GIVING THE SOURCE OF INFORMATION AND BELIEF IN WITNESS STATEMENTS: A MANDATORY OBLIGATION THAT IT IS DANGEROUS TO OVERLOOK

We have looked many times at cases where problems have occurred because someone making a witness statement fails to comply with the mandatory obligation to give the sources of their information and belief.  The problems this can lead to are shown in two judgments of  Chief Master Marsh.  These judgments are illustrative of the importance of ensuring that witness evidence is admissible in interlocutory applications.  The Master was critical of the defendant’s evidence in the first judgment, the problems were rectified by the time of the second judgment and the defendant’s application succeeded.

“18.2  A witness statement must indicate:

(1) which of the statements in it are made from the witness’s own knowledge and which are matters of information or belief, and

(2) the source for any matters of information or belief.”

THE CASE

The claimant brought an action against the bank, having failed at trial in a previous action.  The defendant applied to strike the action out.  There were two hearings. After the first the Master gave the claimant an opportunity to reformulate his case.

THE JUDGMENT  ON THE WITNESS EVIDENCE AT THE FIRST HEARING

At the first hearing the Master commented, quite specifically,  on the defendant’s failure to give evidence about the source of informatino.

Broomhead v National Westminster Bank Plc & Anor [2020] EWHC 1005 (Ch)

1. 1. The defendants’ application is supported by a witness statement from Benjamin Lowans who is a partner with Addleshaw Goddard LLP. His first witness statement is largely formal and sets out the basis upon which the application is made in a helpful way. The claimant served a witness statement to which Mr Lowans has responded and the claimant has in addition the benefit of the lengthy witness statement from Mr Wright.

   2. The court is asked to review the process of disclosure in the first claim based on evidence that is partial and unsatisfactory. I highlight two points in particular:

(1) Mr Lowans’ second statement contains evidence that is largely outside his own knowledge. However, where he is required to provide the source of his evidence, he says he is “informed by the Bank“. He states in paragraph 1 that he uses the term “the Bank” to mean both defendants. He therefore appears to be saying that he is informed by both corporate entities of each relevant fact. This seems inherently unlikely. But more fundamentally, stating that the source of evidence is a named corporate party does not comply with the requirements of Practice Direction 32 paragraph 18.2(2): see Punjab National Bank (International) Ltd v Techtrek India Ltd [2020] EWHC 539 (Ch) at [15] – [20]. In a case such as this in which the claimant makes serious allegations of dishonesty it is understandable that the solicitors acting for the defendants wish to shield those who provide information from making statements on an application for summary judgment. However, the corollary is that the court may be unable to give more than limited weight to information that is not credited to a source. In large organisations such as the defendants, external lawyers are often instructed by in-house counsel, who in turn obtain information from others. In more routine cases, or in routine applications, the court may be unconcerned about such matters; but in a case such as this, it is really important to know who it is who is attempting to meet the serious allegations the claimant makes. The evidence provided by Mr Lowans has significantly reduced weight as a consequence of a failure to give the sources of his knowledge, particularly when set against some of Mr Wright’s evidence that is based upon his own knowledge of the defendants’ systems.

(2) The defendants have chosen to permit the court to take account of Mr Wright’s evidence. Some of what he says is little more than comment and of no real assistance. However, where he gives evidence from his own knowledge of the way data was captured and treated by the defendants in the material period, or where he expresses an opinion he appears to be qualified to provide, the court is bound to accept it unless it is obviously wrong. To reject his evidence, other than in such an instance, would involve conducting a mini-trial.

AND ON THE SECOND TIME OF TRYING

The Master allowed the claimant to reformulate its  case and a second judgment was given  Broomhead v National Westminster Bank PLC & Anor [2021] EWHC 105 (Ch). Here the defendant had remedied the deficiencies in the form of its witness statements and gave the source of information and belief.

1. 1. The court was provided with a good deal of further evidence by both parties for the purposes of the hearing. Surprisingly, Mr Broomhead did not provide any evidence in support of the Revised Claim. Instead, he has chosen to respond to the Bank’s evidence. I accept Ms Eborall’s observation that the Bank was entitled to assume when considering the Revised Claim, and Mr Broomhead’s application to pursue it, that he would only rely upon the evidence that was before the court on the last occasion. The point is an important one because the only basis upon which Mr Broomhead was permitted to serve the Revised Claim was that immediately before the hearing that led to the May Judgment he served a witness statement from Mr Wright containing evidence the court found to be, as it was put in the judgment, “troubling”. But for that evidence the claim form would have been struck out with the particulars of claim. Mr Broomhead now relies on further evidence from Mr Wright that is responsive to the Bank’s evidence and is thus tailored to meet it.

