WITNESS STATEMENTS AND “LITIGATION WISHFUL THINKING”

It is surprising how many cases turn, in essence, on the judge’s assessment of the credibility of the witnesses.  In assessing the evidence on your own, and the other wise, litigators must be aware of the concept, and dangers, of “litigation wishful thinking”.  A recent case provides an example. Anyone taking, or reading, a witness statement must bear this factor in mind.  A witness can believe they are telling the truth but still not be wholly mistaken.

KHAMBAY -v- NIJHAR

This concept was referred to, explicitly, by Mr Simon Picket QC (sitting as a High Court judge) in Khambay -v- Nijhar [2015] EWHC 190 (QB)

“3The witnesses

  1. It will be apparent from the nature of the issues which arise in this case that determination of those issues depends very largely, perhaps even exclusively, on my assessment of the witnesses who gave evidence before me. Put shortly, I have to decide whether representations were made; if they were, whether they were made deceitfully or negligently; and if that is the case, whether the Claimants’ case on inducement has been made out. Each of these matters will turn on the quality of the evidence given by the witnesses, and that depends, in turn, on the witnesses’ credibility – primarily that of the main protagonists, Dr Khambay and Mr Nijhar, neither of whom I found impressive as witnesses.

Dr Khambay

  1. I start with Dr Khambay. He is, as I have already mentioned, a professional man, a dentist. He is also, it would appear, a successful businessman, not only as the owner of apparently busy dental practices but additionally as the developer of certain commercial ventures, namely pubs and clubs, and as the owner of property on the Continent, in particular in Turkey. It would, in such circumstances, be wrong to regard him as inexperienced in property matters, and I do not do this. I accept nonetheless that it would equally be wrong to approach him, and the evidence which he gave, on the basis that he was experienced in developing property similar in size or scale to the Site. I accept his evidence that this was his first venture into the type of development represented by the Site. I accept also that Dr Khambay’s practice is to obtain advice from property professionals whenever he was dealing with property development projects. This was what Dr Khambay himself said in evidence. It is also what Mr Khurll had to say based on his experience of working with Dr Khambay on various property deals. It is further borne out by what happened in the present case, with Mr Mehli and Mr Nijhar both involved in the Site at the beginning and then, after Mr Mehli dropped out, Mr Nijhar, or his company, Gravitas, employed as a property consultant.
  2. Dr Khambay’s abilities were evident to me when he gave evidence; he is undoubtedly an able man. Unfortunately, however, it was also apparent to me that he was astute to the need to ensure that the evidence which he gave did not harm the case which he and Clubhire were advancing against Mr Nijhar. I am also clear that, whilst he was not setting out to mislead in the evidence which he gave, nonetheless he did engage in what has been termed in the past as ‘litigation wishful thinking‘ (see Tamlura NV v. CMS Cameron McKenna [2009] EWHC 538, [2009] Lloyd’s Rep PN 71 per Mann J at [174]). Dr Khambay, in other words, has convinced himself, especially given the passage of time which there has been since the relevant events, that his recollection is in all respects the truth, when that is not the case. He was also grudging in quite a few of his answers to perfectly reasonable questions. This was accentuated by his seeming unwillingness to speak up when giving his evidence, despite several requests that he do so because of the difficulty I sometimes had in hearing what he was saying. In these circumstances, I approach Dr Khambay’s evidence with some degree of care and ideally looking for independent support for what he had to say, whether from other witnesses or in the contemporaneous documents. However, I do not consider it appropriate to adopt the course suggested by Mr Mason, which was to place no trust in the evidence given by Dr Khambay. On the contrary, I felt that, in broad terms at least, Dr Khambay was striving to give evidence which was truthful and reliable. Nonetheless, it does not follow that I should uncritically accept everything he told me since I am conscious that, like the other witnesses, he was relating events which took place a long time ago (mainly about 8 years ago). I also am alive, as I say, to the likelihood that, in giving his evidence, Dr Khambay was at pains to ensure that he said nothing which might damage his (and Clubhire’s) case.”

TAMLURA N.V. -v- CMS CAMERON McKENNA

This concept was set out explicitly by Mr Justice Mann in Tamlura N.V. -b- CMS Cameron McKenna [2009] EWHC 538 (Ch). Here the judge set out an assessment of the witnesses.

“Witnesses

I heard from the following witnesses.

