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THE IMPACT OF CURRENCY FLUCTUATIONS IN THE WORLD OF ART AND ANTIQUITIES.

I. THE PRINCIPLES

Brexit and Sterling in Perspective

With the outcome of the national referendum still reverberating both inside and outside the United Kingdom, and with speculation rife as to the nature of the UK's immediate and long-term political and commercial futures outside the EU, it would be easy to overlook that equally dramatic events may also erupt in countries on the European mainland. There, for several years, some countries, most notably Greece, have been close to abandoning use of the euro or of leaving the EU altogether. These are early days. In the longer term, and once the real effects of Brexit can be assessed, it remains to be seen whether the UK's slender majority decision to leave the EU triggers similar action elsewhere, possibly leading to mass defections, or whether it will act to strengthen the resolve of the remaining members to work together towards stability. The UK has retained its own national currency, so its disentanglement from the EU, although a complicated procedure, will not be as complex as for any of the remaining members, who all (apart from Denmark) have adopted the euro.

With sterling weakening as a result of the referendum, these are clearly challenging times for UK businesses in general. (1) Without the developments in English law initiated in the late twentieth century, London would probably have ceased to remain an attractive forum for international litigation. But between 1976 and 1978 decisions were taken by the Judicial Committee of the House of Lords, then the UK's supreme appeal court, which allowed claimants to recover debts and damages assessed in a foreign currency where that formed a more appropriate solution than giving judgment in sterling. This enabled London to retain its position as an attractive centre for high value litigation during periods when sterling was in decline. In times of increased currency volatility this therefore has importance for many claims and disputes; not only those arising entirely within the UK, but also those with international ramifications. (2)

As it happens, disputes relating to works of art were identified at the very moment of the law's volte face in Miliangos (3) to permit judgments in foreign currencies. In his speech, Lord Simon of Glaisdale, gave the following example:
   John Mitchell is a newly and greatly enriched dividend-stripper and
   property speculator in England. He conceives that a notable art
   collection would be a desirable adjunct and mark of his new
   position in society. His art agent learns that Count Comnenus has
   the finest collection in Central Europe, accumulated by his
   enlightened family over the centuries; and that the estates of the
   count are so heavily encumbered that he is reluctantly faced with
   the necessity of selling his family collection. The deal is
   clinched. John Mitchell agrees to buy the collection for 10 million
   Ruritanian talers. The taler is gold-backed, and the sum is
   equivalent to 1 [pounds sterling] million. The collection is duly
   shipped to England, but the purchaser fails to pay on the due date.
   It is not his fault. War has broken out, and strict exchange
   control has been imposed. Towards the end of the war a revolution
   takes place in Ruritania. Count Comnenus is glad to escape with his
   bare life, and arrives penniless in this country. In the meantime,
   the Ruritanian taler, no longer gold-backed, has become worth only
   the accumulating paper it is printed on. Count Comnenus remembers
   his debt from Mr. Mitchell and that his magnificent collection is
   now the principal ornament of the Mitchell mansions. He claims 1
   million [pounds sterling]. Mr. Mitchell tenders him a lorry filled
   with 10 million worthless Ruritanian talers. Is it justice that Mr.
   Mitchell should succeed, the proud possessor of a valuable
   collection acquired for nothing, and that the count should starve?
   (4)


The reverberations of this example (part of a dissenting speech) were felt in The Texaco Melbourne and may still be affecting judicial attitudes even today. (5)

BETTER JUSTICE BUT LESS PREDICTABILITY

During the last 40 years many and varied situations have been investigated by the UK's courts where there is a foreign currency issue, and general guidelines have been laid down for a number of typical situations. Among the important issues that occur in relation to many contractual disputes is the determination of the proper currency for an award of general or unliquidated damages where this has not been expressly provided for in the contract. Often, under the new regime, neither the currency specified in a contract for the measure of remuneration or other fixed payments (often referred to as the currency or money of account), nor the currency, if different, specified for the discharge of such sums (the currency of payment), will determine which currency is the most appropriate one in which to express damages. Rather, regard will generally be had to the currency in which a claimant's loss is effectively felt by him. This is very similar to the way in which damages in tort are now expressed.

In effect, the greater certainty of result associated with the previous regime, when losses were always expressed in sterling, has been displaced by a system which seeks to provide better justice as it is not dependent upon the strength or weakness of sterling, a currency which will often be unconnected with a loss. Combined with the increasing trend for the assessment of damages away from the date of loss (the former 'breach-date' rule), and towards whatever date is most appropriate in the particular circumstances, the new currency regime is more likely to result in a fair award, particularly where a foreign currency is involved. (6)

The new procedures have not, however, been fully worked out, and there remain areas of uncertainty where significantly different outcomes could be achieved by an alert and well-informed litigant. This article examines a variety of situations where losses and claims may arise, and looks at solutions from the perspective of private and public collectors, dealers, museum curators, auctioneers, government departments and others involved with the purchase, sale, holding, transport or security of art and antiquities.

