First decision on the new PD 57AC: when can a witness of fact give opinion evidence?
In a Commercial Court Judgment handed down in early July 2021 (Mad Atelier International BV v Manes  EWHC 1899), Sir Michael Burton GBE dismissed an application brought by the Defendant to strike out passages of various witness statements, the entirety of one witness statement and elements of an expert report, all served on behalf of the Claimant for use at trial.
The Defendant’s application was pursued under the new Practice Direction 57AC to the Civil Procedure Rules (CPR) which applies to witness statements signed on or after 6 April 2021 for use at trials in the Business and Property Courts. The Practice Direction (PD) provides the Courts with wide discretion to strike out all or parts of trial witness statements that do not comply with its requirements.
The Judgment is understood to be the first time the new PD has been considered by the Courts.
Practice Direction 57AC
After considerable judicial criticism of witness statements in recent years (see our previous Perspectives article on the topic), a new PD was introduced in April 2021 in the Business & Property Courts. The PD introduces major changes to both the preparation and content of trial witness statements.
The key requirement is that trial witness statements must contain only (paragraph 3):
“1. evidence as to matters of fact that need to be proved at trial by the evidence of witnesses in relation to one or more of the issues of fact to be decided at trial” - and specifically “must set out only matters of fact of which the witness has personal knowledge that are relevant to the case”; and
“2. the evidence as to such matters that the witness would be asked by the relevant party to give, and the witness would be allowed to give, in evidence in chief if they were called to give oral evidence at trial” (emphasis added).
Since the introduction of the CPR in 1999 which replaced oral evidence in chief with trial witness statements, these statements have frequently become overly long and argumentative and can stray into matters outside of the direct knowledge of the witness. By placing these requirements front and centre, the PD intends for them to be at the forefront of practitioners’ minds when preparing witness statements.
The PD also includes detailed requirements as to the way that statements are compiled. Amongst other requirements, its Appendix provides that witnesses should not be interviewed using leading questions, and all information provided to the witness and the process followed in preparing the statement should be described in the statement.
The claim and the imputed evidence
The claim concerned a joint venture to develop an international franchise of restaurants. The passages that the Defendant sought to strike out from the evidence all dealt with quantum. Specifically, several of the Claimant’s witnesses of fact, all of whom were working at the relevant time for the Claimant and had some involvement in the joint venture, gave evidence regarding projected revenues from the intended joint venture restaurants in Covent Garden, Mayfair and Dubai. This evidence was based on their knowledge of the industry and the joint venture itself, although it was hypothetical evidence based on a counterfactual (i.e. that the joint venture progressed to operate the restaurants which never happened). The Claimant’s quantum expert relied in part on the evidence from those fact witnesses.
The Defendant’s application was made under Paragraph 5.2(1) of the PD which provides the Court with the power to strike out all or part of a trial witness statement which fails to comply with the PD. The grounds that the Defendant relied upon included that the statements sought to argue the case and/or contained matters of belief, opinion or argument about the meaning, effect, relevance or significance of other evidence (contrary to paragraph 3 of the PD).
The Defendant relied on the Judgment of Sir Terence Etherton in the High Court decision of JD Wetherspoon plc v Harris  1 WLR 3296 in which evidence of a factual witness was struck out on the basis that witnesses cannot give “expert opinion evidence” or evidence “which merely recites the relevant events, of which he does not have direct evidence, by reference to documents he has read”. The Defendant argued that the imputed evidence was opinion evidence – not fact evidence – and this impacted the Claimant’s expert evidence which relied upon that opinion evidence. They argued it was hypothetical evidence based on a counterfactual which was not within the remit of fact witnesses. The Defendant also relied on Buckingham Homes Ltd v Rutter  EWHC 3917 which followed Wetherspoon in finding that a witness statement which was “self-evidently an expert’s report” was inadmissible.
The Claimant also relied on the Wetherspoon judgment but in arguing that that the judicial approach to fact evidence is in fact flexible, with Sir Terrence Etherton noting that “these rules as to witness statements and their contents are not rigid statutes. It is conceivable that in particular circumstances they may properly be relaxed in order to achieve the overriding objective in CPR r 1 of dealing with cases justly”. In response, the Defendant counter-argued that the authorities including Wetherspoon all pre-dated the new Practice Direction and must be read in the light of it.
The Defendant’s application was dismissed. The Judge concluded that, whilst the imputed evidence could well turn out to be “self-serving or unreliable, particularly if not supported by documents”, it was nevertheless admissible. It was “either itself factual evidence or evidence of opinion given by those with knowledge of the facts and by reference to the factual evidence which they each give”.
Further, the evidence did not seek to circumvent the absence of any expert evidence (as in Buckingham) but rather facilitated the independent expert evidence. This was in circumstances where there is in fact no blanket rule prohibiting factual witnesses from giving opinion evidence. The Judge summarised the principles that can be derived from the authorities on this point, as follows:
- Witnesses of fact may be permitted to give opinion evidence where it is related to their factual evidence (for example, if they have relevant industry knowledge or experience); see Multiplex Construction (UK) Limited v Cleveland Bridge UK Limited  EWHC 2220.
- Witnesses of fact may give opinion evidence where it concerns what may have happened in a counterfactual situation; see Rogers v Hoyle  Q.B. 265.
- The above exceptions are even more important where the Court is seeking to quantify loss (as in this case) which necessarily involves a hypothetical exercise which may necessitate the relaxation of the rules of evidence; see Parabola Investments Ltd v Browallia Cal Ltd  QB 477.
Finally, as to the relevance of the PD, the Judge concluded that it is invaluable in “addressing the waste of costs incurred by the provision of absurdly lengthy witness statements merely reciting the contents of the documentary disclosure and commenting on it” but concluded that “it was not in my judgment intended to affect the issue of admissibility”. In any event, the PD permitted the evidence in question as it was of the type that the witnesses would have been permitted to give in examination in chief given the authorities noted above.
The Judgment highlights that despite the recent introduction of the PD which notes that factual witnesses should only deal with matters of fact of which they have direct knowledge, witnesses of fact can, in limited circumstances, give what could be deemed to be opinion evidence ordinarily outside the remit of fact witnesses. In addition, the Judgment helpfully clarifies that the new PD does not affect the rules of admissibility of evidence, and existing authorities in the area are not impacted by the introduction of the PD.
Nevertheless, the PD does give the Business & Property Courts wide discretion to strike out all or parts of witness statements that do not comply with its requirements, so it is important that legal representatives ensure compliance with its terms. Where this discretion is exercised, parties are likely to suffer serious evidential and costs consequences.