Sotheby's v Mark Weiss Ltd & Ors

This is an appeal by the Appellant, Fairlight Art Ventures LLP ("Fairlight"), against the judgment and order of Robin Knowles J CBE ("the Judge") dated 11 December 2019 following an eight-day trial in April 2019. It relates to a painting entitled "Portrait of a Gentleman" (oil on oak panel 13 ½ by 10 ½ inches) ("the Painting"), considered by some (at least formerly) to be the work of Frans Hals, the famous Dutch Golden Age painter (1582/3-1666). Whilst the correctness of that attribution is now very much under scrutiny, that is not an issue that arises for consideration on this appeal.

All the parties are involved in the fine art world. The First Respondent, Sotheby's, is an international auction house. The Second Respondent, Mark Weiss Limited ("MWL"), is a fine art dealership. The Third Defendant, Mr Mark Weiss ("Mr Weiss”), is a director and the sole shareholder of MWL. Fairlight is the special purpose vehicle of Mr David Kowitz ("Mr Kowitz"), who is its designated member and ultimate beneficial owner. He is an investor in fine art.

In 2010 the Painting was purchased by Fairlight on behalf of itself and MWL. In 2011 the co-owners agreed to sell the Painting onwards. Sotheby's, pursuant to a consignment agreement, was involved in its sale in June 2011 by private treaty for US$10,750,000 to EPC Nevada LLC ("Nevada"), controlled and beneficially owned by Mr Richard Hedreen, also a fine art collector and investor. The sale contract was subject to provisions allowing for rescission and return of the Painting and the purchase price. In 2016 Nevada sought to rescind the sale contract following expert opinion on the authenticity of the Painting. Sotheby's returned the purchase price to Nevada and Nevada returned the Painting.

The parties disagreed on the question of whether MWL, Fairlight and Mr Weiss were obliged to reimburse Sotheby's for the returned purchase price.

MWL and Mr Weiss compromised their differences with Sotheby's in a settlement deed dated 18 March 2019 ("the Settlement Deed"). Under the Settlement Deed, MWL and Mr Weiss agreed to pay Sotheby's US$4,200,000 ("the Settlement Sum") and Sotheby's agreed to indemnify MWL in respect of claims against MWL and Mr Weiss by Fairlight up to a cap of US$2,500,000.

Upon his judgment, the Judge ordered:

After adjustment by way of set-off, the net principal sum due from Fairlight to Sotheby's was US$5,375,000 and MWL was under no further liability to contribute towards the principal sum of US$10,750,000. The Judge also made consequential orders relating to interest, the delivery up of the Painting and costs.

Fairlight has been granted permission to pursue four grounds of appeal relating to the Judge's findings: i) on sub-agency and privity; ii) on partnership; iii) on the construction of a clause relating to the views of scholars and experts (and the Judge's findings on the substance of the expert evidence itself); and iv) on whether or not Nevada was entitled to rescind. Fairlight argues that the Judge made substantive errors of law; repeatedly failed to give adequate reasons for his conclusions; and reached perverse conclusions on the facts or failed properly to weigh relevant evidence.

The appeal is resisted by Sotheby's. MWL is party to the appeal since, if Fairlight succeeds, Fairlight seeks consequential orders (in the event that it succeeds on the third and/or fourth grounds of appeal) quashing all provisions directing it to make contributions to MWL in respect of the sums ordered to be paid by MWL to Sotheby's. MWL supports Sotheby's position. Mr Weiss is not a party to the appeal.

As at 2010 Mr Kowitz was a long-standing and important client of MWL and friend of Mr Weiss. Mr Kowitz had bought his first Old Master from MWL in 1997.

Mr Weiss first viewed the Painting in Paris in April 2010. Two years earlier, in 2008, the French government had declared the Painting a "trésor national" and refused it an export licence until 2011.

Mr Weiss viewed it together with Mr Kowitz in May 2010. They agreed to buy the Painting for €3,300,000 on a 50/50 basis, each contributing €1,650,000. For this purpose Mr Kowitz (personally) agreed to lend Mr Weiss/MWL €1,150,000. Mr Kowitz stated in an email to Mr Weiss dated 31 May 2010:

Mr Weiss responded on the same day:

On 7 June 2010 Fairlight (acting on behalf of itself and MWL) duly purchased the Painting (from a Mr Giuliano Ruffini ("Mr Ruffini")) for €3,000,000. The contract was reviewed by Fairlight's lawyers who liaised with both Mr Weiss and Mr Kowitz on its terms.

