Chan Yiu Wah and Another v. The Hongkong and Shanghai Banking Corporation

IN THE COURT OF APPEAL

1986 No. 92
(Civil)

Coram: Fuad, Kempster & Hunter, JJ.A.

Date of hearing: 5-6, 9-13, 16-20, 24-25 November 1987

Date of delivery of judgment: 19^th December 1987

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J U D G M E N T

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Fuad, J.A. :

1.  This appeal arises out of an action in conversion tried by Mortimer J., Mr. Chan Yiu Wah and his wife Madam Law Sim Yuk brought proceedings against the Hong Kong and Shanghai Banking Corporation (“the Bank”) for the return of a particular $1,000 note and “further or alternatively” for damages.

2.  The central issues in the case were whether the Bank had converted the note, and if so, what was the proper measure of damages. The hearing before Mortimer J. occupied 24 days in April and May last year. It concluded on 16 May and judgment was delivered on 21 May.

3.  The judge found for the Plaintiffs and awarded them $375,000 damages with interest and costs. The Bank no longer challenges the judge’s finding that the Bank had converted the note as bailees, but appeals against the quantum of damages. The remaining grounds set out in the Notice of Appeal, of which particulars were later given, are as follows:

“(3) The Learned Judge erred in finding that the Banknote had been purchased for $350,000 in 1982.

(4) The Learned Judge erred in finding that the Plaintiffs contracted to sell the Banknote for $10M in 1983.

(5) The Learned Judge erred in law as to the application of the maxim ‘omnia praesumuntur contra apoliatorem’.

(6) The Learned Judge erred in finding that the Banknote was an error note.

(7) The Learned Judge erred in law and as to facts in assessing the damages at $375,000.00.”

4.  The Plaintiffs were not content with the award made in their favour. By their Notice of Cross-Appeal they had said that they should have received $10 million by way of damages in conversion (or alternatively $1 million).

5.  They had also said that the judge should have awarded each of them general and special damages “for mental distress and psychiatric disorder” amounting in aggregate to something in the region of $268,000. I shall explain here that the judge had rejected the Plaintiffs' claim for damages for personal injuries arising out of the conversion of the note, as being too remote, but indicated that if such damages were recoverable he would have awarded Mr. Chan $40,000 and Madam Law $50,000 as general damages, and their medical expenses as special damages. That is how the amounts sought to be recovered by their cross-appeal under this head had been calculated. The Plaintiffs had also sought aggravated damages.

6.  However，on the 8th day of the hearing of the appeal, the entire cross-appeal was abandoned and by 1eave，the Notice of Cross-Appeal was amended so as to become an ordinary Respondent’s Notice which says that the judgment should be affirmed: on the following additional or a1ternative grounds:

(1) that there was no market value of the note, and, therefore,

(2) the measure of damages should be the loss to the Plaintiffs， such loss being assessed by reference to the cost of the note to them and the 1oss of their chance of selling the note at a high price. 

7.  The Plaintiffs' case was as follows. They came to Hong Kong from Mainland China many years ago. [They are now both in their 50's). They were poor but owing to their industry they succeeded in saving money from their various business activities which developed over the years. Madam Law was the person in the family who held the purse strings and invested in the stock exchange and in gold some measure of success.

8.  During the late 1970s Mr. Chan became interested in collecting antiques, paintings, and coins on a small scale. He took up collecting more seriously after 1978 when the restaurant business they had run together had been sold. It was about 1980 that Mr. Chan began to collect bank notes.

9.  As a young man， a certain Mr. Lau Wai Yee used to patronize a provision store the couple were then running. He must somehow have come to know of Mr. Chan's interest in collecting and although they had not seen or contacted each other for a period of some 7 years, in May 1982， out of the blue， Mr. Lau telephoned Mr. Chan from the U.S.A. telling him that he had a $1,000 note issued by the Bank which was printed in the wrong colour for, instead of being predominantly yellow, it was printed in the brown colour of a $500 note. He also mentioned that he had other specific collectors' items for sale. During the telephone conversation, Mr. Lau's asking price had been somewhere between $500,000 and $600,000 and Mr. Chan told him that he would not enter into serious negotiations unless the items were brought over to Hong Kong for his inspection.

10.  Mr. Chan and his wife discussed the matter. When the figures Mr. Lau had in mind were mentioned, Madam Law told her husband that she could not agree to their spending a penny more than $400,000. Madam Law did not want to touch other family assets and so, on 28 May 1982, she took out a mortgage loan from the Bank of East Asia for $400,000 so that the money would be available.

11.  Mr. Lau came to Hong Kong in June 1982 bringing with him the items he had for sale. After bargaining, Mr. Chan agreed to buy the $1,000 note for $350, 000 and two antique mirrors for $50,000. He decided not to buy the other items that Mr. Lau offered him. Madam Law's reluctance had been overcome because her husband had persuaded her that the note was very valuable.

12.  Mr. Chan thought that the note was of exceptional value because it was extremely rare in that it was the only one of its kind in the world.

13.  Before buying the note，he checked it for authenticity with his ultraviolet lamp and examined it through a magnifying glass.

14.  By the time Mr. Lau came to Hong Kong，Madam Law had used the money she had obtained by way of mortgage for other purposes (including investments) and so it was arranged that Mr. Lau would be paid $100,000 at once and the balance at the end of the month, using other financial resources. After he had been paid Mr. Lau left for Taiwan and has neither been seen nor heard of since. His address has been lost.

15.  Acting on her husband's instructions, Madam Law wrote her name "Sim" on the note for identification purposes and set off to place the note in her safe deposit box at the bank, but she became diverted from her original purpose by engaging in some stock exchange dealings and forgot to put the note in her safe deposit box. Instead she took it home and kept it in her safe.

16.  The note remained in Madam Law's safe at home, and until the matter came out at the trial, Mr. Chan thought his wife had carried out his instructions and that the note had been in the bank all the time.

17.  The Plaintiffs knew a Mr. Chan Chun Yip because he came from their village in Mainland China. He now lived in Thailand. After not having seen each other for about 37 years, a social meeting was arranged for them to meet in a hotel in May or June 1983. During the course of conversation, Mr. Chan casually asked his former co-villager whether he happened to know anyone who might be interested in buying his $1,000 note. He mentioned some very high figures as the price he might accept for the note. Mr. Chan Chun Yip said that he knew a wealthy collector in Thailand (a Mr. Chan Shun Hoi) and agreed to approach him. It turned out that Mr. Chan Shun Hoi did indeed express an interest in buying the note and negotiations ensued. Mr. Chan Shun Hoi gave Mr. Chan Chun Yip a letter of authority to buy the note.

18.  The deal that was reached was that Mr. Chan Shun Hoi would buy the note for S10 million. He required the note to be verified by the bank and that the deal should be documented and witnessed in a solicitor’s office. When all this had been done satisfactorily，a down payment of $2 million would be made by Mr. Chan Chun Yip and then Mr. Chan Shun Hoi would come over himself to Hong Kong and complete the deal by paying the balance of $8 million.

19.  To show that the money for the $2 million deposit would be available, the P1aintiffs were shown a photostat of a time deposit receipt with the Bangkok Bank evidencing a US dollar deposit in Mr. Chan Chun Yip's name.

20.  On 17 September, 1983, the Plaintiffs made an arrangement that Mr. Chan Chun Yip would meet Madam Law outside the Bank of East Asia’s branch in Nathan Road so that Madam Law could take the note from her safe deposit and present it to that bank for verification. When Madam Law set out for the bank, she could not recall whether or not the note was in her safe deposit box but remembered, on her way, outside a shoe-shop, that it was in fact in her safe at home. So she went home, made an excuse to her husband as to why she had returned and went back to the Bank of East Asia with the note.

21.  At the Bank of East Asia，Mr. Chan Chun Yip checked to see if the note bore the number he had earlier been given, and took a $500 note from his pocket to confirm that the note matched the colour of a $500 note. Madam Law then went up to the counter alone to have the note verified. She was told that the note looked genuine but that it should be verified by the issuing bank. And so, Madam Law walked to a small branch of the Hong Kong and Shanghai Bank also in Nathan Road. Mr.. Chan Chun Yip followed some way behind and did not go into that bank with Madam Law. Before he was able to enter the Bank, he heard an altercation going on and became worried because he had heard words being used such as "identity card" and "police station” spoken by people in the bank. Being afraid, and not wanting to become involved, he went away.

22.  According to Madam Law in brief summary, what happened in the second bank on 17 September 1983 was this: she went up to a counter and presented the $1,000 note to a young lady teller. She said that she had brought the note for verification and for verification only. The teller reached her hand out to try to take the note but she retained her hold of it saying: "You made it clear to me, this note is worth much money.”

23.  But the teller took the note and said that if it was genuine it would be returned to her, whereas if it was a fake it would be forfeited. She then went to where the branch manager was standing and was asked for her identification card in a rude manner. Madam Law asked her why they wanted her identification card and was cross at being asked for it.

24.  An argument then ensued and the manager was called. He insisted that she must produce her identification card, saying that if she refused it was the bank's practice to make a report to the police. She took this as a threat and when she still refused, the manager instructed a young man to phone the police. She became frightened and said: “Come and get it, come and get it.”

25.  She thought that she had provoked the manager by not producing her identification card and when the young man was about to dial on the telephone, she became frightened. They refused to give the note back to her and she was given a receipt instead. She was told that verification would take 7 days after which if the note was proved to be genuine, it would be returned to her; otherwise, it would be forfeited.

26.  The Plaintiffs made strenuous efforts to recover the note. They made a report to the police on the day the note was seized but were told that since they had the receipt they should wait until the 7 days mentioned in it had expired to see whether or not the bank would return the note.

27.  On 21 September， Madam Law was telephoned by the bank and as a result of that call, she went to the same branch of the bank in Nathan Road and was offered $1,000 but not the note she had handed over. She refused to accept the money she was offered and on that day, the husband and wife went to the police station to seek their help. The efforts of the police to recover the note from the bank failed. They made a written statement about the events which was recorded. Madam Law went to the bank again on a number of occasions but the Bank did not return the note she was interested in.

28.  The Plaintiffss went to their solicitors a week or so after their attempts to get the note back with the help of the police had failed. Correspondence ensued between them and the solicitors of the Bank. The Plaintiffs received no satisfaction and this action was instituted on 20 January 1984.

29.  I now set out what I consider to be the primary findings of fact by the judge:。

(1) The Plaintiffs bought a $1,000 note which was of the colour of a $500 note from Mr. Lau Wai Yee for $350,000 in June 1982.  Mr. Chan thought the note was of great value being rare and the only one of its kind in the world.

(2) The Plaintiffs had raised $400,000 by way of mortgage on 28May 1982 so that the money would be available for buying the items Mr. Lau Wai Yee said he had for sale， although the money advanced been used for different purposes.

(3) Mr. Chan always thought that his instructions had been obeyed and that his wife had placed the note in their safe deposit box in their bank.  He only realized that this was not so when madam Law gave evidence in the action.

(4) It was arranged with Mr. Chan Chun Yip, as agent, and Mr Chan Shun Hoi as principal, that the latter would buy the note for $10 million.  This was why, on 17 September 1983, the note was taken first to the Bank of East Asia and then to the Hong Kong Bank (both in Nathan Road) for verification。

(5) When Madam Law went into the Hong Kong Bank to have the note verified，Mr. Chan Chun Yip did not go in but he was present at the time.

(6) Madam Law made it clear that she thought the note was valuable and never said at any time that she had brought the note in for replacement.  She was told it would be given back to her if it was genuine but forfeited if it was not.  Madam Law asked for the note back if it could not be verified there and then and the manager refused to do this relying on Bank procedure.

(7) The Bank was a bailee of the note and there was a mandate to verify it and if it were genuine to return it.

(8) Since it had been destroyed, probably on 21 or 22 September, the Plaintiffs were entitled to damages in conversion.

(9) Mr. Chan, Madam Law and Mr. Chan Chun Yip had in turn examined the note and found it to be exactly the same colour as a $500 note.  It was, in fact, exactly the same in colour as a $500 note, and was a genuine error note.

(10) Although a contract for the sale of the note to Mr. Chan Shun Hoi for S10 million was entered into, the chances of the sale actually being effected were remote.

(11) As a result of the loss of the note the lives of the Plaintiffs' family had been devasted and both were suffering from psychiatric problems.

When the judge began to address the question of the genuiness or otherwise of the note which had been converted， the judge first made the point that if it had been available, and had it been produced by the Bank, the issue as to the nature of the note could have been resolved with the greatest possible ease. After summarizing the opposing contentions the judge referred to the reliance placed by the Plaintiffs on the maxim “omnia praesumuntur contra spoliatorem"， or as he put it， "more cogently on the principle in Armory v Delamirie 1 Strange 505 (1722)". [For convenience I will hereafter refer to it as "the maxim". He also cited Gray v. Haig (1855) 20 Beav. 65. He concluded that evidence about the note， even indirect evidence， was admissible to show what kind of note it was, and therefore he would admit the testimony of Mr. Thomas of Bradbury and Wilkinson， the printers of the note， which he had taken de bene esse， despite the Plaintiffs' contention that it was inadmissible.

30.  However, he said， the note had been destroyed and destroyed deliberately by the Bank's wrongfu1 act. In his view it was not a simple misunderstanding， nor was the destruction due to simple carelessness， and， regarded objectively， the sending of the note for destruction was presumptuous. It was also inconsiderate in the light of Madam Lau’s obvious wishes; and it was arrogant in that there was a refusal to return the note coupled with a refusal even to attempt to recover the note if it had not by then been destroyed.

31.  Despite this, in the judge’s view， there was no question here of the Bank having deliberately destroyed evidence to gain an advantage as in Gray v. Haig and it was certainly not a case where the plaintiff was being deprived of evidence in circumstances where the defendant was trying to seek his own profit as had been the situation in Armory v. Delamirie.

32.  The fact that the Bank’s actions were not deliberate to gain an advantage or to gain a profit made a difference to the way in which the principle was to be applied. If deliberate, the presumption against the defendant was in practice irrebuttable, almost to the extent of being an estoppel. It all depended on the circumstances. The Bank' s unlawful destruction of the note meant that the presumption of the note being of the best quality would only be rebutted by the Bank’s calling cogent， compelling and direct evidence as to its nature， always compared with the evidence available to the Plaintiffs.

33.  The judge then evaluated what he called the "direct" evidence given by the Bank about the note. He referred to the evidence of Mr. Leung, the bank note examiner in the Bank's Main Treasury. He found his testimony to have been superficial and unimpressive， and his evidence about the note and its exact colour， therefore, unhelpful. As to the two lady tellers at the Nathan Road branch of the Bank， he did not consider that it was their duty to make any examination of the colour of the note. Once they had decided that it was of a different colour from an ordinary $1,000 note, their task was to refer the matter to the manager. He noted that he had found their evidence was not acceptable on other grounds [as to what was said and what happened when Madam Law handed the note over for verification] and he found their evidence on this point unhelpful too， and likely to be unreliable.

34.  Turning to the Plaintiffs' direct evidence on this issue， the judge concluded that it was considerably more cogent. This was to be expected for， Mr. Chan， having paid a great deal of money for the note，was likely to have given it a little more attention within the limits of his knowledge .at the time. Although uninformed, inexpert and a beginner， he had examined the note and had been satisfied that it was the same colour as a $500 note. Had the note been a different colour， he certainly would have remembered it. On this matter his evidence was reliable and would be accepted.

35.  The matter did not stand alone， in the judge's view. Mr. Chan had been pressed in cross-examination at very great length about the colour of the note and that served to make him conclude that he was able to rely on him. Mr. Chan had examined the note closely (through a magnifying glass) for smoothness among other things because he had heard that a US bank note could be tampered with by rubbing the colour.

36.  The judge then said that he found Madam Law’s evidence on this matter impressive. She was not always accurate， but she was a rather timid and anxious witness trying to give an accurate account. While it was a fact that colours were difficult to remember unless a direct a direct comparison were to be made, he accepted her evidence that a comparison was made between the note and a $500 note and that the colours were exactly the same.

37.  The judge was further satisfied that Mr. Chan Chun Yip was at the Bank of East Asia and that there he had made the same comparison，an act Madam Law had described as being “smart" because he had produced a $500 note from his pocket for that very purpose. Mr. Chan Chun Yip had given the same evidence to the comparison of the colour. This significantly supported the comparison that Madam Law had made

38.  For these reasons) the judge said， the direct evidence given for the Plaintiffs was far to be preferred to that given for the Bank， and the direct evidence led to the conclusion that the note was exactly the same as a $500 note and rendered it highly likely that the note was printed in that colour and that it was a genuine error note.

39.  The judge remarked that it had not been said by any witness that notes of exact1y the same colour as a $500 note could be produced by the discolouration process and none of the notes produced in evidence， which had been discoloured，were of exactly the same colour. He added that he found the note was a circulated note and，therefore， it was very unlikely that anyone had discoloured it in order to deceive an unsuspecting collector.

40.  The judge then reviewed and evaluated what he called the "indirect" evidence called by the Bank. He mentioned that a few other notes had been produced which were said to be discoloured because they were not the same as either a proper $1,000 note or a proper $500 note. These notes had been collected， so the Bank had said， since the case began, but the precise circumstances in which they had been obtained remained unknown. He noted that although there were, in the agreed bundle, documents concerning discoloured notes，there were no internal documents which related to discoloured notes in the .Bank before the incidents which gave rise to this action.

41.  The judge also commented that there was no evidence that any note had been sent to the printers or that the printers had been consulted about the discolouration of notes before the case arose and， therefore, the nature of such notes as had been described was doubtful.

42.  The judge went on to refer to, and review the evidence given by Mr. Thomas.  He then said:

“Now I can summarize this evidence quite briefly， for it is clear that if this system is followed， that is if the notes are printed according to the system laid down and if the machinery operates properly and if the checking is done properly， it is highly unlikely that a thousand-dollar-note could be printed both sides in the wrong colour. Indeed if all those things are done and the checks are made carefully，it would be near impossible for there to be an error note."

43.  After remarking that the evidence was that error notes were easily available and that there were some 30 dealers in Hong Kong, the judge continued:

“ But leaving that aside, the fact is that machines do go wrong, that systems are not followed as they should be, checks are not made as carefully as they should be and those who are carrying out the systems do not always even try to follow them on occasions.

Now all those are general matters and it is no criticism in relation to Mr. Thomas. But the evidence of system and checks are not always a reliable guide as to the result which is achieved. I may say that I have some thirty years’ experience at the bar of considering industrial systems in relation to things that have happened that never have happened. One knows regrettably that because there is a system, it does not mean that unusual things cannot result.

So this evidence which is indirect must be put and firmly put into its proper perspective and the question is: Is that evidence enough to displace the direct evidence which appears on its own to be cogent and compelling, if not, I may say，conclusive?

Well now， when I consider the whole of that matter and I compare the direct evidence with the indirect evidence and then apply properly the principles in Armory v Delamirie， then I find that the heavy burden which is placed upon the defendants in these circumstances is not discharged and indeed I find also that the direct evidence which I have accepted is of itself compelling that this was a genuine error note. I so find."

