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Avrora Fine Arts Investment Ltd v Christie, Manson & Woods Ltd

Chancery Division
27 July 2012
Case Analysis
Where Reported
[2012] EWHC 2198 (Ch); [2012] P.N.L.R. 35; Official
Transcript;
Case Digest
Subject: Sale of goods Other related
subjects: Negligence; Arts and culture; Contracts
Keywords: Assumption of responsibility;
Auctioneers; Auctions; Exclusion clauses;
Misrepresentation; Negligence; Paintings;
Reasonableness; Unfair contract terms
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.
Abstract: 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: Judgment for claimant in part.
(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 (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 and Raiffeisen Zentralbank Osterreich AG v
Royal Bank of Scotland Plc [2010] EWHC 1392
(Comm) 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).

Judge: Newey J
Counsel: For the claimant: Henry Legge QC, Jordan
Holland. For the defendant: James Aldridge, Anton
Dudnikov.
Solicitor: For the claimant: Kerman & Co LLP. For
the defendant: Stephenson Harwood LLP.
Significant Cases Cited
Springwell Navigation Corp v JP Morgan Chase
Bank (formerly Chase Manhattan Bank)
[2010] EWCA Civ 1221; [2010] 2 C.L.C. 705; Official
Transcript; CA (Civ Div); 01 November 2010
Raiffeisen Zentralbank Osterreich AG v Royal
Bank of Scotland Plc
[2010] EWHC 1392 (Comm); [2011] 1 Lloyd's Rep.
123; [2011] Bus. L.R. D65; Official Transcript; QBD
(Comm); 11 June 2010
De Balkany v Christie Manson & Woods Ltd
(1997) 16 Tr. L.R. 163; Independent, January 19,
1995; QBD; 11 January 1995
All Cases Cited
Sort by:
Springwell Navigation Corp v JP Morgan Chase
Bank (formerly Chase Manhattan Bank)
[2010] EWCA Civ 1221; [2010] 2 C.L.C. 705; Official
Transcript; CA (Civ Div); 01 November 2010
Raiffeisen Zentralbank Osterreich AG v Royal
Bank of Scotland Plc
[2010] EWHC 1392 (Comm); [2011] 1 Lloyd's Rep.
123; [2011] Bus. L.R. D65; Official Transcript; QBD
(Comm); 11 June 2010
Titan Steel Wheels Ltd v Royal Bank of Scotland
Plc
[2010] EWHC 211 (Comm); [2010] 2 Lloyd's Rep.
92; Official Transcript; QBD (Comm); 11 February
2010
JP Morgan Bank (formerly Chase Manhattan
Bank) v Springwell Navigation Corp
[2008] EWHC 1186 (Comm); Official Transcript; QBD
(Comm); 27 May 2008
IFE Fund SA v Goldman Sachs International
[2006] EWHC 2887 (Comm); [2007] 1 Lloyd's Rep.
264; [2006] 2 C.L.C. 1043; Official Transcript; QBD
(Comm); 21 November 2006
Thomson v Christie Manson & Woods Ltd
[2004] EWHC 1101 (QB); [2004] P.N.L.R. 42; Official
Transcript; QBD; 19 May 2004
Morin v Bonhams & Brooks Ltd
[2003] EWCA Civ 1802; [2004] 1 All E.R. (Comm)
880; [2004] 1 Lloyd's Rep. 702; [2004] 1 C.L.C.
632; [2004] I.L.Pr. 24; Official Transcript; CA (Civ
Div); 18 December 2003
Morin v Bonhams & Brooks Ltd
[2003] EWHC 467 (Comm); [2003] 2 All E.R.
(Comm) 36; [2003] I.L.Pr. 25; Official Transcript;
QBD (Comm); 18 March 2003
Drake v Thos Agnew & Sons Ltd
[2002] EWHC 294 (QB); Daily Telegraph, March 21,
2002; Official Transcript; QBD; 08 March 2002
Overseas Medical Supplies Ltd v Orient
Transport Services Ltd
[1999] 1 All E.R. (Comm) 981; [1999] 2 Lloyd's Rep.
273; [1999] C.L.C. 1243; Official Transcript; CA (Civ
Div); 20 May 1999
McCullagh v Lane Fox & Partners Ltd
49 Con. L.R. 124; [1996] P.N.L.R. 205; [1996] 1
E.G.L.R. 35; [1996] 18 E.G. 104; [1995] E.G. 195
(C.S.); [1995] N.P.C. 203; Times, December 22,
1995; CA (Civ Div); 19 December 1995
White v Jones
[1995] 2 A.C. 207; [1995] 2 W.L.R. 187; [1995] 1
All E.R. 691; [1995] 3 F.C.R. 51; (1995) 145 N.L.J.
251; (1995) 139 S.J.L.B. 83; [1995] N.P.C. 31;
Times, February 17, 1995; Independent, February
17, 1995; HL; 16 February 1995
De Balkany v Christie Manson & Woods Ltd
(1997) 16 Tr. L.R. 163; Independent, January 19,
1995; QBD; 11 January 1995
Smith v Eric S Bush (A Firm)
[1990] 1 A.C. 831; [1989] 2 W.L.R. 790; [1989] 2
All E.R. 514; (1989) 21 H.L.R. 424; 87 L.G.R. 685;
[1955-95] P.N.L.R. 467; [1989] 18 E.G. 99; [1989]
17 E.G. 68; (1990) 9 Tr. L.R. 1; (1989) 153 L.G.
Rev. 984; (1989) 139 N.L.J. 576; (1989) 133 S.J.
