Mr Thwaytes inherited the Cardsharps (“the Painting”) from his second cousin, who had previously purchased The Musicians by Caravaggio. The Painting is of the same composition as a painting in The Kimbell Art Museum in Fort Worth (“the Kimbell Card Sharps”), which is believed to be an original work by Caravaggio. The Kimbell Card Sharps was discovered by Mina Gregori in 1987 and subsequently attributed to Caravaggio by Sir Denis Mahon.
In 2006 Mr Thwaytes consigned the Painting to Sotheby’s to investigate its potential. The Painting was examined by a junior specialist and he concluded that it was a good 17th Century copy of the Kimbell Card Sharps. His conclusions were presented a ‘picture meeting’ with two senior Sotheby’s experts, who agreed with his attribution.
When told of Sotheby’s conclusion, Mr Thwaytes requested that x-ray analysis be undertaken. The x-rays were examined by Sotheby’s and Mr Thwaytes was told that Sotheby’s’ view remained that the Painting was a 17th Century copy and that there was no cause for further investigation. Mr Thwaytes decided to sell the Painting and it was included within an Olympia Old Master Paintings Sale with a sale estimate of £15,000-£25,000.
For reasons which remain unclear, immediately prior to the auction of the Painting the junior specialist summoned three of Sotheby’s senior Old Master experts to the Olympia sale room to consider the Painting (“the Olympia Meeting”). They examined the Painting and their view was that the Painting was a 17th Century copy and was correctly catalogued.
On 5 December 2006 the Painting was sold for a hammer price of £42,000. The purchaser was Mrs Orietta Benocci Adam, the partner of Sir Denis Mahon, a leading Caravaggio scholar. The underbidder was a consortium of notable Old Master dealers.
Following the sale of the Painting, Sir Denis Mahon announced that he believed the Painting was by Caravaggio. Prior to his announcement, Sir Denis had undertaken technical analysis and conservation of the Painting. He was supported in his attribution by other leading Caravaggio scholars, including Professor Mina Gregori.
The Painting was subsequently exhibited at exhibitions in Trapani and Forli. At the time of the trial the Painting was on display at the Museum of the Order of St John and insured for £10m (inclusive of a £2m undertaking to indemnify from the government).
Mr Thwaytes brought proceedings against Sotheby’s for breach of contract and negligence. Mr Thwaytes did not assert that the Painting was by Caravaggio. Instead he alleged that Sotheby’s failed adequately to research the Painting and failed to notice certain features of it that should have indicated to them that it had ‘Caravaggio potential’.
THE SCOPE OF SOTHEBY’S DUTIES
The claim was put both on the basis of breach of contract and negligence and it was accepted by both parties that the test to be applied was the same for both causes of action. No issues about the interpretation or validity of the clauses in the sale contract were raised.
The scope of the standard of care owed by Sotheby’s to Mr Thwaytes: ‘normal’ standard of care or ‘special inquiry’?
Mr Thwaytes submitted that Sotheby’s were put on ‘special inquiry’ as to the quality and importance of the Painting for a number of factual reasons, including that Mr Thwaytes specifically asked for the Painting to be researched. Sotheby’s submitted that only the ‘normal’ standard of care should be considered in this case and Rose J agreed that “there are no special features in this case to extend that duty or make it more onerous.” Furthermore, she found that “there is no basis for concluding that where a work is consigned to an auction house for research and assessment rather than for sale, that imposes on the auction house a duty to examine the work more carefully than they need to if it is consigned to them for sale.” In determining that the duties of research / sale were analogous, it could be argued that Sotheby’s duties are higher in relation to certain items that previously thought.
The general duty on an auction house: what is the distinction between the duties of a provincial auction house and a leading London auction house?
Rose J considered the judgment by the Court of Appeal in Luxmoore-May v Messenger May Baverstock (a firm)  1 All ER 1067. In that case the Court emphasised that the defendant was a provincial auction house and not a leading London house. Rose J accepted that in the present case she must take that into account and that Sotheby’s must be held to the higher standard that the Court of Appeal rejected in Luxmoore-May.
