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	England and Wales High Court (Queen's Bench Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Scheps v Fine Art Logistic Ltd [2007] EWHC 541 (QB) (16 March 2007) URL: http://www.bailii.org/ew/cases/EWHC/QB/2007/541.html Cite as: [2007] EWHC 541 (QB)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		16th March 2007

Mr. Justice Teare :

Introduction

1. In 1984 the sculptor Anish Kapoor created Hole and Vessel II. It was made of polystyrene, cement, earth, acrylic and pigment and measured 95.2cm x 162.5cm. x 109.2cm. It is not possible for me to describe it. One expert described it as sensuous and sexy, the other as clumsy and somewhat absurd. There is however agreement that it was made during Kapoor's transitional phase when he was "moving away from an exploration of the male/female dichotomy towards an exploration of the void." In his later works "the void" became an important element. In 1991 Kapoor won the Turner Prize and in recent years the market value of his sculptures has increased very substantially.
2. The Claimant, Ofir Scheps, purchased Hole and Vessel II from the Phoenix Insurance Company in June 2004 at a price of US$35,000 whilst it was being stored by Christies. In the same month he instructed Fine Art Logistics Limited, the Defendant, to collect the sculpture from Christie's, and store it before taking it to Anish Kapoor's studio in London for some restoration work. But in September 2004 it could not be found by the Defendant in any of its storage units. It is the considered opinion of the general manager of the Defendant that Hole and Vessel II was, by mistake, placed in a skip and destroyed at a waste transfer station.
3. The Claimant demands either the return of the sculpture or damages in the sum of £600,000 which is said to be its present day value. The Defendant says that it cannot return the sculpture and that its liability for the loss of the sculpture is limited to the sum of £587.13 pursuant to its standard terms and conditions.
4. The Claimant was born in Israel in 1958 but is a Swiss citizen. He is an art consultant and collector who specialises in 19^th and 20^th century art. From 1989 until 2002 he worked at the Petit Palais Museum in Geneva, firstly as the personal assistant to the owner of the collection, Baron Oscar Ghez de Castelnuovo, and then as the director of the museum from the mid-1990s. His purchase of Hole and Vessel II was a private purchase.
5. The Defendant is an English company which was incorporated in 2000 but carried on no business until 2003. In that year it purchased the assets and goodwill of The Packing Shop Limited which was in administration. From 2003 until about August 2004 the Defendant traded as The Packing Shop retaining its management team, personnel and premises.
6. The premises of The Packing Shop were in Ponton Road, London. In about June 2004 the Defendant decided to amalgamate the storage premises of Cadogan Tate (the parent company of the Defendant) and of The Packing Shop into one site at Ponton Road. For this purpose building work was required at Ponton Road. Thus some or all of the storage space at Ponton Road had to be cleared. It was during the clearance of Ponton Road that the Defendant maintains that Hole and Vessel II, packed in a case weighing 200kg., was unceremoniously placed in a skip and removed for disposal as waste.

The contract between the Claimant and the Defendant

7. On 3 June 2005 the Claimant e-mailed Nina Ketani of the Defendant. He requested the Defendant to take Hole and Vessel II into storage from Christie's. There is no e-mail or other response from the Defendant to the Claimant but the request must have been accepted because a Collection Note dated 7 June 2004 was prepared by or on the instructions of Nina Ketani in respect of the Claimant's request. The request was given a Job Number and the Collection Note gave instructions that Hole and Vessel II was to be collected and taken "to Unit 8 – for Swiss Van". Unit 8 was one of the storage facilities at Ponton Road and the Swiss Van was a vehicle used for making weekly deliveries to and from Geneva. The sculpture was collected on 15 June 2004 and taken into the custody of the Defendant. There is no evidence that the Defendant informed the Claimant at any time between 3 June 2005 and 15 June 2004 that the sculpture was to be taken into the Defendant's custody pursuant to its standard terms and conditions.
8. The Defendant maintains, however, that agreement between the parties incorporated the Defendant's standard terms and conditions. Clause 9 provides as follows:

"If we are liable for losing damaging or failing to deliver your goods our liability will be limited to a maximum payment in proportion to £350 per cubic meter of the volume of the missing or damaged item even if it forms part of a pair or set or had exceptional or antique value before it was lost or damaged."

