CARRIAN HOLDINGS LTD. v. CRESTFLAME ESTATES LTD. AND OTHERS

IN THE COURT OF APPEAL

1993, No.205
(Civil)

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J U D G M E N T

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Power, V.-P.(giving the judgment of the Court):

1. This is an appeal from the decision by Godfrey J., as he then was, in an action brought by Carrian Holdings Limited (in liquidation) in which it sought to establish that it was the beneficial of two London residences, one a house situated at 7, Chester Square, SW1, and the other one a flat situated at 8 Lees Place W1. When referring to the parties we will use the designations assigned to them by the judge.

2. The issue was whether the beneficial ownership of the two properties lay in Carrian Holdings Ltd. ("CHL") or the 4th defendant, Kao Wei Tseng, ("Uncle"). There was no dispute that the 1st defendant Crestflame Estate Limited ("Crestflame"), a Hong Kong company, was registered at HM Land Registry as proprietor with leasehold title absolute in respect of the Chester Square property and that the 2nd defendant Lowriver Estates Limited ("Lowriver") was similarly registered in respect of the Lees Place property. However neither Crestflame nor Lowriver make any claim to have any beneficial interest in the said properties.

3. Before 7th November 1983 when an order for the winding up of CHL was made it was controlled by George Tan Soon-gin ("George"). It is the claim of CHL that the properties were purchased with CHL money at the direction of George and that they were for the use and benefit of George and his wife Helen Kao Kang-wan ("Helen"). Neither George nor Helen were parties to this action. It was CHL's case that George was using CHL monies to purchase the properties with the intention that the beneficial ownership therein rest with him and Helen and that he had no intention of reimbursing CHL. It is true that elaborate precautions were taken to disguise the ownership of the properties, but these were, it would seem, primarily, and, indeed, perhaps solely, to ensure that no tax or estate duties would be paid to either the British government or the Hong Kong government. If the properties were not really purchased for Uncle what George intended to do with them and whether he intended to reimburse CHL remains, as George gave no evidence and as there was no evidence as to his intentions, a matter of mere speculation. It is noteworthy that George does not appear to have made any real attempt to conceal the origin of the money within the records of CHL when looked at in their entirety. If the properties were not purchased for Uncle, it may be that George, given that the ultimate control rested in bearer shares, was intending simply to keep all options open.

4. This action was originally brought against Crestflame and Lowriver as the legal owners of the property and against the 3rd defendant Madam Leong Lai Peng ("Auntie"), who is Helen's mother and George's mother-in-law. CHL later added Uncle, Auntie's husband, and the 5th defendant David Kao Keng Hua ("David"), who is the son of Uncle and Auntie, the brother of Helen and the brother-in-law of George. At the trial Auntie did not make any claim to beneficial ownership of the properties. It was the defence of Uncle that George had purchased the properties at his request for the use and benefit of himself and his family. It was Uncle's case, put broadly, that he told George he had HK$10m which he wished to invest in property in London and that he left the acquisition of the properties entirely to George.

5. The following passage from the judgment establishes the real matter in issue at the trial:

"The trained eye of the equity lawyer will have discerned already that all sorts of interesting legal questions could arise here. But I have to record that none of them will; Mr. Ian Glick Q.C., for CHL, and Mr. Gavin Lightman Q.C., for Uncle (and the other defendants), were in agreement, as I understand them, that my only task was to decide whether or not to accept Uncle's version of the facts. If I did, I was to dismiss the action. If I did not, I was to declare that CHL was the beneficial owner of the properties and grant such consequential relief against the various defendants as might on that footing be appropriate."

The sole issue before the trial judge was a relatively simple one of credibility.

