ACLBDD Holdings Ltd & Ors v Staechelin & Ors

The primary claim made in these proceedings is for $10 million by way of commission which is said to be due to one or more of the Claimants from the Defendants, or some of them. The Claimants say that the commission was earned and became payable in connection with the services that one or more of the Claimants rendered to the Defendants, or some of them, in connection with the sale of a painting by the Defendants to the Emir of Qatar on 10 September 2014 for the sum of $210 million. The commission is said to be due pursuant to an express or implied agreement providing for it to be paid. The Claimants or some of them claim, in the alternative, that they are entitled to an amount of commission assessed on the basis of a quantum meruit.

The painting which is at the centre of this dispute is a work by Paul Gauguin painted in 1892. It was painted in Tahiti and shows two native Tahitian women. It is entitled Nafea faa ipoipo and is often referred to as “the Nafea”. The name translates as: “When will you marry?” I will refer to it, somewhat prosaically, as “the painting”.

The painting was acquired by Rudolf Staechelin-Finkbeiner in Geneva in 1917 for 18,000 Swiss francs. He was a significant Swiss art collector. His collecting focused, in particular, on French Impressionist and Post-Impressionist paintings and Swiss art. The core of his collection was acquired in the 1910s and 1920s. In 1931, he formed a Familienstiftung, a family foundation, to which ownership of his collection was transferred. As explained below, the painting was transferred to the Rudolf Staechelin Family Trust on 7 January 2002.

Mr de Pury describes himself as an art dealer specialising in the buying and selling, brokering and curating of impressionist, post-impressionist, modern and contemporary art. He began his career in his native Switzerland in the early 1970s. He joined Sotheby’s auction house in 1974 and he remained with Sotheby’s until 1979. He was the curator of a private art collection until 1986 when he returned to Sotheby’s. He was appointed chairman of Sotheby’s Switzerland and, later, chairman of Sotheby’s Europe. In 1997, he jointly founded an art consultancy and advisory company, de Pury & Luxembourg which later merged with the auctioneers, Phillips, to form Phillips de Pury. Between 2001 and 2012, he was Chairman and chief auctioneer of this company and became its sole owner in 2003. He later sold his interest in the company pursuant to two transactions in 2008 and 2012. Mr de Pury speaks German, French and English. He is fluent in English and gave his evidence in English without an interpreter.

Mrs de Pury married Mr de Pury in 2001. She has a Ph. D. in medieval and renaissance art although in her career she has focused on modern and impressionist, post-war and contemporary art. She has worked at various art houses and joined Phillips de Pury in 2001 as a senior partner. Like her husband, Mrs de Pury speaks German, French and English. She is fluent in English and gave her evidence in English without an interpreter.

In around December 2012, Mr and Mrs de Pury left Phillips de Pury and set up de Pury & de Pury LLP (“the LLP”). Mr and Mrs de Pury are the members of the LLP. It offers its services in relation to art consultancy, advice on sales and purchases of art and acts as a broker or agent in relation to such transactions. The LLP operates from premises in London. Mr and Mrs de Pury say that the arrangements which they made in this case, in relation to the commission payable on the sale of the painting, were made by them as agents for the LLP as an undisclosed principal. Accordingly, they say that the LLP is entitled to bring this claim to commission. In the alternative to this claim, Mr and Mrs de Pury say that they are entitled personally to bring this claim to commission.

ACLBDD Holdings Ltd (“ACLBDD”) was originally the sole claimant in these proceedings. It was incorporated in Jersey on 12 October 2012. On 19 June 2013, ACLBDD entered into a consultancy agreement with the LLP under which it appointed the LLP as a consultant which was to provide services to ACLBDD. The services were to take the form of assistance to ACLBDD in connection with transactions involving the sale and purchase of works of art. The purpose behind the creation of ACLBDD was to allow the LLP to say that transactions which might be otherwise be perceived as being conducted by the LLP were instead conducted by ACLBDD with the result that any resulting commissions or fees or profits would be earned in Jersey and not in London and VAT would not be charged on commissions and fees payable by clients to ACLBDD. The case originally put forward was that the LLP was acting as an undisclosed principal for ACLBDD so that it was entitled to bring a claim to commission in relation to the transaction the subject of these proceedings. For various reasons which were suggested to me on behalf of the LLP and Mr and Mrs de Pury, the claim by ACLBDD was not pursued. Nonetheless, the arrangements which had been entered into by ACLBDD and the LLP and the operation, or purported operation, of those arrangements in relation to a number of other transactions was the subject of detailed cross-examination of Mr and Mrs de Pury where it was suggested to them that the arrangements they operated, or purported to operate, involved dishonesty on their part and the deliberate evasion of taxes payable by the LLP or by them.

Mr Staechelin is Swiss and lives in Basel. He is the grandson of Rudolf Staechelin-Finkbeiner who originally bought the painting in Geneva in 1917. He became the president of the family foundation following the death of his father in 1977. He has throughout been a trustee of the Rudolf Staechelin Family Trust. He joined Sotheby’s in its Basel office in 1991, first as co-head and then as sole head of that office. He remained there until the late 1990s. Mr Staechelin is fluent in English and gave his evidence in English.

Mr de Pury and Mr Staechelin went to school together for a short time. In 1989, Mr Staechelin and the family foundation dealt with Mr de Pury (then at Sotheby’s) in connection with the sale of another painting by Paul Gauguin. From that time, they became friends. In 1990, Mr de Pury offered Mr Staechelin a position as co-head of Sotheby’s office in Basel. In the mid-1990s, Mr de Pury advised the family foundation on a proposed move of the collection to an art museum in the United States. In 2001, Mr de Pury acted for the family foundation in connection with a proposed sale of a Picasso but the sale did not complete. Shortly thereafter, as an alternative to selling the Picasso, the trust decided to sell a Matisse. Mr de Pury acted in connection with the sale of the Matisse. The Matisse was owned by the trust which transferred it to the family foundation which then completed the sale.

It is clear that Mr de Pury and Mr Staechelin are no longer friends. Their friendship broke down over the sale of the painting in this case. As I will explain, in July 2014 Mr Staechelin believed, wrongly, that Mr de Pury had told him a lie about the negotiations for the sale. Mr Staechelin then decided that neither he nor the trustees would pay any commission to Mr and Mrs de Pury. This claim for commission was then brought and it has been strenuously defended. In the course of that defence, counsel for the trustees has cross-examined Mr and Mrs de Pury in an attempt to show that they have committed criminal offences, have been guilty of tax evasion and have been dishonest.

Mr Paisner is a solicitor. He is currently a member of Berwin Leighton Paisner LLP. He has practised in that LLP or in a predecessor firm since 1970. He has been a trustee of the Rudolf Staechelin Family Trust since its creation in 2001.

Ms McCaffrey is an attorney qualified in New York. She is a member of McDermot Will & Emery LLP where she has practised since 2011. Before that, she practised at Weil Gotshal & Manges LLP for 37 years. She has been a trustee of the Rudolf Staechelin Family Trust since its creation in 2001.

On 3 December 2001, the family foundation, as settlor, created the Rudolf Staechelin Family Trust. The trust is governed by New York law. The trust is a discretionary trust. The beneficiaries under the trust are the living issue of Rudolf Staechelin-Finkbeiner and any individual financially dependent on any such issue. At present, the relevant issue are Mr Staechelin, his son, Martin, and Martin’s son.

The terms of the trust were set out in a written Trust Agreement dated 3 December 2001. By Article III(C)(2), it was provided that the trustees had power to employ agents and to compensate them out of the trust fund. By Article III(E), it was provided that no person dealing with the trustees should be bound to inquire into the authority of any action by the trustees. By Article III(J), it was provided that the trustees were authorised to retain, or lend or “otherwise deal” any works of art which were the subject of the trust. By Article X(C), it was provided that all decisions as to the trust authorized or required to be made under the Trust Agreement should be made by a majority of the trustees who were not precluded by law or by the Trust Agreement from making the decision. Since 2001, the trustees of the trust have been Mr Rudolf Staechelin, Mr Paisner and Ms McCaffrey.

On 7 January 2002, the ownership of a number of works of art, including the painting, was transferred by the family foundation to the trust. The ownership of further works of art was transferred by the family foundation to the trust on 6 January 2003.

On 29 August 2012, the trustees amended the Trust Agreement and, in particular, provided that the power of the trustees to deal with art works which were subject to the trust was modified so that Mr Staechelin was not to participate in any decision in relation to that power; this was subject to the proviso that the trustees were to consult with Mr Staechelin before making any such decision.

The parties have agreed a long list of issues which they say arise in this case. Simplifying the formulation of the issues somewhat, I consider that the principal issues are:

As will be seen, there were many occasions when Mr de Pury and Mr Staechelin and others had oral discussions on matters which are now relevant to this claim. There are now significant differences in the accounts given by the relevant witnesses as to what was said. In their closing submissions, counsel for both sides to the dispute submitted that the evidence given by the opposing side’s witnesses was unreliable, at least some of the time. Both sides were able to draw attention to significant discrepancies between various versions of the pleadings and the witness statements and between the witness statements and the oral evidence. In relation to both sides to this dispute, these discrepancies have caused me to be cautious about the evidence of witnesses who now profess to recall specific matters which were originally described by them in different terms.

Counsel for the Claimants submitted that some of Mr Staechelin’s evidence was unreliable and should not be accepted. Counsel for the Defendants made more serious allegations against Mr and Mrs de Pury. He cross-examined Mr and Mrs de Pury with a view to showing that they were dishonest people. He submitted that an important part of Mr de Pury’s evidence was “a concoction” and that there were “other obvious falsehoods”. It was submitted that Mr de Pury was prepared to be dishonest for financial gain and that he was evasive. It was said that Mrs de Pury was a dishonest witness, that she had been guilty of dishonest tax evasion and was evasive in her evidence and that she had learned a script which she was eager to repeat at every opportunity.

I did not find the evidence of Mr de Pury, Mrs de Pury or Mr Staechelin to be wholly reliable. In the case of Mr de Pury, he gave detailed evidence to the effect that he had discussed with Mr Staechelin, before March 2013, the payment of commission to Mr de Pury. I think it is very unlikely that Mr de Pury is right about this and I do not accept his evidence on this point. I consider that Mr de Pury’s evidence on this point was deliberately misleading in an attempt to improve his case overall. In fact, that attempt will have tended to harm his case because the result is that I now have to be cautious about his evidence in other respects also.

Mrs de Pury gave much more limited evidence than her husband. She supported his account of the relevant matters but I do not consider that she provided independent evidence on those matters. It is probably inevitable that Mr and Mrs de Pury will have considered together in detail what evidence they wished to give and the result has been that their evidence has been essentially the same. In the same way as I have to be cautious about Mr de Pury’s evidence, I must also be cautious about the same evidence given by Mrs de Pury. However, being cautious in this way does not mean that I reject everything which Mr and Mrs de Pury had to say on matters which are now in dispute.

I have different reasons for being cautious about the evidence given by Mr Staechelin. He accepted when cross-examined that there were a lot of matters which he could not recall. Nonetheless, from time to time he professed to recall certain matters which I do not think he genuinely remembered. In some respects, I am not able to accept his evidence that matters were described in a specific way. The reason for that finding is that I am not persuaded that Mr Staechelin really remembers the words that were used on such occasions and I find that it is inherently probable that matters were not described in the way that is now alleged. However, in fairness to Mr Staechelin, I note that there were times during his cross-examination when he gave answers which could be said to be contrary to his interests; this tended to show that Mr Staechelin was not always determined to stick to the version of the facts which was most favourable to his case.

