An intriguing and long-running saga involving an alleged Old Master painting, a London art dealer, a US investor and an international auction house appears to have reached its conclusion. For those following the case of Sotheby’s v Weiss Limited and Fairlight Art Ventures LLP, with all its twists and turns, the latest (and possibly the final) chapter came to an unexpectedly speedy conclusion with a judgment from the Court of Appeal, delivered on 23rd November, just two weeks after the appeal hearing.
At face value, the facts of the case were relatively straightforward, certainly if taken one step at a time. In 2011, a painting, Portrait of a Gentleman, described as by Frans Hals, was consigned for sale to Sotheby’s by Mark Weiss Limited, a fine art dealership (“Weiss”). The painting was co-owned by Weiss and Fairlight Art Ventures LLP, an investment vehicle (“Fairlight”). Sotheby’s duly sold the work by private treaty for US $10,750,000 (plus buyers’ premium) to EPC Nevada LLC (“Nevada”, a company owned by Mr Richard Hedreen).
The contract of sale contained an ‘authenticity guarantee’, allowing for recission and return of the painting should Sotheby’s determine it to be a ‘counterfeit’. When it came to light that Weiss and Fairlight had purchased the painting from a certain Giuliano Ruffini, around whom a forgery scandal of epic proportions began to emerge in 2016, Sotheby’s suggested the painting be re-examined. The ensuing investigations, which uncovered synthetic pigments not in use in the seventeenth century, prompted Sotheby’s to determine that the painting was a counterfeit. On request by Nevada, Sotheby’s promptly returned the purchase price and the painting was handed back to the auction house.
Sotheby’s then looked to Weiss and Fairlight for reimbursement, and brought a legal claim against them when this was not forthcoming. Weiss ultimately settled (to the tune of US $4,200,000) shortly before the hearing in April 2019. Fairlight held its ground, but its defence found no favour with the High Court, which ruled that Sotheby’s was right to have refunded the buyer in the circumstances. It had been “reasonable and rational” for Sotheby’s to determine the painting to be a counterfeit, and the auction house had acted “in accordance with the contractual framework” in providing the refund (Mr Justice Knowles for the High Court). Fairlight appealed the decision on a number of grounds. The appeal ultimately proved fruitless but elicited from the Court of Appeal some rather fascinating commentary of wider significance for the art world.
Without delving too deeply into the minutiae of the contractual relationships between the various parties involved, it is worth clarifying the basic structure of the arrangements for the sale. The High Court helpfully referred to the two key agreements as Contracts ‘A’ and ‘B’. Contract A was the consignment agreement between the sellers and Sotheby’s incorporating the wording of the ‘authenticity guarantee’, which the seller agreed would be provided by Sotheby’s to the purchaser (on a non-assignable basis for a five year period). This provided that, should Sotheby’s determine that the painting was a ‘counterfeit’ (an ‘imitation intended to deceive’), the seller agreed to rescind (unwind) the sale and return the purchase price to the buyer.
Contract B was the purchase agreement between Sotheby’s (as agent for the sellers) and Nevada containing the guarantee from Sotheby’s in favour of Nevada, in broadly the same terms as set out in Contract A, but with an important qualification: that it would not apply if, at the date of the agreement, the description of the painting (i.e. with the attribution to Hals) “accords with generally accepted views of scholars and experts…” (subsequently referred to by the Court of Appeal, rather prosaically, as the ‘GAV Proviso’).
It was Sotheby’s case that the exercise of the guarantee by Nevada and the subsequent return to it of the purchase price were carried out properly, in accordance with the provisions of Contracts A and B. Fairlight challenged this view from multiple angles which the High Court distilled into ten points of contention, four of which were carried through into Fairlight’s appeal.
The first two grounds of appeal, and indeed much of the discussion in the first instance hearing, focused on the relationships between Weiss and Fairlight, and between those two parties and Sotheby’s.
In the High Court’s view, Contract A directly bound Weiss and Fairlight as principals to the sale. This was contested by Fairlight which argued, alternatively, that Sotheby’s was a sub-agent to which Weiss delegated functions within the context of a ‘main agency agreement’ between Weiss (as agent) and Fairlight (as principal). In this scenario, Fairlight’s argument continued, there had been no direct contractual relations between Fairlight and Sotheby’s. This argument was rejected by the High Court and subsequently by the Court of Appeal, which considered the notion of a ‘main agency agreement’ to be an “artificial construct designed to attract the sub-agency line of authorities” (Lady Justice Carr for the Court of Appeal). Those authorities, in any event, were not considered to assist Fairlight on the facts for several reasons. One important factor was that Fairlight and Weiss were co-owners of the painting, and as such, both needed to be privy to the contract with Sotheby’s which contained detailed arrangements on matters such as risk, delivery, inspection and authenticity.
Another question about the Weiss/Fairlight relationship was whether a statutory partnership existed between these parties, as an alternative means by which they might both have been bound to Contract A. In light of the finding that both were bound as principals (as described above), this point was not considered to be decisive (though was nonetheless debated at some length in both hearings, with interesting arguments raised on both sides, well worth noting by art dealers entering into arrangements with investment vehicles for trades in art).
The third ground for appeal focused on the so-called ‘GAV proviso’ – the stipulation that the offer to rescind the contract under the ‘authenticity guarantee’ did not apply where the description of the painting (including the all-important attribution) accorded with “generally accepted views of scholars and experts or indicated that there is a divergence of such views…”. Fairlight’s argument here was that the attribution to Hals did indeed accord with such views, thus rendering the guarantee inapplicable. Were that the case, of course, Sotheby’s return of the purchase price and its subsequent claim against Fairlight would have been unsustainable.