6. CHL was a member of the now notorious Carrian Group of Companies ("the Group"). The Group consisted of a number of public and private companies which were controlled by George and which by 1982 were, on the surface, enjoying spectacular commercial success. Until 1982 Uncle had been the Deputy General Manager of the Bank of China in Singapore. He and Auntie had five children two of whom, David and Kenneth, worked for CHL. Uncle formally retired from the Bank of China in June 1982. It was his evidence that he had substantial investments in property and securities and that after a visit to England in February 1982, he conceived the notion of investing HK$10m, the balance of his savings, in property in England. He said he regarded this as an investment for the future and that such property could also, in due course, serve as a place of residence for his grand children if and when they came to study in England. This clearly was not imminent as the oldest grandchild was then only ten years of age, and Uncle said that he proposed that the properties if not occupied could be let. He wanted to protect himself from Singapore estate duties and he therefore decided that the purchase should be kept secret. It is to be noted that, under cross-examination, Uncle admitted that he was not aware whether properties so situated would attract Singapore estate duty and that he had never sought any advice in that regard. He said that sometime after February he spoke to George and to David about this and that George agreed to find something suitable.

7. The judge's finding was as follows:

"Uncle's evidence (supported by David) was in effect that he (Uncle) left everything to George. I accept this; and that Uncle intended and expected to pay for the property which George was to find for him when the time came for him to do so."

The evidence indicated that in May 1982 George asked Mr. Trevor Bedford (the managing director of the Hong Kong Land Company Limited) and Mr. Michael Priest (an English antique dealer and interior designer who had been recommended by Mr. Bedford) to find some property or properties in London. Two properties were found and, on George's instructions and with his authority, Mr. Priest agreed to buy them. The price for the Chester Square property was ?925,000 and for the Lees Place property ?320,000. This totals ?1,245,000 which, at then rate of exchange, exceeded HK$13,000,000.

8. Although Uncle had told George that he had about HK$10,000,000 to invest the fact that this figure was more than HK$3,000,000 in excess of that figure was, Uncle said, never at any time mentioned to him by George or by anyone else. It might be thought a matter of some importance that Uncle's passport showed that from 29th May to Mid-December 1982 he was, apart from two periods, each of about 10 days, residing in Hong Kong. He said in evidence that he was appointed a non-executive director of the group and was given an office in Carrian Centre which at one time was on the same floor as George's office and was later on the floor above. When asked did he see George everyday in Hong Kong he said that he lived at George's home and went to the office with him in the same car.

9. On 10th June 1982, Mr. Priest wrote to George giving full details of both properties and saying "I am sure you and Helen will enjoy looking through them". He also discussed the furnishing of the properties which he estimated would cost $150,000 for Chester and $100,000 for Lees Place. In the outcome the plan to furnish the properties was abandoned. Uncle said that neither the description of the properties nor the proposal to furnish them was ever mentioned to him.

10. The evidence shows that George led Mr. Bedford, Mr. Priest and Mr. John Marshall, a director of CHL and the Managing Director of the group, to believe that he was purchasing the properties for himself and Helen. Given that it was Uncle's wish to keep his ownership secret this is not necessarily inconsistent with his case.

11. A memorandum was produced from George's personal assistant Jeanne Brinkworth, who did not give evidence, dated 30th June 1983, addressed to George which requested his confirmation of the "name of the owner" of the Chester Square property. She added "Here I think Deacons (the Group solicitors) should be advised to the best tax advantages for you". The annotation made by George on this memorandum was "Yes, pl.". It is worthy of remark that George was prepared to go to the expense of seeking advice as to the tax advantages to him but that no advice was sought as to the tax or estate duty advantage that might be achieved if the properties were owned by a person in the position of Uncle. Further Uncle was never asked whether he wanted such advice obtained.

12. Jeanne Brinkworth made a report shortly thereafter which summarised "the properties to be purchased in the United Kingdom". This report referred to "the persons who will be involved in handling our properties". This document was annotated by George with the words "John Your action pl. We bought this property for Uncle to use in London". (The "John" referred to was Mr. John Marshall.)

13. On 3rd July 1982 Marshall wrote to George suggesting that the London house and apartment should each be registered in the name of a Hong Kong company with shareholders being Liberian companies. He said in this note

"Uncle can use the facilities at your discretion but as your family have the continuity of life beyond him their interests should be the first consideration. With Liberian shareholders with bearer shares we set up a perpetuity situation beyond the clutches of estate duty etc. The bearer shares are transferable by transmission and can be kept in a designated safe deposit box."

14. George annotated this note "OK". There was again no mention of what is said to have been the real reason for the elaborate shield structure i.e. to protect Uncle from unascertained Singapore estate duties.