44.  Mr. Rogers, who did not appear in the Court below, relied on the maxim before us in support of the judge's conclusions. He submitted that the maxim had application even in circumstances where no improper motives could be imputed to the act of destroying the evidence. He contended that if a spoliator who is a wrongdoer puts out of the innocent party's power by his wrongful act, evidence by which the innocent party might prove or support his case， it raised a presumption against the spoliator that the evidence， if produced， would sustain the other party's case.

45.  Another way of putting the point would be that the onus of proof shifted to the spoliator to prove that the facts which he alleged in respect of the chattel destroyed are as he alleges. Mr. Rogers accepted the maxim could only apply where there was some evidence to support the plaintiff’s case, and would be displaced by direct evidence as to the nature of the chattel destroyed.

46.  He argued .that the maxim applied in the circumstances of the present case because:

(a) the note had admittedly been converted by the Bank;

(b) there was evidence on which the court could find that the note was a misprinted one;

(c) the destruction of the note put it out of the Plaintiffs’' power to call the best evidence to prove or support their case; and

(d) the Plaintiffs had never had the Banknote examined by experts, it being deliberately destroyed by the Bank without their prior consent or knowledge.

47.  Mr. Rogers went on to submit that the effect of the maxim upon the particular facts of this case was that since the Rank contended that the note had its brown colour other than by misprinting, the onus was upon them to call evidence to establish that contention.

48.  In the circumstances, since the destruction was tortious, it was incumbent on the Bank to satisfy the Court, not only that the note could be treated，after printing， so that it could have the same colour as a $500 note， but also that the note was one that had been chemically treated after it had come out of the printing processes. In order not to allow the Plaintiffs to suffer from the disadvantage to which they were put by the wrongful destruction of the note, it was only right that the Bank should be required to prove what is asserted - that the note was one that had been chemically treated.

49.  I will not refer to all the authorities which were cited to us on this point. I begin by quoting a few extracts from the exhaustive treatment of the subject by the learned authors of Wigmore on Evidence (Chadbourn Revision) (1979) Vo1.2.

50.  At p.192， we find the following paragraph:

“285. Failure to produce evidence, as indicating unfavorable tenor of evidence: (1) In general. The consciousness indicated by conduct may be， not an indefinite one affecting the weakness of the cause at large, but a specific one concerning the defects of a particular element in the cause. The failure to bring before the tribunal some circumstance, document, or witness, when either the party himself or his opponent claims that the facts would thereby be elucidated, serves to indicate，as the most natural inference， that the party fears to do so; and this fear is some evidence that the circumstance or document or witness， if brought， would have exposed facts unfavorable to the party. These inferences， to be sure， cannot fairly be made except upon certain conditions; and. they are also open always to explanation by circumstances which make some other hypothesis a more natural one than the party's fear of exposure. But the propriety of such an inference in general is not doubted.

The nonproduction of evidence that would naturally have been produced by an honest and therefore fearless claimant permits the inference that its tenor is unfavorable to the party's cause. Ever since the case of the Chimney Sweeper's Jewel [Armory v Delamirie] this has been a recognized principle."

51.  And at p.221, the authors say this:

"2.91. (3)  Documents or chattels destroyed or not produced. The applicability of the general principle to an opponent's nonproduction or suppression of documents or chattels has always been assumed.  In England from the beginning of the recognition of the principle， some sort of inference has been acknowledged to be legitimate.  In this country， similarly， the tradition has been continued and steadily enforced， in numerous instances，where the opponent has destroyed， suppressed or refused or failed to produce a document or chattel whose contents or quality came into issue or became relevant under the issues.”

52.  At page 225， there is the statement: "It is not here a question of a presumption of law， i.e. of a rule shifting the burden of producing evidence….. here the sole question is whether the jury may legitimately draw a certain inference from a certain fact."

53.  The digest of Armory v. Delamirie which appears in Strange 505 is so short that I set it out in full:

“ The plaintiff being a chimney sweeper’s boy found a jewel and carried it to the defendant’s shop (who was a goldsmith) to know what it was， and delivered it into the hands of the apprentice，who under pretence of weighing it, took out the stones， and calling to the master to let him know it came to three halfpence， the master offered the boy the money，who refused to take it， and insisted to have the thing again; whereupon the apprentice delivered him back the socket without the stones. And now in trover against the master these points were ruled:

1. That the finder of a jewe1, though he does not by such finding acquire an absolute property or ownership，yet he has such a property as will enable him to keep it against all but the rightful owner， and consequently may maintain trover.

2. That the action well lay against the master， who gives a credit to his apprentice， and is answerable for his neglect(l).

3. As to the value of the jewel several of the trade were examine to prove what a jewel of the finest water that would fit the socket would be worth;  and the Chief Justice directed the jury, that unless the defendant did produce the jewel, and show it not to be of the finest water, they should presume the strongest against him， and make the value of the best jewels the measure of their damages:  which they accordingly did.”

54.  In my judgment， although authority is sparse， the application of the full rigour of the maxim is precluded where， as here， there is no indication that a party has， intentionally and in bad faith， destroyed (or refused to produce) the subject matter in question. They are not to be regarded as spoliatores within the ambit of the principle it embodies.

55.  There is considerable support for this proposition， I feel， in the remarks of Sir Arther Channell in The Ophelia [1916] 2 A.C. 206， a decision of the Privy Council on an appeal from the Prize Court. Other members of the Board were Lord Parker of Waddington， Lord Sumner， Lord Parmoor and Lord Wrenbury. At pp.229-230:

"In the cases as to spoliation of documents， the point has frequently arisen on the preliminary hearing on documents, and the question has been debated whether or not further proof should be allowed. This point cannot arise under the present procedure and it may be that in some respects the old doctrine was rather technical.  The substance of it, however, remains and is as forcible now as ever; and it· is applicable not merely in prize cases, but to almost all kinds of disputes.   If anyone by a deliberate act destroys a document which, according to what its contents may have been, would have told strongly either for him or against him, the strongest possible presumption arises that if it had been produced it would have told against him; and even if the document is destroyed by his own act, but under circumstances in which the intention to destroy evidence may fairly be considered rebutted, still he has to suffer. He is in the position that he is without the corroboration which might have been expected in his case. ”

56.  However, I accept, as Mr. Rodway (who, also, did not appear before the trial judge) now concedes, that the maxim, applied in a much less rigorous manner, can, in certain circumstances， be prayed in aid by a party against his opponent even where the subject matter has not been destroyed in bad faith. There are cases which support this view of the law.

57.  In Seager v. Copydex [1969] R.P.C. 250 (which was a case where the defendants had been held liable for damages to be assessed in respect of their wrongful use of confidential information relating to designs， and the basis for the assessment of damages was considered) Winn L.J. said, at p.258:

"I only desire to add one more thing. That is·that since the basis on which damages are to be recovered in this case is a tortious basis，where there is insoluble doubt between any two possible versions or assessments， when the tribunal of fact is pursuing the factual issues, it should be borne in mind that there is a general principle that omnia praesumuntur contra spoliatorem."

58.  Winn L.J.'s comments were cited by Graham J. in General Tire & Rubber Co.v .Firestone Tyre & Rubber Co. Ltd. [1975] R.P.C. 203, at p.228, and referred to by Russell L.J. giving the judgment of the Court of Appeal in that case at p.267 of the report where he said: "We do not doubt the validity of this view in the context of that case ….. [Seager v.Copydex].”

59.  Nearer home， we have the decision of this Court in The Hong Kong and Kowloon Wharf and Godown Co. Ltd. v. Bank Negara Indonesia [1980] H.K.L.R. 161. The facts do not concern us. At p.168，McMullin J.A. had this to say:

“ No doubt the matter may seem finely balanced enough – and no doubt so seemed to the learned trial judge – when it comes to estimating the weight of one sort of hearsay against the other. But I think that the judge was, with respect, justified in adding to the estimate he had made of these competing hearsay statements， and the other scanty evidence available， the consideration that it was through the negligent default of the servants of the defendant company that the goods had been removed beyond the possibility of inspection as to their nature.

60.  In this he took the line adumbrated in Armory v. Delamirie and certain other old authorities in which the courts have resorted to the maxim 'omnia praesumuntur contra spoliatorem' in refusing to allow a plaintiff's claim to be defeated where the plaintiff was unable to establish the nature or value of property wrongfully converted by the defendant as a result either of malfeasance or misfeasance of the defendant.”

61.  I now turn to consider how the evidence was dealt with by the judge， accepting for the present， that his assessment of the c redibility and reliability of the witnesses cannot successfully be challenged.

62.  I begin by reviewing in some detail, what Mr. David Thomas, the Technical Manager of Bradbury Wilkinson (Inks.) Ltd. said in his expert report furnished before the trial，and during the course of his evidence. His report was before the Court and he amplified what he had written during the course of his evidence. It had been furnished to the Plaintiffs’ solicitors well before the trial.

63.  Mr. Thomas is a Chartered Chemist and a member of the Institute of Printing. He also holds a B.S.C. degree from London University and has been working for the Bradbury Wilkinson group for about 33 years.

64.  In his report he says that Bradbury Wilkinson has been printing bank notes and other security documents since the 1850s. The only other organisations which print bank notes in England are De La Rue, the Bank of England and a small firm in Scotland.

65.  He then refers to the paper on which the notes are printed.· Paper is delivered to Bradbury Wilkinson by the firm which makes it, already having been guillotined to the correct size to make 18 bank notes in three rows of six. The water mark and security thread is put in by the paper firm before delivery.

66.  He stated that the pattern on the back of the Hong Kong $1,000 bank note is produced by offset printing. When this system is used, the ink is sprayed on to one roller with a forward image on it and the ink is transferred to another roller in contact with the first which, by this process, acquires a backward image which is then transferred to a third roller on which the' roll of bank notes paper is and thus it requires a forward image.

67.  After the offset printing, the lion which appears on the back of a $1,000 note, the denomination and the border is placed on the note by the Intaglio system. The Intaglio plate is backwards, that is to say, mirrorwise, and is completely covered with ink which is then applied under the great pressure to the bank notes. Once the back of the note had been printed by the Intaglio process, the front is then printed by the same process twice, once for the very dark green which appears on the notes to be almost black in colour, and once for the yellow or gold colour. During this process, the notes are still in sheets of 18 and they are then examined by eye. For this highly skilled workers are employed.

68.  Mr. Thomas explained that normally there is a 7% to 10% spoilage. This mostly occurs at the beginning of a run of bank notes, when the printers are getting the pressure in the printing plate right and achieving precisely the correct ink balance. The practice was therefore to print more notes than the bank had ordered. The spoilage would not normally be destroyed because the paper used was expensive， amounting to about 50% to the cost of producing each bank note. On a sheet of 18 notes， some of the notes might be perfect and others not. The imperfections would normally consist of smudging.

69.  The perfect notes would then be numbered by machine and the sheet of 18 guillotined, at which stage there would be a further examination of the numbers also by eye. If wrong or faulty numbers were discovered， these notes would be marked and replaced. There were strict control. The notes would then be bundled into hundreds, sealed in security sheets which were heat shrunk so that they could not be opened undetected， and then sent to the bank.

70.  Mr. Thomas's report continues to say that it should be noted that the back of a note may be printed a week or more before the front is printed and because of the high compression used in the Intaglio system, slightly different coloured ink would have to be used so that the colour produced on the back and the front of the finished note appeared the same to the eye.

71.  The ink used was produced within the Bradbury Wilkinson group and delivered to the printing department in 20 kilo. drums. The printer was required to sign a receipt for the ink. These printers were highly skilled and experienced man who had been apprenticed, usually to Bradbury Wilkinson. They would certainly reject any ink which was of the wrong colour.

72.  The ink used in the HK$1,000 bank note had several pigments. Its main ingredient was lead chromate which varied in colour from yellow to orange. Other organic dyes were used and carbon black. Because of the repeated inspection of notes after printing and because the printers would inspect the colour of the ink supplied to them， it was in his opinion, impossible for discoloured notes to be sent out by Bradbury Wilkinson.

73.  The report goes on to say that lead chromate could be converted to lead sulphide or hydrogen sulphide or by placing it in a solution of sodium sulphide in water. It would be difficult and dangerous to convert the lead chromate on a note into lead sulphide by using hydrogen sulphide because the concentration required would be extremely toxic. On other hand, it would be very easy to dip notes into a 15% solution of sodium sulphide. Sodium sulphide could easily be bought in wholesale chemist shops. It was cheap arid was formerly used extensively in photography.

74.  Anyone with an elementary knowledge of chemistry could change the colour of a HK$1,000 bank note by immersing it in a 15% solution of sodium sulphide for a quarter of an hour at room temperature. It was his opinion that the discoloured Hong Kong dollar bank notes he had been shown were discoloured deliberately. He formed this view because the notes were uniformly discoloured – if they had been accidentally exposed to hydrogen sulphide or sodium sulphide, one would expect to find creases showing a lighter or a darker colour – and it was difficult to think how a note could accidentally come into contact with hydrogen sulphide or a sodium sulphide solution in sufficient concentration accidentally.

75.  He had carried out a test on a sample Hong Kong dollar note of a normal colour and had converted in into a dark colour by immersing it in a solution of sodium sulphide. He had re-converted part of the note to its original colour by exposing it to hydrogen peroxide. This had the effect of converting the black lead sulphide on the surface of the note to white lead sulphide so that the note reverted to its original yellow or gold colour.

76.  In evidence, Mr. Thomas explained that a week or so might elapse between the offset printing of the back and the front of the note because the note had to be thoroughly dry otherwise the pressure of the later Intaglio process, which was enormous, would smudge the offset ink. He said that a week or probably longer would elapse between the Intaglio printing of the back and the front of the notes. There would be a minder and an assistant present and it was the minder who had to sign for the ink.

77.  The maximum capacity of the ink well in the Intaglio machine was about 4 kilos. When it ran low, it would be topped up. He could tell that the note which is the subject matter of this action (by its number) came from a 1979 order for 1.5 million notes from the Hong Kong Bank.

78.  When there was a repeat order， examples of previous notes were kept and they had a set of guard books on which notes from previous printings, finished and semi-finished, were placed as examples of each process. These books were available to the manager of each department who would compare the notes in the machine with the notes which had previously been printed. If a $1,000 note were to be printed brown， it would have to be a considerable error when the minder signed for the ink， and if the wrong ink were in the drum it would be obvious from the label to begin with. This was very unlikely in itself.

79.  If it did happen that the wrong coloured ink was delivered， the minder, when filling the ink well with ink, would see that it was of the wrong colour and if the wrong ink was used all the notes would come out in the wrong colour and it would be noticeable at once.

80.  If the correct ink was in the well originally and brown ink was put in to top up the ink well by mistake, this would produce a darker shade and would be noticed because it would be very easy to see. In the two Intaglio processes, when the notes were drying， they would be reeled， that is to say paper would be placed in between each sheet of notes so that the ink from one sheet did not come out on the other. Later, the sheets would be "dereeled" and the girl responsible would see the wrong colour in the process and would draw attention to it.

81.  In his evidence, Mr. Thomas then went on to explain the later processes but before doing so, he said that in view of the fact that the back and the front of the notes were printed in the Intaglio system with a gap of a week or more in between， if it turned out that the front of a sheet of notes or any particular note ended up with the same colour as the back. it meant that the same error would have had to have been repeated and at exactly at the right sequence with the shift， that is to say when the original error note printed in the wrong colour came up for printing again.

82.  He repeated the opinion he had expressed in his report that printing a $1,000 note in the colour of a $500 note was just not possible. He referred to a number of notes he were shown which had errors upon them other than being printed in the wrong colour and he thought he could explain some and not others.

83.  In cross-examination, the first reply he gave was that he could categorically state that both sides of a $1,000 note could not be printed in the wrong colour. He explained that there was a great difference between such errors as the absence of signature, or date, or the lion head not being complete or in the right place. Notes being printed in the wrong colour were errors in completely different class. When he was asked whether it was not surprising when millions of bank notes were being printed that freaks should occur， he was at pains to emphasize that printing a note in the wrong colour was not a machine fault. He could understand the possibility of other errors of the kind referred to him but he could not understand how a note could be printed in the wrong colour.

84.  He was asked how often he visited the offset and Intaglio printing premises and he said usually daily. When asked why, he said that if a new job was starting he would probably have to go and look at it and see all was going well， particularly， if there was a query or a problem arose. There was a manager of each department, the offset, Intaglio and ink departments. The works manager was in overall charge and the manager of each department was responsible to him and he, in turn, to the works director.

85.  At the relevant time, he was more concerned with the ink department. He was not working full time in the offset printing department， only paying visits to it. When asked: "Putting it rather crudely， you are an ink man not a printing man?", he answered that this was so.

86.  Mr. Thomas said that the same machine was used to print $1,000 notes and $500 notes. He said that if any ink had been left from a previous job in the ink well, the machine had to be thoroughly washed out. Mr. Thomas was asked:

"If there had been a run of $500 notes and someone had forgotten to change the ink, that is one possibility in which you could have a brown instead of gold [note]?"

He replied:

“At the beginning, no work would be run until the minder had matched the copy for the new job in the machine. When a new job starts the Intaglio department would have ordered for the new job. Intaglio would request ink for the machine for the new job.”

78.  He added that he had never known a mistake of this kind to occur. If the wrong coloured ink was used at the start of printing a new batch of $1,000 notes after a run of $500 notes, the next thing that would happened was that the minder would see the label on the drum of ink. He said that if the wrong colour appeared on a sheet and someone noticed it, the sheet would be sent to a special department under strict control.

79.  In my judgment this evidence shows that, in practical terms, a $1,000 note could not be printed in precisely the brown colour of S500 note. As I have mentioned, the Plaintiffs had Mr. Thomas's report long before the trial and they did not seek to call any expert evidence to challenge what he had there said. For the reasons that he gave, Mr. Thomas expressed his opinion that such an eventuality was “impossible”. Indeed during the hearing of the appeal Mr. Rogers accepted that the odds against a $1,000 note being printed in the brown ink used for printing $500 notes were several millions to one against; and on more than one occasion， he spoke of the likelihood that the converted note was a “note in a lifetime".

80.  Of course, a judge trying a case brings all his experience with him， and uses it to help him achieve a just result. But I am bound to say， with very great respect, that in the absence of any expert evidence to challenge the opinion given by Mr. Thomas, who was a true expert in the very field that was relevant to the issue the judge was then addressing, the judge did not give this evidence the weight it deserved.

81.  I am unable to accept Mr. Rogers’ submission, in effect, that the testimony of Mr. Thomas was of little value because, for example, no documents were produced to show the signatures of those taking over the drums of inks; there was no evidence regarding the competence of those involved; and there was no specific evidence regarding the actual printing of the relevant series of notes. With regard to another submission on this point， I do not see any suggestion on the record that Mr. Thomas was challenged on the basis that he was not giving evidence of the system of printing which prevailed at the time the banknote in question was printed。

82.  I would stress here, that the plank upon which the Plaintiffs’ case was based was that, as the judge found, the note which had been converted was exactly the colour of a $500 note. Of course, the Bank could have called evidence, which it did not, that it was possible to discolour a properly printed $1,000 note so that its colour became that of a $500 note. Their case would, undoubtedly, have been stronger had they done so. But the Bank were relying on evidence from tellers who handle notes all day (which in the event the judge did not accept) that the note which they seized was of a lighter shade of brown than a $500 note. The Plaintiffs were free to call, if they could, expert evidence to show that no method of treatment, chemical or otherwise, could change the colour of a $1,000 note so that it looked to the eye to be of the same colour as a $500 note.

