WHEN LAWYERS GIVE WITNESS STATEMENTS: THE SOURCE OF INFORMATION AND BELIEF IS ESSENTIAL

We are looking back at a post in 2019. Primarily because the issues the case raises in relation to lawyers making witness statements are prevalent. There are numerous examples on this blog of the difficulties that can occur when a solicitor makes a witness statement on behalf of their clients. The dangers are exemplified in the judgment of Master Marsh in Folgender Holdings Ltd & Anor v Letraz Properties Ltd & Ors [2019] EWHC 2131 (Ch), we are looking at this case and some subsequent judgments.

“The CPR permits secondary evidence to be given provided that the requirements of Practice Direction 32 paragraph 18.2 are complied with. This is an important requirement. However, the maker of a statement must not only provide the usual rubric but also meticulously comply with its requirements. The court must in every instance know from what source the secondary evidence comes.”

THE CASE

The claimant was seeking summary judgment/ striking out defence in a case related to a loan agreement.

THE DEFENCE

The Master was somewhat sceptical about the defence.

1. On 24 September 2018 a full defence was served on behalf of all the defendants. The defence was settled by leading and junior counsel. Neither Mr Kenny QC nor Mr Dunn-Walsh, who appeared at the hearing before me, were involved at that stage. It is not unfair to characterise the position adopted by the defendants as taking every point open to them and, in addition, points which on more mature reflection have proved to be untenable and should never have been pleaded. The defence maintains the defendants’ position that the claimants are not entitled to a second charge or, alternatively, that the charge did not extend to the profit share. They denied that the claimants were entitled to an account of net profit in relation to Hamilton Terrace or to information about the redevelopment of Chesterfield Hill. The defendants went on to say that by virtue of a promissory estoppel, the claimants are prevented from alleging a breach of the loan agreement based on a failure to provide a registrable charge. Surprisingly, the defendants put forward no pleaded case about the relief sought by the claimants. They merely denied that the claimants were entitled to the relief sought. No case was made that specific performance should not be granted in view of the intervention of a subsequent lender’s rights or because of laches or acquiescence.

THE DEFENDANTS’ EVIDENCE IN RESPONSE TO THE CLAIMANT’S APPLICATION

The Master’s scepticism was justified.  At the last moment the defendant filed evidence. Many of the points made in the defence were accepted as untenable.   The defendants proposed to run a defence that was neither pleaded, nor foreshadowed in the witness evidence.   However it is the content of the evidence in response that we are looking at here.

1. An order was made on 22 May 2019 requiring Letraz to serve its evidence in reply to the application by 4pm on 7 June 2019. No evidence was served by that date and on 15 June 2019 an order was made requiring Letraz to serve its evidence by 19 June 2019, or in default it would be barred from relying on evidence in reply.

2. On the last possible day, a witness statement made by Marc Livingston, a solicitor with Waller Pollins Goldstein was served. Before summarising the relevant parts of his evidence, I would say something about the form of the evidence. As a general rule, it is desirable where a party faces an application for summary judgment for evidence to be given by a witness who has first-hand knowledge of the events for the obvious reason that such evidence is likely to carry greater weight than evidence based on instructions. It may, however, be convenient in some cases for evidence to be provided by the party’s solicitor based on instructions. There may also be tactical considerations in play in making a choice between the two options. Mr Livingston was chosen as the mouthpiece for the first defendant and he sets out in his statement the usual rubric saying that the facts contained in the statement are within his own knowledge unless he states otherwise and where facts are not within his knowledge he has identified his sources of information and belief. The CPR permits secondary evidence to be given provided that the requirements of Practice Direction 32 paragraph 18.2 are complied with. This is an important requirement. However, the maker of a statement must not only provide the usual rubric but also meticulously comply with its requirements. The court must in every instance know from what source the secondary evidence comes. There are, unfortunately, numerous examples in the statement of Mr Livingston making assertions of fact about matters that he could not possibly know about without stating the source of his information. He goes further and ventures opinions about the state of the property market and about the normal terms of lending. If a party chooses in response to an application for summary judgment, or indeed any application, to provide evidence through a solicitor, strict compliance with the CPR is required if that party is to avoid the risk that limited, or possibly no, weight is given to the evidence.

