England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
BRISTOL DISTRICT REGISTRY

		Bristol Civil Justice Centre 2 Redcliff Street, Bristol, BS1 6GR
		19/06/17

HHJ Paul Matthews :

Introduction

1. On 16 June 2017 I heard and dismissed an application by Mr Raymond Hayes to set aside a witness summons dated 23 May 2017 that had been served upon him, requiring him to attend the trial of this claim, which is listed for 20 and 21 June 2017 here in Bristol. I did however vary the summons so that he was required to attend only at 2pm on 20 June 2017. At the hearing Richard Anderton of counsel appeared for Mr Hayes, and Brittany Pearce appeared for the claimant. (I should say that neither is instructed in relation to the trial.) At the time when I dismissed the application, I said I would give my reasons for the decision later. These are those reasons.

The claim

2. The application is made in the context of a claim by the claimant to recover £250,000 from the defendant, said to have been lent by the claimant to the defendant on or about 19 May 2013 by cheque cashed on 22 May 2013. The claim form was issued on 23 June 2016, accompanied by detailed particulars of claim. A defence was filed on 12 July 2016, accepting that the sum of £250,000 had been paid, but denying that it was a loan, and asserting it was a gift. It was also alleged that the claimant had on 26 May 2013 signed a document, prepared by her, acknowledging that she had made a gift and not a loan to the defendant. The claimant subsequently filed an undated reply joining issue on the question whether the payment was a loan or a gift, alleging that the document of 26 May was prepared by the defendant rather than the claimant, and alleging it was "was procured by trickery or erroneous advice". But the central issue in the case is the question of "gift or loan", and it will have to be resolved by the oral evidence of the persons involved, coupled with the relatively few documents which bear on the question.

The witness summons

3. The witness summons in question was issued at the instance of the claimant on 23 May 2017, directed to Mr Hayes. He was the solicitor who acted for the defendant in the purchase of a house at 33 St Dunstan's Road, Salcombe, Devon in August 2013. It appears that the purchase price was £280,000, and that the £250,000 received from the claimant was used in part-payment. In addition, the defendant secured a loan on mortgage of the property from HSBC bank for £40,000, the extra £10,000 apparently covering taxes and costs.
4. The witness summons required Mr Hayes, first, to produce to the court the conveyancing file for the purchase and mortgage of the property in Salcombe, and second, to give oral evidence at the trial. It will be seen at once that Mr Hayes, assuming that he has relevant evidence to give, would be a most important witness in resolving the factual issues at the heart of this case. He is, after all, not only not one of the parties, and so has no interest in the litigation to protect, but he is also a professional of long standing, used to taking care in transactions, in following rules, making appropriate records, and (hopefully) recalling accurately what was said to him by his own client and others involved.
5. It appears that, on 23 May 2017, the defendant wrote to Mr Hayes giving him permission to release a copy of the conveyancing file to Michelmores LLP, the defendant's solicitors. It further appears that the file was produced to Michelmores by email on the 25 May 2017, and was then sent again to them on 31 May 2017. I understand that that file has since been disclosed and produced to the claimant's solicitors, so that any privilege in its contents has been waived. Mr Anderton, for Mr Hayes, accepted as much at the hearing before me. That waiver will also extend to oral evidence about the conveyancing transaction, at least so far as the defendant is concerned. I have not heard any argument in relation to the position of the mortgagee for whom Mr Hayes also acted.

The application to set aside

6. Mr Hayes' application notice was issued on 31 May 2017 for an order to set aside the summons. It was supported by Mr Hayes' own witness statement dated 6 June 2017. On 8 June 2017 Mr Amjad Farooq, the claimant's solicitor, made a witness statement in opposition to the application. It is necessary to consider the terms of these two witness statements in some detail.

Mr Hayes' witness statement

7. In his witness statement, Mr Hayes says that he has practised as a solicitor since October 1985, and now heads the property department of Bartons solicitors, in Salcombe. He confirms that he acted for the defendant in connection with his purchase of 33 Dunstan's Road, which completed on 12 August 2013. At paragraph 8 of his statement he says as follows:

"8. I am advised that the claimant's solicitors most likely wish me to attend court so that they can ask me:

8.1. what steps I took to establish the source of the £250,000 paid to my firm by the defendant to enable him to buy the property;

8.2. whether the defendant stated that the funds were a loan or a gift;

8.3. what evidence I saw relative to the source of the funds; and

8.4. whether I gave any assurance to the mortgage provider HSBC about the source of the funds for the mortgage deposit."

