In February's Insurance Brief we reported on the Reforms which were to be introduced in relation to witness statements signed on or after 6th April 2021. Our observation was that, whilst the aims behind these proposed reforms were laudable, it would be interesting to see whether satellite litigation developed as a result.
Brief Recap - Background on Practice Direction 57AC
The Judges of the Commercial Court considered that witness statements had become “ineffective” in achieving best evidence at proportionate cost in Commercial Court trials. It was their view that witness statements were now more often than not, too long, sometimes strayed into submissions and were rarely in the witnesses’ own words. As a result, the Witness Statement Working Group was formed and the Practice Direction 57AC (“PD 57AC”) was drafted and applied to witness statements that were signed on or after 6 April 2021.
The key points of PD 57AC are that a witness statement should address: 1) only matters that are in dispute or needed to be proved at trial; 2) Only matters of fact that the witness has personal knowledge of; 3) A list of documents that the witness has been referred to, and 4) the confirmation of compliance with PD 57AC. It was made clear that witness statements should not quote at length from any document which is already referred to, argue the case generally or on particular issues, take the Court through documents or set out a narrative to be derived from the documents or provide their opinion on other evidence in the case.
The facts of this case
The Claimant, MAD Atelier International BV (" MAI ") and Defendant, Mr Axel Manes ("AM") agreed in 2015 to enter into a joint venture agreement to develop an international franchise of restaurants under the brand "L'Atelier de Joel Robuchon". MAI alleged that AM had fraudulently induced it to enter into various transactions. The joint venture agreement was terminated. MAI alleged that it had suffered losses consequential upon that termination. Proceedings were issued in the Commercial Court. Witness Statements were served. Expert evidence was required including as to MAI's hypothetical lost profits from the Joint Venture.
AM issued an application (which relied on the new PD 57AC) to strike out parts of the witness statements served on behalf of MAI on the grounds that they contained inadmissible opinion evidence as to what would have hypothetically happened to the business and therefore what MAI's profits would have been if the joint venture agreement had not been terminated. AM argued in particular that 1) there was a breach of paragraph 3.1 of PD 57AC as the relevant paragraphs of the statements went beyond facts that needed to be proved at trial, and 2) there was a breach of 3.6 of the Appendix to PD 57AC because the statements contained the witnesses' opinions about hypothetical events .
AM's application was unsuccessful and was dismissed. The Judge concluded that the test to be applied is whether the evidence would be admissible at trial. It was emphasised that the Practice Direction does not change the law as to admissibility of evidence or overrule any previous authorities as to the content of witness statements. PD 57 AC 3.1(2), makes it clear that in addition to matters of fact, the witness statement may include evidence which a witness "would be allowed to give in evidence in chief if they were called to give oral evidence at trial". He emphasised that witnesses of fact may be able to give opinion evidence particularly if they have relevant personal experience, involvement or knowledge as to what would or might have happened given a particular hypothetical outcome (Kirkman v Euro Exide Corporation (CMP Batteries Ltd) ). The Judge specifically referred to the statement of Jackson J in Multiplex Constructions (UK) Ltd v Cleveland Bridge UK Ltd , “As a matter of practice in the TCC, technical and expert opinions are frequently expressed by factual witnesses in the course of their narrative evidence without objection being taken. Such opinion evidence does not have the same standing as the evidence of independent experts… However such evidence is usually valuable and it often leads to considerable saving of costs".
In his concluding remarks, the Judge outlined that "the Practice Direction is obviously valuable in addressing the wastage of costs incurred by the provision of absurdly lengthy witness statements merely reciting the contents of the documentary disclosure and commenting on it, which is expressly abjured by the statement which is now required under paragraph 4.1 of the Practice Direction. But it was not in my judgment intended to affect the issue of admissibility".
This is a helpful clarification that 1) the key test to be applied to the content of a witness statement is whether the evidence is admissible, and 2) a witness can give evidence by reference to personal knowledge and involvement of their view as to what would or could have happened in the counterfactual or hypothetical circumstances albeit ultimately their evidence would need to be tested by reference to cogency and weight.
While this is the first reported case we are aware of to test PD 57AC, it seems unlikely that it will be the last. In the meantime the clarification that PD57AC does not affect the existing authorities in relation to admissibility of witness evidence is to be welcomed .
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