WITNESS SUMMARIES, WITNESS SUMMONSES AND RELIEF FROM SANCTIONS: ALL IN ONE CASE…

In Morley (t/a Morley Estates) v The Royal Bank of Scotland Plc [2019] EWHC 2865 (Ch) Mr Justice Kerr granted the claimant’s application to rely on witness summaries and refused the defendant’s application to set aside witness summonses.  The judge granted the claimant’s application to serve witness summaries of the evidence of former employees of the defendant. The judge also granted the claimant relief from sanctions in relation to the late service of those summaries.  There is a strong warning against the dangers of lawyers leaving this type of application too late.

“I find it very surprising that the claimant’s lawyers took the risk of not asking the witnesses for statements, but the requirement to show inability to obtain a statement should not be used to allow the parties to play games with each other, the witnesses concerned or the court. A degree of reality as well as a degree of rigour is called for”

THE CASE

The claimant brought an action for damages against the defendant bank. It was alleged that the defendant had unlawfully pressurised the claimant into transferring a significant part of his property portfolio to the defendant’s subsidiary.    The claim is put at £37 million.

THE “MISSING WITNESSES”

The defendant did not serve witness statements from two of its key employees at the time.  The claimant served (out of time) witness summaries which set out questions he proposed to ask the witnesses, the claimant also issued witnesses summonses against those witnesses.

THE APPLICATION

The application was in relation to specific disclosure, service of the witness summaries and the banks attempt to set aside the witness summonses.

THE JUDGMENT ON THE WITNESS SUMMARIES

The judge first determined the issue of whether the claimant should have permission to rely on two witness summaries. These were in an unusual form – consisting of evidence that the claimant believed the witnesses could give and questions the claimant proposed to ask them.

The claimant’s application for permission to rely on the two witness summaries

1. 1. The claimant applies to rely on the witness summaries provided in respect of Messrs Sach and Workman. I have seen the draft summaries themselves in the course of dealing with this application.

   2. The summary relating to Mr Sach says that the evidence he would have included in a witness statement is not known to the claimant. Accordingly, the summary sets out topics upon which the claimant wishes to question him.

   3. With respect to the loan facility the claimant proposes to ask him the following questions:

“4.1. Did the Asset Protection Agency (“APA”) direct or influence the Defendant, and if so how, in relation to the Defendant’s approach to enforcing the Facility?

4.2. What did the Defendant’s own objectives, policies and industry practice indicate or dictate as to the approach it would normally expect to take to enforcing the Facility; did the APA’s view and desired course of action conflict with the Defendant’s view and desired course of action as informed by its own objectives, policies and industry practice; did the Defendant allow the views of the APA to override its own objectives, policies and industry practice and if so in what respect(s)?

4.3. Was it the APA’s desired course of action for the Defendant to use West Register to acquire property [in] the Morley portfolio rather than release security against repayment offers by the Claimant to discharge the Facility, and if so did this conflict with GRG’s commercial judgment; and

4.4. In what circumstances would GRG’s commercial judgment typically favour the use of West Register to purchase property assets via a ‘pre-pack’ sale?”

There is then an explanation as to why Mr Sach would be expected to have knowledge of those matters, in the remaining part of the summary.

1. 1. In the case of Mr Workman, again, the draft summary says that the evidence that would be included in a witness statement, if one could be obtained, is not known to the claimant. The topics on which it wishes to question him are set out in the draft summary thus:

“4.1. Mr Workman’s recollection and understanding is to the direction or influence of the Asset Protection Agency (“APA”) upon the Defendant in respect of the Claimant’s lending; and

4.2. The approach of the Defendant in the circumstances where the APA’s view and desired course of action, based upon what the Asset Management Objective (“AMO”) required, conflicted with the Defendant’s view and desired course of action, and the circumstances in which RBS allowed the views of the APA to override its own objectives, policies and industry practice.”

And the remaining parts of the summary explain why, in the claimant’s view, Mr Workman could be expected to have knowledge of those matters.

1. 1. Mr Simms submits that the requirements of CPR 32.9, relating to the use of witness summaries, are met in this case. He submits, in particular, that inability to obtain a statement from either of Messrs Sach and Workman can be inferred as it would be wholly unrealistic to suppose that they would provide statements voluntarily. It is very likely that they are under post-contractual confidentiality obligations, he says. He points to the fact that the defendant has applied to set aside the witness summonses compelling them to give evidence, which shows that any voluntary testimony would be provided against clear opposition from their former employer.