3. The point is of importance in every case. It is however of particular importance in this case because Mr Livingston’s statement has been used by the defendants to abandon their central defence based on promissory estoppel. Mr Kenny said at the hearing that, despite the defence having been settled by leading and junior counsel, the first defendant had been advised that the defence of promissory estoppel was legally unsustainable. Such candour was welcome, if surprising. It has left the first defendant’s position very unclear because Mr Livingston set out grounds to oppose the application that are not pleaded. No suggestion was made in the statement that the defence would require amendment, and no attempt to amend the defence was made until half-way through the hearing at the point at which Mr Grant was closing the claimants’ case. When the draft amended case was revealed, it transpired that the first defendant wished to rely on defences that had neither been forecast in Mr Livingston’ witness statement nor in Mr Kenny’s skeleton argument. Mr Kenny made an oral application for permission to amend the defence. I will return to that application later in this judgment.

4. The approach adopted by the first defendant at the hearing bore little relationship to that adopted in the defence. The first defendant accepted that the claimants were entitled to a charge and were entitled to information about the Chesterfield Hill redevelopment. As to the latter point, there is a narrow difference between the parties as to scope of the information that must be provided. The substance of the defence was based upon three points. First, that the court should not, in the exercise of its discretion, make an order for specific performance of the obligation to grant a charge. Secondly, that if an order is made, it should not have the effect of limiting the amount of the first charge to £7.5 million. Thirdly, that there was no obligation to provide a charge that was capable of being registered.

THE RESULT

The claimant’s application was largely successful.

EXACTLY THE SAME PROBLEM – FOUR YEARS LATER

The judgment in MF Tel Sarl v Visa Europe Ltd [2023] EWHC 1336 (Ch) records it was before “Master Marsh (sitting in retirement).  However the Master had lost none of his pre-retirement keenness for ensuring that parties filing witness statements comply with the requirements of CPR rule 32.8 and PD 32 18.2.(2). A party giving information in a witness statement must state the source of that information.

THE VISA EUROPE CASE

Master Marsh was hearing an application by the defendant to strike out the claim and/or for summary judgment.

THE JUDGMENT ON THE WITNESS EVIDENCE

The claimant filed evidence in reply. Some of the evidence came from the claimant’s solicitor.   The Master took the point that the evidence was deficient and failed to give the source of information.

1. 1. When the application was heard the court considered two witness statements made by David Winfield-Chislett, who is a solicitor and in-house counsel to the defendant, and a witness statement made by Jonathan Speed, who is a partner with Bird & Bird LLP the claimant’s solicitors.

1. 1. At the hearing I observed that Mr Speed had failed to comply with CPR rule 32.8 and paragraph 18.2(2) Practice Direction 32. The latter provides that:

“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.”

1. 1. A witness statement that contains information provided by another person must provide the source of any matters of information and belief. The point is not without importance because the accuracy of this information may be challenged at the hearing of an application or at the trial. The source of the information needs to be clear.^[2] It is of particular importance on applications made under CPR rule 24.2 where the court may be required to exercise a judgment about the quality of the evidence, both in what it says and does not say, and whether it makes out a claim or a defence with a real prospect of success.

1. During the hearing Mr Cloherty KC, who appeared for the claimant, accepted that the witness statement was defective and the claimant offered to provide a corrective statement. On 10 May 2023 Mr Speed filed a further statement providing the source of the evidence given in his first statement. In addition, he took the opportunity to clarify a point made in his first statement. This has proved to be controversial and on 12 May 2023 DLA Piper UK LLP on behalf of the defendant invited the court to disregard Mr Speed’s second statement describing it as not only providing late evidence but also a pleadings alteration. On 17 May 2023 Bird & Bird LLP responded saying, amongst other things, that the statement did not affect the case set out in the amended particulars of claim.

THE EARLIER CASE: PUNJAB NATIONAL BANK (INTERNATIONAL) lTD

The footnote to the judgment refers back to the Master’s previous judgment in   Punjab National Bank (International) Ltd v Techtrek India Ltd & Ors [2020] EWHC 539 (Ch)  a case that was looked at on this blog when it was first published in 2020.

THE JUDGMENT IN PUNJAB

1. 1. The claimant’s case is that the third defendant executed the Guarantee and that the form of the Guarantee is valid according to the law of India. The claimant seeks permission to rely on evidence provided by an expert in Indian law, Mr M L Ganesh. The Defendant seeks permission to rely on expert evidence from Mr S Agrawal. Both are experienced advocates who have provided written reports that comply with CPR rule 35.

