FAP ART MANAGEMENT GMBH & CO KG v INIGO PHILBRICK and Anor

This is an application under CPR 85.5 by Aiden Fine Arts Inc., which was formerly called The Art Collection Inc (‘Aiden’), and V&A Collection LLC, which was formerly called V&A Gallery LLC (‘V&A Collection’), to whom I will refer collectively or when it is unnecessary to distinguish between them as ‘the Claimants’. The Claimants seek to establish that one or other of them has a proprietary interest in certain artworks which are the subject of a Writ of Control in favour of FAP Art Management GMBH & Co KG (‘the Creditor’).

The way in which this application arises is that the Creditor is a judgment creditor of Inigo Philbrick (‘IP’) and Inigo Philbrick Ltd (‘IPL’) (together, ‘the Debtors’). The Creditor obtained enforceable European Orders for Payment (‘EEOPs’) from the District Court of Wedding, Berlin, in July and September 2020 in the Euro equivalent of £10,023,378.80. These were registered by the Queen’s Bench Division in November 2020. The Creditor requested to enforce those EEOPs by means of a Writ of Control pursuant to s. 62 and Schedule 12 of the Tribunals, Courts and Enforcement Act 2007 (‘the 2007 Act’). The Writ of Control was granted on 27 January 2021, and pursuant to it Mr Todd, a High Court Enforcement Officer (or ‘HCEO’), was ordered to take control of goods belonging to the Debtors.

By Order of Master Eastman dated 17 February 2021, the HCEO was given permission to execute the Writ of Control and to search for and take control of artwork at premises belonging to two art storage and transportation companies, namely Williams & Hill Forwarding Ltd (‘Williams & Hill’) and Constantine Ltd (‘Constantine’). By a further Order dated 26 March 2021 the HCEO was given permission to execute the Writ of Control and to search for and take control of artwork at premises belonging to Phillips, the auction house.

The HCEO duly executed the Writ of Control on 22, 23 and 26 February, 29 March and 1 April 2021 by taking control of some 70 artworks.

Paragraph 60 of Schedule 12 to the 2007 Act and CPR 85 provide for a procedure whereby a third party which claims a proprietary interest in goods which are the subject of a Writ of Control may do so. By Order of Master Eastman dated 5 March 2021, any third party claimant who wished to maintain a claim to any of the controlled goods was ordered to file and serve evidence in support of their claim by 4 pm on 19 March 2021. The Claimants gave notice of a claim in respect of ten of the artworks of which possession had been taken by the HCEO, although they failed to file evidence by the specified time and date. Master Eastman subsequently granted relief from sanction in that respect.

Subsequently, the Claimants made claims that they had proprietary interests in a further ten artworks which were subject to the Writ of Control. The Claimants conceded these pieces in September 2021 and given that concession were not the subject of dispute at the present hearing. At the outset of the current hearing, however, there remained issues in relation to ten artworks, as follows:

The background to the present application lies in a wide-ranging fraud perpetrated by IP. The existence and essential nature of this fraud was not in dispute between the parties.

IP was an art dealer. After a period as an intern and as director of secondary market sales at the White Cube gallery, he opened his own gallery in or about 2013. He ran his business through, amongst other vehicles, IPL. The Creditor purchased artworks through IP/IPL, who were supposed to sell them on its behalf.

Towards the end of 2019 it emerged that IP and IPL had been engaged in a wide-spread fraud, and his victims had included buyers, sellers, clients and financiers. One of those who were the subject of the fraud was the Creditor. It became concerned about IP in September 2019 when he refused to return artwork which it owned to it, and it found that his gallery in Miami was shut up. On 23 September 2019 the Creditor filed for an emergency motion in the Circuit Court of the Eleventh Judicial Circuit in and for Miami-Dade, Florida, seeking to obtain possession of its artworks. The Debtors responded on 14 October 2019 asserting that the artworks were not in Florida and, in one case, was no longer in their possession as it had been sold.

Shortly thereafter, on 7 November 2019, the Creditor applied for and was granted a freezing order against the Debtors by Lavender J. That freezing order was granted in support of the then-intended German proceedings, which were subsequently pursued and which resulted in the EEOPs. The Debtors failed to appear in any of the various Court hearings commenced by the Creditors. It transpired that IP had fled to Vanuatu. He was subsequently arrested by the Vanuatu authorities, extradited to the USA and prosecuted for defrauding victims out of some US$ 86 million. In November 2021 he pleaded guilty to the charges brought against him. I was informed that he is yet to be sentenced.