83.  The judge, as we have seen, classified the evidence on this issue as “direct” and “indirect” and placed the evidence given by Mr. Thomas in the “indirect” category. I am not sure that this approach was right. However that may be, although the judge found as a fact that the note was exactly the colour of a $500 note, this finding was based on evidence that it appeared to be of that colour in the eyes of the Plaintiffs’ witnesses. One does not know how reliable was their individual perception of colour.

84.  Before applying the principles in Armory v. Delamirie the judge had arrived at what I take to have been a preliminary conclusion, that since the note was of the exact colour of a $500 note, it was highly likely that the note had been printed in this colour and that therefore it was a genuine error note. With respect, I do not think that the evidence as a whole, properly evaluated, justified this tentative, but firmly expressed, conclusion. Indeed, in my view, the evidence showed that it was highly unlikely that this was so.

85.  If the principles in Armory v. Delamirie are applied to the limited extent I have suggested might be proper, and if its application cast any onus on the Bank, or required them to rebut an inference against them, then it seems to me clear that the ordinary civil standard of proof, on the balance of probabilities, would be involved and it was wrong to speak of a “heavy” burden or that the Bank was required to lead “cogent, compelling and direct” evidence.

86.  As I have already perhaps indicated, I am unable to accept that the evidence led by the Plaintiffs to establish that the note was a genuine error note in so far as its colour was concerned, “was of itself cogent and compelling, if not …. conclusive”, as the judge said.

87.  In my respectful judgment the Bank has succeeded in demonstrating that the judge’s reasoning and approach on this issue cannot be supported, and since the Plaintiffs accept that the note would have had no numismatic value unless it had been printed in the colour of a $500 note, the Bank’s appeal should succeed on this ground alone.

88.  In case I am wrong in my view of the law embodied in the principle applied in Armory v. Delamirie, I turn to address grounds [3] and [4] in the Bank’s Notice of Appeal. Moreover, since so many days were taken up during the hearing of this appeal on these issues, I think the parties are entitled to the decision of this Court upon them.

89.  Although the Bank’s liability in conversion has now been acknowledged, since the judge’s findings of fact in relation to the issues which still divide the parties are challenged, it is necessary to consider the principles upon which a Court of Appeal acts where an action has been tried without a jury. These principles have, over the years, been discussed, and stated and re-stated, by Courts of the highest authority. Although the proper approach of a court of Appeal in such cases is well-known, in a case such as the present, it is as well to be reminded of the principles to be applied. The choice of authorities from which citations could be made is very wide. They indicate, of course, that the Bank faces a heavy task indeed.

90.  I begin by citing from the speech of Lord Summer in S.S. Hontestroom v. S.S. Sagaporack [1927] A.C. 37, at p.47:

“What then is the real effect on the hearing in a Court of Appeal of the fact that the trial judge saw and heard the witnesses? I think it has been somewhat lost sight of. Of course, there is jurisdiction to retry the case on the shorthand note, including in such retrial the appreciation of the relative values of the witnesses, for the appeal is made a rehearing by rules which have the force of statute: Order LXVIII., r.1. It is not, however, a mere matter of discretion to remember and take account of this fact; it is a matter of justice and of judicial obligation. None the less, not to have seen the witnesses puts appellate judges in a permanent position of disadvantage as against the trial judge, and, unless it can be shown that he has failed to use or has palpably misused his advantage, the higher Court ought not to take the responsibility of reversing conclusions so arrived at, merely on the result of their own comparisons and criticisms of the witnesses and of their own view of the probabilities of the case. The course of the trial and the whole substance of the judgment must be looked at, and the matter does not depend on the question whether a witness has been cross-examined to credit or has been pronounced by the judge in terms to be unworthy of it. If his estimate of the man forms any substantial part of his reasons for his judgment the trial judge’s conclusions of fact should, as I understand the decisions, be let alone."

91.  At p.50, Lord Summer said that the material questions were:

"(1) Does· it appear from the President's judgment that he made full judicial use of the opportunity given him by hearing the viva voce evidence? (2) Was there evidence before him, affecting the relative credibility of the witnesses, which would make the exercise of his critical faculties in judging the demeanour of the witnesses a useful and necessary operation? (3) Is there any glaring improbability about the story accepted, sufficient in itself to constitute 'a governing fact, which in
relation to others has created a wrong impression,' or any specific misunderstanding or disregard of a material fact, or any 'extreme and overwhelming pressure' that has had the same effect?

92.  Then, in Powell v. Streatham Manor Nursing Home [1935] A.C. 243, Viscount Sankey had this to say, at p.249:

"It is perfectly true that an appeal is by way of rehearing, but it must not be forgotten that the Court of Appeal does not rehear the witnesses. It only reads the evidence and rehears the counsel.  Neither is it a reseeing Court …. the onus is upon the appellant to satisfy the Court that his appeal should be allowed …. On an appeal against a judgment of a judge sitting alone, the Court of Appeal will not set aside the judgment unless the appellant satisfies the Court that the judge was wrong and that his decision ought to have been the other way.”

91.  At p.250, Viscount Sankey cited with approval from the speech of Lord Shaw in Clarke v. Edinburgh Tramways Co. [1919] S.C. (H.L.) 37, and the passage he cited is as follows:

“'When a judge hears and sees witnesses and makes a conclusion or inference with regard to what is the weight on balance of their evidence， that judgment is entitled to great respect, and that quite irrespective of whether the Judge makes any observation with regard to credibility or not. I can of course quite understand a Court of Appeal that says that it will not interfere in a case in which the Judge has announced as part of his judgment that he believes one set of witnesses, having seen them, and heard them, and does not believe another. But that is not the ordinary case of a cause in a Court of justice. In Courts of justice in the ordinary case things are much more evenly divided; witnesses without any conscious bias towards a conclusion may have in their demeanour, in their manner, in their hesitation, in the nuance of their expressions, in even the turns of the eyelid， left an impression upon the man who saw and heard them which can never be reproduced in the printed page. What in such circumstances, thus psychologically put, is the duty of an appellate Court? In my opinion， the duty of an appellate Court in those circumstances is for each Judge of it to put to himself, as I now do in this case, the question， Am I - who sit here without those advantages， sometimes broad and sometimes subtle, which are the privilege of the Judge who heard and tried the case - in a position, not having those privileges, to come to a clear conclusion that the Judge who had them was plainly wrong? If I cannot be satisfied in my own mind that the Judge with those privileges was plainly wrong, then it appears to me to be my duty to defer to his judgment.'"

92.  Towards the conclusion of his speech, at p.251, Viscount Sankey says:

"There is certainly jurisdiction in the Court of Appeal to reconsider the facts in the way they do reconsider them and to come to an opposite conclusion from that arrived at in the Court below. The judge of first instance is not the possessor of infallibility and, like other tribunals, there may be occasions when he goes wrong on a question of fact;  but first and last and all the time, he has the great advantage, which is denied to the Court of Appeal, of seeing the witnesses and watching their demeanour.”

93.  I next cite from the speech of Lord Thankerton in Watt or Thomas v. Thomas [1947] A.C. 484, 487-8:

"I do not find it necessary to review the many decisions of this House. for it seems to me that the principle embodied therein is a simple one , and may be stated thus:  I. Where a question of fact has been tried by a judge without a .jury, and there is no question of misdirection of himself by the judge, an appellate court which is disposed to come to a different conclusion on the printed evidence, should not do so unless it is satisfied that any advantage enjoyed by the trial judge by reason of having seen· and heard the witnesses, could not be sufficient to explain or justify the trial judge's conclusion;  II. The appellate court may take the view that, without having seen or heard the witnesses, it is not in a position to come to any satisfactory conclusion on the printed evidence; III. The appellate court,  either because the reasons given by the trial judge are not satisfactory， or because it unmistakably so appears from the evidence, may be satisfied that he has not taken proper advantage of his having seen and heard the witnesses, and the matter will then become at large for the appellate court. It is obvious that the value and importance of having seen and heard the witnesses will vary according to the class of case, and, it may be, the individual case in question."

94.  The cases, I would note here, draw a distinction between the trial judge’s view of conflicting testimony and the inferences which he draws from facts which are not in dispute. They also draw a distinction between the finding of a specific fact and a finding which is in reality an inference drawn from facts specifically found. Where the drawing of proper inferences is concerned an appellate court will more readily form an independent opinion, subject to the weight which must always be given to the opinion of the trial judge: see e.g. Benmax v. Austin Motor Co. Ltd. [1955] A.C. 371, per Viscount Simonds, at pp. 373-374.

95.  The obligation imposed upon an appellate court even where findings of fact are involved is constantly stressed in the cases. As examples I cite from the following cases. In Coghlan v. Cumberland [1898] 1 Ch. 705. Lindley M.R., at p.70 said.:

"Even where, as in this case, the appeal turns on a question of fact, the Court of Appeal has to bear in mind that its duty is to rehear the case, and the Court must reconsider the materials before the judge with such other materials as it may have decided to admit. The Court must then make up its own mind, not disregarding the judgment appealed from, but carefully weighing and considering it; and not shrinking from overruling it if on full consideration the Court comes to the conclusion that the judgment is wrong.”

I would interpolate here that after emphasising that where the demeanour of witnesses is involved an Appellate court must always be guided by the impression made upon the judge who saw the witness, Lord Lindley adds:

"But there may obviously be other circumstances, quite apart from manner and demeanour, which may shew whether a statement is credible or not; and these circumstances may warrant the Court in differing from the judge, even on a question of fact turning on the credibility of witnesses whom the Court has not seen."

96.  And in The Glannibanta (1886) 1 P.D. 283，Baggallay J.A., giving the judgment of the Court, said at p.287:

“….. great weight …. is due to the decision of a judge of first instance whenever, in a conflict of testimony, the demeanour and manner of the witnesses who have been seen and heard by him are, as they were in the cases referred to, material elements in the consideration of the truthfulness of their statements. But the parties to the cause are nevertheless entitled, as well on question of fact as on questions of law, to demand the decision of the Court of Appeal, and that Court cannot excuse itself from the task of weighing conflicting evidence and drawing its own inferences and conclusions, though it should always bear in mind that it has neither seen nor heard the witnesses, and should make due allowance in this respect."

97.  I conclude my references to the authorities with a citation from the judgment of Lord Greene M.R. in Yuill v. Yuill [1945] p.15, at pp.19-20:

"We were reminded of certain well-known observations in the House of Lords dealing with the position of an appellate court when the judgment of the trial judge has been based in whole or in part on his opinion of the demeanour of witnesses. It can, of course, only be on the rarest occasions, and in circumstances where the appellate court is convinced by the plainest considerations, that it would be justified in finding that the trial judge had formed a wrong opinion.  But when the court is so convinced it is, in my opinion, entitled and indeed bound to give effect to its conviction.  It has never been laid down by the House of Lords that an appellate court has no power to take this course. Puisne judges would be the last persons to lay claim to infallibility, even in assessing the demeanour of a witness. The most experienced judge may, albeit rarely, be deceived by a clever liar, or led to form an unfavourable opinion of an honest witness, and may express his view that his demeanour was excellent or bad as the case may be.  Most experienced counsel can, I have no doubt, recall at least one case where this has happened to their knowledge.  I may further point out that an impression as to the demeanour of a witness ought not to be adopted by a trial judge without testing it against the whole of the evidence of the witness in question. If it can be demonstrated to conviction that a witness whose demeanour has been praised by the trial judge has on some collateral matter deliberately given an untrue answer, the favourable view formed by the judge as to his demeanour must necessarily lose its value.”

98.  I think, it is here desirable to set out what the judge had to say about his impression of the witnesses as they gave evidence before him.

99.  He said that although Madam Law was almost illiterate, she was c1early intelligent.

100.  About the go-between for the sale of the note for $10 million, Mr. Chan Chun Yip, the judge said:

“He was considerably pressed in cross-examination and in examination-in-chief about the nature of the note which he thought he was buying and about his comparison. Having seen him in the witness box for a considerable length of time, I am satisfied that he was an elderly man and I am satisfied that there were times when he was under cross- examination when he became tired and confused."

101.  As to Madam Law, after stating that he was satisfied on the whole of the evidence that the note was purchased from Mr. Lau Wai Yee for $350,000, and referring to the mortgage, the judge said this:

"On this matter, I remain impressed by Madam Law's evidence and I take into account criticisms that may be made of it and cane be made properly.  She was cross-examined at very very great length and it sometimes happens that a cross-examination of great length destroys a witness absolutely.  It sometimes happens that in the course of cross-examination it becomes clear to the Court that there are matters upon which the Court can rely and that was so in this case.”

102.  In the passage of his judgment where he discusses the cogency of the evidence of Mr. Chan Yiu Wah regarding the colour of the note he bought for $350,000 the judge commented:

"But of course it doesn't stand alone. He was pressed at very great length about the colour of the note and again that served, so far as I was concerned, to make me think, far from the fact that I could not rely on him, that I am able to rely on him."

103.  In the same context， he said this about Madam Law:

“I found her evidence upon this impressive. Not because she was always accurate, because I found she is now always accurate. She was a rather timid and anxious witness trying, I think, to give an accurate account and she was giving an account of things that her husband did not know of until she was in the witness box.”

104.  In relation to the Plaintiffs’ evidence about the purchase of the note from Mr. Lau Wai Yee for $350,000, the judge commented:

"So far as LAU Wai-yee and the transaction are concerned，there are a number of surprising matters. First, there was no documentation of any kind.  No receipt was demanded;  no receipt was given. The reasons for this given by the plaintiffs are frankly unconvincing."

And later:

"I have already mentioned some very unusual and surprising features of the plaintiffs’ account of the acquisition of the note - no documentation; an inability to trace the vendor;  a possible coincidence in relation to the price and the money available on mortgage.”..

105.  In the light of these comments, I think it to be necessary to review what the Plaintiffs said about Mr. Lau Wai Yee’s address, the absence of a receipt and the raising of the money by way of mortgage in readiness for the purchase of the note.

106.  When asked about the whereabouts of Mr. Lau Wai Yee in cross-examination, Mr. Chan said that he used to have his address but when his solicitors had asked him for it, Mr. Lau had moved. His was an address in: the U. S .A., in San Francisco. They had since lost contact. He had written Mr. Lau's address down in a diary, not in an address book, and he had thrown the diary away when he and his wife had moved house in September or October 1982. When Mr. Lau had come to Hong Kong to sell the note, he had told him that he was living in San Francisco and that he might be moving. He had thrown the diary away when they were moving "when I saw it was not significant."

107.  His solicitors had asked him to see if he could locate the address of the person who had sold him the note. He had gone back home to look for the address and it had then occurred to him that he had thrown it away with other writings in a heap which were not thought to be important. He wanted to phone a friend to see if he could locate Mr. Lau but it turned out that the friend was no longer at the address he rang. He had made no further enquiries and could not find Mr. Lau.

108.  Madam Law said in cross-examination that she did not know where Mr. Lau Wai Yee’s address was. She had no copy. She had been told by her solicitors to give them his address. She had given all the correspondence and the address to her solicitors (which she named) who were then acting for her. She said that it was written on a piece of paper with his address and telephone number on it.

109.  When it was suggested to Madam Law that if they had really bought the note for $350,000, they would have obtained a receipt, she replied:

“But Lau did not have a shop. It would have been useless for him to write a receipt on a blank sheet. At time I thought I was willing to buy and he was wanting to sell. It was not necessary to have a receipt."

110.  When Mr. Chan was asked why they had not obtained a receipt, he replied: “By that time I was not in this trade at all. I only collected as I loved it."

111.  In connection with the lack of documentation, I think it is necessary to refer to another part of Madam Law’s cross-examination. She said that whenever her husband bought "antiques" she raised a mortgage to provide the money. She had borrowed money by way of mortgage when they had bought No. 7 Argyle Street, but all the subsequent mortgages were raised to pay for "items". It is clear from the tenor of her evidence that she was including her husband’s collection of bank notes in the expression “antiques". She had kept separate accounts in relation to the antiques which had been bought. Then she said that she had made “casual notes here and there" in her son's exercise book, but had thrown everything away after their business had been closed. She concluded this piece of evidence by saying::

"The exercise book was thrown away. He [her husband] accused me of burning important documents.  Then I retorted that I was in a fit of anger and I might even have burned your collection.”

The judge noted that the exercise book had not been included in the Plaintiffs’ List of Documents.

112.  In this context, I would mention that Mr. Chan displayed 16 bank notes to the trial judge, some of which were acquired before, and some after, the note for which he paid $350,000 to Mr. Lau Wai Yee. He said he could not remember exactly when he bought each of the 16 notes.

113.  In cross-examination he was asked what he had paid for each note and he wrote down the figures. I think that if one adds these sums together they come to something in the region of $2.4 million. Among the notes he had collected were a $1,000 note for which he had paid $1 million and a $500 note which was bought at $700,000; both came into his hands after he had bought the note which is the subject matter of this action.

114.  The only receipt Mr. Chan produced which related to these purchases was one dated 22 August 1985 for a $10 note for which he paid $100,000. He explained the wording on the receipt by saying that a $10 note could not be verified under a light and so it had to be recorded that the seller would be responsible if there were a “mistake”. When asked about the absence of receipts for the other notes, he said he had been given receipts for the ones he had bought from the U.S.A.. He had been given one for the $100,000 transaction because the seller was able to write on paper which bore letterhead. He added: “For others they were on blank pieces of paper which would not have been useful.”

115.  As to the mortgage, in examination-in-chief, when being asked where the money came from for the purchase of the note for $350,000 and the two mirrors for $50,000, Mr. Chan looked at a bank document showing that their bank had made a mortgage loan in their favour for $400,000 and said that this document was relevant to the loan for they had raised the money from the mortgage for the purchases.

116.  What Mr. Chan said about the mortgage in cross-examination was that the money had been advanced (as the document showed) on 28 May 1983 but the money had been withdrawn bit by bit, not in one lump sum. He had to be ready with the money and the advance had been made, but his wife had altered the arrangements, for some of the money had been lent to others. They had to collect the money and give it to Mr. Law Wai Yee in one lump sum. When it was suggested to him that the mortgage had nothing to do with the purchase of the bank note, he replied: "You would have to ask my wife. I know there was a mortgage and she had to collect the money."

117.  He explained that it was his wife who drew the cheques and had withdrawn the money. He had had nothing to do with it. He acknowledged that the price of $400,000 for the items they bought had not been agreed until Mr. Lau Wai Yee had come to Hong Kong and it was suggested to him that the $400,000 had not really been earmarked for the purchase of the note. He said:

"In fact, this money was not specifically for buying this note.  I still had money from my sale of premises in Prince Albert Road but I had to get the money available in the event of a purchase.   That does not mean that the $400,000 was definitely for the purchase of this note.”