8. In paragraph 10 of his statement he says this:

"10. I confirm that I shall say:

10.1. that as far as I recall, the defendant told me that he had received a contribution towards the purchase monies (the sum of £250,000) as a gift from the claimant;

10.2. that in respect of another transaction (for a different client) in which the claimant had made a similar gift, a fee earner from my office contacted her private banker, Steve Lamb, of Lloyds TSB in Bristol, on 18 November 2011. The purpose of the call was to verify the source of funds and to verify that the claimant was in the habit of making gifts. Steve Lamb told us he was authorised to speak to us by the claimant and confirmed, broadly, that she was very wealthy and that he was aware of her proposed gifts. Following the call, he sent to us a certified copy of the claimant's ID. I am unable to produce the documents to verify this discussion as they fall within the scope of an instruction relating to another client;

10.3 that because the monies from the claimant were a gift, I was under no obligation to undertake any investigations into the source of funds. I knew that they came from the claimant and as I have stated above, I already had her ID documents available to me;

10.4. that (as above), when I was instructed to act on behalf of the defendant, I already had ID documents for the claimant on file (having received them in 2011 in the course of another, similarly structured transaction). I did not have to carry out any further enquiries into the claimant's identity. She was already known to me;

10.5. that in a casual conversation in Salcombe, probably at the beginning of 2012, the claimant approached me in Fore Street outside the bakery for a conversation – we walked together back to my office (which is about five minutes walk) on Island Street;

10.6. that during the conversation, the claimant indicated that as an elderly widow she did not need all of the wealth that she had, and as a result wanted to help others. In fact this sort of arrangement is not uncommon amongst the very wealthy in Salcombe. It is something that I have come across before with a small number of my own clients;

10.7. that as far as I recall I was never contacted by the claimant during the course of the transaction, and no suggestion was made to me that the monies were in fact alone. Had there been any suggestion that the monies constituted a loan, or that I could act for the claimant, I would have followed the code of conduct and told the claimant to take independent legal advice;

10.8. that had the monies been a loan, I would have had to organise a deed of priority or have alerted HSBC to the existence of a second loan; and

10.9. that whether or not I gave any assurance to HSBC is irrelevant within the context of the current action, and is a matter between HSBC and Bartons."

9. Mr Hayes went on to say that in the circumstances a non-party disclosure application would have been more appropriate, although, since he had already produced his correspondence file to the defendant, in his view even this was unnecessary. He added that in his view the witness summons had not been issued in good faith for the purposes of obtaining relevant evidence. He repeated that he had already produced his file. At this point I observe only that, according to Mr Hayes himself, his file was produced to the defendant's solicitors for the first time only on 25 May 2017, that is, two days after this witness summons had been issued. I saw no correspondence or other evidence suggesting that Mr Hayes had been asked before the issue of the witness summons to disclose his file, and that he had indicated that he would (or, indeed, that he would not).

Mr Farooq's witness statement

10. The witness statement of Mr Farooq on behalf of the claimant was made to oppose the application to set aside the witness summons. After making some preliminary points, in paragraphs 8 and 9 he says the following:

"8. In paragraphs [sic] 10 Mr Hayes states his proposes [sic] what he is going to say on the basis that the Claimant would ask only matters set out in paragraph 10. That cannot be correct as there may be more questions after taking instructions from the Claimant on those proposed answers.

9. The very nature of his proposed answers warrants his attendance to the court. For the avoidance of any doubt it is necessary to state that

a. My firm offered to deposit £800 with the court office to meet any allowance which the court assesses is reasonable

b. Then my firm on behalf of the Claimant issued the witness summons

c. In an undated letter, Bartons wrote to my firm saying that it had sent the entire file to the Defendant's solicitors and thus two days attendance is disproportionate and if we did not agree to excuse his attendance he or his firm would apply to court to strike out the witness summons and seek associated costs.

d. My firm, in response, 31 May wrote to Bartons that Mr Hayes attendance is still required at the trail [sic]

e. My firm did not hear in response to that letter, and instead issued the application to strike out the summons."

