WHEN A PARTY FILES A WITNESS STATEMENT THAT DOES NOT COMPLY WITH THE RULES: THERE IS NO GOOD REASON AND THE PARTY IN DEFAULT PAYS A PRICE…

In the judgment today in  Prime London Holdings 11 Ltd v Thurloe Lodge Ltd [2022] EWHC 79 (Ch) Mr Nicholas Thompsell  (sitting as a Deputy Judge of the High Court) considered the appropriate response to a witness statement that failed to comply with the requirements of Practice Direction 57 AC.  The breaches, in form and content, were clear and there was “no good reason” for those breaches.  However the appropriate sanction, on the facts of this case, was to require that a compliant statement be served, together with ordering the party in default to pay costs on the indemnity basis.

 

” A failure to meet the requirements of the Practice Direction as to the content of a witness statement must be considered sufficiently serious and significant to warrant the consideration of the sanction of excising that content. There is no good reason to excuse this default and nothing in the conduct of the Defendant that mitigates it”

 

THE CASE

The parties were involved in litigation in relation to rights under the Neighbouring Land Act 1992. The action is in the Business and Property Courts and witness statements were subject to Practice Direction 57AC. The defendant filed a witness statement that did not comply with the Practice Direction. The claimant made an application that the defendant be debarred from relying on that statement.  The judge was considering the appropriate response where the statement did not comply with the Practice Direction in form and, to some extent, in content.

THE PRACTICE DIRECTION

The judge found, and it appears to have been agreed, that the statement did not comply.

Does the Relevant Witness Statement comply with the Practice Statement?

    1. There is no doubt in my mind that the Relevant Witness Statement, as originally drafted (“the Original Witness Statement“) failed to comply with the requirements of PD 57 AC.
    1. PD 57 AC clearly applies in this case since the Relevant Witness Statement was prepared for use in a trial in the Business and Property Courts. The Practice Direction is relatively new – it applies to trial witness statements signed on or after 6 April 2021. However, it applies to witness statements signed after that date, as was the case here, even where the proceedings were in train prior to that date. The proceedings for which it was prepared are not any of the proceedings where its application is excused from application under the terms of paragraph 1.3 of the Practice Direction.
  1. In broad terms, the purpose of the Practice Direction is to ensure that Witness Statements are focused on the purpose of witness statements, which is explained at paragraph 2.1 of the Practice Direction. This purpose is to set out in writing the evidence-in-chief that a witness of fact would give if the witness were allowed to give oral evidence at trial without having provided a statement. The Practice Direction was introduced to deal with a mischief that witness statements were being used for purposes other than this – as a vehicle for argument and for conveying hearsay evidence and opinion, rather than for conveying facts within the knowledge of the witness. Comments made by Andrew Baker J in Exportadora de Sal S.A. de C.V. v Corretaje Maritimo Sud-Americano Inc. [2018] EWHC 224 (Comm) illustrate the concerns of the courts had led to its introduction. (Andrew Baker J, went on to chair the working group that developed the Practice Direction.)

HOW THE STATEMENT BREACHED THE PRACTICE DIRECTION

The judgment then sets out the nature of the breaches.
    1. The Original Witness Statement is in breach of the Practice Direction in two ways:
a) Formalities.
The Original Witness Statement does not comply with the formal requirements of a witness statement.
First, it did not include the confirmation required by paragraph 4.1 of the Practice Direction. This requires the witness to confirm various things. These include his or her understanding of the purpose of the witness statement; that it sets out only the witness’s personal knowledge and recollection, in the witness’s own words, and that the witness has not been encouraged by anyone to include in the statement anything that is not the witness’s own account or recollection.
Secondly, it does not include the required Certificate of Compliance signed by a relevant legal representative confirming that the proper content of trial witness statements and proper practice in relation to their preparation have been discussed with the witness and that the legal representative considers that relevant requirements of the Practice Direction, and of Practice Direction 32, have been followed.
b) Content.
The Original Witness Statement breaches requirements within paragraph 3 of the Practice Direction. These requirements limit the contents of a witness statement and require witness statements be prepared in accordance with the Statement of Best Practice contained in the Appendix 2 the Practice Direction and (in this case) the Chancery Guide. The extent to which it included matters which breached these limitations is disputed, but it is clear, and I think has now been accepted by the Defendant, that at least some of the statements within the Original Witness Statement breached these requirements.

 

THE APPROPRIATE RESPONSE

The judge was critical of the claimant’s delay in responding to service of the witness statement. The statement was served on 17th December 2021, on the 7th January 2022 the claimant’s solicitors wrote to the court asking the court not to read it. On the 10th January 2022 the claimant made an application for an order that the statement was inadmissible.