On 8 July 2010 Fairlight's lawyers emailed Mr Weiss stating that Mr Kowitz had asked them to prepare a draft agreement covering "both the ownership/profit share and the loan" in respect of the Painting. A draft agreement was attached. It showed the parties as Fairlight, Mr Kowitz, Mr Weiss and (possibly) MWL. It recorded that Fairlight held the Painting on behalf of MWL and itself jointly with each party having a 50% interest, and that any profits were to be shared equally. At paragraph 8 it stated:

According to Mr Weiss (in his first witness statement which Fairlight relied on at trial by way of hearsay notice), he and Mr Kowitz agreed to meet on 13 May 2011 to make a decision on whether Mr Kowitz would decide to keep the Painting (and buy Mr Weiss out) or they would agree to offer the Painting to the market. They failed to reach an agreement as to value at that meeting in what Mr Weiss said was a "difficult conversation". Further discussions took place in the following days in the course of which Mr Kowitz agreed that Mr Weiss could try and sell the Painting at a price at or above US$12million.

On 17 May 2011 Mr Kowitz accordingly emailed Mr Weiss as follows:

Mr Weiss states that following this email, Mr Kowitz indicated he wanted, after all, to consider keeping the Painting and asked for more time, to which Mr Weiss agreed. Mr Weiss also engaged with a prospective private buyer in the meantime. By 24 May 2011 Mr Kowitz was again willing for the Painting to be sold. Mr Weiss pursued various potential avenues to sell.

As at June 2011, Mr James Macdonald ("Mr Macdonald"), head of Old Master Paintings Private Sales Worldwide and a senior director of Sotheby's, and who had visited the Painting in MWL's gallery in May 2011, was keen to broker a sale. On 9 June 2011 he indicated to Mr Weiss that he had a private client very interested in the Painting. The Painting was delivered to Sotheby's on 17 June 2011 for viewing by Sotheby's client on 20 June 2011.

On 20 June 2011 Mr Macdonald emailed Mr Weiss with details of an offer at US$10,000,000 (plus Sotheby's commission and export deal). Mr Weiss responded with thanks, although the offer was "a fair bit shy" of his aspirations for the Painting. He stated that he had forwarded the email to his "partner", Mr Kowitz. A Sotheby's internal email from Mr Macdonald the next day recorded that Mr Weiss was speaking "to his partner + will come back to me soon…"

Mr Weiss negotiated an increased offer of US$10,750,000 on 21 June 2011. Mr Weiss states that during his negotiations with Sotheby's he kept in "close and regular contact" with Mr Kowitz. He relayed the increased offer to Mr Kowitz on 21 June 2011 and Mr Kowitz agreed to sell the Painting at that price. Mr Weiss communicated acceptance of the revised offer to Mr Macdonald: US$10,750,000 net to the vendor, plus 5% Sotheby's buyer's commission, full payment in 30 days and export deal.

Mr Macdonald sent another internal email stating that Sotheby's had "reached an agreement to sell the Hals privately for Mark Weiss". An internal High Value Lot Questionnaire dated 22 June 2011 recorded MWL's confirmation that it was the "sole consignor" of the Painting.

There followed a consignment agreement contained in a letter from Sotheby's addressed to MWL. MWL (as agent for Fairlight and on its own behalf) appointed Sotheby's as exclusive agent and granted Sotheby's the exclusive right to offer and sell the Painting by private treaty to a prospective buyer identified by Sotheby's for a minimum price of US$10,750,000. Mr Weiss signed the letter ("duly authorised for and on behalf of MWL") on 23 June 2011 and Sotheby's signed the letter on 25 June 2011 (each also initialling each page) ("Contract A").

Contract A read materially as follows:

The Private Treaty Terms included the following "Authenticity Guarantee":

Mr Weiss sent Contract A to Mr Kowitz by email on 23 June 2011 "fyi". Mr Kowitz responded on 26 June 2011 without objection but asking whether Mr Weiss had insurance on the higher amount reflected in the minimum reserve price stated in Contract A, which seemed important to him, and as to the identity of the person with whom Mr Weiss had dealt at Sotheby's.

By separate letter, Sotheby's (as seller's agent) entered into a contract with Nevada for the sale and purchase of the Painting. The letter was signed for and on behalf of Sotheby's and Nevada respectively on 27 June 2011 ("Contract B").

Contract B provided materially as follows:

It can be seen that Contract B (at clause 4) contained an Authenticity Guarantee which broadly mirrored the terms of the Authenticity Guarantee A ("Authenticity Guarantee B"). However, Authenticity Guarantee A did not contain the proviso to the offer to rescind contained in Authenticity Guarantee B (namely that the offer to rescind did not apply if, at the date of the agreement, the description of the Painting in the agreement accorded with generally accepted views of scholars and experts) ("the GAV Proviso").