Andre Sakhai is a US-domiciled individual who deals in art. He co-owns the Claimants. He and his businesses purchased artworks from IP/IPL from 2012 onwards. This involved some 100 purchases/sales. Mr Sakhai was, until the fraud was discovered, a friend of IP.

In relation to items Nos. 1 and 2, the Claimants contend that Aiden purchased a 50% stake in each from IPL, paid for by the allocation of credits to IPL in the sums of US$ 97,500 (item No. 1) and US$ 200,000 (item No. 2). Those aspects of the Claimants’ claim were not disputed before me.

In relation to item No. 3, the Claimants contend that Aiden purchased this artwork from IPL for US$ 430,000. The Claimants contend that Aiden transferred US$400,000 for the painting, and that the remaining US$ 30,000 was paid for by the allocation of a credit.

In relation to item No. 10, the Claimants contend that this was owned by Aiden pursuant to a purchase made in 2015.

In relation to each of items Nos. 4-9 the Claimants contend that Aiden had a 100% interest in each artwork; in relation to items Nos. 1 and 2, a 50% interest; and in item No. 10, if its claim to ownership on the basis of the previous paragraph was incorrect, a 100% interest. The basis on which these claims have been advanced has developed over time, but before me the sole basis on which these claims was put was pursuant to an agreement which was called ‘the Collateral Agreement’. It is necessary to explain what that Agreement was and the circumstances in which it was made.

The Claimants contend that, in September / October 2019 IPL owed a debt to Aiden in the sum of US$2.5 million. They contend that this debt had arisen as follows. In February 2018 Aiden had purchased from IPL a 50% share of a painting by Jean-Michel Basquiat entitled ‘Hallowe’en’ for US$2,107,500. This share in ‘Hallowe’en’ was paid for by Aiden by way of a credit being applied in accounts with IPL in the amount of US$2,107,500. IPL then sold ‘Hallowe’en’ to a third party for US$2.5 million, without the knowledge of Aiden or Mr Sakhai. Mr Sakhai found out about the sale of ‘Hallowe’en’ in February 2019 and asked IP for an explanation. He was told that 50% of the sale proceeds would be paid over to Aiden. There was therefore a debt owing in the amount of US$2.5 million. That debt was not paid.

While the Creditor had not accepted this up until the hearing before me, in its Skeleton Argument it was accepted that this debt had indeed been due and owing from IPL to Aiden in October 2019.

Mr Sakhai’s evidence, which in this regard I accept, was that he had seen IP at the Frieze Art Fair in London in early October 2019. He had asked IP about the debt. IP had said that he was unable to pay that debt immediately and could not deliver two other paintings that Mr Sakhai owned. Mr Sakhai said that he and IP had sat on a bench in Hyde Park, and IP had broken down in tears at his situation.

On his return to New York, Mr Sakhai instructed a lawyer, Mr Taub, to seek to safeguard his position. Initially, Mr Taub drew up a ‘Repayment Agreement’. The signed versions of this agreement are dated 9 October 2019. This agreement was, on its face, between ‘V&A’ or ‘V& A’, IP and IPL, and provided that ‘Philbrick’ conveyed ‘full right title and interest’ in artworks set out in an Exhibit to the agreement to ‘V&A’ as satisfaction for a debt said to be owed by ‘Philbrick’ to ‘V&A’.

Subsequently, on 10 October 2019, Mr Taub emailed IP, copy to Mr Sakhai, saying that he was wrong to name ‘V&A’ as a party, and that ‘we cannot go forward with this agreement. I am drafting a note and security agreement to put liens on the artworks rather than to transfer title to them at this point.’

Mr Taub then prepared a different document. This was the so-called Collateral Agreement. The signed versions bear the date 12 October 2019, though it may be that they were signed somewhat later than that.

The Collateral Agreement was in these terms:

Schedule A to the Collateral Agreement listed 27 artworks. They included all the items in the Schedule which appears in paragraph 6 above, other than item No. 3.

On 23 October 2019 an agreement was entered into between V&A Collection and IP and IPL. It was entitled ‘Assignment Agreement’. This agreement named IP and IPL as ‘Assignors’ or ‘Sellers’ and V&A Collection as ‘Assignee’ or ‘Buyer’; provided that the Assignors assigned to the Assignee all of their right title and interest in item No. 9 in the above Schedule, namely the Carroll Dunham, Fourth Birch, 1983.

By the time of the hearing before me, as I have said, the Claimants placed reliance only on the Collateral Agreement, and disclaimed reliance on the other two.

