Zabihi v Janzemini & Ors

The claimant, Mr Zabihi, and the first defendant, Mr Janzemini are both members of the Iranian community resident in London. On 12th September 2002 in his flat in Ruislip Mr Zabihi handed to Mr Janzemini four sets of jewelry comprising matching necklace, earrings, ring and bracelet (though one of them may have lacked the bracelet) (“the Jewelry”) in order that Mr Janzemini might sell them on behalf of Mr Zabihi. Shortly thereafter Mr Zabihi left London on a business trip to Iran. (His return to London was delayed until February 2006 due to some unexplained problems with the government in Iran.) A few weeks after his departure Mr Zabihi rang Mr Janzemini and was told by him that the jewelry had been stolen. Mr Zabihi put the matter in the hands of solicitors, Shaidy & Co, who wrote to Mr Janzemini on 30th January and 28th February 2003 and 13th January 2004. Mr Janzemini did not respond to any of them. After his return from Iran Mr Zabihi instructed new solicitors, Roshanian Payman International, who wrote to Mr Janzemini on 11th May 2006 demanding compensation for the loss of the jewelry. Mr Janzemini did not respond to that letter either.

On 20th June 2006 the claim form in this action was issued. In it Mr Zabihi asserted that the Jewelry was antique and worth £2m in 2002. In his particulars of claim he alleged that he had acquired the Jewelry from a business associate in Iran, Mr Nima Zandieh, in discharge of a debt of US$2m due to him by Mr Zandieh. Mr Zabihi relied on a letter dated 28th April 1999 written to him by Mr Nima Zandieh (“the Zandieh Letter”) in which Mr Zandieh described four sets of jewelry each comprising a necklace, bracelet, ring and pair of earrings in some detail, including the number of jewels contained in each, their weight in carats, colour and grade. Mr Zandieh indicated that the jeweller recommended by Mr Zabihi had offered £500,000 for them and thanked Mr Zabihi for accepting them in satisfaction of Mr Zandieh’s debt of £2m.

On 3rd July 2006 the solicitors for Mr Janzemini wrote to those for Mr Zabihi to inform them that Mr Janzemini was still in possession of the jewelry the subject of Mr Zabihi’s claim. This was confirmed by an affidavit sworn by Mr Janzemini on 12th July 2006. Mr Zabihi, his solicitor and a jeweller of his choice were invited to inspect them. Mr Zabihi instructed Mr Peter Buckie, a valuer of jewelry of considerable experience, and the three of them inspected the three sets on 21st July and what Mr Janzemini contended was the fourth set on 6th September 2006. Mr Zabihi denied that any of the four sets of jewelry he then inspected had been handed over by him to Mr Janzemini on 12th September 2002.

The Particulars of Claim were amended on 6th November 2006 and the defence and counterclaim of Mr Janzemini was re-amended on 22nd May 2008 so as to admit the handover of four sets of jewelry by Mr Zabihi on 12th September 2002 but to put him to strict proof of their value. Thus the principal issue in the action was not whether but what jewelry was handed over on 12th September 2002 and its value. The claim was tried by Blackburne J over 19 days between 11th June and 11th July 2008. In his judgment handed down on 28th November 2008 he found that the Zandieh Letter had been concocted by Mr Zabihi. In addition he concluded that none of the jewelry inspected in July and September 2006 (“the Proffered Jewelry”) had been handed over by Mr Zabihi to Mr Janzemini.

In paragraphs 277 to 280 of his judgment Blackburne J described the problems which arose in consequence of those conclusions. He said:

Faced with that dilemma Blackburne J concluded:

In paragraphs 284 and 285 Blackburne J added:

In those circumstances Blackburne J assessed Mr Zabihi’s loss at £125,000 and awarded him damages in that amount. He also gave both Mr Zabihi and Mr Janzemini permission to appeal. His reasons were as follows:

By his appellant’s notice issued on 19th December 2008 Mr Janzemini contends that the damages should be reduced to £2. By his respondent’s notice issued on 23rd December 2008 Mr Zabihi submits that the damages for conversion awarded to him should be increased to £500,000. It is common ground that Mr Zabihi’s cross appeal does not arise unless the appeal of Mr Janzemini is dismissed. Accordingly I shall, in due course, consider the appeal of Mr Janzemini first. But before I do so it is necessary to explain the underlying facts by reference to the judgment of Blackburne J in greater detail.

