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The mystery surrounding a missing Rolf Harris painting has taken a fresh twist, with a UK court clearing an art dealer of being involved in its disappearance.
The painting, Lovers on the Seine II - regarded as one of the Australian entertainer's best works - went missing from a warehouse in England in 2005.
A complex legal battle has been going on for nearly three years amid accusations that art dealer Udi Sheleg and the company he oversaw, Birmingham-based Washington Green Fine Art Publishing, were involved.
A High Court judge ruled in June 2009 that Mr Sheleg knew 'full well' where the painting was and was 'personally and dishonestly responsible for its loss'.
But his lawyers on Tuesday succeeded in persuading the Court of Appeal that neither he nor Washington Green had anything to do with the painting's disappearance.
Lord Justice Andrew Longmore said there had been no evidence to back claims that Sheleg was 'a thief' and the High Court judge had been wrong to rule that Washington Green had ever been in possession of the painting.
He overturned the High Court judge's order for Washington Green to pay STG135,000 ($A223,658) to the painting's owners plus legal costs.
Sheleg and Washington Green were originally taken to court by Maxine Hardy, whose husband Dean Hardy bought the painting along with other drawings and prints by Harris from Castle Galleries in early 2005.
But Hardy never took the works home, instead asking Castle to store them at its warehouse in Warwick.
Around the same time, Castle was bought by Sheleg's Halcyon Fine Art Galleries, which also owned Washington Green.
In October 2005, the Lovers on the Seine II was discovered to be missing from the warehouse, which Washington Green had begun to use to store artworks.
Sheleg was informed, but no one told Dean Hardy.
After he died in May 2006, his widow asked about the stored artworks and was told Lovers on the Seine II had vanished.
She had the remaining artworks delivered to her Nottinghamshire home and launched legal action alleging the painting had been 'dishonestly misappropriated or lost' by Washington Green.
While Ms Hardy had also tried to pursue Castle Galleries in the courts, the company went into administration shortly before the High Court trial, leaving Washington Green as her main target.
During the trial, lawyers for Washington Green and Sheleg insisted that while the company shared the warehouse with Castle, they occupied separate space and Washington never had possession of the missing picture.
In overturning the High Court judge's finding that Washington had possessed the picture, Justice Longmore said the original judgment had been 'tainted' by the judge's conclusion that Sheleg was 'a thief', based on his refusal to give evidence.
As such, 'the judge's conclusion on possession cannot be allowed to stand and the (High Court) judgment in Mrs Hardy's favour will, unfortunately, have to be set aside,' Justice Longmore ruled.
'That means that, sadly, for Mrs Hardy, this appeal must be allowed.'
Justice Longmore noted that while in recent weeks lawyers for Ms Hardy had 'thought it was possible that the picture might have been found', that had turned out to be 'a false hope'.
He ordered Ms Hardy to pay Washington's legal costs, which are expected to top STG50,000 ($A82,836).