11. In the last sub-paragraph, I assume that Mr Farooq meant to refer to Mr Hayes' issuing the application to set aside the summons. Mr Farooq then went on to deal with paragraph 10 of Mr Hayes' witness statement, in which Mr Hayes had given the answers that he would give if he were asked the questions set out in paragraph 8 of his witness statement. Somewhat curiously, given that this application is about setting aside the summons, and the claimant resists that, Mr Farooq takes issue directly with the substance of what Mr Hayes says, as though he were the advocate cross-examining Mr Hayes at the trial. For example, in paragraph 10b he says that

"Paras [sic] 10.2 refers to events of 2011 and in any case the proper step, which Bartons should have taken, was to contact the Claimant or to advise his client to tell her to get advice from her own solicitor and represent [sic] her to confirm loan or gift. Mr Hayes has failed to explain what other gifts of the Claimant, his firm had been involved [sic], and how those old 'transactions' had any connection with the Claimant's payment of £250,000 to the defendant. He has to explain whether it was Barton's [sic] normal practice to disregard the statutory requirement…"

12. He does the same in other paragraphs. And he also directly attacks the answers which Mr Hayes gives. For example, in paragraph 10g he says:

"Para 10.7 again seems to [sic] unconvincing…"

And in paragraph 12 he says:

"Paragraph 14 is very unconvincing".

Other paragraphs of the witness statement go on to complain that there were documents missing from the conveyancing file.

13. As I have already said, this case is likely to turn on the factual evidence to be given by the witnesses, as to whether the payment of £250,000 by the claimant to the defendant was a loan (as the claimant says) or a gift (as the defendant says). Having caused the witness summons to be issued and served on Mr Hayes, and finding Mr Hayes disposed to give evidence which, at least on one view, appears to support the view that the payment was a gift, one might have thought that the claimant would seek to leave well alone, and perhaps consent to an order setting aside the summons. In fact, however, the claimant has instead attacked Mr Hayes' evidence as incomplete and unconvincing. Whether the claimant (having called Mr Hayes to give evidence) could do this at the trial of the action is an interesting question, but to do so by way of opposing the application to set aside the summons seems unusual. Yet Ms Pearce, on behalf of the claimant, at the hearing before me made clear that the claimant still intended that Mr Hayes should give evidence at the trial, and resisted the attempt by Mr Hayes to have the summons set aside.

Arguments for the applicant

14. Mr Anderton, for the applicant, referred to Phipson on Evidence at paragraph 8.05, and the notes to the White Book at paragraph 34.3.5, citing the decision of Mr Justice Gross in South Tyneside Borough Council v Wickes Building Supplies Ltd [2004] EWHC 2428 (Comm). He submitted that a witness summons for oral evidence must be issued in good faith for the purpose of obtaining relevant evidence. It must also be necessary for fairly disposing of the issues in the claim. The court had to consider the overriding objective and take into account other legitimate interests. These would include whether the summons was oppressive or unfair. On an application to set aside or vary a witness summons, under CPR 34.3(4), the burden was on the issuing party to justify the summons.
15. Mr Anderton argued that the witness summons in the present case had not been issued in good faith for the purpose of obtaining relevant evidence, but instead to impugn the conduct of Mr Hayes. It was an abuse of process and it should therefore be set aside. Mr Anderton was constrained to accept, by reference to the points made by Mr Hayes in his witness statement at paragraph 10, that Mr Hayes did have some evidence to give which was relevant to the issues in the case. Nevertheless, he submitted that the claimant's motives for issuing the summons were largely in order to criticise Mr Hayes, and hence it had not been issued in good faith.
16. In order to make good the submission of bad faith, Mr Anderton referred me to Mr Farooq's witness statement. He took me to the various points in that statement where criticisms were made of Mr Hayes' conduct. He said that these criticisms might explain why the summons had been issued in the first place. When it was pointed out to him that on its face the witness summons was issued in order to obtain production of the conveyancing file as well as oral evidence at trial, and that the file was not produced until two days later, Mr Anderton maintained that the witness statement could nevertheless explain why the summons was issued.
17. He submitted that the claimant would not be allowed to cross-examine or contradict Mr Hayes in the way envisaged by Mr Farooq, as it was the claimant herself who was calling him. He referred me to section 3 of the Criminal Procedure Act 1865 (which, despite its title, applies also to civil courts and civil proceedings), and paragraph 12–61 of Phipson. Mr Anderton also submitted that, given that Mr Hayes had already provided the conveyancing file, and a statement of the evidence which he could give, it would not be fair in all the circumstances for him to be summoned.

