PARTY ALLOWED TO RELY ON WITNESS SUMMARIES: RELIEF FROM SANCTIONS GRANTED WHEN PERMISSION SOUGHT RETROSPECTIVELY

In Benyatov v Credit Suisse Securities (Europe) Ltd [2021] EWHC 1318 (QB) Mr Justice Freedman gave the claimant permission to rely on witness summaries. He also granted the claimant relief from sanctions in relation to late service of those summaries.  There is a detailed consideration of the basis upon which the court can grant a party permission to rely on witness summaries.

THE CASE

When serving its witness statements in support of its case the claimant also served three witness summaries. This was an application by the claimant for permission to rely on those summaries.  Permission should have been sought prospectively, here it was being sought retrospectively.

THE LEGAL FRAMEWORK FOR WITNESS SUMMARIES

II The legal framework of the application for permission for witness summaries

1. 1. The CPR sets out the position at CPR 32.9, which reads as follows:

“(1) A party who –

“(a) is required to serve a witness statement for use at trial; but

“(b) is unable to obtain one, may apply, without notice, for permission to serve a witness summary instead.

“(2) A witness summary is a summary of –

“(a) the evidence, if known, which would otherwise be included in a witness statement; or

“(b) if the evidence is not known, the matters about which the party serving the witness summary proposes to question the witness.

“(3) Unless the court orders otherwise, a witness summary must include the name and address of the intended witness.

“(4) Unless the court orders otherwise, a witness summary must be served within the period in which a witness statement would have had to be served.

“(5) Where a party serves a witness summary, so far as practicable rules 32.4 (requirement to serve witness statements for use at trial), 32.5(3) (amplifying witness statements), and 32.8 (form of witness statement) shall apply to the summary.”

1. 1. CPR 32.10 is headed, “Consequence of failure to serve witness statement or summary”:

“32.10. If a witness statement or a witness summary for use at trial is not served in respect of an intended witness within the time specified by the court, then the witness may not be called to give oral evidence unless the court gives permission.”

1. 1. In this case, by agreement of the parties, the time for service of witness statements had been extended to 15 March 2021 at 6.00 pm. On that afternoon, apparently about 20 minutes after 6.00 pm, there were served seven witness statements for the defendant and one witness statement for the claimant and three witness summaries. There was also served a with notice application for permission to serve the three witness summaries.

1. 1. There was a point that was made that the service may have been 20 minutes after 6.00 pm. That point does not appear to be of any significance. The claimant says that there was an agreement by the parties to extend the matter by the extra 20 minutes. If there was not such agreement, then everybody would require permission. It seems to me in the circumstances of this case, given that it involved all the parties, that those 20 minutes amounts to a de minimis position and nothing of significance arises in relation to it.

PROSPECTIVE PERMISSION IS REQUIRED TO SERVE A WITNESS SUMMARY

The rules require a party to obtain permission to serve a witness summary. The judge approached the issue on the basis that a retrospective application was one that required relief from sanction applying the Denton principles.

1. 1. However, there is a point of significance, namely that the claimant served its three witness summaries without having obtained the permission of the court required under CPR 32.9(1)(b).

The claimant submits that it can seek retrospective permission without the need for an application for relief from sanctions. It contends that the witness summaries were served in time. The claimant accepts that permission is still required, but if permission is granted retrospectively, it then has fulfilled its obligation. The defendant submits that the witness summaries could not be served without permission and that, therefore, permission is required not just under CPR 32.9(1)(b), but that relief from sanctions is required in that the witness may not be called without the permission of the Court if the witness statement or summary has not been served within the time specified by the Court. Therefore, in order to make a late application, not only is permission required, but relief from sanctions is required under CPR 32.10.

1. In the event, it is not necessary for the court to determine this point. The court will assume that the defendant is correct and that both the permission and relief from sanctions is required.

INABILITY TO OBTAIN A WITNESS STATEMENT

To obtain permission to rely on a witness summary the claimant had to establish an inability to obtain a witness statement. The judge held that this had been established.  The proposed witnesses had signed non-disclosure agreements with the defendants.  The defendant argued that its permission should have been sought to disapply the non-disclosure agreement for the purpose of providing a statement. The judge was somewhat sceptical about the defendant’s argument.

