Collective Ownership of Collections: When co-owners disagree

In Butler and another v Butler and another [2016] EWHC 1793 (Ch) a collector had amassed a collection of several hundred 17th century Chinese pots, valued at up to £8 million. He gave most of these to his four adult children in equal shares. This gift was made formally, by a deed, but the children themselves did not enter any written agreement governing their relationship with the collection.

The children preserved the collection for over 25 years while their father remained alive. When he died, two of the children (the Claimants) wished for the collection to be distributed amongst each of them, whereas the other two (the Defendants) wished to preserve the collection for scholarly study and exhibition. What happens to the collection in such circumstances and how does the Court decide? 

Where co-owners of moveable property (“chattels”) disagree as to what should be done with it, they may seek an order from the Court under section 188(1) of the Law of Property Act 1925. This section gives the Court discretion to make an order as to whether such chattels should be divided and, if so, how they should be divided. However, a claimant wishing for the Court to make an order must first show that they have “a moiety or upwards” in the chattels, i.e. a half share or more.

In Butler the Claimants did establish that they had a half share. They then argued that the Court should make an order under s.188(1) that each of the children should take turns to select pots from the collection until there were no pots left. The Defendants argued that no order should be made so that the collection could be preserved. Alternatively, they argued that if the Court did make an order it should be that Claimants should sell their share to them (or should sell them such a portion of that share as the Defendants could afford).

In coming to his decision Judge Simon Barker QC, in the High Court, set out the general principles surrounding s.188(1):

  • Its purpose is to enable the courts to do justice between co-owners when they are unable to agree what to do with their jointly owned property;
  • It does not seek to protect the interest of those holding a minority interest;
  • The criteria for determining how the property should be divided are very wide and not limited to commercial interests or the value of the property; and
  • The court should take a flexible and case by case approach depending on the particular circumstances of the case.

In the particular circumstances of Butler, Judge Simon Barker QC found that each of the children should choose one item from the collection until there was nothing left in the collection. In doing so he considered the following factors to be significant:

  1. There was nothing in the original deed of gift that suggested that their father intended that the children preserve the collection. He had expressed a desire for this about 20 years later, but this had no legal significance.
  2. While the collection had unique academic, cultural and historical significance, the collection which Defendants could choose would still be large enough to be considered unique.
  3. Splitting the collection may diminish the value of the collection. However, there was only general evidence provided on this and the Defendants wished to preserve the collection so were unaffected by its financial value.
  4. There was insufficient evidence that the Claimants’ motives for the division of the collection were primarily financial, so an order for the Defendants to purchase their interest was unsatisfactory. There was also insufficient evidence that the Defendants could afford to do so.

A factor which Judge Simon Barker QC determined was not significant was the tax consequences of the order. The Defendants estimated that if each of the siblings picked an item from the collection, they would each incur a capital gains tax bill of over £260,000 and therefore argued no order should be made. This was dismissed with short shrift by Judge Simon Barker QC, who stated “CGT is not a new tax… I do not regard CGT as a factor which should influence the decision I reach”.

It is questionable whether this approach to the tax consequences does justice between the co-owners. The Defendants may be left with a tax bill which, depending on their resources, may have to be paid out of sale proceeds of the very assets that they were looking to preserve. It is noteworthy that no “affirmative submissions as to the tax consequences” were given in Butler and that the estimate of £260,000 was only a given in a “worked example” in the closing submissions. Perhaps if more detail had been given then tax considerations would have had a greater weight.

Generally, Butler and the general principles surrounding s.188(1) that it refers to, show that a fact sensitive analysis is needed when co-owners disagree about what is to be done with their collections as to what division of the collection does justice between them. This can be avoided by planning ahead; if a person is considering leaving their art collection to their children, they should also encourage those children to come to an advance agreement as to what should be done with the collection.

Find out more about Boodle Hatfield’s Art Law team.

Article Contact: Rudy Capildeo:



One thought on “Collective Ownership of Collections: When co-owners disagree

  1. Juan Javier Negri says:

    Thank you for bringing up this interesting case. Would it be possible to have access to the full text of the decision? I am attempting to make a comparative law analysis of the Butler decision vis à vis a hypothetical Continental law solution.


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