Different rules may apply in respect of different legal wrongs. A claimant in a dispute over a work of art, for example, may be claiming in tort, (7) contract, (8) restitution, (9) for breach of trust (10) or in bankruptcy. (11) Moreover, the courts have not yet finally decided whether to accord primacy to fixed rules in the interest of certainty and predictability or to flexible ones in the interests of justice in individual cases. At present, the balance appears to be in favour of the latter approach, which is one with which we agree. (12)

OVERVIEW OF ENGLISH LAW PRINCIPLES RELATING TO FOREIGN CURRENCY CLAIMS

In the present regime a UK court will seek to determine in what currency a judgment for damages or loss or expense will most fairly compensate a successful claimant, generally having regard (for a commercial claimant) to the currency or currencies in which he operates or (for a private individual) the currency with which he is most closely connected. A court will reach a decision on this issue on the basis of evidence of the facts relating to a particular transaction or situation, and the onus will initially be on a claimant to prove that the currency for which he contends is the most appropriate. If a defendant alleges that another currency would be more appropriate, then he will need to support his allegation with proper evidence. In this investigation a court may look behind the currency in which a loss or expense has been directly sustained, to identify whether there is another currency in which compensation could more appropriately be awarded.

A concrete example of how this might work in practice would be where, owing to a third party's negligence, damage is sustained to a work of art which a private collector repairs in France at a cost in euros which he acquires by selling sterling or US dollars. In an English court, the normal solution in such a case would be for damages to be awarded in sterling or US dollars, this being the currency in which he effectively felt his loss. A successful claimant would also normally expect to recover interest at a rate appropriate to the currency of damages, and a significant contribution towards, or in some instances the whole amount of, his legal costs and other relevant expenses.

POSSIBLE IMPACT OF FOREIGN LAW

By 'in a normal case' we intended to identify a dispute in which all issues will be dealt with on the basis of English domestic law. There may, however, be situations where, because of the place of domicile of a defendant, or because the legal wrong, whether a tort or breach of contract or a breach of bailment, occurs in a foreign country, or (at present) is affected by the operation of EU law, a claim may need to be determined, wholly or in part, in accordance with the law of another country. However, even if a foreign court has jurisdiction over a claim, its own conflict of laws rules may entail that the court is obliged to decide the claim on the basis of English law. This is a complex area, and to investigate it in any depth would take us rather a long way from our main theme of foreign currencies; but it is worth noting that for all types of claims the parties have the opportunity of agreeing that an English court shall have jurisdiction and that a dispute shall be determined in accordance with English domestic law. (13)

LIQUIDATED DAMAGES DISTINGUISHED FROM UNLIQUIDATED DAMAGES

There is a further matter of general relevance to the question of the currency of claims in an English court. Claims for debts, and claims for specific sums by way of compensatory damages (known as liquidated damages) are in many instances to be contrasted to claims for compensatory unliquidated damages, where an English court will still sometimes (and, with some types of claim, always) make its assessment in sterling. Examples of liquidated damages would be the cost of repairing a chattel, or the reimbursement of recoverable expenditure or lost earnings; while assessment in sterling for unliquidated damages would apply, for example, to claims for compensation for personal injuries or defamation. Where the value of a lost or destroyed chattel has to be determined by expert evidence, then it is possible that an assessment in a foreign currency may form the best solution, if on the facts a foreign currency has more relevance than sterling. The reason for the distinction is that judges (and juries) cannot be expected to be competent to assess damages at large in foreign currencies, in the absence of market values proved by evidence. A further consideration is that in many such claims (and certainly in claims for personal injury) damages will be assessed as at the date of judgment; in other words, a valuation will take account of then current circumstances; therefore the choice of currency is generally of much less importance in such a claim than where an historical value is adopted. (14)

II. EXAMPLES ILLUSTRATING THE PRINCIPLES

In the following examples, except where expressly stated otherwise, or unless the parties' names are given together with case citations, these are hypothetical examples involving fictitious facts and circumstances, in which we have included background detail in order to set realistic scenarios.

TORTIOUS INJURY: MISADVENTURE IN A GALLERY

During the summer of 2014, an attorney from Boston, Massachusetts, travelled to London on holiday with his wife, and took the opportunity of visiting a well-known art gallery in the West End, with a vague notion of adding to his collection of European paintings. He did not find anything he particularly liked. On preparing to leave the gallery he walked into a clear glass partition that was almost invisible. He was seriously injured and was taken to hospital, and later entered a private nursing home. His injuries kept him in the UK for several months, but he eventually made an almost complete recovery and returned to Boston, where he resumed work in his office. The attorney's injuries were painful, and even after his discharge from hospital he suffered from occasional headaches; and while away from his office he lost significant income. Later in the year he instructed solicitors in London to issue legal proceedings against the owners of the gallery. The gallery owners' public liability insurers organised a defence to the claim, but when the case reached trial two years later the defendants were held to have been at fault. How should the various categories of damages be assessed?