   2. He submits that their evidence on the topics set out in the summaries would be relevant and that relief from the sanction imposed by CPR 32.10 should be granted on the basis that, while accepting the lateness of the application, not made until 15 October, applying the well-known Denton tests, the lateness should not be fatal to the application since this is a proper case for relief from sanctions.

   3. The defendant points to the requirements of CPR Rule 32.9(1)-(4), considered by Warby J in Otuo v. Watch Tower Bible and Tract Society of Britain [2019] EWHC 346 (QB) at paragraphs [20]-[23]. Mr Sinclair submits that the claimant cannot show he is unable to obtain the statements from the two witnesses because he has not approached them to ask whether they would give evidence voluntarily. He argues that it would be wrong to assume that they would refuse.

   4. He points to the observations of Phillips J in Scarlett v. Grace [2014] EWHC 2307 (QB) at [10]ff but, in particular, the observation that the requirement to show inability to obtain a voluntary statement must be “applied with a degree of rigour.” That means, submits Mr Sinclair, that a “clear refusal, express or implied, to assist” must be shown and that a mere suspicion that a party is unlikely to be cooperative is insufficient.

   5. Mr Sinclair also points to the voluntary cooperation of Mr Sneddon who, for his part, is prepared to give evidence for the claimant and a statement has been obtained from him. He submits that the court should enforce the requirements in the rules strictly and not condone what he effectively says is the claimant’s deficient and lax approach in this case.

   6. Mr Sinclair went on to make quite lengthy submissions disputing the proposition that the evidence that would be given by these two witnesses would have relevance to the issues in the case, notwithstanding a number of emails to which they were party concerning the claimant’s portfolio and the defendant’s treatment of it.

   7. He submitted that even if their evidence were relevant, to allow the summaries would not be compatible with the overriding objective as the witnesses would have little time to prepare and would effectively be giving their evidence “cold” on matters that occurred a long time ago.

   8. He says that would be unfair on the defendant, which does not know what they would say about the topics in the witness summaries. He criticises the content of the summaries as inadequate and suggests that the claimant, by contrast to the defendant, was unjustified in professing ignorance of what the witnesses would say, even though he also said that the defendant does not know what they would say.

   9. Finally, he submitted vigorously that relief from sanctions ought not to be granted. He says that the application was made inexcusably late and that applying the three stage Denton test the default was plainly serious and significant, comparable, he said, to a case such as Clearway Drainage Systems v. Miles Smith [2016] EWCA Civ 1258 where late witness statements less than a month before trial were disallowed.

   10. At the second stage of the Denton three stage test, Mr Sinclair submits that no good reason for the default had been shown since the application could have been made in late July 2019, or even before exchange of witness statements. He submitted that the claimant must have known that on its case the evidence of the two witnesses was of potential relevance even before exchange of witness statements, which did not produce any from the two witnesses. Mr Sach, he pointed out, has been a disclosure custodian since February 2019 and it was as long ago as December 2018 that the claimant sought to add him as one.

   11. At the third stage of the Denton exercise, Mr Sinclair submitted that the lateness of the application was already having an impact on the efficient conduct of the proceedings, impairing preparation for trial and adding to costs. He said that it would be “unfair for RBS to be ambushed in this way” and that the additional day that needs to be or has been allocated for these two witnesses to give evidence might not suffice.

2. My reasoning in conclusions on this second application are as follows. I consider, first, the issue of inability to obtain statements from the witnesses. I bear in mind the useful guidance in Warby J’s judgment in the Otuo case. I also agree with Phillips J, as he still is (just), who said in Scarlett v. Grace that the requirement to show inability should be applied with a degree of rigour. Normally that will, of course, require the party seeking to rely on a summary to have asked the witness whether she or he is prepared to provide a statement.

   1. I find it very surprising that the claimant’s lawyers took the risk of not asking the witnesses for statements, but the requirement to show inability to obtain a statement should not be used to allow the parties to play games with each other, the witnesses concerned or the court. A degree of reality as well as a degree of rigour is called for.