118.  In examination-in-chief, Madam Law had explained to the Court how reluctant she was to allow her husband to spend a great deal of money on buying the bank note but she had been persuaded by him that it was extremely valuable and gone along with his plans emphasizing that she would not allow even five cents more than $400,000 to be used for the purchase.

119.  She had been asked by her husband to make arrangements for raising the money and she had agreed in May that she would do so. She had mortgaged the shop which belonged to them in Argyle Street for this purpose. The bank had advanced her $400,000 but, although she could not remember very well about the exact timing, since Mr. Lau Wai Yee had not come when expected, the money had been required for speculation in gold or stocks with Sun Hung Kai. The money advanced had been used for those purchases “or if not, it was lent to others”. She had used the money elsewhere. She was not quite sure when Mr. Lau Wai Yee had come to Hong Kong. She had been in difficulty in raising the money and she explained how she had utilized money from other sources.

120.  When it was suggested to Madam Law that the raising of the loan for $400,000 in May had nothing to do with the purchase of the bank note, she replied:

"I disagree.  I have said  the mortgage was for the transaction and he came a month late by which time I spent the money. My husband was buying antiques so I had to get the mortgagee to get the money for him."

121.  It was then suggested to her that it was quite a coincidence that the money raised turned out to be the exact sum paid to Mr. Lau Wai Yee when he came later with the items he had for sale. She acknowledged that no price had been agreed when the mortgage had been raised and said that the price paid for the items they decided to buy was not a matter of coincidence.

122.  Referring to the mortgage, in the course of his judgment, the judge said this:

123.  But I am satisfied on the whole of the evidence that this note was purchased and that it was purchased for a very considerable sum. I have no reason to doubt that it was purchased for three hundred and fifty thousand dollars because of the support that this is given by the mortgage that was obtained, although the money was used in a different way, and that it was obtained from LAW Wai-yee.”

124.  Mr. Rogers has suggested, in effect, that the judge could not have meant precisely what he said. Of course, passages in judgments must not be read in isolation. They are not be construed as if they were statutes and therefore made subject to minute dissection. Moreover the judge had indicated elsewhere that he believed all the important aspects of the Plaintiffs’ case for other reasons. But; with all respect, I think the Bank is entitled to point to this passage as a misdirection. If a person borrows $10,000 from a bank to buy a gold watch for that sum, of course, the Court may believe that he did so, but if he spends the money he borrowed on something else, and the price he paid for the watch is in issue, the loan agreement itself cannot lend support to his evidence that he paid $10,000 for the watch.

125.  I return to the judge's comments. No doubt when he used the words "surprising features" the judge would also have had in mind, too, whether it was inherently likely that Mr. Chan would pay so large a sum as $350,000 for an error note when he had just began to collect them (this being the first "significant" note he had bought) at a time when he knew nothing whatever about the value of such notes. The judge would, of course, have considered the reasons Mr. Chan had given for spending so much money on it.

126.  As to the agreement by Mr. Chan Shun Hoi to buy the note for $10 million, the judge said that while he was satisfied that the account given about this transaction was “extremely bizarre" he felt sure it was not a fabricated account. However, he felt that once Mr. Chan Shun Hoi had come to his senses in the matter, the chances of the sale going through for $10 million was “quite remote”. He gave his assessment of Mr. Chan Shun Hoi as a man with “a great deal more money than sense” and mentioned his lack of knowledge about error notes and their rarity. He concluded as follows:

"But if one thinks through what was likely to have happened， CHAN Shun-hoi wanted a certificate in relation to the notes showing that it was genuine. That could not have been obtained from the bank on the day that Chan Chun-yip was there.  If a certificate had been sought,  a lot of tests would have been necessary. They would have gone to solicitors.  Once solicitors were brought in, I believe that CHAN Shun-hoi would have come to his senses and the chances of this deal going through in the end were remote.  However, I do accept that so far as the plaintiff was concerned, he really believed that it would go through."

127.  The judge was fully justified in describing the account of this transaction as being “extremely bizarre”. Quite apart from what the other witnesses said about it, one has only to read Mr. Chan Shun Hoi’s evidence to see what an curious story it was.

128.  Mr. Chan Shun Hoi is a business man and runs night clubs and as well as selling electrical products. He lives, and all his business activities are, in Thailand.

129.  He told the Court that he had heard about the $1,000 note printed in the colour of a $500 note during a telephone conversation with Mr. Chan Chun Yip. He could not remember exactly when this was, but it was some time in April, May or June 1983. He was told that the note was for sale. He felt that it was not possible that there could be such a note but if there were, he was interested in buying it. The asking price mentioned by Mr. Chan Chun Yip was HK$15 million and he told him that he was interested but only if a bargain price could be reached.

130.  Mr. Chan Chun Yip had returned to Thailand. They had talked about the note again and at that time bargaining about the sale price was still going on. He told Mr. Chan that he would be willing to pay $10 million for it and that he should act as his agent on his behalf.

131.  The reason why he was prepared to pay such a high price for the note was because in his opinion there was no other note like it in the world. He had other notes in his possession "in old money". These notes were from several countries including Thailand and the U.S.A.. He also collected antiques.

132.  He gave Mr. Chan a written authorization to act on his behalf and the arrangement was for the Bank to certify that the note was genuine and then a deposit of $2 million would be paid by Mr. Chan on his behalf. This money was to come from cash in Mr. Chan's name in Hong Kong, but which belonged to him. Later, Mr. Chan told him that the note had been seized by the Bank and the deal fell through.

133.  When, later still, Mr. Chan Chun Yip told him that there might be a chance of getting the note back, he told him that if this were possible he still wanted to buy the note. If all had gone well, there could have been a certificate from the bank to say that the note was genuine and then a contract for sale and purchase would be made out at a solicitor's office. He would then have come himself to Hong Kong to pay the balance of $8 million.

134.  When asked in cross-examination where the HK$8 million would have come from, he said he would have sent the money to Hong Kong via the black market. There were agencies to whom money could be given in Thailand and the equivalent collected in Hong Kong.

135.  He said that he had bought the note because he thought he could make a large profit from it. He had heard about a stamp which was worth between USS600,000 and US$700,000 and he thought that the bank note could make a greater profit than that. He had no idea of price or value at that time, He just wanted to buy the note and keep if for a while until the right time came to sell it.

137.  Since there was no other bank note of its kind in the world it would be worth more than the stamp he had heard about. It was only the price of this stamp he had read about which made him form this opinion. He could not remember the most he had ever paid for a stamp. People told him about stamps and he simply paid them. He knew nothing about their importance, so he could not give any details about his purchases of stamps.

137.  All he knew about his antiques was that they were expensive. He had so many antiques that he could not remember them all. There were labels on them which had been read to him. He was particularly interested in buying Buddhas and had a large collection of them. The most he had ever paid for one which was $1 million Baht. He gave an exchange rate to the Court of $3.5 Baht for HK$l [this comes to something over HK$285,000].

138.  He acknowledged that he knew nothing about error notes, and when asked why he had been prepared to pay $10 million for one, he answered:

"Like Buddhas - they are lot of good ones, also mis-printed stamps, you can sell at a high price – now if I got the note, there is no other one in the world and if I have it there is no other one in the world."

139.  He could not remember when he had read In a newspaper about the sale of the stamp for something in the region of US$500,000. It was a long time ago. Nor could he remember what sort of stamp it was. He remembered the price was in that region although he could not be sure about the exact figure.

140.  He accepted that although he knew nothing about error bank notes he had made no enquiries as to whether there were other similar ones to be had, but said that he would not have bought such a note if other similar bank notes were in existence. Nor did he know anything about prices paid for error bank notes and yet he had not sought the opinion of anyone as to the value of such notes.

141.  He thought that the note would be worth more than the stamp he had heard about because it was the only one of its kind in the world.

142.  With great respect to the judge's conclusion quoted above, Mr. Chan Shun Poi had sworn to the Court that he was always ready to go ahead with the deal as evidenced by the "certificate" produced by his agent Mr. Chan Chun Yip. If, despite this, he was likely to have come to his senses and gone back on the deal when the transaction was being formalized in a solicitor's office, I think it would be legitimate to comment that it might well be that in the real world no one would agree to buy a note which he had not seen for $10 million, particularly when he had never bought an error note before and hoped to make an eventual profit.

143.  The judge will not comment on his impression of this witness when he was giving evidence but I am bound to say that his evidence seems barely credible as one reads the record.

144.  Since the judge recognized, and rightly recognized, the inherent difficulties in the evidence led by the Plaintiffs to prove the purchase of the note for $350,000 and the agreement for sell it for $10 million, it is of great importance to pay particular attention to anything Mr. Chan or his wife might have said about these matters before they came to Court.

145.  Miss Christina Lau and Miss Annie Pau, the two tellers who gave evidence for the Bank, told the Court that when Madam Law had brought the note in for verification, she told them that it had been given to her by a customer who was making a purchase and, if the note was found to be genuine, she would telephone her husband at the shop to give the customer change.

146.  In cross-examination, Miss Christina Lau said that Madam Law had said that a customer was waiting for change, she thought that this was the reason why she was impatient – because she did not know whether the customer should be given change or not.

147.  In cross-examination when it was suggested to Madam Law that the true origin of the note was that it came into their hands in the course of business from a customer, she replied as follows:

"Regarding this I was not connected with the Hong Kong Bank  when I presented the note.  She said:  ‘Where did you get the note?  Give me your I.D. card.’  Why should I tell her when she threatened me ....··"

148.  When it was pointed out to her that the girls would give evidence to the effect that she had said that the note had been given to her husband in the course of business, she replied that the teller had asked her so many questions and she had asked the teller why she was being questioned. She added: “I said why and I said I got it in business.”

149.  When it was put to her that she had in fact said that if the Bank acknowledged that the note was genuine, she would phone so that the customer could receive change, she said she would not say something that was not true.

150.  She was then asked:

"Did you tell the teller that your husband was with the customer and you would phone so that he could give him the change?”

151.  She replied:

"I never said anything about my husband.”

152.  This is what Madam Law said about the statement she made and signed in the police station on 21 September 1983, in examination-in-chief:

153.  “I say [in the statement] that I got the note in the course of business. When I was making this statement, the policeman told me what had happened had to be reduced into writing and I repeated what I said at the Bank . When I presented the note she shouted at me and demanded the card. Under the circumstances I was not frank and I wanted to conceal. She asked me how I got the note and I wanted to conceal and said I got it when I was doing business. I wanted my police statement to conform with what I said at the Bank. He told me to tell what I said there the other day and so I repeated what I said. I said that because I was threatened by the teller and I wanted to conceal.”

154.  Madam Law was cross-examined on her police statement. This statement was in the nature of a complaint against the Bank and explained how her note had been missed. In the statement she had said:

“Around 6 pm on 16.9.83, I received a HK$1000 note No.CO88191 (belongs to Hong Kong & Shanghai Bank) while I was doing business at the above address. At that time, I saw that the colour of the HK$1000 note was different from that of the normal HK$1000 note of HKSB. The colour of the note was the same as that of HK$500 note. Moreover, I was able to identify the water mark on the note by using a counterfeit money detector. At the time, I knew that the note is a misprinted one. I think that the note is very valuable and I will keep it because it is often reported in the newspapers that the value of misprinted bank notes is very high.”

155.  The following question and answer is recorded towards the end of the police statement:

“Q. Are you sure that the misprinted note is very valuable?”

“A. I myself think that the misprinted bank notes [are] very valuable. Moreover, I will not sell it even though someone offered a high price because my husband and I have the hobby of collecting and keeping valuable property.”

156.  She said that the policeman had asked her what had happened and so she had told him. The police officer had shown the statement to her husband but he had refused to sign it.

157.  It was suggested to her that what she had said in her statement about the note being handed in during the course of business was, in fact, the truth. She said she did not agree. It was then put to her that she had told the same story to the teller. Her replies then became very confused and confusing because she mixed together what she told the tellers and what she told the police. She said that this was not true and that she was evading questions for it was not necessary for her to tell the teller anything. She had not revealed what business she was engaged in to the teller. She had been forced into saying this. She had made a report to the police in the hope that the note would be returned. It was not necessary for her to say "that much”. She had not told the teller where she had got the note from. She had been asked how she had come by the note and she had replied that she was a business person and the note was a genuine one.

158.  She then said in reply to a question:

"Yes, I told the police what happened - about I.D. card - about threats - about the note being alleged forged.  I said I received the note in the course of my business. I told the police what happened at the bank about [the note] being suspected to be a fake - asked for I.D. card - refused to give it - and then upon repeatedly being asked I said to the bank people ‘Would it be alright for me to have received the note in the course of my business’”.

159.  It was suggested to her that she was making up her story as she went along and she denied this.

160.  Then occurs the following passage and here she was referring to what she told the tellers in the bank and not what she related to the police:

161.  “I told them I was in the fashion business and then under threats I told them I had come by the note in the course of my fashion business. I also told them my husband was a collector. It occurred to me after report was made to the police the note would be returned. I went with the officer. I thought the note would be returned.”

162.  When the sentence in her police statement about receiving the note during the course of business on 16 September 1983 was specifically put to her, she replied:

"I had been threatened.  At this time I did not think I had to say much – after all, I had ownership of this note. I thought I did not have to tell a long story about the note. Also I told the police that the note was very valuable.  At that time I was suspected that the note was forged.  I wanted to avoid the question.”

163.  She later said:

“It was my idea. When I was threatened I said as I related I have told the police. What the teller said to me. I think receipt was used to deceive me. I thought I had avoided the question when teller asked me. I told the police the same story. I thought there would be no problem about how I got the note if it was authentic.”

164.  When the whole of the paragraph containing her account of how the note came into her hands was put to her, she said:

"This is not a true statement. I was forced and I was afraid of being arrested and I just went along as matters came to me. I could hardly do anything if they said it was false.  I do not have the guts.  This is my own affair

165.  When she was asked about the question and answer recorded at the end of the statement, she replied:

“I thought that if I gave full story it would be very long and I was concerned with the validity of the receipt and most important point was the note's authenticity. Subsequently I cried and said the note was valuable. I do not admit statement over my dead body. Truth was otherwise, Later I cried and told the bank the truth."

166.  Madam Law was not asked anything in re-examination about the account she gave at the bank about the way the note came into her hands or about her statement to the police.

167.  The police statement was also put to Madam Law’s husband, Mr. Chan, in cross-examination. I would remark here that it was common ground that the police statement was really a joint statement made by both husband and wife although it records only Madam Law’s speaking and only she signed it.

168.  He said that the police had been helpful on that day and he had no complaint about the conduct of the interview which resulted in the statement recorded. The police officer had told him to say what had happened. The reason he had not told the police that he had the valuable contract on the note was because he was afraid that if he said it was valuable then the Hong Kong Bank would take it. They would take away valuable items.

169.  He said he had told the police that the note was very valuable and that he would not sell it no matter how high the price offered was, as stated in the report.

170.  Mr. Chan went on to say that he did not have to tell the police about the contract with Mr. Chan Chun Yip. When his attention was directed to the passage in the statement about receiving the note in business on 16 September he said this was not true and explained that his wife had been "relating events in accordance with sequence. It is not true on this point." His wife had signed a false statement on that point.

171.  He said he had hoped throughout that the Bank would give the note back to them. That was why he had said it had been received in that way. He had hoped that the Bank would act in good faith and give it back to him. Both he and his wife thought at that time that the note would be returned to the them and he added:

"If we said that the note did not have any excessive value it might be given back to us.”

172.  Later, Mr. Chan said that they had “cooked up” a story to tell the police on their way to the police station from the Bank. They had agreed that they should not tell others about the value of the note. He added:

“I am saying that 1 cooked up a story on way to police station that we received the note the previous day."

173.  After being further cross-examined on the matter, this is what Mr. Chan said:

“When I told them this, I did not expect it [the police statement] to be presented in Court today. I thought I could get the note back in 10 days and that the statement would be destroyed. I told the detective that the note was valuable because I hoped that they would make efforts to get the note back for me. I thought that if the bank returned me the note, then this would not be disclosed and I did not expect it to be presented in Court today.”

174.  This is what Mr. Chan said in re-examination about the police statement:

“There is no inconsistency with me telling the police that it was valuable. In the police station, I said it was valuable in the hope of them getting it back for me. I did not tell them about the $10 million contract because I did not have to. It sufficed to tell them that it was valuable for them to get it back. There is a difference between me saying it was valuable and saying that a contract for $10 million to sell it [had been made]. If I had said $10 million, the police officer might not have believed me and not tried to get it back.”

175.  Mr. Chan added that the reason for not telling the bank about the $10 million contract was that the note had been taken for verification. He had not instructed his wife to tell the bank about the contract. Since there would be a large number of people in the bank, he had been afraid that “if the transaction was mentioned it would affect the matter.” When he had himself gone to the bank to try to recover the note, he had not said anything about the $10 million contract because he did not have to say anything about it. It was his own affair.

176.  The importance of what I will call these plainly inconsistent statements is, of course, that they go to the credibility of the Plaintiffs on the central issues of the case. The previous statements make no mention of the purchase of the note, or of the agreement for its re-sale, or of the money involved at each stage, and give a different account of the way the note came into their hands. Placed side by side with the evidence given in Court, both versions cannot be true. The discrediting effect of such previous inconsistent evidence does not depend upon whether or not the Plaintiffs were deliberately lying. The Plaintiffs, however, revealed defects of recollection or honesty which must render their testimony in Court potentially unreliable.

We are denied the advantage the judge had of seeing the Plaintiffs giving evidence over a number of days, but demeanour apart, an appellate court is in a position to reach its own conclusions as to whether any explanations given for the previous inconsistent statements are inherently credible. In relation to Madam Law, when dealing with the bailment issue, the judge said this about her previous accounts:

“ I have not overlooked the fact that at some stage the second plaintiff indicated or implied that she got the note in the course of business. If her evidence is examined, it is clear that she was uneasy about error notes and about her husband’s possession of them. She was not sure at one stage, it seems, whether anyone ought to have such notes in their possession.

It was when she was being challenged and it was suggested that it might be a forgery that she implied, perhaps not directly, that she got the note in the course of business; and she repeated that lie – because even if she implied it, it was one – in her statement later to the police.

Further, I don’t overlook the fact that she might have said something about her husband waiting for the result of the verification. If she said something like that, it was done in her anxiety and her distress to try and get the note back and try to persuade the bank to rely upon the light.”

177.  The judge went on to say that these matters did not in any way disturb his finding that Madam Law had indicated to the Bank that she wanted the note verified and handed back to her, and had indicated that she thought the note was valuable.

178.  The judge did not refer again to Madam Law’s previous statements to the Bank and to the police about the provenance of the note when he was addressing the issues whether or not there had in fact been a purchase of the note for $350,000 from Mr. Lau Wai Yee, and an agreement to sell it for $10 million to Mr. Chan Shun Hoi. It is unlikely that he overlooked these matters when dealing with those issues, but in a long case like this it could happen, if I may be permitted to say so.

