It's Cocoa, Jim, But Not As We Know It: Court's Modern Interpretation Of Underwriters' And Brokers' Duties #4 - Getting The Witness Evidence Right And New Rules

• Published date: 14 May 2021
• Subject Matter: Finance and Banking, Financial Services
• Law Firm: Reynolds Porter Chamberlain
• Author: Mr Tim Bull, Matthew Wood and Elizabeth Singleton

This is the fourth and final article in our series following the decision in ABN Amro Bank N.V. v Royal Sun Alliance Insurance plc and 13 Underwriters and Edge Brokers (London) Limited, in which RPC acted for Edge.

For a detailed background to the case, please read our first article.

If you have been following the series, you will know that our second article set out some of the arguments by which Underwriters sought to avoid liability under the policy and in our last article, we focussed on brokers' duties.

In this article, we focus on witness evidence.

Reliability of Witness Evidence

Given that many of the key issues in the case did not turn on disputed factual evidence, Mr Justice Jacobs remarked that witness testimony was of limited use in resolving the dispute. That said, he did consider the witness evidence and adopted the approach in a number of earlier cases which reflect the Court's approach to testing witness evidence against available documentary evidence. In Armagas Ltd v Mundogas S.A. (The Ocean Frost) [1985] 1 Lloyds Rep, Robert Goff LJ stated that he tested witness testimony with reference to documents in the case. This method was reflected in Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC 3560 (Comm) which has now been adopted in a number of cases. As our brains do not fix memories like digital content on a hard drive, Leggatt J referred to the appropriateness of basing factual findings on inferences drawn from the documentary evidence on probable facts and set out principles to assist in assessing witness evidence.

He also highlighted the inherent problems with memory recall, especially given the passage of time and external influences, such as documents, some of which the witness may not have seen at the time. The problem is that memories are easily corrupted and rewritten each time they are called upon. There are usually many drafts of a witness statement, and therefore, this is happening over and over. It not only occurs when preparing a statement but also when preparing for the hearing itself.

Leggatt J did not think that oral testimony serves no useful purpose at all but thought its utility is often disproportionate to its length. This does not mean oral testimony should be disregarded entirely but, in Leggatt J's view, its value is largely in the opportunity it presents to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness.

In this case, Mr...