1. 1. The inability to provide the witness statements in respect of the three witnesses where witness summaries have been served is stated expressly at paragraph 2 of each of the witness summaries. Mr Southwell, in his third witness statement, addresses this at paragraph 21(a) in the following terms:

1. 1. From the evidence as a whole, in my judgment, the claimant has satisfied the requirement of proving that there was an inability to obtain a witness statement from each of the three witnesses. First, it is not challenged that there are non-disclosure agreements. I reach that conclusion for the following reasons.

1. 1. First, it is not challenged that there are non-disclosure agreements in respect of those employees. The terms of the non-disclosure agreements have not been provided, but it is not suggested that, without a release on the part of the defendant, those witnesses would have been able to have entered into a dialogue with the claimant’s solicitors with a view to providing witness statements on behalf of the claimant.

1. 1. Second, I am satisfied that there were conversations between Mr Southwell and the three witnesses, the effect of which was that they would not provide witness statements because of their non-disclosure agreements. The communications could have been set out in greater detail, but the substance is the same. Each of the witnesses had non-disclosure agreements, Mr Southwell made a request to each of them and in each case the answer was no. In respect of Mr Munir, although the summary could have been fuller, it comes to the same: that, ultimately, the reason why Mr Munir did not agree to provide a witness statement was because he was concerned about the terms of the non-disclosure agreement.

1. 1. Third, the defendant has not said that if there had been a request, it would have given the consent. Ms Banks is deliberate in her language to say that it would have been considered carefully and on its merits. Mr Goulding QC says that it would have been regarded as self-serving if they had said that they would have given permission.

1. 1. In my judgment, if that is what would have occurred, the defendant would have said it, and it is significant that it is not said that permission would have given. Although it is the case that the defendant did not go back to Mr Munir between the two emails, there is no evidence to explain why that occurred. It is equally significant that after Mr Munir said on 15 March that he would not give evidence because he was concerned about the terms of the NDA, the defendant did not at any stage say to him that it would waive the requirements in relation to the non-disclosure agreement.

1. 1. Fourth, I have had the opportunity to consider the matter in the context of the action as a whole, and particularly having dealt with the adjournment application and having seen the attritional nature of the litigation. The word “attritional” is not mine. It is that of Stuart-Smith LJ when he refused permission to the defendant to appeal against the order made by the deputy judge refusing an adjournment in late 2020. The words that he used on that occasion were as follows:

“… there are strong reasons for holding the trial date, not least being that delay will lead to further interim disputes and a further increase in costs that are already excessive. Echoing the observations of the judge, it is time for a degree of cooperation to replace the attritional approach that has prevailed thus far …”

1. 1. I do not use that term in a pejorative sense against either the claimant or the defendant; rather to emphasise that this has been a very heavily fought dispute. Matters have not been agreed easily, and that has been apparent as I have listened this morning to matters within the pre-trial review.

1. 1. In my judgment, against that background, it seems unlikely, if the defendant had been asked to consider the matter, that they would have agreed to release the witnesses from the NDA and to give express permission for them to provide witness statements for the claimant.

1. 1. Fifth, the fact that the defendant has a practice of seeking NDAs from its employees does lead to an inference that prima facie it would not wish parties to disclose to third parties matters relating to their employment, let alone to assist somebody to sue them. There is no evidence provided by the defendant to indicate a practice of waiving this requirement.

1. 1. Sixth, the defendant has had a root and branch opposition to this application. In particular, it has indicated that the witnesses are irrelevant to the case. In those circumstances of opposition to the application, it seems unlikely for that reason also that it would have provided its consent.

1. 1. In my judgment, applying ordinary causation principles, as Kerr J said that the court ought to do, one has to ask the question whether it would have made any difference if the claimant had asked the defendant for permission to call the witnesses or to take witness statements from the witnesses. In my judgment, it would not have made a difference. In the words of Kerr J in the Morley case, whilst approving the requirements of rigour, he said that in addition to that, “a degree of reality is required”. There is nothing in the history of this “attritional” litigation which indicates that such cooperation would have been forthcoming, and if there had been any likelihood of such consent being provided, it is to be inferred that Ms Banks’ witness statement would have said so in clear and unequivocal terms.

1. For these reasons, I take the view that the claimant has proven an inability to obtain witness statements from the three witnesses.

FAIRNESS

The judge considered the issue of fairness.

VII Is it fair to rely on witness summaries?

1. 1. It is said by Ms Banks at paragraph 54 that it is “grossly unfair” to allow the claimant to rely upon such witness summaries. In my judgment, it is not. It is contemplated by the CPR and for the reasons given, the defendant is in no worse position by the failure to obtain permission in advance.