I have already indicated the issues in the action relevant to this appeal. I have ignored the issues relating to the monetary claims which Mr Zabihi joined with the jewelry claim. The oral and other evidence was concluded on 4th July 2008. The hearing before Blackburne J resumed on 9th July for final speeches based on the written closing submissions provided by counsel. Paragraph 1 of the closing note of counsel for Mr Zabihi indicated that in his submission the real issue was the identity of the jewelry admitted to have been handed over by Mr Zabihi to Mr Janzemini on 12th September 2002: was it that claimed by Mr Zabihi or that produced by Mr Janzemini? At the beginning of the hearing on 9th July the judge referred to this passage in counsel’s note and suggested a third possibility namely jewelry of some other description was handed over. There followed a discussion between the judge and counsel for Mr Zabihi of the consequences of such a conclusion. On the following afternoon, namely on 10th July, counsel for Mr Janzemini suggested that the third possibility to which the judge had referred must, if accepted, lead to a dismissal of the action on the basis that the claim advanced by Mr Zabihi had not been proved. On the morning of 11th July counsel for Mr Janzemini handed in a photocopy of paragraph 8-002 McGregor on Damages 17th Ed indicating that this had been produced overnight by counsel for Mr Zabihi. In his reply after the short adjournment on 11th July Counsel for Mr Zabihi dealt with this paragraph in McGregor at some length including the evidence of Mr Zabihi and Mr Janzemini as to what was said by each of them at the time the jewelry was handed over on 12th September 2002. Plainly this passage in the submissions of counsel for Mr Zabihi is reflected in the conclusions of the judge in paragraphs 281 and 282 of his judgment which I have quoted in paragraph 6 above. Counsel for Mr Janzemini did not then or subsequently during the period of the reservation of the judgment suggest that he had not had adequate opportunity to deal with this point.

After describing the parties and their rival contentions in paragraphs 1 to 18 of his judgment Blackburne J commented in paragraph 19 on the almost total absence of documentary or similar evidence to support the contentions of the parties. In paragraph 20 he recorded that, with a few exceptions not relevant to this appeal, those who gave oral evidence did not impress him as persons on whose words in relation to a material issue he could rely unless supported by other evidence of undoubted reliability. Similarly in paragraph 25 Blackburne J explained his reluctance to place any weight on the statements admitted under the Civil Evidence Act of those who had not been cross-examined.

After dealing with the money claims in paragraphs 28 to 64 Blackburne J turned his attention to the jewelry claim in paragraph 65. He said:

In paragraphs 67 to 131 the judge considered the case for Mr Zabihi on the issue he had identified. He considered that the absence of any photographic or other documentary evidence describing the jewelry or indicating its quality to be a striking feature of the case. Further there were no appraisals or valuations by a professional jeweller attesting to having examined and valued the jewelry. He referred to the Zandieh Letter at some length which, as he noted, was critical to the success of Mr Zabihi’s claim. He commented on its discovery by Mr Zabihi, as claimed, on 10th July 2006 and its transmission to his solicitors on 22nd July. He concluded in paragraph 126:

In the course of his consideration of the case for Mr Zabihi Blackburne J considered and accepted evidence from Mr Buckie that when visiting a coffee shop with Mr Zabihi after the inspection of the Proffered Jewelry on 21st July 2006 Mr Zabihi had said to Mr Buckie that he, Mr Zabihi, had taken the jewelry to a jeweller in Tehran. The jeweller had told Mr Zabihi that he would pay £250,000 for the four sets but that he, Mr Zabihi, would probably achieve a significantly higher price if he explored the market perhaps in London. Mr Zabihi claimed that Mr Buckie had misunderstood what he was being told. The judge did not accept that. In paragraph 113 Blackburne J said:

I have referred to this part of the judgment because it is relevant to a submission made to us by counsel for Mr Janzemini. For present purposes it is sufficient for me to comment that the acceptance of the evidence of Mr Buckie as to what was said to him by Mr Zabihi does not involve the acceptance by Blackburne J of the truth of what Mr Zabihi said to Mr Buckie. Such a conclusion is not warranted by the terms of this paragraph and would be quite inconsistent with the judgment as a whole and with paragraph 20 in particular.

Having concluded that the Zandieh Letter, and certain other documents on which Mr Zabihi relied were concoctions Blackburne J considered the consequences. In paragraph 130 he said:

Blackburne J then considered the evidence of what had happened at the meeting of Mr Zabihi and Mr Janzemini in the former’s flat in Ruislip on 12th September 2002. In that connection he did not find Mr Janzemini to be at all convincing as a witness. The judge’s conclusion on this matter is contained in paragraph 156 in these terms:

Blackburne J then considered the case for Mr Janzemini. The relevant question and the judge’s answer are contained in paragraph 275 in the following terms:

The judge also rejected the evidence of a number of witnesses called by Mr Janzemini as to occasions on which they suggested that he had shown them the Jewelry. One of them was a claim by Mr Janzemini that in the company of a friend, a Mr Kaveh, he had taken the Jewelry to Christies for a valuation. Blackburne J expressed himself to be exceedingly sceptical about this episode. Eventually, in paragraph 179, he concluded:

I have already quoted the remaining relevant passages in the judgment of Blackburne J in paragraphs 5 to 7 above and will not repeat them.