When considering the question ‘in what ways must that higher standard of skill and care owed by a leading auction house be manifested?’ Rose J listed the following considerations:
- those who consign their works to a leading auction house can expect that the painting will be assessed by highly qualified people, who will have ready access to the opinions and services of art historians at the highest levels of scholarship around the world;
- a leading auction house must give the work consigned to it a proper examination devoting enough time to it to arrive at a firm view where that is possible; and
- it would be much more difficult for a leading auction house to rely on the poor condition of a painting as a reason for failing to notice its potential.
Despite distinguishing the current case from Luxmoore-May, Rose J stated that “much of what the Court of Appeal said in Luxmoore-May is still relevant here in particular about the nature of the task of attribution, the need to avoid hindsight, the prevalence of copies of the Cardsharps and the absence of bidders prepared to take the price up above £42,000 at the auction.”
In relation to the duty to consult outside experts, Rose J accepted that “the principle that an art expert must know his or her own limitations and when to bring in an expert” would apply to Sotheby’s.
The ‘Hong Kong conveyancing’ principle: Can an auction house be found negligent if they are following the accepted practice of their profession?
The Claimant raised an issue of the difficulty of determining the prevailing standard of conduct when there are only two generally accepted auction houses of this stature at least as regards Old Masters, namely Sotheby’s and Christie’s. Rose J accepted “the proposition that merely because Christie’s and Sotheby’s can be shown to act in a particular way does not automatically mean that that way is not negligent. There must be a back stop consideration of the need to protect the interests of the client.”
THE ALLEGATIONS OF NEGLIGENCE
Rose J found that Sotheby’s were not negligent in their assessment of the Painting. In determining whether Sotheby’s’ assessment of the poor quality of the Painting was unreasonable, she stated that her task was to consider the expert evidence and “come to a conclusion whether Sotheby’s was negligent in that no reasonable leading auction house would have concluded on the basis of quality that the Painting could not be by Caravaggio.” In undertaking that task Rose J noted Buckley J’s warning in Drake v Thos. Agnew & Sons Ltd  EWHC 294 (QB) about substituting her own assessment of quality for that of the experts. However, she stated “it seems to me that the task is inescapable here, given the issues in this case. Further, since the quality of Caravaggio’s work lies in its ability to convey to the viewer a naturalistic and convincing depiction of items or people, a lay person may be more justified in forming a view as to quality than he or she can of an artist who paints in a more abstract or impressionistic style.”
Rose J’s conclusions on negligence were as follows:
- Sotheby’s were entitled to rely on their expertise and connoisseurship and to approach the question whether the Painting is an autograph early Caravaggio or a copy by considering first and foremost its quality.
- Those specialists were highly qualified and examined the Painting thoroughly at the Picture Meeting and at the Olympia Meeting.
- It would be impractical to hold that Sotheby’s experts were not competent to assess a painting because it was covered in discoloured varnish. That is something they do hundreds of times a year.
- They reasonably came to the view on the basis of what they saw that the quality of the Painting was not sufficiently high to indicate that it might be by Caravaggio.
- There were no features of the Painting visible at the Picture Meeting or the Olympia Meeting (whether under ordinary or ultra violet light) that should have put Sotheby’s on notice that the Painting had Caravaggio features or non-copy features that should cause them to question their assessment based on quality.
- Sotheby’s was entitled to rely on its specialists to examine the x-rays of the Painting to see if they provided any information which caused them to doubt their assessment of the Painting and those specialists reasonably came to the view that there was nothing in the x-rays that should cause them to question their assessment based on quality.
- Although Rose J accepted that Mr Thwaytes was prepared to pay for infra-red testing, she rejected the submissions that Mr Thwaytes had instructed Sotheby’s to carry out infra-red testing.
- Sotheby’s were not under any obligation either to carry out infra-red analysis of the Painting or to advise Mr Thwaytes to arrange for that to be carried out, even though Mr Thwaytes stressed that he wanted to be sure of the Painting’s status.
- If Sotheby’s had carried out infra-red analysis they would not have found anything in the infra-red images that should cause them to question their assessment of the Painting.
