice elsewhere. But it would be unfair to OV to allow that to be done by reference to extensive documentary evidence (some of it in Turkish) which would have prompted further enquiries if it had been served in accordance with directions. I have borne in mind Mr Bradley’s point that Mr Aytacli referred in a witness statement dated 12 June 2013 to “some 832 emails (not exhibited hereto) of my efforts to find alternative suppliers”; that when these were requested on 21 June 2019 the response was that they were unavailable because they had been stored on a damaged laptop; and that this response had prompted Mr Aslanali to file his second witness statement. This could all be explored by Mr Bradley in cross-examination. It did not affect my conclusion. Goknur could have requested the emails before the date for exchange of factual evidence or, in any event, much earlier than the first day of the trial.