   2. In the May Judgment I was critical of the evidence provided by the Bank – see [32(1)]. I pointed out that Mr Lowans, who as an external solicitor provided evidence on behalf of the Bank, had failed to comply with the requirements of PD 32 18.2(2) by referring to his source of information as being “the Bank”. The definition included three entities and did not identify any natural person as his source. The Bank’s evidence for the recent hearing is provided principally by Daniel Coelho who worked as Legal Counsel within the Litigation and Investigations team of NatWest Group plc between September 2019 and August 2020. He does not profess to have any first-hand knowledge of the conduct of the first claim. However, he indicates in clear terms the persons to whom he has spoken in relation to each topic he covers and the basis of their knowledge. I consider that the approach he has adopted complies with the requirements of the CPR. For the purposes of an interlocutory application, it is convenient for evidence to be gathered by one person in order to avoid a plethora of short statements form persons with first-hand knowledge of the relevant information. All the more so where the evidence is covering a historic period and/or involves numerous elements of a complex organisation such as the Bank.

   3. The Bank relies in addition upon a witness statement form Gearoid O’Laoithe who is head of eDisclosure at the Bank. He deals with a discrete allegation made by Mr Broomhead arising from a statement made in the Disclosure Statement in the First Claim that no back-up tapes for May 2004 had been located. Again, it seems to me that the approach adopted to the production of this evidence adequately complies with the requirements of the CPR. Mr O’Laoithe names his sources of information where he is able to do so. Inevitably, evidence about the Bank’s IT systems dating back 16 years involves a degree of conjecture.

      1. 1. Mr Doyle QC was critical of this evidence but for the reasons I have given I do not consider that such criticism is justified. By contrast, however, in Mr Wright’s second statement he says on numerous occasions that he has discussed a particular point with former employees of the Bank without naming those to whom he has spoken. They are referred to on occasion as being ‘the whistleblowers’. Although I understand that there may be former employees of the Bank who are able to provide evidence who would prefer not to be named, the references to such persons in Mr Wright’s statements give no clear indication who the persons may be and whether the information they provide is likely to be credible. I am unable place any weight upon evidence that derives from unattributed sources.

   4. At paragraphs 15 to 17 Mr Wright also refers to an unidentified “current senior bank employee” having reached out to him following press coverage of Mr Broomhead’s case. Mr Wright says he has been told by this individual that “a variety of relevant documents” are not authentic. The individual is willing to provide a witness statement but would like to do so anonymously. I am unable to place any weight on evidence of this nature.

   5. In addition, Mr Broomhead relies on a witness statement made by Mr Anthony Stansfeld who is the elected Police and Crime Commissioner for Thames Valley. He is also the elected Association of Police and Crime Commissioners’ national lead regarding fraud. Mr Stansfeld has no first-hand knowledge of either the First Claim or the Bank’s files as they relate to Mr Broomhead other than having discussed the case with Mr Broomhead and Mr Wright. He says he is well placed to speak about:

“… a large number of cases involving allegations of systemic, fraudulent conduct by a number of UK banks, including the Defendants in this case (RBS and NatWest), Lloyds and HBOS. These cases have involved significant document tampering, including the forging of customer signatures, the fabrication of evidence in relation to legal proceedings and the giving of false statements by bank employees and their solicitors in Court”.

1. 1. The tenor of his evidence can be seen from the following passage:

“14. I understand from Mr Wright that the authenticity of the documents disclosed by the Defendants in this case is also disputed by current employees of the Defendants who have raised concerns at board level in RBS. I am told that the Defendants have, to date, refused to provide voluntary disclosure of the relevant systems that would prove conclusively the authenticity of such documents; I am not surprised by this approach however.

15. From my own experiences in office, and from the evidence which I have been privy to, I can say that the allegations made by Mr Broomhead, as supported by the evidence of Mr Wright, are consistent with other similar cases involving document fabrication and manipulation by banks.

16. The issues regarding the evidence in this case and the alleged endemic fabrication of documentary evidence at RBS are extremely serious and fit within a broader national context of UK banks fabricating evidence to win court cases against customers. The same context also applies at an international level where significant investigations in the US and Australia have made findings of a similar nature to those being highlighted here in the UK.