On 7 July 2011 Mr Weiss sent Mr Kowitz a reconciliation document ("the Reconciliation"), setting out a proposed profit share and allocation of expenses in respect of the Painting (and other items). Fairlight's share of the total net proceeds was to be US$7,730,689.65 and MWL's share US$3,019,310.35. On 18 July 2011 Mr Kowitz responded, updating the values for sterling and euros. He did not disagree with the proposals and gave instructions for payment. He added that he was "also "awarding" [Mr Weiss] a £100,000 bonus for the work well done".

In December 2011 the Painting was transferred by Nevada to Mr Hedreen; in July 2016 it was transferred back again to Nevada.

In 2016 a painting attributed to Lucas Cranach, a German Renaissance painter, was seized by the French police as a suspected forgery. The source of that painting was Mr Ruffini.

In April 2016 Sotheby's approached Nevada to inform it of press reports raising concerns as to the authenticity of the Painting and invited Nevada to provide the Painting for forensic testing, which Nevada duly did.

Sotheby's commissioned a technical expert report (dated 24 May 2016) from Mr James Martin ("Mr Martin") of Orion Analytical LLC, a forensic art analyst, which concluded that the Painting was a counterfeit. There were synthetic pigments widely located in the ground and paint of the Painting, including under and in the figurative parts, which were not in use until the second quarter of the twentieth century and were irreconcilable with the attribution of the Painting to Frans Hals.

Mr Weiss also commissioned a report from Art Analysis & Research. That report (dated 24 May 2016) confirmed the presence of synthetic pigments not in use in the seventeenth century in the Painting. The Painting was either a modern pastiche or had undergone invasive treatment so that substantial passages of the work were of recent origin.

On 27 May 2016 Nevada wrote to Sotheby's with evidence raising doubts as to the authenticity of the Painting. It relied on Mr Martin's report and an independent peer review of that report dated 24 May 2016 by Mr John Twilley ("Mr Twilley"), an art conservation scientist. Nevada sought to return the Painting and to be repaid the purchase price.

On 11 July 2016 Sotheby's determined that the Painting was a counterfeit on the basis of the reports from Mr Martin and Mr Twilley, and also from Art Analysis & Research ("the Determination").

Since the trial in April 2019, a French criminal investigation into the Painting (and other paintings connected to Mr Ruffini) has been continuing. A Europe-wide arrest warrant for Mr Ruffini has been issued.

Sotheby's commenced proceedings in February 2017. Very shortly before trial, on 18 March 2019, the Deed of Settlement already referred to above was entered into by Sotheby's, MWL and Mr Weiss. Fairlight continued to contest the claim to trial in the following month.

For Sotheby's, the following witnesses of fact gave oral evidence: Professor Claus Grimm ("Professor Grimm") (one of three leading scholars on Frans Hals as at June 2011); Mr Michael Goss (chief financial officer); Mr Martin and Ms Rena Neville (then global head of client development). Reliance was placed on a written statement from Mr Hedreen.

For Fairlight, the following witnesses of fact gave oral evidence: Mr Kowitz and (under subpoena) Ms Clarissa Post (former Head of Private Sales for Old Master Paintings at Sotheby's). Further, as already indicated, Fairlight also adduced the first witness statement of Mr Weiss as hearsay evidence.

The Judge heard oral expert evidence from:

In his judgment, the Judge stated that it was common ground that MWL entered Contract A not only on its own behalf but also as agent for Fairlight and he proceeded on that basis. He found that there was privity of contract between Fairlight and Sotheby's in Contract A, alternatively that Fairlight and MWL were in partnership such that Fairlight was bound by Contract A. He accepted Sotheby's case that Authenticity Guarantee B had been invoked properly by Nevada; that Sotheby's had properly determined that the Painting was "counterfeit" and returned the purchase price to Nevada. It was accordingly entitled to reimbursement from MWL and Fairlight under Contract A.

The Judge rejected Fairlight's various challenges:

Fairlight contends that the authorities concerning sub-agency (namely Calico Printers Association v Barclays Bank Ltd [1930] 36 Com. Cas. 71 at 78; Kahler v Midland

These authorities are said to show, normally in the context of a claim by the principal against the sub-agent, that:

In his oral submissions for Fairlight, Mr James Collins QC, who did not appear below or until very recently on this appeal, refers to the Privy Council decision in The Pioneer Container [1994] 2 AC 324 to make good his proposition that the sub-agency authorities do not represent a unique or "quirky" line of authorities: rather the principle established can apply, for example, in bailment situations. He emphasises that the exception to the general rule is a narrow one; the burden must be on the party seeking to establish that it exists to show "some special factors" to raise an argument "that the general rule makes way for the exception" (see Prentis at 332).