Although the attorney's experience was traumatic, he was fortunate to have made an almost complete recovery, as every year there are reports of people sustaining similar injuries, some of which prove fatal. (15) His claim included various heads:

* Compensation for pain and suffering and some loss of amenity

* The cost of hospital treatment and extensive nursing care in London

* The cost of accommodation for his wife

* Significant loss of income

* Compensation for disruption of the couple's holiday

* Legal expenses and the cost of several medical reports.

As indicated earlier, damages for pain and suffering (that is, the non-economic element of the award) will be assessed in sterling, this being the only currency in which an English court is confident in being able to express general damages of that nature. For similar reasons, sterling will also be the currency in which the court will award damages to reflect the disruption to the couple's holiday. Different considerations apply to the financial claims if specific sums are involved. As the attorney lives and works in the United States, the currency with which he is most closely connected is the US dollar. In accordance with the principles governing such claims, damages for loss of income will be awarded in dollars.

It was from his dollar bank account that the attorney acquired sterling to settle the expenses incurred in London, so the same approach will be adopted for the cost of hospital and nursing care, and the expenses of the attorney's wife, whom the court held to have acted reasonably in remaining in London to be with her husband. The legal expenses, and the cost of expert medical and other evidence was all paid for by the attorney from his dollar account, so will receive the same treatment as his claim for loss of income. Accordingly, the attorney's claim for loss of income and reimbursement of expenses will not be affected by any variation in the exchange rate between the dollar and sterling: he will recover the same amount of dollars that he lost or spent, plus interest at dollar rates. Credit will be given for any costs recovered from the defendants. (16)

BREACH OF CONTRACT: A SOVEREIGN REMEDY

With an eye to providing some interesting Christmas and birthday presents for her several grandchildren, a wealthy French widow bought a large number of gold sovereigns from a bullion dealer in London and arranged to have them delivered to her bank in Montpellier. She paid for the coins in sterling, which her bank had acquired at a cost to her in euros. The sovereigns never arrived. Both the dealer and the courier company denied liability and sought to rely upon limitation and exclusion clauses in their contracts. Eventually, when it became clear that the sovereigns had indeed been lost rather than temporarily mislaid, the matter was brought before an English court.

The judge held that as the dealer had given inadequate instructions, and the courier company had been grossly negligent, the widow should recover damages. The dealer and the courier company then argued that they should be liable for no more than the sum in pounds that had been paid. But there was a complication, because since the time of purchase, the value of sterling had depreciated against the euro, and with an increase in the price of gold the value of the sovereigns had risen. As a result, the repayment of the purchase price in pounds would have been a double blow to the claimant. The judge held that it was reasonable for the widow to have awaited the outcome of her claim, rather than expend further money on buying replacement coins, and that the fairest solution would be to award her their present value assessed in euros. She could then choose whether or not to acquire replacement coins, so she would be put into the same financial position as if the original sovereigns had been delivered to her.

Under English law, sovereigns minted in 1837 and later years, and Britannia gold coins, of full weight (i.e. that are not clipped or greatly worn) are legal tender for any amount; (17) but they have a much greater value as bullion and as collectors' items, and it is therefore highly unlikely that they would be used in normal transactions. The fact that sovereigns are bought and sold, and for sums far higher than their face value, gives them in such transactions the character of a commodity rather than money, despite the fact that they may be legal tender. This remains so, even after Comdex v Zambia (No. 3), (18) a controversial decision arising from an attempt by an assignee to enforce Zambian public law, and which involved a determination as to whether a particular liability was a debt or whether a remedy should be by way of damages, which in turn depended on a distinction between foreign currency as a medium of exchange and foreign currency as a commodity. (19) Interesting and surprising questions of characterisation can also arise in relation to some forms of alternative money. (20)

LIBEL: AN EXPENSIVE HOLIDAY

For some years there had been animosity between a retired banker, now living in some style in a large mansion near Chipping Camden, Gloucestershire, and the director of an Italian Museum of Modem Art. It is not clear exactly how the problem began, but it seems that the banker took exception to the way he was treated when he visited the museum in the year 2012 while on holiday. Subsequently, there had been some correspondence between the parties, which had aggravated rather than resolved the situation. The matter had come to a head when, following an article in The Times, which held the museum out to be one of the finest in Italy, the editor published a letter in which the banker expressed an entirely different view and included some remarks about the museum's managing director. Within a few days, solicitors appointed by the director had written to the banker and to The Times, asking that the remarks be withdrawn and that an apology be published. No retraction or apology was forthcoming, and the director caused legal proceedings to be issued in London against the banker and the owners of the newspaper, claiming damages for defamation.

When the case reached a trial, the judge held that the personal remarks in the letter were indeed defamatory, and awarded general damages against both defendants. Damages were expressed in sterling in the sum of 25,000 [pounds sterling]. As to costs, which greatly exceeded the amount of damages, and various expenses that the director had incurred, the judge held that these should be assessed in euros, having regard to the sums actually expended by the director, plus interest from the relevant dates at a rate appropriate to euros.