  1. Mr Vlotman. Mr Vlotman originally came from South Africa, where he was a chartered business secretary. In the 1980’s he came to this country and in due course achieved a senior managerial position in Dixons, the electrical retailer, with responsibility for opening their out of town stores. He is an intelligent man, capable of understanding legal documents (at least when they were explained to him), and he has a clear understanding of where his commercial interests lie. He was capable of seeing the benefits, and detriments, of the structure of the share sale deal with which this action is concerned, and of pursuing them. He would be capable of identifying, and pursuing, the commercial objectives of a transaction without a lot of assistance from others. I think that he could not always be bothered with detail, and in the present transaction was prepared to engage Mr Kevin Christie to deal with it (see below), but he would be likely to focus on anything perceived to go to commercial matters. Mr Terry expressed the view that Mr Vlotman was not a detail man, and I agree with him. While I do not think that he came to this court to lie, I think that some of his evidence was somewhat tailored to his case. The principal manifestation of that was a form of pretence that he did not understand the effect of some of the drafts of the documents even to this day. In the witness box he sought to give the impression that he was understanding them for the first time, as they were put and explained by counsel. That would be an unlikely state of affairs for an intelligent man who would want to understand his litigation and how matters had (from his perspective) gone wrong, and later in his evidence he said (not surprisingly) he had become aware of the effect of the SPA in 2002, contrary to his earlier answers. I think that he had misguidedly thought that professing ignorance of these matters might assist his case. I therefore treat his evidence with some caution. I think that he is capable of, and has been guilty of, reconstruction based on wishful thinking. His recollection of detail of this case is, like that of most of the participants, understandably hazy where it exists at all. That is not surprising.
  2. Mr Harvey QC, for CMS, invited me to find that the abandoned actions and claims which I have referred to above demonstrated a propensity to advance and pursue claims without considering whether they were properly justified. That point was never really canvassed in cross-examination. Such a cross-examination would have required at least a partial investigation of substantial claims which were no longer being pursued, so a decision not to go down that route was an entirely realistic one. However, it does mean that I was left in a position of not being able to form any views at all about those other matters and what their abandonment said about Mr Vlotman. I therefore do not take this point into account at all.
  3. Mr Graham Kresfelder. He, too, was of South African origin. He now lives in Italy. He met Mr Vlotman when they worked together at Dixons. He has a degree in business economics. He struck me as an intelligent man who gave his evidence in a very careful, focused and considered manner. I think that he would have brought the same attention to matters of business in 2000. Like others, his real recollection of detail was very slight.
  4. Mr Kevin Christie. He is a chartered accountant by training. Before branching out in his own business shortly before the events of this case, he was employed by Investec Bank as part of a team involved in buying and selling companies. He was therefore experienced in the sort of agreements involved, and in the concepts involved. In my view he was fully capable of grasping the sort of structural, commercial and valuation concepts involved on both the commercial and legal side of the deal. He was engaged by Tamlura, having met Mr Vlotman and Mr Kresfelder when conducting a transaction for Motorcare, to act for it in its sale of TIHBV to TIG. His functions were to conduct the day to day aspects of the matter, and his involvement was considerable. He was paid about £70,000 in fees on this matter. I think he is likely to have conducted his retainer with care, and as a witness he struck me, again, as being careful. He was doing the best he could with very historic events of which he had little detailed recollection, but from time to time he was guilty of the same thing as Mr Vlotman, namely pretending to a previous lack of understanding that he did not really have. The impression one had of some of his evidence was that he was having aspects of the documentation explained to him for the first time. He himself admitted, in answers to me, that that was not an impression he would have wished to give. Until that point he had given it, and I do not think that that was accidental. I am sure he is a basically truthful man, but I think that some of his evidence was affected by concern at the commercial outcome of this deal, and his reconstruction has led him into evidence tinged with wishful thinking. I certainly do not doubt his capabilities. He was capable of following detailed trails through the documents in cross-examination, and having seen him I consider that he would have been well capable of doing much of that for himself back in 2000. He had some of his own notes to assist him (not many and mainly on drafts of documents), but had to indulge in a lot of reconstruction.
  5. Mr Mark Aspery. He was the partner at CMS instructed to deal with this matter; he is no longer with CMS. He had previously worked with Mr Christie, and was Mr Christie’s choice of solicitor to act in this matter. Yet again, he had little detailed recollection of events, and none whatsoever of a crucial meeting on 10th October 2000. He did keep some attendance notes of meetings and telephone calls, and made other notes on drafts of documents. He was criticised by Mr Cakebread for not having kept notes of developing matters other than by marking up drafts, but I think that that criticism was unfair. This was a fast-moving transaction which required speedy responses, and the making of detailed attendance notes of absolutely everything was not practicable. No adverse inference can be drawn as to his abilities from his note-taking. Having heard his evidence and seen his handiwork I consider that he was a skilled and careful solicitor (which was also Mr Christie’s opinion of him at the time), and an honest witness. He did not seek to fabricate, and approached the giving of his evidence conscientiously and carefully. In cross-examination he was accused by Mr Cakebread of pretending to a non-recollection of the meeting on 10th October when in fact he had a real recollection of events which favoured the claimant’s case. This was a somewhat implausible accusation, and I can say at this stage that I acquit him of it entirely. He was also accused, in essence, of covering up what was said to be his mistake when he realised that he had made one, and of not telling the truth to me on the point. He did not strike me as a man who was prepared to lie (or as a man who was lying), and I do not think he was covering up as alleged (or at all). I shall deal with that point in more detail in due course. I found Mr Aspery to be a man whose evidence I could rely on.
  6. Mr Thomas Page. He was Mr Aspery’s assistant, brought in when the main sale and purchase agreement was being drafted. At the time he was of two years’ qualification. He participated in the crucial meeting, and carried out the critical drafting. Yet again he had little detailed recollection, and like Mr Aspery was always ready to say when he remembered and when he was reconstructing. As a witness he was careful, measured and conscientious, and I consider that I can rely on his evidence. He took notes, which were helpful and important. Unlike Mr Aspery, he was not accused of fabricating a non-recollection of the meeting (despite what seemed at one stage to be a foreshadowing of such an attack).
  7. Mrs Fiona Mares (formerly Walker). She was the assistant solicitor working on this deal for TIG at DLA. She gave her evidence without the benefit of any contemporaneous notes. Indeed, virtually no DLA notes, and relatively little other DLA material, were produced at the trial despite the fact that both parties had had full access to the DLA files (there was one potentially highly relevant note of 9th October 2000 that was available). Her recollection of detail was as poor as most of the other witnesses, and she was frank about that. She was plainly a conscientious, careful and honest witness, doing her best to reconstruct.
  8. Mr Stephen Hallam. He was another partner at CMS who was consulted at a later date by Mr Vlotman. He gave short evidence going to the point of time at which Mr Vlotman first indicated that he had a claim. He was a credible witness.
  9. Mr Robert Terry. He was, as I have said, the chief executive officer of TIG and gave evidence about his dealings in relation to this matter and as to TIG’s thinking in relation to germane issues (going to both liability and damages). He had to sustain a very hostile cross-examination (both in content and tone) and sometimes (understandably) bridled at that and became a little combative. I do not hold his attitude against him. He came over as a man with some commercial arrogance about him, which was not entirely engendered by his cross-examination. He professed to more direct recollection of some points in this case than other witnesses, but that is not surprising bearing in mind how this transaction would have ranked in his dealings at the time, though some of the matters which he spoke of in cross-examination did not appear in his witness statement. I think that he would have kept a very firm line in business negotiation, where necessary. So far as his evidence went, I do not think that he came to court to tell untruths, though his response to hostile cross-examination was sometimes to take a slightly firmer position than might have been appropriate. Apart from anything else, he had no motivation for lying (he is no longer involved in TIG) and he gave his evidence voluntarily. He told me that his witness statement was prepared recently, and in haste, and that may well explain some apparent omissions from it. Despite Mr Cakebread’s attempts to convince me otherwise, I think he was, on core events, and in particular as to his attitude to the elements of the bargain, a reliable witness.