In the course of their discussions, the parties are likely to have made statements and remarks which did not have the importance at the time which they are said to have later assumed. It is only to be expected that the witnesses would not genuinely recall the detail of those statements and remarks. In such a case, there is a considerable temptation for a witness to make good the deficiency in his or her recollection by saying what he or she wished had been said at the time in the light of the dispute which has subsequently emerged.

I heard evidence from Mr Paisner, one of the trustees, about a meeting on 26 June 2014, amongst other matters. Mr Paisner is a respected and experienced solicitor and his evidence was clear and firm. However, his evidence was not wholly consistent with his pleaded Defence and with some hesitation I consider that it is likely that he has, probably unwittingly, yielded to the temptation of professing to recall matters of detail and specific expressions which he is not genuinely able to recall.

I also heard evidence from Mr Gutzwiller, an adviser to the trustees of the Staechelin Family Trust and from the third trustee, Ms McCaffrey. I accept the evidence of Mr Gutzwiller. Ms McCaffrey was asked a number of hypothetical questions as to what she would have done in certain circumstances and her evidence therefore involved some speculation. I think that it is likely that her evidence was more firm and definite than might well have been the case if the hypothetical situations had actually arisen. In the event, I do not consider that it is necessary for me to make findings on those matters. Ms McCaffrey, who is a New York attorney, also referred to matters of New York law as regards the position of the trustees under the Staechelin Family Trust. She was not called as an expert witness on New York law and, indeed, the parties agreed throughout the trial that I should assume that New York law, the law which governed the trust, was the same as English law in all relevant respects. Ms McCaffrey referred to New York law in relation to the position of trustees by way of an explanation as to why her original Defence had contained a particular averment which was later changed by an amendment of that Defence. I am very doubtful as to her explanation and, in particular, I consider that it is very likely that her account of her state of mind is a reconstruction rather than a recollection of the relevant state of mind.

The result of these assessments is that I will obviously give considerable weight to the contemporaneous documents when making my findings as to what really happened. I will treat much of the evidence given by Mr de Pury, Mrs de Pury and Mr Staechelin, in so far as it is not supported by the documents, or which is not corroborated by another reliable witness, with caution. I am likely to accept evidence from a witness where the evidence is against his interests in this dispute. However, these techniques will not be enough on their own to resolve the conflicts in the evidence in this case. Some of the evidence relates to oral discussions where there is no contemporaneous document, or corroboration, which is of much assistance. In those instances, where I am faced with two conflicting accounts from witnesses, neither of whom is wholly reliable, I will have to assess the overall probability of one version as compared with the other.

I ought to comment specifically on the case put by the Defendants that Mr and Mrs de Pury were guilty of criminal offences and of tax evasion and the circumstances show that they are essentially dishonest people. There was lengthy cross-examination about the formation of ACLBDD and the use which they made of that company. In summary, what happened was that Mr and Mrs de Pury were advised that in relation to a great deal of their work (or the work of the LLP) they ought to be able to treat the earnings from that work as having been earned outside the jurisdiction. ACLBDD was created in Jersey so that it could invoice the client for the fee or commission which had been earned. It was not intended that ACLBDD would have any staff or do anything. Instead, it would enter into a consultancy agreement with the LLP and that would give the appearance that all the work which was done would be done by the LLP but pursuant to a consultancy agreement and for the benefit of ACLBDD. The suggested consequence of this was that the relevant earnings would be the earnings of ACLBDD in Jersey and they would not be remitted to this jurisdiction and would not be liable to tax in this jurisdiction. Further, as the client would be liable to pay a fee or a commission to ACLBDD, the client would not be charged VAT. I accept the evidence of Mr and Mrs de Pury that they were advised that they could proceed in that way to save tax and avoid the need to charge VAT although I do not need to decide whether such a scheme would indeed have those tax consequences.

Like many others who are advised to act in a specific formal way to avoid tax, Mr and Mrs de Pury were not good at implementing all of the steps in the scheme which had been devised. It was demonstrated in the course of their cross-examination that what happened was that they or the LLP dealt with the client and did whatever work they did and earned whatever fee or commission was payable. Then, after the fee or commission was due and payable, they told the client that the fee or commission was due to ACLBDD in Jersey. This usually caused some confusion or bemusement to the client, or even irritated the client, to whom it would have appeared that he was being asked after the event to collude in a pretence that he had been dealing with ACLBDD and not Mr and Mrs de Pury or the LLP. Undoubtedly, in the course of cross-examination, the way the de Purys had gone about matters could be made to look as if it involved the making of statements which they knew to be false and dishonest. However, I do not think that Mr and Mrs de Pury were guilty of conscious wrongdoing in the way in which they handled matters. It may be possible to criticise their readiness to adopt what they were advised would be a tax saving scheme and it is certainly possible to criticise their attention to the detail as to how the scheme was intended to work. However, these criticisms do not persuade me that they were guilty of conscious wrongdoing or were dishonest in these respects. However, for quite different reasons, as explained earlier, I have decided to treat the evidence of Mr and Mrs de Pury with caution. The questions put in cross-examination on the subject of ACLBDD do not persuade me to take any other view.

I will start with some general matters. Over the period which is relevant to this dispute, until July 2014, Mr and Mrs de Pury were friends with Mr and Mrs Staechelin. Mr and Mrs de Pury met Mr Staechelin at various art events and the two couples met at each other’s homes. The subject of the painting and its possible sale came up in the middle of what were otherwise social meetings.

Mr Staechelin’s attitude to a sale was not straightforward and was not constant. For most of the time, Mr Staechelin was at some point or other on the scale between being opposed to a sale and being willing to sell; his precise position on the scale changed from time to time. Some of the time, Mr Staechelin was certainly reluctant to sell.

Mr and Mrs de Pury were keen to bring about a situation where Mr Staechelin would agree to sell the painting. They knew that the painting was owned by trustees rather than by Mr Staechelin but they had a well-founded expectation that if Mr Staechelin wished to see a sale of the painting then the painting would be sold. Mr and Mrs de Pury were keen to be involved with the sale of the painting as they wished to receive a commission from the sellers in respect of the sale.

Mr and Mrs de Pury had a long association with Mr Bennett who acted as the agent for the Emir of Qatar and over the period which is relevant to this litigation, they were in constant touch with him in relation to a number of works of art.

Mr de Pury knew that the painting was part of a collection which was owned, first, by the family foundation and then by the trust. In particular, in 2001, Mr de Pury acted for the family foundation in connection with a proposed sale of a Picasso and in 2002, Mr de Pury acted for the family foundation in connection with the sale of a Matisse. As regards Mr de Pury’s knowledge of the trust, I refer below to two communciations, dated 5 and 6 February 2013, which showed that Mr de Pury was aware that the collection was owned by the Family Trust. Further, Mr de Pury accepted that in the course of discussions with Mr Staechelin in March 2013, Mr Staechelin told him that the collection was owned by a foundation or trust. At that date, the painting was owned by the Family Trust and I find that Mr Staechelin expressly told Mr de Pury that that was the case. On the other hand, Mr de Pury dealt with Mr Staechelin rather than with the other trustees. He did not meet Mr Paisner until 26 June 2014 and he had not met Ms McCaffrey at any relevant time. Further, Mr de Pury had a well-founded expectation that Mr Staechelin’s views would be highly influential with the other trustees.

In 2012, Mr de Pury discussed with Mr Bennett the possibility of a sale of the painting to clients of Mr Bennett. In August 2012, Mr de Pury told Mr Staechelin that if he were willing to sell the painting such a sale might indeed be possible. Mr de Pury said that the Qataris might be interested in buying the painting. At that point, Mr de Pury was encouraging Mr Staechelin to consider a sale and Mr Staechelin was expressing reluctance to sell.

Mr de Pury gave evidence that he told Mr Staechelin that in the event of a sale, the seller would invoice the buyer for the sale price and Mr de Pury would invoice the seller for Mr de Pury’s commission. Mr de Pury told me that he repeated this statement to Mr Staechelin every time they met and that he said it so often that Mrs de Pury told him that he sounded like “a broken down record”. Mr Staechelin denied that these conversations had taken place. I am not able to accept the evidence of Mr de Pury on this point. I think that he has added in these alleged details in a rather obvious attempt to boost his claim to commission in this case. First of all, I consider that a laboured explanation of how one invoice is sent by the seller to the buyer and another invoice is sent by the agent to the seller was hardly necessary. If there really were an agreement by a seller to pay commission, then it would be obvious that the seller would pay the agent and if an invoice were necessary then it would be the agent who would invoice the seller. Secondly, if Mr de Pury had felt it necessary to say this once, I cannot see why he would have to repeat it. Thirdly, I accept Mr Staechelin’s evidence that he was not aware in the early stages of the talks about the painting that Mr and Mrs de Pury were going to be paid commission in respect of any sale; Mr Staechelin would not have been unaware of that if Mr de Pury had repeated his mantra about commission on several occasions. Fourthly, Mr de Pury did mention the procedure for invoicing but only on 20 March 2013. Fifthly, when the present dispute about commission arose, Mr de Pury justified his claim to commission by stating that the payment of commission was agreed at a meeting on 26 June 2014 but he did not mention the many earlier alleged occasions when he allegedly explained to Mr Staechelin that Mr de Pury would be entitled to invoice the seller for commission.

On 26 November 2012, Mr and Mrs de Pury, Mr Staechelin and Mr Bennett met at a restaurant at Zurich airport. Mr Bennett explained to Mr Staechelin that he acted for the Qatari royal family who were interested in the painting and he further explained the intentions of the Qatari royal family if they were to acquire the painting.

On 25 January 2013, Mr and Mrs de Pury met Mr and Mrs Staechelin at their home in Basel. They discussed a possible sale of the painting. Mr Staechelin gave evidence that Mr de Pury had advised that the painting could be sold for between $250 million and $300 million. Mr de Pury said that he did not give that advice. He told me that the parties discussed the recent sale of a Cezanne to the Qataris for a reported price of $250 million and Mr de Pury said that the painting was of the same or better quality than the Cezanne and could fetch between $200 million and $300 million. I do not need to decide which version of this conversation is correct. Mr de Pury also gave evidence that Mr Staechelin told him that Mr Staechelin had spoken to a representative of Sotheby’s who had valued the painting on a sale by auction at $150 million to $200 million and had stated that they would charge 5% commission on a private treaty sale.

On 5 February 2013, Mr Staechelin emailed Mr and Mrs de Pury on the question as to his readiness to sell paintings in the Staechelin collection. He referred to “your client” which suggested that Mr and Mrs de Pury had been discussing the sale of the Nafea on the basis that the purchaser was the client of Mr and Mrs de Pury. Mr Staechelin stated that he and his family did not wish to sell any major work.

Mr Staechelin’s email crossed with a long email from Mr de Pury on the same day. Mr de Pury sent this email to Mr and Mrs Staechelin suggesting that it would be useful for Mr de Pury to comment in writing on the proposed sale of the painting to the Qataris. Mr de Pury referred to his email being shown to Martin Staechelin and to “your trustees” which showed that Mr de Pury knew that the painting was the subject of the Staechelin family trust. Mr de Pury’s email discussed the Qataris’ position in considerable detail. The email did not refer to the question of a commission being payable to Mr and Mrs de Pury.

Mr Staechelin replied, on 5 February 2003, to Mr de Pury’s email of earlier that day. He stated that he would like to submit Mr de Pury’s arguments to “the trustees” and asked him to send the email again in English. On 6 February 2013, Mr de Pury provided Mr Staechelin with an English translation of his email of 5 February 2013 in order that the email could be sent to Mr Staechelin’s fellow trustees.

On 4 March 2013, Mr and Mrs de Pury and Mr Staechelin met Mr Bennett at the de Purys’ home in London. At this meeting, Mr Bennett explained to Mr Staechelin the detailed plans of the Qatari royal family to display the painting at a proposed new gallery in Qatar.