   2. The wording of the rule does not refer to a “refusal” to provide a statement. Inability to obtain one can arise for other reasons, such as illness, ignorance of the witness’s whereabouts, absence from the jurisdiction, confidentiality obligations, and so forth.

   3. On the plain wording of the rule, CPR 32.9(1)(a), and applying ordinary principles of causation, a person is, in my judgment, “unable to obtain” a statement if the court is satisfied on the balance of probabilities that had a request been made to the witnesses to provide a statement the request would have been turned down.

   4. In the present case, I am so satisfied for the following reasons:

(1) The two witnesses were in senior positions at the material time from May to August 2010. They were in a position to influence what happened in the case of the claimant; and the outcome for the claimant was not good.

(2) Their evidence on the topics set out in the summaries could, if given by them, assist the claimant more than the defendant. They would not be likely to want that, though I do not rule out that they might. Other things being equal, they would be likely to want to assist the defendant rather than the claimant.

(3) They have left the defendant’s employment, but the defendant’s representatives have not disputed, or chosen to obtain instructions on, the proposition suggested in the claimant’s skeleton argument that they are inhibited by continuing contractual obligations of the type that are very common in the industry from giving evidence voluntarily;

(4) The defendant is not calling them and is doing all it can to stop them giving evidence.

(5) The witnesses’ reaction to service of the summonses on them was to contact the defendant and not the claimant. One of them, indeed, has not returned a call from the claimant’s solicitors.

1. 1. For the avoidance of doubt, although I have dealt with the position of the two witnesses together, I have considered carefully the potential evidence of each separately. I have been shown the emails to which they were party, showing the extent of their involvement with the claimant’s case. There are not many of those emails and they might not take very long to deal with in evidence, but they could be important.

   2. My conclusion is not altered by the fact that, rather against the odds, the claimant is able to call Mr Sneddon. His position is different. He was more junior than the two witnesses. He dealt personally with the claimant and was on good terms with him for a time. And he ceased to be the claimant’s relationship manager before the critical events in the case had taken place.

   3. I do not accept as realistic another point made by Mr Sinclair: that the witnesses might prefer to be called by the claimant rather than the defendant, so that the claimant would be unable to cross-examine them and the claimant would be bound by their answers in chief. That would not necessarily be the position at trial, though it may well be. It would depend on, among other things, what evidence they should give in chief.

   4. The second issue is the extent to which the two witnesses can give relevant evidence. The defendant says they cannot, but as at present advised I disagree. The fact that there are other witnesses being called by the defendant who will be giving evidence on the same topics does not, contrary to the suggestion in the defendant’s skeleton argument, mean that the evidence of these two witnesses is irrelevant. You can have a situation where witness A and witness B give evidence on the same topic, which is mutually contradictory. It is not for one party alone to select which witnesses should cover which topics.

   5. The likely absence of recall on Mr Workman’s part, another matter mentioned in the defendant’s skeleton argument, is not a factor that weighs heavily with me. Both witnesses may well remember these events, particularly when reminded by being shown documents. As I have said, there are not very many documents that they need to look at. Nor do I accept that it is difficult to see what the evidence of these witnesses could add to those being called by the defendant. For the purposes of the trial my mind remains fully open on these issues, but such is my thinking for the purposes of deciding this application.

   6. Next, is it compatible with the overriding objective to allow the summaries to be relied on? Subject to procedural considerations and the Denton exercise, in my judgment it is. Justice is served by relevant evidence being called, not by preventing it from being called.

   7. Next, are the summaries adequate? Do they adequately set out “the matters about which the party serving the … summary proposes to question the witness”; CPR 32.92(b). In my judgment they do. There is no lack of clarity in the summaries.

I think it is primarily for the party seeking to rely on the summary to say whether that party knows or does not know what evidence the witness will give. Very few things in life are known for certain. This is not a case where the witness’s evidence is purely a matter of factual recollection, as in Scarlett v. Grace, were the issue was whether a seat belt had been worn. The evidence of these witnesses will or may include evidence about their motivation and state of mind. That is not within the claimant’s knowledge.