NEGLIGENCE AND BAILMENT: TROUBLED WATERS

The author of a definitive book on the life of the eighteenth-century Flemish painter Jacob van Bredael, was fortunate in being able to borrow for a few days one of the artist's most popular works to display prominently in a major London bookshop to coincide with publication. It was a medium-size oil painting titled A Barque Entering Harbour, and had just been purchased by an American private collector at an auction in London at a cost of 975,000 [pounds sterling]. On the book launch day, the painting was placed on a stand next to the table at which the author was signing copies of his book.

Owing to extensive advertising, and the presence of a television crew, the event proved to be very popular, and many people were in the bookshop. The queue stretched outside the shop, where it was beginning to rain. The crowd was large, and there was much jostling for position. With even more people trying to enter the shop there was a surge, and an accident occurred. One of the powerful lights being used by the television crew toppled over and fell against the painting, knocking it off its stand.

When order was restored it was found that the painting had been tom in two places, and a section several inches across had been badly burned. As can be imagined, the owner of the painting, who had been in the shop at the time, was most unhappy. He was not at all pleased at the prospect of either taking home a damaged work or losing the painting altogether. He took advice the next day from his London lawyers, who pointed out that a solution was not entirely simple. They emphasised that several parties were potentially involved. It had not been possible to identify exactly who had knocked against the light, and the chances were that whoever it was had been pushed from behind by someone who had in turn been pushed. Claims might lie against the television company, for not better securing the lights; and against the shop owners for not keeping the crowd under control; and also against the author and his publishers under the terms of the loan and as bailees. (21) The painting had been insured against loss or damage, but it was not yet clear whether repairs would be satisfactory or how much they might cost. Also, it was possible that the painting could be treated as a total loss.

Eventually, after several months of correspondence and discussions between the lawyers of the various parties, the matter was resolved on the basis that the buyer would keep the painting and have it repaired at his own cost, and the other parties would contribute to a payment of one half of the purchase price. It was agreed that in accordance with the principles a court would have applied, the purchase price would be measured in the amount of US dollars that the buyer had spent in acquiring the sum of 975,000 [pounds sterling] plus the auctioneers' fees. Thus he would not suffer the small percentage depreciation of sterling against the dollar since the time of the auction. The buyer would also receive 10,000 [pounds sterling] in sterling to reflect his loss of enjoyment of the painting pending its repair. Whether the buyer received any payment from his insurers was not disclosed. If he did, it is likely that he would be under a duty to pay part of his recovery to the insurers, but that would depend on the precise details, and in any event considerations of that nature did not affect the settlement as the insurers did not have a right of direct action against those responsible.

FRAUDULENT MISREPRESENTATION: NO TITLE

In early 2015 an item was sold for US$65,000 on eBay to a collector of antiquities living in Geneva, Switzerland. The item was a pair of ancient, gypsum alabaster stone vessels, each about eighteen inches high, probably from the 1st century BC. They were vases, with three tiers of carvings, and despite their age were only slightly damaged. The sale was supported by a certificate of authenticity and an export licence from the Jordanian Ministry of Culture. The buyer was delighted with the purchase and displayed the vases in his home alongside some other artefacts, and was pleased to show them to his visitors.

Some months later, he received a visit from the Swiss Federal Criminal Police, following a raid by their TIGRIS task force on an office in Geneva, where a search of computer equipment revealed details of many looted antiquities, including the vases. In short, it turned out that the Jordanian documents were false, and the vases had entered the country illegally. The owner of the office, being the person who had sold the vases, was a wealthy businessman based in London, and it was there that the buyer sought redress, alleging fraudulent misrepresentation.

The seller of the vases denied all knowledge of the fact that they had been looted, and claimed to have bought them from a reputable dealer in the Middle East. The seller was, however, unable to provide evidence to support his statement. The trial judge did not accept the defendant's story, and held that, even if it had been supported, it was clear that whatever of the relevant countries' laws were invoked, the seller had not acquired a valid title to the vases. Accordingly, he was not able to pass title to the buyer, who was therefore entitled to a refund of the purchase price together with his expenses and costs. The claim had been presented in US dollars, but the judge held that all compensation would be assessed in Swiss francs, as it was from that currency that the buyer had acquired dollars for the purchase and also sterling for his costs and expert evidence. Interest was to be added at appropriate rates. Additionally, in light of the facts disclosed during the hearing, the judge ordered that the matter be referred to the Director of Public Prosecutions. (22)

BAILMENT: THE LOST PEARL (23)

