Court cross-examination

Insolvency Practitioners could be excused from cross examination?

Insolvency Practitioners could be excused from cross examination?

Insolvency Practitioners could be excused from cross examination – as a proposition this is confined to claims where the Insolvency Practitioner is the claimant and seeking compensation – typically from Directors in relation to historic transactions.

Discovery of such documents typically arises because for instance an insolvent company’s Director has provided them as part of company records. They can also commonly be discovered when records are reconstructed frequently from the company’s bankers and accountants records.

The Insolvency Practitioner acting for creditors enters office as a stranger, having had no material prior dealings with the insolvent estate.

He usually comes as a stranger to the affairs of a company which has sunk to its financial doom.

Megarry J. in re Rolls Razor Ltd. (No. 2) [1970] Ch. 576, 591-592

The Witness Statement

Cross examination germinates from the Witness’ Statement. The Witness Statement is evidence that the Insolvency Practitioner will provide to the Court to use to prove the case.

A witness statement would appear to be a statement of the facts that the party serving it wants to provide evidence of.

It will usually be signed by the Insolvency Practitioner many months, possibly even a year, two years or more sometimes (such can be the arguably pedestrian pace of litigation) before the case reaches the final hearing of the matter or as Lord Justice Lewison put it:

the first and last night of the show“.

Fage UK Ltd & Anor v Chobani UK Ltd & Anor [2014] EWCA Civ 5

Save for developments and discoveries subsequent to it (such as conflicting evidence in other documents) you might envisage that the facts referred to in the statement when supported by contemporary documents could be accepted on face value and would not require cross examination in most cases.

The Insolvency Practitioner will not have been around when the impugned transactions were undertaken and therefore will be unable from his or her direct knowledge to make positive assertions that go beyond what the documents appear to suggest. As then Deputy Registrar Schaffer said:

The TIB, Mr Green, like all insolvency practitioners, could only speak to the documents which he had procured through the course of his investigation…

Green v Stadler (unreported) 4 December 2015

The Insolvency Practitioner can really only point to the documents to see if similar inferences are drawn by the Court. The importance of those contemporaneous documents assembled by the Insolvency Practitioner cannot be overstated.

You can see in general the importance of contemporaneous documents for example when you consider what happened in the Court of Appeal recently in a case which unusually ordered a retrial because of why such documents did not feature materially in a judgment:

It is therefore particularly important that, in a case where there are contemporary documents which appear on their face to provide cogent evidence contrary to the conclusion which the judge proposes to reach, he should explain why they are not to be taken at face value or are outweighed by other compelling considerations. It is, however, striking that the judgment in this case contains virtually no analysis of the contemporary documents many of which appear to shed considerable light on the nature and purpose of the critical confirmations and the way in which they were understood.

Simetra Global Assets Ltd & Anor v Ikon Finance Ltd & Ors [2019] EWCA Civ 1413

Cross Examination

There might be cases in which the Insolvency Practitioner’s opponent wants to consider evidence that does not materially feature in the Insolvency Practitioner’s witness statement(s). In which case, in view of anti-ambush rule in Browne v Dunne (1893) 6 R. 67, H.L. the Insolvency Practitioner must presumably be cross examined but in general, given the Insolvency Practitioner has a second bite at the cherry to respond to the Respondent’s evidence in reply, you would have thought that all the documentary evidence perhaps will have been addressed before the final hearing.

The usual rule appears to be that a person seeking to rely on a witness statement as evidence must be available for cross examination. That presumption could conceivably be reversed with the burden put on the party seeking to cross examine the Insolvency Practitioner making relevant submissions as to why it would be useful for the Court.

If a case clearly turns on the documents as many of these do, then absent some other good reason could Insolvency Practitioners not be justified in simply assembling documents in a statement to support an application and then simply be excused from cross examination, thereby freeing up the creditors from indirectly bearing the potentially huge costs of having the Insolvency Practitioner prepare for his or her day in the witness box?

Disclaimer: this is not legal advice. No liability is accepted by the author, Elliot Green or Oliver Elliot Limited for any reliance placed upon the same. You should seek independent legal advice.