The appeal of Mr Janzemini seeks an order of this court reducing the award of damages for the conversion of the Jewelry from £125,000 to £2. He does so on five grounds, namely:

The first issue is based on the course of the proceedings which I have described in paragraph 10 above. Counsel for Mr Janzemini relied on the decision of this court in Senate Electrical Wholesalers Ltd v Acatel Submarine Networks Ltd [1999] 2 Ll.L.R 423. That case concerned a breach of warranty claim in respect of the accuracy of certain accounts in connection with the purchase of the assets of a company. The price for the company had been calculated by reference to a formula based on the price/earnings ratio. The damages sought were based on the application of that formula to the profits as they should have been shown in the accounts as opposed to how they were shown in fact. On this basis the claim was for damages of £16.99m. The judge rejected this approach and concluded that the loss was £5m on the basis that the negotiated price for the company would, in fact, have been less by this amount if the profits had been truly stated. The Court of Appeal agreed with the judge in rejecting the computation of loss put forward by the claimant but allowed the appeal of the defendant on a number of grounds.

In paragraph 32 of the judgment of the Court given by Stuart-Smith LJ the Court of Appeal pointed out that:

Counsel for Mr Janzemini complained that the measure of damage found by the judge had never been pleaded. The only case ever put forward by Mr Zabihi had been that based on the Zandieh Letter. He objected that he had had no opportunity to lead evidence or cross-examine on the figures which the judge eventually adopted. In this connection he relied on the acceptance of the evidence of Mr Buckie as to what Mr Zabihi had told him to which I have referred in paragraphs 14 and 15 above. He asserted that he had had no sufficient opportunity to reply to the, effectively, new submissions made by counsel for Mr Zabihi in his reply.

I do not accept any of those submissions. The fact is that it was always clear from the pleadings that one of the central issues in the case was the value of the Jewelry, not some abstract concept as to its calculation as in Senate Electrical Wholesalers Ltd. Mr Janzemini had himself put Mr Zabihi to “strict proof as to the value of the jewelry which he handed to [Mr Janzemini]” in paragraph 10.8 of his amended defence. Both sides had ample opportunity to adduce evidence and to cross examine the other on that issue, including any apparent conflict between what Mr Zabihi told Mr Janzemini and Mr Buckie it was worth in, respectively September 2002 and July 2006. The fact that Mr Janzemini, as well as Mr Zabihi, chose to adduce dishonest and false evidence in respect of the jewelry handed over and its value precluded him from adducing evidence or cross-examining on the basis of some other, true, case. The point was squarely raised by the judge at the commencement of the hearing on 9th July. He sought and obtained submissions from counsel for each party in respect of it. There was no protest at the conclusion of the hearing on 11th July from counsel for Mr Janzemini that he had not had sufficient opportunity to deal with the point and no request to the judge to accept a written submission on it before giving his judgment. For my part I would reject the suggestion that the judge’s conduct of what, on any view, was an extraordinary case was anything other than exemplary.

I turn then to the second ground. There are two limbs to it, namely paragraph 8-002 of McGregor on Damages 17th Ed which the judge relied on in paragraph 280 of his judgment and the decision in Armorie v Delamirie (1721) 1 Strange 505 to which he referred in paragraph 285. Counsel for Mr Janzemini contends that the judge was wrong to adopt and apply either.

The relevant passages in McGregor on Damages 17th Ed are in the following terms:

Counsel for Mr Janzemini contends that the judge was wrong not to insist on proper proof of loss by Mr Zabihi by establishing exactly what was handed over and adducing expert evidence as to its value. He contends that this case does not fall into any of the eight categories listed later in Chapter 8 of McGregor on Damages. He suggests, in effect, that the judge was wrong to have done his best on the material available.

