In Property Alliance Group Ltd v The Royal Bank of Scotland Plc  EWCA Civ 355 the Court of Appeal considered, amongst other things, two issues relating to witness evidence. Firstly in relation to the inferences a court should draw from missing witnesses. Secondly whether a party, applying to adduce a witness statement from their opponent, can rely on part of that statement.
“No litigant is obliged to call witnesses to satisfy the curiosity or enthusiasm of his opponent”
- The trial judge was not bound to draw adverse inferences from the defendant’s failure to call witnesses that the claimant asserted should have been called.
- The discretion under CPR 32.5 to allow a party to rely on their opponent’s witness statement when the witness was not called did not extend to allowing a party to rely on part of that witness evidence. The discretion could only be exercised in relation to the entire statement.
The claimants were appealing against a decision in relation to interest rate swaps. It appealed “against the Judge’s decision on the Negligent Misstatement, Misrepresentation, LIBOR and Valuation Claims.” This involved , in part, a challenge to factual findings made by the trial judge.
ADVERSE INFERENCES WHEN THE DEFENDANT DID NOT CALL WITNESSES
One ground of appeal was in relation to the inferences that the trial judge should have drawn when the defendant did not call witnesses that, the claimant, argued were important to the case.
THE COURT OF APPEAL JUDGMENT ON THIS ISSUE
The Court of Appeal rejected an argument that the trial judge had erred in failing to draw adverse inferences from the absence of witnesses.
“(6) Absence of senior management witnesses
- No litigant is obliged to call witnesses to satisfy the curiosity or enthusiasm of his opponent.It was always open to PAG to subpoena any witness it thought would be helpful to the Court. The fact that a party who might be expected to produce witnesses does not do so may sometimes speak volumes but it is a matter for the Judge to decide whether it does so in a particular case. The critical question in the present case was whether manipulation of GBP LIBOR had taken place. The critical witness for that purpose was Mr Thomasson. If he was believed, there was nothing relevant for senior management to know; if he was not, RBS’s case collapsed anyway. The Judge did say (paragraph 461) that RBS’s decision not to call Mr Cummins (and a Mr Nielsen) in connection with the allegations of lowballing did not reflect well on RBS and repeated this in her decision on whether RBS had been fraudulent (paragraph 485). She was well aware of Mr Lord’s case (paragraph 479) but in the end was not prepared to draw an adverse inference. We do not think the Judge can be criticised.”
THE CLAIMANT USING PART OF A STATEMENT PREPARED BY THE DEFENDANT
Another ground of appeal related to the trial judge’s refusal to allow the claimant to put in evidence part of a witness statement that had been disclosed by the defendant but where the defendant had not called the witness.
Judgment on this issue
“The next issue in this context is whether the Judge was right to decline to allow PAG to rely on the passages from the witness statement of Mr Sefton which it contended supported its case. The statement in question had been served by RBS, but it had not in the event called Mr Sefton to give evidence at the trial. PAG wished to put in as hearsay evidence these parts of the statement:
“2. In relation to PAG, my understanding when I came to work on the file in early 2013 was that RBS was not inclined to continue financing PAG beyond the expiry of the 2011 Facility in June 2014.
38. As I mentioned above, it was my understanding when I came to work on the file in early 2013 that RBS was not inclined to continue financing PAG beyond the expiry of the 2011 Facility in June 2014, largely in view of PAG’s high LTV [i.e. loan to value] ratio.”
“If a party who has served a witness statement does not—
(a) call the witness to give evidence at trial; or
(b) put the witness statement in as hearsay evidence, any other party may put the witness statement in as hearsay evidence.”
CPR 32.5 was considered in McPhilemy v Times Newspapers Ltd (No. 2)  1 WLR 1732, where the claimant sought to adduce statements made by a potential defence witness with a view to discrediting much of what was said. The Court of Appeal held that the trial judge had been right to refuse the application. Brooke LJ, with whom Thorpe LJ agreed, noted that, when witness statements were first introduced in 1986, there was an express rule barring a party from putting in evidence a statement served by his opponent of a witness who was not called. Brooke LJ observed (at page 1736):
“[CPR 32.5] abrogates the old rule and makes permissive what the old rule prevented. It is then a matter for the discretion of the judge whether to permit it. In my judgment, however, there is nothing in this new rule to change the basic rules of the laws of evidence which existed before the new rule was introduced by the rule-makers, and which are still in force today.”
Going on, Brooke LJ said (at page 1740):
“I know of no principle of the law of evidence by which a party may put in evidence a written statement of a witness knowing that his evidence conflicts to a substantial degree with the case he is seeking to place before the jury, on the basis that he will say straight away in the witness’s absence that the jury should disbelieve as untrue a substantial part of that evidence.”
In our view, CPR 32.5 is not applicable where a party wishes to put in only part of a witness statement. The rule itself refers to “the witness statement” being admitted, not merely some of it. Further, it makes sense that a party wanting to rely on something said in a statement should have to place all of the statement before the Court. A Court asked to attach significance to a passage from a statement should have before it the totality of what the witness said. There would otherwise, as the Judge noted in paragraph 296 of her judgment, be “real concern that cherry picking out of context would arise”. It would, moreover, be odd if a party were free to contend for the reliability of what the witness said in a particular passage while withholding the balance of the statement because he disputed it. That, in fact, would seem to have been the position in the present case had the Judge acceded to PAG’s application. PAG, we gather, was unwilling to put in Mr Sefton’s witness statement in its entirety because most of what he said was adverse to its case. It follows that, in our view, the Judge was correct to refuse PAG’s application.”