9. No argument was addressed to me as to the true construction of this clause but it was common ground that if this term was fair and reasonable pursuant to The Unfair Contract Terms Act 1977 and/or The Unfair Terms in Consumer Regulations 1999 then it limited the Defendant's liability for the loss of Hole and Vessel II to £587.13.
10. Thus the first question to decide is whether the Defendant's standard terms and conditions formed part of its agreement with the Claimant. It has been submitted on behalf of the Defendant that its terms and conditions were incorporated into that contract because it is usual in the transport and storage trade for services to be provided on standard terms and conditions that limit liability and that the Claimant was aware of this as a result of his considerable experience of arranging for the transport of works of art. In this regard reliance was placed, in particular, upon British Crane Hire v Ipswich Plant Hire [1975] QB 303 and Laceys Footwear (Wholesale) Ltd. V Bowler International Freight Ltd [1997] 2 Lloyd's Rep.369.
11. I accept that it is usual for transport and storage of fine art in London to be provided on the basis of terms and conditions which contain a limit of liability. Jonathan Hood, a director of the Defendant who has been involved in the fine art storage and transport industry for most of his working life, gave evidence that fine art storage is a niche market in London. Only 6 or 7 companies are engaged in it. Those companies have terms which limit their liability.
12. The Claimant, when working at the Petit Palais Museum in Geneva, was involved in the transport of works from the museum to other museums throughout the world. He said that several people worked in the transport department and that Baron Oscar Ghez was responsible for such matters. He said that the museum worked with 2 or 3 freight forwarders who engaged transport companies. The scope and extent of the Claimant's involvement in and knowledge of transport matters was explored in the course of his oral evidence.
13. On behalf of the Claimant it was submitted that I should find that he had no involvement with standard terms or conditions or their operation and therefore did not know that the transport companies used by the museum operated on such terms, let alone on terms that limited liability. On behalf of the Defendant it was submitted that the Claimant knew that transport and storage companies contracted on standard terms and conditions which were likely to limit liability.
14. In a letter dated 25 January 2005 written by the Claimant to Mr.Jenkins of the Defendant, the purpose of which was to complain about the apparent loss of Hole and Vessel II and demand compensation for that loss, he stated that he had "very long experience in working with art transporters". He said that he supervised and was responsible for the transport of about 100 paintings a year on loan to exhibitions and in his 13 years at Petit Palais he had "supervised all transport formalities for over 13000 works". In his oral evidence he accepted that these statements were true but said that his experience and supervision were "at a certain level" and that he was "not acting alone". It was suggested to him that, because the extent of his knowledge and experience of transport was an issue in these proceedings, he had diminished his role in his oral evidence. His oral evidence may well have been directed to diminishing the importance of his role but on the other hand his letter of 25 January 2005 appears to have exaggerated his role in an attempt to persuade the Defendant to pay substantial damages for the loss of the sculpture. I have concluded that he dealt with transport matters but that he did not have sole responsibility for transport, at least whilst Baron Oscar Ghez was alive.
15. The Baron died in about 1998 and from about then, according to the Claimant's witness statement, the Claimant moved from being a personal assistant to the owner to being the director of the museum. Whilst it might be thought that at that stage he must have assumed greater responsibility for transport (and no doubt other) matters, the Claimant said that his responsibilities remained much the same. This is odd and in circumstances where he moved from being a personal assistant to being the director of the museum cannot strictly be true. But his evidence may be explained by the circumstance that after the death of the Baron the museum did less and less exhibition work and so the amount of transport which had to be organised also fell. That was, the Claimant said, the reason why he left the museum.
16. The Claimant was asked about the extent of his knowledge of the terms and conditions used by the freight forwarders and transport companies engaged by the museum. His evidence as to his knowledge was both vague and specific. It was vague in that he accepted that he "probably" realised that they had terms and conditions but specific in that he said he did not know what the terms were or that, in particular, they sought to limit their liability for the loss of items consigned to them. He said that he had not heard of the CMR Convention pursuant to which carriers of goods by road may limit their liability. He said that in the course of his work for the museum he did not look to see what terms and conditions applied to the transport of the museum's works of art. These were matters dealt with by Baron Oscar.
17. I do not accept that the Claimant was as unaware of commercial realities as some of his answers suggested. It is more likely than not that the Claimant was aware that freight forwarders and transport companies had terms and conditions. It is difficult to envisage that he was unaware of this having regard to the circumstance that he was involved in transport matters as personal assistant to the Baron and later as director of the museum. Indeed he accepted that he "probably" knew that they had terms and conditions. Whilst he did not say that he "probably" knew that such terms and conditions were likely to contain limits on liability it must be likely that he was aware, at least in general terms, of the practice of transport companies to limit their liability. That is because of his involvement in transport matters when working for the museum.