15. The deposit, $32,000 for the Lees Place property, and $92,500 for the Chester Square property, a total of $124,500, was due on 12th July 1982. When George was informed of this he made no approach to Uncle with whom he lived and with whom he travelled to work but gave a hand written instruction to Kenneth, who was a director of CHL at that time and was in charge of the CHL treasury, "to use Wan's (i.e. Helen's) personal a/c in London transfer $124,500. Official letter to West LB". This was a direction to draw the money from an overdraft facility of $500,000 which George had arranged in February 1982 for Helen with the Westdeutsche Landesbank Girozentrale, London Branch ("West LB"). Further, according to Uncle he was informed neither that this deposit to be paid nor that it was the intention that it be paid by his daughter. We note that this overdraft account with West LB was later discharged from borrowed monies provided by CHL.

16. On 13th July 1982 Ms. Brinkworth in a memorandum to George regarding his instruction to Kenneth to use the West LB account of Helen stated:

"Mr. Marshall suggests the following because he feels that Helen Tan's personal account in London can easily be traced back to you.

Suggests: The two nominee companies open two separate bank accounts in Hong Kong.

That necessary funds are then paid in by cashier's orders with no cheques or links.

These funds are then remitted to London.

Could I please have your comments, please."

The concern of the staff was, clearly, to ensure that the money expended on the properties could not be traced back to its source. There seems to have been no attempt within the records of the company itself to conceal that source.

17. Throughout the rest of July 1982 there were communications between Deacons and Mr. Marshall (about an elaborate structure to conceal the beneficial ownership) of the property through two Hong Kong companies Crestflame and Lowriver whose shares were to be held by an intermediate Liberian companies the shares of which were, in turn, to be held by a top Liberian company. The final share in each top Liberian company was to be a bearer share.

18. In a letter of 21st July 1992 Mr. John McLean of Deacons wrote to Mr. Marshall stating:

"I understand that in fact that the Hong Kong companies are to finance their purchase of the U.K. properties by way of shareholders' loan to flow down through the Liberian companies. One could, without incurring any capital duty, inject the funds into the top Liberian company by way of capital rather than loan and then the top Liberian company could lend funds on down to the intermediate company and so on to the Hong Kong company. Please let me know which method you would prefer and if you would like me to have a word with Price Waterhouse (the accounts who were to act) on the question of tax implications. If we are going to do it all by way of loan then for company records we will need to know who is to make the initial loan available on the top Liberian companies ... I understand that completion of both properties is to take place in early August and that you are anxious that the funds to be transmitted to London should not be traceable back to Carrian ..."

The concern here is again that the funds should not be able to be traced back. Again there is no endeavour in the letters would be part of the records of both CHL and Deacons to conceal the nature of the manoeuvres being undertaken. Mr. McLean, clearly under the impression that the properties were being acquired for George, raised a difficulty in the last paragraph of this letter of 21st July 1982 when he said:

"Lastly, in deciding to adopt Hong Kong companies as the property holding vehicle, did you consider the possibility of an estate duty liability in Hong Kong? If the beneficial ownership of the shares in the Hong Kong company was traced through to George then a charge to estate duty would arise on the asset value of these shares i.e. the value of the relevant U.K. property. Similarly, a charge to capital transfer tax in the U.K. could arise if the real ownership was revealed."

In a letter of 24th July, Mr. Marshall brushed aside this concern stating:

"The funds should be capitalized into the top Liberian company and then the top Liberian company will lend funds on down to the intermediate company and so on to the Hong Kong company ... I believe we finally decided that no capital transfer tax or estate duty will be liable in Hong Kong since they are bearer shares ... I am returning the Nominee Service Agreements and Letters of Indemnity duly signed."

There is no suggestion anywhere that concern be had for the possibility of estate duty in Singapore.

19. In the outcome the purchase of the Chester Square property was completed on 4th August 1982 and all of the money, except for an amount of HK$25,081.75 which was paid out of the funds of a private company in the Group named Perak Pioneer Limited ("Perak") came from CHL.