It is said that the fact that MWL was permitted to confer a power on Sotheby's to contract on behalf of the Painting's owners went no further than that. The fact that MWL consigned the Painting to Sotheby's with Fairlight's consent also took matters no further: the sub-agency cases all assume that the sub-delegation is authorised.

The question was thus not whether MWL was acting as agent in consigning the Painting, but whether it was authorised to do so in such a way as to create direct contractual relations between Sotheby's and Fairlight, something which required precise proof. The question of whether an arrangement was effective to confer on Sotheby's the power to bind Fairlight towards third party prospective buyers of the Painting is separate to the question of whether the arrangement was effective to bind Fairlight to Sotheby's (see Henderson v Merrett Syndicates Ltd (supra) at 202). The judgment is said to have been confused on this question.

Fairlight submits that the undisputed facts amply supported Fairlight's proposition that Sotheby's was a sub-agent to whom MWL had delegated functions within the scope of the agency between MWL and Fairlight: reliance is placed on the purchase of the Painting; the exchange of emails between Mr Kowitz and Mr Weiss on 17 May 2011; Contract A; and the fact that Mr Weiss signed Contract A for MWL, with no mention of Fairlight anywhere in the agreement. Mr Collins emphasises that the reference to “you” in Contract A, for example in clause 6, must be a reference to MWL (and not necessarily the owner(s) of the Painting). Sotheby’s did not need a contract with all owners of the Painting.

It is said that the true effect of Contract A was that MWL delegated part of its agency function (within Fairlight's authorisation) to Sotheby's by consigning the Painting to Sotheby's for sale within 3 months, whilst still retaining its wider duties as agent for Fairlight. It is also said that the Judge gave inadequate reasons for his finding that there was no sub-agency, failing to identify the specific evidence considered or why he considered Fairlight's contention as "unrealistically narrow". He failed to recognise the heavy burden on Sotheby's to adduce strict proof of direct contractual relations between Sotheby's and Fairlight.

In summary on Ground 1, Fairlight contends that, had the Judge properly directed himself on the law and applied the law to the evidence, he would have been constrained to hold that:

Given what is said to be the undisputed nature of the primary evidence, Fairlight submits that this court is able to apply the law to the facts, drawing inferences as necessary, and reach the appropriate secondary conclusion that no privity of contract existed between Fairlight and Sotheby's.

Fairlight contends that the Judge erred in law by holding that a statutory partnership existed between Fairlight and MWL in relation to the Painting when the consignment agreement was executed on 25 June 2011 and that such partnership had entered into direct contractual relations with Sotheby's.

Fairlight submits that the judgment is silent on the law, and the Judge failed to direct himself properly on the law relating to statutory partnerships. The Judge's reasons for finding that a partnership existed between Fairlight and MWL are "extremely thin". He was wrong to state that the interest of MWL and Fairlight was indivisible. He needed (but failed) to address at least the following points:

Fairlight further submits that, even if a statutory partnership existed, the Judge was wrong to hold that MWL was authorised to create direct contractual relations in connection with Contract A on behalf of such partnership. His reasons, (namely that there could be no question but that MWL "as the more active partner" had full authority to enter into Contract A on behalf of the partnership, and the fact that Mr

Fairlight contends that the Judge erred in his construction of the GAV Proviso. He held that the relevant question was whether as at 27 June 2011 a single "generally accepted opinion ha[d] been reached". He ought to have held that the relevant test was whether most or a majority of the relevant views of scholars and experts on the Painting at that date accorded with the description of the Painting in Contract B (which attributed the Painting to Frans Hals).

Contrary to the Judge's conclusion, it is said that the natural and ordinary meaning of the word "generally" required both a headcount to be conducted and a majority. Any doubt should have been resolved in favour of Fairlight pursuant to the contra proferentem rule. The provision did not require a single generally accepted opinion. Reliance is placed on the unchallenged expert evidence of Mr Warner-Johnson (for Fairlight): that is not how the commercial art market operates. The Judge did not address Mr Warner-Johnson's evidence in this regard. The Judge ought to have asked himself the following sequential questions:

Moreover, it is said that the Judge's findings on the expert evidence were perverse:

It is also said that the Judge ought to have drawn adverse inferences from Sotheby's failure to call Mr Naumann, an employee or agent of Sotheby's. Mr Naumann had, in in an email of 5 May 2011, referred to Professor Slive's positive attribution ("enthusiastic acceptance") of the Painting as a work of Frans Hals. The Judge stated that he had doubts about Mr Naumann's account because it was "indirect and not detailed".