Over a period of 7 to 10 days up to 20 March 2013, Mr de Pury negotiated with Mr Bennett as to the sale of the painting. Mr de Pury gave evidence that Mr Bennett offered $190 million and then $210 million and Mr de Pury asked for $290 million and then $270 million. Mr de Pury said that on 20 March 2013 or shortly before, Mr Bennett said words to the effect “I am going to make an offer” and then said the offer was of $230 million. I find that the date on which this was said was not later than 19 March 2013.

Following Mr Bennett’s offer of $230 million, Mr de Pury telephoned Mr Staechelin (not later than 19 March 2013) and encouraged him to accept the offer. Mr Staechelin told me that he asked Mr de Pury for his confirmation that there would be no commission deducted from the $230 million. Mr de Pury replied that he was expecting to be paid commission by the sellers. Mr Staechelin told me that he was surprised to be told this as he had thought that Mr de Pury was acting for the Qataris. The matter was not resolved in that conversation. I accept Mr Staechelin’s evidence as to the conversation with Mr de Pury about commission. It is supported by a chronology which Mr Staechelin prepared on 17 April 2013. This version of the conversation is also supported by the fact that Mr de Pury decided to write to Mr Staechelin on 20 March 2013 on the subject of commission, as explained below.

On 20 March 2013, Mr de Pury sent an email to Mr Staechelin on the subject of commission in respect of the sale. Mr de Pury referred to the conversation with Mr Staechelin of the previous day. He reported that a potential deal was in sight so that he wanted to confirm “our thoughts regarding commission”. He did not suggest that the matter had already been agreed or even discussed. He referred to earlier transactions in which he had been engaged for Phillips where the seller paid Phillips a commission of 10%. He referred to a procedure whereby the seller invoiced the buyer for the sale price and the agent invoiced the seller for the commission. He expressed the view that it was too early to say whether there would be a sale but he said he would like to come to an agreement about commission and that commission should not be a stumbling block for the transaction. He said that the value added by the efforts of himself and Mrs de Pury would exceed a commission of 10% of the sale price. He then stated that the commission would be split equally between himself and Mrs de Pury. He may have made that comment to make it appear that his personal commission would be more modest, at only 5%, but the comment also suggests that the commission would be payable to Mr and Mrs de Pury personally. In the end, Mr de Pury did not claim that he and Mrs de Pury were entitled to 10% commission but instead invited Mr Staechelin to say what he thought would be a reasonable commission. He expressed the view that they could find a fair solution.

Mr de Pury gave evidence that Mr Staechelin did not respond in writing to his email of 20 March 2013 and he took that to mean that Mr Staechelin agreed with what was proposed in the email. However, Mr de Pury also gave evidence that Mr Staechelin telephoned him to say that he would only sell for $250 million net of commission. Mr de Pury said that he then told Mr Staechelin that to achieve $250 million net of commission they would have to ask Mr Bennett for $260 million because Mr de Pury was not willing to take less than $10 million in commission. Mr Staechelin then left Mr de Pury to propose to Mr Bennett a sale at $260 million.

Mr Staechelin gave detailed evidence about the state of the negotiations with Mr Bennett around 20 March 2013 and his reaction to Mr de Pury’s email of 20 March 2013 referring to commission. He told me that he had at least one telephone conversation with Mr de Pury. He did not accept Mr de Pury’s proposal of 10% commission and, in response, Mr de Pury said that 10% was not his final word. Mr de Pury said that he would drop his 10% to 5% and Mr Staechelin said that they would find a solution. Mr Staechelin explained in his witness statement that he came to the view that if the Qataris were willing to pay $260 million, then he “would recommend to the trustees” that they should pay $10 million commission to Mr de Pury. Mr Staechelin’s main concern was the net receipt from the sale which would be $250 million.

Mr de Pury accepted that, in this conversation or conversations between Mr de Pury and Mr Staechelin, Mr Staechelin told him that it was for the trustees as owners of the painting to make the decision whether to sell it. Mr de Pury also told me that Mr Staechelin told him that the trustees would “go along with” his suggestions. I consider it likely that Mr de Pury believed that Mr Staechelin’s views would be very influential with the other trustees. It may be that Mr de Pury did not really consider the possibility that the other trustees would not take the same view as that of Mr Staechelin. However, I am not persuaded that Mr Staechelin said anything specific to the effect that the involvement of the trustees was a formality or that their views could be disregarded.

Mr Staechelin accepted when cross-examined that from this time he realised that Mr de Pury was expecting to receive a commission in the event of a sale of the painting. In his witness statement, he recognised that he had not told Mr de Pury in response to his email of 20 March 2013 that Mr de Pury would not be paid a commission in respect of a sale. He suggested that he could have told Mr de Pury that and then continued with Mr Bennett separately without further involving Mr de Pury. He explained that he did not want to act that way and he would not have felt comfortable doing so because Mr de Pury was an old friend. He also acknowledged that Mr de Pury had been instrumental in bringing the parties to that stage of the negotiations. In any event, Mr Staechelin allowed Mr de Pury to go back to Mr Bennett with a new offer to sell at $260 million on the basis that the seller would receive the net figure of $250 million and Mr and Mrs de Pury would receive a commission of $10 million.

I find that Mr de Pury and Mr Staechelin agreed in their telephone conversation or conversations after the email of 20 March 2013 that Mr de Pury should propose to Mr Bennett a sale at $260 million and in the event of such a sale Mr de Pury would receive $10 million compensation. Although Mr Staechelin had said in his witness statement that he had told Mr de Pury that he “would recommend to the other trustees” that Mr de Pury should be paid a commission of $10 million, when he was cross-examined he accepted that he had not said those words to Mr de Pury. I regard that change in his evidence as very significant. It shows me that Mr Staechelin was prepared in his witness statement to put forward a version of the conversation which he was not able to support when cross-examined. Whatever Mr Staechelin may have had in his mind about his intentions to consult the other trustees on the subject of commission, he now accepts that he did not explain to Mr de Pury that the most he could commit to was to recommend to the trustees that commission of $10 million be paid. Although both Mr de Pury and Mr Staechelin knew that the decision to sell had to be made by the trustees and if there were no sale there would be no commission, the discussion between them was consistent with the question of commission having been concluded between the two of them. Accordingly, if the trustees did decide to sell then the understanding between Mr de Pury and Mr Staechelin was that commission would be payable.

When cross-examined, Mr Staechelin said that his understanding as a result of these discussions with Mr de Pury about commission in 2013 were that Mr de Pury would be entitled to receive $10 million commission if the painting was sold with Mr de Pury’s assistance even if the price achieved was less than $260 million. I think that I would not myself have understood the rest of the evidence in that way but it is right to record that Mr Staechelin gave that evidence. In any event, the question of commission was discussed again later in January and in June 2014.

Mr de Pury’s diary for 21 March 2013 has the figure of “260” written in it and it seems likely that by 21 March 2013, Mr de Pury and Mr Staechelin had had their conversation about an offer to sell the painting at $260 million and/or that offer had been communicated by Mr de Pury to Mr Bennett. In any event, Mr de Pury did telephone Mr Bennett and made an offer to sell the painting for $260 million. Mr Bennett reacted angrily to this offer and said that the deal was off and the Qatari royal family would not deal with Mr Staechelin again and would not buy the painting even if it became available at auction at a lower price. Mr de Pury then informed Mr Staechelin of what had happened. Mr de Pury told me that Mr Staechelin did not seem to be particularly disappointed by the loss of the sale.

By 23 March 2013, the negotiations with Mr Bennett for the sale of the painting had come to an end without an agreement being reached. On 23 March 2013, Mr de Pury emailed Mrs Staechelin (but not Mr Staechelin) referring to “the offer of 230”. He also stated that he had been prepared to reduce his commission “to a minimum”.

On 11 April 2013, following a conversation in Basel a few days earlier and a telephone conversation on 11 April 2013 between Mr de Pury and Mr Staechelin, Mr de Pury sent an email to Mr and Mrs Staechelin stating that he wanted to confirm the current situation in writing. He referred to the last offer made by the Qataris as being $230 million and Mr Staechelin’s counter-offer as being $260 million. He added that the counter-offer of $260 million involved the payment of commission of $10 million, or 3.85%, so that the sum received by the seller would be $250 million. Mr de Pury added that the Qataris had said that the matter was now closed and they would never again attempt to acquire the painting even if became available later at auction. Mr de Pury asked if Mr Staechelin would be prepared to sell for $240 million. On the subject of commission, Mr de Pury sought to assure Mr Staechelin that the sale would not fall through as a result of commission and that “we” would be prepared to reduce the commission even further (presumably to a figure less than $10 million). Mr Staechelin replied to this email by saying that he would comment later but he did not do so.

In 2013 and 2014, Mr and Mrs de Pury were in regular contact with Mr Bennett in relation to a number of works of art. In particular, on 2 August 2013, Mr de Pury emailed Mr Bennett in relation to a list of works of art which were of interest to both of them. The list included a reference to the painting and Mr de Pury thanked Mr Bennett for keeping it in mind and referred to the possibility that something might still happen in relation to a sale of the painting. Mr Bennett replied to indicate his agreement with this suggestion.

In January 2014, Mr and Mrs de Pury met Mr and Mrs Staechelin in Rome. On 27 January 2014, Mr de Pury emailed Mr and Mrs Staechelin to report that he had had a telephone call from Mr Bennett. On 31 January 2014, Mr and Mrs de Pury went to Mr and Mrs Staechelin’s home in Basel. Mr de Pury discussed with Mr Staechelin the possible sale of the painting. Mr de Pury gave advice about the state of the market for the painting and expressed the view that the long-term value of the painting might be in decline. Mr de Pury told me that Mr Staechelin had said (again) that a representative of Sotheby’s had told him that they would charge a commission of 5% on a private sale of the painting. He also told me that it was agreed that he should try to re-open negotiations with Mr Bennett and that he would receive a commission of 5% in the event of a sale.

Mr Staechelin’s evidence about the meeting on 31 January 2014 was that he accepted Mr de Pury’s suggestion that Mr de Pury should attempt to contact Mr Bennett again to see if negotiations could be re-opened. Mr Staechelin said that he did “not recall” whether he discussed commission with Mr de Pury at this meeting but that he still intended to recommend to the trustees that Mr de Pury be paid a commission of $10 million if a suitable offer were forthcoming.

I make the following findings as to what was agreed in January 2014. The parties agreed in their evidence that Mr Staechelin asked Mr de Pury to contact Mr Bennett again. I think it is very likely that the subject of commission was raised by Mr de Pury. After all, in view of what had been said in March 2013 on the subject of commission, Mr de Pury would have known that the subject needed to be addressed. It is possible that Mr Staechelin did refer to the advice from Sotheby’s. I am not able to make a positive finding that the parties agreed either 5% of whatever turned out to be the sale price or a fixed commission of $10 million but I think it likely that enough was said to reassure Mr de Pury that commission would be paid and the parties would either agree a rate of 5% or a fixed fee of $10 million or would further discuss the detailed figure when the final sale price would be known.

I was not given evidence as to any contact between Mr de Pury and Mr Bennett shortly after Mr de Pury’s meeting with Mr Staechelin in January 2014. However, in April 2014, Mr de Pury sought to interest a wealthy Russian as a potential purchaser of the painting. Mr de Pury did not have the authority of Mr Staechelin (or the trustees) to approach the Russian in this way and he did not tell Mr Staechelin that he had done so.

