Lawyers Covered - March 2023

Welcome to the latest edition of our Lawyers Liability & Regulatory Update, in which we look back over the last month at key developments affecting lawyers and the professional risks they face.

Your statement or mine? Witness statements under Practice Direction 57AC

The judgment of Mr Justice Fancourt in the solicitor's negligence case of Mackenzie v Rosenblatt Solicitors & Anor [2023] has highlighted, in no less than 36 paragraphs on the matter, the importance of ensuring compliance and understanding of Practice Direction 57AC - Trial Witness Statements in the Business and Property Courts ("PD 57AC"), when preparing witness statements.   

Mr Justice Fancourt was critical of the parties' witness statements and highlighted that, in his view, the claimant's four "witness statements are the careful work of a legal team, contrary to the requirements of PD 57AC". Should a party fall foul of any part of PD 57AC, the court, pursuant to PD 57AC paragraph 5, has the full range of sanctions available to it. 

Whilst PD 57AC is not strictly applicable to claims outside of the Business and Property Courts, litigators and legal teams responsible for preparing witness statements should ensure that they properly understand and follow PD 57AC where and when it is applicable, or otherwise ensure good practice and compliance with any other relevant Rule or Practice Direction applicable to their case

To read the wider article on the judgment, click here.

Relief granted for serving a witness statement… six months late

If properly prepared, a witness statement can form the factual backbone of a party's case and is a crucial piece of evidence that will be relied upon at trial.  It is of paramount importance, therefore, that parties file and serve witness statements on time.  If a party fails to serve a witness statement on time, that witness may not be called to give evidence unless the court gives the party permission to do so (see CPR 32.10). 

In Davidson & Ors v Looney (Re Kieran Looney & Co Ltd), the parties were ordered to file and serve witness statements by 3 December 2021.  The Applicants complied with the order, but the Respondent did not.  After taking advice, the Respondent issued an application on 30 June 2022 (over six months later) seeking relief from sanctions and an extension of time for serving his witness statement.

When considering relief from sanctions, the court must apply the three-stage test established in Denton v TH White. First, was the breach serious or significant?  Second, was there a good reason for the breach?  Finally, what is the just result having regard to all the circumstances (including the need for litigation to be conducted efficiently and at proportionate cost, and the need to enforce compliance with rules, practice directions and orders (see CPR 3.9)).

The court held that the service of the Respondent's witness statement six months late was indeed a 'serious failure' and that there was no good reason for the default. The Respondent (who was a litigant in person) argued that the failure was not deliberate and that it was not until he received advice that he realised that he should have produced a witness statement.  Whilst the court will not apply a lower standard of compliance with rules and orders for litigant in person (see Barton v Wright Hassall), the Respondent's argument was a factor that the court took into account to decide what the just result was.

The court held that much of the Respondent's statement 'would not have come as a surprise to the Applicants' and doubted whether earlier service would have enabled the parties to reduce the issues between them or to reach a settlement.  The court was satisfied that the prejudice caused to the Respondent if he was not permitted to rely on his witness statement and give oral evidence, outweighed that to the Applicants.  Despite the court also accepting that the Applicants' arguments to refuse the application were 'good and valid', it held that the just result was that it would grant relief from sanctions and an extension of time – excluding only part of his evidence.

The rules are sufficiently clear and it would be unlikely that practitioners responsible for filing and serving witness statements would be granted the same relief in a retrospective application, especially without good reason.

Claims against solicitors and barristers have declined by over a third since 2020

According to the UK litigation data platform, Solomonic, the volume of claims against professional service firms has fallen considerably, by around 25% in 2022. However, claims against professional service firms are still amongst the most frequent to appear in the High Court compared with other sectors.

The statistics also vary across different professions. It is reported that litigation against solicitors and barristers, in particular, has dropped significantly since 2020. There were over one third fewer claims against solicitors and barristers between 1 October and 31 December 2022, compared with the same period in 2020.  

Notwithstanding these statistics, we anticipate the number of claims against solicitors and barristers to rise as challenging economic conditions continue throughout 2023. The legal sector should therefore remain cautious despite the reduction in reported claims.

"Cross-border" enforcement of judgments between Mainland China and Hong Kong 

Clients and their lawyers involved with legal proceedings against parties in Mainland China (among other places) have for a long time been frustrated with attempts to enforce court judgments. With this in mind, the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance, enacted in Hong Kong on 26 October 2022, has attracted much interest and is set to take effect (on current estimates) in mid-2023. 

The Ordinance implements the "Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and of the Hong Kong Special Administrative Region", signed between Mainland China and Hong Kong authorities on 18 January 2019.

Some of the key points of the Arrangement and the Ordinance are as follows:

• The new regime will supersede the existing limited arrangement for reciprocal enforcement of civil and commercial judgments between Mainland China and Hong Kong.
• Applicants will be able to enforce a broader range of civil judgments and obtain a wider range of court remedies in the other jurisdiction
• Applications to enforce Mainland judgments in Hong Kong will be by way of a registration procedure and vice versa in relation to the enforcement of Hong Kong judgments in Mainland China.

The Arrangement and the Ordinance should be seen in the context of the existing legal framework, which provides for the "cross-border" enforcement of arbitral awards and interim measures in arbitral proceedings between Mainland China and Hong Kong.

Overall, most observers welcome these developments. The enforcement of judgments between Mainland China and Hong Kong should become more expedient and less expensive. This should enhance Hong Kong's reputation as an international and regional disputes centre for (among other things) commercial disputes involving parties from Mainland China. Clients and their lawyers will need to keep up with developments.  

Read more about the Ordinance here.

Disclaimer: The information in this publication is for guidance purposes only and does not constitute legal advice. We attempt to ensure that the content is current as at the date of publication, but we do not guarantee that it remains up to date. You should seek legal or other professional advice before acting or relying on any of the content.