Douglas& Ors v Hello Ltd & Ors [2003] EWCA Civ 332

[2003] EWCA Civ 332IN THE SUPREME COURT OF JUDICATURE A3/2003/0399
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(MR JUSTICE LINDSAY)
Venue Royal Courts of JusticeDate Monday 3 March 2003
The Strand
London
B e f o r e:
THE LORD CHIEF JUSTICE OF ENGLAND AND WALES
(The Lord Woolf of Barnes)
LORD JUSTICE KENNEDY
and
LORD JUSTICE SCOTT BAKER
Between
MICHAEL DOUGLASRespondents/ClaimantsCATHERINE ZETA-JONESRespondentHELLO LIMITEDAppellants/DefendantsHOLA S AAppellantEDUARDO SANCHEZ JUNCOAppellantMARQUESA DE VARELAAppellantNENETA OVERSEAS LIMITEDAppellantPHILIP RAMEYAppellant
B E T W E E N:
_______________(Computer Aided Transcription bySmith Bernal, 190 Fleet Street, London EC4A 2HDTelephone 020 7421 4040Official Shorthand Writers to the Court)_______________A P P E A R A N C E S:MR JAMES PRICE QC and MR GILES FERNANDO (instructed by Messrs Charles Russell, London EC4A 1RS) appeared on behalf ofTHE APPELLANTS (FIRST, SECOND AND THIRD DEFENDANTS)MISS HELEN MULCAHY (instructed by Messrs Reed Smith, London) appeared for FOURTH AND FIFTH DEFENDANTSMR MICHAEL TUGENDHAT QC and MR DAVID SHERBORNE (instructed by Messrs Theodore Goddard, London EC1A 4EJ) appeared for RESPONDENTS_______________J U D G M E N T

