Standard Chartered Bank Australia Limited v Bank of China

[1991] HCATrans 363

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S91 of 1991

B e t w e e n -

STANDARD CHARTERED BANK

AUSTRALIA LIMITED

Applicant

and

BANK OF CHINA

Respondent

Application for special leave

to appeal

MASON CJ
DEANE J

McHUGH J

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TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 13 DECEMBER 1991, AT 10.33 AM

Copyright in the High Court of Australia

MR P.G. HELY, OC: If the Court pleases, I appear with

MR J.C. KELLY, for the applicant. (instructed by

Gadens Ridgeway)

MR T.E.F. HUGHES, OC:  May it please the Court, I appear

with MR B.W. RAYMENT, OC, and MR J.R. McKENZIE, for

the respondent. (instructed by Ratner Chiu & Co)

MASON CJ:	Mr Hely.
MR HELY:	Your Honours, it is submitted that this case is an

appropriate case for the grant of special leave for

two reasons - - -

MASON CJ: It is only an issue of fact, is it not?

DEANE J: That is an encouraging start.

MR HELY:  A very encouraging start. Could I perhaps do my

best, Your Honour, before responding to that

question?

MASON CJ: Yes. It is just a warning shot, that is all,

Mr Hely.

MR HELY:  Your Honour may not be surprised to know that it

is anticipated.

MASON CJ: Yes.

MR HELY:  We would submit two matters. First, we would

submit that the meaning and effect of endorsements

commonly used in financing documents in

international trade is a matter of public

importance. Second, we would submit that the

interests of justice in the particular case would

warrant the granting of leave flowing from

impermissible interferences by the appellate court

in findings of fact made by the trial judge.

As to the first of those propositions, may I

submit with respect that it either finds favour

with Your Honours or it does not and I would not

wish to take up Your Honours' time in developing it

further.

As to the second of those propositions, we put these submissions: firstly, the trial judge found

that - - -

DEANE J:  Mr Hely, could I take you back to the first for

one moment?

MR HELY:  Yes, Your Honour.

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DEANE J:  I gather that there was no evidence that there was

any applicable banking practice. Is that so?

MR HELY:  Yes, subject to a qualification. The

qualification is that such endorsements were often

regarded as producing that consequence but such a

finding would fall short of permitting me to give

an affirmative answer to Your Honour's question.

DEANE J: Well now, was there any evidence that there was

not any applicable banking practice?

MR HELY:  I will have to check. I am told not.

DEANE J: That was what I wanted to ask.

MR HELY:	Your Honours, as to the second point, the trial
judge found that it was the applicant's

understanding that verification of the signatures

was tantamount to verification of the letter of

credit and not merely the expression of an opinion

as to the correspondence of those signatures which

the signature book. His Honour made that finding

on page 23, lines 1 to 5 and on page 26 at lines 10

to 20.

We would submit that that finding is a pure

finding of fact dependent upon the credit of the

witnesses and is unimpeachable. In terms of what

was conveyed to the applicant, we would submit that

that is a definitive statement of what was

conveyed.

GAUDRON J: But as such, that is an inference from primary

facts, is it not?

MR HELY:  I would submit not. The witnesses gave evidence

as to what they took from the conduct, what

conclusions they drew from it, and His Honour, in

effect, accepted what they had to say in that

regard. So, we would submit it is a bit more than

simply drawing of inferences, it is a positive

acceptance that that was the manner in which the

applicant's officers regarded the matter.

But if one looks at, for example, page 68, in

the judgment of Mr Justice Mahoney, at about

line 18 to line 22; at page 69, between lines 10

and 15; at page 71, between lines 1 and 3, in our
respectful submission, one sees His Honour reaching

conclusions as to what the applicant's officers thought which are inconsistent with the factual findings made by the trial judge on that matter and

which, in terms of the authorities, was an
impermissible approach for the Court of Appeal to

adopt.

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The Court of Appeal appears to have accepted

that the conduct was capable of conveying the

representations for which the applicant contended.

The question therefore becomes, "Did it in fact

convey that message?" That question, we would

submit, is a question of fact upon which the trial judge's findings are conclusive and that the Court of Appeal - - -

GAUDRON J: Well, is that really the end of the matter

though in the way in which you put it, because, I

mean, it is right to say that the first question is

what it was capable of conveying and then another

question is what it did convey, but the third

question really is, in this area: is there any

justice - does the justice of the situation require

it to be dealt with on the basis of what it did

convey, or whether, having regard to the

circumstances in which your Bank knew that all that

was being done was that there was a comparison

being made with a photographic record, whether the

justice required that some lesser situation be the

one which you would hold to, all of which seems to

be wrapped up without delimitation in the way that

the Court of Appeal approached the matter.