As a result of a number of concessions on both sides, the issues which remain to be decided have narrowed considerably. There are now three issues or groups of issues, which are as follows:

I will deal with these issues in turn.

The Collateral Agreement is governed by New York law. The parties were also in agreement that the question of whether a security interest was created pursuant to the Collateral Agreement is one governed by New York law. The Creditor denies that the Collateral Agreement gave any proprietary interest to the Claimants over any of the items in question.

Expert evidence was adduced from New York lawyers for each side. The Claimants called Mr Dennis Drebsky and the Creditor Mr Raymond Dowd. The following matters were not in issue between them or the parties.

In the first place, that in order for the Claimants to have acquired an interest pursuant to the Collateral Agreement, that Agreement must have been a valid and binding contract. If it was not, then the Claimants will not have acquired an interest in the relevant artworks pursuant to it.

Secondly, even if the Collateral Agreement was a binding contract, to have acquired a proprietary interest in the artworks, it was necessary for Aiden to have perfected its security interest by the time that the HCEO took control. Under the New York Uniform Commercial Code (‘the UCC’) there were two ways in which Aiden could have perfected a security interest. The first was under UCC 9-310, pursuant to which Aiden could have filed a UCC-1 form, thereby registering and making publicly known its interest in the artworks. It was common ground that no such UCC-1 form was filed. The second was by ‘possession’ under UCC 9-313.

What separated the experts and the parties were the following two issues. First, whether the Collateral Agreement was a binding contract. Secondly, if it was a binding contract, whether Aiden/the Claimants had perfected their security interest by possession. They contended that they had. The Creditor denied this.

The first question is, therefore, whether the Collateral Agreement was a binding contract. One aspect of this question was that the Creditor did not admit that the agreement was sufficiently certain and consistent for there to be any binding agreement. I did not consider that this point was correct. Though there were a number of errors in it, I consider that, applying the test summarised in the Restatement of Contracts 2d, and referred to by Mr Drebsky, the Collateral Agreement demonstrated mutual assent as to the material terms.

The more significant point on whether the Collateral Agreement was a binding contract, and that on which Mr Sullivan concentrated, was whether it was supported by any consideration provided by Aiden.

There was no dispute as to what, in principle, would be regarded as good consideration as a matter of New York law. The experts were agreed that the law was accurately set out in Lebedev v Blavatnik 193 A.D. 3d 175 (NY App. Div. 2021) as follows (at 183):

The experts and the parties disagreed, however, as to whether, applying those principles, consideration had been provided. For the Claimants it was submitted, in conformity with Mr Drebsky’s view, that there was good consideration, in that, under the Collateral Agreement, Aiden had given IP/ IPL time to pay, namely until 10 or 20 April 2020, and had agreed not to sue in the interim. Aiden had thus agreed to forebear, and that constituted consideration. For the Creditor, it was submitted that the Collateral Agreement did not contain any forbearance.

Each side argued for its position on the basis of what the Collateral Agreement could be said expressly to provide for. There was no argument by the Claimants as to the Collateral Agreement containing implied terms, and no expert evidence as to particular principles of construction in New York law.

While recognising that the Collateral Agreement is not expressed with entire clarity, I consider that, read sensibly and as a whole, it must be regarded as providing that IP/IPL should have more time to pay, and that Aiden would not sue to enforce ‘the Debt’ in the interim. The Agreement’s terms are said to be ‘based upon’ the recitals, which provide that IP/IPL wish to repay ‘the Debt’ within six months. In that context, the agreement that IP/IPL shall pay by 10 April (or possibly 20 April) 2020 should be read as mutual assent that IP/IPL should be permitted to pay in accordance with that wish. That objective would be negated if Aiden were able to sue immediately for the Debt.

Further, the provision in clause 6 is to the effect that ‘the Debtor and/or Philbrick shall be in default in the terms of this Agreement, upon the failure to pay … the Debt on or before April 20, 2020’. That must mean that ‘the Debtor and/or Philbrick’ are not to be treated as in default under the Agreement, including in relation to the obligation to pay the Debt provided for and acknowledged in clauses 1 and 2, until there has been non-payment by that date. It would be inconsistent with that if suit for payment of the Debt could be brought before then.

I consider that it must also be legitimate to take into account that, if there was no forbearance, then the Collateral Agreement would be unsupported by consideration, and would not be a binding agreement. Yet it would appear clear that the Collateral Agreement was intended as a binding contract. I consider that it must be appropriate to read its terms in such a way as is consistent, rather than inconsistent, with there being such a binding contract.

