Lawyers believe auction houses face growing legal risk over premium

A SPECIALIST art industry lawyer believes the courts may scrutinise the buyer’s premium far more closely now that Christie’s and Sotheby’s have raised it to 25 per cent at the bottom end.

ATG legal columnist Milton Silverman, of London-based solicitors Streathers, put his views forward in a letter to the newspaper as Sotheby’s announced that they would match Christie’s move to charge the buyer higher fees for lots sold below £10,000.

He is backed in his opinion by retired lawyer John Osler.

At the heart of Mr Silverman’s view is that, since the payment of a buyer’s premium at all has been questioned in the courts already, the latest increase “will certainly increase the acuteness of this conflict [between duty to buyer and seller]… There is no doubt that this heightens the possibility of disputes arising and possible litigation.”

He pointed to the case of Marie Zelinger de Balkany against Christie, Manson and Wood in 1995, stating that although judgment was passed on other grounds, “the judge… made specific mention of the buyer’s premium and was concerned to know what, exactly, Madame de Balkany received in return for it”.

He also referred to the special duty of care to buyer Taylor Lynne Thomson – admitted by Christie’s – in the Houghton urns case, which the auction house won on appeal in 2005.

Meanwhile, Mr Osler has focused on the ongoing debate over whether any contract exists between the buyer and auction house.

He argues that under English civil law there is no contract and that the auction house therefore “cannot claim a contractual payment from the buyer under it”.

He continues: “The auction house might seek to argue that its terms of business and conditions set out in the catalogue form the basis of a contract between the house and the buyer, but then the house has to show that it has provided services to the buyer which constitute the consideration for the payment. To argue that there is such consideration does bring into focus… where the house’s duty lies: to the seller or the buyer, as their respective interests are diametrically opposed.”

Having given his legal opinion, Mr Osler challenged lawyers from the auction houses to give theirs, pointing out where he is wrong, if they believe he is.