Mr de Pury and Mr Bennett met in Basel on 16 June 2014. They were in Basel for reasons unconnected with this particular painting. They had lunch together and over lunch they discussed the painting. There is no document which throws any light on what they discussed. I heard evidence about this meeting from Mr de Pury only. His evidence was that:

It was put to Mr de Pury that he had agreed with Mr Bennett that at the intended meeting with Mr Staechelin on 17 June 2014, no-one would mention the fact that there had been a previous offer of $230 million. Mr de Pury denied any such agreement. There was no evidence that there had been any such agreement and I think that such an agreement was improbable. I consider that it is more likely that Mr Bennett emphasised to Mr de Pury that in June 2014 the purchaser would not offer more than $210 million.

Mr de Pury telephoned Mr Staechelin to arrange a meeting between them and Mr Bennett for 17 June 2014. Mr de Pury gave evidence that he told Mr Staechelin that the prospective purchaser was interested in re-opening talks about the painting. Mr de Pury said that he did not tell Mr Staechelin of what he had discussed with Mr Bennett. Mr Staechelin gave evidence that Mr de Pury told him over the telephone about the change of Emir and that the purchaser would not offer $230 million again but would only offer $210 million. Mr Staechelin said that Mr de Pury told him that he must not mention the $230 million offer to Mr Bennett and although he found this a little odd, he went along with it. Mr Staechelin said that he informed his wife and his son, Martin, who were due to be present at the meeting on 17 June 2014 of what Mr de Pury allegedly said. Mrs Staechelin and Martin Staechelin were not called to give evidence at the trial.

I am not persuaded that either Mr de Pury or Mr Staechelin can remember the detail of their conversation on 16 June 2014. Accordingly, I am very cautious about accepting either version of that conversation. I think it is likely that Mr de Pury passed on to Mr Staechelin the essential points which Mr Bennett had made to Mr de Pury at their lunch on 16 June 2014. There is no obvious reason why he would not tell Mr Staechelin what had been discussed. As to Mr Staechelin’s suggestion that Mr de Pury had told him not to mention the offer of $230 million, I consider that version of the conversation is improbable. Mr Staechelin accepted when cross-examined that his version of events meant that the conversation had been “strange” but yet Mr Staechelin did not ask why Mr de Pury was insisting that the offer of $230 million could not be mentioned. Accordingly, I do not accept Mr Staechelin’s evidence on this point. What I consider probably happened is that Mr de Pury emphasised to Mr Staechelin that Mr Bennett would offer $210 million but the price was not negotiable and there was no prospect of getting back to the previous year’s offer of $230 million. That version of the conversation makes more sense.

On 17 June 2014, there was a meeting at Mr Staechelin’s house in Basel. Mr de Pury, Mr Bennett, Mr Staechelin, Mrs Staechelin and Martin Staechelin were present. Mrs de Pury joined the meeting later. There is no document which throws direct light on what was said at this meeting. I heard evidence about the meeting from Mr de Pury and from Mr Staechelin. Mrs de Pury gave evidence about the later part of the meeting which took place after Mr Bennett had left.

It was common ground that, at this meeting, Mr Bennett explained why he was offering $210 million. Mr Bennett referred to the new Emir and his attitude to impressionist art. Mr Bennett also said that the market had fallen. At the time of this meeting, Mr de Pury and Mr Staechelin knew that Mr Bennett had made an offer of $230 million the previous year. Mr Bennett’s explanations for the figure of $210 million were entirely consistent with that. That comment particularly applies to Mr Bennett’s comment about the market having fallen. I find that Mr de Pury and Mr Staechelin understood Mr Bennett to be explaining to them why he was only offering $210 million when he had offered $230 million the previous year. Mr Staechelin accepted in the course of his cross-examination that Mr Bennett was “telegraphing” that the purchaser had been prepared to pay more than $210 million the previous year. There was no suggestion that what had happened the previous year did not involve an offer at a price more than $210 million.

Mr de Pury and Mr Staechelin did not agree in their evidence as to whether the figure of $230 million had been mentioned by anyone at this meeting. Mr Staechelin said that the figure had not been mentioned. Mr de Pury say that Mr Bennett “must have” mentioned the figure of $230 million. I do not think that Mr de Pury really knows whether that specific figure was mentioned. There is certainly reason to think that the specific figure of $230 million might have been referred to. However, it is possible that that specific figure was not mentioned. Even if that specific figure was not mentioned, Mr Staechelin clearly understood from Mr de Pury’s earlier statements that Mr Bennett had offered $230 million the previous year and Mr Staechelin also understood that Mr Bennett was saying to him that he was now only offering $210 million and the higher figure of the previous year was no longer available.

Mr Staechelin asked Mr Bennett a number of questions and then said that he wanted a little time to consider the offer of $210 million. Mr Bennett then left the meeting. After Mr Bennett left, there was a discussion involving Mr and Mrs de Pury and Mr Staechelin. Mr de Pury said that Mr Staechelin asked him for his views on the offer. Mr de Pury gave advice as to the state of the market. He recommended acceptance of the offer. He advised that the purchaser was unlikely to improve the offer and if Mr Staechelin asked for a higher offer, he might lose the sale. Mr de Pury was very keen for a sale to occur but I accept that his advice represented his genuine views about the wisdom of accepting the offer. Notwithstanding this advice, Mr de Pury gave evidence that Mr Staechelin asked him to contact Mr Bennett again to ask if there might be a higher offer; Mrs de Pury also gave evidence to the same effect. This evidence was not challenged. Mr de Pury said that Mr Bennett telephoned him later that day and during the conversation, Mr de Pury reported that Mr Staechelin had asked whether the offer could be improved upon. Mr Bennett said any demand for more money would finish off the deal. Curiously, I was not given any evidence that Mr de Pury told Mr Staechelin about his conversation with Mr Bennett.

On 18 June 2014, Mr Staechelin emailed Mr de Pury to ask for Mr Bennett’s contact details and Mr de Pury provided them.

Around this time, possibly on 18 June 2014, Mr Staechelin spoke to Mrs de Pury and asked if she thought that Mr de Pury would object “to taking a step back from the deal”. He suggested that it would be better for the progress of the deal if there were fewer people around the table. Mrs de Pury agreed to pass on this request to Mr de Pury. Later, in a conversation between Mr de Pury and Mr Staechelin, the latter suggested that he had been advised by Mr Paisner to make this request. I do not think that is correct as Mr Paisner was only told later about Mr de Pury’s involvement in the proposed sale. Mr Staechelin gave evidence that he did not intend to involve Mr de Pury further at this stage. He explained that by saying that Mr de Pury did not have any further role to play. I find this evidence a little puzzling. Mr Staechelin gave evidence that Mr Bennett had suggested to him that Mr de Pury should not be at the intended meeting. It may be that Mr Staechelin’s real reason was that he thought that Mr de Pury was pushing him too hard to agree to sell the painting for $210 million and he wanted to make up his own mind without that pressure.

On 19 June 2014, Mr Staechelin telephoned Mr Paisner. Mr Staechelin gave Mr Paisner some information about the possible sale of the painting. This was the first time that Mr Paisner was made aware of this being a real possibility. Mr Staechelin asked Mr Paisner to fix up a meeting for 26 June 2014. Mr Staechelin proposed that he, Mr Paisner and Mr Bennett should attend the meeting. Mr Paisner then arranged a meeting between himself and Mr Staechelin for 10.30 am on 26 June 2014 and so that Mr Bennett would join them at 11.30 am on that day. On 20 June 2014, Mr Staechelin emailed Mr and Mrs de Pury to inform them that there was to be such a meeting on 26 June 2014 but they were not invited to attend. Instead, Mr Staechelin said that he would contact them at the start of the following week. On 20 June 2014, Mrs de Pury replied to Mr Staechelin but did not suggest that Mr de Pury should attend the meeting on 26 June 2014.

On 24 June 2014, while Mr and Mrs de Pury were on holiday together in Greece, they discussed Mr Staechelin’s request that Mr de Pury take a step back from the deal. Mr de Pury was not happy with this request. He telephoned Mr Staechelin to discuss the request. Mr de Pury pressed Mr Staechelin quite hard to agree that he should attend the meeting with Mr Bennett and Mr Paisner. I infer that Mr de Pury wanted to be present at the meeting so that he could encourage Mr Staechelin to agree to sell. If there were no agreement to sell, then Mr de Pury would not receive any commission. Mr Staechelin was annoyed with Mr de Pury pressing him to invite Mr de Pury to the meeting but after discussing the matter with Mr Bennett and Mr Paisner, he agreed that Mr de Pury should be invited to the meeting on 26 June 2014. Mr de Pury gave evidence that during his telephone conversation with Mr Staechelin, the latter asked Mr de Pury if Mr Staechelin could ask the purchaser for an extra $10 million. Mr de Pury strongly advised against doing so.

Mr Staechelin spoke to Mr Paisner about Mr de Pury’s attendance at the meeting on 26 June 2014. Mr Staechelin said in cross-examination that he explained to Mr Paisner who Mr de Pury was. Mr Staechelin also agreed that he told Mr Paisner that he had agreed a deal with Mr de Pury about the payment of commission. Mr Paisner told me that he did not recollect that he was told this by Mr Staechelin. Mr Paisner then invited Mr de Pury to attend the meeting on 26 June 2014. Mr Paisner also told Mr Bennett that Mr de Pury would be at the meeting.

On 26 June 2014, Mr Staechelin met Mr Paisner at the latter’s offices. I heard evidence about this meeting from Mr Staechelin and Mr Paisner. Mr Staechelin gave Mr Paisner more information about the possible sale of the painting to the Emir of Qatar and they discussed various points about the sale which would need to be attended to. Mr Staechelin gave evidence that he told Mr Paisner that if a sale were to be agreed at $210 million, then he and Mr Paisner would tell Mr de Pury that they would recommend to the third trustee, Ms McCaffrey, that he would be paid $10 million. Mr Staechelin’s evidence was: “I said I thought that the payment to Simon would be a necessary part of the deal. I recall that Martin shared my view.” When cross-examined, Mr Staechelin agreed with the suggestion that: “… you have agreed with Martin to offer Mr de Pury 10 million commission.”

Mr Paisner’s evidence about his meeting with Mr Staechelin on 26 June 2014, before the others arrived, was rather different from the evidence given by Mr Staechelin. Mr Paisner said that when Mr Staechelin referred to the question of commission to be paid to Mr de Pury, he said that he was shocked and annoyed when Mr de Pury had asked for commission of 10% of the price. Mr Paisner said that Mr Staechelin had explained that he had not originally given Mr de Pury any mandate and he had thought that Mr de Pury was acting for the Qataris. Mr Paisner also said that Mr Staechelin stated that he would recommend to the trustees that, if the painting were sold, then they should pay Mr de Pury a fixed sum for commission but Mr Paisner did not remember whether that sum was to be $10 million. Mr Paisner was cross-examined as to whether the phrase “recommend to the trustees” was actually used. He said that it was his assumption at the meeting with Mr Staechelin that what they agreed would be recommended to the third trustee. Mr Staechelin, when cross-examined, did not agree with parts of the evidence given by Mr Paisner about this meeting.

I will now make my findings as to what was said at this meeting between Mr Staechelin and Mr Paisner. I think that it is likely that Mr Staechelin did express some criticism of Mr de Pury to Mr Paisner. I think that it is likely that Mr Staechelin was not happy that Mr de Pury was going to receive $10 million commission. He seems to have communicated this unhappiness to Mr Paisner and to have criticised Mr de Pury for asking for even more commission at 10% of the price. Nonetheless, Mr Staechelin was reconciled to the idea that $10 million commission would have to be paid to Mr de Pury. Mr Paisner did not see any reason to disagree with Mr Staechelin’s conclusion and he agreed that Mr de Pury would receive $10 million commission if the sale proceeded. As to whether Mr Staechelin or Mr Paisner used the phrase that they would “recommend to the trustees”, I think it is likely that they used that phrase in relation to the sale of the painting for $210 million. I say that because the decision to sell the painting was a major decision and both Mr Staechelin and Mr Paisner would have been aware that it was necessary for the decision to be taken by Mr Paisner and Ms McCaffrey without Mr Staechelin technically participating in that decision. If it is possible that they used that phrase about the sale of the painting then it might be said that it is possible that they used the phrase again when they discussed the commission to be paid to Mr de Pury. However, on balance, I consider that it is more likely than not that the discussion about the payment of commission went along the lines of Mr Staechelin saying that he was sorry he had to pay Mr de Pury commission but he felt it had to be done and Mr Paisner agreed that Mr de Pury would be paid commission of $10 million.