In May 2008 Mr Jabir, an international dealer, was offered by Mr Ruff, a dealer living in Zurich, a valuable pearl of unusual colour and free from flaws. Mr Jabir believed that it was a saltwater pearl, and therefore more valuable than a freshwater pearl, and that it was of an ideal size for mounting in a ring. Mr Jabir agreed to buy the pearl for US$500,000 subject to certification. He took delivery of the pearl, and after it was satisfactorily certified by a laboratory in London Mr Ruff sent him an invoice for US$500,000. Mr Jabir arranged for H. A. Jordan & Co. Ltd, who thereby became bailees, to mount the pearl in a ring, he having meanwhile reached agreement to sell the pearl to a Dubai dealer for US$650,000. Unfortunately, the pearl was lost while with Jordan & Co. They admitted liability (there was no suggestion of dishonesty on the part of their staff) but agreement could not be reached as to the value of the pearl. Jordan & Co. had given Mr Jabir a receipt for an "intense orangeypink pearl", but there had been no formal determination as to whether it was a saltwater or freshwater pearl.

There was a complication in that Mr Jabir had several transactions pending with Mr Ruff, whom he had known for many years, and he did not pay Mr Ruff the sum of US$500,000 but only US$167,996, this being the net amount due from all the transactions. Another complication was that experts who were called to give evidence as to value had not seen the pearl. The trial judge accepted that Mr Jabir and the Dubai dealer were truthful and credible witnesses, and he assessed damages at US$650,000, being US$500,000 as the price at which Mr Jabir purchased the pearl together with US$150,000 for lost profit on the intended sale to the Dubai dealer. The award was upheld on appeal.

A particular feature of the case was that the market for high quality pearls is small, and that (as Mr Jabir explained in evidence) it is a trade in which privacy and discretion are of great importance; where the ultimate customers are people of great wealth who would be anxious to preserve their anonymity, which accounted for a shortage of details in the public domain of comparable transactions. The judge accepted the evidence of Mr Jabir and the Dubai dealer as being the best possible evidence of the pearl's value.

There was no analysis or express finding in the judgment of the proper currency for an award, but the judge did record that Mr Jabir lived in New York and Kuala Lumpur, and a reasonable inference is that the judge considered that Mr Jabir's relevant finances were most closely connected with the US dollar. At any rate, the deals on which the valuation was based involved liabilities and payments in US dollars. Damages for loss of the pearl were assessed in US dollars, as also was compensation for Mr Jabir's lost profit.

BREACH OF COPYRIGHT: MUSICAL NOTES (24)

In May 1967 the British musical group Procol Harum released their immensely popular record A Whiter Shade of Pale, which soon entered hit parades in the UK and elsewhere. Since then, almost 800 versions have been performed by other groups. The song was listed in 2004 by the American magazine Rolling Stone at number 57 in their '500 Greatest Songs of All Time', and Channel 4 put it at number 19 in its list of the '100 Greatest Songs'. On the record label the writers given credit for the song were Keith Reid (lyrics) and Gary Brooker (music), who had both assigned their copyright to the music publishers Essex Music Ltd in return for various royalties and fees. Subsequently, there were further assignments, including to Onward Music Ltd.

A feature of the song, as recorded, was an opening 8-bar organ 'solo', repeated later, which was composed and performed by Matthew Fisher, who was not credited on the record label and who did not make any assignment of his rights. Some 38 years after the record was released a claim was brought by Mr Fisher, seeking a declaration of his authorship of part of the song as recorded, and a share of past and future royalties (the claim being restricted, for past royalties, to the previous six years because of the effect of the limitation statute). At the trial in 200625 before Mr Justice Blackbume the organ 'solo' (so-called because it was accompanied mainly by what the judge referred to as a "languorous drum beat"), was described by an expert witness as "both distinctive and memorable and would ... be identified by almost anyone familiar with the repertoire of contemporary popular music even after hearing just a few bars". The judge accepted that evidence.

The case was highly unusual because of the very long delay between the release of the record and the start of Mr Fisher's legal action; but the judge held that such delay did not, either directly or by way of estoppel or other legal defence, take away what he held was Mr Fisher's right to a declaration as to a substantial share of the musical copyright, which he valued at 40 per cent. The judge dismissed the claim for royalties for the six years before the start of proceedings, because Mr Fisher's earlier lack of action allowed the royalty collecting societies to account on the basis that Mr Brooker alone was the author of the music. For the period until May 2005 the judge considered that Mr Fisher must be taken to have gratuitously licensed the exploitation of his copyright. However, since that time Mr Fisher was entitled to a share of the royalties. The decision was overturned on appeal, but was reinstated by the House of Lords. (26)

The decision in the case obviated the need for an account going back for six years before the start of proceedings. In some other situations, if--unlike in this case--there had been dishonesty on the part of a defendant by concealing relevant facts, it is theoretically possible that the normal limitation period would be held not to apply, and an account could be ordered for an even longer period. That could present immense practical problems, particularly if there had meanwhile been ill-advised assignments of rights, or if the song had been performed by third parties illegally, possibly in foreign jurisdictions. An attempt to put a copyright owner into the financial position he would have been in but for such dishonesty and subsequent activities could involve an investigation of a wide range of facts, and the assessment of damages based in part on the non-payment of sums converted from various foreign currencies.