Monday 3 March 2003

[1]This is an appeal by leave of Lindsay J from an order he made on 26 February 2003 in the trial, which is still continuing but which has been adjourned for the purposes of this appeal, of an action between Michael Douglas and others against Hello Ltd and others.[2]The issue that arises is one which is of some general importance and in relation to which there is no direct authority.[3]The facts of the present litigation are sufficiently well known. It would be neither helpful nor desirable for this court to set them out for the purpose of this judgment. The background facts, if they are known to anyone, are know to the trial judge who has listened to the evidence and has had to manage difficult litigation.[4]The problem for this court arises out of the fact that the fourth and fifth defendants obtained a statement from Miss Sue Neal who, at the relevant time was, a picture editor of the first defendant. On the material which is before this court it is not quite clear as to whether she was employed by the first defendant, Hello Ltd, or Hola SA, the Spanish company which owns the first defendant. That does not matter. The fourth and fifth defendants having obtained a statement, the claimants subsequently obtained a supplemental statement from the same witness.[5]As the picture editor of the first defendant Miss Neal would appear to be in a position to give very important evidence as to the issues between the parties. But as the case proceeded, although the claimants had referred to her evidence in the pleadings and referred to her evidence for the purposes of cross-examination, the claimants never put her statements in evidence. Nor did the fourth or fifth defendants.[6]There the matter remained until Mr Price QC, who appears on behalf of the first and second defendants, had reached the stage where he had called his live witnesses and all that was left was for him to deal with certain housekeeping matters. One of those matters was to take a decision in relation to the statements of Miss Neal which had not been placed in evidence. Mr Price decided to put the statements in evidence and he informed the judge of his decision. He addressed the judge on the inferences to be drawn from those statements.[7]Mr Tugendhat QC, who appears on behalf of the claimants, was taken by surprise. He had not expected this to happen. However, having consulted the White Book, Mr Tugendhat sought leave to have Miss Neal called to give evidence before the judge so that he could cross-examine her. That application in turn took Mr Price by surprise. He considered that it would be quite contrary to the normal principles upon which litigation is conducted that the claimants, who had taken a statement from Miss Neal, should be able to cross-examine her to their advantage and to the disadvantage of his clients who had not taken a statement from her and indeed who regarded her as someone who was hostile, although she had been in their employment until June 2002, since after that date she had left and had brought contentious litigation against them.[8]The judge acceded to Mr Tugendhat's submission and made the order which is the subject of this appeal. He gave no judgment at the time as to his reasons for coming to that conclusion, other than to indicate by his decision that he thought that Mr Tugendhat's submissions were right and that Mr Price's submissions were wrong. However, for the benefit of this court the judge has prepared a helpful note. It reads:
“Sue Neal ('SN'), formerly pictures editor of Hello! and a person who dealt at the time with the photographer or agent who sold the allegedly offending photographs to Hello!, is capable, in my judgment, of being an important witness on several issues which are already in dispute. Several passages of her Witness Statements ('WS') have already been put to other witnesses, but neither the fourth and fifth defendants (on whose behalf SN's first WS was prepared) nor the claimants (on whose behalf her second WS was prepared) chose either to call her to give oral evidence or to put in her WS as hearsay evidence or to rely on their contents as if evidence. However, at the very end of his case for the 1st to 3rd Defendants, Mr Price QC applied successfully to put in, as hearsay evidence, both of her Witness Statements under CPR 32.5(5) and read the Witness Statements to me at some length and sought to draw inferences from them. He then closed the case for the 1st to 3rd defendants on this, the 16th day of the trial, only then to hear Mr Tugendhat QC for the claimants applying to cross-examine SN under CPR 33.4(1). Mr Price opposed that application chiefly, if not wholly, in point of jurisdiction. Mr Tugendhat, he said, was, at least as to SN's 2nd WS, seeking to cross-examine his own witness, which would be quite extraordinary. I took the view that Mr Tugendhat's application was within the Court's jurisdiction under 33.4, that he was not seeking to cross-examine but seeking rather to cross- examine a witness whom he had studiously not made his own witness (and one whose statement Mr Price had chosen to rely upon) and that SN would have relevant evidence to give. I therefore granted Mr Tugendhat's application. I gave leave to Mr Price to appeal because the position, so far as the parties were able to draw to my attention, is wholly novel and one on which authoritative guidance would be welcome and would be of fairly general application.”
[9]The outcome of this appeal depends upon the relevant Civil Procedure Rules. However, it is important to have in mind that those rules were intended, so far as is practical and appropriate, to overcome one of the difficulties which had arisen under the previous procedure of the Civil Courts. This is the fact that the procedure had become excessively technical and thus contributed to the complexity and expense of litigation. It is therefore, in my judgment, very important when considering issues of this sort to have in mind that the general intent of the CPR is that litigation should be conducted with as little technicality as possible. In particular, it should be conducted in accord with the overriding objective contained in Part 1 of the CPR. However, while recognising that that is the general position, parties have to understand the possible consequences of their taking a particular action in the course of litigation. The difficulties which have arisen in the present proceedings probably would not have arisen under the procedures which were adopted prior to the CPR. The principal change which has created the difficulty is the practice now that parties are required to conduct litigation with their cards face up and not against their chest. That practice is intended to be achieved in part by the requirement that the parties should prepare statements in relation to the witnesses they are considering calling to give evidence. Those statements should be served on the other party to the litigation so that that other party knows in advance in general terms the case with which they are going to have to deal at the trial.[10]Part 32 deals with evidence. It is relevant to refer to Part 32 because it deals with the power of the court to control evidence. It provides:
“(1) The court may control the evidence by giving directions as to -- (a) the issue on which it requires evidence; (b) the nature of the evidence which it requires to decide those issues; and (c) the way in which the evidence is to be placed before the court. (2) The court may use its power under this rule to exclude evidence that would otherwise be admissible. (3) The court may limit cross-examination.”
That rule gives the court very wide powers to control evidence which is adduced; but Mr Price is right in submitting that it does not entitle the judge to look for evidence. It is the obligation of the parties to produce the evidence on which they rely to support their case and to rebut the case of the other side.[11]Part 32.2 provides:
“(1) The general rule is that any fact which needs to be proved by the evidence of a witness is to be proved -- (a) at trial, by their oral evidence given in public; and (b) at any other hearing, by their evidence in writing.”
[12]Rule 32.4 provides:
“(1) A witness statement is a written statement signed by a person which contains the evidence, and only that evidence, which that person would be allowed to give orally. (2) The court will order a party to serve on the other parties any witness statement of the oral evidence which the party serving the statement intends to rely on in relation to any issues of fact to be decided at the trial. (3) The court may give directions as to -- (a) the order in which witness statements are to be served; and (b) whether or not the witness statements are to be filed.”
[13]Pausing there, in his submissions on behalf of the defendants on this appeal, Mr Price draws attention to the fact that statements should contain evidence on which a party intends to rely at trial. A party's intentions during the conduct of litigation and the course of the trial may change. But in general terms the rule is clear: Witness statements are not served for tactical purposes; they are served because they are intended to be relied on at the trial at the time they are served by the party serving them, although there may be no concluded view as to whether the witness will be called at the trial. The witness is not bound to be called merely because a statement has been served.[14]Mr Price submits, and it seems to me that he is entitled so to do, that where a statements is served which contains a declaration of truth at the end, it entitles the other party to form the view, first, that it is contemplated that the witness will be called, and second, that the witness is put forward as someone whom there is no reason to doubt has properly included in the statement a declaration that the contents of the statement are believed to be true.[15]Part 32.5 is an important rule. It provides:
“(1) If -- (a) a party has served a witness statement; and (b) he wishes to rely at trial on the evidence of the witness who made the statement, he must call the witness to give oral evidence unless the court orders otherwise or he puts in the statement as hearsay evidence.”
There is then a note which is not without relevance to the present issues. It reads:
“Part 33 contains provision about hearsay evidence.”

