UK & Europe
Insurance & Reinsurance
A new practice direction regarding the preparation of trial witness statements in the Business and Property Courts will come into force on 6 April 2021 and has implications for all accounting firms who are currently, or may become, the subject of civil claims.
The new rules, which supplement the existing rules in CPR Part 32, provide for some important changes. In this article we suggest some practical tips for professionals, when considering these new rules in practice.
The new Practice Direction 57AC and appended Statement of Best Practice ('SPB') has been produced in order to improve the efficacy and reliability of trial witness statements. Whilst some requirements will be familiar, there are some new ones which require close attention. The changes apply to trial witness statements only and not, for example, to witness statements prepared in support of an interloctutory application or for the purposes of a regulatory investigation.
The key points arising include:
What does this mean in practice?
We set out below a number of practical tips and points, specifically in the context of professional negligence claims. Some of these are specifically required by the new rules. Others are our suggestions as to how best to comply with the new rules as a whole.
Before the witness interview:
During the interview:
Drafting the witness statement:
These are the main rules to be aware of, and our suggestions as to how to comply with them. But anyone preparing a witness statement for trial under the new rules should read Practice Direction 57AC and the SBP.
Implications for regulatory investigations
It is worth emphasising that while the new rules apply specifically to trial witness statements only, they give rise to questions as to the interplay with statements prepared in response to regulatory investigations and questions as to whether such requirements and best practice should be followed in those cases as well, particularly where a civil claim is extant or expected.
If regulatory proceedings are running alongside a civil action then by far the simplest way to address this issue would be to prepare both statements in accordance with the requirements of the new Practice Direction and Statement of Best Practice (or, if applicable to the situation, use the same statement for both the regulatory proceedings and the civil action). This approach should be less likely to result in any suggestion in the civil action that best practice has not been followed. It should also make it easier for both the witness and legal representative to sign the statements of compliance. However, how realistic a prospect this approach is in practice is far from clear at this early stage and will vary from case to case.
Of course, such an approach will not be possible in circumstances where regulatory statements have already been prepared at an earlier stage, without following the new rules. What a witness has been made aware of during the preparation of an existing statement cannot of course be undone, so it is then necessary to consider what documents need to be listed in the civil statement, and whether it will be necessary to apply to dispense with the certificates of compliance.
It may be possible to explain the circumstances in which the regulatory witness statement was prepared, a copy of which could be exhibited to the civil statement.
Provided any departure from best practice can be properly justified on the basis of the requirements and/or nature of the regulatory action, then the witness should be much less likely to be the subject of criticism and/or adverse inferences than where best practice has simply not been followed.
It is important to note that the new rules suggest transparency is key, and this should always be at the forefront of thinking when preparing witness statements.