I do not think that this part of the second ground is separate from the third ground comprising grounds 3 to 5 both inclusive. The judge’s reliance on the statements in McGregor were distilled into the principle stated in paragraph 280 that

So I pass to the second limb of the second ground, namely the proper application of Armorie v Delamirie. Blackburne J referred to it in paragraph 285 of his judgment but it is unclear to me whether and to what extent he applied it. In Armorie v Delamirie a chimney sweep’s boy took ‘a jewel’ which he had found to a goldsmith for a valuation. The goldsmith’s apprentice removed the stones from their socket, offered the sweep’s boy three halfpence and when the offer was refused merely handed back the socket. The sweep’s boy sued the goldsmith for damages in trover. Several valuers gave evidence as to the value of jewels of a size to fit the socket. Pratt CJ directed the jury that:

Such a presumption cannot be of unlimited application. As I pointed out, with the agreement of the other two members of the court, in Malhotra v Dhawan [1997] Med.L.R. 319, 322 the principle must be subject to, at least, the following limitations:

In this case the difficulty in assessing the value of the Jewelry is due to the dishonest evidence given by both sides. A presumption against either is matched by the equal and opposite presumption against the other. So I do not think that the principle can be applied to the facts of this case for that reason alone. But, equally, there must be some limit on the extent of the presumption. In Armorie v Delamirie the socket from which the stones had been removed was available to indicate the size of stone required and the evidence of the expert valuers was, I assume, directed to the value of stones required to replace those taken. No doubt they testified to a range of values and the jury, as directed, took the top of the range. But, on the conclusions of Blackburne J in this case there are no similar parameters, save that the jewelry comprised diamonds mounted in gold, by which the extent of the presumption may be restricted. Without such parameters an application of the principle would lead to little more than guesswork. In my view for that reason too the principle of Armorie v Delamirie cannot be applied without some limitation in this case. But I do not think that the judge did so. It is clear from what he said in paragraph 285 that he tempered the principle, but then applied it so tempered only as a check on the conclusion he expressed in paragraph 282. I do not accept that this ground is any reason for us to interfere with the judge’s conclusion.

I pass to the third ground. Was the evidence on which the judge relied sufficient to justify his conclusion? The process through which the judge went in paragraphs 281 and 282 of his judgment involved the following steps:

Counsel for Mr Janzemini attacks both the first and the second steps. He contends that the first step involves assumptions of (a) a conversion in a way which enabled Mr Janzemini to discover the value of the Jewelry and (b) a calculation of the value of the Proffered Jewelry so as to show a profit. He claims that neither is justified. He challenges both steps on the ground that Mr Zabihi has no expertise in the valuation of jewelry. Accordingly his opinion expressed at the handover meeting on 12th September 2002 are irrelevant to the issue. It was suggested by reference to the decision of this court in Dover District Council v Sherred and Tarling (1997) 29 HLR 864, 867 that only expert evidence is admissible to prove the value of the Jewelry.

I do not accept that last submission. In Dover DC this court considered, in the context of housing disrepair, that:

The essential point is that ‘evidence’ must be logically relevant to the issue, see Phipson on Evidence 16th Ed. para 7-06. Thus to take some hypothetical examples evidence of the price paid by the claimant the year before the conversion would not be expert evidence but it would be some logical evidence as to the value of the article at the time of the conversion, adjusted as might be required to account for events of the intervening twelve months. Similarly evidence of what some third party would pay for the article, if for sale, would be some, albeit not expert, evidence of value. In each case it would be a matter for the judge to determine what weight to attach to it. If he decided to give it weight the disappointed litigant would have to accept that there was some evidence to justify the judge’s conclusion.

Accordingly, in my view, the resolution of this appeal depends on whether the evidence the judge accepted was logically relevant to the issue he had to determine. I do not have any doubt in relation to the first step. The assumption on which the judge was working, which is not challenged on this appeal, was that Mr Janzemini, a dishonest witness, had lost or disposed of the true jewelry and sought to replace it with the proffered jewelry. On that basis the judge considered that Mr Janzemini would not have replaced it with jewelry of greater value, at least without so informing Mr Zabihi. As the proffered jewelry was agreed to be worth £30,000 then the Jewelry must have been worth “at least” that amount. In my view the logic of that progression is impeccable. It may involve certain further assumptions in relation to the understanding of Mr Janzemini of the value of the Jewelry. But how that understanding was obtained seems to me not to matter beside the fact that it must, on the hypotheses adopted by the judge, have existed. Accordingly I would accept the first step taken by the judge and conclude that the value of the Jewelry was ‘at least’ £30,000. It must follow that the contention of counsel for Mr Janzemini that the damages should be reduced to £2 should, in my view, be rejected.