At this point on 26 June 2014, Mr Bennett and Mr de Pury joined the meeting. Mr Paisner prepared a handwritten note which was later typed up. The last part of the note referred to the issue of commission but that was not discussed in the presence of Mr Bennett but was discussed by the three others, after Mr Bennett had left the meeting.

Mr Paisner’s note contained the following points which may now be relevant:

I heard evidence about this part of the meeting from Mr de Pury, Mr Staechelin and Mr Paisner.

Mr de Pury said that at the start of this part of the meeting, Mr Paisner asked Mr Bennett if it would be possible to improve the offer which was on the table. Mr Bennett replied that the offer of $210 million was “all or nothing”. The figure of $210 million then appeared to be settled. It was put to Mr de Pury that Mr Bennett was told that Mr Staechelin and Mr Paisner would discuss the offer further and consider it with their fellow trustee. Mr de Pury did not recall that being said. He referred to the fact that Mr Staechelin had worn a tie with an image of the painting on it and during the meeting he removed the tie and handed it to Mr Bennett as a symbolic gesture to show that the painting would be sold.

Mr Staechelin told me that he and Mr Paisner had said to Mr Bennett that they would consider the matter further and discuss it with their co-trustee. Otherwise, Mr Staechelin substantially agreed with Mr de Pury’s evidence about this part of the meeting. Mr Staechelin agreed that by handing over the tie, he had created a mood of acceptance of the offer from Mr Bennett.

Mr Paisner gave more detailed evidence about this part of the meeting. He said that he had the impression from what was said that the price of $210 million was lower than had previously been “mooted”. He referred to a general discussion about higher figures that had previously been mooted and a discussion about the market. Mr Paisner says that he told Mr Bennett that he and Mr Staechelin were two trustees and that there was another trustee whose consent would be needed for any sale. That part of his evidence was not challenged. I accept that Mr Paisner did say to Mr Bennett, in Mr de Pury’s hearing that there was a third trustee and the consent of that trustee was needed for any sale. It is the sort of thing one would expect Mr Paisner to say particularly by way of explanation to Mr Bennett as to what would happen next and as to why Mr Staechelin and Mr Paisner were not making a final decision at the meeting.

Mr Bennett then left the meeting. After he had gone, Mr de Pury and Mr Staechelin discussed commission in the presence of Mr Paisner. According, to Mr de Pury, Mr Staechelin raised the subject of commission. He told Mr de Pury that if the painting was sold for $210 million, the commission would not be more than $10 million and that he did not want the question of commission to stand in the way of their friendship. Mr de Pury told me that the difference between 5% of the price and $10 million was not so significant and he agreed that commission of $10 million was totally acceptable. Mr de Pury said that neither Mr Staechelin nor Mr Paisner mentioned any need to obtain authorisation from any other party to the payment of commission. Mr Paisner asked whether the figure of $10 million was inclusive or exclusive of VAT. Mr de Pury said that he did not know but he would check and would let them know.

The original Defence in this case pleaded certain facts as to a discussion about commission on 26 June 2014. It pleaded that Mr de Pury asked for a commission of $10 million and Mr Staechelin and Mr Paisner did not agree to make this payment while Mr de Pury was in the meeting. It was then pleaded that after Mr de Pury left the meeting, Mr Staechelin and Mr Paisner discussed the matter and agreed that in the event of the sale going through, they would recommend to the trustees to make a payment to Mr de Pury. This pleading was later amended to be more in accordance with the evidence which Mr Staechelin and Mr Paisner gave at the trial.

Mr Staechelin’s evidence was that he told Mr de Pury that if the sale proceeded then “we”, i.e. Mr Staechelin and Mr Paisner, would be willing to recommend to the trustees that Mr de Pury should receive $10 million. Mr Paisner’s evidence was that Mr Staechelin said that, if the sale proceeded, he would recommend to Mr Paisner and to Ms McCaffrey that the trustees would pay him $10 million.

The evidence of Mr Staechelin and Mr Paisner was different from their original Defence. The evidence on this subject in their witness statement was very brief and, to some extent, differed from each other. In particular, Mr Paisner’s version was that Mr Staechelin said that he would make a recommendation on commission to Mr Paisner. I think it is highly unlikely that Mr Staechelin expressed himself that way in view of the fact that Mr Staechelin and Mr Paisner at the beginning of their meetings on that day had agreed between themselves that Mr de Pury would receive $10 million commission. I consider that neither Mr Staechelin nor Mr Paisner had any clear recollection as to the detail of the discussion with Mr de Pury at that meeting.

My conclusion about the discussion in relation to commission on 26 June 2014 must therefore be based on my assessment of the probabilities as to how matters were expressed. There was clearly a consensus between Mr de Pury, Mr Staechelin and Mr Paisner that if the sale went through, Mr de Pury would receive $10 million. There was no question at that meeting, that the sale might go through and Mr de Pury would not receive anything. Nor was there any question of the sale going through and Mr de Pury being offered less than $10 million. Mr Staechelin was always going to be the effective decision maker in relation to the payment of commission to Mr de Pury. He had the personal relationship with Mr de Pury. Mr Paisner had no previous dealings with Mr de Pury and he immediately acquiesced in Mr Staechelin’s decision to pay $10 million commission to Mr de Pury. Ms McCaffrey had had no dealings with Mr de Pury nor with the negotiations for the sale of the painting. Mr Staechelin and Mr Paisner did not expect her to have any views on the subject of commission which differed from Mr Staechelin’s views. The point at issue is whether it was explained to Mr de Pury that there was no commitment to pay him any commission unless Mr Staechelin and Mr Paisner obtained the approval of the third trustee. I am not persuaded that that was explained to Mr de Pury. I consider that it is more probable that that was not explained. After all, Mr Staechelin did not explain matters that way when he discussed the question of commission with Mr de Pury in March 2013, although he initially asserted in his witness statement that he had. The words used at the meeting would have simply stated that if the sale went through at $210 million, then Mr de Pury would receive a commission of $10 million. I will consider later the legal effect of matters being expressed in that way.

Mr De Pury telephoned Mr Bennett after he left the meeting on 26 June 2014. They agreed that the meeting had been very positive.

On 4 July 2014, Mr Staechelin and Mr Paisner met Mr Gutzwiller in Zurich to discuss the proposed sale of the painting. At the end of the meeting, it was agreed that Mr Paisner should contact Mr Bennett again and propose a sale at a price of $230 million. Mr Paisner prepared a note of the points he would wish to put to Mr Bennett in this respect. The note included the comment: “market hasn’t moved to extent suggested” and “Hence 230 only”. The note also had the remark: “and we need to convince another trustee”.

On 6 July 2014, Mr Bennett emailed de Pury and asked if there was “any news” from Mr Staechelin as Mr Bennett’s client was getting very anxious. On the same day, Mr de Pury replied that Mr Staechelin was still battling with himself to make a decision and that Mr de Pury did not want to contact him at that point. Although Mr de Pury initially suggested otherwise, it is clear that at this stage there was no suggestion from Mr Bennett that Mr de Pury should not contact Mr Staechelin.

Early on 7 July 2014, Mr Paisner telephoned Mr Bennett to discuss the sale of the painting and, in particular, the price. Mr Paisner dictated a note of the telephone conversation and the note appears to have been typed up on 9 July 2014. I accept that his note is reliable as to what was said. Mr Paisner told Mr Bennett that there had been a meeting between himself, Mr Staechelin and Mr Gutzwiller on 4 July 2014 and that a decision had been taken at that meeting to proceed with a sale of the painting but only at a price of $230 million. Mr Paisner then spelt out the reasons for this decision. He said:

“ … the trustees only wanted to proceed with a sale if they were able to conclude a deal at the best price which they had been offered, i.e. US $230.”

Mr Paisner added that although Mr Bennett’s offer of $210 million was a very good price, if the trustees were to sell it had to be at “the top price”.

Mr Bennett’s response to this information from Mr Paisner was to say that he was 99% sure that the price of $230 million would be rejected. He then said, according to Mr Paisner’s note:

“He wanted me to understand very clearly that he had never made any offer of US $230. Did I appreciate that?”

Mr Paisner told Mr Bennett that if this was the position i.e. that no higher offer had ever been made, then he needed to go back to Mr Staechelin urgently since he would not wish any final decision to be taken based on a misunderstanding. Mr Bennett agreed to give Mr Paisner 30 minutes to contact Mr Staechelin.

Mr Paisner immediately telephoned Mr Staechelin and told him what Mr Bennett had said over the telephone. Mr Paisner’s note of what Mr Staechelin said stated:

“He expressed surprise, since he had understood from Simon de Pury that there was an offer on the table at US $230 and he had this in writing.”

Mr Stechelin told me that when he said that “he had this in writing”, he had in mind Mr De Pury’s email of 11 April 2013. Mr Paisner then suggested that he should ask Mr Bennett to contact Mr Staechelin and Mr Staechelin agreed to that course. Mr Paisner telephoned Mr Bennett again and arranged for him to speak to Mr Staechelin.

Mr Staechelin then telephoned Mr Bennett. Mr Staechelin referred to an earlier offer of $230 million. He said that Mr de Pury had told him that Mr Bennett had offered $230 million. Mr Bennett simply said words to the effect “No, that’s not true” and that he had never offered $230 million.

Mr Staechelin told me that these statements from Mr Bennett shocked him. His reaction was to conclude that Mr Bennett was telling the truth and that Mr de Pury had lied to him about there having been an offer of $230 million in March 2013. He became very suspicious of Mr de Pury and thought that Mr de Pury had earlier tried to prevent Mr Staechelin having a meeting with Mr Bennett alone.

Mr Staechelin then spoke to Mr Paisner again. Mr Paisner said that on the basis that the offer of $210 million was the highest offer on the table, he and his family ought to give it very serious consideration. Mr Staechelin agreed with this advice. He told me that an acceptance of the offer of $210 million would give the trustees time to consider and that they could back out later if they discovered anything new to contradict Mr Bennett.

Mr Staechelin spoke to Mr Bennett again on the telephone. Mr Bennett repeated that there had never been any offer of $230 million. Mr Staechelin told him that he would recommend the offer to the trustees subject to Mr Bennett confirming in writing that there had been no previous offer of $230 million.

On 7 July 2014 at 13.13 London time, Mr Bennett sent an email to Mr Staechelin referring to their earlier conversation. The email stated:

“As requested, this email is to confirm that I never made a formal offer for the painting by Paul Gauguin for the amount of $230 million.

The only formal offer made was directly to you for $210 million on the 18^th June 2014.

I am overwhelmed that you have accepted this offer pending agreement from the other trustees and I very much look forward to concluding the contract.”

On 7 July 2014 at 14.47 Swiss time, Mr Staechelin replied to Mr Bennett thanking him for his email and saying “agreed”. Mr Staechelin also, at around that time, sent Mr Bennett’s email to Mr Paisner.

In his email, Mr Bennett referred to there being no “formal offer” of $230 million. Mr Staechelin’s evidence was that Mr Bennett had not used the words “no formal offer” in his telephone conversations with Mr Staechelin. Mr Bennett had therefore changed his statement, apparently in a significant way. Mr Staechelin told me that he did not attach any significance to the word “formal” in the email.