17. In my opinion, and having regard to my experience of similar circumstances, the Court should consider carefully the evidence relied upon by the Defendants in the trial and exercise great caution before forming a view as to Mr Broomhead’s case. Consideration of the original documents (which I understand will need to be disclosed by the Defendants, though I am not clear why those documents have not been disclosed to date, particularly in relation to the trial of the original case) by the Court and by the parties would allow certainty. I understand that the Defendants have been asked to provide these voluntarily, but at the time I give this statement, have chosen not to do so. I find this concerning in the face of such serious allegations which would be easily addressed with this disclosure.

18. Mr Broomhead’s allegations may appear, at least to the uninitiated, as speculative, if viewed through the traditional lens and perception that the banks have enjoyed as trustworthy, professional organisations where criminal activity and efforts to conceal criminal activities would simply not occur. From my experiences, Mr Broomhead’s allegations are unremarkable. As a result of my own knowledge and experience I can confirm that the behaviour of the type described and complained of by Mr Broomhead in his case (and in the evidence of Mr Wright), does occur and has done so with the full knowledge and co-operation of senior executives within the relevant banks.”

1. The matters of which Mr Stansfeld speaks are clearly very serious indeed and his exhortation to the court to consider the evidence carefully and to exercise great caution before forming a view is noted. However, the assistance provided by Mr Stansfeld’s evidence is very limited because the court must decide the applications based upon the Revised Claim and the evidence in this case, and only this case. Mr Broomhead does not provide admissible similar fact evidence. Furthermore, it is worth observing that this case concerns the conduct of litigation and it is not in dispute that a great deal of documentary evidence was provided by the Bank. Indeed, the process of disclosure in the First Claim is a convenient starting point.

10 KEY POINTS ABOUT THE DUTY TO GIVE THE SOURCE OF INFORMATION AND BELIEF

POINT ONE: A FAILURE TO INCLUDE THIS MEANS THE ENTIRE STATEMENT CAN BE REJECTED BY THE COURT

The rule states a witness statement “must indicate”. This is a mandatory obligation. Failure to do this renders the statement defective. The party can no longer rely on the statement as of right and the court can refuse to admit it.

Defects in affidavits, witness statements and exhibits

25.1  Where:

(1) an affidavit,

(2) a witness statement, or

(3) an exhibit to either an affidavit or a witness statement,

does not comply with Part 32 or this practice direction in relation to its form, the court may refuse to admit it as evidence and may refuse to allow the costs arising from its preparation.

25.2  Permission to file a defective affidavit or witness statement or to use a defective exhibit may be obtained from a judge in the court where the case is proceeding.

So a party that does not comply with the rules (and many, indeed sometimes it appears a majority, do not) requires permission.  Presumably this is considered on CPR 3.9 grounds.  This is never a good start to an application or trial.

POINT TWO: A FAILURE TO GIVE THE SOURCE OF INFORMATION AND BELIEF CAN SOMETIMES BE FATAL TO THE ENTIRE EVIDENCE

See the observations of Mr  Justice Mann in JSC Mezhdunarodniy Promyshlenniy Bank -v- Sergi Viktorovich Pugachev [2014] EWHC 4336 (Ch) when considering submissions that statements contained hearsay evidence.

“He complains that it contains an enormous amount of hearsay evidence but generally does not identify its source. His point is that it is unacceptable to base an application for a worldwide freezing order as serious as this one (or indeed any freezing order) on evidence which does not conform to the requirements for identifying sources. The point comes down to one of weight, and without an identified source much of Mr Roberts’ evidence should be given much less weight. He submits that this is not a pointless (or point-scoring) quibble; the requirements to identify the source are an important part of the protection provided to the other side, and unless it is done it is all too easy to use unattributed statements to create a generalised impression intended to smear (which is my summary of his point, not his word) Mr Pugachev. Mr Tregear does not deploy this as a standalone knockout blow, but says it has to go into the scales with the other points that he relies on.”

Further in response to an argument that a solicitor could not give the source since it was “privileged”.