THE APPROACH OF THE COURT

The judge considered the principles governing the appropriate response

    1. Under paragraph 5 of the Practice Direction, where a party fails to comply with any part of the Practice Direction, the court retains its full powers of case management. Paragraph 5.2 emphasises that the court’s powers include, in particular, the power to strike out part or all of the witness statement; to order that the witness statement be redrafted in accordance with the Practice Direction or as may be directed by the court; or to order the witness to give some or all of their evidence in chief orally. In addition the court may make an adverse costs order against the non-compliant party.
    1. In argument, Mr de Waal on behalf of the Claimant suggested that the way I should approach this was in two stages. The first was to find that the Original Witness Statement should be struck out and then secondly to apply the Denton criteria to decide whether to give relief to the Defendant which he argued should be limited to the relief which the Claimant was prepared (by way of concession) to allow, which would be to accept paragraphs 1 to 13 of the Revised Witness statement, but not the remainder of it. In mentioning the Denton criteria, Mr De Waal was referring to the well-known three stage approach in Denton v TH White [2014] EWCA Civ 906 (“Denton“).
    1. Given the breadth of powers the court has under the Practice Direction, this is not the only way of approaching the matter. It is open to the court to decide that the appropriate sanction for the original failure to comply with the Practice Direction was for the court to order that the witness statement be redrafted as may be directed by the court. To the extent that the court orders this, and this position was acceptable to the Defendant, there may be no occasion for the Defendant’s application for relief and technically the Denton criteria may not apply.
    1. The approach to be taken by the court and by the parties in a case where the Practice Direction has not been followed was considered in two recent cases: Mansion Place Limited v Box Industrial Services Ltd [2021] EWHC 2747 (TCC) (“Mansion Place“) and Blue Manchester Ltd v Bug-Alu Technic GmbH, Simpsonhaugh Architects Limited [2021] EWHC 3095 (TCC) (“Blue Manchester“).
    1. In her decision in Mansion Place, O’Farrell J sets out a useful summary of the relevant rules for trial witness statements, the history and purposes giving rise to the Practice Statement and the requirements of the Practice Statement. She states at [49] that:
“Where a party is concerned that another party has not complied with the Practice Direction in any particular respect, the sensible course of action is to raise that concern with the other side and attempt to reach agreement on the issue. Where that is not possible, parties should seek the assistance of the court, by application for a determination on the documents or at a hearing. However, this should be done at a time and in a manner that does not cause disruption to trial preparation or unnecessary costs. The court does not wish to encourage the parties to engage in satellite litigation that is disproportionate to the size and complexity of the dispute. Often, the judge will be best placed to determine specific issues of admissibility of evidence at the trial when the full bundles and skeletons are before the court.”
    1. In Mansion Place both parties were requesting redactions to certain witness statements put forward by the other party on the grounds that these included information contrary to the Practice Direction. The judge ordered various redactions to the witness statements in question but refrained from ordering other redactions suggested by the party opposing the party putting forward the witness statement.
    1. The decision in Mansion Place was referred to, and followed, in the decision in Blue Manchester, which was given by HHJ Stephen Davies sitting as a High Court Judge. The learned judge went on to provide some further useful guidance on how to approach various aspects of the Practice Direction. In the particular case before him, he did not consider that the incidents of non-compliance justified the striking out of the witness statements. He described this as:
“a very significant sanction which should be saved for the most serious cases. There is a sufficient core of compliant material in each witness statement and it is true as … That they are not particularly lengthy witness statements which are particularly egregious in their non-compliance.”
    1. Instead, he annotated the witness statement with a series of amendments which he required to be made to the witness statement for it to be in accordance with the Practice Direction.
    1. It is notable that in both cases the judge approached the matter by considering how to sanction the original non-compliance with the Practice Direction, rather than by applying the sanction of striking it out and then considering under the principles in Denton whether to grant relief.
Analysis
    1. Considering this matter in the light of the decisions in Mansion Place and Blue Manchester, I find fault on both sides in how they dealt with this matter.
    1. Certainly, the initial fault was with the Defendant, who is extremely well represented and really has no excuse for failing to ensure that the Relevant Witness Statement complied with the Practice Direction. There has been no real explanation why this was the case, certainly in relation to the failure to meet the formal requirements of the Practice Directions.
    1. As regards the inclusion of content that is contrary to the Practice Direction, Mr Warwick, on behalf of Defendant, explained that this came about partly as a result of the terms of the Consent Order sealed on 20 December 2021 (but available in draft before that date) which set out instructions for the exchange of evidence. One of the paragraphs of this order allowed the parties to file supplemental statements and reports setting out in full their reasoning on areas of disagreement following the production of a joint report by the expert witnesses setting out what issues remain between them. This appeared to envisage that witnesses on behalf of each party would indeed set out their reasons for disagreeing with the other side’s expert, and that this in the words of Mr Warwick, on behalf of the Defendant, laid
“the seeds of the problem which your Lordship is now grappling with, because what this is seemingly inviting the lay witnesses to do is to file supplemental statements setting out in full the reasoning on the areas of disagreement”
and that as a result
“both sides had some degree of misunderstanding as to exactly how they ought to approach the further lay evidence from the witnesses”.
    1. This is not much of an excuse for failing to comply with the Practice Direction. The instructions in an order of the court should not be taken as ousting any element of the Practice Direction, perhaps not ever, but certainly not unless the intention to do this is very clear on the face of the court order. Nevertheless, I accept that the application of the Practice Direction should be read in the light of this instruction and that the witness was allowed to use matters within his own knowledge to explain if assumptions made by one of the experts to which he was responding, appear to him to be wrongly based.
    1. The Defendant’s initial reaction in brushing off the concerns raised by the Claimant and its failure to apologise for the oversight also do it no credit in this matter.
    1. Whilst the primary fault was with the Defendant, the Claimant is also at fault for not identifying earlier its objections to be Relevant Witness Statement and explaining these in detail to the Defendant with a view to agreeing a revised version of the witness statement that could be substituted. Since the decisions in Mansion Place and Blue Manchester parties to litigation, and certainly those who are professionally advised, should understand that the court expects and requires this approach of the parties and that failure of a party to do this can be expected to influence how the court approaches an application to strike out a witness statement.
    1. Some explanation as to the reasons for the delay is given in the Witness Statement of Leanne Norton, a senior associate at Dentons UK and Middle East LLP (“Dentons“), the Claimant’s firm of solicitors. Her explanation was essentially based on absences from the office on her behalf which coincided unfortunately with Counsel’s leave of absence during the Christmas break, so that the defects in the Original Witness Statement were not identified until New Year’s Eve, resulting in the delay in raising the point until 4 January 2021. I do not consider this to be much mitigation for the delay – a well-resourced firm like Dentons should have been able to arrange cover so that the matter was spotted and dealt with earlier.
    1. The explanation also does not provide any excuse for failure of the Claimant to identify in detail matters complained of in the Original Witness Statement.
  1. As a result of these faults on both sides this matter came to court and took up valuable court time (and has required me to take considerable part of my weekend to review all of the circumstances and case law to put together this decision).