179.  As I read the passage from the judgment I have quoted, I do not think that it can be said that the judge was rejecting the tellers’ evidence that Madam Law had told them that the note had been given to her by a customer during the course of business and if it were found to be genuine she would telephone her husband so that he could give the customer change. If this reading is correct, then Madam Law did not admit that she had said all this and therefore she herself offered no explanation for what she had earlier said. I remark in passing that she had said in evidence that her husband was minding their shop and this was why he had not accompanied her to the bank.

180.  As to her police statement, I am bound to say that as the record reads, without the benefit of seeing her giving her evidence, Madam Law’s explanations, varying as they went along, about its contents appear evasive and unconvincing.

181.  On one essential point, the statement was consistent with what she had told the tellers (that they had come by the note in the course of business) and inconsistent with what she said in Court. Her explanation, in so far as one can understand it, that she wanted her police statement to conform with what she had said at the bank[although it was not true because the police officer taking down the statement told her to say what had happened at the Bank, does not, in print at least, have the ring of truth about it.

182.  Be all that as it may, the reasons given by both husband and wife for answering the question at the end of the police statement in the way that they did, on the bare record, seems highly suspect. Here they were, making a formal complaint to the police of the seizure of the note which they wanted to recover. If they really had bought it for the huge sum of $350,000 and secured a re-sale at the enormous sum of $10 million, when they were asked how they could be sure that the note was valuable, having earlier stressed that it was so, even if the figures involved were to be concealed, surely they would have said either, “we bought it for a large sum” or “we have agreed to sell it for a large sum” or both. And one must ask how they could have told the police that they would not sell the note even if a high price were offered to them, when they had already agreed to do just that.

183.  The judge did not indicate that he had considered the possible effect upon Mr. Chan’s credibility about his account in Court of the acquisition and re-sale of the note by reason of the contents of the police statement, which, as we know, he acknowledged to be, in effect, a joint one. He admitted, as we have seen, that he and his wife had deliberately combined to tell a false story to the police about how they came by the note, and his explanation for having done so, on paper, strains credulity too far.

184.  Then there in his astonishing statement that although he was impressing upon the police that the note was valuable, he thought that if he mentioned the $10 million contract, the police officer might not have believed him, and might not have tried to recover the note. But this is not all. There is also his later explanation that he thought that the police statement would be destroyed so that he did not expect to be confronted with it.

185.  The judge did not refer to a visit made by Madam Law to the Bank early in October and what she said about the provenance of the note on that occasion. It was common ground that she had visited the Bank on several occasions after the incident that occurred on 17 September 1983, in fruitless efforts to recover the bank note.

186.  The teller, Miss Christina Lau, told the Court that early in October Madam Law had come to the Bank and shown her an album. The first page contained a $500 note with discrepant numbers on it and there was a blank space next to it. Madam Law told her that her husband had bought the note which had been kept by the Bank as well as the $500 note still in the album for $100,000. She said that she had been afraid that her husband might have been cheated and this was why she had taken it out from her husband’s safe and presented it to the Bank for verificiation

187.  Miss Lau pointed out that she had told her earlier that it had come from a customer during a purchase. Madam Law had replied that she had earlier lied to her about that. She asked for the return of the note and was crying. Miss Lau said she could not help and Madam Lau had left the Bank still in tears. She was corroborated on this piece of evidence in every detail by the other teller, Miss Annie Hau.

188.  The record indicates that although in relation to their evidence in general it had been suggested to each of the tellers that they had combined to tell a false story out of their loyalty to the Bank, a suggestion which they vehemently denied, they were very sketchily cross-examined on this visit.

189.  When this incident had been put to Madam Law in cross-examination, and she had been asked whether it was not true that she had told the tellers that she had taken the album from her husband’s safe without his consent because she wanted to make sure that the note was genuine, she denied it. She had only said that her husband was a collector and she had shown the album for that purpose.

190.  When she was pressed that she had said she wanted the note verified because she was afraid that her husband had been cheated, she repeated that she had only produced the book to show that her husband was a collector, adding that she had told the teller that she must be given the note back otherwise her husband would throw her into the sea. It was put to her that the teller had asked her why she had told a different story on 17 September about getting the note in the course of business and that she had admitted that she had told a lie on that occasion. She replied, somewhat enigmatically, that the girl in question was not the one who had taken the note on 17 September.

191.  This, to my mind, was very significant evidence for it showed, if the tellers’ account could be relied upon, that Madam Law was giving yet another account about the acquisition and value of the note. Moreover, of course, if she really did say that, and it were the truth, it gives the lie to the whole story of the $350,000 purchase and the $10 million re-sale. It wou1d explain why she really went to the bank to have the note verified. Moreover it makes her husband’s anger with her for having lost the note more understandable and would account for all that happened after the note was seized. It is certainly very difficult to give credence to the reason Mr. Chan himself gave for being so angry with his wife - because she had gone on to the Bank after her visit to the Bank of East Asia without his knowledge and consent.

192.  Mr. Rogers suggests that the judge could not have overlooked this evidence and that it must be assumed that he preferred Madam Law's version of what took place on that occasion. But the judge did not disbelieve the whole of the tellers' evidence. Rejecting this part of their evidence would mean that they had put their heads together to take advantage of Madam Law's October visit to the Bank, and her bringing her husband’s album to show them, to add to what she really said. One must ask what would be the point of Madam Law showing them the album to indicate her husband was a collector of bank notes without opening it? And so the two different versions of what happened coincide to a striking degree.

193.  In my view, the Bank was entitled to a finding on this crucial piece of evidence.

194.  However, if Madam Law was telling the truth as to what she had said on this visit， and had been begging for the return of the note, in tears, because otherwise her husband would throw her into the sea, she again did not mention what she now says was the true provenance of the note, the money paid for it and the agreement for its re-sale.

195.  Indeed, I would comment here, that the first the Bank knew of the enormous claim against them in money terms was when they saw the affirmation Mr. Chan filed on 10 March 1984 (in support of an application for Interrogatories) 6 months after the incident which gave rise to the action, and nearly 2 months after the issue of the Writ which was indorsed with a Statement of Claim which then made no reference to the loss of the $10 million deal. Nor was there any mention of the sums involved in the pre-action correspondence.

196.  I now examine the support given to the Plaintiffs' case by the agent for the re-sale of the note, Mr. Chan Chun Yip. The judge commented that "his account of the events which followed him leaving the Bank of East Asia [was] very strange". One has only to read his evidence, to see how strange it was. If his evidence could not properly be relied upon, the whole of the Plaintiffs' case breaks down, so crucial is the role played.

197.  In examination-in-chief, Mr. Chan Chun Yip said that in accordance with the arrangements that had been made to have the note verified, he had gone to the Bank of East Asia branch in Nathan Road with Madam Law. He sat down inside the bank near the entrance and looked at the bank note. He then told Madam Law to present it to the bank teller for examination. She did so, and a member of the staff told her that the bank note was genuine, but since it had not been issued by their bank, she should take it to the Hong Kong Bank for verification.

198.  They left the Bank of East Asia and walked towards the Hong Kong Bank but Madam Law had gone ahead of him while he came on behind her slowly. He did not go into the second bank for, when he reached the doorway, he saw that Madam Law was quarrelling with someone in the bank. He could not hear what was being said but he knew a quarrel was going on because someone asked for Madam Law’s identity card and there was a mention of reporting the matter to the police. He became afraid that there was something improper about the bank note so he went away.

199.  In cross-examination, Mr. Chan said that Madam Law had left the Bank of East Asia walking very fast and he had followed her slowly because he was old and his legs would not allow him to walk faster. When asked why in the Bank of East Asia he had not gone up to the counter with Madam Law to hear what was being said about the note, his reply was that he considered that once the note had been produced to the staff they would tell the truth as to whether it was genuine or not. He added that it was not necessary for him to do so – if the staff of the bank thought that the note was not genuine and could not he used, then the bank would seize the note.

200.  He explained that Madam Law told him to go to the Hong Kong Bank and she left first. He was slow in getting up from where he had been sitting in the Bank of East Asia. On the way to the Hong Kong Bank, he was smoking and he saw her going ahead very hurriedly. She went into the bank and when he reached the door of the bank he wanted to finish his cigarette before going in because it was quite long. He was afraid of entering the bank while still smoking in case someone should scold him. He said he would have gone into the bank but for cigarette.

201.  When it was put to him that if everything had gone smoothly， he would have had to report back to his principal that he had not been present when the note had been verified, he said this was not so because he would have gone into the bank when he had finished smoking his cigarette. He was able to hear that someone was demanding Madam Law’s identity card and the mention of the police station. This was all he heard,. and he managed to hear this because from time to time someone opened the door of the bank outside which he was standing.

202.  He had intended to go into the bank originally but he had become afraid and gone away. He was afraid that it might be a forged note and he was also afraid that he might be required to become a witness; this was why he had gone away. He was afraid of becoming involved and he did not wish to be a witness. He had ceased being afraid when he knew it was not a forged note.

203.  It was suggested to him that it was unreasonable to suppose that the person who took a bank note to a bank for verification would be accused of forgery. He replied that he was aware of that, but he heard the quarrel and realised that the note would be taken away by the bank. Since this was so he would not have been able to obtain the note, and thus there was no point in him staying there any more.

204.  He first said that Madam Law had come out and told him that she had been asked for her identity card but immediately afterwards said that Madam Law had not spoken to him at all. He had seen her pocketing her identity card and that was how he had realized she had been asked for it, and so he had gone away.

205.  He was asked why he had not stayed to hear from Madam Law what had happened. He said he had heard the argument about the note and then he had noticed that Madam Law’s "countenance was not good".

206.  I would mention here that Madam Law told the Court that she had told Mr. Chan Chun Yip to go with her when she went up the counter in the second bank to seek verification of the note. She went to the counter on her own. She did not know how far Mr. Chan Chun Yip was behind her and did not even know if he come into the bank with her. She had assumed that Mr. Chan Chun Yip was behind her but she never looked over her shoulder. After the dispute, she looked round and found he was not there. She did not know when he had left.

207.  As we have seen, the judge was impressed by Mr. Chan Chun Yip's evidence and we must, as the authorities emphasise, be guided by the impression he made on the judge. But in my judgment, and with very great respect, his evidence, as one reads it, seems hardly worthy of belief.

208.  Elderly though he was, he had come all the way from Thailand to do a job, and his explanation as to why he was not with Madam Law at the counter, where he would naturally be expected to be, when she took the note to be verified (because he wanted to finish the cigarette he was smoking) is as inherently incredible as is the reason he gave for going off and not waiting to talk to Madam Law about what had happened. In my respectful opinion, he just did not behave, judged by standards of ordinary human conduct, unsophisticated as he undoubtedly was, in the manner of a person helping to advance a $10 million transaction.

209.  I would mention here that Mr. Chan Chun Yip spoke of his comparison of the note with a $500 note before he and Madam Law went into the Bank of East Asia, and said that he thought the note was exactly the same as a $500 note in all respects save that the figure 1,000 were upon it. About this, the judge said:

"I am satisfied that in giving that evidence he is not giving false evidence. If he were giving false evidence, one would not find a witness coming to court and making such an elementary error in the account he was supposed to give. "

I may be permitted to remark that this,  rare though it may be, does occasionally happen.

210.  I now turn to another matter. In my view, it was of great importance in this case, when evaluating the evidence of the two Plaintiffs, to have regard to Mr. Chan's conduct towards his wife after the note had been seized by the Bank.

211.  Madam Law acknowledged that the trouble which had ensued between herself and her husband had originated from the fact that he blamed her for losing the note. She accepted that when she had been to the bank on three or four occasions, she had cried and, at the Bank's main treasury, when she was trying to recover the note, she had revealed that her husband had threatened to push her into the sea, and had begged the Bank not to cause her family to be broken up.

212.  She did say, however, that she was not afraid of her husband and had never been afraid of him. She denied that her children in the U.S.A. had offered to come back to look after her because of the problems she was having with her husband. She said that the quarrels were really due to the fact that she kept refusing to give her husband money to institute the action against the Bank because she thought that they were not in a position to maintain an action against so formidable an opponent. She said that her husband had, indeed, threatened to feed her to the fish but this was before the destruction of the note.

213.  Madam Law admitted that her husband had hit her when pressing her to raise money to sue the Bank. In examination-in-chief when giving evidence in support of her claim for mental distress, she said that her husband and she had quarrelled and fought over the matter. He had hit her and she was aggrieved. They quarreled incessantly. When she cried, her three children cried with her.

214.  Mr. Chan was asked about his treatment of his wife in cross-examination, and he said that the first time he had beaten her was after she had presented the note and it was not returned. He said he had slapped her face once and this was on 17 September. He had done this because he had told her to go to the Bank of East Asia and she had gone to the Hong Kong Bank without informing him. She had acted unreasonably because she had not obtained his consent.

215.  He accepted that after the Bank had refused to return the note， he had been continuously quarrelling with his wife but he said he had not beaten her so badly that she had had to seek medical treatment. However, he did acknowledge that he had assaulted her to the extent that she had made a report to the police and had to consult a bone-setter.

216.  He said that he was not a naturally violent man but he had picked on his wife because she had caused him to lose his bank note. He was desperate and had taken it out on her. She had done wrong because he had not told her to take the note to the Hong Kong Bank. He went on to say:

217.  “My wife is sometimes not scared of me. Sometimes she was hit by me and sometimes we fought. We struggled – after she had been hit by me, she would not take it as such and end the matter so we struggled.”

218.  He accepted that it was true that the only reason his children had not gone to the United States was to stay and protect their mother. He was also prepared to accept that he was lucky that his wife still stayed with him despite all their troubles.

201.  In my judgment, this poignant and distressing story, demonstrating Mr. Chan's harsh treatment of his wife following the Bank's retention of the note, required to be placed in the scales and a conclusion reached whether or not Madam Law's testimony was consciously or unconsciously influenced by her husband's domineering behaviour. This approach in my opinion was particularly critical because it was common ground that both husband and wife were suffering from serious psychiatric illness at the time of the trial.

220.  There is one further matter to which I feel I should refer. We have seen that the judge concluded that what had occurred when the Bank seized the note was not due to a to a simple misunderstanding, and that the action of the Bank thereafter was presumptuous, inconsiderate and arrogant. With every respect to the judge’s views, I beg to doubt whether such epithets were wholly justified. Madam Law had demanded Bank the very note she had handed over and made it clear that she thought the note was valuable, but in the judge’s words: “I do not think she repeatedly said anything about this because her husband had told her not to say anything about the deal which had been made. ….” However she said she had received the note during the course of business. Earlier the judge had acknowledged that “the background [was] unknown to those in the Bank … about the acquisition of the note and the importance of that note, at least to the Plaintiff.”

221.  It seems to me, with respect, that in these circumstances Madam Law was, herself, partially to blame for the way the whole unfortunate incident developed. The tellers and the manager could not have appreciated the reason for what must have appeared to them the somewhat eccentric behaviour of someone who, without saying why, ascribed a special value to a note which seemed to be worth, if it were genuine, just $1,000. When they gave her a receipt for the note, in their eyes, they could not have thought that they were depriving Madam Law of anything. Had she told the Bank on the first occasion simply that the note was a collector's item, things might have turned out very differently and this immensely expensive litigation avoided.

222.  I now seek to app1y the principles derived from the authorities which govern the approach of a Court of Appeal where the appeal is against conclusions of fact arrived at by the trial judge.

223.  The judge tried the action with anxious care and gave a very full judgment. All that I have said about his treatment of the evidence (as I hope I have indicated) and will say, is said with the utmost respect to a judge of great experience.

224.  In my judgment, the judge did not give sufficient weight to the difficulties created by the Plaintiffs for their case by their own out of Court statements about the provenance of the note, for they both plainly revealed that habitual veracity was not one of their attributes. This must gravely affect the credit to be accorded to the evidence they gave in Court, that they bought the note for $350,000 (upon which account, in the event, the judge based his award of damages), and agreed to sell it on for $10 million.

225.  In my view the judge did not demonstrate, that in adopting his favourable impression of the demeanour of the Plaintiffs and their witnesses, he had tested his impression against the whole of the evidence each was giving (recalling the words of Lord Greene M.R. in Yuill v.Yuill, at p.20.)

226.  As to the alleged agreement to sell the note for $10 million, if the Plaintiffs' impressive demeanour can be said to have justified the judge accepting their evidence as to the purchase of the note from Mr. Lau Wai Yee despite "the very unusual and surprising features" of their account, there were, to my mind, such glaring improbabilities in the stories given in turn, by Mr. Chan Chun Yip and Mr. Chan Shun Hoi of their part in the affair， and accepted by the judge, that however convincing their demeanour may have appeared, neither was a witness who could safely have been relied upon. I have taken the expression "glaring improbabilities" from the speech of Lord Sumner in S.S. Hontestroom v. S.S. Sagaporack (at p.50). These were, in my judgment, so evident that they were "sufficient in [themselves] to constitute a governing fact, which in relation to others … created a wrong impression."

227.  As I have earlier remarked, the judge did not comment on Mr. Chan Shun Hoi’s demeanour but that, too, must have impressed him for he accepted the "extremely bizarre account" of the $10 million transaction, which, of course, the Plaintiffs and Mr. Chan Chun Yip also supported.

228.  Whatever may be said about the evidence regarding the purchase of the note for $350,000, if the Plaintiffs did not, as I think to be the position, by credible evidence, establish on the balance of probabilities that there was an agreement to sell the note to Mr. Chan Shun Hoi for $10 million, then the reason given by the witnesses for Madam Law’s visit to the Bank on 17 September 1983 could not be relied upon. The truth might lie in one of the earlier versions given by the Plaintiffs about the provenance and value of the note, or entirely elsewhere.

229.  In these circumstances, the evidence given by the two Plaintiffs and Mr. Chan Chun Yip about the precise colour of the note (on which the judge based his finding that it was a genuine error note) cannot be depended upon.

230.  I have been persuaded that this is one of those very rare cases where the Appellants have succeeded in discharging the extremely heavy onus which was upon them, for I am convinced that my judicial obligation is to give an affirmative answer to the question suggested by Lord Shaw in Clarke v. Edinburgh Tramways Co., and approved by Viscount Sankey in Powell v. Streatham Manor Nursing Home:

231.  “Am I – who sit here without those advantages, sometimes broad and sometimes subtle, which are the privilege of the Judge who heard and tried the case – in a position, not having those privileges, to come to a clear conclusion that the judge who had them was plainly wrong?”

232.  For the reasons I have attempted to give, I would allow the Bank’s appeal and enter judgment in favour of the Plaintiffs for the face value of the note: $1,000, a sum the Bank was always willing to give them. I find no basis upon which an award of even nominal damages could be made.

Kempster, J.A. :

233.  On 17th September 1983 and following a visit to the Bank of East Asia Madam Lam Sim Yuk, the second plaintiff and wife of the first, Chan Yiu Wah, asked a young female teller at the small Nathan Road mini-branch of the Hong Kong and Shanghai Banking Corporation, the defendants, to authenticate an unusually coloured used HK$1,000 note issued in 1979 and which she said, had been received in the course of business. She delivered the note to the teller who consulted her manager. He thought that only the defendants' Central Treasury could determine with assurance whether the note was genuine or counterfeit. The second plaintiff was told that it would be sent for examination accordingly. She did not agree to this course and demanded its return. Her request was refused; even after she had procured the intervention of the police.

