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A witness is 'hostile' if his oral testimony is harmful to the side calling him, and in conflict with the expectations of that side.
Suppose, for example, that a witness makes a statement to the police that supports a particular view of the facts surrounding an offence (see previous statement), and is later called as a witness to be examined on that view. If he then offers evidence that is in outright disagreement with his original statement, the party calling him may ask the judge to grant leave to treat him as a hostile witness. If leave is granted, the witness may be examined on his previous statement, and he may be asked leading questions (RVThompson1976).
Until recently it was strictly the case that evidence of previous statements, whether made by a hostile witness or not, were not admissible to show the truth of their contents, but only to attack the credibility of the witness's testimony. In practice, particular in jury trials, it was impossible to expunge from the memory the contents of the previous statement, and it would be almost impossible not to take it into account. This situation is tidied up by s.119 of the CJA_2003, which allows for previous statements to be admitted to prove the truth of the matters stated.
Until recently there was some uncertainty whether a witness who was not compellable (see compellable witness) could be declared hostile. After all, if the witness cannot be compelled to testify at all, surely he or she cannot be compelled to testify in line with the expectations of the person calling that witness? However, in RVPitt1982 it was held that once a non-compellable witness takes the oath, that witness must give testimony just like any other witness, and so can be declared hostile. However, the Court of Appeal suggested that the situation should never arise -- the judge ought to ensure that a non-compellable witness is fully aware of his or her right not to testify before taking the oath.