Chan Chee Chin @ Chun Choo Chin v 1. ) Lee Yoon Huat (WA-22NCC-565-08/2023)

On the issue of how our Courts determine whether a particular litigant knows a particular fact at issue was explained succinctly by S Nantha Balan JCA in IB Capital Sdn Bhd v Ivory Indah Sdn Bhd [2021] CLJU 2348 where he explained: - [232] We shall start by alluding to the legal principles concerning "knowledge". The issue of knowledge is the proverbial key to unlocking the vexed issues in this case. It would be useful therefore to examine the legal principles in relation to the issue of "knowledge". S/N bdbdstQ0102vT042ezO5Q [233] We will start with the case of Baden v. Societe Generale pour Favoriser le Developpement du Commerce et de l'Industrie en France SA (Note) [1993] 1 WLR 509 which is of considerable utility for our purposes. At pages 575-576 of the case, Peter Gibson J dealt with the question of proof of knowledge and said: "Knowledge may be proved affirmatively or inferred from circumstances. The various mental states which may be involved are (i) actual knowledge; (ii) wilfully shutting one's eyes to the obvious; (iii) wilfully and recklessly failing to make such inquiries as an honest and reasonable man would make;

(iv) knowledge of circumstances which would indicate the facts to an honest and reasonable man;

knowledge of circumstances which would put an honest and reasonable man on inquiry. A person in categories (ii) or (iii) will be taken to have actual knowledge, while a person in categories (iv) or (v) has constructive notice only." [234] Thus, a person either had "actual knowledge" or "constructive knowledge". Both types of knowledge are potent. It all depends on whether the party who claims to be a bona fide purchaser had S/N bdbdstQ0102vT042ezO5Q actual knowledge or constructive knowledge of a pre-existing interest over the subject matter of the trust. ye", or the proverbial "Nelsonian eye" can be exalted to actual knowledge. In this regard, the authors of Snell's Equity (34th Edition) opined, inter alia At paragraph 4.028 (p.71) the authors of Snell's Equity said:-

Actual notice. It has been said that actual notice should only be binding if it was given by a person interested in the property and in the course of the negotiations, and if it was clear and distinct, and that vague reports from persons not interested in the property would not affect the purchaser's conscience. The better view may be, however, that a purchaser could not safely disregard information from any source if a reasonable person would have acted on it. Wilful blindness about the existence of the equitable interest would be equivalent to actual knowledge of it. Where a purchaser with actual notice of an equitable charge completed his purchase on the faith of a forged discharge, he was held to be subject to the S/N bdbdstQ0102vT042ezO5Q charge; since he chose to complete in reliance upon the assurance of the vendor or of the vendor's solicitor that an equitable interest had been got in or destroyed, he did so at his own risk. Actual knowledge [235] We may now consider actual knowledge. The classic example of actual notice/knowledge is seen in the case of Loke Yew v. Port Swettenham Rubber Company, Limited Lord Moulton dealt with the issue of the respondent's actual knowledge of Loke Yew's interest in the land and said, There is, however, another ground upon which, in their Lordships' opinion, the defendant is entitled to succeed in this case. It is admitted that the plaintiff company bought with full knowledge of the transactions with regard to the land occupied by Loke Yew, so that they knew that Haji Mohamed Eusope had parted with his rights in that land. Under the provisions of s. 3 of Enactment No. 9 of 1903, entitled "An Enactment to define and amend the Law relating to certain kinds of Specific Relief," the plaintiff company became by the transfer trustees for Loke Yew in respect of that land. This is clear from Illustration (g) to that section, which reads as follows:- S/N bdbdstQ0102vT042ezO5Q "A. buys certain land with notice that B. has already contracted to buy it. A. is a trustee within the meaning of this enactment for B. of the land so bought." Constructive (notice) knowledge [237] Next, we must consider the issue of constructive notice or constructive knowledge. This is sometimes described as knowledge that the person ought to have been aware of, or had the means of knowing. It is knowledge which the law will impute. But this will depend on the circumstances of the particular case and it depends on several factors. But the primary question is whether the other party had acted in a reasonably prudent manner. In this regard, we would regard the following passage from Snell's Equity at paragraph 4.029 (p.71), as accurately reflecting the legal position. It reads:

Constructive notice.