1. Is it fair, in all the circumstances, to confront the defendant with the summaries? Subject to the considerations set out in the Denton case to which I am coming, in my judgment it plainly is. The situation is quite normal. A witness has relevant evidence to give. The party who most naturally would call the witness declines to do so. The other party wishes to do so. I see nothing unfair to the defendant about evidence on the topics set out in the summaries being called at trial, provided the witnesses and the defendant have adequate time to prepare, provided the trial is not thereby disrupted and provided the Denton exercise shows that it is right to grant the necessary relief from sanction.

THE JUDGMENT ON RELIEF FROM SANCTIONS

The witness summaries were served late. The claimant required relief from sanctions to rely on them.  The judge granted relief (with the warning that the application was left very late and this did not put down a marker that such applications would be accepted so late in the future).

1. I, therefore, come to the question of relief from sanctions. I agree with the defendant that the default here is significant and serious. The application could and should have been made in August 2019, even though that was the summer break period. It is surprising and, with respect, reprehensible that the claimant’s solicitors waited so long before serving the draft summaries. The defendant might have thought the issue had gone away, until notified on 27 September 2019 by the claimant’s solicitors that the claimant intended to obtain witness summonses in respect of two individuals.

2. What are the reasons for default? I have considered carefully Mr Elam’s explanation for the delay, which is in one of his witness statements, to which Mr Simms took me. However, I find that the reasons for the default were, essentially, slowness on the part of the solicitors to wake up to the need to get on with serving summaries on the defendant and apply for permission. The claimant’s solicitors should not have waited until the pre-trial review. They should have applied in August 2019.

3. The third stage of the exercise is to consider all the circumstances of the case, to enable the court to deal justly with the application for relief from sanctions, including the need for litigation to be conducted effectively and at proportionate cost, and to enforce compliance with rules, practice directions and orders.

4. Here, the defendant has been alive to the issue since 3 October 2019 and has had the draft summaries since 7 October 2019. I do not think the conduct of the trial will be significantly impaired if the witnesses are called. The compass of their evidence is relatively narrow. I am confident that it can be dealt with within a day. The time estimate for the trial, indeed, has been informed by the possibility that it will include the giving of their evidence.

5. I do not accept that the case is comparable to one where lengthy, late, witness statements are served shortly before trial. The summaries are compact. I do not accept that the witnesses or the defendant will be ambushed, or that the defendant will be prevented by lack of time from preparing properly for trial.

6. The defendant has found the time to put substantial resources into dealing with procedural issues, including those argued before me yesterday. There is nothing wrong with that, but it shows how adept are the defendant and its lawyers at getting things done efficiently and quickly.

7. I have no fears for the fairness of the trial. It will not be disrupted. The evidence is already contained within the estimate. I expect and hope to start the trial on Monday rather than Wednesday; Tuesday being unavailable due to a commitment of counsel. The cost of the trial will be modestly increased, but that cost is likely to be borne by the losing party, which does not, at this stage, appear to me unjust.

8. I do bear in mind the need to enforce compliance with the rules. I have had to think long and hard about that, given the seriousness of the default. I do think it would be close to folly for lawyers, in future, to rely on this judgment as laying down any general principle or excusing the default that occurred here through unjustified delay. The claimant took a real risk in leaving this application so late but, in the end, I am just persuaded that this factor is outweighed, in all the circumstances by the other factors I have mentioned and that this is a proper case for relief from sanctions.

9. I, therefore, grant that relief and permission to rely on the witnesses’ summaries.

THE DEFENDANT’S APPLICATION TO SET ASIDE WITNESS SUMMARIES

Finally the judge considered, and refused, the defendant’s application to set aside the witness summonses.  The judge bypassed the question of whether the defendant, in fact, had locus to make such an application.

1. 1. The defendant applies to set aside the summonses in respect of Mr Sach and Mr Workman. Mr Sinclair reminds me of rule 34.3(4) states: “[t]he court may set aside or vary with a summons issued under this rule”. He submits, on the authority of Freedman J’s decision in Solicitors Regulation Authority, Ogene v. Naqvi [2019] EWHC 1420 (Admin) at [26], that the defendant has standing to make the application. He says that the lateness of the summonses and the circumstances in which they were obtained are such that the court should set aside the summonses and not permit the claimant to call the witnesses.

   2. He compares the position to that in Gamatronic (UK) Ltd v. Hamilton [2016] EWHC 1455 (QB), in which Garnham J set aside a witness summons, observing at [37]: “[i]n the absence of either a witness statement or an adequate witness summary, or other adequate explanation, I see no grounds for maintaining the witness summons”. So that was a place where there was no witness summary.

