PD57AC: How compliant is compliant? High Court refuses to strike out passages in fact witness statements

Lifestyle Equities CV & Anor v Royal County of Berkshire Polo Club Ltd & Ors(1), departs notably from the recent pattern of authority and guidance on the enforcement of the new witness statement Practice Direction 57AC (PD57AC).

In this IP dispute, the High Court rejected a number of objections to sections of two witness statements, concluding that despite some "minor infractions" it was not reasonably necessary to strike out any of the paragraphs or passages complained of, because "very largely" they comprised admissible trade evidence. 

This is the latest in a recent line of authority on the application of rules concerning the preparation of witness statements following the introduction of the new regime in April 2021.  PD57AC was introduced in large part to prevent improper influence on the memory of a witness during the preparation of a statement and was intended to reduce perceived 'over lawyering' of witness evidence (including the making of legal submissions and commentary about contemporaneous documents) and associated costs.

The Court had regard to recent High Court decisions about PD57AC including Mansion Place Ltd v Fox Industrial Services Ltd(2), Blue Manchester Ltd v Bug-Alu Technic GmbH(3), and Greencastle MM LLP v Alexander Payne & Ors(4), in which the Court in each case held that sections of witness statements were non-compliant, and ordered either the strike out or redrafting of that evidence.  The applicable principles were not in dispute – the difference here was the Court's approach to enforcement and the question of proportionality.  

Facts

The underlying proceedings concerned an alleged infringement of trademarks registered in the UK/EU and in Overseas Territories including Chile, Mexico, Panama, Peru and the UAE.  

In order to reach a finding in respect of the alleged trademark infringement, the Court needed to be informed about the context of all alleged infringements and in particular the relevant characteristics of the average consumer in each territory (trade evidence).

The trade evidence (lay opinion evidence from suitably experienced people in the trade about the circumstances in the trade concerned) was a key component of the defendants' case, and a central issue on the application was whether the way in which the defendants put that evidence before the Court was compatible with PD57AC.  

The defendants proposed to rely on trade evidence from two witnesses who sought to give evidence about the relevant market and consumer relations.  This evidence included opinion evidence, which was said to be within the personal knowledge and experience of each witness. Of note, one witness statement commented specifically on selected documents from the applicants' disclosure, and the other referred to a schedule compiled by the defendants' trademark attorneys.  

The application

At the pre-trial review, the applicants objected to a number of passages in the two statements, on the grounds that the passages contained:

• opinion, matters of belief, commentary on other evidence, submission, argument or repetition;
• commentary on an exhibit which was not on matters from within the witnesses' own knowledge or was speculation; and
• impermissible commentary on documents.

Decision

Of particular interest is the Court's clear guidance about when to deploy an application under PD57AC.  It noted that the practice direction "should not be taken as a weapon with which to fillet from a witness statement either two or three words at various points or essentially insignificant failures to comply with PD57AC in a witness statement" and that careful consideration should be given to proportionality.  The Court also stated that "an application is warranted only where there is a substantial breach of PD57AC" which "should be readily apparent and capable of being dealt with on the papers".   

At a general level, the Court concluded that although there were some "minor infractions" in the witness evidence, it was not reasonably necessary to excise any of the paragraphs that were complained of, because they largely comprised admissible trade evidence (although the weight to be given to that evidence stood to be assessed by the trial judge).  

In addition to considering whether trade evidence could be given under PD57AC (answer: yes) and whether the evidence complained about by the applicants was rightly categorised as trade rather than expert evidence (answer: yes, but with weight to be given to that evidence to be determined at trial), the Court considered whether the witnesses' approach to giving such evidence fell foul of PD57AC.   

The Court's assessment of the impugned passages emphasised efficiency, practicality and the ability of the trial judge to make rulings as to the weight to give to certain passages at trial. The Court pointed to comments in earlier jurisprudence regarding cost-saving benefits of the approach enshrined in PD57AC, including: (5)

• 'Serious consideration should be given to finding a more efficient and cost-effective way forward' in a PD57AC application (the relevant application had taken a full day to argue).
• 'Parties in the Business and Property Courts who indulge in unnecessary trench warfare in such cases can expect to be criticised and penalised in costs'.
• The Court will not strike out offending parts of witness statements where that is not reasonably necessary.

