First application to strike out trial witness statement under new Practice Direction 57AC

On 8 July 2021, Sir Michael Burton GBE handed down a judgment disposing of what we understand to be the first application to strike out parts of a witness statement under the new Practice Direction 57AC - see Mad Atelier International BV v Axel Manes [2021] EWHC 1899 (Comm). (We wrote an article earlier this year describing the changes to trial witness statements in the Business and Property Courts brought about by that Practice Direction if you'd like to read more about that.) 

The defendant's application in Mad Atelier was dismissed on the basis that its arguments were, in substance, about the admissibility of the claimant's evidence and the court held the evidence was admissible. This therefore wasn't the sort of juicy case we can no doubt expect to see in the future where a litigant has prepared - as the judge in this case warned against - "absurdly lengthy witness statements merely reciting the contents of the documentary disclosure and commenting on it". But it is definitely worth a read as the first in a line of authority and it's a short judgment.

The facts

The claimant and defendant agreed in 2015 to enter into a joint venture to develop an international franchise of restaurants under the brand "L'Atelier de Joel Robuchon". The claimant alleged that the defendant had fraudulently induced it into transactions which led to the termination of the joint venture agreement and which resulted in damage to its business. The defendant applied under paragraph 5.2(1) of PD 57AC to strike out passages of the claimant's witness statements dealing with matters of quantum (in particular the sections addressing various hypotheticals, namely what would have happened to the joint venture business if it did not terminate). These passages were said to breach: 

1. Paragraph 3.1 of PD 57AC, because the statements were not limited to facts which needed to be proved at trial; and/or
2. Paragraph 3.6 of the Appendix to PD 57AC because they sought to argue the case and/or contained “matters of belief, opinion or argument about the meaning, effect, relevance or significance of other evidence”.

Decision

The application was dismissed.

On the first argument (that the statements went beyond facts that needed to be proved at trial):

1. The court emphasised that the approach to assessing what may be permissibly be contained in a witness statement is flexible, applying JD Wetherspoon plc v Harris [2013] 1 WLR 3296.
2. There is support in the existing authorities for hypothetical evidence as to what would or could have happened itself being evidence as to matters of fact.
3. Paragraph 3.1(2) of PD57AC makes clear that a witness statement may contain what the "witness would be allowed to give in evidence in chief if they were called to give oral evidence at trial" in addition to matters of fact. The test is therefore one of admissibility at trial.
4. The new Practice Direction does not change the law as to admissibility of evidence or overrule the directions given by the previous authorities.
5. Reference to documents in a witness statement does not necessarily amount to inadmissible “commentary” because paragraph 3.2 of PD 57AC requires the identification of documents to which the witness has been referred for the purposes of giving their statement.
6. The sanction is paragraph 5.2(1) of PD57AC is discretionary.

On the second argument (the statements contained matters of opinion):

1. The authorities show that witnesses of fact may be able to give opinion evidence which relates to the factual evidence which they give, particularly if they have relevant experience or knowledge.
2. This is particularly so where the evidence given is as to a hypothetical situation as to what would or could have happened. This kind of evidence may be considered as evidence of fact, even though it is, by its nature, hypothetical and not evidence of observed fact. The Defendant tried to argue that the principle is limited to evidence going to what the person giving evidence themselves, or possibly their company, could or would have done. The court rejected this approach and held that it extends to what would or could have happened in the relevant counterfactual or hypothetical scenario, provided only the witness can give the evidence by reference to his or her personal knowledge and involvement.
3. This is particularly so in relation to questions about quantum, where the court is just trying to "do its best on the material before it". In cases where quantifying involves a hypothetical exercise, the court does not apply the same balance of probabilities approach as it would to the proof of past facts but instead estimates the loss by making the best attempt it can to evaluate all the chances, great or small, taking into account all significant factors.

In light of the above, the court held the relevant passages were admissible either as factual evidence itself, or evidence of opinion given by those with knowledge of the facts.