18. However, I accept his evidence that whilst working at the museum he did not investigate the specific terms on which the freight forwarders and transporting companies engaged by the museum carried the museum's works of art or in particular the extent to which they limited their liability. Whilst it may be regarded as surprising that the Claimant did not examine with care the terms and conditions upon which the museum's valuable works of art were transported when he was the personal assistant to Baron Oscar and, the more so, when he directed the museum the explanation may well be that his role was more concerned with the selection and cataloguing of works of art. There was no evidence that any work of art had ever been lost which might have led him to investigate the terms on which the museum's works of art were carried. Thus, whilst the Claimant was not an art connoisseur ignorant of business life he was not the careful businessman suggested by the Defendant.
19. Some attention was addressed to the insurance of works of art owned by the museum whilst being transported to other museums. The Claimant said that the museum itself took out no insurance on works of art which had been collected by transport companies but that the transport companies or the museums to which the works of art were being consigned did. He said that he always made sure that works of art were insured and that he or Baron Oscar gave valuations of the works of art to the transport companies. It was suggested that he always appreciated that in the absence of insurance the museum would not be able to recover the full value of an item which was lost because he knew the transport company would have limited its liability. Although he was probably aware, in general terms, of the practice of transport companies to limit their liability I am not satisfied that the Claimant made sure that works of art were insured because he knew that he could not recover their value from the transport companies. It is more likely that he followed the museum's practice of checking that works of art were insured whilst being transported because that was good practice and because he thought, in a general sense, that being insured was better protection than relying upon a cause of action against the transport companies.
20. Whatever the state of the Claimant's knowledge as to the practice of freight forwarders and transport companies engaged by the museum in Switzerland to limit their liability there is no evidence that the Claimant had any particular knowledge of the terms and conditions used by the Defendant and the other companies involved in fine art storage and transport in London. All that can be said is that if he had asked himself whether they traded on terms and conditions it is likely that he would have concluded, based upon his experience in Switzerland with the museum, that they probably did and in some way limited their liability for loss or damage. This is indeed suggested by an answer given in his oral evidence to the effect that having e-mailed Nina Ketani with instructions concerning Hole and Vessel II he said that he was extremely surprised not to receive a reply "informing me as to their conditions, transport costs and all these things we discussed". He sought to explain that he meant transport costs, storage costs and insurance matters. I am sure that transport and storage costs and insurance matters were amongst the matters in respect of which he expected a reply but his mention of "conditions" was separate from transport costs and I consider that it reflected his understanding that the Defendant would probably supply its services pursuant to certain terms and conditions which might well include limits on the Defendant's liability. However, the Defendant made no mention of any such terms and conditions. Nor had it done so on an earlier occasion in March 2004 when the Claimant asked the Defendant to arrange for the transport of a painting by Caillebotte from London to New York.
21. I should mention two points which arose in connection with insurance of the Caillebotte and Hole and Vessel II. (1) It was submitted that the Claimant obtained his own insurance in respect of the Caillebotte and expected to hear from Nina Ketani about insurance of Hole and Vessel II because he knew that the Defendant's liability was limited. I agree that the probabilities are that the Claimant was aware, at least in general terms, of the practice of transport companies to limit their liability and understood that the Defendant would probably supply its services pursuant to certain terms and conditions which might well include limits on the Defendant's liability. But I do not think that his dealings with Nina Ketani prove anything more than that. The Caillebotte was insured by the Claimant for transport from Paris to New York via London. The Defendant was responsible for only part of that transport. The obtaining of such insurance is consistent with good practice and does not necessarily indicate a specific knowledge of the extent to which the Defendant's terms and conditions limited its liability. Equally, expecting to hear from Nina Ketani about insurance does not necessarily indicate that the Claimant appreciated the extent to which the Defendant's terms and conditions limited its liability. In the event the Claimant did not insure the sculpture whilst it was in the possession of the Defendant, which does not suggest an appreciation of the extent to which the Defendant's terms and conditions limited its liability. (2) The Claimant suggested that he had a discussion with Nina Ketani in which he said that the sculpture was worth £150,000-£200,000. He said in his evidence in chief that he assumed she wanted this information in order to insure the sculpture while it was in the Defendant's possession. In cross-examination he said that he told her to check the value. This evidence was prompted by study of an e-mail dated 11 June 2004 from Nina Ketani to Christies on which manuscript figures appeared, including £150,000-£200,000 and $35,000-$50,000. However, I consider that the Claimant has read too much into these figures. I am not able to accept his evidence that he assumed Nina Ketani wanted this information to enable the Defendant to insure it. If he had had a discussion about values with Nina Ketani and assumed that she wanted information about values in order to insure the sculpture the matter would have been of such importance in the context of this case that he would surely have remembered it before his 6^th.witness statement served on the first day of the trial. If the manuscript figures reflect a discussion with the Claimant (and it is possible that they do because of the mention of the figure of $35,000) the figures are more likely to relate to the VAT problem referred to in the e-mail.
22. It is now necessary to identify the proposition (or propositions) for which the two cases relied upon by Counsel for the Defendant stand as authority.
23. The principle for which British Crane Hire stands is stated by Lord Denning at p.311 of the judgment.