In determining what was meant by the ‘generally accepted views of scholars and experts’, the High Court held that the phrase must be given its ‘ordinary meaning, in context’. This meant considering whether a single, generally accepted opinion had been reached, or as the Court of Appeal neatly put it, “whether there was a consensus (i.e. a generally held view not requiring unanimity) among scholars and experts at the time”. Fairlight argued that the proper test was a ‘majority’ or ‘headcount’ test (i.e. did most, or the majority of experts and scholars think that the work accorded with the description?). Fairlight apparently presented this argument in graphical form, with ticks or crosses against the names of the relevant experts and scholars. This approach was rejected by the Court of Appeal, since it failed to reflect the true nature of the exercise, which was to look at the whole field of scholarly and expert opinion expressed and to reach a judgement on (i) whether there was a generally accepted view and (ii) what that was. A ‘check-box’ methodology wasn’t capable of achieving this.
Applying its more nuanced approach, the Court of Appeal upheld the decision of the High Court that, at the date when the ‘authenticity guarantee’ was given, no ‘generally accepted view’ had been reached by experts and scholars as to the painting’s attribution. It was significant that the work was newly discovered, having been recorded for the first time only in 2008 (the guarantee being provided in June 2011). As Sotheby’s had argued, and both Courts accepted, it can take time for a consensus to be reached about a newly discovered work. For the work in question here, that time had not come by June 2011. Such was evidenced by a litany of factors, including that there had only been one publication about it (a catalogue commissioned by Weiss), the leading Hals scholar had not seen it in person, another eminent scholar had a dissenting view and no forensic testing had been conducted. Other criticisms levelled by Fairlight about the High Court’s handling of the expert evidence were shortly dismissed by the Court of Appeal, which confidently confirmed the position that at the date the guarantee was given, there was no generally accepted view on the painting which should have invoked the ‘GAV proviso’.
The final point Fairlight raised on appeal was a somewhat technical one relating to the status of the entity to which the refund was provided. The terms of the guarantee specified that it was not assignable, and applied only to the original buyer and not any subsequent owners. After purchase of the painting by Nevada, it had been transferred to the company’s owner, Mr Hedreen, then back again to Nevada. Fairlight’s argument that these transfers rendered invalid Nevada’s claim under the guarantee looks a little like clutching at straws. Sure enough, it was given short shrift at both levels, the Court of Appeal dismissing it in just six paragraphs (of its 117-paragraph judgment).
Disputes in the art world which reach the courts are fairly few and far between. Settlements, often at the eleventh hour (like that between Weiss and Sotheby’s) are much more common, as the participants seek to keep their deals confidential, their relationships intact and their powder dry. On the rare occasions when litigation ensues, the results are generally fascinating, and this case was no exception. Whilst it inevitably turned on its own set of facts, there are certainly some noteworthy points for the art trade, not least because the ‘authenticity guarantee’ at the heart of the dispute is a relatively common offering, in some shape or form, in the standard terms of major auction houses.
So what are the take home points for art market professionals? Firstly, clarity in business relationships is key, particularly between co-owners, or those entering into some form of joint arrangement to buy or sell art. The relationship between Fairlight, as an investor/partner/lender/co-owner/client and Weiss as a dealer/partner/co-owner was never fully spelled out (and, as an aside, had in fact, been the subject of a draft agreement, but this was never executed – a lesson in itself!). This provided fertile ground for dispute and rendered the two parties rather uneasy bedfellows from the outset. On the question of relationships, the traditional contractual structure of auction house sales, with separate contracts between seller and auction house, then auction house and buyer was also brought into sharp focus. Whilst there are good reasons for parties to prefer this structure (confidentiality, principally), the risk of loopholes arising in these ‘back-to-back’ contractual situations are manifold.
The difficulties for courts in addressing questions of attribution were also brought to light, as they have been on numerous previous occasions (as far back as the 1950’s in relation to an alleged Constable, in the case of Leaf v. International Galleries for example, and more recently in cases such as Harlingdon v. Christopher Hull in 1991 (an alleged Gabriele Mϋnter); Drake v. Agnew in 2002 (an alleged Van Dyck); and Avrora v. Christie’s in 2012 (an alleged Kustodiev)). The High Court Judge in the present case concluded by confirming in no uncertain terms that his judgment did “not determine whether the Painting is by Frans Hals”. Of course, this was not his job, but he was required to consider detailed expert evidence in the context of what might constitute the ‘generally accepted view’ on attribution. The comments of both Courts as to how this seemingly straightforward phrase should be interpreted were insightful, and merit close attention by those contracting on terms which use this form of words.
Perhaps above all, not for the first time, the case highlights the risky nature of transacting in art. While technical advances in assessing works and advancements in scholarship and understanding can afford a seller (and buyer) of art a degree of comfort, on the nuanced question of attribution there remains uncertainty and room for challenge. The legal protections available are limited, precisely because the questions at stake do not lend themselves to black-and-white answers. In his closing line, the High Court Judge expressed his hope that “whether by Frans Hals or not” the painting’s “intrinsic qualities will not be ignored and that it may be enjoyed for what it is”. One suspects that such words felt rather more like rubbing salt into Fairlight’s wound than providing the salve that was perhaps intended. No such soothing balm was offered by the Court of Appeal either. We’ll wait to see whether any further avenues remain to be explored, but for the moment, at least, it looks like the end of the road for this fascinating saga.
Image – Manner of Frans Hals, Public domain, via Wikimedia Commons
For articles about past attribution cases, see the following entries in Art Antiquity and Law: A. H. Hudson, ‘Attribution of Paintings and Sale by Description: Drake v. Agnew’; I. Paintin ‘The Art of Connoisseurship through Judicial Eyes: the Law of Negligence and Fine Art Attribution’; J. Holland ‘The Approach of the English Court to Connoisseurship, Provenance and Technical Analysis’.