(1) Aclbdd Holdings Ltd v (1) Ruedi Staechelin
| Jurisdiction | England & Wales |
| Judge | Mr Justice Morgan |
| Judgment Date | 16 January 2018 |
| Neutral Citation | [2018] EWHC 44 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC 2014 000468 |
| Date | 16 January 2018 |
[2018] EWHC 44 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Rolls Building, London, EC4A 1NL
Mr Justice Morgan
Case No: HC 2014 000468
Jonathan Cohen QC and Ashley Cukier (instructed by Grosvenor Law) for the Claimants
John Wardell QC and James McCreath (instructed by Lipman Karas LLP) for the Defendants
Hearing dates: 28, 29, 30 June, 3, 4, 5, 6, 10, 11 July 2017
The claim in outline
The primary claim made in these proceedings is for $10 million by way of commission which is said to be due to one or more of the Claimants from the Defendants, or some of them. The Claimants say that the commission was earned and became payable in connection with the services that one or more of the Claimants rendered to the Defendants, or some of them, in connection with the sale of a painting by the Defendants to the Emir of Qatar on 10 September 2014 for the sum of $210 million. The commission is said to be due pursuant to an express or implied agreement providing for it to be paid. The Claimants or some of them claim, in the alternative, that they are entitled to an amount of commission assessed on the basis of a quantum meruit.
The painting
The painting which is at the centre of this dispute is a work by Paul Gauguin painted in 1892. It was painted in Tahiti and shows two native Tahitian women. It is entitled Nafea faa ipoipo and is often referred to as “the Nafea”. The name translates as: “When will you marry?” I will refer to it, somewhat prosaically, as “the painting”.
The painting was acquired by Rudolf Staechelin-Finkbeiner in Geneva in 1917 for 18,000 Swiss francs. He was a significant Swiss art collector. His collecting focused, in particular, on French Impressionist and Post-Impressionist paintings and Swiss art. The core of his collection was acquired in the 1910s and 1920s. In 1931, he formed a Familienstiftung, a family foundation, to which ownership of his collection was transferred. As explained below, the painting was transferred to the Rudolf Staechelin Family Trust on 7 January 2002.
The Claimants
Mr de Pury describes himself as an art dealer specialising in the buying and selling, brokering and curating of impressionist, post-impressionist, modern and contemporary art. He began his career in his native Switzerland in the early 1970s. He joined Sotheby's auction house in 1974 and he remained with Sotheby's until 1979. He was the curator of a private art collection until 1986 when he returned to Sotheby's. He was appointed chairman of Sotheby's Switzerland and, later, chairman of Sotheby's Europe. In 1997, he jointly founded an art consultancy and advisory company, de Pury & Luxembourg which later merged with the auctioneers, Phillips, to form Phillips de Pury. Between 2001 and 2012, he was Chairman and chief auctioneer of this company and became its sole owner in 2003. He later sold his interest in the company pursuant to two transactions in 2008 and 2012. Mr de Pury speaks German, French and English. He is fluent in English and gave his evidence in English without an interpreter.
Mrs de Pury married Mr de Pury in 2001. She has a Ph. D. in medieval and renaissance art although in her career she has focused on modern and impressionist, post-war and contemporary art. She has worked at various art houses and joined Phillips de Pury in 2001 as a senior partner. Like her husband, Mrs de Pury speaks German, French and English. She is fluent in English and gave her evidence in English without an interpreter.
In around December 2012, Mr and Mrs de Pury left Phillips de Pury and set up de Pury & de Pury LLP (“the LLP”). Mr and Mrs de Pury are the members of the LLP. It offers its services in relation to art consultancy, advice on sales and purchases of art and acts as a broker or agent in relation to such transactions. The LLP operates from premises in London. Mr and Mrs de Pury say that the arrangements which they made in this case, in relation to the commission payable on the sale of the painting, were made by them as agents for the LLP as an undisclosed principal. Accordingly, they say that the LLP is entitled to bring this claim to commission. In the alternative to this claim, Mr and Mrs de Pury say that they are entitled personally to bring this claim to commission.