"I would not put it so much on the course of dealing, but rather on the common understanding which is to be derived from the conduct of the parties, namely, that the hiring is to be on the terms of the plaintiff's usual conditions.

As Lord Reid said in McCutcheon v David Macbrayne Ltd. [1964] 1 WLR 125 at 128 quoting from the Scottish textbook, Gloag on Contract 2^nd.ed(1929) p.7:

"The judicial task is not to discover the actual intentions of each party; it is to decide what each was reasonably entitled to conclude from the attitude of the other." "

24. The quotation from Gloag emphasises the objective nature of the test and the facts of British Crane Hire illustrate the application of that test. Both parties to the hiring contract were in business of hiring out cranes and were of equal bargaining power (pp.308D and 310D). On two occasions in the year previous to the contract in question the defendants had hired cranes from the plaintiffs on the latter's terms and conditions (p.310A). The defendants knew that forms in the plant-hiring trade always imposed conditions in regard to the hiring of plant: and that their conditions were on much the same lines (p.310D). Most were "to one extent or another variations of a form …called the Contractors Plant Association form" (p.310E). Thus Lord Denning was able to say:

"in view of the relationship between the parties, when the defendants requested this crane urgently and it was supplied at once-before the usual form was received-the plaintiffs were entitled to conclude that the defendants were accepting it on the terms of the plaintiffs' own printed conditions-which would follow in a day or two. It is just as if the plaintiffs had said: "We will supply it on our usual conditions" and the defendants had said "Of course, that is quite understood" (p.311D-E).

25. It is readily understandable how the principle referred to by Lord Denning applied. By reason of the plaintiffs and the defendants being in the same business and of equal bargaining power, trading upon similar terms derived from the Contractors Plant Association and having in fact traded on two occasions in the immediate past upon on the plaintiffs' terms the plaintiffs could readily conclude that the defendants intended to trade on the plaintiffs' terms.
26. British Crane Hire is not mentioned in Lacey's Footwear. The material facts of the latter case were that the defendants had for some time been soliciting the plaintiffs' custom and on about 5 occasions between 1985 and 1991 the plaintiffs had received a letter from the defendants which referred to their trading conditions on the reverse of the letter (p.371 col.1). In October 1992 the plaintiffs requested a quote and the defendants replied with a quote which referred to their trading conditions on the reverse in the same way as the previous letters. The quotation was accepted (p.371 col.2). The representative of the plaintiffs accepted that he would have noticed the terms and conditions. He understood that they allowed "the transport people to get out of something and as long as I am fully insured they cannot hurt me."(p.378 col.1). Beldam LJ (with whom Saville LJ agreed) therefore concluded that the plaintiffs' representative

"knew that carriers and forwarding agents such as [the defendants] did contract on terms and conditions which limited or were likely to limit their liability as carriers though he did not read them because, as he said, he was meticulous about insuring goods. …..[He] was well aware that there most probably were terms and conditions and, had he chosen to do so, he could have read them (with some difficulty) and informed himself of them…..his frame of mind was that he was prepared to enter into the contract of carriage on the basis of the terms and conditions whatever they were because he was going to takes steps to see he was properly insured. Thus … the terms and conditions did apply to this contract of carriage. (p.378 col.1)