The second step is more debateable. In paragraph 156 of his judgment Blackburne J accepted that the figures of £340,000 and £500,000 were mentioned at the handover meeting in the context of the prices at which the Jewelry might be sold. In that context it appears to have been common ground that both Mr Zabihi and Mr Janzemini had their eyes on an acquaintance known to both of them as ‘Ali Rolls Royce’, see paragraphs 141 and 149 of the judgment of Blackburne J. Neither was asked for the grounds of his belief because it was not relevant to the case being advanced by either party. Nor was the apparent belief of Mr Zabihi necessarily inconsistent with what he had told Mr Buckie in the coffee shop on 21st July 2006 (see paragraph 14 above) because the assumed jeweller told Mr Zabihi that he might get more than £250,000 if he explored the market perhaps in London. In addition the judge accepted the evidence of Mr Salamat, a friend of Mr Janzemini, that in late September 2002 Mr Janzemini showed him the jewelry in the presence of three or four others and mentioned a figure of £500,000 (see paragraphs 166-168). Further, as the judge held in paragraphs 210-220 Mr Janzemini saw at least two of the three letters sent to him by the solicitors for Mr Zabihi in the period 30th January 2003 to 13th January 2004 asserting that the jewelry was worth £350,000 to £500,000 but never challenged any of those statements.

The submission of counsel for Mr Janzemini invites us to assume that Mr Zabihi had no good reason for thinking that the jewelry might be sold for anything like the sums he mentioned. Only then can it be said that his evidence had no relevance. That is not an assumption I am prepared to make. The judge found Mr Zabihi to have been dishonest in the evidence he gave. But he did not find that he did not genuinely believe the jewelry to be worth the sums he mentioned. Nor, until after these proceedings had been commenced did Mr Janzemini challenge the values suggested by Mr Zabihi, rather he adopted them as his own in his discussions with Mr Salamat in late September 2002.

Ultimately, an article is worth what someone else will pay for it. On their face the statements made by Mr Zabihi at the handover meeting on 12th September carried the implication that he had grounds for thinking that someone, whether it was Ali Rolls Royce or another, would or might be prepared to pay the stated sums for the Jewelry. Whilst such evidence may lie at the outer limits of what is relevant to the issue of value, in my view, it was sufficiently relevant to be admissible on that issue and, being admitted, to justify the judge taking it into account. Plainly it would not have been safe to accept it without qualification, nor did he. First the judge discounted both such values back to the open market values referred to by Mr Buckie and Mr Stocker to produce a range and then he took the mid-point in the range. For my part I can see no reason why Mr Janzemini should complain about a liability to pay £125,000 in damages for conversion of four sets of jewelry each consisting of a necklace, bracelet, ring and pair of earrings (though one of them may have lacked the bracelet) comprising diamonds mounted on gold which he had been told by Mr Zabihi in September 2002 should be sold, whether to Mr Ali Rolls Royce or another, for £340,000 to £500,000. The judge saw and heard the witnesses. His long and detailed judgment cannot be a complete statement of the impression they made on him, see Biogen Inc v Medeva plc [1997] RPC 1, 45. I do not accept the submission that there was no evidence on which he could have properly concluded that the value of the Jewelry was £125,000.

For these reasons I would dismiss the appeal of Mr Janzemini.

On his cross-appeal Mr Zabihi, in effect, challenges the propriety of the third step I have summarised in paragraph 33 above. Counsel for Mr Zabihi complains that the judge did not pursue the logic of his own conclusion. If the parties contemplated a sale to a private buyer at the prices they had mentioned then the jewelry was worth the price obtainable at such a sale not the lower open market or disposal prices to which Mr Buckie and Mr Stockton referred.

I do not accept that submission. The prima facie measure of damages for conversion of a chattel is the market value of the chattel at the time of its conversion, see Chubb Cash Ltd v John Crilley & Son (a firm) [1983] 2 AER 294. The fact that the parties may have envisaged a private sale at a substantially higher price cannot alter the legal measure. The evidence of both Mr Buckie and Mr Stockton showed conclusively that there was a market for jewelry such as that which was converted and that the prices obtainable in that market were lower by the amount of the average mark-ups to which they referred.

In my view the judge was right to discount the prices thought by the parties to be obtainable on a private sale in the way that he did in order to arrive at the market value of the Jewelry. That was the legal measure of Mr Zabihi’s loss and the figure by reference to which his damages were to be calculated.

For these reasons I would dismiss the appeal of Mr Zabihi too.

For all these reasons I would dismiss both appeals.

I am grateful to the Chancellor for his description of the circumstances giving rise to this appeal, to which there is nothing I can usefully add.

I agree that there is no merit in the first ground of appeal. Although it was Mr. Zabihi’s case that he had delivered to Mr. Janzemini four sets of antique gold and diamond jewellery of such quality as to be worth many hundreds of thousands, if not millions, of pounds, the particular characteristics of the jewellery which, if established, would result in its having such a high value, were not essential to his case. In my view Mr. Zabihi’s case as pleaded encompassed the simple allegation that he had delivered various items of jewellery to Mr. Janzemini for which Mr. Janzemini had failed to account. If he could establish that, he was entitled to recover damages calculated by reference to the true characteristics of the jewellery, whatever they might be.