The quality of the evidence generally

  1. From what I have said about the witnesses, and from what will appear below, it will be apparent that most of them lacked detailed recollection, and sometimes any direct recollection, of events. A very large amount of reconstruction has gone on. Even witnesses who made notes had little or no real recollection of the events which the notes encapsulated. All this is understandable, since the relevant events were now, mainly, over 8 years ago. Accordingly, this judgment itself has to rely to a large extent on reconstruction based on probabilities. Certain events and matters are recorded in documents, and they are the only sure indicia of what was happening, followed then by the probabilities.

THE NATURE OF THE CASE

In Tamulran the judge set out his views of the claimant’s motivation in a short post-script on liability.

“174. I would add one further matter in relation to how this claim came to be brought, because Mr Vlotman seemed to think that he had a real case and I have not found that either he or Mr Christie have acted dishonestly in bringing it. I think that this is a case in which Mr Vlotman and Mr Kresfelder, and probably Mr Christie, made and accepted the deal that they did without themselves foreseeing the full scale of what might happen to the consideration. They made the deal with their eyes open in relation to the main aspects of the deal, without perhaps fully thinking everything through, but at the same time being satisfied with a bargain which gave them potentially a lot of money. They probably thought that TIG shares would continue to rise, and if they had done so then a completion date valuation would give them a good deal. When things turned sour, their first reaction was not to accuse CMS of letting them down, because CMS had not done so. CMS had implemented their bargain, as they were instructed to do. However, as is not unfamiliar in litigation, regret over what happened has led to a search for those who might be blamed, and has tinted the spectacles through which the events are now viewed. It is a form of “litigation wishful thinking”. So they have forgotten that they were content with the original deal, and meetings at which they discussed things with Mr Aspery have turned into false recollections of advice that was not given. This does not amount to a deliberately fabricated case, but it does not create a good one either.”

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