Arguments for the respondent

18. On behalf of the respondent claimant, Ms Pearce submitted that the fact that the witness summons was issued for the production of the file as well as for the oral evidence, made clear that the summons had been issued in good faith. The witness statement of Mr Farooq came later. It was clear from his witness statement that Mr Hayes could give relevant evidence at the trial. Whether it was a good idea for the claimant to require Mr Hayes to come was another matter. To the extent that the claimant might seek to ask questions which were not relevant to the issues, or to cross-examine Mr Hayes as though he were a hostile witness, the trial judge would be well able to control any such behaviour.
19. She submitted that the evidence of Mr Hayes was relevant to the issues in the case, and could greatly assist the trial judge, in particular in relation to the issue of whether the payment was a gift or a loan. When I referred Ms Pearce to paragraph 23 of the decision of Mr Justice Gross in the South Tyneside case, where (at sub-para (iii)) he said that relevance was "not by itself necessarily decisive", she submitted that in this case it was nonetheless very important.

The law

20. The relevant law is not in any doubt. It is clear that the court has power to set aside or vary a witness summons that has been issued: see CPR rule 34.3(4). On an application to set aside or vary a witness summons, the burden does indeed lie upon the issuing party to justify the summons, rather than on the resisting party to show why it should be set aside. It is also clear that the cases (largely decided under the old RSC) have established a number of grounds upon which the court may (not must) set aside a witness summons. These include that the summons was not issued in good faith for the purpose of obtaining relevant evidence, that the witness cannot in fact give any relevant evidence, that it is oppressive, and that it breaches the confidentiality of others, particularly where the same information could be obtained in ways that do not. See R v Baines [1909] 1 KB 258, and South Tyneside Borough Council v Wickes Building Supplies Ltd [2004] EWHC 2428 (Comm). The latter was cited to me during the argument, and I referred to the former.
21. But it is also clear that the court must balance the interests of justice in the fair disposal of the claim with competing outside interests. And the fact that a party issuing a witness summons has motives going beyond the purposes of the particular action does not by itself make the issue of the summons oppressive. Similarly, the fact that a witness may (or, indeed, may be obliged to) claim privilege against answering certain questions does not mean that the witness summons should be set aside. Privilege may be waived, or may not prevent the particular question, or a part of such a question, from being answered.
22. Section 3 of the Criminal Procedure Act 1865, to which I have already referred, provides as follows:

"A party producing a witness shall not be allowed to impeach his credit by general evidence of bad character; but he may, in case the witness shall in the opinion of the judge prove adverse, contradict him by other evidence…"

For this purpose, Phipson at paragraph 12–61 says that a party is "adverse" when he

"bears a hostile animus to the party calling him and so does not give his evidence fairly and with a desire to tell the truth to the court. He is not adverse in the statutory sense when his testimony merely contradicts his proof or because it is unfavourable to the party calling him".