After receiving Mr Bennett’s email of 7 July 2014, Mr Staechelin continued to believe that Mr de Pury had lied to him about the offer of $230 million. Mr Staechelin told me that at that moment he no longer intended to pay Mr de Pury any commission. The situation therefore was that Mr Paisner on 7 July 2014 had sought to agree a price of $230 million with Mr Bennett. If that price had been agreed, $10 million would have been payable to Mr de Pury so that the trustees would have received $220 million. In the event, Mr Staechelin agreed to sell for $210 million but in circumstances where he did not intend to pay any commission so that the trustees would receive $210 million from the sale. That was not as good as receiving $220 million but it was better than receiving $200 million (i.e. $210 million less commission of $10 million).

Mr Staechelin gave evidence as to what he would have done if he had believed in July 2014 that there had been an earlier offer of $230 million and that Mr Bennett was lying. He said that he would have recommended to the trustees that they did not sell, certainly not at $210 million. He said that either the Qataris should go ahead at $230 million or the deal would have been off.

There were no communications on 7 July 2014 between Mr Staechelin and Mr Paisner on the one hand and Mr de Pury on the other. Mr de Pury did not hear from them about the meeting with Mr Gutzwiller on 4 July 2014 nor of the conversations with Mr Bennett on 7 July 2014.

It is important to try to determine what communications there were between Mr Bennett and Mr de Pury on 7 July 2014. I did not hear any evidence from Mr Bennett. I did receive evidence on this subject from Mr and Mrs de Pury but I will refer first to the relevant documents. On 7 July 2014 at 21.51, Mr Bennett sent to Mr de Pury the email he had received from Mr Staechelin which had used the word “agreed”; this email also showed Mr Bennett’s earlier email to Mr Staechelin which stated that there had not been a formal offer of $230 million. Mr Bennett merely forwarded the emails to Mr de Pury and did not add any message of his own. Mr de Pury immediately forwarded the emails to Mrs de Pury, again without adding any message of his own. I also have Mr de Pury’s telephone records which show that he telephoned Mr Bennett at 21:46 and again at 21:58 on that day. Mr de Pury’s telephone records do not show calls received by Mr de Pury.

In their Defence, the Defendants made significant allegations as to the communications between Mr Bennett and Mr and Mrs de Pury on 7 July 2014. It was pleaded that it was to be inferred that Mr Bennett had told Mr de Pury either before or after his telephone calls to Mr Paisner and Mr Staechelin on 7 July 2014 of what he was planning to say or had said about a previous offer of $230 million. It was then pleaded that Mr de Pury had agreed with Mr Bennett that he would not tell Mr Staechelin or the trustees that there had been a previous offer of $230 million.

In their Reply, the Claimants first pleaded that they had no knowledge of the communications which had taken place between Mr Bennett and Mr Paisner and Mr Staechelin. However, contrary to this plea, it is clear that Mr and Mrs de Pury did know about the email exchanges on 7 July 2014 between Mr Bennett and Mr Staechelin. As to the allegation that there were communications between Mr Bennett and Mr de Pury on 7 July 2014, the Claimants pleaded that the inferences relied upon by the Defendants were denied and that the facts relied upon did not support the alleged inferences.

In his witness statement, Mr de Pury referred to Mr Bennett “mentioning” to him that Mr Staechelin had asked Mr Bennett to sign a written statement to the effect that no formal offer of $230 million had ever been made and that this statement was necessary to enable a sale to proceed at $210 million. Mr de Pury said that he questioned Mr Bennett as to why this statement was being made when it was not correct and Mr Bennett said that Mr Staechelin had specifically asked him to write in those terms. Mr Bennett emphasised that the statement said that there was no “formal” offer. Mr de Pury also said that Mr Bennett had sent him the exchange of emails between Mr Bennett and Mr Staechelin of 7 July 2014. The Reply was then amended to accord with this witness statement.

Mr de Pury was cross-examined about the communications he had with Mr Bennett on 7 July 2014. It emerged that Mr de Pury accepted that Mr Bennett had telephoned him on 7 July 2014 and told Mr de Pury that he was going to write to Mr Staechelin saying that there had never been a formal offer of $230 million. Mr Bennett also told Mr de Pury that Mr Staechelin had asked for this written confirmation. Mr Bennett stressed that the statement would say that there had been no “formal” offer. The conversation with Mr Bennett was neither particularly long nor particularly short. This conversation must have taken place before Mr Bennett sent his email at 13:13. Mr de Pury accepted that he had telephoned Mr Bennett at 21:46 and 21:58 but he told me he did not recall what was discussed. It is entirely possible that when he telephoned at 21:46 he asked Mr Bennett to send him whatever email had been sent to Mr Staechelin because, at 21:51, Mr Bennett sent to Mr de Pury the email exchanges with Mr Staechelin. The further conversation at 21:58 might have been to acknowledge receipt of Mr Bennett’s email.

In his evidence, Mr de Pury was quite clear that Mr Bennett had made an offer to buy the painting for $230 million. He was also quite clear that Mr Bennett knew that and also that Mr Staechelin knew that because Mr de Pury had told Mr Staechelin so and indeed had discussed it with him a number of times. Mr de Pury told me he was puzzled why Mr Staechelin wanted Mr Bennett to put into writing something that both he and Mr Bennett knew was not true.

It was put to Mr de Pury in cross-examination that Mr Bennett had told Mr de Pury that Mr Bennett was going to tell Mr Staechelin a lie and that it was important that Mr de Pury did not contradict Mr Bennett’s lie so that Mr Staechelin would believe that there had not been any earlier offer of $230 million. It was also put to Mr de Pury that the fact that he did not immediately contact Mr Staechelin to say to him that there had been an earlier offer of $230 million was because Mr Bennett had requested Mr de Pury not to do so.

I also heard evidence from Mrs de Pury about the events of 7 July 2014 which involved her husband. Her evidence of these events was more limited than that of her husband. She claimed that she had forgotten about the email from Mr Bennett to her husband on 7 July 2014 until the week before the trial. That is an astonishing claim and I do not accept her evidence about that. However, I am not prepared to alter the findings which I consider to be appropriate based on Mr de Pury’s evidence by reason of Mrs de Pury’s evidence.

It may be that there were more communications between Mr Bennett and Mr de Pury on 7 July 2014 than I have been told about and the conversations between them may have been more elaborate than I was told. In the absence of any evidence from Mr Bennett, I am not prepared to reject the basic elements of Mr de Pury’s account of what happened on 7 July 2014. It is clear that Mr Bennett did tell Mr de Pury, in advance of sending his email to Mr Staechelin, that Mr Bennett was going to write to Mr Staechelin saying that there had been no “formal” offer of $230 million. It is also clear that Mr de Pury saw the email communications between Mr Bennett and Mr Staechelin which again referred to no “formal” offer. That expression did not amount to a statement that there had not been any offer of $230 million and indeed the use of the word “formal” would suggest that there had been an informal offer of $230 million. I have no evidence which would enable me to find that Mr de Pury knew that Mr Bennett had told Mr Paisner and Mr Staechelin that there had never been any offer of $230 million, formal or otherwise. I accept Mr de Pury’s evidence that he was puzzled about what was going on. I do not accept the suggestion that he agreed with Mr Bennett that he would not contact Mr Staechelin in order not to contradict what Mr Bennett was writing to Mr Staechelin.

The fact that Mr de Pury did not immediately contact Mr Staechelin and tell him that there had indeed been an earlier offer of $230 million can be explained by a number of factors. The first is that Mr de Pury believed that Mr Staechelin knew as well as he did that Mr Bennett had made an earlier offer of $230 million. The second factor is that there was an emphasis in Mr Bennett’s statement that there was no “formal offer” and this seemed to be intended by Mr Bennett and by Mr Staechelin to be consistent with what they both knew as to the earlier offer. The third factor is that Mr de Pury was puzzled about what Mr Staechelin’s motive was. The fourth factor was that at around this time (if not on 7 July 2014, then on 8 July 2014) Mr Bennett told Mr de Pury that Mr Staechelin did not want Mr de Pury to be involved. That was indeed the case as Mr Staechelin did say to Mr Bennett at around this time that he did not want Mr de Pury to be informed of what was going on.

On 8 July 2014, Mr Bennett emailed Mr Staechelin to say that the Emir of Qatar was very pleased that his offer to buy the painting had been accepted. On the same day, Mr Staechelin replied to Mr Bennett to tell him to contact Mr Gutzwiller in relation to the steps to be taken to progress the sale. This email was copied to Mr Gutzwiller and Mr Paisner. Mr Staechelin wrote:

“Please keep a maximum of discretion and do not speak about the matter, not even to Simon. I am still under shock, that your offer to buy at 230 of last year did not exist.”

It was at this point that there was a clear instruction to Mr Bennett not to speak to Mr de Pury about the state of play. In fact, Mr Bennett largely disregarded this instruction as he had a number of conversations around this time with Mr de Pury and, indeed, he expressly told Mr de Pury not to contact Mr Staechelin. Mr Bennett replied to Mr Staechelin’s email to say that he would “ensure maximum discretion regarding this matter”. He also said that he would telephone Mr Staechelin the next day.

Mr Staechelin wanted to keep Mr de Pury out of matters at this stage because he fully expected that he would later say to Mr de Pury that he would not receive a commission in respect of the sale. Mr Staechelin decided to go with the offer to buy at $210 million in circumstances where no commission would be paid. He did not want to sell at $210 million and then have to pay out $10 million in commission. He did not want Mr de Pury to complicate matters by telling him that what Mr Bennett was saying was untrue. It was unlikely that Mr Staechelin would ever achieve a sale at $230 million and it would be better to end up with net proceeds of $210 million than net proceeds of $200 million.

I also find that one of the reasons why Mr Staechelin wanted Mr Bennett to send an email about there not being an earlier offer of $230 million was to use that email against Mr de Pury in relation to Mr de Pury’s claim to commission.

On 8 July 2014, Mr Gutzwiller sent three emails to Ms McCaffrey telling her of a proposed sale of the painting to the Emir of Qatar. The emails gave her information about the proposed sale. He split the information between three emails in an attempt to keep the information more confidential. Mr Gutzwiller told Ms McCaffrey that an offer of $210 million for the painting had come as a surprise. He explained that as Mr Paisner was in Zurich on another matter, Mr Gutzwiller and Mr Staechelin had informed Mr Paisner of the offer to purchase. He further explained that Mr Staechelin and Mr Paisner and Mr Gutzwiller himself thought that the offer was “unique” and should be accepted. Mr Gutzwiller then asked Ms McCaffrey to confirm her consent in principle to the proposed sale and “all related issues” and that a final version of the sale contract would be presented to her before signature. Ms McCaffrey replied about two hours later to say that she agreed in principle to the proposed sale. The emails to Ms McCaffrey did not refer to Mr de Pury or his involvement or to the payment of commission to him. In particular, Ms McCaffrey was not asked to give her approval to the payment of commission to Mr de Pury. It is only possible to speculate as to why these matters were not raised with Ms McCaffrey. One possibility is that Mr Staechelin had already decided that he would not pay any commission to Mr de Pury so that it was not necessary for him to ask for Ms McCaffrey’s approval to the payment of commission. Another is that Mr Staechelin was unsure what he wanted to do in that respect and he therefore did not raise it with Ms McCaffrey. Another possibility is that the possibility of the payment of a commission was one of the “related issues” referred to in Mr Gutzwiller’s emails to Ms McCaffrey. Another possibility is that Mr Staechelin considered that the decision as to Mr de Pury’s commission was for Mr Staechelin and Mr Paisner.

