Auction houses and disputed title: Hillary and Hillary v. Hillary.
The action before Venning J. of the High Court of New Zealand involved the watches of Sir Edmund: one of these, the 'Everest watch' had been bestowed upon him after his successful conquest of the eponymous mountain; the other four being (mere) Rolexes. Sir Edmund died in 2008. The plaintiffs, two children of his first marriage, claimed that four of the watches had fallen into the residue of his estate, which they held under the terms of the will. They claimed the fifth watch had been gifted by Sir Edmund to his son Peter and therefore did not fall into the estate at all but belonged ab initio to the son.
Lady June Hillary, Sir Edmund's second wife ('Lady Hillary'), in possession of the watches and under the impression that they had been gifted to her by Sir Edmund inter vivos, undertook to sell them at auction in Switzerland, the purpose of which was to raise funds for the Himalayan Trust, a trust established by Sir Edmund and dedicated to improving the lives of the people of the Himalaya. The watches were sent in 2010 to the Antiquorum auction house in Geneva. The plaintiffs soon informed her of their ownership claim and the parties took steps to resolve the matter. However, when Lady Hilary inquired about removing the items from auction, the auction house advised that in such a scenario it would seek full compensation for its cost and the loss of profits associated with the aborted sale.
Fearful that the sale might go ahead, Sir Edmund's children sought ex parte an interim injunction against Lady Hillary, forbidding her from selling the watches and ensuring that they be retrieved from Switzerland. The High Court went through the criteria required for an interim injunction, namely:
(1) whether there was a serious question to be tried,
(2) whether damages would be adequate,
(3) the balance of convenience and
(4) whether any other discretionary factors could be considered.
The Court dealt with these as follows:
1. Serious Question: It was clear there was a serious question to be tried, as the action related to the disputed ownership of the watches. The plaintiffs had a strongly arguable case in this regard.
2. Balance of Convenience: This element was most interesting when examining the case from the optic of special-value property or 'cultural' property. Venning J. clearly held that the watches were unlike regular items of commerce. Were they to be sold, damages would be insufficient to palliate the loss. He held that the watches have "intrinsic value in themselves to the family of Sir Edmund, which cannot be addressed by money". (2)
3. Adequacy of Damages: This factor was answered in favour of the children for the reasons explained above.
4. Other Discretionary Factors: Here the court considered the delay in the plaintiffs' action, the maintenance of the status quo and the undesirability of a mandatory order against Lady Hillary. Neither of these arguments was found to override the need for an injunction. Even the contractual agreement between Lady Hillary and the auction house, which purportedly created a status quo to be maintained, could not outweigh the necessity of informing Antiquorum of a competing ownership claim in the watches.
An injunction was therefore ordered against Lady Hillary requiring her to cancel the sale and seek the return of the watches from Switzerland.
While the dispute between Lady Hillary and the plaintiffs may have been capable of resolution, the true conflict existed as against the auction house. If Antiquorum demanded that Lady Hillary abide by the rules of the consignment agreement, what could be done? Of course, the New Zealand Court could not bind the foreign auction house, but it could bind the parties before it in how they dealt with that auction house. Lady Hillary was enjoined to cancel the forthcoming sale and to seek the return of the watches. However, the Court did not go so far as to order Lady Hillary to pay the damages sought by the auction house. In the words of Venning J., this would have been 'inappropriate', especially since the amount sought by Antiquorum appeared inexplicably high.
The court order itself could instead be seen as part of a creative approach to resolving the problem caused by Antiquorum's demands. A court order from the parties' home jurisdiction, New Zealand, could be employed as a large stick and waved defiantly against the auction house's contractual assertions. While Lady Hillary may have technically been liable for damages under the terms of the agreement, a court order (even of a foreign court) would demonstrate the strength of the claims of the Hillary children to the watches. No self-respecting auction house would wish to proceed with a sale when title to the goods was being challenged. As the Venning J. held:
[It] is appropriate that the auction house be made aware that if it was to proceed with an auction in those circumstances it would do so on notice of the claims by the plaintiffs to ownership of the watches. One would expect a responsible auction house, acquainted of those facts, not to proceed with the auction. If, despite knowledge of the plaintiffs' claim to ownership, it chose to proceed with the auction one would expect it would at least have to advise potential purchasers of the adverse claims to ownership of the watches. (3)
Even more so, if the children were eventually found to have title in the watches, the auction house could potentially be found liable for any sale it sanctioned of their property. (4) It would therefore be up to the parties to use the court order to convince or force the auction house to relent on its demands. Were any payment to be made to Antiquorum, the parties would have to agree on the terms and apportionment thereof.
The judgment as reported is therefore best understood as a single piece in an overall jigsaw. The order of an interim injunction against Lady Hillary is the result of a straightforward application of the rules for granting such an order. However, the use the parties can make of the judgment goes beyond the realm of litigation, acting instead as a tool for negotiation. The case provides a lesson for strategists: often the most direct route to international resolution involves obtaining a court order and employing it as a pressure tactic.
(1) Peter Edmund Hillary and Sarah Louise Hillary v. Lady June Hillary (12 Nov. 2010), High Court of New Zealand, Auckland Registry, Civ-2010-404-007445
(2) At para. 17.
(3) At para. 22.
(4) There may also be a potential argument under Swiss law based on the nullity of the contractual clause at issue.
Alexander Herman, Academic Co-ordinator, Institute of Art and Law.
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|Publication:||Art Antiquity & Law|
|Date:||Jul 1, 2014|
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