27. If this is an illustration of the principle stated in British Crane Hire then it can fairly be said that by reason of the several letters from the defendants referring to their terms and conditions and from the terms of the correspondence in October 1992 the defendants were able to conclude that the plaintiffs intended to contract on the terms and conditions of the defendants. However, the case could also be explained as one where the defendant's offer to contract referred to their terms and conditions and the plaintiffs accepted that offer upon those terms.
28. The present case is, in my judgment, very different from the two cases relied upon by counsel for the Defendant. The Defendant at no stage provided the Claimant with a copy of its terms and conditions or with a document which referred to them. The Claimant was a private customer of the Defendant's. There was nothing about the status in which the Claimant dealt with the Defendant which might have led the Defendant to believe that the Claimant was dealing with the Defendant on the basis of the Defendant's terms and conditions. Nor was there anything done or said by the Claimant which might have led the Defendant to believe that the Claimant was contracting with the Defendant upon the basis of the Defendant's terms and conditions. Although it is more likely than not that the Claimant understood that the Defendant would probably supply its services pursuant to certain terms and conditions which might well include limits on the Defendant's liability, that does not, in my judgment, entitle the Defendant to rely upon its terms and conditions against the Claimant because the Defendant at no stage mentioned its terms and conditions and, objectively, there was no reason why the Defendant might reasonably conclude that the Claimant intended to contract with the Defendant on the basis of the Defendant's terms and conditions.
29. For these reasons I have concluded that the Defendant's terms and conditions were not incorporated into the agreement between the Claimant and the Defendant.

Was the limit fair and reasonable ?

30. In view of my finding that the terms and conditions were not incorporated I shall deal with this issue shortly. It was common ground that either the Unfair Contract Terms Act 1977 or the Unfair Terms in Consumer Contracts Regulations 1999 or both applied. I have therefore had regard to Schedule 2 to the former and to regulations 5 and 6 of the latter. I have also been referred to Singer Co. v Tees and Hartlepool Port Authority [1988] 2 Lloyd's Rep. 164 and Frans Maas (UK) Ltd. V Samsung Electronics (UK) Ltd. [2004] 2 Lloyds Rep.251.
31. The primary argument for saying that the term was not fair and reasonable is that the term restricts the liability of the Defendant to a very small sum, £350, per cubic metre (apparently whatever the cause of the loss or damage – neither the Claimant nor the Defendant said that its scope should be narrowly interpreted ) in circumstances where many of the items of fine art stored by the Defendant are likely to be worth much more. Mr. Jonathan Hood, a director the Defendant, agreed that the majority of items dealt with by the Defendant were worth more than £350 and that the average value was about £2,000. He also gave evidence that the other companies in this niche market in London had similar limits so that the Claimant did not have the opportunity of making a contract with others on more favourable terms. Finally, it does not appear that the Claimant took any steps to bring this limit to the attention of the Claimant. On the other hand, the cost of insuring unlimited liability is likely to be considerable, assuming that it would be available. There was evidence from Debbie Honnor who worked for the Defendant in 2004 (but did not deal with the Claimant) that the Defendant habitually asked its customers about the value of the item in question and whether they wanted the Defendant to insure it. She herself always advised people to insure.
32. In my judgment it is fair and reasonable for a company engaged in the business of fine art storage and transport to limit its liability to a fixed sum per weight or volume because the goods entrusted to them can vary so much in value. This need not harm the owner because he knows the value of his property and can insure it. However, my conclusion assumes that the limit is clearly brought to the attention to the customer. This is a relevant matter to consider; see Schedule 2 to the 1977 Act which includes, as a relevant matter, "whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard among other things to any custom of the trade and any previous course of dealing between the parties)". In the present case the Defendant took no steps to bring the limit to the attention of the Claimant. As was said by Mr.Jenkins in another context "systems were not as tight down at Ponton Road as they should have been". Nor is there any evidence from Nina Ketani that she offered to arrange insurance for the Claimant. In the particular circumstances of this case, therefore, I would have held that the limit was not fair and reasonable had I found that the contract had been on the terms of the Defendant's standard terms and conditions.

What has happened to Hole and Vessel II ?

