Mad Atelier International BV v Mr Axel Manes

Hearing date: Friday July 2 2021

Approved Judgment

George Hayman QC for the Defendant brought before me, on what was otherwise the pre-trial review of this claim, fixed for hearing in October, an application to strike out passages of witness statements served on behalf of the Claimant in May 2021, namely parts of those of Messrs Patel, Umur and Akdag and the whole of that of Mr Buyukkaya, and some parts of the Claimant's expert report by Mr Ilett, reliant upon that evidence. He does so relying upon the provisions of the new Practice Direction 57AC — Trial Witness Statements in the Business and Property Courts, which have not yet, it seems, been subject to judicial consideration or the subject of any commentary in the White Book. Paragraph 1.1 of that Practice Direction reads as follows: – “… It concerns witness statements for use at trials in the Business and Property Courts and applies to new and existing proceedings, but only to trial witness statements signed on or after 6 April 2021”.

The relevant passages upon which Mr Hayman relies are as follows: –

“3.1 A trial witness statement must contain only –

(1) evidence as to matters of fact that need to be proved at trial by the evidence of witnesses in relation to one or more of the issues of fact to be decided at trial, and

(2) the evidence as to such matters that the witness would be asked by the relevant party to give, and the witness would be allowed to give in evidence in chief if they were called to give oral evidence at trial…

…

3.4 Trial witness statements should be prepared in accordance with –

(1) the Statement of Best Practice contained in the Appendix to this Practice Direction…

4.1 A trial witness statement must be verified by a statement of truth… and… must also include the following confirmation signed by the witness:

… I understand that it is not my function to argue the case, either generally or on particular points, or to take the court through the documents in the case.…”

The relevant part of the Appendix referred to in paragraph 3.4 (1) reads as follows:

“3.6 Trial witness statements should not – …

(4) include commentary on other evidence in the case (either documents or the evidence of other witnesses)…”

Paragraph 5.2 of the Practice Direction provides:

“If a party fails to comply with any part of this Practice Direction, the court may, upon application by any other party or of its own motion, do one or more of the following –

(1) refuse to give or withdraw permission to rely on, or strike out, part or all of a trial witness statement…”

The impugned passages all deal with quantum. The Claimant and Defendant agreed in 2015 to enter into a joint venture to develop an international franchise of restaurants under the brand “L'Atelier de Joel Robuchon”. The Claimant alleges that the Defendant fraudulently induced it into transactions which led to the termination of the joint venture agreement (JVA), and in particular resulting in two heads of damage relevant to the issue of quantum recoverable for that fraud: (i) the transfer of the Claimant's interest in the company MAD Atelier SA at a substantial undervalue and (ii) the loss of the profits which the Claimant would otherwise have earned from the joint venture. The two heads are potentially intertwined insofar as dependent upon an expert assessment of the likely profitability of the restaurants which would have been operated pursuant to the JVA in London and Dubai. Both require an assessment of the ‘but for’ question – a conclusion as to the hypothetical profits that were likely otherwise to have been made.

As in any such exercise, the hypothetical assessment depends largely upon comparables. Both experts have considered some external comparables. The Defendant has not disclosed what success he had subsequently in Dubai, and so has provided no potential comparable. The Claimant's evidence, to which Mr Hayman takes exception, all of which is given by those who are and were at the time working for the Claimant group of companies and had some involvement in the joint venture, is given, by reference to their relevant experience, as to the projected restaurants in Covent Garden, Mayfair and Dubai. Mr Ilett has relied in part upon the evidence from such witnesses, as he makes clear. Mr Caldwell, the Defendant's expert witness, was instructed not to refer to such evidence, although in the event he has done so.

Mr Hayman relied upon the authority of Sir Terence Etherton C in JD Wetherspoon plc v Harris [2013] 1 WLR 3296 at [39]–[41], ruling out evidence from a factual witness, Mr Goldberger:

“39. Mr Goldberger 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. These points are made clear in paragraph 7 of Appendix 9 to the Chancery Guide 7th ed (2013)…

40 Nor would Mr Goldberger be permitted to give expert opinion evidence at the trial. 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…..Mr Goldberger, however, has expressed his opinions on market practice by way of commentary on facts of which he has no direct knowledge and in 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.

41 I recognise, of course, that these rules as to witness statements and their contents are not rigid statutes. 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. I can see no good reason, however, why they should not apply to Mr Goldberger's witness statement in the present proceedings.”

Mr Hayman also refers to a decision of Mr John Kimbell QC sitting as a Deputy High Court Judge in the Chancery Division in Buckingham Homes Ltd v Rutter [2018] EWHC 3917 (Ch), who followed Etherton C in concluding (in a case where, as in Wetherspoon, no provision had been made for independent expert evidence) that the witness statement was “ self-evidently an expert's report” and given by someone who could not give evidence of any primary facts in issue in the proceedings and was (at [30]) “ an independent third-party who has been asked to look at the documents in the disclosure and to provide commentary on them”.

The Buckingham...