What if - the admissibility of hypothetical witness evidence and the recent reforms

The recent reforms to witness evidence implemented by Practice Direction 57AC are a significant development in commercial litigation in shaping how parties must prepare their witness evidence for trial. What has not been clear, however, is how the courts will approach these reforms.

Mad Atelier International BV v Manes [2021] EWHC 1899 (Comm) is one of the first cases to consider the recent reforms. There the Commercial Court considered a challenge to witness statements on the grounds that they contained inadmissible opinion evidence as to what would have happened in a particular scenario.

To start: the facts

The Claimant (Mad Atelier) and the Defendant (Mr Manes) entered into a joint venture agreement to develop the L’Atelier de Joel Robuchon restaurant brand. Things did not go well and Mad Atelier alleged that Mr Manes had fraudulently induced transactions that led to the termination of the JVA.

Mad Atelier's claim depended on a hypothetical assessment of the profit that would have been made by restaurants that would have been operated under the JVA but for the alleged fraudulent conduct. Mad Atelier served witness evidence addressing that aspect of its claim.

Mr Manes applied to strike out those parts of the witness evidence on the basis of the new Practice Direction provisions that a witness statement must contain only "evidence as to matters of fact that need to be proved at trial…” and not “include commentary on other evidence in the case (either documents or the evidence of other witnesses)…".

The main course: the decision 

The judge (Sir Michael Burton GBE) dismissed Mr Manes' application. His starting point was that: "the new Practice Direction does not change the law as to admissibility of evidence or overrule the directions given by the previous authorities … as to what may be given in evidence."

He went on to note that, in addition to matters of fact, the witness statement may include evidence which a witness "would be allowed to give in evidence in chief if they were called to give oral evidence at trial". Hence, the test is one of admissibility at trial.

So, was the evidence admissible? The judgment reviews the circumstances in which non-expert witnesses of fact might be permitted to give opinion evidence. While opinion evidence is largely the preserve of expert witnesses (for which the Court's permission is required), there is no blanket rule that witnesses who are not independent experts cannot give opinion evidence. The judge held that the authorities establish that witnesses of fact may be able to give opinion evidence where:

• they have relevant experience or knowledge; and
• their opinion relates to the factual evidence which they give.

This is particularly so where the evidence given is as to a hypothetical situation as to what would or could have happened and such hypothetical evidence could, itself, be considered evidence of fact.

The Court held that provided the witness can give their evidence by reference to personal knowledge and involvement, the principle extends to "evidence on what would or could have happened in counterfactual or hypothetical situations." The judge thought that this is particularly so in relation to quantum where the Court is bound to do the best it can on the evidence before it.

Two other helpful points were made in the judgment. First, the judge noted that references to documents in witness statements does not necessarily amount to inadmissible "commentary" because paragraph 3.2 PD 57AC requires the identification of documents to which the witness has been referred for the purpose of giving their statement. Second, and importantly, he also noted that the power to strike out witness statements under the new rules is, in any event, discretionary

And for dessert: our opinion

This judgment serves as a helpful confirmation that the recent reforms were not intended to vary the rules on the admissibility of evidence or overrule previous authority on what may be given as evidence. It also provides a welcome reminder that, where a witness has relevant knowledge and experience, their opinion may be admissible, including in respect of hypothetical and counterfactual scenarios. Perhaps most importantly, this judgment provides an early indication that the courts will take a robust and common sense approach to the implementation of the new reforms.

Authors: Catrin Southgate, Solicitor; Tim West, Senior Associate