Fairlight submits that the Judge should have held that a clear majority of the scholars and experts had expressed views on the attribution (which he wrongly confused with authenticity) of the Painting that accorded with the description of the Painting in Contract B. Six of the seven scholars and experts who had expressed a view by June 2011 had positively attributed the Painting to Frans Hals (Dr Biesboer, Dr Buvelot, Mr Naumann, Professor Slive, Dr Liedtke, Dr Roelofs). Professor Grimm was a lone dissenting voice. This majority view was reinforced by further evidence, such as Sotheby's own view at the time of Contract B.

Accordingly, he erred by failing to hold that the offer to rescind did not apply and Sotheby's had no sustainable cause of action against Fairlight.

In relation to the third ground of appeal, Sotheby's has served a Respondent's Notice seeking to revive, if necessary, its argument below that, even if there was a generally accepted view of scholars and experts as at 27 June 2011, the GAV Proviso did not qualify Sotheby's right under Authenticity Guarantee A to require MWL and Fairlight to return the purchase price where the Painting was determined to be counterfeit.

Fairlight contends that Nevada was a "subsequent owner" and so not entitled to rescission and Authenticity Guarantee A was not applicable. The Judge erred in holding that Nevada was to be construed as "the original buyer" and not as a "subsequent owner" with the result that Authenticity Guarantee A applied. He ought to have held that Nevada was a "subsequent owner" at the relevant date in 2016. Properly construed, Authenticity Guarantee A required that the buyer of the Painting should remain the buyer at all times between the original purchase and purported rescission. Mr Collins emphasises that it does not matter that Nevada was the original buyer, at the time of rescission its "status" or "capacity" was that of "subsequent owner".

Alternatively, there was ambiguity as to the meaning of the subsequent owner provision, and the principle of contra proferentem ought to have been applied. Authority Guarantee A was a pro forma clause used by Sotheby's for its private treaty sales when it acts as consignee.

On either basis, the Judge ought to have held that Authenticity Guarantee A was not applicable in 2016 when Nevada sought to rescind Contract B.

It can be seen that Fairlight only pursues four of its original defences on appeal. Grounds 1 to 3 each raises a challenge to either mixed findings of fact and law or pure fact; Ground 4 is a pure challenge of construction on undisputed facts. As set out above, the Judge heard a substantial amount of factual and expert evidence. I propose to address the grounds in the order in which they were advanced below and in Fairlight's skeleton on this appeal, albeit that Mr Collins chose in his oral submissions to address Ground 2 before Ground 1.

There is a line of sub-agency authorities as identified by Fairlight (arising out of attempts by a principal to sue a sub-agent) as set out in paragraph 45 above.

These authorities address circumstances where there is a contract of agency between a principal ("P") and agent ("A"). A enters into a contract with B whereby A delegates to B, and B promises A that he will perform some or all of the duties owed by A to P. B is a "sub-agent". The court in such circumstances will not conclude from the mere fact that P had authorised A to enter into the contract with B that P is privy to the contract with B, something which will require "precise proof" or, as it was put in Prentis, "special factors".

The starting-point is to consider whether, as the Judge put it, the facts "supported the idea that Sotheby's was a sub-agent to which MWL delegated functions within an agency between MWL and Fairlight". In my judgment, he was right to conclude that they did not.

Fairlight's case rests upon the notion that on 17 May 2011 a "main agency agreement" was created between Mr Kowitz for Fairlight and Mr Weiss for MWL that "Fairlight would employ MWL to sell, or endeavour to sell, the Painting on behalf of both Fairlight and MWL to a third party buyer". Everything that followed, including the decision to consign in June 2011, was carried out under this "main agency agreement".

I do not consider that the email of 17 May 2011 created such an overarching "main agency agreement”. The suggestion appears to me to be an artificial construct designed to attract the sub-agency line of authorities. By the email of 17 May 2011 Mr Kowitz (for Fairlight) was simply confirming his permission to Mr Weiss (for MWL) at that time to sell the Painting for not less than US$12million. He also stated that he wished to be consulted on any decision to consign it to any third party before Mr Weiss made any such commitment. He was thus not authorising any commitment to consign at this stage.

The email was but part of a continuum of discussions between the co-owners of the Painting as to how they wished to proceed as their plans evolved. Thus, very shortly after he sent the email on 17 May 2011, Mr Kowitz indicated that he wanted time to consider again whether in fact he did not want to sell the Painting. Matters moved on again when in early June 2011 Sotheby's indicated that it had a potential client buyer. Negotiations followed, to Mr Kowitz's knowledge, culminating in the eventual offer on 21 June 2011 that MWL and Fairlight accepted. That offer was discussed specifically by Mr Kowitz and Mr Weiss on 21 June 2011 and both agreed to accept it. Contract A was not the product of (or entered into under the auspices of) the (limited) authorisation given by Mr Kowitz in the email of 17 May 2011, but rather the product of the agreement reached between Fairlight and MWL on 21 June 2011. It differed from the authorisation given in Mr Kowitz's email of 17 May 2011 in two material respects: first, the sale price agreed was significantly lower, and secondly, the consignment of the Painting to Sotheby's was agreed.