- Sotheby’s were not negligent in failing to inform Mr Thwaytes about the interest in the Painting that triggered the Olympia Meeting or that the Olympia Meeting had taken place. If they had informed him, Rose J found that he would not have withdrawn the Painting from sale since he would have been informed that all the Sotheby’s experts were certain that the Painting was a period copy and not by Caravaggio.
In the event that she was wrong on the issue of negligence, Rose J considered causation. In relation to consulting experts generally, Rose found that: “If Sotheby’s are confident that a painting is right then they will catalogue the painting accordingly though they will refer to contrary views expressed by others. Similarly if they are convinced that a painting is not right they will not catalogue it more optimistically unless the positive views they receive cause them to change their minds.”  Furthermore, Rose J found that, if Sotheby’s were to consult outside experts, they would go first to the scholar with the best reputation in the scholarly community, as opposed to a more “expansionist” scholar.
Rose J found, on the balance of probabilities, that Sotheby’s would have consulted Sir Denis Mahon (as Mr Thwaytes claimed) if they had considered that the Painting had Caravaggio potential and that he would have given a positive opinion. However, Rose J found that Sotheby’s would not have consulted Professor Gregori.
Rose J found that once Sotheby’s had received a positive opinion from Sir Denis Mahon, “they would have sought to garner support from other experts on Caravaggio but they would have been disappointed.” In these circumstances, Rose J found that Sotheby’s would have maintained their own very strong doubts about the autograph status of the Painting. Therefore they would still have proposed to Mr Thwaytes that the Painting be auctioned as by a Follower of Caravaggio, albeit that the catalogue entry may have mentioned the positive view expressed by Sir Denis Mahon.
Mr Thwaytes alleged that if Sotheby’s had performed their duties towards him properly, he could either have sold the Painting for much more money or he would have decided not to sell the Painting and would now own a work of art of much greater value than he received on its sale. He pleaded that the quantum of his loss was the difference between the value of the Painting being sold at auction or by private treaty, with a description that reflected the scope of the academic support that existed for the Painting, and the amount that the Painting in fact realised at auction. Rose J noted that whether this is the correct formulation was “very far from clear”, but it was not necessary for her to develop the point any further.
Rose J concluded “that the Painting probably would have made slightly more at auction or by private treaty if it had been sold with a catalogue entry detailing the positive and negative attributions of respectable scholars but not a great deal more.” In light of her findings on liability, she did not speculate further on an amount.
The decision in this case is highly fact specific in the context of Caravaggio and the particular composition which allowed for a visual comparison with the Kimbell Cardsharps. The Judge was primarily concerned with the question of whether there were any features or ‘red flags’ visible in the Painting by way of visual or technical examination that should have been spotted by Sotheby’s and which indicated that the painting had ‘Caravaggio potential’. The decision certainly does not preclude future cases in which, pursuant to the facts, a Court could find that there were ‘red flag’ features that should have been spotted by a leading auction house and/or there were that circumstances which put them on ‘special enquiry’.
The Judge determined that Sotheby’s were entitled to rely on their own expertise and connoisseurship and that a first and foremost consideration of ‘quality’ was appropriate. However, she also determined that an auction house specialist should know their limitations and that there will be circumstances where it is appropriate to consult an outside expert. Again this will be fact specific in terms of future cases.
As set out above, the Judge confirmed that the ‘Hong Kong conveyancing principle’ applies to this area of law, namely that merely because Christie’s and Sotheby’s can be shown to act in a particular way does not automatically mean that that way is not negligent and that there must be a back stop consideration of the need to protect the interests of the client. This is a useful development in the law.
In the context of legal proceedings, if a work of art has subsequently been sold under a new attribution, or with greater academic support, this will make the process of assessing value more straightforward.
Finally, in terms of the mechanics of bringing a claim, the Judge accepted that it is difficult for a claimant to find an auction-house expert with relevant experience who is not involved with either Sotheby’s or Christie’s. She rejected Sotheby’s argument that because the Claimant’s auction house expert was an art dealer who had never worked for an auction house, his evidence was of no probative value or weight at all. This is a helpful decision for Claimants seeking to instruct auction house experts in the future.
Consignors should ensure they understand what research the auction house is undertaking and what obligations arise as a result.