Wedgwood collection available to creditors

Sad news for The Potteries, the five towns of North Staffordshire famous for their manufacture of china tableware and ceramics and the setting for most of the novels of Arnold Bennett.

Over the years, many of the works have closed and the great names disappeared, or moved production to the Far East. One famous name, Wedgwood, is still trading, but it is insolvent and there is a big hole in the workers' pension fund. The trustees of the fund could get some relief from the Pension Protection Fund, but only after trying to get as much as possible from the Wedgwood insolvency, in which the pension fund is the major creditor.

As early as 1774, it was decided that samples of every product from the factory should be preserved and so there is a Wedgwood Museum with a fine and valuable collection.  Unfortunately, the five employees of the museum were also in the same Wedgwood pension scheme, making the Museum Trust jointly liable for £134m and so also insolvent.  The question, on which the High Court ruled yesterday, is whether the collection belongs to the Museum Trust outright, in which case it must be available to creditors, or whether it is held in trust for others, and so protected.  The court has decided that the collection is not held in trust, and so is available to benefit the Wedgwood creditors.  As a result, the collection will probably be sold.

The lesson is obvious.  The museum and its collection should have been kept apart from the rest of the business, whereas the common pension arrangements were its undoing.  There are many other small museums attached to industries and other institutions, and they would be well advised to check their ring-fencing.

Art and money laundering

The bane of every English lawyer's life is having to deal with the requirements of the Money Laundering Regulations.  These hail from the EU, but were adopted and expanded with enthusiasm by the last government. 

For every new client, we have to establish the identity of the client and, if the client is a company or trust, the identity of those who control or beneficially own the client.  Original or certified copy documents showing addresses, such as utility bills, and official photographs, such as passports, are required.  Failure to carry out these checks can have serious criminal consequences for the lawyer or those responsible for compliance, and so they can not be avoided.  For a commercial law firm with international clients it can be very difficult to identify those companies, organisations or beneficial owners, and that is particularly so when acting for the owners or purchasers of art. 

Props in the Galaxy

"In 1976 a struggling art school graduate called Andrew Ainsworth was asked to give a visual dimension to the drawings and paintings of an artist … ".  So begins an interesting article by my partner Eddie Powell concerning the recent Supreme Court decision in Lucasfilm v Ainsworth [2011] UKSC 39. 

Read more: www.fladgate.com/propsinthegalaxy

Res Nullius?

When and where I studied law, the Roman Law course was compulsory.  In retrospect, all I got from it was a collection of Latin legal terms.  The use of legal Latin became politically incorrect in the 1990s, culminating in the Civil Procedure Rules, which even changed "writ" to "claim form".  Perhaps a new generation of lawyers brought up on Harry Potter will restore the balance, but I digress.

A res nullius in Roman Law was a thing that belonged to no one, and yet, I was taught, there was no such thing in English Law, except perhaps a corpse.  If an object's owner cannot be identified, it does not make the object ownerless, and therefore ownership cannot be acquired by the taking.  That can make some objects problematical, and one such object is on a plinth outside the Houses of Parliament.  I refer to Henry Moore's sculpture "Knife Edge Two Piece" which is the subject of an interesting article by Martin Bailey in The Art Newspaper. 

Gifts of art to the nation

Tomorrow is the last day for responding to the Government's consultation paper on the new scheme for tax incentives for giving art to the nation.  http://tinyurl.com/6b56c63

The idea was first raised in the March 2011 budget.  The rationale, according to Jeremy Hunt, Secretary of State for Culture, Media and Sport, is that (and I paraphrase the Treasury press release) "With art being so expensive to buy for the nation, we would rather encourage philanthropists to give us art, in return for some tax incentive". 

Fair enough, but it can't be any old item of art.  It must be a "pre-eminent object or work of art".  That is likely to include items with an especially close association to our history or national life, that are of artistic or art historical interest and perhaps have an especially close association with a particular historical setting.