The Part continues:

“(2) Where a witness is called to give oral evidence under paragraph (1), his witness statement shall stand as his evidence in chief unless the court orders otherwise.”
Then there is power for the witness to be able to amplify his statement. It is necessary in addition to refer to rule 32.5(5) which provides:
“If a party who has served a witness statement does not -- (a) call the witness to give evidence at trial; or (b) put in the witness statement as hearsay evidence, any other party may put in the witness statement as hearsay evidence.” (My emphasis). That rule sets out what Mr Price did in this case. The other parties had not called Miss Neal to give evidence. Nor had they put the witness statement in as hearsay evidence. Mr Price therefore put in the witness statement as “hearsay evidence”
. The Part continues:[16]The reference to “hearsay evidence” takes us to Part 33, which is the part on which Mr Tugendhat relies in support of the judge's decision. Earlier rules in Part 33 deal specifically with hearsay evidence. For present purposes it is sufficient to refer to Part 33.4 which provides:
“(1) Where a party -- (a) proposes to rely on hearsay evidence; and (b) does not propose to call the person who made the original statement to give oral evidence, the court may, on the application of any other party, permit that party to call the maker of the statement to be cross-examined on the contents of the statement. (2) An application for permission to cross-examine under this rule must be made not more than 14 days after the day on which notice of intention to rely on the hearsay evidence was served on the applicant.”
[17]Mr Price submits that Part 33.4 was not intended to apply to this sort of situation where his clients had not prepared or assisted the witness to prepare the statements which were adduced in evidence. Whether that be right or not, I have no doubt at all that the language of 33.4 is apposite to cover the situation which we have here. The parties (namely Mr Price's clients) proposed to rely on hearsay evidence. They did not propose to call the person who had made the original statements to give oral evidence. That being so, the judge in my judgment had a discretion to require the witness to be called and for Mr Tugendhat's clients to be in a position to cross-examine the maker of the statements on their contents. Because of the way matters happened, formal hearsay notices had not been served in this case. But that does not affect the fact that Part 33.4 covered this situation. When Part 33.4 is read together with Part 32.5(5), with its reference to hearsay evidence, the applicability of 33.4 to the present position in my judgment becomes clear.[18]Mr Price submits that he was lulled (not intentionally) by the claimants into a false position with regard to putting in the statements of Miss Neal. He says that the whole manner in which the case had been conducted up until that time caused him to be of the view that the claimants accepted the credibility of Miss Neal's evidence and that if he had thought that there was a risk of cross-examination of that lady he would not have taken the action that he did because he and his clients have no idea what she would say when and if she were to give evidence.[19]On the evidence which is before us that nobody knows precisely what Miss Neal will say as and when she comes to give evidence. But be that as it may, it seems to me that the judge was perfectly reasonable to take the view, that he did, that it would assist the achievement of justice in this case for this lady to give evidence and for him to have the benefit of her evidence because she clearly played a central role in the negotiations which are part of the subject matter of this hotly contested litigation. From his point of view it could prove to be highly desirable to know the facts rather than for the matter to be dealt with on the basis of the inferences which Mr Price sought to draw from Miss Neal's statements.[20]It is significant to note that there are limits to the power of the court under Part 33.4; it is to allow the maker of the statement to be cross-examined as to its contents. That provision does not enable Mr Tugendhat to cross-examine the witness when she is called as to matters that do not arise out of the statement. Reference to the “contents” of the statement confines it to matters dealt with in the statement. But a reasonable approach has to be adopted to determine what are the contents of the statement for that purpose. The trial judge has a considerable discretion over the extent of the cross-examination. If he considers that the cross-examination is going beyond proper bounds, then his powers to control evidence enable him to limit the evidence in an appropriate manner. The judge can be relied upon to see that no unreasonable use is made of the powers of cross-examination.[21]Mr Price complains that if the lady is cross-examined it may be necessary for additional evidence to be given by his clients' witnesses who have already given evidence. That would be unfortunate and is something to be avoided if possible. However, this litigation has so far been conducted in a way which suggests that costs constraints that sometimes apply to litigation have not been the first consideration of the parties. Equally, the convenience of witnesses so far has not been a first consideration of the parties. It seems to me that we can rely upon this experienced judge to ensure that if, regrettably, witnesses in addition to Miss Neal have to give evidence because of anything that Miss Neal says in cross-examination, then the inconvenience which will be caused to the witnesses and the additional expense which may result is confined as far as possible. In that regard I draw attention to the fact that there is today power for the court to receive evidence by video transmission which would at least reduce the inconvenience to the witnesses and help to control costs. I would dismiss this appeal.

LORD JUSTICE KENNEDY: I agree.

LORD JUSTICE SCOTT BAKER: I also agree.

[24]MR PRICE: My Lord, your Lordship did not specifically deal with the suggestion that I made that it might be right in the circumstances that I be given an opportunity to take instructions with a view to reconsidering whether we wish to rely on Sue Neal's evidence. Your Lordship has not specifically ruled on that.

THE LORD CHIEF JUSTICE: I apologise for not doing so, Mr Price. I did mention it, I think, in my judgment. I intended to reject that.

[26]MR PRICE: My Lord, so be it.

ORDER

Appeal dismissed with costs.

Cited in 1 later judgment