An order for an account to be taken could occur in many situations, not simply where an infringement of a musical or literary copyright has been established. Indeed, in the late-Victorian case Manners v. Pearson (27)--described by Lord Wilberforce (28) as "the fans et origo" of the pre-Miliangos "self-imposed limitation" against giving judgments in a foreign currency--an account had been ordered in respect of commission payable under a contract related to the drainage system of the City of Mexico. That case involved a dispute as to the date as at which Mexican pesos should be converted into sterling. In other situations, if there had been a breach of copyright affecting royalties on worldwide sales, there could be a need to determine the proper currency of damages, and to convert sums into it from a large number of currencies at varying dates, which could be a formidable task. Such a situation might have occurred in the case brought against the publishers of The Da Vinci Code, if they had been held to have breached the claimants' copyright in their earlier work. (29)

INNOCENT MISREPRESENTATION: NO MASTERPIECE (30)

From time to time, the buyer of a work of art, or an item of jewellery, or an antique object may discover that what he has bought is not what he thought it was. Such was the case when in March 1944 Mr Ernest Leaf bought a painting of Salisbury Cathedral which he thought was by John Constable. He thought it was by Constable because he believed an innocent misrepresentation to that effect made by the sellers. When Mr Leaf's claim for rescission of the contract reached the Court of Appeal, which confirmed the judgment at first instance, Lord Denning said that the representation as to the identity of the artist was a term in the contract going to the quality of the painting rather than to its nature; but that although the mistake was in a sense fundamental it was not sufficient to void the contract. (31) He treated it in Mr Leaf's favour as a condition rather than a warranty (as breach of a warranty would have given rise only to a claim for damages). The result was that Mr Leaf would, in principle, have been entitled to rescind the contract, but that remedy was denied to him because, in the Court's view, he had not brought his claim within a reasonable period of time: he had not discovered the error until five years after the purchase. And he had not sought damages in lieu of rescission, so his claim was dismissed.

It may seem at first sight that the decision was rather harsh, as the limitation period in contract is of six years. But the point is that a right to rescind a contract is one which has to be exercised promptly, whether it is rescission for a breach going to the root of the contract, a repudiatory breach, a breach of condition, or for misrepresentation. On this theme, Lord Evershed, M.R. said: (32)
   The attribution of works of art to particular artists is often a
   matter of great controversy and increasing difficulty as time goes
   on. If the plaintiff is right in saying that he is entitled,
   perhaps years after the purchase, to raise the questionwhether in
   truth a particular painting was rightly attributed to a particular
   artist, most costly and difficult litigation may result. There may
   turn out to be divergent views on the part of artists and critics
   of great eminence, and theprevailing view at one date may be quite
   different from that which prevails at a later date.


Since the decision in Leaf, the Misrepresentation Act 1967 was enacted, section 1 of which allows rescission to be ordered even when a misrepresentation has become a term of the contract or the contract has been performed, provided that the party which had been misled would otherwise be entitled to rescind the contract without alleging fraud. The decision needs to be qualified in the light of a recent decision in a case arising from the sale of a Cadillac motor car, which had been misrepresented as being "brand new". (33) But the difference appears to be that mere delay is not of itself a bar to rescission. It will depend on whether the purchaser acted reasonably promptly in the light of the information available to him. The complications caused by the then applicable sections 11(1)(c) (34) and 35 (35) of the Sale of Goods Act 1893 no longer arise.

In Leaf's case, there was originally no claim for damages in lieu of rescission, and a late application for leave to amend was disallowed. The question arising from the difference between representations which are incorporated into the contract as warranties, and representations which do not form part of the contract but merely induce one party to enter into the contract, did not arise. The distinction is of much less importance today because awards of damages instead of rescission for misrepresentation are now permissible. Section 2(1) of the 1967 Act provides, in principle, that damages may be awarded even for an innocent misrepresentation, unless the party making it reasonably believed that the facts represented were true; and section 2(2) provides, broadly, that where a non-fraudulent misrepresentation gives an entitlement to rescission, and the court considers that it would be equitable to award damages in lieu of rescission, it may do so. However, we are here not so much concerned with the details of the circumstances in which damages may be awarded for misrepresentation, as with aspects of the assessment of damages.

