Practice Direction 57AC (PD 57AC) came into effect on 6 April 2021, overhauling the way in which witness statements are to be prepared for trials conducted in the Business and Property Courts (BPC) of the High Court (this includes cases in the Chancery Division BPC List, the Commercial Court, the Technology and Construction Court, the Patents Court and the Competition List).
The recent case of Mad Atelier International BV v Manes [2021] EWHC 1899 (Comm) (8 July 2021) has provided much needed clarification on the admissibility of evidence produced subject to the requirements of PD 57AC and is the first reported judgment dealing with the Court’s powers under the new PD 57AC.
The Background – Practice Direction 57AC
The requirements of PD 57AC are extensive, and set out requirements on the content of trial witness statements, including the need for witness statements (i) to only contain evidence on matters of fact on issues to be decided at trial (ii) to set out the documents, if any, that the witness has referred to for the purposes of providing evidence and (iii) to not contain commentary or set out matters of belief, opinion or argument.
Further, the provisions of PD 57AC provide the Court with an inherent power to impose sanctions on parties who fail to comply with its requirements, including the power to refuse to give permission to rely on a witness statement and/or strike out all, or part, of a witness statement.
Admissibility of Witness Evidence Subject to PD 57AC
In Mad Atelier International BV v Manes [2021] EWHC 1899 (Comm) (8 July 2021), the Claimant produced witness evidence dealing with the quantum of damages claimed. This included evidence as to the hypothetical outcome had a joint venture agreement, entered into between the parties, not been terminated. The Defendant applied to strike out part of the Claimant’s witness evidence, pursuant to paragraph 5.2 of PD 57AC, on the basis that it was not limited to the facts needed to be proved at trial and contained inadmissible evidence, namely, opinion evidence.
The Court, referring to JD Wetherspoon plc v Harris [2013] 1 WLR 3296, and the flexible approach that should be taken in relation to witness evidence, confirmed that PD 57AC did not change the law on the admissibility of witness evidence at trial. Paragraph 3.1 of PD 57AC requires witness evidence to only deal with matters that a party would be allowed to give in evidence in chief. Therefore, the test was whether the witness evidence was admissible at trial. In relation to the issues in dispute:-
- Hypothetical evidence, such as that adduced by the Claimant, could amount to evidence of fact and meet the requirements of paragraph 3.1 pf PD 57AC.
- Referring to a document in a witness statement was not necessarily inadmissible commentary, for the purposes of the PD 57AC, as paragraph 3.2 specifically requires identification of documents to which the witness has been referred for the purpose of giving their statement.
Further, the Court confirmed that the sanctions contained in paragraph 5.2 of PD57AC are discretionary.
The Court’s decision was bolstered by the fact that section 3(2) of the Civil Evidence Act 1972 confirms that there is no “blanket rule” to prevent witnesses, who are not independent experts, giving opinion evidence. The Court noted that:-
- There are authorities which confirm that non-expert witnesses of fact can give opinion evidence, if such evidence relates to their factual evidence. This is particularly the case where the witness has relevant experience and knowledge. Although the Court was clear to note, that as such witnesses are not independent, this evidence does need to be tested and given appropriate weight.
- It may be especially appropriate for a non-expert witness to give opinion evidence, where that evidence relates to a hypothetical situation as to what could or would have happened. Applying, Kirkman V Euro Exide Corporation [2007] EWCA Civ 66, the Court found that such hypothetical evidence could amount to evidence of fact. This was not limited to what the witness, or the Claimant, could or would have done, but extended to what would or could have happened in “counterfactual or hypothetical circumstances“, provided that the evidence is based on the witnesses personal knowledge and involvement.
- Such evidence, may be particularly relevant on the issue of quantum, where the Court is tasked with calculating loss based upon a hypothetical scenario. In such circumstances, the Court does not apply the ‘balance of probabilities’ test but instead has to make its best attempt to calculate loss and should take into account all significant factors.
- The fact that a party’s witness evidence must be “self-serving” or “unreliable”, particularly if not supported by appropriate documentary evidence, does not mean that the evidence is inadmissible.
The Claimant was entitled to rely on its evidence as to the “hypothetical” counterfactual scenario.
The decision has provided some welcome clarification in this area. In applying PD 57AC the overarching issue to be determined is whether the witness evidence would be admissible at trial. What will amount to admissible evidence remains unchanged and PD 57AC should be applied by reference to existing case law on this issue. The Court will continue to take a flexible approach to the issue of admissibility of witness evidence. The Court appears clear in its assessment, that regardless of the requirements of PD 57AC, it is not now a question of ‘form over substance’ and the real question remains whether the evidence being provided is relevant and helpful to the Court.
The decision has further clarified the position on non-expert opinion. There are circumstances in which a witness of fact can give opinion evidence i.e. where they have the relevant expertise and knowledge, and/or where they are giving their opinion in relation to quantum, particularly if this relates to a hypothetical counterfactual scenario.
This is likely to be the first of a many cases dealing with the application of PD 57AC, given the widespread changes brought about by the Practice Direction and the potential consequences for failure to comply with its requirements.
For further information or advice please get in touch with Nick Scott on nxs@blasermills.co.uk or Jade Brooks on jkb@blasermills.co.uk.