THE APPROACH OF THE COURT AT TRIAL WHEN A PARTY HAS NOT GIVEN DISCLOSURE: THE BENEFIT OF DOUBT IS AGAINST THEM

In Aegean Baltic Bank SA v Renzlor Shipping Ltd [2020] EWHC 2851 (Comm) Mr Adrian Beltrami QC (sitting as a Judge of the High Court) considered the appropriate approach at trial when a party has been debarred from calling evidence.

“Where a party is able to procure the attendance of relevant witnesses but chooses not to do so, the Court will be astute to ensure that any resultant gap in the evidence does not enure to that party’s benefit… Similar considerations ought to arise in a case where the party has failed to provide disclosure.”

 

THE CASE

The claimant brought an action for debt and damages under a loan agreement.  The defendants failed to give disclosure during the action and an order was made debarring them from relying on on any witness of fact of expert evidence.

THE SANCTION FOR FAILING TO COMPLY WITH DISCLOSURE

The judgment sets out the orders made when the defendants failed to give any disclosure.

b. The Bank complied with its obligations to provide disclosure but the Defendants did not. On the contrary, they produced no disclosure at all. On 21 February 2020, Butcher J ordered that unless the Defendants complied by 13 March 2020:
“…the Defendants shall not be entitled to adduce or rely upon any witness evidence of fact or expert evidence in support of their Defence (as amended on 17 July 2019).”
He also ordered that the Defendants pay the costs of the Bank’s application, assessed at £40,000.
c. The Defendants did not attend and were not represented at the hearing before Butcher J. Nevertheless, the Judge was able to conclude that the Defendants’ failure to comply with their obligations was deliberate:

It is, in my judgment, reasonable to infer on the basis of the material before me at the moment that the defendants’ failure to give disclosure to date is deliberate, apparently being a step taking in tandem with disengagement from these proceedings and pursuit of litigation in Greece.”

d. The Defendants did not provide disclosure by 13 March 2020, and have never done so. The sanction ordered by Butcher J has accordingly come into force. The default remains unremedied. Nor have the Defendants satisfied the costs order which was made.

THE JUDGE’S APPROACH TO EVIDENCE WHEN A PARTY IS IN DEFAULT

The judge then considered how the case, and the evidence in particular,  should be approached when a party has failed to give disclosure.

    1. In the light of the Order of Butcher J, the Defendants were not able to tender any evidence of their own. The reason for that Order, as I have explained, was the Defendants’ persistent failure to comply with their disclosure obligations. The result was that the evidential picture presented to the Court was unusually incomplete. Before considering the facts and the various issues, I need to determine my approach to the evidence, in two respects.
    2. First, in terms of the issues before the Court, I derive these from the pleadings, as distilled into the List of Issues. Where the Bank bears the evidential burden of establishing any particular proposition then, to the extent that the proposition is put in issue, it must be established on the evidence in the normal way. Where, however, the Defendants bear the evidential burden of establishing contentions that they have raised in their Defence, more circumspection is required.
    3. CPR 32.2(1) provides that the general rule is 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. The Bank referred me to Kimathi v The Foreign and Commonwealth Office [2018] EWHC 2066 (QB) at [35], where Stewart J stated that:
“… the contents of a statement of case are not evidence in a trial, even though verified by a statement of truth. This is the effect of CPR rule 32.2 and CPR 32.6. In Arena Property Services Limited v Europa 2000 Limited Arden LJ said at [18]:

“Mr Banning submits that there was an allegation of an easement in the Pt 20 claim, which was verified by a statement of truth. This does not assist since an allegation so verified is not evidence for the purposes of the trial (see CPR 32.6(2)).””

  1. As an application of the general rule, that must, with respect, be right. However, I do not read Stewart J as saying any more than that. In particular, I would not exclude the possibility that a pleading with an appropriate statement of truth could constitute hearsay evidence in accordance with CPR 33.2, and be subject therefore to questions of weight in the event that it is incapable of being challenged by cross-examination. The point does not arise in the present case as the possibility of adducing even hearsay evidence was precluded by the Order of Butcher J.
  2. The end result is that no evidence has been adduced by the Defendants in support of the positive averments which they have pleaded. However, I will still need to consider those defences and, subject to the next point I mention, must have regard to such evidence as is in fact before the Court, which may include evidence supportive of one or more of the pleaded defences even if not adduced by the Defendants.
  3. The second point is as to the state of the evidence itself. That evidence is materially incomplete because the Defendants have not complied with their disclosure obligations and have not themselves adduced oral evidence. The former was a deliberate choice by the Defendants in breach of two Court Orders. Whilst, following the Order of Butcher J, the Defendants are now unable to adduce their own witness evidence, that is an outcome that they have brought upon themselves by their failure to provide disclosure. Hence, as it seems to me, the absence of witnesses can also properly be seen as a voluntarily act by the Defendants.
  4. Where a party is able to procure the attendance of relevant witnesses but chooses not to do so, the Court will be astute to ensure that any resultant gap in the evidence does not enure to that party’s benefit. This will normally involve, as appropriate, the drawing of adverse inferences in areas where the evidence is incomplete, provided there is a case to answer on the issue in questionWisniewski v Central Manchester Health Authority [1998] PIQR 324, at p 340 per Brooke LJ.
  5. Similar considerations ought to arise in a case where the party has failed to provide disclosure. One remedy for such a failure may be to seek an order debarring that party, if a defendant, from defending the claim. In the present case, the Court instead ordered that the Defendants be precluded from adducing evidence in support of their Defence. But as Butcher J expressly recognised, it is inherently unfair to proceed to a trial in which only one party has made available its documents. To make one of several obvious points, the Bank has not been provided with any adverse documents which the Defendants should have produced in the ordinary way but have not.
  6. Given that the failure to provide disclosure is not just a voluntary act but a breach of an Order, the Court should be especially astute to ensure that the non-defaulting party is not put to a disadvantage. This, though, may be less straightforward than it sounds. It is one thing to draw an inference that the evidence of a missing witness would or might be adverse. It is another to speculate that there exists a document which is adverse. Absent at least a reason to believe that such a document does exist, this would be going too far. Nonetheless, in considering the documentary record in the trial bundle, I must always remember that that record is incomplete, that the Defendants have not furnished their disclosure and that the Bank and the Court have been prevented, by the Defendants’ conduct, from finding out whether documents do exist which might be adverse to the Defendants’ case. At the very least, I would expect the benefit of any doubt to be firmly in the Bank’s favour.