Where damages are awarded for misrepresentation in a contractual setting it will not always be appropriate to assess them in the currency in which monetary obligations under the contract are expressed, or in the currency (if different) in which those obligations are required to be paid. We prefer the term 'currency of damages', arrived at by reference to the principles laid down in The Folios f which may or may not identify the same currency as the one in which the obligations are expressed, or the currency in which they are to be paid. (37)

The currency of damages in contract will be that currency (or, occasionally, currencies) in which a successful claimant effectively and foreseeably felt his loss, or with which he is most closely connected. It will not necessarily be the currency in which (for example) he purchased an object. Rather--in such an example--it will generally be the currency (if there be such other currency) which he used for the purpose of acquiring the currency in which he made the payment, unless there is a particular reason why yet another currency would be more appropriate. As we mentioned earlier, this may initially lead to some uncertainty, but it is the inevitable result of the search for better justice flowing from the new regime introduced by Miliangos, (38) The identity of the most relevant currency for the purpose of damages will often become clear from the pleadings in a case, and from the documents that the parties must disclose. (39) At the least, these will delineate the areas of dispute and narrow the range of currencies contending for the role of the currency in which an award of damages is to be made, even if it remains the task of factual and expert evidence to enable the tribunal finally to reach a conclusion on that issue.

III. FINAL COMMENTS

As the above examples illustrate, Miliangos (40) and its successors have enabled English law to escape from the previous, strait-jacket, solution of converting all foreign currency claims into sterling, acknowledging the commercial reality that sterling is no longer the stable and dominant currency that it was during the Victorian era, at the height of the British Empire. Without the change, judges would have been put to much trouble in attempts to avoid injustices caused by the fall in value of sterling against many other major currencies.

Running in parallel with the new approach towards foreign currency claims have been changes in the ways that the courts tackle the assessment of damages. The earlier, centuries-old regime, based on assessment as at the date of breach, has been replaced by a more flexible system, in which judges are generally at liberty to make an assessment at the time at which fairest compensation can be provided. (41) The result of these two sets of changes is that awards can now be made which more closely fit the requirements of better justice, avoiding what in the past have sometimes been unsatisfactory decisions that failed to provide proper financial compensation for an aggrieved party. All these changes have been devised by the courts themselves, which we consider reflects very creditably on the English system of law.

([section]) This article, whatever its shortcomings, is intended as a tribute to the late Professor Norman Palmer, C.B.E., Q.C., and the friendship and interests we shared with him over many years.

* Q.C., London; Visiting Professor of Law, Tulane University, Louisiana.

([dagger]) Sometime Consultant, Holman Fenwick Willan, London.

(1) A striking example affecting the art world was the decision by James Tomilson Hill III to seek an additional 8 million [pounds sterling] above the price at which he had previously been willing to sell Jacopo Pontormo's Portrait of a Young Man in a Red Cap, because of the fall of sterling after he had purchased the painting in 2015: 'Billionaire Abandons Sale of Old Master to National Gallery after Fall in Sterling', The Times, 7 Feb. 2017.

(2) The change in English law flows from a claim for debt, Miliangos v. George Frank (Textiles) Ltd [1976] A.C. 443 (H.L.), which overturned more than a century of contrary practice, and was applied to claims in tort and damages for breach of contract in The Despina R (Owners of the Eleftherotria v. Owners of the Despina R), and The Folias (Services Europe Atlantique Sud (SEAS) v. Stockholms Rederi AB Svea) respectively, both reported at [1979] A.C. 685 (H.L.). The changes and their effect are set out in Howard, Knott and Kimbell, Foreign Currency: Claims, Judgments and Damages (Informa Law, 2016).

(3) Miliangos v. George Frank (Textiles) Ltd [1976] A.C. 443 (H.L.).

(4) See above, note 3, at 488-9.

(5) Attorney General of the Republic of Ghana (Ghana National Petroleum Corp) v. Texaco Overseas Tank Ships Ltd (The Texaco Melbourne) [1994] 1 Lloyd's Rep. 473 (H.L.), in which a somewhat similar situation actually occurred in a dispute involving a lost cargo of oil, where the House of Lords held, in a controversial decision (that has arguably since been side-lined), that compensation should be in a currency that had severely depreciated against the US dollar, the international currency of the oil industry. See Howard, Knott and Kimbell, above, note 2, at para. 6.96 et seq.

(6) The breach-date element has been relaxed in a broad range of situations, such as for a claim in nuisance Dodd Properties (Kent) Ltd v. Canterbury City Council [1980] 1 W.L.R. 433; a contract of sale case, Johnson v. Agnew [1980] A.C. 367, where Lord Wilberforce said (at 401) "this is not an absolute rule: if to follow it would give rise to injustice, the court has power to fix such other date as may be appropriate"; a claim for loss caused by negligent advice, County Personnel (Employment Agency) Ltd v. Alan R. Pulver & Co. [1987] 1 W.L.R. 916, per Bingham L.J. at 925-925; and a claim for damages for breach of a charterparty, Golden Strait Corporation v. Nippon Yusen Kubishka Kaisha (The Golden Victory) [2007] UKFIL 12. The principle of greater flexibility is now well established. As appears below, the degree of flexibility may vary from legal context to legal context. The desirability of such flexibility is also somewhat controversial.

(7) Howard, Knott and Kimbell, above, note 2, Ch. 7.

(8) Ibid, Ch. 6.

(9) Ibid, Ch. 8.

(10) Ibid, Ch. 9.