In these circumstances and without more, the sub-agency cases were not engaged and privity existed between Fairlight and Sotheby's in Contract A under the normal principles of agency relating to an unnamed (albeit here disclosed) principal (see for example Siu yin Kwan v Eastern Insurance Co Ltd [1994] 2 AC 199 at 207). Mr Kowitz's evidence in cross-examination made it crystal-clear that MWL was authorised to bind Fairlight to Contract A jointly with MWL as co-owner of the Painting: Mr Kowitz transferred to Mr Weiss "the authority to do what [Mr Weiss] saw fit in his judgment".

Further and in any event, it can be seen that the sub-agency cases do not assist Fairlight (either because they are not engaged for additional reasons or because "precise proof" of privity between Fairlight and Sotheby's or "special factors" existed), as follows:

The facts of this case are thus very far removed from the facts of the sub-agency cases relied on by Fairlight, including Prentis (where marine insurance had been placed by plaintiff Lloyd's brokers on the instruction of defendant New York brokers acting for their principal, Offshore Oil Services UK Ltd).

The concession now made by Fairlight (that it was party to Contract B) gives rise to this further conundrum. It prompts the question of how it is not bound to comply with the obligation in Authenticity Guarantee B for "the owner [to] return the purchase price" for the Painting in the circumstances which have now transpired.

Whilst the Judge could usefully have expressed himself more fully, I do not consider that there is any legitimate challenge based on inadequacy of reasoning or a failure to deal adequately with relevant evidence. He stated in terms that he considered the evidence at trial, including the oral and written evidence of Mr Kowitz. The Judge addressed the fact that Mr Weiss had only signed as "[d]uly authorised for and on behalf of [MWL]". The question was whether MWL was acting only on its own behalf or on behalf of both owners. He addressed expressly Mr Macdonald's internal email of 22 June 2011 in which he stated that Sotheby's had reached an agreement to sell the Painting for Mr Weiss (and why it did not advance Fairlight's case). (It is also to be noted that it is clear that Sotheby's in fact knew that another party was involved as seller). He addressed the fact that Mr Kowitz was not sent and had not asked to see Contract A at an early point.

For these reasons, I would uphold the Judge's decision that by Contract A both owners of the Painting, Fairlight and MWL, were committed as principals to the consignment of the Painting to Sotheby's on the terms set out therein. The fact that Fairlight was not named in Contract A is in no way inconsistent with this conclusion; it may often be the case, particularly in the art world, that parties are keen to remain anonymous. The parties were themselves familiar with such an arrangement, not least because it was adopted when they purchased the Painting in June 2010 (when only Fairlight was named as buyer but the agreement was entered into for both Fairlight and MWL).

I would therefore dismiss Ground 1.

In the light of this conclusion, as was the case below, the question of partnership is not decisive and does not need to be determined.

S. 1 of the Partnership Act 1890 ("the 1890 Act") provides:

S. 2 sets out the rules to which regard shall be had in determining the existence of a partnership, including:

The formation of a partnership creates strict and important rights and obligations between the partners (see for example s. 20 (restrictions on the use of partnership property), s. 29 (accountability) and s. 30 (duty not to compete) of the 1890 Act). In determining whether or not a statutory partnership exists, it is important to look at the substance of the relationship, not the words used by the parties to describe it (see Mann v D’Arcy [1968] 1 WLR 893 at 899; Protectacoat Firthglow Ltd v Szilagyi [2009] IRLR 365 at [61]). For a very recent summary of the relevant law, reference can be made to Patel and another v Barlows Solicitors and others [2020] EWHC 2753 (Ch) at [100] to [110].

The pleaded partnership was as follows:

Mr Collins launches a powerful attack on the Judge’s conclusion (such as it was) that there was a partnership. He submits that the Judge failed to grapple with the three key requirements for a statutory partnership, namely i) the carrying on of a business ii) in common iii) with a view to profit. Had the Judge done so, it is said that he would have been driven to conclude that no such partnership existed.

