McGlinn v Waltham Contractors Ltd & Ors

Factual and Procedural Background

This action concerns alleged major defects in a large house built by the Plaintiff in Jersey between 1998 and 2002. The Plaintiff claims the defects were so extensive that the house had to be demolished and rebuilt. The First Defendant, the building contractors, are in administration and not participating in the proceedings. The Second, Third, and Fourth Defendants are the professional team involved: architects, mechanical and electrical engineers, and quantity surveyors respectively. The trial, involving damages of approximately £4 million, is scheduled to commence imminently. The Plaintiff has been resident abroad for about 20 years.

By an application dated 11th September 2006, the Plaintiff seeks permission under CPR 32.3 to give evidence via video link rather than attending trial in London personally. The reason given is the risk of incurring a substantial Capital Gains Tax liability, estimated at around £50 million, arising from recent share sales in a well-known company.

Legal Issues Presented

1. Whether the court should exercise its discretion under CPR 32.3 to allow the Plaintiff to give evidence by video link rather than in person.
2. Whether there is a real risk that the Plaintiff would incur a substantial Capital Gains Tax liability if he attends trial in London.
3. Whether the Defendants would suffer prejudice if the Plaintiff’s evidence is given by video link.
4. The relevance and weight of public policy considerations in permitting video link evidence.

Arguments of the Parties

Plaintiff's Arguments

• The Plaintiff faces a real risk of substantial Capital Gains Tax liability if he travels to London to give evidence in person.
• He has received specialist financial and legal advice confirming this risk.
• There would be cost and logistical savings by using video link.
• The Plaintiff’s evidence, while important, is not of critical importance compared to expert evidence expected at trial.
• The application was not made late; the possibility of video link evidence was raised appropriately before the pre-trial review.

Defendants' Arguments

• There is no evidence that a visit to London would cause any substantial Capital Gains Tax liability.
• The Defendants would be prejudiced because video link evidence reduces the pressure on the witness and complicates cross-examination.
• The application was deliberately made late to avoid scrutiny of the Plaintiff’s tax position.
• Cross-examination via video link presents logistical difficulties, especially when using exhibits such as photographs and videos.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Polanski v Conde Nast Publications Ltd [2005] 1 WLR 637	Use of video link evidence under CPR 32.3; balancing prejudice to parties; public policy considerations regarding fugitives from justice.	The court was bound by the House of Lords decision allowing video link evidence where the witness faced significant personal risk. The principle that the administration of justice is not brought into disrepute by permitting video evidence was applied analogously, despite the Plaintiff not being a fugitive.

Court's Reasoning and Analysis

The court began by acknowledging the wide discretion granted under CPR 32.3 and the guidance in the accompanying Practice Direction, which emphasises a case-by-case assessment balancing convenience, cost savings, and fairness. The court considered the House of Lords decision in Polanski, noting that even where a witness was a fugitive from justice, video link evidence was permitted due to the significant prejudice to the witness and minimal prejudice to defendants.

The court found the Plaintiff’s basis for the application—avoiding a potential large Capital Gains Tax liability—unattractive but accepted it was not unlawful or improper. The court rejected the Defendants’ assertions of prejudice, finding that cross-examination via video link is feasible and that any logistical difficulties are manageable. It noted that the Plaintiff’s evidence, though relevant, is not critical compared to expert testimony, reducing the risk of prejudice from remote testimony.

Regarding the tax risk, the court held it was not appropriate to determine the complex tax liability issue definitively on this application but found there was a real, not fanciful, risk based on the Plaintiff’s specialist financial and legal advice. The court emphasized that the Plaintiff would bear the burden of proving non-liability if he attended in person.

The court also dismissed the suggestion that the application was late, observing that the possibility of video link evidence had been raised properly before the pre-trial review and no prejudice had resulted from the timing.

Balancing all factors, the court exercised its discretion in favour of permitting video link evidence to protect the Plaintiff from the real risk of substantial tax liability while ensuring fairness to the Defendants.

Holding and Implications

The court GRANTED the Plaintiff’s application under CPR 32.3 to give evidence by video link rather than attending trial in person.

The direct effect is that the Plaintiff will provide his testimony remotely, avoiding the risk of incurring a significant Capital Gains Tax liability. The Defendants retain the ability to cross-examine effectively, and no substantial prejudice was found. The decision does not establish new legal precedent but applies established principles on video link evidence and judicial discretion in balancing competing interests.