33. The Defendant accepts that it has been unable to deliver the sculpture from its custody to the Claimant. Although there is no direct evidence as to what has happened to the sculpture the Defendant says that on the balance of probabilities the sculpture was placed in a skip as waste and presumably disposed of as waste. The Claimant does not accept this explanation. He is not satisfied that it has been destroyed in the manner suggested though he has no positive case that it remains in the custody of the Defendant. He maintains that since the Defendant cannot establish that it no longer has custody of the sculpture he is entitled to an order for its delivery pursuant to section 3 of the Torts (Interference with Goods) Act 1977. Neither party suggested that the sculpture has been stolen.
34. It is accepted that the sculpture had been taken into the custody of the Defendant on 15 June 2004. That therefore is prima facie evidence that the sculpture is in the custody of the Defendant. The Defendant opposes the making of an order for the delivery up of the sculpture and so the evidential burden must lie on it to prove that on the balance of probabilities the sculpture is no longer in its custody.
35. The Defendant adduced evidence from David Jenkins, the General Manager of the Defendant, who coordinated the attempts to locate the sculpture. His evidence may be summarised as follows.
36. The collection note indicated that the sculpture was taken into storage unit no.8 at Ponton Road which is a secure, alarmed unit of approximately 8300 sq.ft. divided into 5 bays. When building work commenced at Ponton Road in July and August 2004 unit 8 was cleared and items stored in that unit were moved into one of the other units in Ponton Road. In unit 8 were also some empty and unused crates and waste packing material. These were to be placed in a skip but instructions were given to the Defendant's employees and agency staff to open any crate which was sealed and did not have a job sheet in order to check the contents. Once the building work was complete items were returned to unit 8 or to other units. A small number of items were placed in containers and sent for storage at Acton Lane. It appeared from Mr.Jenkins' evidence in cross-examination that careful records were not kept of what items went where.
37. In September 2004 when Hole and Vessel II was due to be moved to Anish Kapoor's studio for renovation the sculpture could not be found. Mr.Jenkins ordered a search of unit 8 and then of the other units in Ponton Road. He also searched for the sculpture himself. It could not be found. On 14 September 2004 he handed the Claimant a letter in which he said that it appeared that the sculpture had been transferred to Acton and that he was to arrange a search of Acton on 17 and 18 September. This search did not reveal the missing sculpture; nor did subsequent searches, some of which were conducted with the Claimant. Enquiries were also made of two large consignments which had left Ponton Road. When these were complete on 15 November Mr.Jenkins e-mailed the Claimant advising him that the sculpture should now be considered missing. It was apparent from his evidence in cross-examination that checks were also made at the Defendant's other premises at Relay Road and in Berkshire.
38. Mr.Jenkins thought theft was most unlikely, the sculpture being difficult to move, difficult to store and difficult to dispose of. He concluded that it must have been put in a skip by mistake and subsequently destroyed as waste. The skip in question was large and large items could be walked in through two large doors or thrown in by fork lift truck.
39. The possibility explored in cross-examination was that Hole and Vessel II had by mistake been sent to Switzerland. This was based upon the undoubted fact that the collection note contained the instructions "To unit 8 – for Swiss Van". Mr. Jenkins does not appear to have given this possibility much credence. In his evidence in chief he interpreted the instruction as an instruction to deliver the sculpture to Unit 8 using the Swiss van. However, the Swiss van was not used for this purpose because the driver who collected the sculpture was not qualified to drive the Swiss van. In cross-examination it was suggested to him that the sculpture was put in the Swiss van for transport to the Claimant in Switzerland as a means of avoiding liability for VAT. Mr.Jenkins did not think this likely because there was no other paperwork and paperwork would have been required to get the crate containing the sculpture through customs and accepted by the Swiss companies with whom the Defendant dealt. He also said that he had instructed an employee, Eddie James, who spoke French, to telephone the Swiss companies with which the Defendant dealt. He reported that they had received nothing which was unexpected. However, Mr.Jenkins did not himself organise a search of the premises in Switzerland to which the Swiss van delivered (or of the premises in Paris from which the Swiss van collected items for delivery to Christies in London). He said that the Swiss company would have been asked to conduct a search themselves. He said that nothing had been found. In addition he checked through the documentation for the items carried by the Swiss van during the period June 15 until 7 September 2004. There were about 70 jobs and only two items approached the required volume for Hole and Vessel II. The paper work suggested that the correct goods had been delivered in both cases.
40. It was suggested to Mr.Jenkins that he had convinced himself early on that the sculpture had been destroyed and therefore saw little point in wasting time and effort in searching for it properly. It was also suggested to him that because there was thought to be a limit on the Defendant's liability and any liability was covered by insurance it was not commercially productive to use management time searching for the missing sculpture. Mr.Jenkins did not accept these suggestions. I formed the view that he was a conscientious manager who was very much troubled by the disappearance of the sculpture and who had carried out as thorough a search as he reasonably could. In his evidence he stressed the fact that the reputation of the company had been damaged and that he had a lot of sympathy for the client. I do not accept the suggestion that he failed to carry out a proper search for any of the reasons suggested.
41. There are of course matters which point to Mr.Jenkins' suggestion as to what happened to the sculpture being unlikely. The collection note must either have come off the crate or had been ignored. A sealed crate which cannot have felt empty must have been manhandled or lifted by forklift into a skip for removal as waste. However, the sculpture has not been found in any of the Defendant's storage facilities. It has not been reported as having been found in the Swiss facilities used by the Defendant. Significantly, the period June to August 2004 was not an ordinary time for the storage of works of art by the Defendant. The storage facilities were the subject of building works and items stored were being moved out of unit 8 where the sculpture had been kept without accurate record being kept as to what was going where. Staff of the Packing Shop were being moved from one part of the premises to another and were, according to Mr.Jenkins, not happy with the take over by Fine Art Logistics. In addition there were agency staff working on the removal of items from unit 8. Although there were aspects of the search conducted by Mr.Jenkins which could have been improved or made more complete (eg keeping a record of precisely what parts of the storage facilities were searched and when, searching the records for crates of the volume of the crate which contained the sculpture rather than the volume of the sculpture itself and sending an employee to Switzerland and Paris to check the premises visited by the Swiss van) I am persuaded that it is more likely than not that Hole and Vessel II was placed in a skip and destroyed at some time between June and September 2004.
42. I therefore find that Hole and Vessel II is no longer in the custody of the Defendant. In such circumstances the appropriate remedy cannot be an order to deliver up the sculpture because that would be an order to do that which the Court has found, to the required standard of proof, to be impossible. The loss and destruction of the sculpture was a wrongful interference with the Claimant's sculpture (in particular a conversion of it) and the Defendant is liable in damages for the resulting loss (see Clerk and Lindsell on Torts 19^th.ed. para.17-83 fn 71).