Mr Collins submits that it was unclear what the business was said to be. The definition of "business" in s. 45 of the 1890 Act - "every trade, occupation, or profession" - is not exhaustive, but nevertheless gives a clear steer as to what is intended. Mere co-investment in or co-ownership of property is not enough (see Lindley & Banks on Partnership (20^th ed) ("Lindley & Banks") at 5-07 and 5-08). Reliance is placed on the fact that Fairlight, whilst a trading vehicle, was not in the business as such of fine art dealership. Moreover, Mr Kowitz was from time to time considering buying out Mr Weiss’s interest in the Painting.

It is said that none of the factors relied upon by the Judge justified his finding of a partnership:

Reference is also made to Mr Kowitz’s evidence that partnership accounts were never contemplated. The Reconciliation cannot have been a partnership account, not least since it covered items, profits and expenses wholly outwith the alleged partnership. Moreover, when dealing with the profit on the Painting, the gross proceeds were not “netted off” for expenses, as would happen in a partnership account. Rather the gross profit was simply divided 50/50. Further, the Judge was wrong to dismiss the relevance of the Unexecuted Acquisition Agreement, which stated in terms that there was no partnership.

In summary, submits Mr Collins,:

In response, Mr Nathan Pillow QC for Sotheby’s and Mr Joe Smouha QC for MWL mount a staunch defence of the Judge’s conclusion on partnership:

It is fair to say that the Judge’s reasoning on the question of partnership is sparse. But this has to be seen in context, namely that, given his conclusion on privity, he did not have to decide the issue.

I harbour doubts as to whether, on the material that I have seen, I would have concluded that there was a partnership as alleged. In particular, I struggle to identify clear evidence of a "business in common" between the parties. However, that is not the test on appeal. In the absence of a demonstrable misdirection on the law, I would have been hesitant to interfere with the Judge’s finding on the facts that a partnership existed. This was ultimately a question of fact for the Judge to determine. In circumstances where the question of partnership does not need to be resolved and where the Judge made no formal ruling upon it, it is in my judgment unnecessary for this court to make a ruling on Ground 2.

I add, however, that I would have rejected the suggestion that the entering into Contract A was something outside the partnership (if it existed). There can be no serious argument that the act of binding the partnership to Contract A was anything other than within the scope of a partner’s authority.

The issue raised by Sotheby’s in its Respondent’s Notice is logically the first to consider under Ground 3, namely whether the GAV Proviso formed part of Contract A at all. It will be remembered that it is not included in Authenticity Guarantee A.

The point is a short one. The GAV Proviso was an additional proviso which does not appear in Contract A. It was for Sotheby’s protection in Contract B, in the sense that it narrowed the circumstances in which Nevada could rescind Contract B. I agree that there is nothing to suggest that Sotheby’s right under Authenticity Guarantee A was similarly restricted.

But in any event, I do not consider that the Judge erred in his construction of the GAV Proviso or that it can be said that his finding on the evidence was perverse.

I can find no fault with the Judge’s approach to construction of the GAV Proviso. The material wording that is being interpreted is as follows:

The Judge held that the words “generally accepted views of scholars and experts” were to be given their ordinary meaning in context. I agree. The rather poor drafting invites argument, but the ordinary meaning of the words, read together, shows that the question is whether the description of the Painting is one that would be generally accepted by scholars and experts at the time. That is what the Judge rightly found. As was said for Sotheby's, what is required is for "views" plural to have coalesced into a "generally accepted view" singular. Another way of putting it, which avoids the use of the word "view's", would be to say that the question is whether there was a consensus (ie a generally held view not requiring unanimity) among scholars and experts at the time. There may be an absence of consensus either because of a divergence of views or because there has been insufficient time for a generally accepted view to have formed.

The Judge went on to say that the words did not set a “headcount or a majority” or require "a weighting between one scholar and another or between a scholar and an expert". The views that were material were views that were considered and the result of the application by scholars and experts of their expertise.

Fairlight's contention that the words require a headcount or majority approach does not accord with their natural meaning, nor is it apt in what is a far more nuanced situation. As the Judge said, in a literal sense, the words do not require a "weighting" between scholars and experts. However, when deciding whether there is a generally accepted view, it will be necessary to identify who the scholars and experts are in the field, and to survey their views in the light of their numbers, eminence and the degree of consideration that each has given to the question.

Fairlight's position, as set out graphically in a chart (with a tick or a cross against any scholar or expert who had expressed a view on authenticity, however fleeting, informal or private, and irrespective of purpose and context), demonstrates the problem: it takes no account of the strength or precision of the view expressed, the status of the scholar or expert in question or the basis and background for the indication given. It does not reflect the exercise to be carried out, which is to look at the whole field of scholarly and expert opinion expressed and reach a judgment on whether or not i) there is a generally accepted view and, if so, ii) what that view is. This is an exercise of judgment that cannot be reduced to a mechanical process of the type contended for by Fairlight.

