Judge says art auction house ‘reprehensible’

Renowned auction house Christie’s Australia has been called “reprehensible” by a NSW judge for not telling a client there were credible reasons to believe she had bought a fake painting.

Equity Court Chief Justice Patricia Bergin said Christie’s decision not to inform its client of the very real possibility it had inadvertently auctioned a fake was “commercially reprehensible and unconscionable”.

“I am satisfied Christie's knew the [claim the painting was an original] was false and decided not to correct it. Christie's had an obligation to correct the representation,” Justice Bergin said.

“The falsity of the representation was known to Christie's before the transaction was completed [and before the buyer] paid the $10,000 buyer's premium to Christie's. I am satisfied Christie's is guilty of the tort of deceit.”

The judge’s comments followed a lengthy trial late last year where Sydney lawyer Louise McBride sued Christies, art agent Vivienne Sharpe, vendor Holland Fine Art and Cars (HFA) and HFA director Alex Holland over the $75,000 purchase. She claimed they had been deceitful and not fulfilled their fiduciary duties to ensure the purported Albert Tucker painting was authentic. She also sued Ms Sharpe for negligence and exceeding her purchase budget.

The court was told that Ms McBride had asked Ms Sharpe to purchase an appropriate piece of artwork for investment purposes. Ms Sharpe had worked through Christie’s Australia and, on May 1, 2000, settled on what was said to be an original Albert Tucker named Faun and Parrott after it was passed in at auction.

Ms Sharpe paid $85,000, including a $10,000 buyer’s premium for the artwork.

A few weeks after the auction, an art dealer approached Christie’s with concerns about the painting’s authenticity and others from the same collection. No documentary or photographic evidence of the painting existed and Tucker’s widow Barbara did not think it was genuine.

However Christie’s did not inform Ms McBride, Ms Sharpe or HFA of the possibility the painting was fake, despite having many opportunities to do so. The decision was deliberate and amounted to deceit, Justice Bergin said.

The court heard Ms McBride remained unaware the painting was potentially a fake for nearly 10 years until she tried to sell some of her art collection in 2010 and learned of the concerns from a decade earlier.

Subsequent expert evaluations confirmed the painting was probably a fake because of inconsistencies in the technique and signature and the lack of documented evidence.

Ms Sharpe sued Christie’s and others involved in the auction and purchase, seeking the cost of the painting and interest she had paid through financing arrangements. She also sued Ms Sharpe alleging she was negligent in purchasing a fake and had exceeded an agreed purchasing limit without first seeking approval.

Justice Bergin found the entire episode had resulted in an unconscionable deceit against Ms McBride and awarded her $118,788.71, including the purchase price, her $10,000 buyer’s premium and interest.

She dismissed the claim against Mr Holland but found his company, HFA, and the art dealer had to accept some blame. She found Christie’s responsible for 85% of the loss, HFA 10% and Ms Sharpe 5%.

“Christie's held real concerns about the authenticity of the painting very soon after the auction,” she said. “Christie's chose to remain silent and not alert HFA, Capital Finance [Ms McBride’s financial backers], Ms Sharpe or [Ms McBride] to the possibility the painting was a forgery or at the very least that there were real difficulties with its provenance. This was particularly disgraceful.”

The other’s responsibility was because of their lack of diligence in authenticating the painting, despite several warning signs such as a lack of verifiable history.

Justice Bergin rejected Ms McBride’s claim Ms Sharpe was personally negligent, other than bearing a part in the collective responsibility. Otherwise, the art dealer had taken all the steps “a reasonably competent and diligent art dealer would be expected to take in the circumstances of this case” by relying on the verification of others.

She also dismissed the claim Ms Sharpe had exceeded her authority. Ms McBride did not express concern at the time of the purchase and willingly paid the asking price.

(McBride v Christie's Australia Pty Ltd [2014], NSWSC 1729, 4/12/14)