Jarring claims: Jeddi v Sotheby’s and others

The judgment in Jeddi v Sotheby’s and others handed down in June, determined competing claims to ownership of a £12 million early Islamic rock crystal jar, and provides guidance on agency, bailment and the immediate right to possession.

Facts

The case concerned competing claims to ownership of a £12 million early Islamic rock crystal jar by Mr Jeddi (the claimant) and Mr Pishvaie (the second defendant). The jar was in the possession of Sotheby’s (the first defendant), after being deposited there for sale by Mr Pishvaie in January 2012, in the name of Belford Invest Limited (the third defendant). Belford Invest Limited disclaimed any claim to or interest in the jar.

Mr Jeddi and Mr Pishvaie are both antiquity collectors and occasional dealers, with “irreconcilable cases as to the provenance and ownership of the Jar” (paragraph 21).

Mr Jeddi claimed to be the sole owner of the jar and entitled to immediate possession, having purchased it for $150,000 from an Iranian antiquities dealer in 2010. It was purchased by an oral agreement, which was subsequently documented by a bill of sale later in 2010. In 2012, Mr Jeddi asked Mr Pishvaie, as his agent, to consign the jar to Sotheby’s in London, which is evidenced by a handwritten note referred to as “the Dubai Agreement”. The proceeds of sale at auction were to be shared 75% to Mr Jeddi and 25% to Mr Pishvaie (less costs of the sale), with Mr Jeddi remaining the sole owner and Mr Pishvaie acting as his agent. Indeed, Mr Jeddi contended that Mr Pishvaie had acted as his agent before, on four or five occasions, and always on the basis of a commission of 25% of the hammer price, although the court found that there was “no clear evidence” of this (paragraph 94).

Mr Pishvaie claimed that the jar was co-owned by him (25%) and Mr Jeddi (75%). Mr Pishvaie said that the jar came from his father’s collection and was given to him by his father. It had been brought to Europe with other objects in 1968 (significantly, just before the UNESCO Convention of 1970) and was purportedly recorded in a 1969 inventory, allegedly written by his lawyer in pencil on a scrap of notepaper. Further, Mr Pishvaie’s case was that in 2010, he acquired a bronze sculpture from Mr Jeddi, in return for Mr Jeddi acquiring 75% of the jar, with Mr Pishvaie retaining the remaining 25% to reflect the fact that the jar was more valuable than the bronze. On his case, in 2012 Mr Jeddie and Mr Pishvaie then agreed to consign the jar to Sotheby’s for sale, and that was reflected in the Dubai Agreement.

Judgment

The court considered the conflicting evidence, accusations by each party that the other of “fabricating documents, deliberate deception and lying to the Court” (paragraph 58) and expert evidence about the authenticity of key documents, including transcripts of phone calls secretly recorded by Mr Jeddi, in order to determine the nature of their rights and interest in the jar, including the immediate right to possession.

Having considered the oral and documentary evidence, the court “came to the firm conclusion that [Mr Pishvaie’s] case as to the pre-2012 provenance of the Jar, and as to the nature of the arrangements between him and Mr Jeddi, was false” (paragraph 59) and that “Mr Pishvaie’s account of the exchange of the Jar with the Bronze Object was implausible and unevidenced and … could not [be] accept[ed]” (paragraph 65). Having considered all of the evidence, the court also found that “on the balance of probabilities, the 1969 Inventory is a forgery.”

The court accepted Mr Jeddi’s case about the events in 2011 and 2012 and the nature of the parties’ dealings at the time of the Dubai Agreement, but was unable to accept Mr Jeddi’s case about the provenance of the jar before 2011, about which he made no finding.

The court therefore held that Mr Pishvaie “did not and does not have the 25% ownership of the Jar which he claims” (paragraph 102).

Immediate right to possession

The court found that Mr Jeddi had an immediate right to possession of the jar (paragraph 104) and approached this issue “by reference to a comparison of the comparative rights of the claimants to the property, rather than by determination of the question of absolute entitlement”.

The court also took into account previous case law, including Parker v British Airways Board; Waverley Borough Council v Fletcher; Webb v Chief Constable of Merseyside Police and Costello v Chief Constable of Derbyshire Constabulary.

The court’s reasons for its finding are set out at paragraph 105 of the judgment:

• Mr Jeddi was in possession of the jar on 25 January 2012, the date of the meeting in Dubai, and therefore had at least a possessory title. This was good as against all, save anyone who could assert that they were, or were claiming through, the true owner or had a prior and subsisting right to keep the jar. Mr Pishvaie fell into neither exception.

• The legal effect of the Dubai Agreement and Mr Jeddi’s handing over of the jar was that Mr Jeddi authorised Mr Pishvaie to sell the jar for him as his agent; agreed to pay Mr Pishvaie a commission if the jar were sold; and bailed the jar to Mr Pishvaie for the purposes of the sale.

• Angove’s Pty Ltd v Bailey confirmed that the general rule is that the authority of an agent may be revoked by the principal, even if it is agreed by their contract to be irrevocable. Although this position is subject to exceptions, none applied here. Specifically, while there is an exception where the agreement between principal and agent is that the authority is irrevocable and where the agent has a relevant interest of their own in the exercise of the authority, it was also clear to the court that an authority would not be irrevocable where the agent’s only interest was a commercial one in being able to earn their commission. In this case, the agency created by the Dubai Agreement was not agreed to be irrevocable; it certainly was not agreed to be irrevocable even if significant efforts to sell the jar had been made and had failed. In any event, Mr Pishvaie’s only interest in the exercise of the authority was to earn the commission.

• Mr Jeddi revoked Mr Pishavie’s authority by 30 July 2014 at the latest, when Sotheby’s told Mr Pishvaie that Mr Jeddi no longer wanted him to act as Mr Jeddi’s agent. It was repeatedly confirmed thereafter, including during the proceedings, that the authority had been terminated.

• The purpose of the bailment of the jar to Mr Pishvaie was to enable him to sell it. The purpose of the bailment, and Mr Pishvaie’s right to possession of the jar, came to an end once his authority had been terminated.

The judge concluded, at paragraph 106, that:

“In the circumstances, Mr Pishvaie has no proprietary interest in the Jar, nor actual possession of it, nor a right to possession. Mr Jeddi has, as between the two claimants, an immediate right to possession.”

Implications and take-aways from the decision

Firstly, the case is a reminder of the inherent risks of oral agreements and the importance of documentation, particularly for transactions involving valuable property like the jar. The dearth of documentation here ultimately meant that the court’s decision rested on which party it found to be more credible, despite expressing concerns about both. Although it is common sense advice to emphasise the importance of documentation, it is not uncommon for transactions involving artwork and cultural property to be completed by oral agreement with minimal paperwork, or even on a handshake, even by individuals who would be very cautious if they were purchasing other assets of equivalent value, such as property or investments. This case, however, demonstrates the perils of that approach.

Secondly, the case provides guidance on when a principal may revoke an agent’s authority, even where the contract says it is irrevocable, applying previous case law (paragraph 105).

Thirdly, the case develops the law of bailment and draws on previous cases (including on the law of finders) to determine that Mr Jeddi had an immediate right to possession.

The full judgment is available here: http://www.bailii.org/ew/cases/EWHC/Comm/2018/1491.html

This article first appeared in PLC’s Dispute Resolution Blog http://disputeresolutionblog.practicallaw.com/jarring-claims-jeddi-v-sothebys-and-others/

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