Acting to stop harm: the FCA and Appointed Representatives
Chancery Division of High Court highlights important point regarding the content of witness statements in civil proceedings
The facts of this case are far removed from the regulatory arena and are not relevant to the principles considered in this summary. In brief, the Claimant (C) alleges that the first Defendant (D1) had dishonestly assisted a property finding company (VDB) in breach of his fiduciary duties and that he had paid them a bribe in connection to the two transactions. The Claimant alleges that it would, or might have, acquired the freeholds (rather than just the leaseholds) of the properties if VDB had advised them that it was available for purchase. In the event he had not and thus the second, third or fourth Defendant acquired the freehold.
The present case was concerned with an application by all the defendants for summary judgement against C. Further, and importantly for present purposes, C applied to strike out the majority of a witness statement given on behalf of the second to fourth Defendant companies by a Mr Goldberger (G). G was a director of the second to fourth defendant companies and had had no involvement with them until eight years after the event.
The vast majority of Mr Goldberger’s witness statement contained a recitation of facts based on the documents, commentary on those documents, argument, submissions and expressions of opinion, particularly on aspects of the commercial property market. It was argued that large swathes of it should be removed.
It had been argued on behalf of the second to fourth defendants that the statement should stand; they should be permitted to present their case as best they could. It was argued that in the absence of anyone currently employed by the defendants who has direct knowledge of the events subject to the proceedings, it was appropriate that G should give the explanation he has. In pursuing this argument, it was said that by setting out the course of events and making reference to the documents, G was doing no more than that which would be done on behalf of the second to fourth defendants in opening their case at trial. It was brought to the Court’s attention that Master Bowles had refused permission to adduce expert evidence on valuation but acknowledged that such opinion evidence could be adduced in the course of evidence.
Those submissions were rejected; the Court held that G’s witness statement was ‘an abuse’ and that the ‘abusive parts should be struck out’.
Having recited CPS r32.4, namely that ‘a written statement signed by a person which contains the evidence which that person would be allowed to give orally’, it was held that;
‘G would not be allowed at trial to give oral evidence which merely recites the relevant events, of which he does not have direct knowledge, by reference to documents he has read. Nor would he be permitted at trial to advance arguments and make submissions which might be expected of an advocate rather than a witness of fact’.
The Court went further to say that G would also not be permitted to give opinion evidence at the trial. It was held that;
‘a witness of fact may sometimes be able to give opinion evidence as part of his or her account of admissible factual evidence in order to provide a full and coherent explanation and account….G, however, has expressed his opinions on market practice by way of a commentary on facts of which he has not direct knowledge and of which he cannot give direct evidence. In that respect he is purporting to act exactly like an expert witness giving opinion evidence. Permission for such expert evidence has, however, been expressly refused’.
The Court did go on to say; ‘I recognise, of course, that these rules as to witness statements and their contents are not rigid statues. 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’.
Bringing this case back to the regulatory context, the comments bring to mind the often detailed statements of ‘Investigating Officers’ in FTP hearings. It is a reminder that such witnesses must not trespass into becoming ‘experts by the backdoor’ and should only comment on those matters on which they have direct knowledge. They should not be providing simply a commentary on the documents the Panel already have. That having been said, the Court did provide a rather wide caveat that there will be ‘particular circumstances’ where such rules can be relaxed.
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