The dangers of falling foul of Practice Direction 57AC: words of caution from the courts on witness statements

November 11, 2024

In April 2021, the requirements for trial witness statements in the Business and Property Courts changed substantially. We have previously written on the key changes in detail. The aim was effectively to move away from lengthy witness statements which contain analysis or commentary on documents, with the focus instead being placed on ensuring that they contain only details of the evidence in chief that the witness could give at trial.

The principles

Practice Direction 57AC (the Practice Direction) and the Statement of Best Practice which sits alongside the Practice Direction together set out key points to be kept in mind when practitioners are preparing trial witness statements:

• The statement should only set out matters which the witness personally experienced, avoiding arguments or opinions (unless the witness has relevant specialised knowledge).
• If any documents are referred to as part of the statement, these should be clearly identified and a list of documents should be provided at the end of the statement. However, excessive reliance on documents should be avoided.
• Both the witness and the legal representative preparing the statement must sign a confirmation that they have complied with the requirements of the Practice Direction. The legal representative must also certify that they have explained the purpose and rules of witness statements to the witness.
• There is a specific prohibition on influencing the witness or asking leading questions to point to particular evidence. Open questions should be used and the interview should be recorded as fully as possible using contemporaneous notes or other methods.

Since the new rules were implemented in April 2021, there has been a range of cases from the courts, providing helpful guidance of what to do and what not to do in respect of the new rules. The courts have also dealt with the consequences of parties not adequately adhering to the Practice Direction.

Statements should not be overly legalistic

As with Part 32 which sets out general rules for witness statements, overly legalistic statements should still be avoided under the Practice Direction. In Blue Manchester Ltd v. Bug-Alu Technic GmbH [2021] EWHC 3095 (TCC), the court highlighted the importance of ensuring that a statement is in the witness's own words and drafted in the first person. In this case, parts of the witness statement were written in the third person, which made it difficult to determine whether the evidence was from the witness's own knowledge or from another source.

Importantly, the court clarified in this case that complying with the Practice Direction did not mean that every section of a statement must confirm whether it was made from personal knowledge and whether documents were referred to. Instead, it could be sufficient for a witness to state at the outset of the statement how it was prepared and what documents were generally re-read.

Use of documents

Introduction of the Practice Direction has led some parties to be wary of excessive reliance on documents in their witness statements and recent court decisions have shown that this remains a hot topic. Best practice was outlined in Mansion Place Ltd v. Fox Industrial Services Ltd [2021] EWHC 2747 (TCC), where the court emphasised that, rather than requiring witnesses to list every document they have looked at during the proceedings, the purpose of the rule is instead to provide transparency as to the documents the witness has referred to in order to refresh their memory. Excessive paraphrasing of the witness's own words was also discouraged as this could distort the evidence and produce a tainted account of events.

More recently in IlliquidX Ltd v. Altana Wealth Ltd [2024] EWHC 2191 (Ch), the dispute concerned allegations of a misuse of confidential information by the defendants. An application requiring two of the claimant's witness statements to be rewritten was granted by the court and the overall sense from the statements was that they had been written by reference to documents. Instead, the statement should be the evidence of events within the witness's knowledge and it was not clear in their original form "how far the evidence reflected what the witness actually remembered of events or simply recalled events from the documents".

A logical starting point therefore would be to base any witness statement preparations around the key events and issues in dispute, rather than reverse engineering a statement based on documents arising out of the disclosure phase that the parties wish to put before the court.

Issues should be raised promptly

The recent cases suggest that, if a party identifies an issue with an opponent's witness statements, this should not be "sat on" for tactical reasons. The importance of raising objections promptly was highlighted in Prime London Holdings 11 Ltd v. Thurloe Lodge Ltd [2022] EWHC 79 (Ch) in which the claimant's delay in identifying their objections had an impact on how the application was dealt with by the court. Emphasis should be on preventing unnecessary delays and costs during trials.

In terms of the extent of objections, the Practice Direction should not be used for "minor infractions" such as small written issues and should only be invoked for substantial breaches (Lifestyle Equities CV v. Santa Monica Polo Club Ltd [2022] EWHC 1134 (Ch)). Likewise in Blue Manchester Ltd, parties were discouraged from overzealous "nitpicking" of minor technical breaches.

In contrast, the defendant was penalised in Curtiss v. Zurich Insurance plc & Ors [2022] EWHC 1514 (TCC) for making an oppressive and disproportionate application. The court highlighted that applications should not be used as a weapon "for the purpose of battering the opposition" and parties should use common sense. In this case, the defendant had essentially carried out a line-by-line analysis of the statements, identifying sentences that may be non-compliant with the Practice Direction. This had taken more than two months and was deemed to be inconsistent with the overriding objective.

It is clear that there is a balance to be struck between raising objections in relation to statements which are in serious breach of the Practice Direction and wasting the court's time with minor infractions of the rules.

Sanctions

If a party fails to comply with any part of the Practice Direction, the court may (of its own motion or on an application):

• refuse to give, or withdraw, permission to rely on part or all of a trial witness statement;
• strike out part or all of a trial witness statement;
• order that a trial witness statement be redrafted in accordance with PD 57AC or as may be directed by the court;
• make an adverse costs order against the non-complying party; and/or
• order a witness to give some or all of their evidence in chief orally.

Although the courts have been reluctant to strike out a witness statement for failure to comply with the Practice Direction, it appears that, more than three years on, patience is starting to wane.

In Kieran Corrigan & Co Ltd v. OneE Group Ltd and others [2023] EWHC 649 (Ch), the defendant was ordered to rewrite their witness statements and pay the claimant's cost of the application on the indemnity basis. This was due to significant breaches of the Practice Direction, including suggested co-ordination between witness statements, and the correct statement of truth, certificate of compliance and list of documents not being included.

More recently, the court in Fulstow and another v. Francis [2024] EWHC 2122 (Ch) held that it was unable to give any weight at trial to three witness statements that were non-compliant with the Practice Direction. The statements had omitted the witness's certificate of compliance and the list of documents to which the witness was referred. Additionally, two of the statements were very similar, suggesting the wording was copied from one to the other rather than in the witness's own words, and factual statements were included that the witness himself could not have known. The court declined to strike out the evidence as the party would otherwise have had no witness evidence on which to rely, though it determined that no weight should be given to them. Comments made shortly after in KSY Juice Blends UK Ltd v. Citrosuco GmbH [2024] EWHC 2098 (Comm) suggested that far too many practitioners were assuming that non-compliant statements would have no consequences.

The takeaway from these cases therefore seems to be that attention should be paid to all aspects of the Practice Direction. It should not be assumed that a minor infraction will not go unnoticed by the court and there is a real risk of an order for sanctions.

Application to interim applications

The Practice Direction expressly excludes its application to non-trial witness statements. However, recent court guides for the Chancery and Commercial Court highlight the need to comply with CPR Part 32. For example, the Commercial Court Guide notes that that argument should be left to skeleton arguments or submissions at a hearing, rather than contained in a witness statement. Therefore, the best practice appears to be that consideration should still be given to the Practice Direction even when preparing witness statements for use in interim applications.

Commentary

It is apparent from these cases that the courts are intent on moving away from witness statements that simply tell a story. The purpose of the statements is to set out the witness's recollection of the key issues or events, without providing legal submissions or opinions. As shown above, non-compliance will not be tolerated by the courts, although there is a balance to be struck between ensuring that the rules are largely complied with and allowing parties to weaponise the Practice Direction by raising objections to every infraction, regardless of its importance.