The principle. The general principle was that a purchaser had constructive notice of all that a reasonably prudent purchaser, acting on skilled advice, would have discovered. Constructive notice has been said to be: "in its nature no more than evidence of notice, the presumptions of which are so S/N bdbdstQ0102vT042ezO5Q violent that the court will not allow even of its being controverted." There were two main heads of constructive notice, namely:

Those where the purchaser had actual notice that the property was in some way incumbered. Here he had constructive notice of all that he would have discovered if he had investigated the incumbrance.

(ii) Those where the purchaser, whether deliberately 105 or carelessly, abstained from making inquiries that a prudent purchaser would have made. [238] Next, it is also necessary to have regard to the lucid exposition of the law on constructive notice by Justice P N Bhagwati (later Chief Justice) in Haji Abdul Gafur Haji Hussenbhai v. The Ahmedabad Municipal Corporation [1967] 8 Gujarat Law Report p.65 where he said (p.65-66): "Constructive notice is the equity which treats a person who ought to have known a fact as if he actually does know it. It arises from an irrebuttable presumption of notice. The test to be applied is what is the course which on the facts and circumstances of the case an ordinarily prudent purchaser dealing bona S/N bdbdstQ0102vT042ezO5Q fide in the proper and usual manner for the protection of his own interest would have followed "with a view to his own title": what inquiry he would have made? If the purchaser omits to follow such course or to make such inquiry he must be held to be guilty of wilful abstention from making such inquiry with the intention of avoiding knowledge of facts which such inquiry would reveal or of gross negligence and in such a case he must be fixed with constructive notice of facts which he would have known if he had made such inquiry. It may be that in a given care having regard to the facts and circumstances an ordinarily prudent purchaser may not be expected to make a particular inquiry or to follow a particular course and in such a case omission to follow such course or make such inquiry would not be visited with constructive notice of facts which might have come to the knowledge of the purchaser if he had not so omitted." [239] The learned Judge then articulated that there was a duty on the part of a party who asserts that he is a bona fide purchaser to conduct reasonable inquiries. S/N bdbdstQ0102vT042ezO5Q [240] He said (p.76-77):- These observations show that the test to be applied is what is the course which on the facts and circumstances of the case an ordinarily prudent purchaser dealing bona fide in the proper and usual manner for the protection of his own interest would have followed "with a view to his own title"; what inquiry he would have made? If the purchaser omits to follow such course or to make such inquiry he must be held to be guilty of wilful abstention from making inquiry with the intention of avoiding knowledge of facts which such inquiry would reveal or of gross negligence and in such a case he must be fixed with constructive notice of facts which he would have known if he had made such inquiry. The proposition involved in this test is essentially a proposition of fact and not of law and it must depend on the facts and circumstances of each case whether the purchaser has omitted to follow a course or to make a inquiry which as an ordinarily prudent man dealing in the usual course of business be would have followed or made for the protection of his own interest with view to his own title. It may be that in a given case having regard to the facts and circumstances on ordinarily prudent purchaser may not be expected to make a particular S/N bdbdstQ0102vT042ezO5Q inquiry or to follow a particular course and in such an event omission to follow such course or make such inquiry would not be visited with constructive notice of facts which might have come to the knowledge of the purchaser if he had not so omitted. We must, therefore, examine the facts and circumstances of each case with reference to the standard of care and caution which should be expected from an ordinarily prudent man acting bona fide in the proper and usual manner for the protection of his own interest in the matter of purchase of property. [241] Quite obviously, the standard of enquiry or the conduct that is expected of a bona fide purchaser must fall within the band of inquiry or conduct which one would expect from a reasonable man. What then is the standard of the reasonable man? Justice Bhagwati explained (p.77) with usual clarity and lucidity that: The standard of care of the reasonable man is, in one sense, an impersonal test. It eliminates the personal equation and is independent of the idiosyncrasies of the particular person whose conduct is in question. Some persons are by nature unduly suspicious and distrust every statement made by the person with whom they are dealing. Others more trusting S/N bdbdstQ0102vT042ezO5Q rely implicitly on the good sense of the person with whom they are transacting business and fail to take even the elementary precautions of safeguarding their interests. The reasonable man is presumed to be free from both these infirmities. He is neither over-suspicious nor over-trusting but there is a sense in which the standard of care of the reasonable man involves in its application a subjective element. It is still left to the Judge to decide what in the circumstances of a particular case the reasonable man would have done." S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q

An obvious difficulty which affects allegations and oral evidence based on recollection of events which occurred several years ago is the unreliability of human memory.