THE COURT’S DECISION

 

The judge held that it was not appropriate to strike out the witness statement or prevent the defendant relying on it. Rather the defendant should be ordered to file a compliant statement and suffer a penalty in costs.

    1. Taking all of this together, I think I should follow the lead of the learned judges in Mansion Place and Blue Manchester and respond to the breach of the Practice Direction by ordering the replacement of the Original Witness Statement with a compliant one. I agree with HHJ Stephen Davies that the striking out of a witness statement is “a very significant sanction which should be saved for the most serious cases”.
    1. I therefore propose, in response to the Claimant’s Application, not to grant the Claimant the order that it has applied for. Instead, I will make an order that the Original Witness Statement should be replaced with a version of the Revised Witness Statement, after some further amendment which I will describe and which, in my view, is necessary for this witness statement it to comply with the Practice Direction. This to my mind is the best way of doing justice to the parties and otherwise reflecting the overriding objective set out in CPR rule 1.1.
    1. In particular, I consider that, as with the circumstances in Blue Manchester, the version of the Relevant Witness Statement that I propose to approve includes a useful core of compliant material and that the failures by the Defendant in relation to the content of the Original Witness Statement were not particularly egregious in their non-compliance.
    1. It was not clear from the wording of the Defendant’s Application what sanction it was from which it was requesting relief. I take it that primarily it was asking for relief from the sanction that the Claimant had at that point said it would be applying for – the striking out of the Relevant Witness Statement. If that is the case, then there is no need to consider that application further as that sanction has not been imposed and therefore cannot be relieved. On this basis the Denton approach is not engaged since I am not considering ordering any relief from a sanction imposed by the court, I am merely choosing a lesser sanction than the Claimant has requested.
    1. I do not think that the Defendant’s Application should be considered to be any wider than this and be regarded as asking for relief from the sanction that I have imposed, i.e. ordering the substitution of the Original Witness Statement with the Revised Witness Statement but subject to redactions. However to the extent that it could be considered to be doing so, it scarcely requires the application of the Denton approach to determine that the court will refuse such an application I have found that there are paragraphs that need to be redacted if the witness statement is not to breach the requirements of the Practice Statement. Having found this, it would be perverse if I nevertheless ordered that these paragraphs be included. However, for the record I have considered the factors considered important in Denton in reaching the decision that I have reached. A failure to meet the requirements of the Practice Direction as to the content of a witness statement must be considered sufficiently serious and significant to warrant the consideration of the sanction of excising that content. There is no good reason to excuse this default and nothing in the conduct of the Defendant that mitigates it. The overriding objective is clearly best served in refusing the application to the extent that it does need to be read in that way.
    1. My decision in this case should not be seen as providing any carte blanche to parties to play fast and loose with the Practice Direction, and to leave it to the court to produce a compliant witness statement. However, in all the circumstances described above, particularly having regard to the failures on both sides to act constructively in agreeing a way forward, this seems the correct approach to me.
This approach should, however, be accompanied by sanctions against the Defendant, as the party most at fault, in costs. The Defendant has already accepted in court that it would be appropriate for a costs order to be made against it, given its role in this matter coming before the court. I will hear both sides further on this question, but the Defendant should be warned that I am minded to award costs in relation to this particular matter on an indemnity basis to mark the court’s disapproval relating to the original breach of the Practice Direction.