INFERENCES TO BE DRAWN WHEN A PARTY DOES NOT FILE EVIDENCE AND THERE ARE ISSUES WITH DISCLOSURE: A WORKING EXAMPLE

In Sinha v Taylor & Ors [2022] EWHC 1096 (Comm) Mr Simon Colton QC considered the inferences to be drawn when the defendants had not filed witness evidence and there was issues in relation to disclosure.

THE CASE

The claimant brought a claim for damages alleging that the defendants made fraudulent representations which induced him to invest £200,000 into a company. The action was defended.  However the defendants did not file any witness evidence.   The claimant stated that the defendants’ disclosure list was inadequate.  The response from the defendants’ solicitors was that they no longer represented the defendants.   The defendants appeared in person at trial.

THE JUDGMENT IN RELATION TO EVIDENCE

The judge considered the relevance of the absence of evidence from the defendants and also the alleged defects in disclosure. He held that the absence of witness evidence was highly relevant, and he could draw adverse inferences.  The absence of documentary evidence, however, may have some justification and no adverse inferences were drawn.

1. 1. Both of the defendants were present at the trial, but were unrepresented. Although the defendants had received the link to the trial bundle five days earlier, they had not downloaded it, and I gave them time to do so. Equally, although they had had Mr Sinha’s witness statement since last December, they had not read that statement (or not recently) and so I allowed them time for that too.

1. 1. By CPR 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. This prohibition amounts to a sanction within the meaning of CPR 3.9, and so an application for permission to call a witness for whom no witness statement or summary has been served requires an application for relief from sanctions under CPR 3.9. No such application was made by the defendants. In any event, bearing in mind the three stage process for such applications laid down in Denton v TH White Ltd [2014] EWCA Civ 906, any such application would have been very unlikely to succeed: the defendants’ breach was both serious and significant, in the context of the case, since it affected all of their potential witnesses, and endured up to the day of trial; there was no good reason for it – the primary reason appearing to be that the defendants could no longer pay their solicitors; and to have permitted the late service of witness statements, or oral evidence without witness statements, would have been unfair to the claimant in either requiring his counsel to cross-examine without proper preparation, or necessitating an adjournment of the trial.

1. 1. As a result, the position at trial was that, in addition to the documentary evidence in the trial bundle (which had been prepared unilaterally by the claimant’s solicitors, given the non-engagement of the defendants), I heard oral evidence only from the claimant. I did not permit the defendants to give factual evidence which could and should have been included in witness statements. I did not allow them to advance any positive case by reference to facts which were not contained in the admissible evidence. However, I allowed the defendants to test and challenge the claimant’s claim by cross-examination of Mr Sinha, and by opening and closing submissions. While on occasion the submissions of the defendants strayed into giving evidence of factual matters, I made clear to them, and to the claimant, that I would not be giving any weight to such matters.

1. 1. In conducting the trial, and in reaching my judgment, I have also had regard to the pleaded Defence of the defendants, and the agreed list of common ground and issues annexed to the case management order of Picken J. I have assumed that the defendants continue to advance their pleaded defences, even where they made no reference to them in their oral submissions.

Approach to the evidence

1. 1. I must make findings of fact on the balance of probabilities. In making such findings, I have regard to the witness evidence, the underlying documents, the submissions made by or on behalf of the parties, and the inherent probabilities of the matters alleged.

1. 1. Mr Sinha was called as a witness and confirmed that his witness statement was true. He was cross-examined by each of the defendants, and I also asked some clarificatory questions. It was never suggested to Mr Sinha that his evidence was untruthful in any way, and having read his witness statement, and seen Mr Sinha in the witness box, I have no reason to doubt that his written and oral evidence was a truthful description of his recollections. Accordingly, I accept his evidence in its entirety.

1. 1. As previously indicated, there is no witness evidence from the defendants. In Royal Mail Group Ltd v Efobi [2021] UKSC 33, the Supreme Court addressed the issue of adverse inferences which may be drawn in such circumstances. Lord Leggatt JSC held at [41], in summary, that whether or not to draw an adverse inference “really is or ought to be just a matter of ordinary rationality”, using “common sense”. He indicated, however, that:

“Relevant considerations will naturally include such matters as whether the witness was available to give evidence, what relevant evidence it is reasonable to expect that the witness would have been able to give, what other relevant evidence there was bearing on the point(s) on which the witness could potentially have given relevant evidence, and the significance of those points in the context of the case as a whole.”

1. 1. Mr Fear-Segal submitted that I should also draw adverse inferences from the absence of documentation which, if the defendants’ case were correct, would have been available to them and disclosed in the course of proceedings. As it was expressed by Arden LJ in Wetton (as liquidator of Momtaz Properties Ltd) v Ahmed [2011] EWCA Civ 610 at [14], documentation may be “conspicuous from its absence” and I may be able to draw inferences from missing documentation.

1. 1. In the present case, I consider I can draw adverse inferences from the absence of witness evidence from both Mr Taylor and Mr Kendrick. Their evidence would plainly have been material to the matters in issue. Their Case Management Information Sheet indicated that both intended to give evidence. Their continued intention to do so was implicit in their email to Fletcher Day of 1 December 2021. And yet, no attempt was made to serve witness statements in any form, nor to give evidence on oath, at any time. I infer that the defendants could not have provided a credible response to the allegations of Mr Sinha. This affects not only Mr Sinha’s evidence of facts within his own knowledge (such as what was said or not said at meetings he held with the defendants), but also in relation to matters which he did not personally know but suspected (such as his allegation that in making false statements the defendants were acting dishonestly).

1. I do not, however, draw any additional inference from the scarcity of documents disclosed by the defendants. By the time of these proceedings, the Company had gone into liquidation. At every stage, including when represented by solicitors and counsel, the defendants indicated that documents belonging to the Company were no longer within their control. In their disclosure certificate, they said that they had asked the liquidators to confirm what documents the liquidators had, but again indicated that all such documents were no longer within their control. Documents belonging to the Company are not, therefore, conspicuous by their absence. As for the defendants’ personal documents (text messages, and the like) they would not necessarily have been disclosable in respect of any of the identified issues for disclosure. Overall, therefore, while the absence of documentation may be regarded as suspicious, it is not clear-cut that the defendants acted improperly in the disclosure they gave, and so I draw no inference in this regard.

THE RESULT

The claimant succeeded at trial.  The defendants were held jointly and severally liable to pay back the £200,000 the claimant had invested.