Discussion

23. It would be a matter for the trial judge to decide what questions the claimant may be able to ask Mr Hayes, and I shall therefore say no more than that, in my judgment, the mere fact that the claimant might wish to ask questions which the judge might not permit does not mean that the summons was issued in bad faith. At the time that it was issued, the conveyancing file had not been disclosed, and indeed still has yet to be produced to the court. In part at least, that is what it was issued for. That certainly cannot be shown to have been in bad faith.
24. To the extent that the summons was issued to obtain evidence at trial, it seems apparent that at that time the claimant did not know what Mr Hayes would say. It might have been in the claimant's favour. The claimant may have taken a calculated risk to summon Mr Hayes, in the hope that he would say something favourable to the claimant's case. I do not need to say, and I do not say, anything as to whether this hope has been realised. But in my judgment it is hard to make good the argument that the issue of the summons was in bad faith when the only evidence relied on is material contained in a witness statement made subsequently, which in substance takes issue with some of the points made by the witness in his witness statement made in support of an application to set aside the summons. On the material before me, I decline to find that this summons has been issued in bad faith.
25. It is also clear that Mr Hayes is able to give relevant evidence at the trial. Again, for obvious reasons, I will not go into this in any detail. The fact that the claimant may wish to criticise some aspects of Mr Hayes' evidence does not alter that relevance. The trial judge has power to prevent questions being asked which are not relevant or which are oppressive, or which are otherwise not proper questions. In circumstances where the case is likely to turn on oral evidence as to a contested matter of fact, and Mr Hayes is in a position to provide relevant evidence in relation to that question, and from an objective and independent source, I would be very slow to regard the issue of the witness summons as oppressive, and I do not do so here. On the contrary, it seems beneficial to the process.
26. As for s 3 of the 1865 Act, in the present case, I agree with Mr Anderton that it is difficult to see how the claimant can call Mr Hayes to give evidence at the trial and then seek to cross-examine him as a hostile witness merely because he gives evidence which the claimant does not like. Telling the truth (which every witness promises to do) does not by itself demonstrate a hostile animus. Ultimately, though, this is a matter for the trial judge. On the other hand, Mr Hayes can give relevant evidence, and the court will not set aside the witness summons just because that evidence may not or does not support the case of the party calling him.
27. Of course, I accept that Mr Hayes is a busy professional man, with a practice to run, and this is not his dispute. Moreover, he may be anxious not to be seen to take sides. Sometimes reputational questions arise. I do not know. But it is the civic duty of each of us, when called upon to give evidence which is relevant, to assist in the resolution of disputes before the courts. Here Mr Hayes can give relevant evidence, and he is that rare thing, the independent witness. He says (correctly) that he has already handed over to the defendant a copy of the file referred to in the summons, and provided a statement. But that does not make his attendance at court unnecessary.
28. As to the file, the summons requires him to produce it to the court, not to hand it over to one or other party beforehand. As it happens, his client asked him to provide it to his (the client's) solicitors, but that does not discharge Mr Hayes' obligation to the court. At least in the absence of agreement between the parties, the original file must still be brought to court. Second, and more important, his written statement supplied in response to the summons is not without more admissible evidence of anything. And the party calling him is entitled to his oral evidence on oath on all the questions properly asked of him in open court (not just those dealt with in the statement), where the judge may observe his demeanour, and supplementary questions may be asked to elucidate his evidence. If Mr Hayes thought that he could discharge his obligation to attend court by disclosing the file (to his own client) and serving a statement of what he thought he might be asked, then I am afraid that he was wrong.
29. Although at the outset the defendant was entitled to confidentiality in his dealings with his solicitor for the purposes of the purchase of the property, in the circumstances of this case by disclosing it to the claimant he has effectively given up that confidentiality, at least for the purposes of the action, and with it any legal professional privilege that may attach to the file. The impact on the mortgagee, HSBC Bank, is less clear, and of course I have heard no argument on it, the bank not being a party to this application. If necessary, that is a matter on which the trial judge will have to rule. But, the mortgagee's part in this transaction being much smaller and less important than that of the defendant, it is clear to me that confidentiality and privilege will not be a bar to most, if not all, the relevant evidence being given by Mr Hayes to assist the court in the resolution of the issues of fact in this case.

Conclusion

30. In the result, therefore, and for the above reasons, I declined to set aside this witness summons. On the other hand, I could see no good reason why Mr Hayes should be required to attend on the whole of both days of the trial. I therefore varied the summons to require him to attend at 2 pm on the first day of the trial. It seems likely to me that he can be dealt with within that afternoon. But if that should prove not to be the case, then I am sure that the trial judge will make arrangements to accommodate him accordingly.

Costs

31. On the question of costs, after discussion with counsel at the end of the hearing, I decided that the question of the costs of the application which I have refused should be reserved to the trial judge. This was largely for two reasons. First, the claimant might decide after the hearing but before the trial that Mr Hayes need not give evidence after all. Second, the judge at trial would be in a better position to decide on the impact of Mr Hayes' evidence than I could be at the hearing of this application. If for any reason the trial judge is not called on to adjudicate on costs, then I can of course be asked to do so in relation to the costs of this application. In the first instance, I could do that on paper, without the need for a hearing.