On 8, 9, 10 and 11 July 2014, there were several telephone conversations between Mr Bennett and Mr de Pury and in some, at least, of those calls they spoke about the sale of the painting. By this time, it is likely that Mr Bennett had told Mr de Pury that there might be an issue about his being paid commission.

On 9 July 2014, Mr Bennett and Mr Staechelin agreed to speak the next day although I am not clear whether they did.

On 10 July 2014, Mr Staechelin spoke to Mr Gutzwiller who then emailed Mr Bennett to say that “the subject is clear to me”. The evidence of Mr Staechelin and of Mr Gutzwiller supported the suggestion put to them that this was a reference to Mr Staechelin and Mr Bennett agreeing not to alert Mr de Pury to any possible problem about his position.

In the evening of 10 July 2014, Mr Bennett and Mr de Pury had a telephone conversation. After the conversation with Mr de Pury, Mr Bennett emailed Mr Gutzwiller and Mr Staechelin to inform them of his conversation with Mr de Pury. The email stated:

“I spoke with the individual in question this evening and explained clearly (in a very friendly manner) that the discussions had been positive and that lawyers for both parties were now in communication. I explained that I had very little to elaborate on as I wasn’t a lawyer and was simply waiting to hear if potential contractual issues could be resolved – he seemed to understand.

I also told him that while I haven’t been involved, that it was my understanding that the “fee” would be discussed if and when an agreement could be reached. Again, he seemed to understand. I strongly believe that if he feels talks continue and his fee will be discussed in the near future he will remain focused and involved.

I imagine he will call Rudy tomorrow. I am convinced that if he hears the same story from Rudy that I delivered, he will not become a disruptive element. Our frustrations should be discussed with him after the contract is possibly signed. This is the only way to ensure absolute confidentiality.”

It is entirely possible that, by this stage, Mr Bennett was saying one thing to Mr de Pury and a different thing to Mr Staechelin or certainly saying more to Mr Staechelin than he was saying to Mr de Pury. If Mr Bennett did say to Mr de Pury what he described in this email, then he told Mr de Pury that his commission would be discussed if and when an agreement would be reached. That would have disturbed Mr de Pury who, on 26 June 2014, had considered that the question of his commission had been settled. It is possible that Mr Bennett did say enough to Mr de Pury to cause him to think that the question of his commission had now become unsettled and that Mr Staechelin would not necessarily adhere to the agreement made on 26 June 2014 to pay Mr de Pury $10 million commission. I also find that Mr Bennett said something to Mr de Pury to encourage or at least permit Mr de Pury to contact Mr Staechelin the following day. Reverting to Mr Bennett’s email, it is not entirely clear what the “same story” was meant to be. It is also not clear how it was considered that Mr de Pury might become “a disruptive element”. The most likely explanation is that it was feared that Mr de Pury might press his claim for commission and contradict Mr Bennett’s statement that there had not been an earlier offer of $230 million.

On 11 July 2014, Mr Gutzwiller replied to Mr Bennett’s email with a copy to Mr Staechelin and Mr Paisner. Mr Gutzwiller said that he agreed with the analysis and recommendation of Mr Bennett. Mr Staechelin’s position at that time seems to have been that Mr de Pury had lied about the earlier offer of $230 million and would not be paid commission. It is clear that, at this point, Mr Staechelin did not want to engage with Mr de Pury, did not want to hear from him and did not want to explain to Mr de Pury his thinking in relation to the sale and the subject of commission.

On 11 July 2014, Mr de Pury telephoned Mr Staechelin. Mr de Pury gave evidence about this conversation. Mr Staechelin told me that he did not recall what had been discussed. I accept the essentials of Mr de Pury’s evidence about this conversation. Mr de Pury was eager to contact Mr Staechelin as he was unclear what was happening and he wished to raise again his own position in relation to the sale. His pretext for contacting Mr Staechelin was that Mr Paisner had asked him on 26 June 2014 whether the commission would include VAT. Mr de Pury therefore told Mr Staechelin on 11 July 2014 that his commission would not bear VAT. Mr de Pury told me that he then referred to Mr Bennett’s email of 7 July 2014 but Mr Staechelin tried to close down the conversation and said that he did not want to have a “bilateral” conversation about that matter but that he would later have a discussion with Mr de Pury and Mr Bennett so that he could understand why the final deal would be for $20 million less than the previous offer. Mr de Pury then tried to explain the position and Mr Staechelin said that he did not want to discuss it over the telephone. Mr de Pury said that he would be happy to meet him and Mr Bennett in due course.

Thus, on 11 July 2014, Mr de Pury wished to discuss with Mr Staechelin the question of Mr Bennett’s email of 7 July 2014 which referred to there having been no formal offer of $230 million and Mr Staechelin made it clear that he did not want to know what Mr de Pury had to say on that subject. Mr de Pury’s preparedness to discuss that matter is incompatible with the Defendants’ case that Mr de Pury had reached a prior agreement with Mr Bennett to lie to Mr Staechelin about the earlier offer of $230 million.

Following his conversation with Mr de Pury, Mr Staechelin emailed Mr Gutzwiller, Mr Bennett and Mr Paisner to say:

“I had a very short conversation today with Simon and told him that it is not the time yet to discuss commission. That we will do this with Guy (and possibly Martin) also speaking about the 230 offer.”

On the same day, Mr Bennett replied to Mr Staechelin, copied to Mr Gutzwiller and Mr Paisner, saying that he was very happy to have that conversation with Mr de Pury at the appropriate time.

In July and August 2014, the lawyers for the parties to the proposed sale exchanged drafts of a contract of sale and purchase. By 8 August 2014, one such draft had a clause which provided that no third party including Mr de Pury was authorised to represent the sellers in respect of the sale.

On 1 September 2014, Mr Staechelin, Mr Paisner and Ms McCaffrey signed a written resolution in relation to the sale of the painting to the Emir of Qatar for $210 million. The resolution recited the terms of the trust agreement, as amended, to the effect that a decision as to whether to retain a painting was to be taken by Mr Paisner and Ms McCaffrey and that Mr Staechelin was not to participate in that decision although, following a decision to dispose of a painting, Mr Staechelin could participate in any decision as to how to dispose of the same. The resolution recited that all three trustees believed that the offer of $210 million was “an excellent offer”. The resolution then recited that Mr Paisner and Ms McCaffrey had decided that the painting should be sold and those two trustees together with Mr Staechelin resolved on the particular sale to the purchaser for $210 million.

On 2 September 2014, Mr de Pury emailed Mr Staechelin to say that he had not wanted to bother him earlier but he hoped that he would soon be hearing from him. This was the first time that Mr de Pury had contacted Mr Staechelin since 11 July 2014. Mr de Pury was hoping for an early positive response from Mr Staechelin but what he received, a week later on 9 September 2014, was a reply stating that Mr Staechelin suggested that Mr de Pury speak to Mr Bennett. Mr de Pury replied the same day stating that in accordance with Mr Staechelin’s suggestion, he had spoken to Mr Bennett and was happy to hear the way that things had progressed. He then asked for the identity of the person to whom the invoice for commission should be sent. He referred to the commission having been agreed earlier in the presence of Mr Paisner. Mr de Pury also proposed a social meeting with Mr Staechelin on a specified date.

On 10 September 2014, the trustees contracted to sell the painting to the Emir of Qatar for $210 million.

On 12 September 2014, Mr Staechelin replied to Mr de Pury’s suggestion of a social meeting to say that he would not be available. Mr Staechelin did not answer Mr de Pury’s question about commission; indeed, he did not refer to the question of commission at all.

On 14 September 2014, Mr de Pury wrote again to Mr Staechelin with a copy to Mr Paisner. He again raised the question of commission and said that he was troubled by the lack of response on that subject to his email of 9 September 2014. On 17 September 2014, Mr de Pury emailed Mr Staechelin and Mr Paisner again on the subject of his commission and asked for an explanation as to what was happening. On 18 September 2014, Mr Paisner replied saying:

“Let me make it absolutely clear immediately that my clients are satisfied that they neither have, nor have at any time had, any obligations to you whatsoever and that remains their position.

I have now had a full discussion about all this with Guy Bennett and he will be in direct touch with you.”

Mr de Pury sent a further email on the subject of his commission on the 18 September 2014. He said that Mr Staechelin and Mr Paisner had agreed a commission fee of $10 million at Mr Paisner’s offices on 26 June 2014. Mrs de Pury wrote to Mr and Mrs Staechelin on 21 September 2014. In her email, Mrs de Pury referred to Mr Bennett having offered to pay $230 million, an offer which Mr Staechelin had declined. Eventually, the present proceedings were issued on 25 September 2014.

I have made a number of findings as to the times at which there was a consensus as to the payment of a commission to Mr and Mrs de Pury, or to Mr de Pury (in the summary which follows, for the sake of simplicity, I will refer to commission being paid to Mr de Pury). In summary, those findings were:

In the events which have happened, the painting was sold for $210 million. It is therefore necessary to analyse the legal consequences of the agreement reached on 26 June 2014. It is necessary to ask: did that agreement amount to a binding contract and, if so, between which parties?

I have found that the agreement on 26 June 2014 was not expressed as a statement of intention on the part of Mr Staechelin and Mr Paisner that they would recommend to the trustees that Mr de Pury should be paid a commission of $10 million in the event of a sale for $210 million. Instead, the agreement was expressed as a simple commitment to the effect that Mr de Pury would be paid $10 million in the event of a sale for $210 million. I find that there was nothing in the context or the expression of the agreement which would prevent the consensus reached from having contractual effect.

The next question is: who is bound to pay the commission? Mr de Pury submits that the three trustees are bound, alternatively, Mr Staechelin and Mr Paisner are bound to pay. The Claimants refer to a number of provisions in the Trust Agreement in support of their submission that all three trustees are bound by the agreement reached on 26 June 2014. By Article III (C), the Trustees had the power to make such an agreement. By Article XIV (21), the “Trustees” were defined to be “each Trustee and all Trustees serving under this Trust Agreement at any given time”. By Article X (C), it was stated:

“Except as otherwise provided, all decisions as to the Trust authorized or required to be made hereunder by the Trustees shall be made by a majority of the Trustees who are not precluded by law or this Trust Agreement from making the decision and who have not declined to participate in the decision, but their ministerial duties (such as signing of checks, execution of brokerage transactions relating to securities or commodities, and execution of applications for life insurance) may be executed by any one Trustee.”

As to the application of Article X (C) in this case, the Claimants say:

The Claimants also draw attention to Article III (E) which provides:

“No person dealing with the Trustees shall be bound to see to the application or disposition of cash or other property transferred to them or to inquire into the authority for or propriety of any action by the Trustees.”

The Defendants’ response to these submissions is to contend that although Mr Staechelin and Mr Paisner did form a majority of the three trustees, they did not consult the third trustee, Ms McCaffrey, and in the absence of such consultation, they were not able themselves to make a decision which would bind her. It appeared to be accepted by the Defendants that if Ms McCaffrey had been consulted and had opposed the wishes of Mr Staechelin and Mr Paisner, the latter two would have been entitled to make a decision which would bind her.

The Defendants relied for the purposes of their submission on Article X (A) which allowed a trustee to decline to participate and was in these terms:

“Any Trustee, at any time or from time to time, may decline to participate in any one or more decisions to be made by the Trustees. Any such refusal shall be set forth in a written instrument signed by such trustee or on his, her or its behalf and delivered to each other co-Trustee.”

Counsel for the Defendants did not seek to identify the consequences of a trustee declining to participate pursuant to Article X (A) but he did submit that if a trustee did not decline to participate then he or she had a right to participate and he went on to submit that the other trustees could not make a binding decision by a majority without permitting the other trustee to participate in the process of decision making.