MR HELY:  Yes, Your Honour. May I take Your Honour's point

and endeavour to deal with it in this way: if

Your Honour would be good enough to go to page 22

or perhaps to page 21, there is some

cross-examination of one of the applicant's
witnesses directed towards his comprehension of the

process that took place in connection with

verification, and that was put in support of a

proposition which is really inherent in the

question that Justice Gaudron was putting to me.

His Honour dealt with it in three ways:

firstly, at page 22, at about line 4 to line 7.	He
says that:

the argument falls down -

because -

verification of signatures conveys -

something more than that a process -

of comparison has been undertaken -

and he comes to that conclusion, firstly, because

as appears from page 23, lines 1 and 5, it was the

experience of the applicant that verification of signatures carried with it authentication of the

instrument. Second, on page 25, lines 18 to 20,

His Honour records:

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that verification of signatures can be and

often is regarded as authentication of the

relevant instrument.

GAUDRON J:	One can understand that as a general statement but there are peculiar aspects to this, are there
not, in that it was a branch distant by some
several thousand miles from the head office and it
was being known that they were being checked as
against a photographic record in a branch and not at the issuing - verification from the Bank where they were in fact issued rather than a branch might
well convey one thing.

MR HELY:  Yes. I take Your Honour's point, but could I

perhaps just complete the references to the

evidence and then I will more directly answer

Your Honour's question?

GAUDRON J: Yes.

MR HELY:  Page 25, line 26:

verification of signatures by direct approach to the issuing bank would readily be regarded

as authentication of its instrument.

Those passages, subject to my responding to

Your Honour's question, I submit, would support the

proposition that the applicant's understanding was

reasonably based. And then if I could respond, I

hope, directly, to Your Honour, this was not a case

in which there was simply a casual inquiry across the counter, it was an inquiry conducted with the

maximum of formality.

The letter which initiated the inquiry is at

page 60. It is signed by two officers of the

applicant, each of whom gives their identification

number, no doubt for purposes of authentication if

authentication was sought to be appropriate, and

what it sought was an endorsement on the letter of

credit reflecting the result of the inquiry.

If one looks at the letter of credit itself -

it is on page 72 - one can see that endorsement:

Signature(s) verified

Bank of China -

and -

(For Bank of China ..... ) -

what purport to be the signatures of two officers

and as the evidence discloses that was also

followed by their identification numbers. So, it

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is not a case of a casual inquiry over the counter
of officers of the Bank. It is a formal inquiry of

the Bank itself seeking the Bank's endorsement on

the Bank's own paper for the purpose, we would
submit, of testifying that it is what it appears to

be. Considered as in the case of estoppel, what

the court is primarily concerned with is the

position of the person who seeks to rely upon the

estoppel.

GAUDRON J: But in those circumstances, and particularly

having regard to the letter at page 60, could you

take anything more from the verification than you

would take from your own checking of the signatures

against the signature book if you had it?

MR HELY:	We would submit, yes, because the two things are not the same. There is no way that the applicant could do for itself what the respondent did for it
because what the respondent did for it was to endorse its corporate chop, as it were, upon its paper. That is something which the applicant could
never have - the mere fact that the applicant may
have some comprehension of the mechanical processes
that lead to that endorsement does not, in our submission, shrink or qualify what would otherwise be the effect of that endorsement.

DEANE J: But it must, must it not? Obviously, the Bank of

China has acted unwisely and any third party who

dealt on the faith of this verification, I would

have thought, would have an unanswerable action
against them but your problem is you were there and
you knew what had happened. If you had not been,
you would no doubt have assumed what your witness

said he knew had not taken place, and that is that

they did not put this sort of stamp on something

without actually verifying the document, as

distinct from simply saying it looks like the

signature.

MR HELY:  The stamp as a stamp is a stamp of the Bank. It

is not a stamp of the individuals, it is the Bank's

chop. One, I would submit, would be entitled to

infer that those officers who were responsible for

committing the Bank to that endorsement had taken

whatever steps they considered were appropriate in the circumstances in order to make that the action of the Bank. That is particularly so in the

context where, as His Honour found, it was

perfectly plain to the respondent that the

applicant proposed to rely upon that endorsement

and proposed to rely upon it immediately and in

relation to large sums of money.

Those are the submissions that we would seek

to put.

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MASON CJ:  The Court need not trouble you, Mr Hughes.

The question sought to be argued is one of

inference to be drawn from primary facts. It

raises no issue of general principle. Nonetheless,

it is contended that the Court of Appeal erred in

principle in reversing the finding of fact made by

the primary judge.

We are not persuaded that there was such an

error or that it was not open to the Court of

Appeal to reach the conclusion which it reached.

We would add that the evidence neither established

the existence nor the absence of any relevant

banking practice.	The application is therefore
refused.

MR HUGHES:	I ask for costs, Your Honours?
MASON CJ:	You do not oppose that, Mr Hely? The application

is refused with costs.

AT 10.51 AM THE MATTER WAS ADJOURNED SINE DIE

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