A complex situation arose when the owners of The Madonna and Child with St Anne and a Lamb, the Liechtenstein-based Accidia Foundation, decided to sell it. Acting on the foundation's behalf, the Monaco-based collector Gheri Sackler approached dealer and consultant Daniella Luxembourg in November 2006, asking her to arrange the sale.
She, in turn, approached art dealership Simon C. Dickinson Ltd for help in marketing the work and the firm duly negotiated a sale at $7m, having established through Ms Luxembourg that her client was happy to accept $6m. The $1m commission represented the difference between these two figures.
Daniella Luxembourg then took a commission of $500,000 and a further $500,000 was paid to Gheri Sackler as the representative of Accidia.
The judge accepted that Accidia, who only learned of the true nature of the deal and the $7m sale in April 2008, were only expecting to pay ten per cent of the gross selling price, as negotiated by Ms Luxembourg.
Thus he ruled that $700,000 would be a fair sum for commission on the whole deal and that since Luxembourg Art Limited had already been paid $500,000, Dickinson's firm were only entitled to $200,000, plus £2500 for restoration costs.
Counsel for Accidia tried hard to show that Dickinson's firm had acted "surreptitiously and disreputably", but the judge dismissed this accusation, saying Mr Dickinson and his fellow director Emma Ward, who was involved in the sale, were "entitled to assume that Ms Luxembourg would have explained the deal they had made to her client, when it turned out that she had not".
However, he went on to say that the fact that the firm had not acted surreptitiously did not mean that it was automatically entitled to be remunerated. He said that the evidence showed that Simon C. Dickinson Ltd was aware that it was acting as an agent for Accidia and that "It could and should have done more to make sure that Accidia understood the less than usual arrangement it had reached with Ms Luxembourg...".
The judge commented on the principle of 'net return price' deals, where a dealer obtains the price expected by the vendor and retains any amount over and above that as commission. He said that he was not satisfied that "any custom or practice exists whereby art dealers agree with principals or their agents for a return price on the basis that the dealer may sell the piece at any price without informing the principal or his agent of that ultimate price or the level of commission the dealer thereby receives after passing on only the return price."
Though Daniella Luxembourg was not involved in the court action, the judge was critical of her role in the deal because she did not keep her client informed. He said that "fully informed consent was sought and obtained by Dickinson from Ms Luxembourg, but never sought or obtained by Ms Luxembourg from Mrs Sackler or Accidia".
He said that the case was really about "two innocent parties who have been forced to litigate because of the conduct of a third, whom neither has chosen to bring before the court, namely Luxembourg Art Limited and Ms Luxembourg".
By Mark Bridge