1. 1. As regards the timing point, there is adequate time to prepare on the basis of the witness summaries. The witness summaries were served without permission on 15 March. Now, as at 15 April, there is still about seven weeks to go until trial. It will be recalled that in my judgment in relation to the adjournment, I formed the view that an adjournment was required until about 10 or 17 May. In the event, I allowed the adjournment until the new term so that the matters would be dealt with within one term. That shows that additional weeks were allowed, and I am satisfied that having to have these witnesses does not cause the unfairness contended for by Ms Banks.

RELIEF FROM SANCTIONS

The judge assumed that the Denton principles applied to this retrospective application. It was held that the breach was significant, there was no good reason for the breach but in all the circumstances of this case it was appropriate to grant relief from sanctions.

VIII Relief from sanction

1. 1. I said earlier in this judgment that I will approach the matter as if relief from sanctions is required. The claimant submits that relief from sanction should be granted and addresses the three Denton criteria.

1. 1. The first question is whether the breach was significant or serious. The witness summaries were served at the time of full service of the witness evidence and the application was made for permission at the same time. The claimant says that if the application had been made without notice a few short days before, it is likely to have been granted, subject to the defendant being able to seek to set it aside. It is therefore submitted on behalf of the claimant that the breach was not serious or significant. It also refers to the case of Scarlett, where no question of relief from sanctions had arisen.

1. 1. In my judgment, if relief from sanctions is required, then the breach is a serious or significant breach. That is because it is required that in order to serve a witness summary, the permission of the court ought to be sought. On the premise that the relief from sanctions is required, it would follow that the permission has to be sought in advance of serving the witness summaries. However, in the scale of seriousness of the breach, that is on the low side because the impact of the lateness is small, for the reasons which I have given.

1. 1. The defendant then says that there was a good reason for the breach and relies on the evidence in the third witness statement of Mr Southwell at paragraph 23(a), where he sets out the difficulties that were besetting the claimant in relation to this matter, gathering evidence in relation to the new case in the amended defence and encountering difficulties with witnesses and the like. In my judgment, that does amount to a mitigation, but it is not a good answer to the breach. It does not excuse the fact that the application had not been made.

1. 1. Turning to the third Denton matter, what, in all the circumstances of the case, would best enable the court to deal justly with the application, including the need for litigation to be conducted effectively and at proportionate cost and to enforce compliance with rules, practice directions and orders? In my judgment, the granting of this application would accord with the purpose of the CPR to enable the witness evidence to be heard where it was not possible to obtain the statements and to ensure that the court has the relevant evidence before it. In my judgment, there is no real difficulty for the defendant in being able to deal with this matter. The summaries came at the same time as Mr Benyatov’s statement. There is no substantial prejudice arising out of the fact that the permission had not been sought prior to the applications.

1. 1. Further, the matters to which I drew attention in relation to the nature of the amendment did bring about a focus on the risk assessment process of the defendant and the evidence of the defendant’s employees or former employees who might be able to give relevant evidence in relation to this.

1. 1. I refer to the description of what occurred in the two months prior to the time of the witness summaries and to the pressure that the claimant was put under during that period of time. None of that amounts to an excuse, but it is all relevant to the degree of fault on the part of the claimant which, in my judgment, is low.

1. 1. Above all, I bear in mind that the evidence of these witnesses, particularly in relation to the new matters which have arisen as a result of the amendments, but also in relation to the risk assessment process generally of the defendant, are matters which would be or are potentially valuable to the court in order to assess the issues in this case.

1. 1. In my judgment, the words of Kerr J at [117] of his judgment in Morley ring particularly loudly:

“Justice is served by relevant evidence being called, not by preventing it from being called.”

1. 1. As to the fairness of the process, Kerr J said at [119], in relation to a case against the defendant bank where the lateness of the application was much greater and different from this case:

“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 that 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.“

IX Conclusion

1. 1. In my judgment, in this case, I am clearly of the view that the witness summaries are proper and that the evidence can and should be accommodated at the trial. The defendant has adequate time to prepare. The defendant has demonstrated, in its ability to deal with procedural issues and to get things done efficiently, that it will be able to deal with these matters. There is, in my judgment, no fear of disruption of the trial or its fairness. There is concern, if that evidence is not admitted, that justice will not be done.

1. For all those reasons, I take the view that the witness summaries are appropriate and that, in the exercise of the court’s discretion, the court allows each of the witnesses and gives, insofar as it is required, relief from sanctions.