20. The purchase of the Lees Place property was completed on 10th August 1982, and again the money came from CHL.

21. The money in both cases came by what the judge described as "a convoluted route". Although it would appear that Uncle had funds waiting in Singapore for this investment he was not asked to remit that money, nor, indeed, was he told even that the purchases were being made.

22. However on 11th August Uncle said, David, having told him that the purchase of the property which he had asked George to arrange to acquire for him was about to be completed, procured the remittance from Singapore to Hong Kong of HK$10m. He said that he had agreed to put up $10m and thought it right now to do so. He was, however, again not told by David of the amount actually owing nor was any description of the properties given to him. The money having been remitted from Singapore on 11th August was paid into the bank account of CHL with the Hongkong & Shanghai Banking Corporation on 13th August 1982 by way of a cheque which was signed by Uncle. On the stub of this cheque appears the word "loan". This word was written by Kenneth but the stub was initialled by Uncle. According to Uncle the money was to pay for properties which were about to be purchased and was not a loan.

23. This cheque along with three others were paid in at 3.54 p.m. on 13th August accompanied by one pay-in slip. This slip was endorsed by John Wong, the Group Financial Controller of CHL, who was an accountant by profession with the words "short-term advance from directors". Mr. Wong who gave evidence said that he had no recollection why he had endorsed the pay-in slip in that way.

24. The other three cheques detailed to on the pay-in slip, one of $3,000,000 from Helen, one of $300,000 from George, and another of $3,200,000 from George, when added to the amount which came from Uncle total $16,500,000. The bank statement of CHL shows that this exact amount was paid out of the account in two cheques on the same day, the 13th August. There is, however, no evidence to indicate what that commitment was.

25. Whatever may have been the impression given by George to Mr. Bedford, Mr. Priest, Mr. Marshall and Deacons, the "Nominee Service Agreements and Letters of Indemnity" required by Deacons in connection with the financing and management of the two properties were signed by Helen alone.

26. The learned judge was satisfied that in the months immediately after the purchase all questions of management and changes of management were decided by George. Uncle in his evidence agreed that this was so and said that he was told nothing with regard to those matters.

27. There was a public announcement on 26th October 1982 that the group was in difficulties. Because of this West LB's London Branch, with which Helen had the overdraft facility used to pay the deposits for the two properties, was troubled. In consequence Rod Bell, the Group Financial Director, wrote to that Branch on 18th November 1982 stating:

"We propose to lodge with your London branch the title deeds to two residential properties to which Madam Kao (i.e. Helen) is the beneficial owner ... It is also the intention that should be overdraft facility be unpaid by the end of 1982, then a legal binding mortgage of these two properties will be entered into with your Hong Kong office in order to repay the overdraft facility with your London branch and any surplus funds will be available to Madam Kao."

28. On 13th December 1982, Johnson Stokes and Master wrote in connection with this proposal to Deacons for a letter confirming which property was held by which chain of companies, which company was owned by which company, the ultimate beneficial ownership, the directors representing each of the companies etc. They said that this information was needed to satisfy themselves that Mrs. Tan (i.e. Helen) was in the position to give a valid undertaking as the ultimate owner in the chain of companies. In fact this proposal was never proceeded with and the overdraft was cleared from funds raised by CHL by borrowing from Bumiputra Malaysia Finance Limited.

29. On 25th February 1983, Deacons who, given that Helen had signed the "Nominee Service Agreements and Letters of Indemnity", were regarding her as the client in relation to the properties, wrote asking for authorisation from George or from Helen. George in a hand-written note stated:

"This property not belonging to Helen and I can't sign ..."

Why Helen dropped out of the picture is not explained by the evidence nor is there any real explanation as to why Auntie, her mother, came into the picture. It seems quite clear, however, that by 8th March someone had given instructions to Deacons that Auntie was the beneficial owner of the properties as Deacons wrote to her stating:

"As the beneficial ownership of the above companies has been changed to you, we enclose a new Nominee Service Agreements and Letters of Indemnity, in triplicate. Subject to your approval please sign all copies and then return the original and one copy to us. The extra copy is for your records."