   3. Mr Sinclair goes on to repeat his argument that the witnesses have no relevant evidence to give. He submits that the summonses are, therefore, oppressive and he essentially repeats his argument that it is not fair to the defendant or the witnesses to require their evidence to be given at such short notice.

   4. For the claimant, Mr Simms observes that the arguments in this application substantially overlap with those in the previous one and that the two would be likely to stand or fall together.

   5. He did, however, dispute the proposition that the defendant had any standing to bring the third application to set aside the witness summonses. He disputed the proposition that Freedman J’s decision in the Solicitors Regulation Authority case was an adequate foundation for the defendant’s standing, and he took me to one of the cases cited to Freedman J, Marcel v. Commissioner of Police for the Metropolis [1992] Ch 225; a decision of the then Vice-Chancellor, Sir Nicholas Browne-Wilkinson, and a Court of Appeal comprising Dillon and Nolan LJJ and Sir Christopher Slade.

   6. There, a person from whom documents had been seized by police wished the police to produce them in a subsequent civil action. Mr Simms took me to passages in the judgment of the Vice-Chancellor at 239C, in the judgment of Dillon LJ at 253A-C and in the judgment of Sir Christopher Slade at 267B. Those passages, he submitted, at least cast doubt on the defendant’s standing here.

   7. He went on to refer me to a passage in the current 19^th edition of Phipson on Evidence, at paragraph 8-21, part of which states as follows:

“It is not necessarily the case that the other party to the litigation has a right to apply to set aside a witness summons, although the authorities indicate that, in specific instances, he may object. It has been recognised that an opposing party in litigation may have a limited interest in setting aside a witness summons or subpoena, namely an interest that the hearing should not be allowed to expand beyond the trial of the issues raised by the pleadings and matters necessarily ancillary thereto… .”

1. Those observations in Phipson are supplemented by footnotes numbered 91 and 92, citing a number of cases that were not cited to me yesterday. I am unclear whether they were cited to Freedman J in the Solicitors Regulatory Authority case. They are Harmony Shipping v Saudi Europe Line [1979] 1 WLR 1380; Boeing Company v PPG Industries Inc. [1988] 3 All ER 839; Jonal Property Ltd v Ms McLeod Holdings Ltd [1994] S.A.S.C. 4380, a decision of the Supreme court of South Australia, said by the editors of Phipson to support the proposition that in general, there is no standing in an opposing party to apply to set aside a subpoena; and Bengalla Mining Co Pty Ltd v Barclay Mowlem Construction [2001] N.S.W.S.C. 93, N.S.W. Sup; a decision of the Supreme Court of South Wales.

2. In my judgment, this is not the appropriate occasion on which to decide, on a firm basis, whether the defendant has standing to bring this application. I have not heard full argument and I have not been taken to the cases cited in the footnotes of Phipson. I also note that Freedman J was dealing with a case where the facts were different, and he too had to make his decision extempore and under considerable time pressure, possibly even greater time pressure than is now on me.

3. I think the appropriate course, today, is to assume without deciding that the defendant has standing. The question of standing raises potentially difficult issues about the interaction or tension between the principle that there is no property in a witness and the principle that a party to litigation should be protected against oppressive and irrelevant evidence and is entitled to ask for case management decisions to secure that right.

   1. On the assumption that the defendant has standing to make the application, I am not prepared to accede to it. My reasoning on this third application overlaps considerably with what I have already said when giving reasons for allowing the summaries to be relied on. I do not repeat what I have already said when dealing with that matter.

4. It is relevant here that the application is not made by the witnesses themselves. Given my provisional view that their evidence could be relevant to issues I have to decide at trial, I do not think it would be appropriate to set them aside.

5. I think the justice of the position here is adequately protected by the right of the witness to apply to set aside the summons. I do not think it is for the defendant to do it for them, without having contacted them despite knowing, since early October 2019, of the claimant’s intention to call them.

6. In all the circumstances, I do not think this is a case where I should set aside the summonses. As at present advised, I think justice requires that the defendant should not be allowed to assert what comes perilously close to asserting a de facto right of property in these witnesses.