597; HL; 20 April 1989
Hedley Byrne & Co Ltd v Heller & Partners Ltd
[1964] A.C. 465; [1963] 3 W.L.R. 101; [1963] 2 All
E.R. 575; [1963] 1 Lloyd's Rep. 485; (1963) 107 S.J.
454; HL; 28 May 1963
Smith v Land & House Property Corp
(1885) L.R. 28 Ch. D. 7; CA; 27 October 1884
All Cases Citing
Sort by:
Mentioned by
Greenridge Luton one Ltd v Kempton Investments
Ltd
[2016] EWHC 91 (Ch); Ch D; 22 January 2016
Mentioned by
Thwaytes v Sotheby's
[2015] EWHC 36 (Ch); [2015] P.N.L.R. 12; Official
Transcript; Ch D; 16 January 2015
Significant Legislation Cited
Misrepresentation Act 1967 (c.7) s.3
Unfair Contract Terms Act 1977 (c.50)
Unfair Contract Terms Act 1977 (c.50) s.2
Legislation Cited
Misrepresentation Act 1967 (c.7)
Misrepresentation Act 1967 (c.7) s.2(1)
Misrepresentation Act 1967 (c.7) s.3
Occupiers' Liability Act (Northern Ireland) 1957
(1957 No. 25)
Occupiers' Liability Act 1957 (c.31)
Unfair Contract Terms Act 1977 (c.50)
Unfair Contract Terms Act 1977 (c.50) s.1(1)
Unfair Contract Terms Act 1977 (c.50) s.1(1)(b)
Unfair Contract Terms Act 1977 (c.50) s.2
Unfair Contract Terms Act 1977 (c.50) s.2(2)
Unfair Contract Terms Act 1977 (c.50) s.6
Unfair Contract Terms Act 1977 (c.50) s.11
Unfair Contract Terms Act 1977 (c.50) s.11(1)
Unfair Contract Terms Act 1977 (c.50) s.11(2)
Unfair Contract Terms Act 1977 (c.50) s.11(5)
Unfair Contract Terms Act 1977 (c.50) s.13(1)
Unfair Contract Terms Act 1977 (c.50) Sch.2
Journal Articles
The art of fine art authentication
Antiques; Art; Attribution; Auctioneers; Duty of care;
False descriptions; Misrepresentation; Ownership;
Paintings; Professional negligence.
L.L.I.D. 2014, Jan 23, 7
The art of fine art authentication
Antiques; Art; Attribution; Auctioneers; Duty of care;
False descriptions; Misrepresentation; Ownership;
Paintings.
L.L.I.D. 2014, Jun 12 Supp (A legal year in brief
2013-2014), 11
Basis clauses and the Unfair Contract Terms Act
1977
Assumption of responsibility; Auctioneers; Duty of
care; Exclusion clauses; Unfair contract terms.
L.Q.R. 2014, 130(Jul), 377-382
Positive news for fine art insurers
Antiques; Attribution; Auctioneers; Breach of duty of
care; Jewellery; Negligence; Paintings; Valuation.
L.L.I.D. 2013, May 2, 7
Positive news for fine art insurers
Antiques; Attribution; Auctioneers; Breach of duty of
care; Jewellery; Negligence; Paintings; Valuation.
L.L.I.D. 2013, May 21 Supp (A Legal Year in Brief
2012-2013), 22
Effective exclusion in B2B contracts
Commercial contracts; Exclusion clauses;
Reasonableness; Unfair contract terms.
S.J. 2013, 157(33), 19
Auction house standard terms and conditions
Auctioneers; Breach of warranty; Exclusion clauses;
Misrepresentation; Negligence; Paintings;
Reasonableness; Standard terms; Unfair contract
terms.
P.L.C. 2012, 23(8), 54
Books
Benjamin's Sale of Goods 9th Ed. Incorporating
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Benjamin's Sale of Goods 9th Ed.
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Chitty on Contracts 32nd Ed. Incorporating First
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Chitty on Contracts 32nd Ed. Incorporating First
Supplement
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Chitty on Contracts 32nd Ed. Incorporating First
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Chapter: Chapter 15 - Exemption Clauses
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Chapter: Chapter 15 - Exemption Clauses
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Clerk & Lindsell on Torts 21st Ed. Incorporating
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exclusion of duty
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Exclusion Clauses and Unfair Contract Terms
11th Ed.
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Clauses
Documents: Some special exclusion clauses
Exclusion Clauses and Unfair Contract Terms
11th Ed.
Chapter: Chapter 7 - The Unfair Contract Terms Act
1977: Some Preliminary Points
Documents: Varieties of exemption clause
Jackson & Powell on Professional Liability 8th
Ed.
Chapter: Chapter 5 - Defences
Documents: Sub-section (a) - The Position at
Common Law
Jackson & Powell on Professional Liability 8th
Ed.
Chapter: Chapter 22 - Art Professionals
Documents: Sub-section (i) - Contractual Duties
Jackson & Powell on Professional Liability 8th
Ed.
Chapter: Chapter 22 - Art Professionals
Documents: Sub-section (b) - Duties to Third Parties
Jackson & Powell on Professional Liability 8th
Ed.
Chapter: Chapter 22 - Art Professionals
Documents: Sub-section (i) - Reasonable Standard
Keating on Construction Contracts 10th Ed.
Chapter: Chapter 6 - Excuses for Non-Performance
Documents: Section 4. - Misrepresentation Act 1967
Practical Intellectual Property Precedents
Chapter: G10 Statutory Restrictions on Contractual
Freedom
Documents: Introduction
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