“I would observe at this point that the reference to privilege would seem to me to be misplaced, as Mr Smith was eventually constrained to accept. If it were a good point then any lawyer giving hearsay evidence for his client in an interim application would be able to decline to identify the source of information. The position is that giving hearsay evidence in those circumstances is an opportunity afforded to a litigant but it comes at the price of identifying individuals who are the source of the evidence (usually). Once the information has been disclosed then no privilege can exist, and there can be nothing objectionable in terms of the law of privilege in requiring a solicitor to identify the source of what has become non-privileged information. A litigant has a choice. If he wishes to rely on this information then the price is that the source is no longer privileged. If he does not want to identify the source then he cannot rely on the information and at the same time maintain the claim to privilege.”

POINT 3: THE RULES SAY “MUST”

See also Aitkens LJ in  Consolidated Contractors International Company SAL and Others v Munib Masri [2011] EWCA Civ 21

“ 32. In my view the aim of that paragraph of the Practice Direction is to ensure that a person against whom serious allegations are being made can identify the source of any information or belief that is not within the deponent’s own knowledge so that the facts deposed to on the basis of information or belief can be investigated. That is only fair to the person against whom the evidence in the affidavit is directed. Therefore, I would interpret the phrase “must indicate….the source of any matters of information or belief” as meaning that, save in exceptional cases, the deponent must identify the source of the relevant information or belief. If the source is a person, that person must, save in exceptional cases, be identified with sufficient certainty to enable the person against whom the affidavit is directed to investigate the information or belief in accordance with the rules of court or other relevant legal principles.

POINT 4: FAILURE TO COMPLY COULD LEAD TO A MAJOR HOME GOAL

In YXB -v- TNO[2015] EWHC 826 (QB) Mr Justice Warby considered the evidence provided on behalf of the claimant in a case in which a well-known footballer sought a without notice injunction.

. This part of the evidence therefore seems to be Ms Feely’s account of what Mr Manley told her he had been told by the Agent. Further degrees of hearsay are involved, as will be clear from the account given,... .

1. The defendant’s statement notes at paragraph 50 that there was no mention in Ms Feely’s first statement of any distress that would be caused to YXB by the release of any of the information. The response came in Ms Feely’s third statement. The information in this statement was, like her first, said to be “derived from my own knowledge unless otherwise stated.” At paragraph 18 she refers to the defendant’s paragraph 50, describing it as “remarkable” to suggest the claimant would not be distressed. She asserts that it is “obvious that such would result from infringement of his privacy. For the avoidance of any doubt the publication of the claimant’s confidential and private information would undoubtedly cause the claimant distress and embarrassment.” This once again takes the form of a submission rather than a statement of fact based on what she has been told by the claimant. She goes on “The claimant believes that his sex life is and should remain private and that details of it should not be published to the world at large (whether for commercial gain or not)”. This is not much better. Although it does refer to what the claimant believes, it does not state that she has spoken to him about the matter. I note that the statement of truth on the Particulars of Claim is not signed by the claimant but by Ms Feely.

POINT 5: THE SOURCE OF INFORMATION NEED NOT NECESSARILY BE ADMISSIBLE EVIDENCE

       “An expression of opinion on a factual matter by a witness of fact is clearly inadmissible subject to the limited exception contained in s.3(2) of the Civil Evidence Act 1972. But the provisions of paragraph 18.2 of the Practice Direction under CPR Part 32 are not concerned with evidence of primary fact. They are simply procedural provisions requiring the deponent to identify the source of the hearsay evidence he will give. They do not require that attribution to be based only on admissible evidence. They merely require it to be stated so that the party affected by the evidence knows who is the alleged source of the information.”

POINT 6: THIS TENDS TO HAPPEN A LOT AND THE COURTS ARE NOT VERY FORGIVING

Dar Al Arkan Real Estate Development Company and Ors –v- Mr Majid Al – Sayed Bader Hashim Al Refai and Ors [2012] EWHC 3539 para 19. The Court was considering an application by the defendant’s to set aside an ex parte order obtained by the claimant on the grounds that the claimant had failed to give full and frank disclosure.   Andrew Smith J observed of one of the claimant’s witnesses:-

“I observe that Dr Almajthoob did not properly state the source of his information: the reference to enquiry agents engaged by the claimants was not adequate: see Masri v Consolidated Contractors International Co SAL, [2011] EWCA Civ 21 , White Book, 32.15.4. This is a recurrent deficiency in the claimants’ evidence, both that adduced at the ex parte hearings and later affidavits and statements although all the witnesses have routinely and inaccurately stated that they give the source of the information about facts and matters not within their own knowledge. This has much detracted from the quality of their evidence”

(The ex parte order was set aside, overall witness credibility playing an important part in this determination).