While everyone knows that memory is fallible, I do not believe that the legal system has sufficiently absorbed the lessons of a century of psychological research into the nature of memory and the unreliability of eyewitness testimony. One of the most important lessons of such research is that in everyday life we are not aware of the extent to which our own and other people's memories are unreliable and believe our memories to be more faithful than they are. Two common (and related) errors are to suppose: (1) that the stronger and more vivid is our feeling or experience of recollection, the more likely the recollection is to be accurate; and (2) that the S/N bdbdstQ0102vT042ezO5Q more confident another person is in their recollection, the more likely their recollection is to be accurate.

Underlying both these errors is a faulty model of memory as a mental record which is fixed at the time of experience of an event and then fades (more or less slowly) over time. In fact, psychological research has demonstrated that memories are fluid and malleable, being constantly rewritten whenever they are retrieved. This is true even of so-memories, that is memories of experiencing or learning of a particularly shocking or traumatic event. memory is in fact misleading, reflecting as it does the misconception that memory operates like a camera or other device that makes a fixed record of an experience.) External information can intrude into a witness's memory, as can his or her own thoughts and beliefs, and both can cause dramatic changes in recollection. Events can come to be recalled as memories which did not happen at all or which happened to someone else (referred to in the literature as a failure of source memory).

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. Studies have also shown that memory is particularly vulnerable to interference and S/N bdbdstQ0102vT042ezO5Q alteration when a person is presented with new information or suggestions about an event in circumstances where his or her memory of it is already weak due to the passage of time.

The process of civil litigation itself subjects the memories of witnesses to powerful biases. The nature of litigation is such that witnesses often have a stake in a particular version of events. This is obvious where the witness is a party or has a tie of loyalty (such as an employment relationship) to a party to the proceedings. Other, more subtle influences include allegiances created by the process of preparing a witness statement and of coming to court to give evidence for one side in the dispute. A desire to assist, or at least not to prejudice, the party who has called the witness or that party's lawyers, as well as a natural desire to give a good impression in a public forum, can be significant motivating forces.

Considerable interference with memory is also introduced in civil litigation by the procedure of preparing for trial. A witness is asked to make a statement, often (as in the present case) when a long time has already elapsed since the relevant events. The statement is usually drafted for the witness by a lawyer who is inevitably conscious of the significance for the issues in the case of what the witness does S/N bdbdstQ0102vT042ezO5Q nor does not say. The statement is made after the documents. The documents considered often include statements of case and other argumentative material as well as documents which the witness did not see at the time or which came into existence after the events which he or she is being asked to recall. The statement may go through several iterations before it is finalised. Then, usually months later, the witness will be asked to re-read his or her statement and review documents again before giving evidence in court. The effect of this process is to establish in the mind of the witness the matters recorded in his or her own statement and other written material, whether they be true or false, and to cause the witness's memory of events to be based increasingly on this material and later interpretations of it rather than on the original experience of the events.

It is not uncommon (and the present case was no exception) for witnesses to be asked in cross-examination if they understand the difference between recollection and reconstruction or whether their evidence is a genuine recollection or a reconstruction of events. Such questions are misguided in at least two ways. First, they erroneously presuppose that there is a clear distinction between recollection and reconstruction, S/N bdbdstQ0102vT042ezO5Q when all remembering of distant events involves reconstructive processes. Second, such questions disregard the fact that such processes are largely unconscious and that the strength, vividness and apparent authenticity of memories is not a reliable measure of their truth.

In the light of these considerations, the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses' recollections 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. This does not mean that oral testimony serves no useful purpose though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, 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 S/N bdbdstQ0102vT042ezO5Q that recollection provides any reliable guide to the truth. [Bold added] Of the above, frequency in which they are cited and the range of cases in which they are i (Barrow - paragraph 36) S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q S/N bdbdstQ0102vT042ezO5Q