234.  The second plaintiff was provided with a receipt for the note "suspected of being counterfeit" which stated "This receipt should be presented after seven days from the date hereof at which time the Bank will advise whether or not it is prepared to accept the note for deposit. The issue of this receipt does not imply any obligation on the part of the Bank to make any payment in respect of the said note whether in the amount of its face value or otherwise.” Subsequently the note was found to be genuine but, none the less, destroyed. The defendants have at all material times been willing to furnish the plaintiffs with another HK$l,000 note.

235.  On 20th January 1984 the plaintiffs, both of whom since 17th September 1983 have been suffering from severe depression involving acts of violence by the husband against the wife, issued a specially indorsed writ claiming against the defendants the return of the note and damages. The Defence denied any liability to return the specific note. The pleadings subsequently underwent a series of amendments but the defendants’ liability to pay even nominal damages for detinue or conversion remained in issue. The hearing of the action before Mortimer J. took 24 days and on 21^st May 1986 he found that the defendants had converted the note and awarded the plaintiffs HK$375,000 being his assessment of its value. Against that award, though not against the finding of conversion which is unarguable even on their own evidence, the defendants appeal. The plaintiffs’ cross appeal, seeking a higher award, to reflect their psychiatric illnesses and the injury to their feelings caused by the high-handed attitude of the defendants in retaining and destroying the note, has been abandoned. Mincing no words the defendants contend that the story told by the plaintiffs and their witnesses was incredible if not fraudulent.

236.  The trial judge described the case as "one of the most interesting and fascinating” with which he had ever been concerned. The evidence had ranged from the plaintiffs' arrival in Hong Kong from China in about 1958, virtually penniless, through a time of affluence and, eventually, to an occasion in October 1983 when the second plaintiff made a final visit to the defendants’ mini-branch in Nathan Road, showed them an album and， apparently unwilling to accept that it had been destroyed, implored the teller to whom she spoke to return the note. According to the tellers at the bank she said that on 17th September she had lied about the note having been received in the course of business and that the truth was that she had taken it from her husband’s collection without his knowledge or consent in order to check whether or not he had been deceived into buying that and another note for HK$100,000. The whole of this conversation the second plaintiff denied albeit she admitted in court that she had indeed lied in saying that the note had been obtained in the course of business.

237.  By that time the plaintiffs had instructed solicitors, the return of note “CO88191” had been demanded and solicitors for the defendants， admitting that the note had been destroyed, had asserted a public interest in removing discoloured banknotes from circulation.

238.  The October 1983 incident and a much later conversation between the first plaintiff and Dr Green apart, the judgment of Mortimer J. sets out in circumstantial detail the material evidence adduced before him in terms which reflect a careful observation of the age, psychiatric state, mental awareness or confusion, agility, acumen, literacy, fears, backgrounds, relative roles and motivation, as the case may have been, of the witnesses. He mentions the first plaintiff's propensity for making generous but ill-advised loans to his friends for example and the disclosure by the second plaintiff, for the first time when she gave evidence, that she had not previously revealed to her husband her speculations on the stock-exchange, her failure to deposit the HK$1,000 note at the Bank of East Asia as he had directed and her substantial holding of US$ notes. On all essential matters the judge accepted the testimony of the two plaintiffs; as regards both being influenced by the way they had respectively dealt with the many questions properly put to them in the course of cross-examination. Insofar as it is suggested that, because he did not say so, the judge did not rely upon demeanour the submission is unsustainable.

239.  The story recounted by the plaintiffs and their witnesses was that during the late 1970s, after a restaurant and a provision shop had successfully been established in Argyle Street, the first plaintiff began to collect antiques, paintings, coins and banknotes. This propensity became known to one Law Wai Yee who in due course departed to the United States as a student. During the first half of 1982, by which time the first plaintiff had become a more serious collector of erroneously printed banknotes, Law phoned him from America to ask if he was interested in buying for a very substantial sum certain mirrors, paintings, a Chinese Imperial Decree and, more particularly, a HK$1,000 note issued by the defendants which, instead of being yellow in colour, was brown; like the defendants’ HK$500 note. The first plaintiff told him that no realistic negotiations could take place before he had brought the items in question to Hong Kong.

240.  After the two plaintiffs had conferred together the second plaintiff, who tended to have the last word on matters of money, put HK$400,000 as the top figure for any purchases from Law. On 28^th May she borrowed such a sum from the Bank of East Asia on mortgage. The following month Law arrived in Hong Kong with his treasures by which time, unbeknown to her husband, the second plaintiff had reinvested all the money she had borrowed. None the less they agreed to buy two antique mirrors for HK$50,000 and the HK$1,000 note for HK$350,000; to be paid as to HK$100,000 forthwith and the balance of HK$300,000 in a matter of weeks. The note had been compared with a HK$500 note issued by the defendants and examined by the first plaintiff under ultra violet light. As the judge expressly reminded himself there was no documentation and no receipt for the price. The plaintiffs’ explanation for such lacunae he found unconvincing. He also remarked on the subsequent disappearance of Law without trace.

241.  By June: 1983 the plaintiffs, though still wealthy, were short of ready cash. Opportunely there arrived on the scene from Thailand a man whom they had known many years before in their home village in China called Chan Chun Yip. The subject of the brown HK$1,000 note having arisen in conversation and the plaintiffs beingwilling to sell, Chan Chun Yip agreed to mention it to Chan Shun Hoi, a wealthy neighbor in Bangkok who was a collector of such rarities. Negotiations by telephone between Hong Kong and Thailand ensued and Chan Chun Yip returned to Hong Kong in July armed with written authority from Chan Shun Hoi to conclude an agreement for the purchase of the note on his behalf “at all costs”. In due course a provisional oral agreement was reached for its sale and purchase at a price of HK$10 million of which HK$2 million was to be paid once the authenticity of the note had been warranted by a bank and a formal document been drawn up at a solicitor’s office. Chan Shun Hoi was thereafter to come to Hong Kong to pay the balance. Hence the events of 17^th September 1983 The whole of this story is stigmatized by the defendants as incredible.

242.  In accepting the plaintiffs’ story both as regards the acquisition of the note for HK$350,000 and the inchoate sale for HK$10 million the trial judge described the former, on two occasions in the course of his judgment, as “surprising” and the latter as “extremely bizarre”. Insofar as it is suggested that he failed to take into account probabilities, the second plaintiff’s fear of her husband or the interest of the plaintiffs in their account of events where it differed from that of, presumably, disinterested tellers such submission is also unsustainable.

243.  The acceptance, in great measure, of the plaintiffs’ account of the history of HK$1,000 note number “CO88191” is important because it formed the basis for the judge’s assessment of damages. Shrinking, perhaps, from the logical conclusion of his findings, which would have been that in all probability the defendants, by converting the note, had deprived the plaintiffs of a sale price of HK$10 million, he found that Chan Shun Hoi would have required a written certificate of authenticity, consulted solicitors and “come to his senses”. Mortimer J. had obviously formed the opinion that even on the most favourable construction of the evidence the note was not worth anything like the price that he had found provisionally agreed. He then sought to ascertain its value and arrived at the figure of HK$375,000 by adding to the sum which the plaintiffs had paid for it “a modest increase”; presumably to allow for the fall in the value of money between June 1982 and September 1983. There is no cross appeal by the plaintiffs against this finding.

244.  It has correctly been submitted to us on behalf of the defendants that the only part of the inherently unlikely evidence given by the plaintiffs and their witnesses which was open directly to challenge and, therefore, afforded an opportunity of testing their credibility was that relating to the events of 17^th September 1983 which the judge called “the nub of the case”.

245.  Referring only to some of the more important conflicts of evidence the second plaintiff had said that the note was dark brown, like a HK$500 with which she had compared it on at least two occasions, that when asking for verification she had said “This note is worth much money” and that she had been promised its return if found genuine. In answer to a question from one of the tellers she had said that the note had come into her possession in the course of her fashion business. In evidence she admitted she admitted not only that this was a lie but that it had been repeated in the statement made by her to the police. The first p1aintiff had been present when she made it and, to put it no higher, not demurred.

246.  The two tellers on the other hand testified that the first plaintiff had asked for the HK$1,000 note, which was of a lighter brown than a norma1 HK$500, to be authenticated as a matter of urgency since it had been handed over in the course of business and her husband was waiting to provide the customer with change. They also said she had been told that she would be provided with HK$1,000 if the note was genuine and that it would be forfeited if found counterfeit. Although both said the note was lighter than a HK$500 note it appears from the notes of evidence that one of them, Miss Lau, said “- well by the look of it I though it was HK$500 but it was HK$1,000 – ”.

247.  In preferring the second plaintiff’s version of events the judge did not overlook the fact that in the bank the second plaintiff had indicated or implied that she had got the note in the course of business and had said so in terms in her statement to the police. He further concluded that she might have said something about her husband waiting for the results of the verification; finding none the less that “she wanted the note verified and passed back to her and – indicated that she thought the note was valuable”. For my part I cannot thereby conclude that the judge was accepting the teller’s evidence that the second plaintiff had said that her husband was waiting to give change; by necessary inference treating the note as money rather than as a valuable chattel. No more can I accept that by omitting to refer to the visit paid by the second plaintiff to the mini-branch during October 1983 or to the first plaintiff's apparent ignorance, when interviewed by Dr. Green, of the name of the American who had sold him the note he failed, in assessing relative veracity, to take such matters into account and in particular what was said about the second plaintiff’s visit by the tellers. Certainly the confession attributed to the second plaintiff is fully consistent as well with the judge’s findings as to what transpired on 17th September as with the terms of the plaintiff's solicitor's letter of 28th September 1983. None the less I am not persuaded to doubt the judge’s word when he said .. “I am satisfied on the whole of the evidence that this note was purchased - I have no reason to doubt that it was purchased for HK$350,000”. As Lord Simonds stated when referring to the judge of first instance in Watt v. Thomas)(1) at p 492 :

“ – your Lordships are entitled and bound, unless there is compelling reason to the contrary, to assume that he has taken the whole of the evidence into his consideration.”

248.  Citing this passage in Onassis v. Vergottis(2) at p 421 Lord Morris observed :

“In the same way it would, I think, be unsound to assume that some arguments have been ignored merely because they may not be fully recited in a judgment.”

249.  If, then, the judge took all the evidence and that probabilities into account and also relied upon his observation of demeanour when resolving the conflict of evidence as to the events of 17th September a heavy burden rests on the defendants to satisfy a court rehearing the case on the basis of notes of evidence and documents that he was misled let alone fraudulently deceived.

250.  The evidence given by Chan Chun Yip and Chan Shun Hoi warranted examination as careful as that afforded to the evidence of the plaintiffs themselves. The varying testimony of the former included such surprising features as his lingering outside the mini-branch to finish a cigarette while the second plaintiff sought verification of the note he had come to buy on behalf of his principal, a rather tendentious explanation of resources available to him in Hong Kong and an unconvincing account of the comparison which he made between the designs of the HK$1,000 and HK$500 notes. Chan Shun Hoi demonstrated ignorance about the several types of article which he claimed to collect. Indeed, so meticulous has been the analysis of inconsistencies and improbabilities as in the evidence called on behalf of the plaintiffs that were I not to look beyond the written materials available to this appellate court I would hesitate to accept it. I look beyond such materials because the judge took the inconsistencies, improbabilities and the explanations of· Chan Chun Yip and Chan Shun Hoi into account before finding that Chan Chun Yip had not given “false evidence” and that the account of a projected sale of the note for HK$10 million had not been "fabricated". It is to be emphasized both that we are not a reseeing court and that, in the context of a society in which, without complaint, large fortunes are made and lost as the result of business gambles, the improbabilities already outlined are not of such an order as to falsify the findings on credibility of the seeing judge. ·No more am I prepared to find that he failed to check his impressions by a critical examination of the whole of the evidence.· As Lord Greene said in Yuill v. Yuill(3)at p 19 :

“It can, of course, only be on the rarest occasions and in circumstances where the appellate court is convinced by the plainest considerations, that it would be justified in finding that the trial judge had formed a wrong opinion."

In that case, much relied upon by the defendants, the judge had “entered the arena” and, again in the words of Lord Greene(3) at p 20, was liable to have his vision clouded by the dust of the conflict". I cannot accept the defendants' submission that no conclusion is possible except that the judge misused his relative advantages and made erroneous findings as a result. "If his estimate of the man forms any substantial part of his reasons for his judgment the trial judge 's conclusions of fact should - be let alone." per Lord Sumner in Hontestroom (Owners) v.Sagaporack (Owners)(4) at p 47. A final quotation in this regard from Lord Wright in Powell v. Streatham Manor Nursing Home(5) at p 267 :

“- as the evidence proceeds through examination, cross examination and re-examination the judge is gradually imbibing almost instinctively, but in fact as a result of close attention and of long experience, an impression of the personality of the witness and of his trustworthiness and of the accuracy of his observation and memory or the reverse. He will not necessarily distrust a witness simply because he finds him inaccurate in some details : he can give such inaccuracy its proper place, particularly if he sees that the witness is tired, or antagonized, or confused, or perhaps impatient, and especially if the matter of the inaccuracy is of minor or collateral importance. But such inaccuracies may appear in a very different light when pointed to as isolated passages in the shorthand notes and abstracted from the human atmosphere of the trial and from the totality of the evidence. The judge will form his impression from the whole personality of the witness : he can al1ow for the nervous witness standing up in a crowded Court or worried by the strain of cross-examination. The judge may be deceived by an adroit and plausible knave or by apparent innocence : for no man is infallible; but in the main a careful and conscientious judge with his experience of Courts is as likely to be correct in his impressions as any tribunal, unless perhaps, as some would say, a jury of twelve members is preferable.”

251.  Accepting, therefore, the material parts of the plaintiffs’ evidence it remains to assess the propriety of the judge's assessment of damages; particularly the finding, which alone afforded the note a value exceeding that on its face, that its dark co1ouring derived from an error in the printing process. Here we enter the realm of inference where we are at no relative disadvantage as compared with the trial judge and act directly within our jurisdiction as provided by R.S.C. Order 59 rule 10(3).

252.  Accepting the testimony of the plaintiffs and of Chan Chun Yip, the primary finding of fact upon which Mortimer J. relied in referring that the unusual colour of the converted HK$1,000 note derived from printing errors was its exact match with the colour of the defendants’ HK$500 note. This cannot be construed as a finding more definite than that the colours appeared to those witnesses so to match or less definite than that the colours comprised not only the distinctive dark brown but also the whole rather sophisticated patterns of colour on the front and back as well. I regard an initial inference as fairly drawn on that footing·

253.  Also cogent in this context, however, was the evidence of Mr. Thomas, the Technical Manager of Bradbury Wilkinson (Inks) Ltd., an associate company of the printers of the note. He had been employed by the Bradbury Wilkinson Group for thirty-three years and the trial judge had no option but to concede that "if the notes are printed according to the system laid down and if the machinery operates properly and if the checking is done properly it is highly unlikely that a HK$1,000 note could be printed both sides in the wrong colour. Indeed, if all those things are done and the checks are made carefully, it would not be near impossible for there to be error an error note.” I would add that the defendants’ HK$1,000 and HK$500 notes differ in size and it is difficult to understand how an error note of the colour described could have passed undetected through their hands and into circulation. But as the trial judge remarked, relying upon his experience at the Bar and on the Bench : “machines do go wrong – systems are not followed as they should be, checks are not made as carefully as they should be and those who are carrying out the systems do not always even try to follow them on occasions.” I have personally no doubt that had the Superintendent of the Chernobyl Nuclear Power Plant been asked about his safety system prior to the recent disastrous escape of radiation he would have given convincing evidence that such an eventuality was impossible.

254.  The judge also found that examples of misprinted notes issued by the defendants were readily available for purchase in Hong Kong from some thirty dealers. Systems and checks are not infallible. However, the errors proved were attributable to machine malfunction on the application of facsimile numbers, signatures and dates and the alignment of the patterns. In one instance the lion’s head appeared on the front as well as the back of a HK$1,000 note. The distinctive yellow of the HK$1,000 note is applied by the intaglio system first to the back and a week or so later to the front of a sheet of notes. Though it was proved that the colour of notes can be changed after issue by chemical or related processes there was no evidence as to whether or not so great a change could or could not thereby be brought about as to produce the apparent matching observed.

255.  On the basis of the primary facts found and of the material evidence I am unable to infer on the balance of probability that the unusual colour of the converted note derived from errors in the printing process. No more am I able to draw any inference to the contrary. Without more, therefore, I would have accepted the defendants’ submission that the trial judge was wrong to draw the inference he did and, an, as a result, to award the plaintiffs a sum in excess of the face value of their note. In the circumstances it falls to consider another factor taken into account by Mortimer J. That factor was the applicability of the maxim "omnia praesumuntur contra spoliatorem” which can, I believe, loosely be regarded both as an aspect of the more general proposition that a party should not be allowed to gain an advantage from his own wrong and an admonition to judges to use their common sense when considering their approach to a party’s destruction of or failure to produce a document or record which might materially assist an opponent in the proof of his case. In most instances I would expect the approach to be as described by Staughton J. in Indian Oil Corporation Ltd. v. Greenstone Shipping S.A.(6) at p 885 :

“- if the wrongdoer has destroyed or impaired the evidence by which the innocent party could show how much he has lost the wrongdoer must suffer from the resulting uncertainty."

Quite how the wrongdoer is to suffer involves some, though far from an exhaustive, reference to the volume of learning with which we have been favoured in this regard.

256.  The plaintiffs rely strongly on two judgments given on motion for a retrial in Williamson v. Rover Cycle Co.(7) Madden J., at p. 208, expressed the view that :

“a party from whom evidence has been kept back which, if produced, might have established his case is entitled to call upon the court to draw an inference in his favour from the mere fact of the suppression of the evidence – a party who destroys or suppresses evidence is a spoliator of evidence within the meaning of this maxim although he may have had no improper motive at the time. It would be sufficient” he thought “if the effect of the wrongful act had been to deprive the plaintiff of evidence by which his case might be supported.”

Palles C.P., also emphasizing that the failure to produce certain bicycle parts was unexplained, gave judgment to like effect. The opinion of Madden J. was obiter because, in the event, he found that the defendants were not spoliators since the plaintiff had had ample opportunity to inspect the subsequently destroyed parts critical to his case, Kenny J. had said, at p 203 :

"I think there can be little question that if - a destruction (was) effected for the purpose of concealing the truth - the: onus might be shifted – I doubt very much whether the maxim is applicable in the absence of circumstances suggestive of motive or of a wrongful destruction.”

With this view Palles C.B. expressly disagreed. Little distinction is to be drawn between inference and shifting the burden of proof. In neither event contrary evidence is called for from the other party. Further, though the defendants in the instant case acted wrongfully in that their destruction of the HK$1,000 note constituted the tort of conversion it was accepted that they had not intended to suppress evidence which might be favourable to the plaintiffs.