Later in that year, on 24th June, Deacons wrote to George saying:

"... although ultimate ownership of the U.K. properties has been transferred from Helen to her mother we are obviously obliged to issue the fee notes to her although it is obviously open for them to agree whatever arrangements they like as regards the payment of those fees."

The endorsement made by George on this letter for action by his aide Helen De Roza was:

"Helen. Do it immediately, pl."

30. Wardley Limited, bankers, and Price Waterhouse, accountants, were, in 1983, retained to advise as to a possible reconstruction of the Group. As the books of CHL showed that Uncle had on 13th August 1982 advanced $10,000,000 to the Group he was sent a formal letter to sign asking him to confirm a claim to be a creditor of CHL in that amount. This he did on 10th August 1983 by signing the letter which stated:

"I have pleasure in confirming to you that the amount due to me by Carrian Holdings Ltd. which amounts to $10,000,000 as at 31st May 1983 and of today's date represent unsecured interest fee advance. I also agree to subordinate the aforesaid amounts to all other indebtedness of Carrian Holdings Ltd. upon Carrian Holdings Ltd. Moratorium Scheme becoming effective."

The beneficial ownership was at this time said to reside in Auntie. Uncle explained the letter by saying that he was persuaded to sign it by George who was desperate to ensure that nothing was done which would hinder a delay for the reconstruction.

31. In October of 1983 a petition was presented for the winding up of CHL The Statement of Affairs made by Mr. Marshall referred to the $10,000,000 as a loan from Uncle. His name was incorrectly spelled as "Kao Wai Ting" but we are satisfied that anyone with knowledge of the Group's affairs could not have been misled by that misspelling. Deacons continued to treat Auntie as "the ultimate owner" They dealt with her son David who had by then taken over the management of the two properties and who paid to Deacons such fees as they incurred.

32. A liquidation Order for CHL was made on 7th November 1983. The liquidator, Mr. Stevenson, who gave evidence, wrote to David seeking the return of certain paintings which he said belonged to CHL which had been shipped to Singapore early in 1983 on David's authority. It was Mr. Stevenson's assertion that they had been paid for by CHL and were therefore the assets of the company. David consulted Fairbairn & Kwok who, on 9th April 1985, wrote to Mr. Stevenson in the following terms:

"No doubt you will be familiar with the statement of affairs dated the 10th October 1983 prepared in respect of the above company. We would refer you to List A thereof which you will know indicates, inter alia, an indebtedness of $10 million to Mr. Kao Wai Ting who is the father of Mr. David Kao. The various items to which this present correspondence relates were acquired by Mr. Kao on his own behalf and payment was effected by Carrian Holdings Limited as his agent. The amount of the respective purchases should have been debited to Mr. Kao's current account in the books of Carrian Holdings Limited and such debit entry will be reflected in the ultimate amount for which Mr. Kao is a creditor of the company. If appropriate entries have not been made, that is not the fault of our client and does not affect the fact that the paintings are beneficially owned by him and not by Carrian Holdings Limited."

The above passage was set out by the trial judge in his judgment but he omitted the opening words of the letter which were: "We refer to your letter of 27th March and its enclosures upon which we have taken instructions." David said that he had never given any instructions such as referred to in the letter. Uncle said that he had no knowledge of the existence of any such correspondence and had never been consulted in relation to the matter. Mr. Catley, the solicitor involved, in a hearsay statement upon which he was not able to be cross- examined, said:

"... I think it is unlikely that he (David) would have given me any specific instructions on the point raised in the letter of 9th April 1985 concerning the statement of affairs. It is far more likely that from knowledge which I had obtained independently concerning the Statement of Affairs and its contents I would have made the point which appears in the letter of 9th April 1985 on my own initiative assuming that the Statement of Affairs concerning the apparent indebtedness of CHL to David Kao's father was correct."

33. Despite Mr. Catley's express indication that he was writing the letter having "taken instructions" he here says that he did not take "specific instructions" but "made the point" upon the basis of "knowledge which I had obtained independently concerning the Statement of Affairs and its content ..." Mr. Catley appears to be saying that the assertions were made without express instructions.

34. In 1989 Uncle was sent a proof of debt by the liquidators. This he said he ignored as he was not asserting that he was owed any money by CHL. As regards the facts it need finally be noted that the $3,000,000 balance of the purchase price was never requested of or settled by Uncle and he never formulated a claim to be owner until the defence was filed in 1991.