POINT 7: IF YOUR WITNESS STATEMENT DOESN’T COMPLY YOU MAY HAVE TO PAY THE PIPER

In Barclays Bank –v- Piper (CA 23^rd May 1995), the Court of Appeal considered a technical argument about the provisions under RSC Order 14 (the previous rule for summary judgment).

“The third head relates to defects in the Affidavit of the bank’s solicitor Mr Harper. Those defects are first a failure to identify the source of his information or belief. Second a failure to assert that the facts pleaded in the Statement of Claim are true. Third, a failure to depose to a belief that there is no defence to the bank’s claims.”

“Mr Stanton relied on the Notes at para 14/2/7 and 14/2/8 of the Supreme Court Practice. Mr Stanton accepted that these objections to the form of Mr Harper’s Affidavit were technical but submitted that a Defendant may show cause against a Plaintiff’s application for Summary Judgment under Ord 14 by a preliminary or technical objection, for example that the Affidavit in support is defective because it does not amount to a due verification of the claim. Mr Stanton drew the court’s attention to the note at para 14/3-4/3 in Vol. 1 of the Supreme Court Practice, 1995.”

The plaintiff’s solicitor swore a second affidavit which attempted to rectify the omissions made in the first affidavit. Roch LJ stated:

“In my judgment the second Affidavit of Mr Harper concedes the technical defects in his first Affidavit without correcting them. The second Affidavit does not make clear from which source Mr Harper received particular information. I would accept the submissions of Mr Stanton that Ord 14 Proceedings, because they may deprive a defendant of his opportunity to defend a plaintiff’s claim and in particular the opportunity of hearing and cross examining the plaintiff’s witnesses, make it all the more necessary that the technical requirements of an Affidavit in support of the application for Summary Judgment should be observed, so that a defendant and the Court can assess whether the information or belief as to the material matters on which the plaintiff’s claim is based were derived directly or indirectly from persons who could be expected to have the necessary knowledge or be the keepers of the necessary documents. Order 14 proceedings are quite unlike applications for Interlocutory Injunctions in which liberty to the defendant to apply to set aside the Order will be a standard term. An Ord 14 Judgment finally disposes of the Action, in a summary manner. The purpose of the rules relating to the contents of the affidavit in support is to ensure that the plaintiffs have demonstrated that the case is a proper case for summary judgment. In this case it should have been simple for the Bank’s solicitor to obtain the necessary information from persons having first hand knowledge of the appellant’s loan account.”

POINT 8: EVIDENCE OF THIS TYPE OFTEN SPILLS OVER INTO GIVING THE COURT THE BENEFIT OF THE WITNESSES “OPINION”

In witness statements drafted without consideration of the rules there is often a basic failure to understand the very nature of “evidence”. This is a common event and seen in many, many witness statements, particularly in interlocutory applications. It is precisely the problem identified by Sir James Munby in Darlington Borough Council -v- M [2015] EWFC 11 when considering a schedule of findings.

“It confuses the crucial distinction, once upon a time, though no longer, spelt out in the rules of pleading and well understood, between an assertion of fact and the evidence needed to prove the assertion”

POINT 9: JUDGES TEND TO GUARD THEIR ROLE AS FACT FINDERS SOMEWHAT JEALOUSLY

Smith J in Rock Nominees v RCO Holdings [2003] EWHC 936 (CH) when he said of a witness:-

“Before he actually gave evidence we had the somewhat surprising spectacle of finding something like 75% of the witness statement being struck out, as Mr Potts QC conceded in effect the material there, consisting largely of assertions, expressions of opinion and usurpation of my role, should never have been there in the first place.”

POINT 10: IT CAN ALL BE AN (EXPENSIVE) WASTE OF TIME

See Norcross -v- Georgallides [2015] EWHC 2405 (Comm)  One witness statement gave “evidence” of matters the witness had no direct knowledge of. In relation to another.

1. Mr Dickinson’s witness statement extended beyond admissible evidence of fact. He expressed his views about usual accounting practice, and offered his opinion that in some ways AOG had behaved as “no responsible firm of accountants” would have done. No permission was sought or given for Mr Dickinson to give expert evidence, and this was not properly included in his witness statement. In any case I do not consider these views useful, and I disregard them.