1. 1. The claimant also relies on its particulars of claim and four witness statements made by:

(1) Mr Randeep Jandu a solicitor with Stradbrooks Solicitors.

(2) Mr Pramod Kumar an Assistant Manager with the claimant.

(3) Mr Muddor Nayak who was until he retired in May 2019 an Executive Director of the claimant.

(4) Mr Andrea Angelillis a lawyer with Studio Legale Bird & Bird in Milan.

1. 1. Mr Jandu deals with the claimant’s application for summary judgment against the second third and fourth defendants. His evidence is largely formal. Paragraph 2 contains the type of rubric that is common. He says:

” I make this statement from matters within my own knowledge and from information that has been provided to me by officers of the Claimant and from a perusal of the documents in the Claimant’s files and from other information that has come to me in the course of acting as the Claimant’s solicitor. Matters within my own knowledge are true and all other matters are true to the best of my knowledge and belief.”

1. 1. The general rule about the evidence of witnesses is contained in CPR rule 32.2(1) to the effect that any fact which needs to be proved by the evidence of witnesses is to be proved, at any hearing a trial, “by their evidence in writing”. Under CPR rule 32.2(2) the general rule is subject to any provision to the contrary contained in the CPR or elsewhere and to an order of the court.

1. 1. CPR rule 32.6(1) provides a general rule that “… at hearings other than the trial evidence is to be by witness statement, unless the court, a practice direction or any other enactment requires otherwise.” Hearsay evidence is generally admissible in civil proceedings by virtue of the Civil Evidence Act.

1. 1. CPR rule 32.8 specifies that a witness statement must comply with the requirements set out in Practice Direction 32 and paragraph 18 of that practice direction sets out provisions specifying what must be contained in the body of a witness statement. Paragraph 18.2 requires that the witness statement contains a statement indicating which of the statements are made from the witness’s own knowledge and which are matters of information and belief. In addition, the witness statement must indicate “… the source for any matters of information or belief.” The rule does not say whether the “source” of evidence in the case of a corporate entity must be identified by referring to a person or persons, or whether, as here, it suffices to identify “officers of the Claimant”.

1. 1. CPR rule 32.4(1) describes a witness statement as “a written statement signed by a person which contains the evidence which that person would be allowed to give orally. Whether the witness statement is intended for use at a trial or another hearing the form of the statement is the same and the requirements of CPR rule 32.8 and the Practice Direction must be complied with. It is important, however, that the maker of the witness statement makes it clear when the statement contains hearsay evidence and in doing so complies with the requirement to specify the source. As Patten J pointed out in Clarke v Marlborough Fine Art Ltd [2002] 1 WLR 1731 at [37] the failure to identify the source of hearsay evidence does not render the hearsay evidence inadmissible but it goes to the weight the court will give to that evidence.

1. 1. As a general observation, it is a matter of considerable convenience that a legal representative is able to provide hearsay evidence for hearings, other than trials, based on instructions. One reason for this is that it is more economical for evidence to be gathered together in one place, rather than the court being provided with a series of witness statements from those who can give first-hand evidence. Another factor that will be in the minds of legal advisors is that hearsay evidence provided by a solicitor prevents the person who has knowledge of the relevant events being subjected to cross-examination at the trial on the content of a witness statement made at an early stage of the claim and before disclosure has taken place. The corollary, however, is that the requirements of paragraph 18 of Practice Direction 32 must be carefully complied with if the statement is to be given full weight. Where the applicant seeks summary judgment this is of particular importance.

1. 1. In my judgment, where the maker of a statement is relying on evidence provided by a witness who is an officer of, or employed by, an incorporated body, the requirements of paragraph 18 of Practice Direction 32 to provide the source of evidence is not complied with merely by saying that the source is the entity or officers of the entity. If the source of evidence is a person, as opposed the source being documents, the person or persons must be identified and named. A corporate entity cannot experience events and can only operate through the medium of real persons. It follows that the source of evidence must be a named person or persons. A failure to identify the source in a manner that complies with paragraph 18.2 will mean the court has to consider whether to place any weight on the evidence, especially where it touches on a central issue.