On that basis it is necessary to consider the second issue, namely whether Aiden perfected its security.

There was only limited dispute as to the principles of New York law relevant to this issue, as opposed to their application to the facts, on which there was substantial disagreement.

Thus, there was no dispute that, given that Aiden did not file a UCC-1, the relevant provision is UCC 9-313. It provides, in relevant part, as follows:

The leading authorities in relation to UCC 9-313 are Hutchison v CIT Corporation 726 F 2d 300 (6^th Cir, 1984), In re: Jeffrey Lew Liddle 608 BR 356 (Bankruptcy SDNY, September 6, 2019) (‘Liddle 1’) and In re: Jeffrey Lew Liddle 613 BR 186 (SDNY, March 6 2020, Rakoff J) (‘Liddle 2’). These were cited by Mr Dowd, and Mr Drebsky did not disagree with the principles stated in those cases.

In Liddle 1 the Judge referred (at 361) to the fact that Article 9 of the UCC does not define ‘possession’. In Hutchison Krupansky J referred to the principle that:

In Liddle 2, the Judge referred (at 190) to the rationale of UCC 9-313 as being that ‘ “the debtor’s lack of possession coupled with actual possession by the creditor [or] the creditor’s agent … serves to provide notice to prospective third party creditors that the debtor no longer has unfettered use of [its collateral]…”’ At 191 the Judge further referred to the rationale of UCC 9-313(a) as being that possession should ‘have placed other potential creditors on notice that [the relevant creditor] had an interest in the sale proceeds…’

In Liddle 2 it was confirmed that a secured party may establish possession within UCC 9-313(a) through the possession of a third party if it can establish that the third party was its agent. The ordinary principles of principal and agent apply (190).

In relation to UCC 9-313(c), for the security interest to be perfected, the third party in physical possession must authenticate a record stating that the collateral ‘is being held for the secured party’s benefit’ (Liddle 2 at 365).

The rationale behind UCC 9.313(c) was explained in Liddle 2 as follows (at 365), by reference to other cases and the commentary on UCC:

A ‘record’ is defined in UCC 9-102(a)(70) as ‘information that is inscribed on a tangible medium or which is stored in an electronic or other medium and is retrievable in perceivable form’. ‘Authenticate’ is defined by UCC 9-102(a)(7) as ‘(A) to sign; or (B) with present intent to adopt or accept a record, to attach to or logically associate with the record an electronic sound, symbol or process.’ As it was put (by reference to other cases) in Liddle 1 (at 365) ‘it no longer suffices to show that a bailee had received notification of a security interest. Rather the bailee must acknowledge that it possesses on behalf of the secured creditor…’

Those being the relevant legal principles, are the facts such that Aiden had perfected its security under either UCC 9-313(a) or (c)? The factual position was addressed in evidence in particular by Mr Myles Nurse, and by reference to documents which were put before me.

Mr Nurse is an artist. In his first witness statement dated 5 November 2021, he said that he had worked for Mr Sakhai for some 4 ½ years as his personal assistant, but as an independent contractor rather than an employee of Mr Sakhai or either of the Claimants. Mr Nurse did business under the name MAN Advisory LLC.

What the documents which I was shown reveal is, in summary, as follows:

At the hearing, the Claimants’ primary case was that their security had been perfected under UCC 9-313(a), and in the alternative UCC 9-313(c). I will accordingly address the case in relation to sub-section (a) first.

Given that the artworks were, at all material times, in the physical possession of Williams & Hill or Constantine, the Claimants could only have ‘taken possession’ of any of them for the purpose of UCC 9-313(a) if Williams & Hill or Constantine had been the Claimants’ agent for the purposes of such taking of possession.

The way in which, as I understood it, the Claimants contended that this had come about was that, through Mr Nurse acting for and as agent for Aiden, Williams & Hill and Constantine had themselves been constituted as Aiden’s agents. The position is somewhat confused by the fact that, on an application for relief from sanctions, evidence was put in on behalf of the Claimants to the effect that communications between Mr Nurse / MAN Advisory and the storage companies had not been in the Claimants’ possession for the purposes of CPR r. 31.8, which it was to expected that they would have been had Mr Nurse / MAN Advisory been Aiden’s agents. I am prepared to proceed on the basis, nevertheless, that Mr Nurse / MAN Advisory were acting as agent for Aiden, as this is consistent with Mr Sakhai’s evidence in paragraph 41 of his 3^rd Witness Statement.