Given the nature of the cases being advanced by Mr. Zabihi and Mr. Janzemini respectively (each of which the judge rejected as false), I cannot see how counsel for Mr. Janzemini could have addressed the court on the assumption, contrary to his instructions, that the judge might find that some jewellery had been delivered to his client, but that it was neither that which had been described by Mr. Zabihi, nor that which Mr. Janzemini had offered to hand over. There were two critical issues for the judge to decide: did Mr. Zabihi hand some jewellery to Mr. Janzemini for the purposes of finding a buyer; and if so, what was the nature and value of that jewellery? They were apparent from the outset and there is no substance in the suggestion that the judge should not have determined them, if he could, on the evidence before him.

Like the Chancellor, I am not at all sure that in assessing the value of the jewellery that was delivered to Mr. Janzemini the judge did apply the principle in Armory v Delamirie (1721) 1 Strange 505, but I agree with him that it has no application in this case. The indemnity principle, which lies at the heart of the common law approach to damages, coupled with the law on the burden of proof requires a claimant who seeks to recover damages for wrongful interference with his goods to prove on the balance of probabilities both the commission of the wrongful act and the loss that he has suffered as a result. In a case where goods have been stolen, damaged or destroyed that involves placing before the court some evidence by reference to which the court can assess their value at the relevant time.

The decision in Armory v Delamirie is difficult to reconcile with those two principles insofar as it involves the court in assuming the existence of facts that are most favourable to the claimant. It can, perhaps, be justified in a case where the defendant has wilfully suppressed evidence that would otherwise have been available to the claimant to enable him to prove his case, but I find it difficult to accept that the inability to make the goods available for inspection is of itself sufficient for that purpose. In the absence of evidence to the contrary, it would seem more logical to assume that the goods were of fair average quality rather than the best or worst of their kind. However that may be, as this court pointed out in Malhotra v Dhawan [1997] Med.L.R. 319, the application of the principle is necessarily subject to certain restrictions. In particular, whatever assumptions the judge makes must in my view be consistent with his findings of fact and the evidence before him.

In the present case the judge’s findings make it clear that both Mr. Zabihi and Mr. Janzemini could have provided evidence about the true nature of the jewellery that was handed over to Mr. Janzemini on 12^th September 2002, but that neither chose to do so. This was not a case, therefore, in which the defendant prevented the claimant from giving evidence that would have enabled him to prove his case. Even a relatively imprecise description of the jewellery of the kind that Mr. Zabihi actually put forward would probably have been sufficient to enable a valuation to be made, if it had been believed. In fact, however, each of them was equally responsible for withholding the truth from the court. Moreover, as the Chancellor has pointed out, some facts must be established if the relevant assumption is to have any rational basis. In the present case all that the judge was told was that each set of jewellery comprised a matching necklace, earrings, bracelet and ring in diamonds and gold. In view of the evidence of the expert witnesses about the different characteristics that affect the value of diamonds alone, I agree that that did not provide a sufficient basis for making any assumption of about its quality or value.

The final and most taxing question is whether the judge had sufficient evidence to support his finding that the jewellery that Mr. Zabihi actually delivered to Mr. Janzemini had a value of £125,000. I agree that in making a finding of that kind the court is not restricted to expert evidence. In most cases in which the court has to value a piece of jewellery it will be necessary for the judge to hear expert evidence because he will not himself possess the skill and experience to assess the weight and quality of the stones or the workmanship of the piece. He will therefore have no other relevant evidence to draw on. Occasionally, however, that may not be the case.

In paragraph 33 of his judgment the Chancellor has summarised the judge’s train of reasoning. I agree that the first step is sound. There was evidence on the basis of which the judge could find that the original jewellery was worth at least £30,000. The second step, however, is more problematic, because it rests on the express finding that Mr. Zabihi honestly believed that the jewellery could be sold for between £500,000 and £340,000 and on an implicit finding that he had reasonable grounds for that belief.

Although the judge regarded both Mr. Zabihi and Mr. Janzemini as unreliable witnesses unless corroborated by independent evidence, he appears to have accepted in paragraph 281 of his judgment that Mr. Zabihi honestly believed that the jewellery could be sold privately for the sums mentioned and I am prepared to assume for present purposes that Mr. Janzemini thought the same. But what was the basis for that belief? The judge rejected the Zandieh letter as a forgery, so that was of no assistance. Mr. Zabihi said that he had obtained indications of value from a jeweller in Tehran, but the judge did not accept his evidence on that point and so one must disregard that as well. (Given its importance to the case as a whole, if the judge had been satisfied that Mr. Zabihi had received even an informal indication of value from a jeweller in Tehran or elsewhere, he would surely have made a finding to that effect since, apart from anything else, it would have provided some objective evidence of the value of the jewellery at the time when Mr. Zabihi acquired it.) Moreover, as the judge recorded in paragraph 72 of his judgment, Mr. Zabihi disclaimed any knowledge of jewellery. Similarly, Mr. Janzemini, who was then in business as a restaurateur, did not profess to have any specialist knowledge of jewellery and told the judge that he was reluctant to sell it because he did not know what it was worth.