257.  English authority at the time of the Irish decision does not appear to have borne hardly upon an innocent destroyer of evidence potentially favourable to another party to litigation. To quote from the judgment of Dr. Lushington in The Johanna Emilie (8)at p 327 :

“If papers are destroyed when the capturing vessel is in sight or there is a chance of capture, it is the strongest proof that these papers contain some matter which would incure to condemnation – but if the papers are destroyed a long time antecedently before there is any probability that they were destroyed for fraudulent purposes, then, though there is no spoliation and though, no doubt, the inference of law is against the act during war, yet the case is of a less stringent nature.”

The meaning of the words “of a less stringent nature” was, I believe, explained by Sir Arthur Channell giving the advice of the Privy Council in The Ophelia (9)at p 229 :

Authorities more recent than those two prize cases have shifted in the direction of the judgment of Madden J. in Williamson v. Rover Cycle Co. in Seager v Copydex(10) at p 258 Winn L.J. stated :

“ – since the basis on which damages are to be recovered in this case is …. tortious …. where thre is insoluble doubt between any two possible versions or assessments when the tribunal of fact is pursuing the factual issues it should be borne in mind that there is a general principle that ‘omnia praesumuntur contra spoliatorem’.”

A strong Court of Appeal in General Tire and Rubber Co. v. Firestone(11) at p 267 did not :

“doubt the validity of this view in the context of that case –”

and this Court gave judgment to similar effect in Hong Kong and Kowloon Wharf and Godown Co Ltd v. Bank Wegara Indonesia(12). Persuaded, perhaps, by these authorities the defendants have conceded that their destruction of note Co88191 is a factor to be taken into account if we cannot otherwise resolve whether or not its unusual colour was due to errors in the printing process. In the light of that concession, rightly made in my view, I am able, like the trial judge, to infer that the unusual colour derived from such errors. It was therefore a collector’s piece of unusual rarity.

258.  The final question arises as to whether the converted error note had a value of HK$375,000 as found below. Again this is a question in which we are in no position of disadvantage as compared with that of the trial judge. The note would have had a market value among collectors, albeit there was no “available market”, in the sense described by Lord Denning M.R. in Building & Civil Engineering Holidays Scheme Management Ltd v. Post Office(13) at p 264 in the passage cited by the judge :

"The market value here means the price at which the goods could be expected to be bought and sold as between willing seller and willing buyer, even though there may be only one seller and one buyer and even though one or both may be hypothetical rather than real.”

That price cannot, I am satisfied, in any way be related to the sum which the first plaintiff, thinking he had a bargain, paid to Law Wai Yee for the note in ·June 1982. No more do I feel able to rely on the other large sums which he gave for further error notes much more recently. These prices arc greatly in excess of those paid, by the defendants’ emissary shortly before trial and by knowledgeable collectors whom they called, for notes having similar flaws. At the time of his purchase of the HK$1,000 note “he was uninformed, inexpert and in any event only a beginner” as the judge reminded himself. The evidence does not suggest any subsequent increase in his expertise.

259.  Chan Kwai' s most expensive acquisition had cost him some HK$6,300 but Law Yiu Ching, called by the plaintiffs, had bought a HK$10 note with half the print on one side missing for some HK$117,000 and sold it for more. Leung Tai Leung, whose evidence the judge found acceptable despite his lowly occupation, said that he had been offered HK$260,000 for a pair of error notes which he was seeking to sell on a commission basis.··

260.  While the defendants, if anyone, must suffer from the uncertainly as to value insofar as it is occasioned by their destruction of a HK$1,000 error note of unusual rarity, like Mortimer J. I discount as speculative the prospects of an actual payment by an uninformed though keen collector of an exorbitant price. A Court must be wary of awarding exemplary damages under another guise. The meagre relevant evidence will not, in my opinion, support a finding of value exceeding HK$250,000. I would allow the appeal and substitute that figure for the HK$375,000 awarded below; interest to run from 22^nd September 1983 until 25^th May 1986 at the rate of one percent above the prime rate from time to time prevailing during that period.

Hunter， J.A.:

261.  The circumstances which give rise to this appeal have already been most carefully and fully set out in the judgments already delivered. I shall therefore proceed separately to consider the three issues raised in this appeal namely :-

(1) The . judge’s findings of primary fact.

(2) The judge’s finding that the note was misprinted in the colour of a HK$500 note and was not discoloured.

(3) The judge’s finding that the note was worth HK$375,000.

I. The Judge’s finding of primary fact

262.  The judge faced a difficult task in making his findings of primary fact in four critical areas of dispute. These were:-

(1) The alleged purchase of the note for HK$350,000.  In the absence of any supporting oral or documentary evidence, beyond that of the bank borrowing, his conclusion depended entirely upon his view of the credibility of the two plaintiffs.  His most significant findings here were:-

(a)  The first plaintiff : “I am satisfied that this note was of great importance to the first plaintiff.  He thought that the note was of great value and he thought it was extremely rare, the only one of its kind in the world”. p. 36(2)

(b) The second plaintiff : “On this matter, I remain impressed by Madam Law’s evidence and I take into account criticisms that may be made of it and can be made properly. She was cross-examined at very very great length and in sometimes happens that a cross-examination of great length destroys a witness absolutely.  It sometimes happens that in the course of cross-examination it becomes clear to the court that there are matters upon which the court can rely and that was so in this case” p.36(5).  Later “I am satisfied that I can rely upon what was said inspite of the obviously unusual nature of the account.  I am quite satisfied that the note was purchased, as I said, for HK$350,000”. p 37(3)

(2) The events at the mini-branch of the bank on 17th September 1983.

Here the judge had to weigh the evidence of the second plaintiff against that of the two bank tellers. His conclusion was : "I prefer Madam Law’s account” p 42(3).

This conclusion extended to the whole of her evidence subject to the express qualifications noted in the judgment between pages 44(2) and 45(5) where the judge found her evidence in part unreliable, but acquitted her of telling lies.

(3) The eye·witness evidence, what the judge called direct evidence, bearing upon the colour of the note.  Here the judge had to weigh the evidence of Mr. Leung Pak Nam and the two tellers against that of the first and second plaintiffs and Mr. Chan Chun Yip.  He reached a firm conclusion in favour of the latter’s evidence which he described as “cogent and compelling” p.36(2).  In relation to the particular witnesses he concluded :-

(a)  First plaintiff : “He was pressed at a very great length about the colour of the note, and again that served, so far as I was concerned, to make me think, far from the fact I could not rely upon him, that I am able to rely on him” p. 52(4).

(b) The second plaintiff : “So far as Madam Law was concerned I found her evidence upon this impressive.  Not because she was always accurate, because I found she is not always accurate.  She was rather a timid and anxious witness trying, I think, to give an accurate account, and she was giving an account of things that her husband did not know of until she was in the witness box ….  She said, and I accept, that the comparison was made between this note and a HK$500 note, and she said the colours were exactly the same” p 52(6) & (7).

(c)  Chan Chun Yip.  In part the judge found him to be unreliable but not untruthfull : p 29(5) to p 30(5).  The overall assessment of his evidence was : “So far as the comparison of the colour is concerned, I think it significantly supports the comparison that had been made by “Madam Law” p 59(3).

(4) The “sale” of the note to Chan Shun Hoi.  Since the suggestion was that both the oral evidence of Chan Chun Yip and Chan Shun Hoi, and the so-called “supporting” documents was false and fabricated, that was the key issue before the judge. Again it turned upon the impression they made upon him as witnesses.  The judge’s conclusion, having heard both men, was : “I do not think that this is a fabricated account.  It is extremely bizarre, but I am quite sure that it is not a fabricated account” p 57(3).

263.  Mr. Gilbert Rodway , Q.C. for the appellant Bank, has launched an impassioned and detailed attack upon these findings. The plaintiff’s case at the trial was he submitted a “scam” : by which I understand him to mean that it was a false case fraudulently presented and supported by perjured and fabricated testimony. The four principal witnesses, the two plaintiffs, Chan Chun Yip and Chan Shun Hoi, assisted by Law Yui Ching and Leung Tai Leung, had successfully combined to deceive the trial judge. This Court, so the submission went, only had to read judge's notes of evidence to conclude that the critical phrases frequently used by Mr. Rodway like “completely lying witness”, “concocted story”, “wholly dishonest”, “not credible”, “cock and bull story”, could properly and accurately be used to describe much of their evidence individually and collectively. This court should therefore re-try the case on the documents and dismiss the plaintiffs’ claim.

264.  Mr. Rodway founded upon a dictum of Lord Greene, M.R. in Yuill v. Yuill (1) at p 22 where he said that in that case the trial judge :

“cannot, I think, have subjected the evidence to an adequate scrutiny before expressing the view which he did as to the demeanour”

265.  of two vital witnesses. The suggestion here was that had the trial judge given himself more than the four days he took to consider the position after the conclusion of the hearing, and thus been able more carefully to re-read his notes, he would not have fallen into the errors attributed to him.

266.  It is perhaps noteworthy that the most quoted dictum of Lord Greene in Yuill(1) is :

"It can, of course, only be on the rarest occasions, and in circumstances where the appellate court is convinced by the plainest considerations, that it would be justified in finding that the trial judge had formed a wrong opinion.”

267.  p 19. This is principally because, in relation to findings of primary fact, as opposed to inferences drawn from such facts, a crucial part of the evidence never reaches the appellate court. Most regrettably in Hong Kong, we do not presently enjoy a transcript of the evidence in civil cases. This case demonstrates the urgent need to remedy this situation. But even where a transcript is available, it does not record the material upon which a trial judge has mostly to rely in a case like the present. What is lost to the appellate court was graphically described by Lord Wright in Powell v. Streatham Manor Nursing Home(2) at p 267 as follows :

“as the evidence proceeds throught examination, cross-examination and re-examination the judge is gradually imbibing almost instinctively, but in fact as a result of close attention and of long experience, an. Impression of the personality of the witness and of his trustworthiness and of the accuracy of his observation and memory or the reverse. He will not necessarily distrust a witness simply because he finds him inaccurate in some details : he can give such inaccuracy its proper place, particularly if he sees that the witness is tired, or antagonized, or confused, or perhaps impatient, and especially if the matter of inaccuracy is of minor or collateral importance. But such inaccuracies may appear in a very different light when pointed to as isolated passages in the shorthand notres and abstracted from the human atmosphere of the trial and from the totality of the evidence. The judge will form his impression from the whole personality of the witness : he can allow for the nervous witness, standing up in a crowded Court or worried by the strain of cross-examination. The judge may be deceived by an adroit and plausible knave or by apparent innocence : for no man is infallible; but in the main a careful and conscientious judge with his experience of Courts is as likely to be correct in his impressions as any tribunal, unless perhaps, as some would say, a jury of twelve members is preferable”

268.  These considerations have led to several formulations of the principles to be applied by an appellate court, two of which are conveniently to be found in the speech of Lord Thankerton in Watt Or Thomas v. Thomas(3) at p 487. The first is Lord Thankerton’s formulation : -

“(1) Where a question of fact has been tried by a judge without a jury, and there is no question of misdirection of himself by the judge, an appellate court which is disposed to come to a different conclusion on the printed evidence, should not do so unless it is satisfied that any advantage enjoyed by the trial judge by reason of having seen and heard the witnesses, could not be sufficient to explain or justify the trial judge’s conclusion;

(2) The appellate court may take the view that, without having seen or heard the witnesses, it is not in a position to come to any satisfactory conclusion on the printed evidence;

(3) The appellate court, either because the reasons given by the trial judge are not satisfactory, or because it unmistakably so appears from the evidence, may be satisfied that he has not taken proper advantage of his having seen and heard the witnesses, and the matter will then become at large for the appellate court.”

The second is that approved by Viscount Sankey L.C. in Powell v. Streatham Manor Nursing Home(2) and cited by Lord Thankerton as follows :

"Am I – who sit here without those advantages, sometimes broad and sometimes subtle, which are the privilege of the judge who heard and tried the case – in a position, not having those privileges, to come to a clear conclusion that the judge who had them was plainly wrong?  If I cannot be satisfied in my own mind that the judge with those privileges was plainly wrong, then it appears to me to be my duty to defer to his judgment.”

269.  When these principles are applied to the facts of this case, in my judgment they reveal four fatal obstacles to the acceptance of Mr. Rodway’s submissions. First, as the quoted extracts sufficiently show, it is the “lost” evidence upon which the trial judge particularly relied. This was far from being a case where he was able to accept one witness or a group of witnesses totally in preference to others. His assessments of each witness was both qualitative and quantitative. He had to dissect the truth from the false : the reliable from the unreliable. In a case like the present the factors described by Lord Wright are quite as important, and may transcend in importance the recorded content. Because it is notorious that “evidence may read well in print but may be rightly discounted by the trial judge or, on the other hand, he may rightly attach importance to evidence which reads badly in print” per Lord Reid in Bemmax v. Austin Motor Company Ltd(4) at p 375. It seems to be a classic example of a case where “an appellate court can never recapture the initial advantage of the judge who saw and believed” per Lord Atkin in Powell v. Streatham Manor Nursing Home(2) at p 255.

270.  Secondly, I see no substance in the suggestion that the trial judge failed sufficiently to scrutinize his note. The breadth and scope of the judgment is wholly against this. Without attempting the impossible task on dealing with every single point, he went into the matter in considerable detail. We are “entitled and bound, unless there is compelling reason to contrary, to assume that he has taken the whole of the evidence into his consideration” per Lord Simonds in Watt Or Thomas v. Thomas(3) at p 492. I see no such reason.

271.  Thirdly, I am not impressed by the repeated invitation to regard much of the evidence of the four main witnesses as improbable. Here again I turn to Lord Wright at p 269 in Powell v. Streatham Manor Nursing Home(2) who said this :

“When this delay is spoken as a glaring improbability, it must be inquired what is the standard of probability to be taken. Is it that of the normal man in normal circumstances, if such an abstraction is conceivable? Any such standard would obviously be fallacious, since the true question can only be what was probable if you take, as you must, these particular individuals situated in the particular circumstances in which they were. I can see no reason to reject the judge’s conclusion, even if it were competent for me to speculate on probabilities of this kind.”

Those words were spoken in the context of medical negligence. In this case the obstacles I detect in my path are infinitely greater. The case has introduced me to a market of which I have no prior experience. I have no idea by what touchstone I am supposed to judge probabilities in the context of persons with the background of the plaintiffs, in a market where conduct may be motivated in an infinite variety of ways between the extremes of a determination to possess the rare for its own sake, to the taking of a stimulating gamble. I feel unable to place any reliance on personal perception, as against the judge’s observations.

272.  Fourthly, the judge observed these four witnesses being cross-examined at length and he believed them. At the same level of professional negligence Lord Wright said this about the doctor, in Powell v. Streatham Manor Nursing Home(2) at p 271 :

“I can only observe that …. he was, after being cross-examined at great length, believed by the judge. To my mind it would be unjust, after this, to seek to convict him on paper.”

This case again is a fortiori.

273.  In these circumstances I have no doubt that this case falls within the second of Lord Thankerton’s propositions; and that the answer to the question posed by Viscount Sankey is “no”.

II. The judge’s finding that the note was an error note of HK$1,000 denomination misprinted in the colour of a HK$500 note.

274.  The judge reached this conclusion by two separate but parallel routes namely : -

(1) By inference from his findings of primary fact and from his conclusions on the discolouring and printing evidence.

(2) By the application of the principle of Armory v. Delamirie(5), p 56(3).

275.  The judge’s three main findings of primary fact were : -

(1) The note was genuine.

(2) The note was a used note which had been in circulation.

(3) The note was identical in colour to that of a HK$500 note.

One and two are common ground : three was hotly disputed.

276.  Here, as I have already noted, the judge expressly preferred the evidence of the plaintiffs and Chan Chun Yip to that of the two bank tellers, mainly because he believed the former, who had made a careful and precise comparison between the colour of the note and that of a normal HK$500 note, whereas he rejected the tellers’ evidence as unreliable. We were much pressed with the supposed experience of bank tellers in differentiating between the colour of bank notes. In some circumstances this can be compelling. But as the judge observed : “it is a fact that colours are difficult to remember unless a direct comparison is made” p 52(7). Direct comparison also meets the criticism that different persons may see different colours in a different way. These tellers did not purport to make any such comparison : their recorded descriptions varied : and the judge was not impressed by their evidence. I am not persuaded that his conclusion was “plainly wrong”.

277.  In relation to the evidence on discolouring the judge correctly， observed that no witness had asserted that notes of the colour of a HK$500 note were produced by discolouring, and that none of the notes produced and alleged to have been discoloured were exactly the same as the colour of a HK$500 note – or I might add anywhere near it. He summarized the system evidence given by Mr. Thomas the Technical Manager of Bradbury Wilkinson (Inks) Ltd. But this did not persuade him that the multiple human error necessary to produce a misprinted note in the wrong colour could never have occurred.

278.  The bank had by its evidence sought to make good two complementary propositions. First that it was a simple matter chemically to change the colour of a HK$1,000 note. Secondly that it was impossible for the printers to print and release a miscoloured note. Considering its importance the evidence on discolouring was surprisingly incomplete.

279.  The printers used two quite distinct colours for the proper printing by the contaglio process of the principal colours on the HK$500 and HK$1,000 notes. For the HK$500 note this was a strong, deep distinctive brown which I shall call “500 brown”. For the HK$1,000 note this was a clear, chrome yellow which I shall call “1,000 yellow”.

280.  A range of “discoloured” notes were produced in evidence by the bank in exhibit D7. They all appear to have been rescued from the normal destruction process subsequent to the plaintiffs’ complaints. Broadly speaking they fell into three different colour categories which I shall call A, B and C.

(1) Category A were basically yellow/orange in colour, but were slightly dirtier in colour that the true clear 1,000 yellow.  Examples are numbers 5, 6, 11 & 26 in D7.

(2) Category B are still predominantly orange/yellow but are distinctly dirtier in colour than Category A.  In the subjective area of description I would be minded to adopt “very light coffee”.  Examples are numbers 7 and 8 in D7.

(3) Category are stronger and deeper in colour, with a distinct brown tint to the yellow.  My personal description would be “yellow brown”.  Examples are numbers 2 and 4 in D7.  Although I have used the word brown in my description, the colour to my eye is very markedly different to 500 brown.

281.  All these notes were evenly discoloured overall. For reasons which carry conviction accidental discolouring was ruled out by Mr. Thomas. This leaves only two possible explanations : deliberate discolouring : or printing error.

282.  On discolouring, Mr. Thomas’ evidence was that the major ingredient in 1,000 yellow was lead chromate to which was added yellow, orange and red organic dyes and carbon black. Lead chromate he said can be converted to lead sulphide, which he said was black or dark brown in colour, by dipping the note in a 15 percent solution of sodium sulphide. His statement of evidence, as orally corrected, concluded as follows :-

"I have carried a test on a sample HK$1,000 banknote normal colour, and have converted it to a dark colour by immersing it in a solution of sodium sulphide.  I have reconverted part of the note to its original colour by exposing it to hydrogen peroxide.  This converts the black lead sulphide on the surface of the note to white lead sulphate, so that the note reverts to its original yellow or gold colour”.