I turn then to the Judge's central point – or the “middle ground” as it was described – that can arise when a work of art is newly discovered. As the Judge stated, on what is a question of opinion, the words required that a generally accepted opinion has been reached. It can take time, after first discovery of a work, to reach the point where there are "generally accepted views of scholars and experts". Fairlight was not in a position to attack this proposition.

The Judge found here, on the facts, that as at 27 June 2011 that time had not come:

It can be seen that this produces a commercially sensible method of risk allocation for parties dealing with a newly discovered work: the buyer does not take on the risk of the description of the work being inaccurate and the work being a counterfeit. The seller has the benefit of Sotheby's guarantee to attract buyers.

The Judge's finding of fact was made by reference to the extensive material and evidence heard and considered by him. It cannot on any view be said to be perverse. Indeed, it appears to be unassailable on the facts: the Painting was unrecorded before 2008; little had been written about it – indeed there had been only one publication mentioning the Painting, namely a catalogue commissioned by Mr Weiss from Dr Biesboer; Professor Slive, widely acknowledged as the leading scholar on the life and work of Frans Hals, had not seen the Painting in person (which the Judge understood did not compromise a negative attribution but would compromise a positive one); there was a considered dissenting view from Professor Grimm, one of only three leading scholars on Frans Hals; a good number of scholars and experts had not seen the Painting in person; no forensic testing of the Painting had been carried out. As it was put by Lord Justice Henderson during the course of the hearing, this was a "newly discovered painting which ha[d] no proper provenance, ha[d] not been published [except by Dr Biesboer] and had never been in an exhibition". Any discussion between the scholars and experts, including reasons for disagreement with the reasoning of Professor Grimm was "conspicuously absent".

As set out above, Fairlight makes a series of detailed criticisms in relation to the Judge's findings on the evidence relating to authenticity. Those criticisms do not appear to be well-made (and Mr Collins did not press them with any vigour). I take them shortly:

The additional matters relied on by Fairlight, namely the fact that the Louvre sought to raise funds to purchase the Painting in 2010 with the statement that "international specialists ha[d] confirmed the attribution to Frans Hals", and Sotheby’s own view in 2011 that the Painting was by Frans Hals, do not begin to undermine the justification for the Judge's conclusion that as at 27 June 2011 there was no generally accepted view on the Painting such as to invoke the GAV Proviso.

I would therefore uphold the Respondent's Notice and I would dismiss Ground 3.

Authenticity Guarantee A provided:

There was no transfer or assignment by Nevada of the offer to rescind in Authenticity Guarantee B (nor any assignment of Authenticity Guarantee A). The offer to rescind in Authenticity Guarantee B was made to Nevada personally and remained with Nevada, which in 2016 invoked it.

As set out above, Fairlight contends that "crucially, at the time of rescission," Nevada was "first and foremost" a "subsequent owner" for the purpose of Authenticity Guarantee A. Like the Judge, I see no force in Fairlight's contention that Nevada was not "the original buyer" but a "subsequent owner" by reason of the transfer of the Painting by Nevada to its beneficial owner, Mr Hedreen, and back again, such that Authenticity Guarantee A was inapplicable.

Nevada was and remained the "original buyer". Those words are clear and unqualified: there is no suggestion that the "original buyer" only has that status for so long as it remains the owner. Authenticity Guarantee A was for the personal benefit of the party first purchasing the Painting, here Nevada, which was then fully entitled to rely on it. It conferred a (limited) personal (non-assignable) right on Nevada. What the "subsequent owner" provision seeks to do is to prevent a third party to whom the original buyer has sold the Painting from subsequently invoking the guarantee against Sotheby's. That is not the case on the facts here. There is no superfluity of wording on this construction, as Fairlight suggests, not least since Authenticity Guarantee A prohibited only assignment (and not, for example, transmissibility upon insolvency or death). Nor can it be said that there is anything commercially objectionable about the result. By contrast, Fairlight's construction could lead to very odd results: thus for example, were Nevada to sell the Painting on for profit, the onwards purchaser might require an authenticity guarantee from Nevada. On Fairlight's case, were the guarantee to be invoked, Nevada would be left with no remedy against Sotheby's, something which, objectively, the parties are unlikely to have intended.

For these reasons, I would dismiss Ground 4.

In the light of the findings above on Grounds 1, 3 and 4, there is no basis on which to interfere with the contribution order made against Fairlight in favour of MWL.

For all these reasons, I would dismiss the appeal, though not without recording my gratitude to counsel on all sides for their skilful and focussed submissions.

I agree.

I also agree.