Three specific decisions in the judgment are of individual interest, as they appear to step back from a strict enforcement of PD57AC:

• The Court declined to strike out a passage containing commentary on documents, agreeing with the defendants' submission that the witness was not asked to comment on what the documents showed, but rather was asked to comment on them because of his knowledge of the market from which they came.  The Court held that such evidence was acceptable because it 'puts the disclosure documents into context'(6).
• The Court also declined to excise a passage of text that was introduced by the words 'I consider the key point for the court to note is …', noting that simply because the evidence was "packaged as a submission" did not affect the evidence itself, and it was not reasonably necessary to strike the initial words out.
• The Court allowed witness evidence given by reference to a schedule of information prepared by the defendants' trademark attorneys (the schedule), even though the schedule was not a contemporaneous document or prepared by the witness and the witness would not have been able to give the same evidence without reference to the schedule.  The Court allowed the evidence on the basis that errors in the information presented could be challenged at trial, and that the schedule was "an efficient way of conveying information which one party contends is relevant and one which, ultimately, saves costs and court time".(7)

Comment  

This judgment takes a surprisingly light touch to policing of the PD57AC principles and has important consequences relevant both to the witness drafting their statement and to the potential applicant seeking to challenge compliance.  

Whilst the decision could (and should) be understood in the context in which it was made – namely the admissibility of IP trade evidence – we suggest treating it with caution in a more general context.  In particular, the Court's blessing of the passages of evidence containing reference to documents should be seen as no more than contextualising the use of trade evidence.  As such, we do not expect to see a wide-scale judicial stepping back from the policing of PD57AC.  As ever, practitioners should continue to strive for compliance in form and substance, not least due to the obligation to sign the certificate of compliance and the significant impact non-compliance can have (strike-out/sanctions).(8)

That said, proportionality and reasonableness still need to underpin any application in respect of PD57AC. The judgment sends a clear message to practitioners that such applications should be considered carefully and only made when substantive or significant non compliance has been identified. The Courts are also evidently concerned to limit the time and expense consumed by witness evidence and related applications, and this judgment makes it clear parties should keep that objective in mind, and refrain from pursuing "essentially insignificant" breaches. 

There is limited specific guidance in the judgment as to what would constitute an "essentially insignificant" failure to comply with PD57AC (such a determination appears to be wholly objective), but when considering making an application in respect of PD57AC, practitioners should:

• Carefully consider each issue identified in a witness statement to identify whether each point is significant and reasonably requires a ruling by the Court;
• Endeavour to resolve any underlying disputes about witness evidence in correspondence prior to resorting to an application to the Court; 
• Remember that while parties are entitled to apply in the event of non-compliance, such an application should not be deployed as a weapon or a strategic device: significant non-compliance (on an objective determination) should be identified before the Court is asked to intervene; and
• Consider whether the application can be determined on the papers.

Readers are also directed to Curtiss v Zurich [2022] EWHC 1514 (TCC) which was handed down on 17 June 2022, in which the Court awarded the respondent to an application regarding PD57AC compliance 75% of their costs on an indemnity basis, despite a partially successful application, on the grounds that the application was 'oppressive and disproportionate'.  That judgment also emphasised that parties should use common sense and have regard to proportionality when assessing how to respond to a failure to comply with PD57AC.

(1) [2022] EWHC 1244 (Cth)
(2) [2021] EWHC 2747 (TCC) at [22]-[38] 
(3) [2021] EWHC 3095 (TCC)
(4) [2022] EWHC 438 (IPEC)
(5) At [11], citing Blue Manchester Ltd v Bug-Alu Technic GmbH [2021] EWHC 3095 (TCC) and Mansion Place Ltd v Fox Industrial Services Ltd [2021] EWHC 2747 (TCC)
(6) [70] – [75]
(7) [84] – [90]
(8) See, for example, Greencastle MM LLP v Alexander Payne & Ors [2022] EWHC 438 (IPEC)