ACLBDD Holdings Ltd (“ACLBDD”) was originally the sole claimant in these proceedings. It was incorporated in Jersey on 12 October 2012. On 19 June 2013, ACLBDD entered into a consultancy agreement with the LLP under which it appointed the LLP as a consultant which was to provide services to ACLBDD. The services were to take the form of assistance to ACLBDD in connection with transactions involving the sale and purchase of works of art. The purpose behind the creation of ACLBDD was to allow the LLP to say that transactions which might be otherwise be perceived as being conducted by the LLP were instead conducted by ACLBDD with the result that any resulting commissions or fees or profits would be earned in Jersey and not in London and VAT would not be charged on commissions and fees payable by clients to ACLBDD. The case originally put forward was that the LLP was acting as an undisclosed principal for ACLBDD so that it was entitled to bring a claim to commission in relation to the transaction the subject of these proceedings. For various reasons which were suggested to me on behalf of the LLP and Mr and Mrs de Pury, the claim by ACLBDD was not pursued. Nonetheless, the arrangements which had been entered into by ACLBDD and the LLP and the operation, or purported operation, of those arrangements in relation to a number of other transactions was the subject of detailed cross-examination of Mr and Mrs de Pury where it was suggested to them that the arrangements they operated, or purported to operate, involved dishonesty on their part and the deliberate evasion of taxes payable by the LLP or by them.
The Defendants
Mr Staechelin is Swiss and lives in Basel. He is the grandson of Rudolf Staechelin-Finkbeiner who originally bought the painting in Geneva in 1917. He became the president of the family foundation following the death of his father in 1977. He has throughout been a trustee of the Rudolf Staechelin Family Trust. He joined Sotheby's in its Basel office in 1991, first as co-head and then as sole head of that office. He remained there until the late 1990s. Mr Staechelin is fluent in English and gave his evidence in English.
Mr de Pury and Mr Staechelin went to school together for a short time. In 1989, Mr Staechelin and the family foundation dealt with Mr de Pury (then at Sotheby's) in connection with the sale of another painting by Paul Gauguin. From that time, they became friends. In 1990, Mr de Pury offered Mr Staechelin a position as co-head of Sotheby's office in Basel. In the mid-1990s, Mr de Pury advised the family foundation on a proposed move of the collection to an art museum in the United States. In 2001, Mr de Pury acted for the family foundation in connection with a proposed sale of a Picasso but the sale did not complete. Shortly thereafter, as an alternative to selling the Picasso, the trust decided to sell a Matisse. Mr de Pury acted in connection with the sale of the Matisse. The Matisse was owned by the trust which transferred it to the family foundation which then completed the sale.
It is clear that Mr de Pury and Mr Staechelin are no longer friends. Their friendship broke down over the sale of the painting in this case. As I will explain, in July 2014 Mr Staechelin believed, wrongly, that Mr de Pury had told him a lie about the negotiations for the sale. Mr Staechelin then decided that neither he nor the trustees would pay any commission to Mr and Mrs de Pury. This claim for commission was then brought and it has been strenuously defended. In the course of that defence, counsel for the trustees has cross-examined Mr and Mrs de Pury in an attempt to show that they have committed criminal offences, have been guilty of tax evasion and have been dishonest.
Mr Paisner is a solicitor. He is currently a member of Berwin Leighton Paisner LLP. He has practised in that LLP or in a predecessor firm since 1970. He has been a trustee of the Rudolf Staechelin Family Trust since its creation in 2001.
Ms McCaffrey is an attorney qualified in New York. She is a member of McDermot Will & Emery LLP where she has practised since 2011. Before that, she practised at Weil Gotshal & Manges LLP for 37 years. She has been a trustee of the Rudolf Staechelin Family Trust since its creation in 2001.
The trust
On 3 December 2001, the family foundation, as settlor, created the Rudolf Staechelin Family Trust. The trust is governed by New York law. The trust is a discretionary trust. The beneficiaries under the trust are the living issue of Rudolf Staechelin-Finkbeiner and any individual financially dependent on any such issue. At present, the relevant issue are Mr Staechelin, his son, Martin, and Martin's son.
The terms of the trust were set out in a written Trust Agreement dated 3 December 2001. By Article III(C)(2), it was provided that the trustees had power to employ agents and to compensate them out of the trust fund. By Article III(E), it was provided that no person dealing with the trustees should be bound to inquire into the authority of any action by the trustees. By Article III(J), it was provided that the trustees were authorised to retain, or lend or “otherwise deal” any works of art which were the subject of the trust. By Article X(C), it was provided that all decisions as to the trust authorized or required to be made under the Trust Agreement should...
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