(11) Ibid, Ch. 10.

(12) See the discussion in Howard, Knott and Kimbell (above, note 2) referencing in Ch. 6 but not accepting the concerns of Professor V. Black in Foreign Currency Claims in the Conflict of Laws (Hart Publishing, 2010).

(13) Research for the twelve months ending March 2015 revealed that 63 per cent of litigants in the Commercial Court were based outside the UK, and that "foreign litigants continue to see London as the international disputes resolution centre of choice": Portland PR Ltd, "Who uses the Commercial Court", April 2015. At present, and subject to any changes that may be made after the full effect of Brexit has been determined, the Rome I Treaty may have an impact upon the law governing contractual claims, while Rome II may have a similar effect on non-contractual claims. Neither treaty affects claims for defamation. See Hetty Gleave 'Art Disputes and Procedural Matters Post Brexit' (2017) XXII Art Antiquity and Law 152.

(14) See above, note 6, for examples of situations where awards may reflect values at the time of a trial.

(15) Each of the present authors had the misfortune to undergo a similar experience within the last three years. The consequences were minor--the main feature being embarrassment--and, contrary to the modem trend, neither author claimed compensation.

(16) See Hoffman v. Sofaer [1982] 1 W.L.R. 1350, where an American citizen received negligent medical treatment while on holiday in England; and Van Oudenhoven v. Griffin Inns Ltd [2000] 1 W.L.R. 1413, where the Dutch claimant was injured by the defendants' negligence while visiting the UK. In each case damages for personal injury were awarded in sterling, and damages for loss of earnings, etc, were assessed in the claimants' own currency but, contrary to the general rule, and possibly to facilitate payment by the defendants' insurers, were also awarded in sterling. See Howard, Knott and Kimbell (above, note 2,) at paras 7.116-7.121 for further comment.

(17) Coinage Act 1971, s. 2(1), as amended.

(18) [1997] CLC 714 (C.A.).

(19) The Comdex decision is analysed in Howard, Knott and Kimbell (above, note 2) at paras 6.1476.153.

(20) See, e.g., the BBC News report of 18 April 2017 relating to the use of goats for the payment of school tuition fees in Zimbabwe: <http://www.bbc.co.uk/news/blogs-news- fromelsewhere39639204>. Many other examples are given in Howard, Knott and Kimbell (above, note 2) in Ch. 15.

(21) On all questions affecting the liability of bailees one must, of course, refer to Palmer on Bailment (3rd edn, Sweet and Maxwell, 2009), the standard work on the subject.

(22) 'ISIS is making $200 million from stolen ancient artefacts', Reuters report, 6 April 2016. The amount is disputed in some quarters, but it is clear that substantial sums have been raised by this method for terrorist purposes.

(23) A case fought in the English High Court and the Court of Appeal: Jabir v. H.A. Jordan & Co. Ltd [2010] EWHC 3465 (Q.B.); [2011] EWCA Civ. 816. As to the case generally, see N.E. Palmer, (2011) XVI Art Antiquity and Law 261, and Art, Adventure and Advocacy (Institute of Art and Law, 2015) at p. 5.

(24) A case fought in the English High Court, the Court of Appeal, and the House of Lords: Fisher v. Brooker & Anor [2006] EWHC 3239 (Ch.); [2008] EWCA Civ 287; and [2009] UKHL 41.

(25) See above, note 24.

(26) Ibid.

(27) [1898] 1 Ch. 581 (C.A.).

(28) Miliangos v. George Frank (Textiles) Ltd [1976] A.C. 443 at 466G (H.L.). See Howard, Knott and Kimbell (above, note 2) at para. 5.3 etseq.

(29) Baigent and Another v. The Random House Group Limited [2006] EWHC 719 (Ch.).

(30) Leaf v. International Galleries [1950] 2 K.B. 86 (C.A.).

(31) Ibid, at p. 89.

(32) Ibid, at p. 94.

(33) A case fought in the English High Court and the Court of Appeal: Salt v. Stratstone Specialist Ltd (t/a Stratstone Cadillac Newcastle) [2015] EWCA Civ 745, paras 32-35.

(34) See now s. 11(4) Sale of Goods Act 1979. Where the buyer has accepted goods under a contract of sale, breach of a condition was to be treated as breach of a warranty, i.e. not giving rise to a right to repudiate the contract.

(35) Section 35 Sale of Goods Act 1979. Acceptance would be deemed to occur either through express communication to that effect to the seller or by reason of lapse of time, as in the Leaf case.

(36) See above, note 2.

(37) See Howard, Knott and Kimbell (above, note 2) at para. 6.18 et seq. for a detailed discussion of this.

(38) See above, note 3.

(39) For detailed comments on the topic of disclosure of documents in a foreign currency claim, and related court procedure generally, see Floward, Knott and Kimbell (above, note 2) at Ch. 14.

(40) See above, note 2.

(41) See, e.g., the cases mentioned above, note 6.
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