Law

London High Court Deems Buyer Secrecy “Not An Absolute Obligation” in Art Fraud Case

London based art dealers Simon Dickinson Ltd have been sued for refusing to reveal certain classified information in relation to the fraudulent sale of an oil painting. In a ruling on 22nd September 2020, the UK High Court refuted the London-based art dealer’s argument that the art world custom of buyer-seller secrecy precluded them from disclosing information to a court of law.

London based art dealers Simon Dickinson Ltd have been sued for refusing to reveal certain classified information in relation to the fraudulent sale of an oil painting. In a ruling on 22nd September 2020, the UK High Court refuted the London-based art dealer’s argument that the art world custom of buyer-seller secrecy precluded them from disclosing information to a court of law.

The claimant, Ms. Linda Hickox, is alleged to be a victim of a scheme by convicted art dealer Timothy Sammons, who according to the Manhattan District Attorney, “between 2010 and 2015 brokered the sale of multiple artworks on behalf of his clients” – including Pablo Picasso’s Buste de Femme (1944) and Marc Chagall’s Rêverie (1969) amongst others – “but failed to turn over corresponding proceeds”. Subsequently in 2019, the Supreme Court of the State of New York convicted Sammons of grand larceny and fraud in an amount between $10 million and $30 million (£8m. – £25m.), from clients spanning the UK, US and New Zealand.

At the crux of Hickox’s claim is the 1896 painting Calanque de Canoubier (Pointe de Bamer) by Paul Signac, which turned out to be one of the artworks Sammons wrongfully misappropriated. The Painting was sold on Hickox’s behalf with Sammons working as an agent in 2013 via Dickinson for $4.85 million. And while Dickinson paid Sammons immediately, Hickox never received any monies from the sale. Hickox claims that Sammons stole the Painting from her, and that she remains its owner.

Pictured: Convicted dealer Sammons at a hearing in Manhattan Supreme Court. Top: Picasso’s Buste de Femme; Bottom: Marc Chagall’s Reverie. © John M. Mantel | Daily Mail

According to court files, once Hickox learned of the New York court’s judgment against Sammons, the former sought information from Dickinson as to the location and purchaser of the Painting, the date of sale, whether Sammons made the sale and who received its proceeds. However, it is commonplace in the art world to keep the identity of private buyers confidential and, despite several attempts, Dickinson’s lawyers refused such disclosure, citing “grounds of confidentiality” and a “lack of legal obligation”.

But, why should a convicted thief and fraudster get to exploit the art market custom of confidentiality to carry out serial fraud? The UK court acknowledged this unfairness – particularly where that same custom prevents a victim from pursuing any further legal recourse.

Still, Hickox’s main challenge was not in proving Sammons’ criminal activity – that much at least was already certain. The issue lay in the fact that Sammons was imprisoned and bankrupt. Hence, any further recourse against the jailed dealer would be futile and would not secure further information, the Painting, or the sale proceeds. Hickox would need to first identify a wrongdoer in order to commence legal action against them or any other forms of redress.

The Court subsequently permitted Hickox’s application to obtain a Norwich Pharmacal Order (NPO) against the defendant London gallery, which is essentially an order for the disclosure of documents or information by the respondent to the applicant. Hickox also pursued the unnamed purchaser for either the civil tort of conversion –   where someone converts another’s property for their own use – or claims in bailment – where the owner transfers physical possession of personal property for a time, but retains ownership.

Pictured: Calanque de Canoubier (Pointe de Bamer) by Paul Signac (1896)

In an explanation to the court, Dickinson’s Managing Director Ms. Emma Ward contended primarily that: confidentiality of client identity is a longstanding art market custom; that such disclosure would put client security at risk; and that, consequently, the integrity of the art market in London would be hurt. The Deputy High Court Judge – Ms. Clare Ambrose – disagreed, asserting that “[the general custom of] confidentiality is not an absolute obligation and that there was no basis to suggest that it could preclude compliance with a court order made for the purpose of pursuing a wrong”. Not only did Dickinson’s concern that its market reputation would be damaged lack weight in relation to a court order, but there was also no reason to consider that Hickox would disclose any sensitive information.

As to the privacy of the purchaser, “their concern to avoid publicity concerning the extent of their wealth and possessions” did not outweigh the claim of a victim of fraud, particularly as Hickox had “a realistic competing claim against that purchaser for ownership”.

Judge Ambrose, agreed that Hickox had sufficient grounds to obtain the NPO and had fulfilled the requirements outlined in Collier & Ors v Bennett [2020]  to do so. Namely: (1) Hickox demonstrated a “good arguable case” due to the legally recognised wrong of theft of the Painting (as opposed to theft of the sale proceeds); (2) Dickinson was “mixed up” in its clients purchase of the Painting, hence facilitating the wrongdoing; (3) the respondent to the application is [likely] able to provide information necessary to enable the ultimate wrongdoer to be pursued; and (4) requiring disclosure from the respondent is an appropriate and proportionate response considering the circumstances.

In response to the court order requiring their disclosure, Dickinson released documents disclosing the identity of the purchaser of the Painting in October 2020. The information will enable Hickox to establish the basis of transactions and determine potential defendants.

Commenting on the outcome of the case, art lawyers Pierre Valentin and Mona Yapova note that considering the recent disclosure obligations imposed on the UK art market [think: last year’s Anti-Money Laundering Regulations], the decision serves to further erode the market’s longstanding tradition of confidentiality.

Case details: Linda Hickox v Simon Dickinson, Simon C Dickinson Ltd [2020] EWHC 2520 (Ch)

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