Jewellery containing diamonds and gold is one kind of property for which there is almost always a reasonably active market, if only because of the intrinsic value of its constituents. It is not surprising, therefore, that the experts in this case had little difficulty in valuing the proffered jewellery by reference to the price at which it could be sold at auction. If there is an active market in the kind of goods whose value the court is required to assess, the price that the goods in question will command in that market is usually the best indication of their value: see McGregor on Damages, 17^th ed. paragraph 33-006 and Chubb Cash Ltd v John Crilley & Son [1983] 1 W.L.R. 599. Such a price reflects a bargain between a willing buyer and a willing seller, each of whom can be assumed to have a reasonable understanding of the subject matter of the bargain, and was the approach adopted by the experts in this case.

It may be that in this case both Mr. Zabihi and Mr. Janzemini had reason to think that someone, perhaps Ali Rolls Royce or another of their acquaintances, would be willing to pay the sort of price that they had in mind for the jewellery, but I am unable to accept that that belief provides any reliable evidence of its true value. There are two reasons for that. First, there is no evidence that a potential purchaser had seen the jewellery or expressed any indication of what he might be prepared to pay for it. It is inherently unlikely that anyone would pay the kind of sums mentioned unless he had obtained an independent valuation or was himself sufficiently expert to know what he was buying. There was therefore no reason for them to think that Ali Rolls Royce or anyone else would pay more for the jewellery than it was actually worth. On that basis their belief as to the price for which the jewellery could be sold simply reflected their untutored views of its true value.

If, on the other hand, they both thought that they would be able to identify a gullible purchaser who could be persuaded to pay an inflated price for the jewellery, their belief as to what they might obtain would not in my view provide evidence of its actual value. One can test this by considering what the position would be if the stones were paste and the pieces of little or no value as a result. The fact that Ali Rolls Royce might be persuaded to part with £340,000 for the jewellery would not make it worth that amount. It would simply establish that he had been tricked into paying too much for them. If value is to be assessed by reference to the selling price, it must be by reference to the open market price, ideally at public auction.

Although I have nothing but admiration for the way in which the judge dealt with what was clearly a most difficult case, I am satisfied that when he came to the assessment of damages he failed to consider what evidence there was to support Mr. Zabihi’s belief that the jewellery could be sold for between £500,000 and £340,000. In my view there was none and I find it impossible to accept that there was evidence before him on a matter of such importance to which he did not himself refer and which neither party was able to identify for us. For these reasons I am unable to accept that, whatever may have been the basis of his belief, the views expressed by Mr. Zabihi at the time the jewellery was handed over on 12^th September 2002 provide any reliable evidence of its true value and it follows that I am unable to accept that there was any foundation for the subsequent steps in the judge’s reasoning. The result is that, although Mr. Zabihi could show that the jewellery was worth at least £30,000, he was not able to show that it had any significantly greater value, there being no sound evidential basis on which the judge could assess to the extent to which its value exceeded that of the proffered jewellery. The desire to give Mr. Zabihi an adequate remedy for the loss of his property is entirely understandable, but the court must have some basis for making a rational assessment, otherwise the award of damages becomes arbitrary.

Mr. Zabihi sought to argue on his cross-appeal that the judge should have assessed the value of the jewellery by reference to its retail price rather than the open market price, since his intention had been to sell it to a private buyer. I cannot accept that. What Mr. Zabihi has lost is the value of the jewellery that Mr. Janzemini should have returned to him and for the reasons I have already given the best evidence of that value is what he could have been sold it for in the open market. The fact that a commercial jeweller, having bought it in the open market, might have been able to sell it to a private client in the retail trade for two or three times its purchase price is nothing to the point.

For these reasons I would allow the appeal, dismiss the cross-appeal and vary the order below by reducing the award of damages to £30,000.

I agree with the Chancellor that both the appeal and the cross-appeal should be dismissed. There is nothing I can usefully add to the Chancellor’s judgment in respect of the cross-appeal and the first and second grounds of the appeal. In view of the disagreement between the Chancellor and Lord Justice Moore-Bick I will set out my reasons for concluding, in response to the third ground of appeal, that Blackburne J. did have sufficient evidence to support his finding that the jewellery that Mr Zabihi actually delivered to Mr Janzemini had a value of £125,000.