283.  These two test notes, signed by Mr. Thomas and dated 27/6/85, were numbers 18 and 19 in D7. In each case the part reconverted can be seen in the top left hand corner. This indeed appears as original 1,000 yellow. But what Mr. Thomas called “a dark colour” is no more than category A in my scale. The note is still a slightly dirty orange in colour : not brown at all like the notes in category C : and no where near 500 brown.

284.  The only other tested notes produced in evidence were numbers 5 and 6 in D7. In relation to them there is indirect evidence that both were treated with a 15 percent solution of sodium sulphide, and then number 6 was reconverted with a solution of 30 percent hydrogen peroxide. Again the conversion of number 5 has only led to a category A type slightly dirty orange note : and the reconverted number 6 appears only slightly cleaner and with an apparent serious thinning of the paper.

285.  If in fact it was chemically simple, feasible or possible, to convert a HK$1,000 yellow note into various shades of brown up to and including 500 brown, it would have been very simple to produce a range of notes expressly so converted. All that was proved was that a particular process could produce a dirty orange note. Further this evidence does not persuade me that the same process could produce a note of 500 brown. I note particularly the words “on the surface of the note” in part of the amendment to Mr. Thomas’ statement. This raise doubts in my mind as to how deep into the pigments of the note the chemicals penetrate in either the conversion or reconversion process. When also one can see how comparatively little was achieved in notes 5, 18 and 19, and what a very long way remained to go, I would be minded to infer that this process alone, without the use of additional dyes or pigments, would not produce the distinctive 500 colour.

286.  This leaves the notes in categories B and C, and especially the latter, explained by no direct evidence. The proven chemical discolouring process stopped short of achieving a 500 brown colour. Although it would seem that the bank had quite a number of these notes in its possession, not one was treated with hydrogen peroxide. They seem simply to have been described by Mr. Wong, the bank official who took the statements from the bank’s two expert witnesses, as “failed” notes, which description was thereafter accepted.

287.  These notes have some bearing upon Mr Thomas' evidence of impossibility, which the appellants argue that the judge should have accepted and acted upon. Mr Thomas described what he called a system of “strict control” at all stages in the production and inspection of the notes. He was not happy with the number of error notes in court, some of which were put to him. These apparently showed machine failure in printing, followed by human error in failing to exclude them on subsequent inspection. But he claimed that a miscoloured note could only result from multiple human error which he dismissed as “just not possible”; or “I do say the odds are so high that I do not believe that this could have happened”.

288.  One of the strongest points in Mr Thomas’ favour was that the fronts and backs of the notes were printed by the intaglio process separately and more than a week apart. The colour mix for the second printing differs slightly from the first, by reason of the compression of the paper brought about by the first. Therefore for a note to be evenly printed both sides in the wrong colour the identical mistake would have had to have been made twice. This would have to be followed by several failures to detect and reject the wrong coloured note.

289.  The number on the missing note led by Mr Thomas to conclude that it was printed early in a run. It was also at this time that most of the note inconsiderable wastage, put at 7 to 10 percent, occurred, whilst pressures and the correct ink balances were got right. The same intaglio machine was used for both the yellow and brown processes. Of course between each colour change the machine ought to have been thoroughly cleaned. But in the course of discussing in his evidence in chief what printing a discoloured note would have involved, Mr Thomas considered as a hypothetical possibility the topping up of the machine with yellow ink from which all the brown ink had not been removed. He said : “To begin with the brown ink would mix with the yellow ink and produce a darker shade”. We went on to say that this mistake should never have happened, and should in any event have been obvious to the operator. It would follow that any such note should be added to the wastage and dealt with under the same “strict control”.

290.  This brings one back to the untested cause of discolouring of the notes in categories B and C. They, and particularly category C, are “a darker shade”. Their colour could have resulted from a mixing of the yellow ink with some brown. If they, or any of them, were so printed, then their existence would tend to show that insufficient cleaning of the machine between inks did occur, and occurred more than once, and that the wastage “strict control” was also not perfect. On this hypothesis the impossible would have occurred, and the question whether the error could have extended to a 500 brown note would become one of the degree. The failure to exclude any such possible explanation of these notes by simple testing to my mind raises a very serious question mark over that most difficult of concepts being advanced, the suggestion that multiple human errors could never have occurred.

291.  For my part therefore I would add to the judge’s primary findings of fact these conclusions upon the discolouring and printing evidence namely :-

(4) The evidence on discolouring did not address the real problem and stopped well short of revealing any method by which a note could be converted from 1,000 yellow into this particular 500 brown.

(5) Like the judge I am not satisfied that the printing of a HK$1,000 note in the 500 brown colour could not have occurred.

I would accordingly be minded to draw the same inference from this evidence as did he.

292.  In addition the judge relied upon the principle of Armory v. Delamirie(5). For this purpose the material facts, additional to the three findings of primary fact, are these. The destruction of the note was tortious. The description itself prevented the testing which would quickly have decided the issue of misprint or discolour. No other testing evidence was available to the plaintiffs, who had had no occasion to obtain it prior to the destruction of the note. Do those facts give rise to an inference against the bank that the note was a misprint, which it is for the bank to rebut? Or in other words do those facts have the effect of transferring to the bank the evidential burden of proving on the balance of probabilities that this note was in fact discoloured. In my judgment these questions should be answered in the affirmative.

293.  We have the benefit of a much more detailed argument and more extensive citation of authority on this aspect of the case than did the trial judge. The authority seems to me to show that the principle encapsulated in the maxim “omnia praesumuntur contra spoliatorem” and applied in Armory v. Delamirie(5), may be no more than a particular application of the maxim “nemo ex suo delicto meliorem suan conditionem facere potest” – no man can place himself in a better position by his own wrong. It operates at two quite different levels, but without overall verbal adjustment to the terms of the maxim itself.

294.  The highest level of application is where there is evidence suggesting deliberate destruction by the spoliator. Here “all” is indeed “presumed” against him. The presumption may be virtually irrebuttable : or the court may conclude that the spoliators “have by their acts put themselves in such a position that their evidence cannot be relied upon" per Sir Arthur Channell in The Ophelia(6). Since the judge negatived deliberate destruction, the appellants originally contented that the maxim had no application to the case at all. But Mr. Rodway resiled from this in reply and acknowledged a limited application of the maxim at the lower level.

295.  At the lower level of application no inconsiderable rewriting of the maxim seems to me really to be necessary. First, in certain contexts at least, spoliator can be equated with tortfeasor e.g. where the act of destruction is also an act of conversion however accidentally caused. Secondly, “all” requires two qualifications. First, the destruction has to be of something which might asst to prove the plaintiff’s case, which, secondly, puts the plaintiff in particular difficulty owing to the lack of other evidence in his possession. Thirdly, there arises not so much a presumption with the consequences considered above, but an inference which transfers the evidential burden of proof upon the very matter rendered uncertain by the destruction.

296.  These conclusions seem to me to have the supported of :-

(1) The Queen’s Bench and Court of Appeal in Ireland in Williamson v. Rover Cycle Co(7) , where the application of the maxim was excluded by the presence of other evidence in the plaintiff’s position, but where this statement of principle is to be found in the judgment of Palles C.B. p 102 :

“All that I think necessary to lay a foundation for the application of the well known maxim, “omnia praesumuntur contra spoliatorem” is that the loss or destruction is as against the plaintiff wrongful; and that that which was lost destroyed or not produced, might reasonably, with other evidence, had been sufficient to maintain the plaintiff’s case …. I purposely use the word “might” as distinguished from “would” because when evidence is not forthcoming, it is often, as it was in the present case, uncertain what its exact weight might have been. The additional risk thus involved I hold to lie on the wrongdoer. Viewed in this, its very mildest light, the rule operates not so much as a punishment, but as the provision of an equivalent, for that which has been wrongfully taken away”.

(2) Atkin L.J. in Smith v. G.W. Railway(8) where in his dissenting judgment he said :

“I have little doubt that once there is a prima facie case of conversion the doctrine “omnia praesumuntur contra spoliatorem” applies, of which the decision in Armory v. Delamirie(5) is a well known instance”.

It is notworthy that the view on onus of proof Atkin L.J. was advancing, now prevails, see Levison v. Patent Stream Carpet Clearning Co Ltd(9); and he was there applying another decision of Palles C.B. to whose eminence the majority paid special tribute Bankes L.J. p 248 and Scrutton L.J. p 253.

(3) Scrutton L.J., significantly in a pre-conversion context in Goldman v. Hill(10)  :

“It was his duty as bailee to prove his breach of duty did not cause the loss, not the plaintiff’s duty to show that it did”.

(4) Diplock L.J. in the context of the assessment of damages against a negligent solicitor;  Allen v. McAlpine (11)

(5) Winn L.J. “where there is insoluble doubt between two possible versions or assessments” of damages recoverable on a “tortious basis” Seager v. Copydex(12).

(6) The Court of Appeal, Russell, Buckley, and Orr L.JJ. in General Tire v. Firestone Tyre(13) applying the dictum of Winn L.J. in the context of an assessment of damages, and making the distinction I have sought to draw between an inference arising from innocent destruction and a presumption from deliberate destruction.

(7) Staughton J. in Indian Oil Corporation v. Greenstone Shipping S.A.(14) :

“Secondly if the wrongdoer has destroyed or impaired the evidence by which the innocent party could show how much he has lost, the wrongdoer must suffer from the resulting uncertainty”.

(8) Last but not least, this court in Hong Kong and Kowloon Wharf v. Bank Negara Indonesia (15) per McMullin J.A.

297.  In the light of the evidence I have considered above, the application of this principle to the present facts necessarily leads to the conclusion, in my judgment, that the bank failed on the balance of probabilities to show that the missing note was a discoloured note. Subject only to one reservation, I therefore agree with the judge’s conclusion, and substantially with his reasoning. On one reading of his judgment at page 51(c), it might be said that he was applying a higher standard than the balance of probabilities. With this I could not agree, but I doubt if this reading is correct. I think he was doing no more than using the same adjectives that he used to describe the plaintiffs’ evidence e.g. at p 56(2).

III. The judge’s finding that the note was worth HK$375,000.

298.  This I have found the most difficult aspect of the case. The first problem is that the note was destroyed when it had been examined from a numismatic viewpoint only by the plaintiffs and Chan Chun Yip, and not by anyone who could claim greater experience. In answer to the plaintiffs’ solicitor’s first letter seeking the return of the note the bank replied on 5^th October 1983 in these terms :-

“The Banknote was duly analysized by our Main Treasury Division who confirmed that it was genuine though discoloured. Where a banknote (or coin) which has been presented for analysis is of numismatic interest (for some reason or other) it is our practice to return the banknote (or coin) to presenter …. We confirm that the value of banknote C088191 (which was analysized by two currency experts) was that shown on its face, HK$1,000 and that the note had no “premium” value in respect of its colouring (or any other distinguishing feature)”.

299.  We were told that one of the two experts there referred to was Mr. Leung Pak Nam who gave evidence. We disclaimed any expertise, and said he examined notes only to see if they were genuine or forged. It thus appears that the bank was aware of the risk of destroying notes which might have numismatic value without prior examination. The oral evidence did not disclose the existence of the practice suggested in the letter, but if it in fact existed it was clearly not followed. A tortious destruction of the note in such circumstances justifies a court in applying the maxim “omnia praesumuntur contra spoliatorem” in the manner considered above and in drawing adverse inference if it finds itself faced with “insoluble difficulties” per Winn L.J., or “resulting uncertainty” per Staughton J. in the assessment of damages.

300.  The second problem is the very special nature of such market for error banknotes as can be said to exist. Here I think that the judge was right to conclude that there was no available market for such a note in the sense that it could readily be bought or sold. This was because a note of this character was so rare as to approach or to be unique. On the evidence the available market in error notes extended no further than notes displaying various types of printing errors. The judge in my view was right to recognise that the market with which he was concerned was in the words of Lord Denning M.R. in Building and Civil Engineering Holiday Scheme Management v. the Post Office(16)· which he quoted:-

One where ‘there may be only one seller and one buyer’ and where ‘one or both may be hypothetical rather than real’.

The judge had to assess the price which the note in question might have realized on about 22^nd September 1983 on a sale by the assumed willing plaintiffs to some hypothetical willing purchaser.

301.  I have not found it easy to identify the likely characteristics of such a purchaser. By the sober standards of the western banker, who can happily accommodate the futures market, this market might well be condemned as pure speculation or a pure gamble. This may be putting it too high, but I am minded to think that any buyer must possess courage : a confident readiness to back his own judgment or instinct : and to relish the taking of a risk. But how relevant or material is knowledge or experience? Knowledge of the printing processes which might point to a note’s true rarity might, as the judge suggested, help. But no buyer could ever really “know” or discover in fact how rare a particular note is. He has to make his own assessment and base his price upon it. Nor can I see that experience in the existing market for misprinted notes, which produces no true comparables, would do much more than provide a starting point. Another relevant characteristic may be something of a collector’s zeal, that peculiar feeling of satisfaction derived from the possession of something thought to be exceedingly rare. But I would be minded to regard the ultimate dominating factor as the buyer's personal conviction that he is acquiring something rare for a price which will appreciate because others in the future will recognize its value at a greater sum.

302.  The significance of this attempted analysis is that it would suggest that the first plaintiff was by no means untypical of that perhaps small group of persons prepared to enter the upper strata of this market at all. I do not question the truth of the judge’s view that he was “uninformed, inexpert and only an beginner”, p 52(3); and that both he Chan Chun Yip and Chan Shun Hoi did not know much about error notes or the printing processes. What I question is the significance of this. Their lack of knowledge of the printing processes was shared by all the other valuers. This plaintiff convinced himself of the rarity of the note and backed his judgment. The fact that the knowledge of printing processes may have assisted this, seems to go more to support his view, than to lead to the conclusion that his approach was quite peculiar and unrepresentative. I accept that the dual process of perception of rarity and the backing of judgment, being personal to every buyer, is calculated to lead to a wide range of prices. But for my part I do not feel justified in dismissing this price of HK$350,000 as pure speculation and as of no assistance at all. I see it rather as giving an indication of this range.

303.  On this aspect of the case also I see no reason to dissent from the judge’s findings of primary fact. These were :

(1)His preference for the evidence of Leung Tai Leung, the street trader, who he found “a good deal more street-wise and to have a good deal more knowledge of the real market than the other experts who were called”, at the market level with which he was familiar.  We were invited to conclude that he was a liar largely by reason of answers given in relation to his pre-trial “statement”.  But it is clear that he was not given a proper opportunity to read through, correct and sign any statement written in his own language, and the judge expressly accepted his account that this was a result of “rather casual conversation” with the plaintiffs’ solicitor.  The judge’s conclusions were clearly and expressly based upon the impact each witness made upon him and I am far from satisfied that he was “plainly wrong”.

(2)“rarity is a test for value”.  This seemed to be common ground between all the valuers.  In the case of something which is apparently exceptionally rare, this must I think mean the buyer’s perception of rarity.

(3)“That error notes are sold for sums which were quite unknown in a amount to the defendant’s experts”.  This conclusion was based first upon the evidence of Law Yiu Ching that he had paid US$15,000 (now equivalent to HK$117,000) for a HK$10 note with half the printing on its face and the number missing : and had later sold it for US$17,000.  Secondly upon the evidence of Mr Leung himself particularly in relation to two pairs of notes he had then available on offer at HK$450,000 and HK$400,000 respectively.  His view on the first pair was that it was worth HK$450,000 but the minimum price he expected to be accepted was HK$200,000 : whereas in relation to the second he had had an offer of HK$260,000.

304.  The judge accepted these figures as a guide to value : as the best comparables he had. They all related to notes containing printing errors, and may be said to represent the top end of the range for this type of note. But all the evidence tended to show that the colour error established was of a much greater order of rarity. The problem is to identify the factor which has to be applied to these comparables to reflect this.

305.  This is what divides the judge and Kempster J.A.. The judge (at its highest) adopted a factor of four having regard to the printing evidence and to the purchase price. Kempster J.A. feels unable to place any reliance upon the purchase price and arrives at a corresponding factor of the order of two.

306.  My initial view as to agree with the judge. The printing evidence alone seemed to me show this factor to be realistic and not excessive, and for the reasons I have sought to give I derive some assistance from the purchase price. To my embarrassment I now found myself cast in the decisive role. I have therefore most anxiously reconsidered my position. Having done so I am not persuaded that the judge was wrong.

307.  There is another approach to this problem which may reflect the uncertainties and peculiarities of this market. It is to consider the plaintiffs’ loss as the loss of a chance. It may not be inappropriate to liken the plaintiffs’ purchase of this note to the taking or acquisition by him of three chances. The first chance was that the note was genuine – as it was. The second chance was that it was misprinted and not discoloured – as the judge has found. The third chance was that in his own time he would find a similarly minded buyer at a price which would show him a profit or at least no loss. This is the lost chance which has to be evaluated. It is essentially a jury question. In the words of Fletcher Moulton L.J. in Chaplin v. Hicks(17) :

“The jury must give what they think to be an adequate solatium under all the circumstances of the case”.

On the whole of the evidence in this case I think a hypothetical reasonable jury would be most unlikely to assume against the plaintiffs and in favour of the wrongdoer that the first plaintiff had necessarily gambled and lost. I think it much more likely that such a jury would have evaluated this chance at the figure which would have shown the first plaintiff a very modest profit. This would mirror the judge’s approach.

308.  For my part therefore I would dismiss this appeal.

Mr. Gilbert Rodway, Q.C. and Mr. Michael Bunting (Johnson, Stokes & Master) for Appellant/Defendant.

Mr. Anthony Rogers, Q.C. and Mr. Benjamin Yu (A.C.Y. Tong & Co.) for Respondents/Plaintiffs.

(1) [1947] A.C. 484

(2) [1968] 2 Lloyd’s Reports

(3)  [1945] P. 15

(4) [1927] A.C. 37

(5)  [1935] A.C. 243

(6)  [1987] 3 W.L.R. 869

(7)  [1901] 2 I.R. 189

(8)  (1854) 1 Spinks 317

(9)  [1916] 2 A.C. 206

(10) [1969] R.P.C. 250

(11) [1975] R.P.C. 203

(12) [1980] H.K.L.R. 161

(13) [1966] 1 Q.B. 247

(1)  [1945] P. 15

(2)  [1935] A.C. 243

(3)  [1947] A.C. 474

(4)  [1955] A.C. 370

(5)  (1722) 1 Strange Law Reports 505

(6)  [1916] 2 A.C. 206, 230

(8)  [1921] 2 K.B. 237, 258

(9)  [1978] Q.B. 68

(10)  [1919] 1 K.B. 443, 458

(11)  [1968] 2 Q.B. 229, 257

(12)  [1969] R.P.C. 250, 258

(13)  [1975] R.P.C. 203, 267

(14)  [1987] 3 W.L.R. 869, 885

(15)  [1990] H.K.L.R. 161, 168, 169

(16)  [1966] 1 Q.B. 247, 264