Claimant to pay indemnity costs after latest witness statement failure

Farnhill: Claimant wrong to accuse defendant of nit-picking

The High Court has ordered a claimant who seriously breached the rules on witness statements to pay indemnity costs, having exacerbated the situation by dismissing the defendant’s concerns.

Richard Farnhill, sitting as a deputy High Court judge, also criticised the claimant for failing to engage with the issue until just before the pre-trial review (PTR), six weeks after the defendant had raised it.

Practice direction 57AC came into force in April 2021 and various parties have since fallen foul of its more stringent requirements, although judges have also warned against it being used as a “weapon with which to fillet” essentially insignificant failures to comply.

But in McKinney Plant & Safety Ltd v Construction Industry Training Board [2022] EWHC 2361 (Ch), Mr Farnhill – a litigation partner at City giant Allen & Overy – found that the failures were not insignificant.

The defendant, which instructed DAC Beachcroft, argued on 7 June that the supplemental statement of Michael McKinney was non-compliant.

The defendant, represented by Doyle Clayton, responded on 22 July, suggesting that the criticisms were largely “nit-picking”.

Both Mr McKinney and his lawyer had confirmed the statement’s compliance with PD 57AC.

The judge said that, while he was mindful of concerns over satellite litigation in relation to witness statements, “those concerns do not give carte blanche to non-compliance with the rules”. At the PTR, held three days later, he raised the issue and ordered an exchange of written submissions.

The claimant’s submission then acknowledged “significant non-compliance” with PD 57AC – it identified problems with 95 of the statement’s 102 paragraphs – and it later purported to serve an amended statement.

Mr Farnhill said the original statement’s failures included “extensive commentary giving Mr McKinney’s views on other evidence that was not available to [him] at the time of the events giving rise to this dispute”, criticism of the defendant’s witnesses, and documents not being identified “with any specificity”.

The defendant also argued that the revised statement included commentary but the judge decided that, while he could see “why that criticism is made”, the non-compliance was not “readily apparent” and the trial judge should assess it.

He added that the claimant should have sought relief from sanction before serving the revised statement but, as he would have ordered it to do so anyway, “I do not see that the outcome changes simply because it has acted prematurely”.

The defendant sought indemnity costs to be summarily assessed at just under £10,000.

In agreeing to order £9,600, the judge said the breach was “a serious one” and the claimant had failed to engage with the issue for six weeks until the eve of the PTR, which “effectively precluded any meaningful discussion”.

The position was “aggravated by the claimant’s dismissive approach”. The judge said: “Given the scale of the ultimate changes, the claimant’s suggestion that the defendant was ‘nit-picking’ was plainly wrong.

“It was further aggravated by the claimant’s attempt to suggest that it did not understand the defendant’s concerns.

“In their 22 July letter, Doyle Clayton required that the defendant ‘set out the precise contravention, cross referencing it to an accurate quotation of the part of PD57AC relied upon’. That request was baseless.

“After I raised the issue at the PTR, with no further guidance the claimant and its legal advisors were able to identify necessary changes and deletions to 95 of the 102 paragraphs.”

Mr Farnhill concluded: “In my view the seriousness of the breach and the claimant’s refusal to engage with it until I raised the point does take this case well outside the norm and does merit an award of indemnity costs.”

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