35. It is the contention of Mr. Glick Q.C., with him Mr. Clayton, for the appellant that the judge's decision to accept the evidence of Uncle was so demonstrably wrong that this Court must intervene. He contended that, however plausible Uncle might have been in terms of demeanour the incontrovertible evidence made it clear that he was lying and left no room for any conclusion other than that the plaintiff's account was true.

36. Mr. Boyle Q.C., with him Mr. Faulkner, for the respondent submits that the matter was essentially a determination of credit, indeed really of the credit of Uncle, which was very much a matter for the trial judge who, having heard the evidence, accepted that the payment was for the properties and accepted Uncle's explanations as to matters which, it is true on their face, were such as to raise suspicion.

37. Except for three matters to which we will shortly refer the judge dealt with each of the matters which Mr. Glick suggested were incontrovertible.

38. He accepted the explanations put forward. He was in no way shaken in his conclusion that Uncle was a credible witness. Credit was essentially a matter for the trial judge. It does not advance the matter to submit that there were facts which, unless explained, must have given the lie to a story such as that told by Uncle. The fact of the matter is that they were explained and the explanations were accepted by the judge who heard the evidence.

39. We summarise our conclusions in this way. A consideration of the transcript, the documents and the circumstances surrounding the purchase of the London properties together with counsel's submissions has led each member of this Court to have entertained misgivings as to whether the judge was right to accept Uncle's evidence. But the issue was put before the judge by counsel at the outset of the trial. There never was doubt that the case turned on whether he accepted Uncle's evidence on that crucial matter. The judge's admirably clear and concise judgment demonstrates that his efforts were concentrated upon that very question.

40. The approach of this Court is not in doubt. We express it in this way:

(1) An appellate court has jurisdiction to try the case and find the facts on the transcript. It is a re-hearing.

(2) Nevertheless, not having seen and heard the witnesses, it is in a position of permanent disadvantage as against the trial judge.

(3) Therefore, this Court will reverse a trial judge on a finding of fact when that finding depended upon the credibility of a witness or witnesses only if:

(a) It is shown that the judge failed to use, or culpably misused his special advantage, and

(b) The witness's evidence is vitiated either by such a glaring improbability or by an objective fact or conclusive document which shows that the judge's finding was wrong.

See the Hontestroom [1927] AC 37 at 49-50 per Lord Sumner and Powell v Streatham Manor Nursing Home [1935] AC 243 at 265-268 per Lord Wright.

41. Further, in a case such as this which turns on the judge's opinion of the witness formed in all the circumstances of the trial, if we are to reverse his decision on the facts, we "must not merely entertain doubt whether the decision below is right, but be convinced it is wrong". The Julia (1860) 14 Moo PC 210 at 235 per Lord Kingsdown.

42. Mr Glick seeks to convince this Court that the judge's findings were wrong by urging upon us the following matters:

(1) The vagueness of Uncle's arrangement with George for the purchase of property.

(2) The failure of George or anyone else to inform Uncle of the progress of negotiations and the purchases even though Uncle and George for most of the time were living together in the same house and working in CHL.

The consequence was that Uncle readily conceded that he was ignorant of the nature of the properties, the exact price, the date of completion and the proposals (later abandoned) for furnishing and decoration.

(3) Uncle's concern for secrecy to avoid the estate duty about which he took no advice whereas George noted "yes please" on a letter (p.54) indicating that he would like that advice for himself.

(4) The undisputed fact that the deposit on the properties came from Helen's account with West LB in London (later discharged by CHL) and that the balance came from CHL itself.

(5) The cheque stub not written but signed by Uncle which designated the $10 million payment to CHL as "loan".

(6) The indorsement of the paying-in slip by John Wong (an accountant with CHL) as "short-term loan from directors". Also, some reliance was placed upon the opening of a specific director's loan account in the books of CHL covering the cheques on the paying-in slip including the $10 million.

(7) CHL's bank statement showing that on 13th August, among other payments-out, there were two which totalled $16.5 million which equaled the amount on the paying-in slip.