Insofar as the answer to the issue raised by these submissions depends upon the true construction of the Trust Agreement, it seems clear to me that the Claimants’ submissions are to be preferred. The Trust Agreement does not lay down any rules as to how the trustees may go about the decision making process. The Trust Agreement does not require there to be formal meetings of the trustees and does not provide that the trustees are only able to make decisions at formal meetings. The Trust Agreement does not provide for there to be a period of notice to all trustees prior to the trustees, or a majority of them, making a decision.

The reliance by counsel for the Defendants on Article X (A) appears misplaced. It is true that Article X (A) is referred to in Article X (C) but the reference to it operates in a different way from that contended for. Article X (C) provides that a trustee who has declined to participate in a decision may not be counted in the relevant majority for that decision. However, Mr Staechelin and Mr Paisner had not declined to participate in the relevant decision. Because Ms McCaffrey had not declined to participate in the relevant decision, she is counted as a relevant trustee so that Article X (C) requires there to be a majority out of the three trustees.

Counsel for the Defendants also relied on a passage in Lewin on Trusts, 19^th ed., para. 29-072. This passage makes the point that, in the case of a private trust, the normal position is that the trustees must act unanimously but this is subject to the trust instrument providing otherwise. Lewin then states in relation to a case where the trust expressly permits decisions to be made by a majority of the trustees:

“But it is not open to a majority to exercise a power without reference to the other trustees, so that if a meeting is required notice must be given to all the trustees and a decision taken without such notice is ineffective.”

The footnote in Lewin refers to Sovereign Trustees Ltd v Glover [2007] PLR 2777 at [24].

The authority cited by Lewin, Sovereign Trustees, involved a pension trust where decisions could be made by a majority of the trustees. Clause 9(ii) of the Interim Trust Deed in that case required meetings of trustees to be convened by the giving of due notice. The court stated that, although the trust provided for decisions to be taken by a majority, a decision taken by two out of three trustees at a meeting which had not been convened by due notice to the missing trustee was not an effective decision. This case is therefore a decision on the true construction of a provision requiring the convening of trustee meetings by the service of due notice and does not offer any real assistance with the construction of the Trust Agreement in the present case.

At the trial, I referred to the fact that although trustees of a private trust must (in the absence of an express provision to the contrary) act unanimously, the position was different in relation to charitable trusts. That led to the citation of one of the well-known cases establishing that position in relation to charitable trusts: Re Whiteley [1910] 1 Ch 600. That case did not itself discuss whether, in the case of a charitable trust, a majority could only bind the minority if the minority were consulted. However, that case did refer to the earlier case of Wilkinson v Malin (1832) 2 Crompton & Jervis 636 where the position in relation to public trusts was considered and where the older case of Grindley v Barker (1798) 1 Bosanquet and Puller 229 had been cited. In those cases, where the rule about a majority binding a minority is considered, it is discussed by reference to the relevant decision being taken at a duly convened meeting in accordance with the requirements of the relevant trust. Counsel for the Defendants submitted that Wilkinson v Malin provided support for his submission that Ms McCaffrey could only be bound by the decision of Mr Staechelin and Mr Paisner if she had been consulted. I do not derive that proposition from those cases. The decisions in those cases turned on the requirements of the relevant trust as to the convening of meetings at which valid decisions could be taken.

For completeness, I will refer to the case cited by Ms McCaffrey which she said showed that, under the law of New York, even where a majority of the trustees could make a decision binding all of the trustees, such a decision would not be effective unless the majority had consulted the minority in advance of making the decision. She referred to Re Martin’s Will (1961) 29 Misc. 2d 271. This case considered the position of the executors of a will. It was held that co-executors could act independently and separately where the will did not provide otherwise. However, it was held that a co-executor was entitled to participate in discussions and decisions of the executors. I consider that this decision relates to the rights and obligations of the co-executors as between themselves. The case does not purport to discuss the position of a third party who engages in a transaction with one co-executor. The case is not authority for the proposition advanced by Ms McCaffrey that a decision by Mr Staechelin and Mr Paisner made without consulting her would be an ineffective decision and could not be relied upon by a third party such as Mr de Pury.

Accordingly, I consider that the answer to the issue raised by these submissions depends upon the true construction of the Trust Agreement and I have already stated that, in that respect, the Claimants’ submissions are to be preferred. I therefore hold that the agreement made by Mr Staechelin and Mr Paisner with Mr de Pury on 26 June 2014 is binding on the three trustees.

If I had accepted the submission that Ms McCaffrey was not bound by the agreement reached with Mr Staechelin and Mr Paisner on 26 June 2014, I would have held that Mr Staechelin and Mr Paisner were bound by that agreement. On my findings, I can see no reason why they should not be contractually bound by the terms which they agreed with Mr de Pury.

I next need to consider the identity of the contracting party on the side of the Claimants. The Claimants say that the persons who negotiated the contract were Mr and Mrs de Pury rather than Mr de Pury alone. They also say that Mr and Mrs de Pury were acting for the LLP as an undisclosed principal. The Defendants did not invite me to take any other view of the matter on the ground, apparently, that this point did not matter to the Defendants. In those circumstances, I am content to adopt the analysis put forward by the Claimants with the result that the LLP is entitled to enforce against the trustees the agreement made on 26 June 2014.

These conclusions mean that it is not necessary to consider alternative analyses of the position arrived at on 26 June 2014. The alternative analyses put forward included the following:

Although not necessary for my decision, I will briefly comment on the Claimants’ alternative case that Mr Staechelin and Mr Paisner were in breach of a contractual agreement to recommend to Ms McCaffrey the payment of a commission to Mr de Pury. On the assumption, contrary to my findings, that that was how matters were expressed on 26 June 2014, I think that it is unlikely that I would have accepted the submission that Mr Staechelin and Mr Paisner made a contract with Mr de Pury to recommend to Ms McCaffrey the payment of commission and then committed a breach of that contract by not making that recommendation to Ms McCaffrey. I consider that a more appropriate analysis of such an arrangement would be that Mr Staechelin and Mr Paisner were expressing an intention as to how they would act but without undertaking a contractual commitment to act in that way.

My conclusions so far make it unnecessary to consider whether, in the absence of an agreement arrived at on 26 June 2014 and binding the trustees (or Mr Staechelin and Mr Paisner), the Claimants or some of them would be entitled to be paid a reasonable sum by way of commission based on the dealings between Mr de Pury and Mr Staechelin, in particular between March 2013 and January 2014, to which I have referred above. In case this matter goes further and it becomes necessary to consider what such a reasonable sum might be, I will express my own conclusions on that subject.

I received expert evidence as to the assessment of a reasonable sum by way of commission on the facts of this case. The expert called by the Claimants was Mr Smith, the managing director of Gurr Johns, valuers and fine art consultants of Pall Mall, London. The expert called by the Defendants was Mr Nathan, a director of Beaumont Nathan Art Advisory Ltd of Bruton Street, London.

Mr Smith gave evidence as to the way in which a reasonable seller of fine art might go about negotiating remuneration with his agent or intermediary. He identified three different fee structures that might be agreed. These fee structures produced figures of $7.35 million, $9.375 million and $6.84 million. Mr Smith said that he would have proposed to a client the second of these fee structures as the structure would serve to align the agent’s or intermediary’s interest (in obtaining a high sale price) with that of the client. Mr Smith said that a flat fee of $10 million without a performance element would have been on the high side.

Mr Nathan said that there was no industry standard for the fee payable to a seller’s agent or intermediary in respect of a private treaty sale. There were a number of different fee structures which were possible and the structure selected would be the result of individual negotiation. He said that it was impossible to identify a standard fee or a prevailing market practice but a case could be made for a figure anywhere between 1% and 5% of the sale price.

The legal principles to be applied in the present case for the purpose of assessing a reasonable sum to be paid by way of commission are those set out in Benedetti v Sawiris [2014] AC 938. The facts of that case were somewhat complicated and the discussion of the relevant principles was more sophisticated than is needed for the resolution of the present case. So far as relevant to the relatively straightforward circumstances of this case, I take the principles to be:

Applying these principles to this case, I reach the following conclusions:

I now need to assess the objective market price for the services agreed to be provided by Mr de Pury. On the evidence before me, there is no standard fee structure for such services nor is there a prevailing market practice as to the fixing of remuneration. Everything depends upon the negotiation between the seller and the agent or intermediary. In this case, I have the evidence of what actually happened between Mr Staechelin and Mr de Pury. In January 2014, they discussed the question of commission and various figures were mentioned but not then agreed. On 26 June 2014, they agreed a fixed fee of $10 million. That figure was the result of a process which involved a limited amount of negotiation. It can therefore be said with some force that a figure actually agreed between experienced people is a good indicator of the objective market price for the services in question. As against that, Mr Smith, the expert called by Mr de Pury, thought that the figure was on the high side. I consider that the selection of the figure was influenced by the relationship between Mr de Pury and Mr Staechelin. I consider that an arms-length negotiation between a seller and an agent or intermediary would have resulted in the agreement of a lower figure. After all, Mr de Pury had indicated in March 2013 that he wanted Mr Staechelin to make a fee proposal to him and he was prepared to accept $10 million when the sale price was to be $260 million. Further, in his emails of 23 March 2013 and 11 April 2013, Mr de Pury had indicated a willingness to be flexible as to the amount of the commission.

I consider that an arms-length negotiation between a seller and an agent or intermediary would have resulted in an agreement of a fee below $10 million. It is difficult on the evidence, where there is no standard fee structure or prevailing market practice, to settle on the appropriate level of fee but in the end I consider that an arm’s length negotiation would have produced an agreed fee of $7.5 million. I think that the parties would have agreed that $10 million was too high and $5 million was too low and they would have split the difference at $7.5 million.

The Defendants submitted that much of the involvement of Mr and Mrs de Pury had occurred before March 2013 at a time when Mr Staechelin had not committed himself to the payment of a commission. I think that is beside the point. The relevant contract was a commission contract which provided for the payment of a commission on the happening of an event as a result of the introduction effected by Mr and Mrs de Pury. That event happened and it is not appropriate to assess commission by reference to the actual work done, or time spent, by Mr and Mrs de Pury whether before or after March 2013.

Having reached these conclusions, I next need to consider the case put forward by the Defendants to the effect that the LLP has lost its right to be paid $10 million commission because the LLP, acting through Mr and Mrs de Pury, forfeited its right to be paid by reason of their breach of fiduciary duty which is said to have been owed to the Defendants. The Defendants’ pleaded case as to a breach of fiduciary duty is:

The Claimants contended that none of the Claimants owed a fiduciary duty to the trustees. This contention was put forward on the basis that the relevant Claimant was an intermediary acting in the middle between the seller and the buyer, rather than being an agent for the trustees or Mr Staechelin. Further, the Claimants contended that the only breach of fiduciary duty which could result in the forfeiture of the right to be paid commission was a dishonest breach and none of the Claimants had been dishonest. I consider that it is not necessary to consider these specific submissions because I find that the allegation of a breach of fiduciary duty fails on the facts.

As regards the allegation that Mr de Pury agreed with Mr Bennett that he would not inform the trustees or Mr Staechelin that Mr Bennett’s statement was false, I have found that Mr de Pury did not make any such agreement with Mr Bennett. As regards the narrower allegation that Mr de Pury committed a breach of fiduciary duty by not informing the trustees or Mr Staechelin that Mr Bennett’s statement was false, I hold that Mr de Pury did not commit any breach of duty in this respect. I have already made a number of findings which are relevant in this context. I have held:

The result of the foregoing is that the LLP is entitled to judgment for $10 million against the Defendants.

I will hear submissions as to any outstanding issues as to the LLP’s claim for interest and costs following the handing down of this judgment.