The starting point must be Blackburne J.’s express finding that Mr Zabihi genuinely believed that the jewellery had a value of between £350,000 - £500,000 if sold privately (para. 281 of the judgment). It is implicit in the second step of his reasoning in paragraph 282 of the judgment that Blackburne J. considered that Mr Zabihi had some basis for that belief. I agree with Lord Justice Moore-Bick that Mr Janzemini’s reluctant (because he did not know what the jewellery was worth) agreement to Mr Zabihi’s suggestion that he should sell the jewellery for £340,000 is not capable of providing any support for Mr Zabihi’s belief as to the jewellery’s value.

I also see the force of Lord Justice Moore-Bick’s observation that if Blackburne J. had been satisfied that Mr Zabihi had received even an informal indication of value from a jeweller in Tehran or elsewhere, he would surely have made a finding to that effect. However, given the absence of any express finding one way or the other as to whether there was, or was not, an informal valuation, the converse is equally likely.

If Blackburne J. had concluded that Mr Zabihi, who had disclaimed any knowledge of jewellery, had no basis whatsoever for his belief as to the value of the jewellery because he had never, at any stage, whether before or after acquiring it in the spring of 1999, received even an informal indication as to its value from a jeweller, i.e. he had simply plucked the value of £350,000 - £500,000 out of the air, then surely he would have made a finding to that effect, particularly in view of the extent to which he felt unable to rely on Mr Zabihi’s unsupported evidence generally (see para. 20 of the judgment); and he would not then have proceeded to the third step in his valuation.

Although Blackburne J.’s acceptance of Mr Buckie’s evidence as to what Mr Zabihi told him after the inspection on 21^st July 2006 did not necessarily involve his acceptance of the truth of what Mr Buckie was told, nowhere in the judgment is the truth of that account expressly rejected by the judge. He found, despite Mr Zabihi’s evidence to the contrary in cross-examination, that Mr Buckie was told by Mr Zabihi that there had been an informal valuation after Mr Zabihi had acquired the jewellery (paras. 99, 110 and 113 of the judgment). In para. 101 of the judgment Blackburne J. pointed out the conflict between this account and the account based on the Zandieh letter, in which the “valuation” contained in the letter was said to have been given to Mr Zandieh before he handed the jewellery to Mr Zabihi’s agent in Tehran.

In rejecting the account in the Zandieh letter Blackburne J. relied, in part, upon this conflict. He did not conclude that there had been no valuation. Read in isolation, his words in paragraph 101 “the valuation, if there was one” would suggest that he was not satisfied that there had been any valuation at all. However, paragraph 101 is in that part of the judgment in which the judge was considering whether the Zandieh letter was genuine, and in that context the words “if there was one” are a reference to the terms of the letter itself (see para. 69 of the judgment) which, arguably, do not amount to a valuation, and are certainly not a formal valuation.

Once the figures mentioned in the Zandieh letter are rejected as a possible basis for Mr Zabihi’s belief as to the value of the jewellery, and on the judge’s findings they could not have been the basis for any genuine belief, what possible basis was there for Mr Zabihi’s belief other than the valuation which he had described to Mr Buckie? The belief that the jewellery was worth £350,000 - £500,000 on a private sale basis in London is consistent with what the jeweller was alleged to have told Mr Zabihi: that he could obtain “a significantly higher price” than £250,000 if he “explored the market – perhaps in London”.

The judgment must be read as a whole. If one does so, there are two possible conclusions in respect of the second step in the judge’s valuation. The judge either:

Failed to consider whether Mr Zabihi had any basis for his belief as to the value of the jewellery before using it as the starting point for his valuation of £125,000 (the first step leads nowhere beyond the base value of £30,000); or he

Considered that Mr Zabihi did have some basis for his belief because he broadly accepted the truth of the account which Mr Buckie said he was given by Mr Zabihi, and was satisfied that Mr Zabihi had received an informal valuation (not the Zandieh letter valuation) at some time after he had acquired the jewellery.

Neither conclusion is entirely satisfactory. I am not inclined to accept conclusion (i). In the context of such a meticulous, and in all other respects impeccable judgment, it is most unlikely that the judge would have made such an obvious error. I realise that in order to reach conclusion (ii) it is necessary to read into the judgment by implication a finding which, in an ideal world, would have been explicit. However, of the two approaches to the judgment, (ii) is the least unsatisfactory. On balance, I am not persuaded that the judge erred in reaching his valuation of £125,000 and I would therefore dismiss the appeal.