(8) The signing by Uncle of the "Wardley Letter" of 10th August 1983 in which he acknowledged that he was a creditor of CHL for the $10 million.

(9) On the day Uncle paid the $10 million to CHL, CHL had paid out $11.79 million for the properties, yet he was not asked to pay that sum nor was he ever asked to account for the balance later.

(10) The letter to the liquidator from Fairbairn and Kwok (Mr Catley) of 9th April 1985 which contended that Uncle's payment of $10 million to CHL was a reimbursement for the purchase of paintings.

(11) That George managed the properties after their purchase and later used some of the rent for his own purposes.

43. On paper these are powerful points against Uncle. The plaintiff may well have thought that faced with cross-examination from experienced leading counsel on them, the edifice Uncle sought to erect would be reduced to rubble. As is clear from the judgment this did not happen.

44. Save for CHL's bank statement of 13th August each of these points was fully explored in Uncle's evidence. He was cross-examined about them and the judge accepted Uncle's explanations supported by other evidence or circumstances. There were three points which the judge did not specifically consider in his judgment to which we will turn in due course. As to the others, it suffices to deal with four of them.

The Wardley Letter of 10th August 1983

45. Uncle accepted that he signed this letter which wrongly stated that he was a creditor of CHL for $10 million. The judge accepted his explanation that he refused to sign the letter twice and was only persuaded to sign by George who said that it would jeopardise and delay the reconstruction of the Carrian Group by indicating that the accounting records were wrong. On this, Uncle's account was supported by Jed Tan and Rod Bell whose statements were in evidence. The circumstances were that CHL (a huge commercial group) was on the verge of collapse unless the rescue package could be agreed quickly. Further, this evidence had to be set against all the other circumstances which included Uncle ignoring the opportunity to prove for the $10 million in the later liquidation.

The Fairbairn and Kwok Letter of 9th April 1985

46. In spite of the terms of the letter the judge accepted Uncle's evidence that he was not a party to it and knew nothing of it. He also accepted son David's evidence that he handed the matter over to the solicitor, Mr Catley, to do his best to explain the situation and to deny the liquidator's claim. Mr Catley in his statement admitted that the explanation was invented by him and supported this with some detail. Although the judge did not form a favourable view of David, on the whole of the evidence it would have been difficult for him to find that Uncle was in any way concerned with the letter. On this finding the point became irelevant to further consideration of Uncle's evidence.

The Cheque Stub

47. Uncle and son David had a joint account upon which the cheque was drawn. The stub was filled in by son Kenneth and who wrote on it the single word "loan". The stub was initialled by Uncle. Kenneth's explanation in his witness statement was that his use of the word "loan" was mere shorthand to indicate that the cheque had been drawn in reimbursement of the advances made by CHL for the purchase of the properties. The explanation contended for by the liquidator was that Uncle was lending $10 million to CHL and relied upon his initials on the stub linked with the paying-in slip written by John Wong.

48. Uncle's evidence in cross-examination was that he paid no attention to the word "loan" and did not discuss it with Kenneth. He was concentrating on the amount and he initialled the counterfoil because he wanted to record that the cheque was one issued by him (and not David) on the joint account. Having considered the whole of the evidence and the circumstances the judge held that the point was equivocal.

49. In the end the question for the judge was: What did Uncle's initials on the cheques mean and what weight should be given to this point compared with his overall assessment of the witness, the other evidence and the surrounding circumstances? It would be a strong thing for this Court to say that his conclusion was wrong and there is no sound basis upon which we can do so.

50. Mr Boyle, QC for the respondent, placed some reliance upon the defendants' voluntary disclosure of the cheque stub at trial, but this is not a matter to which we are prepared to give weight. It seeks to make a virtue out of the defendants' fulfilment of their duty.

The Paying-in Slip indorsed by John Wong

51. This slip indorsed by John Wong (an accountant with CHL) recorded four cheques including the one from Uncle. The others were cheques from George and Helen (also directors of CHL) but they maintained a specific account with CHL and normally those cheques would have been credited to that account. There was no evidence of any kind which indicated the purpose for which the other three cheques were drawn nor why they were credited into a new director's loan account.

