The judgment in Jaffé & Another v. Greybull Capital LLP & Others [1] gives an excellent insight into how the English courts are grappling with issues arising from the fallibility of memory.
Background
The case concerned an allegation that the claimants, Wirecard, were induced to provide banking services to Monarch Airlines by a fraudulent misrepresentation made by Monarch’s majority shareholder, Greybull. The misrepresentation concerned the source of a $165 million injection of funds into Monarch. The vast majority of the funds had ultimately come from Boeing by way of an agreement that Monarch would purchase 30 Boeing aircraft, Boeing would pay Greybull $132 million, which Greybull would use to fund Monarch and Boeing would recoup by increased aircraft sale and leaseback prices. Boeing insisted that the terms of the deal be kept confidential.
Wirecard alleged that Greybull had told them at a meeting in October 2016 that it was itself the source of the funds and had denied that Boeing had provided funds. One of the attendees from Wirecard had taken a manuscript note of the meeting, which he wrote up in a summary the next day. That summary contained the following: “Boeing did not contribute capital to Monarch or provide capital to [Greybull] in any way. The capital placed by [Greybull] is derived entirely from the assets of Greybull’s owners.”
The defendants said that no such representation was made, and that Greybull had stuck to a script prepared before the meeting. That script included the following: “Despite confusing press reports, Boeing have not provided equity or loans to Monarch. [If pushed for more clarity] Boeing have provided backstop financing in the unlikely event the [sales and leaseback] market was not available as and when required.”
One of the key factual issues for the court to determine was whether the representation had been made as alleged by the claimants.
High Court’s judgment on whether representation was made
The judge started her analysis by noting that nearly eight years had passed since the meeting in issue and that there was, therefore, an obvious point about the reliability of recollection. She considered that the key witnesses on both sides were honest and truthful, stating ‘I have no doubt the individual witnesses’ truths – in the sense of what they either do (now) recall or what they honestly think they recall – are simply different’. So, this was not a case where the court could resolve the matter on the basis of an assessment of the credibility of the witnesses – what was required was a much deeper analysis, taking into account the science of memory.
Unsurprisingly, reference was made to the judgment in Gestmin SGPS SA v. Credit Suisse (UK) Limited[2], in which Mr Justice Leggatt (as he then was) famously suggested that ‘the best approach for a judge to adopt in the trial of a commercial case is … to place little if any reliance at all on witnesses’ recollection of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts’. The value of witness evidence instead lies largely in the opportunity to ‘subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness’. And finally, ‘it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth.’
Notably, the judge then turned to the lecture given by Lord Justice Popplewell – ‘Judging Truth from Memory’. She noted that she had drawn the parties’ attention to ‘the important lecture’, from which she quoted the following as being of particular interest:
- 10. …determining what happened is not the only task. Commercial litigation often involves an inquiry into a witness’ state of mind. That state of mind may be an essential ingredient of the cause of action, as for example where claims are framed in constructive trust. But more generally, it matters what the witness knew, or believed, or was thinking or intended at a particular point in the narrative of events because that casts light on the events themselves. Fact-finding is concerned not only with what happened, but just as much with why it happened.
- 36. … When we encode our memories we don’t photograph what is happening; we interpret what is happening, and that interpretation uses our schema. … So, experience and expertise can make a big difference to what goes into our memory. … We don’t see things as they are, but as we are’.
- 40. The semantic memory can also corrupt a recollection by affecting it at the retrieval stage. Our beliefs, attitudes and approach, our worldview, our schema, changes over time. The recollection is affected by the schema at the time of retrieval, which may be different from that which applied at the time of the events in question… . As Leggatt J said in Gestmin ‘Memory is especially unreliable when it comes to recalling past beliefs. Our memories of past beliefs are revised to make them more consistent with our present beliefs’.
- 52. Further, encoding is often influenced by pride or wishful thinking. It is a common, although not universal, human tendency to want to portray our participation in events in a way which paints us in the best light. … it can also infect how witnesses pictures events to themselves when first encoding the memory.
- 55. … contemporaneous documents … may be produced near the time, but they are produced after the memory has been encoded, and if there is an encoding fallibility, which there may be for all these different reasons, it infects the so called contemporaneous record every bit as much as other reasons for the fallibility of recollection which affect it at the storage and retrieval stage.
- 66. One [other issue] is reconstruction from semantic memory. We assume that something happened because that is what we would expect to have happened. … our memories fill in gaps by reference to what we assume we would have done or would not have done. The witness will respond in cross-examination that they are sure that something did not occur because ‘I would never have done that’, or vice versa.
- 67. The dangers here are several: things do not always happen as we expect them to, and may not have done so on this occasion. We are also applying our present semantic memory schema to our attitudes at a different time. A third is another common source of erroneous recollection, in my experience, which is, again, pride or wishful thinking. We like to suppose that we did or thought that which we now consider we ought to have done or thought.
The judge suggested that one way to deal with the inherent unreliability of memory would be to say that the documentary record – i.e., the summary of the meeting produced by an attendee from Wirecard – trumped other sources. However, that would fail to take into account the possibility of a faulty impression or recollection being encoded at a very early stage and recorded in that document. She explained that while the document could be taken as a basis for a compelling argument, it must be tested against the facts in the full context: What was common to both parties in terms of knowledge and what (if anything) the parties were each focussing on which did not get communicated to the other side, which might affect both encoding and recording or how the Greybull representative may have expressed himself.
Ultimately, the judge concluded on the balance of probabilities that the misrepresentation was not made. She considered that the issue of the source of funds was not the main focus of interest and, therefore, would not have taken up much time in the meeting or been examined closely. She determined that the Greybull representative likely would have stuck closely to the script and would not have been flustered into saying an untruth if he had been questioned on the point. And, finally, due to the ambiguity of Greybull’s technically accurate description of the source of the funds, and Wirecard’s view prior to the meeting that Boeing was the source of the funds, it is easy to see where the (entirely innocent) inaccuracy arose in the summary note produced by Wirecard the following day.
Takeaway
Parties and practitioners should take note of the English courts’ developing interest in and application of the science of memory. Instead of simply asserting what a witness remembers of events, it is necessary to look at the full context in which that memory has been encoded to anticipate and address any questions as to faulty encoding. Further, it should not be assumed that contemporaneous documents will trump all other evidence – in respect of key documents, the courts are increasingly likely to examine the circumstances of their production and whether they may have been infected by faulty encoding of a memory.
[1] [2024] EWHC 2534
[2] [2013] EWHC 3560 (Comm)
Contributors
Alex Radcliffe