It is not yet known what the tax reliefs will be, but they will be capped at only £20m per year, which is for the whole scheme.  That cap is to be shared with the existing "acceptance in lieu" (AIL) scheme, which allows assets to be transferred to the Government in place of tax. AIL already accounts for about £12m per year, which does not leave much for the new scheme.  It seems that the relief will have to be rather mean or the works not particularly pre-eminent, or there can't be many of them, which makes one wonder if the scheme is going to be worth the effort.

Hanging

My property litigation partner, Alison Mould, has raised an interesting point. She tells me that permission may be required for attaching art to surfaces in premises that are let to the occupant.  Substantial works will require substantial hangings.  Anything more than the odd drawing pin may involve interacting with the fabric of the building and require a landlord's licence to alter.  Licences can take two or three months to obtain and so, if anticipating an exhibition or gallery, this is something that will need to be factored into the timetable.

There's good reason for landlords to be concerned.  One of our construction litigation partners, Frances Alderson, has a case where a building owner innocently hung several heavily framed paintings on a wall.  What he failed to check was whether the wall had been designed to take either the weight of the pictures or the movement in the wall caused by the weight.  In the event, the movement caused cracks, giving rise to a dispute as to who was to blame - the owner, the architect or the builders.

Droit de suite

The reports last week of the decision of the Paris High Court regarding the droit de suite (aka artist's resale right) on the sale of certain paintings by Salvador Dali are a reminder of what is coming our way.  In less than five months the scheme will be extended to the UK, for deceased artists, under EU Directive 2001/84/EC and the Artist's Resale Right (Amendment) Regulations. 

 

The scheme provides for part of the sale price of works of art, sold on the art market, to be paid to the artist or his or her heirs for 70 years from the artist’s death.  The maximum amount to be paid is €12,500 per item, based on a sliding scale from 4% down to 0.25% of the price.  The UK has dragged its feet for as long as possible, with the right being introduced for living artists in 2006 and it is now to be extended for deceased artists from 1 January 2012, which will quadruple its scope. 

 

Inspiration and risk management

At the risk of being disowned by my History of Art student daughter, I have to admit that installation art doesn't engage me much.  The lawyer in me kicks in and I start thinking about what could go wrong.


For example, earlier this year, said daughter led me through The Forked Forest Path by Olafur Eliason at the Whitworth Gallery in Manchester.  For those unfamiliar with the work, it consists of an area of tall and dense bushes, all dead and very dry (it dates from 1998), through which you walk in a maze of paths in semi-darkness.  I soon began to fear that some bored child on a school trip might think it a great place to mess around with a cigarette lighter!


Then of course we had Ai Weiwei's Sunflower Seeds at Tate Modern.  From originally inviting visitors to interact with the massive area of hand painted stone seeds, the stage was reached where they could only be accessed in white overalls and breathing apparatus (OK, I'm exaggerating slightly) in view of the potential health hazard from the dust.

Enforcement against state-owned art abroad

The Czech government is urgently trying to repatriate its art lent to overseas institutions, to avoid it being seized to enforce a $500m Czech judgment, obtained against the Czech state by a commercial organisation. See Artinfo: http://bit.ly/jQskNk 

Art has already been seized from a gallery in Vienna, and Paris seems likely to follow.  Could it happen in London?

Good news for experts and valuers

An interesting case has just been reported.  Ian W Spencer v S Franses Limited [2011] EWHC 1269 (QB)  provides a fascinating story, court room drama and some new law which will be welcomed by art and antiques experts and valuers.  You can read the reported judgment at http://bit.ly/lv9W6C

It concerned some valuable embroideries found by Ian Spencer, the claimant, in a house clearance, and valued by the well-known expert valuer and dealer, Simon Franses, whose company was the defendant.  What had previously been considered to be Victorian stage props turned out to be medieval and “national treasures”.

A murky world?

The recent trial of Accidia v Simon C Dickinson Limited [2010] EWHC 3058 (Ch) became quite a talking point in the art market, not just in London.  As I acted for the claimant, I was well aware of the interest generated by the press reports, and my own opinion piece in The Art Newspaper. How many art owners must have wondered about transactions they never fully understood, and how many dealers must have felt uneasy that their clients might ask questions they would rather not answer?


Read the judgment at http://www.bailii.org/ew/cases/EWHC/Ch/2010/3058.html