52. It was undisputed that Uncle had no part in either the making out of the slip or the opening of the account. The plaintiff did not call John Wong and so he was called by the defendants. He could not remember the circumstances in which he made out the slip nor the reasons for it. He could only infer what had happened from his knowledge of his work and the system.

53. There was no evidence to support the plaintiff's contention that he must have sought instructions about the payments. The judge was asked to infer this from his evidence but he declined. Having seen and heard John Wong, however, he did find, and was entitled to find, that at the time he made the entry on the paying-in slip he had no instructions about the nature of the payment so that he invented this one on the basis it would suffice until the true nature of the transaction was known.

54. Again, this point was fully considered by the judge and was not sufficient to disturb his main finding.

The Judge's Finding on The Central Issue

55. Save for that given by Uncle, there was a paucity of direct evidence on the real issue in the case. The plaintiff relied heavily on matters disclosed in documents and comments written thereon - usually by George Tan who did not give evidence. It invited the judge to draw inferences from documents and comments on them which lacked explanation. On any view this cannot have been an easy case and one in which the initial burden rested upon the plaintiff.

56. Uncle was examined and cross-examined at length. In the result the judge accepted his evidence that $10 million was paid into CHL in respect of the property. The judge accepted that he had an arrangement with George Tan for the purchase of property together with the reasons for it. This arrangement was supported by the note written by George on Jeanne Brinkworth's report, "We bought this property for Uncle to use in London." This demonstrated at least that George was linking the properties to Uncle before the purchase. He accepted - and there was no evidence to the contrary - that the $10 million represented the balance of Uncle's life savings. The payment to CHL on the 13th August 1982 was a remarkable coincidence when the completion of one of the properties took place on 10th August 1982. The judge's acceptance of Uncle's supported explanation of the Wardley letter bolsters his account that this was not a loan and it is further supported by Uncle's failure to prove in the liquidation for the $10 million. Had the $10 million really represented a loan of the balance of his life savings this was a surprising omission.

57. CHL's statement of account for the 13th August 1992 with the payment out of two cheques equalling the payment in of the four cheques on the paying-in slip was known to the plaintiff at trial. Some reference was made to it in the opening but it was never referred to thereafter and it was not the subject of cross- examination. Mr Glick seeks to resurrect the point before us but with respect there is nothing in it. There were large payments-in and payments-out of this account. The liquidator's evidence was that CHL's account were kept meticulously. A full investigation must have been made before the trial of the payments-in and payments-out and nothing was demonstrated. In particular the company's need for a short-term director's loan of $16.5 million and its disbursement were not established. There was therefore a complete lack of explanation as to why Uncle should lend the company the balance of his life savings as a matter of urgency. Although somewhat negative, the judge found this was support for Uncle's case when compared with that of the plaintiff.

58. Finally, Mr Glick submits that the judge failed to take into account and give proper weight to three matters. These are:

(1) The family situation,

(2) Uncle's failure to take advice on tax; and

(3) His failure to link Uncle's initials on the cheque stub with the words on the paying-in slip.

59. With respect this is not a sound criticism. It was not necessary for the judge, having considered most of the evidence with some care, to deal with every point made. It is not to be assumed because he did not deal specifically with them that he did not have them in mind in reaching his conclusion on the reliability or otherwise of the evidence. The same point was taken in Watt v Thomas [1947] AC 484. At 492 Lord Simonds dealt with the point in this way:

" ... Your Lordships were therefore invited to find that the learned judge had forgotten or ignored this evidence and to hold that his judgment was thereby vitiated. I believe this to be fundamentally unsound criticism. The trial judge has come to certain conclusions of fact; 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."

60. In short, the plaintiff having failed to reduce the defendants' case to rubble at trial seeks to do so before this Court. In this endeavour it also fails. There are no grounds for thinking that the judge failed to use his advantage of seeing and hearing the witnesses as the case developed.

61. In conclusion, therefore, having considered all the matters put before us and eloquently urged upon us by Mr Glick, in particular the judge's advantage in seeing the witnesses, we are not satisfied that we could properly hold that the judge must have been wrong in the findings he made.

62. For these reasons we dismissed this appeal.