Party penalised in costs for disproportionate application to strike out witness evidence for non-compliance with PD 57AC

A recent High Court decision highlights the need to think carefully before applying to strike out an opponent's witness statements, or parts of them, for non-compliance with Practice Direction (PD) 57AC (which applies to trial witness statements signed since April 2021): Curtiss v Zurich Insurance Plc [2022] EWHC 1514 (TCC).

A line of authorities since the PD came into force have shown that the courts are willing to impose sanctions for serious failures in compliance, such as where witness statements include matters outside the witness's own knowledge, mere commentary on documents, or argument (see for example here and here). Sanctions include requiring a witness statement to be redrafted so that it complies with the PD or, in extreme cases, striking out a witness statement.

However, the latest decision emphasises that an application under the PD "should not be used as a weapon for the purpose of battering the opposition". Parties must use common sense and act proportionately when assessing how to respond to an opponent's non-compliance. In this case, the defendant's conduct in pursuing numerous complaints, many of which the judge considered to be "petty or pointless", resulted in an order to pay 75% of the claimants' costs on the indemnity basis - despite the application having succeeded in a number of respects.

The decision also illustrates that, in some cases, it may be more appropriate to leave matters of non-compliance with PD 57AC to be dealt with at trial. The judge referred to Fancourt J's remark in a previous case (considered here) that it was not appropriate, in that case, to leave the dispute to be sorted out at trial, but said that should not be taken as expressing any general principle that it is never convenient or appropriate to leave matters of non-compliance with PD57AC until trial. All will depend on the facts and circumstances of the particular case.

Background

The underlying claims are brought by around 150 claimants who allege that they were induced to purchase their flats in a development in Swansea by fraudulent misrepresentations in cover notes issued by the defendant insurer. The claims are strongly contested.

The claimants served 49 witness statements amounting to some 400 pages in total, excluding exhibits. Two months later, the defendant sent a 16 page letter appending a 109-page schedule giving particulars of alleged non-compliance with PD 57AC.

After receiving the claimants' response rejecting the criticisms, the defendant applied for an order striking out the entirety of four of the claimants' witness statements and parts of a further 29 statements. The objections were essentially as set out in the schedule to their earlier letter, though ultimately they did not pursue all of the objections.

The court (HHJ Keyser QC sitting as a High Court judge) struck out four of the statements on the basis that they contained no relevant evidence from the witnesses' own personal knowledge, but sought to introduce opinion evidence on matters on which the judge had refused to permit expert evidence. Various parts of another witness statement were also struck out, because they contained commentary or opinion on documents or other matters falling outside the PD. Other aspects of the application did not succeed, including an application to strike out "stock phrases" that might indicate a common draftsman for some of the statements.

The present judgment was concerned with the costs of the application.

Decision

The court ordered the defendant to pay 75% of the claimants' costs on the indemnity basis.

The judge noted that the total costs incurred by both sides on the application, excluding VAT, exceeded £275,000. He said he regarded that figure with dismay. Although this was substantial litigation, there was "no rational world in which this sort of expenditure can have been justified on an application such as this". He rejected the submission that most of these costs would have been incurred anyway in the course of the litigation.

The judge agreed with the claimants' statement, in response to the defendant's detailed letter setting out particulars of non-compliance, that PD 57AC was "not intended to encourage parties to perform a line-by-line analysis of a witness statement with a metaphorical scalpel in hand" to identify sentences that might stray beyond the bounds of the PD. That would be inconsistent with the overriding objective and generate satellite litigation.

The judge noted that the defendant's preparation of the schedule had extended over two months and, he said, appeared to have been a waste of time and effort. It included many complaints which the judge regarded as "petty or pointless". For example, the defendant objected to the following passage of a key witness for the claimant (the defendant's surveyor) on grounds that it did not indicate the witness's source for matters of information or belief:

"On more complex projects, such as the Development where there were a number of different buildings being constructed at the same time, I would usually be expected to inspect every 2 weeks or thereabouts during the busy stages of construction but in any event at least once a month as, without this, it would be impossible to keep up with the work, let alone reinspect works which had not been signed off due to the appearance of defects."

The judge said that, as the witness was the defendant's surveyor responsible for the inspections at the development, and was explaining his work as such, this objection seemed "absurd". Even if it had had some basis, it did not merit an application.

Overall, the judge took the view that the application was not, primarily, aimed at ensuring the efficiency of the trial process but was rather a strategy to seek to "emasculate" the evidence of a witness who was central to the claimants' case.

The judge took into account that the application had had some success and that the claimants never accepted that any of their witness statements were open to any objection, though this point carried little weight because:

• The defendant's meritorious points were set out in a "disproportionate and oppressive" schedule, much of which was clearly lacking in merit, and the defendant did not take up the claimants' invitation to provide a revised schedule which they would then consider.
• Even the objections that succeeded could have been dealt with at trial by counsel "cross-examining quickly and pertinently on some parts of the evidence, disdainfully ignoring other parts, and dealing appropriately with the evidence in submissions". That would have taken far less time than the application.

All of that meant it was appropriate for the defendant to pay 75% of the claimants' costs. As for the basis of assessment, an order for indemnity costs was appropriate as the application was well outside the norm. The judge commented that if parties make "oppressive and disproportionate applications, resulting in the incurring of very substantial and quite unnecessary costs, they can hardly be surprised if their conduct is marked by an award of costs on the indemnity basis".