I am unable to conclude, however, that through the communications of Mr Nurse / MAN Advisory with them the storage companies became agents of Aiden for the purposes of possessing the artworks such that their possession counted as Aiden’s possession for the purposes of UCC 9-313(a). For that to be the case, they would have had to have possessed the relevant goods for Aiden and not for IP / IPL; and they would have had to have owed an obligation, if required by Aiden, to refuse possession to IP / IPL. This is because, as explained in Liddle 2, it is necessary for the purposes of UCC 9-313(a) that the debtor should not have possession, and the secured party or its agent should have possession. I do not consider that the storage companies agreed or understood themselves to hold possession of the goods for Aiden instead of, and if necessary to the exclusion of, IP / IPL.

In the case of Williams & Hill, it is the case that that company acted in accordance with instructions given by Mr Nurse / MAN Advisory to collect, store and prepare for air transport a number of the artworks. It appears from the documents, however, that Williams & Hill did not regard Aiden or any other principal of Mr Nurse / MAN Advisory as being its client for these purposes as opposed to IP / IPL. Instead, it appears to have regarded Mr Nurse as authorised to give instructions on behalf of IP / IPL as well as on behalf of Mr Sakhai / Aiden. Hence, Williams & Hill accepted Mr Nurse’s instruction that invoices for the tasks he had told Williams & Hill to undertake should be addressed to ‘Inigo Philbrick’. Moreover, the communications which I have referred to in sub paragraphs 53 (11) and (12) above show that Williams & Hill regarded its client as IP / IPL, and that the goods were, throughout, ‘under’ that account.

I thus do not consider that Williams & Hill had been constituted Aiden’s agent for the purposes of Aiden’s having possession of the goods and IP/IPL not having such possession.

Further, even if, contrary to that conclusion, it could be said that Williams & Hill were constituted Aiden’s agent to possess the goods, Aiden’s possession was not ‘unequivocal, absolute and notorious’. It was, instead, debatable, and far from clear even to the storage company which had physical possession of the goods.

In relation to the artworks at Constantine the position is a fortiori, by which I mean that the Claimants’ case that it had possession of those works for the purpose of UCC 9-313(a) is more clearly wrong. Constantine apparently acted on the instructions of Mr Mitchell, for IP/IPL, to get items Nos. 8 and 10 ready for release, but they were not physically released. Item No. 7 was apparently in bond in ‘Inigo Philbrick’s name’ throughout. Furthermore, Constantine billed IPL in respect of the storage of all the items throughout the time it had them, and regarded them as held for IPL, as shown by the inventory provided to the HCEO.

I therefore do not consider that the Claimants have shown that Constantine was Aiden’s agent for the purposes of possessing the artworks in its keeping. Certainly I do not consider that Aiden had, through Constantine, a possession which was ‘unequivocal, absolute and notorious’.

At the hearing the Claimants placed little emphasis on their case that security was perfected under UCC 9-313(c), though it was not abandoned.

There was no clarity in the Claimants’ case as to what constituted a record authenticated by Williams & Hill or Constantine acknowledging that they held possession of the relevant artworks for Aiden’s benefit. Suffice it to say that the case that there was any such authenticated record was not made out.

Item No. 3 is a piece by Christopher Wool, ‘Untitled’ but referred to as ‘Bubbles’. Aiden, then called The Art Collection Inc, through Mr Sakhai, bought this piece from ‘Philbrick Ltd’, acting by IP, in September 2015. This sale is evidenced by an invoice from IP dated 16 September 2015, which shows that the account into which the price should be paid as that of ‘Philbrick Ltd’. The terms set out in that Invoice included, as (4)

On 25 September 2015 Aiden paid to Philbrick Ltd the sum of US $400,000 in respect of the piece, by bank transfer. It is the Claimants’ case that the remaining US$ 30,000 was paid by way of a credit to IP and that this was confirmed in an email dated 20 March 2016. That email is from IP to Mr Sakhai. Its Subject is said to be ‘Credits’. It contains a list of items ‘To IP’, one of which is ‘Wool Air bubbles’, and totalling US$ 7,409,500; and a list of items ‘To Andre, totalling US $ 9,565,500’.

Mr Sakhai gave evidence that the US $30,000 had been paid ‘as credit applied against debts owed to me by [IP]’. The Claimants also adduced evidence from Ms Somya Munjal. She is an accountant, whose private clients include the Claimants. Her evidence was that outstanding balances were often settled by credits issued by a party selling a work of art, where that seller already owed the buyer money. From 2016 she kept an accounting ledger of transactions between the Claimants and IP, and that ledger contained multiple instances of where artwork was paid for by credit.

