“A net from which there is no escape”: takeaways from recent cases on dishonesty and conspiracy

The case of Lakatamia Shipping Co Limited v Nobu Su ¹ is one of a number of recent judgments to grapple with questions of honesty and credibility. ² The courts have long dealt with these issues, but recent cases have moved the discussion forward, concentrating on the fallibility of human memory, the importance of contemporary documents, and the evidential issues arising in cases of serious wrongdoing. ³ This note considers these themes.

The fallibility of memory

The knowledge that human memory is fallible is by no means new, but the caution to be exercised when considering a witness’s recollection was reinforced by the influential case of Gestmin v Credit Suisse [2013] EWHC 3560 (Comm), which is now routinely cited when questions of memory come up. In Gestmin, Leggatt J (as he then was) warned that common errors were to suppose that: (1) the more vivid a recollection and (2) the more confident a person is of their recollection, the more likely the recollection is to be accurate. Memory is especially unreliable when it comes to recalling past beliefs, which are revised to make them more consistent with present beliefs. The judge considered that the best approach was to base factual findings on inferences drawn from the documentary evidence.

The issue of witness memory arises frequently, given the time it can take for a case to come to trial, as well as the spotlight that is put onto the detail of meetings and conversations that may have taken place years earlier. An implicit acknowledgment of the difficulties can be seen in Practice Direction 57AC, which came into effect in the Business & Property Courts in April 2021. PD 57AC provides that trial witness statements must contain a Confirmation of Compliance, to be signed by the witness, requiring the witness to state how well they recall key matters, and whether their memory has been refreshed by considering documents (another danger identified by Leggatt J in Gestmin).

The importance of contemporary documents

In Lakatamia v Su, the court reiterated the vital role of documentary evidence when assessing the veracity of witness evidence. In Simetra Global Assets Limited v Ikon Finance Limited [2019] EWCA Civ 1413, the Court of Appeal commented that contemporary documents were a means of getting at the truth as to the motivation and state of mind of those concerned. Particular attention should be paid to a party’s internal documents, including instant messaging: Males LJ observed that these tend to be the documents where a witness’s guard is down and their true thoughts are plain to see.

Lawyers should consider disclosure from sources such as Whatsapp groups, mobile phone location data, the timing of the use of swipe access cards, printers and copiers.

The big picture

Claimants often face the difficulty that fraudsters rarely set out their plans in writing. Much of the evidence in a fraud case is likely to be circumstantial, and claimants will often put forward a case based on inference. The court will give weight to the inherent plausibility or implausibility of the witnesses’ accounts. In Lakatamia, the court stated that the essence of a successful case based on circumstantial evidence is that the whole is stronger than individual parts: it becomes a net from which there is no escape.⁴ The most effective case presentation will cumulatively eliminate other possibilities.

It is important to stand back and consider points in the round, e.g. who stood to gain, which party may have been in financial difficulty and thus have motive for fraud. Even where the primary documentary evidence is limited, there is an evidential role for the lawyer, e.g. to obtain statements from third parties to corroborate the main witness’s version of events, or to disclose documents showing patterns of events similar to those for the client contends.

Conclusions

Human nature being what it is, there will always be cases of fraud and dishonesty. The recent authorities underline that a court will look to the contemporaneous documents as the best evidence possible, but it will also take a step back and consider what is the most plausible version of events when arriving at its decision.

¹ [2021] EWHC 1907 (Comm)

² See also Kogan v Martin [2019] EWCA Civ 1645, TMO Renewables Limited (in liquidation) v Yeo [2021] EWHC 2033 (Ch), Christopher Simon Jones v Zurich Insurance plc [2021] [EWHC] 1320 (Comm)  

³ Memory is also a hot topic in arbitration: see the ICC Commission Report “The accuracy of fact witness memory in international arbitration”, November 2020, ICC publication DRS 890 ENG, available at www.iccwbo.org

⁴ See paragraph 63 of the judgment