On 14 August 2024, in the case of Timothy Fulstow and Robert Woods v Jeremy Francis [2024] EWHC 2122 (ChD) (Fulstow), the High Court dismissed a high value investment claim, partly because the claimants’ witness statements were in clear contravention of Practice Direction 57AC (PD 57AC).
This case acts as a cautionary tale for legal representatives and their clients. It not only highlights the importance of complying with the requirements of PD 57AC when preparing witness statements, but also draws attention to the personal, albeit professional, obligations of lawyers when signing declarations of compliance with PD 57AC.
In his judgment, Deputy High Court Judge David Stone made a point of criticising the solicitor representing the claimants for submitting a ‘false’ declaration that the witness statements were compliant with PD 57AC, when they were clearly not. He went as far as questioning the suitability of the representative, suggesting that “any solicitor properly practising in this court ought to have known [that the witness statements did not comply with PD 57AC]”.
The Key Provisions of PD 57AC
PD57AC was introduced in 2021 to prevent the perceived “over-lawyering” of witness statements, and to address long-held concerns that witness statements were often too long, argumentative or filled with largely irrelevant material. In the preparation and presentation of witness statements, the parties are required to consider the following main provisions:
- the statement must set out only matters of fact of which the witness has personal knowledge that are relevant to the case, and must identify by list what documents, if any, the witness has referred to or been referred to for the purpose of providing the evidence set out in their trial witness statement;
- the statement should be prepared in such a way as to avoid so far as possible any practice that might alter or influence the recollection of the witness;
- the statement should not seek to argue the case, set out a narrative derived from the documents or include commentary on other evidence in the case;
- the statement should be based on a record made of evidence obtained by an interview, which should avoid leading questions where practicable, and should not use leading questions in relation to important contentious matters; and
- unless the court directs otherwise, the statement must include a confirmation of compliance signed by the witness and must be endorsed by a certificate of compliance signed by the legal representative.
The Dispute
The dispute in Fulstow arose from an alleged investment in Capital Land (EDA) Swindon Limited, which owned significant development land near Swindon. The claimants argued that they made payments to the defendant for a substantial shareholding in the company. The defendant maintained that the payments were deemed to be an initial commitment fee relating to a wider agreement, which never materialised.
The majority of the negotiations concerning the alleged investment were made orally and therefore factual witness evidence would play a key part in determining the dispute. The case was also particularly unusual because privilege was waived to such an extent that a significant amount of correspondence between the claimants, their solicitors and their counsel formed part of the evidence.
When the parties presented their witness evidence, the Deputy High Court Judge found that the evidence was “clearly inadequate”, and while he refused to strike out the witness statements on the basis that the claimants would then be left without any evidence, or they would have to give their testimony orally thereby further prolonging the trial, he was unable to give the witness statements any weight in the proceedings. This would be fundamentally detrimental to the claimants where such evidence was crucial to their pleaded case.
Consequences of Non-Compliance
Where a party fails to comply with PD 57AC, the court is able to:
- refuse or withdraw permission to rely on, or strike out, part or all of a witness statement;
- make an order that a witness statement be re-drafted so as to be compliant;
- make an adverse costs order; and/or
- order a witness to give some or all of their evidence in chief orally.
While the court has the power to strike out a witness statement in its entirety or in part, the court in Blue Manchester Ltd v Bug-Alu Technic GMBH [2021] EWHC 3095 recognised that striking out the entirety of a witness statement for non-compliance is a “very significant sanction which should be saved for the most serious cases”.
Even in the case of Greencastle MM LLP v Payne [2022] EWHC 438 (IPEC), where the court was presented with “the clearest case of failure to comply [with PD57AC]”, the claimant was ordered to redraft the statement so as to make is compliant, as opposed to having its evidence struck out.
The Preferred Approach
While some commentators may be critical of the court’s meticulous observance of PD 57AC, Fulstow underlines how non-compliance can have a significant impact on the court’s willingness to treat that evidence as credible, resulting in a potentially devastating outcome to a party’s case.
This judgment emphasizes the importance of solicitors carefully considering PD57AC and the accompanying Statement of Best Practice when drafting witness statements, in order to not inadvertently overlook key requirements and risk adverse orders from the court. If there is a need to depart from PD 57AC for whatever reason, legal representatives need to be prepared to justify their approach to the court.
If a party receives a seemingly non-compliant witness statement, they ought to engage with the other side to try and resolve the issues giving rise to non-compliance. The courts have made it clear that satellite litigation on such matters should be avoided where possible and they will not look favorably upon parties who make applications to the court without having first tried to resolve the issue between themselves.