The Creditor denied that any payment of the US$30,000 had been made in cleared funds, or at all; and thus denied that title to item No. 3 had passed to Aiden. As part of this case, the Creditor contended that no credence could be placed in Mr Sakhai’s evidence because he had been demonstrably dishonest in relation to various matters, in particular in relation to the Repayment Agreement. The Creditor also submitted that the email of 20 March 2016 was not sufficiently clear to contain an agreement for a credit of US$ 30,000 or to evidence one made earlier; and that it was significant that the alleged credit did not appear in Ms Munjal’s ledger.

I agreed with Mr Sullivan’s submission, on behalf of the Creditor, that Mr Sakhai’s evidence was to be accepted only if supported by documentary evidence. Mr Sullivan was, as I find, correct to say that Mr Sakhai had deliberately attempted to rely on the Repayment Agreement (which purported to effect an immediate transfer of title in the relevant goods) on various occasions after the point at which he knew that it was not a valid agreement, and had been superseded by the Collateral Agreement. That undoubtedly affects his credibility. Furthermore, I considered that Mr Sakhai’s evidence as to matters of detail concerning his business transactions had to be regarded with circumspection. His evidence was marked by various inconsistencies and my assessment was that he is sometimes muddled.

Approaching Mr Sakhai’s evidence in this way I nevertheless conclude that there was an agreement between Mr Sakhai and IP, and their respective companies, that the balance of US$ 30,000 for the Christopher Wool ‘Bubbles’ was treated as having been paid by a credit against sums owing to Mr Sakhai. There is no doubt that the transactions between Mr Sakhai and IP were conducted in a somewhat casual way. The nature of the email of 20 March 2016 is consistent with that manner of doing business. It does, however, seem to me to contain or to evidence an agreement that the amount of US $30,000 should be set off against sums due to Mr Sakhai. Furthermore, and importantly, there is no indication in the documents I have seen that the US $30,000 was ever thereafter in issue. The inference I would draw from this is that the parties (and in particular the principals on each side, Mr Sakhai and IP) regarded the payment as having been effected, and no longer to be outstanding. These matters, in my judgment, corroborate Mr Sakhai’s evidence to the court in relation to the credit, and allow me to accept it.

Accordingly I find that Aiden is the owner of item No. 3.

Item No. 10 is a 1978 painting by Andy Warhol, ‘Untitled’, but which has been called ‘Shadow painting’.

It is not in issue that Aiden purchased this piece in March 2015. On 20 March 2015 Anatole Shagalov raised an invoice to Aiden (under its former name) in the amount of US$ 160,000. That was paid by Aiden by bank transfer on 23 March 2015.

The Creditor does not dispute that, in 2015, Aiden bought this artwork. It denies, however, that the Claimants can show that they, or either of them, owned it at the time of the issue of the Writ of Control or now. They point out that Mr Sakhai does not say in his witness statements that Aiden owns item No. 10; and that Mr Sakhai signed the Collateral Agreement which contained a representation and warranty by IP/IPL that they owned item No. 10. They refer further to a letter from the Claimants’ solicitors of March 2021 which, after referring to the purchase of 2015, stated in relation to this item, ‘We are instructed that title to this piece may have been transferred to [IPL] during the business relationship, resulting in [IP’s] addition to Schedule A. It is also possible that [IP’s] inclusion arose in error.’ They submitted that the inherent probabilities must be that there was some sort of transfer to IP/IPL, for otherwise why did IP have possession of the piece in October 2019.

The position is far from clear and this again speaks to the informal nature of the dealings between Mr Sakhai and IP. The fact is, however, that Aiden acquired property to this painting in 2015, and I have been shown no document containing or evidencing any agreement or transaction whereby it was transferred to IP or IPL, nor has any witness evidence been adduced of such an agreement or transaction. On that basis I conclude, on the balance of probabilities, that Aiden remained the owner of the piece.

There is no dispute that the Claimants are entitled to a 50% share in items Nos. 1 and 2.

Aiden is, and was at the time of the Writ of Control, owner of items 3 and 10.

The Claimants’ claims based on the Collateral Agreement fail. Thus the Claimants’ claims in respect of the other 50% of items Nos. 1 and 2, and in respect of items Nos. 4-9, fail.

If they cannot be agreed, I will consider further representations from the parties as to the terms of the order necessary to reflect these conclusions.