Summary

The claimant had established that a painting bought by it at an auction by Christie's was a forgery; it was entitled to a refund under a limited warranty given by Christie's, but the latter's conditions of sale barred the claimant's claims in negligence and misrepresentation.

Facts

The claimant company (F) brought a claim against the defendant auctioneer (C) seeking the cancellation of its purchase of a painting; it also made claims for negligence and misrepresentation.

F was owned by a very wealthy Russian individual; it had been set up with a view to building up a collection of Russian art. The painting, which was called "Odalisque", had been bought by F at an auction held by C for £1.5 million; the painting was said to be by a famous Russian artist called Kustodiev (K). After the sale, an art dealer who had been asked to view F's collection expressed doubts about the painting, and certificates were later obtained from Russian museums stating that the painting was not by K. The catalogue for the auction sale at which the painting was sold incorporated C's conditions of sale. They contained a limited warranty enabling the buyer, in the case of certain items, to cancel the sale and obtain a refund in the event that the item was found not to be authentic. They also provided that all statements made were statements of opinion; that, subject to the limited warranty, C would not be responsible for errors and omissions in the catalogue; that each item would be sold "as is"; and that, subject to the limited warranty, no representation, warranty or guarantee would be given in respect of matters such as attribution, authenticity and provenance.

Held

(1) As to F's claim to cancel the purchase under the limited warranty, the main issue was whether Odalisque had been painted by K. The expert (or connoisseurship) evidence provided the most reliable guide to authenticity. That evidence indicated quite strongly that K was not the painter. Certain material tended to suggest the contrary, but the expert evidence was more compelling, and the absence of any known reference to the painting in the archives reinforced the conclusion that Odalisque was not by K. F was therefore entitled to cancel its purchase of the painting and to recover the money paid (see para.118 of judgment). (2) F had asserted that C had been negligent in attributing Odalisque unequivocally to K and that it had impliedly represented that it had reasonable grounds for holding the opinion that Odalisque was by K when it did not in fact have such grounds (para.120). As to the negligence claim, C's conditions of sale made it clear that it was not assuming responsibility to F, De Balkany v Christie Manson & Woods Ltd (1997) 16 Tr. L.R. 163 considered (para.127). However, a misrepresentation had been made: it was clear that C not only warranted that Odalisque was by K but represented that that was its opinion; as C was giving its opinion as well as a warranty, it had impliedly represented that it had reasonable grounds for holding that opinion (para.134). It was necessary to consider the applicability and effect of the Unfair Contract Terms Act 1977. C had argued, in relation to the negligence claim, that the Act did not apply, because the relevant conditions of sale merely defined the scope of the task undertaken by it, as opposed to being terms that excluded or restricted an obligation or duty. A provision which purported to prevent an assumption of responsibility would be subject to the Act if it attempted "retrospectively to alter the character of what has gone before" or "to rewrite history or parts company with reality", Springwell Navigation Corp v JP Morgan Chase Bank (formerly Chase Manhattan Bank) [2010] EWCA Civ 1221, [2010] 2 C.L.C. 705 and Raiffeisen Zentralbank Osterreich AG v Royal Bank of Scotland Plc [2010] EWHC 1392 (Comm), [2011] 1 Lloyd's Rep. 123 applied. C's conditions did part company with reality insofar as they negated an assumption of responsibility, with the result that the Act applied (paras 139, 144-146). It was also necessary to consider the "requirement of reasonableness" under the Act: the Misrepresentation Act 1967 s.3 prevented the conditions from barring a claim under that Act unless the relevant parts of the conditions satisfied the requirement; moreover, by virtue of s.2 of the 1977 Act, a person could not exclude or restrict his liability for negligence except insofar as the term in question satisfied the requirement. The requirement of reasonableness was met. Among other things, there was, given the warranty, no question of F's being left without a remedy if Odalisque proved not to be by K. Further, C could reasonably take the position that it should not be exposed to a claim in circumstances where the likelihood was that it had been correct that Odalisque had been painted by him. Moreover, while C contracted only on its own standard terms, F was a vehicle for a particularly rich man and it was under no economic imperative to deal with C if it did not wish to; F also appeared to have had some familiarity with C's terms, and in any event could reasonably be expected to know of them. Accordingly, the relevant parts of the conditions were not invalidated by either s.2 of the 1977 Act or s.3 of the 1967 Act and so would have served to bar F's claims for negligence and misrepresentation (paras 147, 152-153).

Judgment for claimant in part