The date at which damages are to be assessed

43. There is an issue between the parties as to whether damages should be assessed at the date of the conversion or at the date of judgment. Although several cases were referred to the most recent and authoritative discussion of the remedy of damages for conversion is to be found in Kuwait Airways Corpn.v Iraqi Airways Co. (Nos.4 and 5) [2002] 2 AC 883 in the speech of Lord Nicholls of Birkenhead with whom Lords Steyn, Hoffman and Lord Hope agreed. Lord Nicholls said at p.1090 of the report, paragraph 67:

"The fundamental object of an award of an award of damages in respect of this tort, as with all wrongs, it to award just compensation for loss suffered. Normally ("prima facie") the measure of damages is the market value of the goods at the time the defendant expropriated them. This is the general rule, because generally this measure represents the amount of the basis loss suffered by the plaintiff owner. He has been dispossessed of his goods by the defendant. Depending on the circumstances some other measure, yielding a higher or a lower amount, may be appropriate. The plaintiff may have suffered additional damage consequential on the loss of his goods. Or the goods may have been returned."

44. In the present case Hole and Vessel II was lost and destroyed by about September 2004. If the Claimant is awarded the value of the sculpture at that date together with consequential damages to compensate the Claimant for the rise in value which occurred thereafter (assuming it to have been reasonably foreseeable and lost by reason of the conversion) the Claimant will have recovered just compensation for the loss suffered.
45. The primary argument on behalf of the Claimant assumed that the Claimant would obtain an order for delivery up of the sculpture with an option to pay damages. In such event it was said with force that in such circumstances damages should be assessed on the basis of the value of the sculpture as at the date of the judgment. But the Claimant has not secured such an order.
46. It was also said that only by awarding the value of the sculpture at the date of judgment will effect be given to the cardinal principle that the claimant should be put in the same position, as nearly as money can do so, as he would have been in had the tort not been committed. But an award of the value of the sculpture at the date of the conversion coupled with damages for consequential loss to compensate the Claimant for the rise in value which occurred thereafter and which was reasonably foreseeable and which the Claimant lost by reason of the conversion will also give effect to that cardinal principle. Similarly, such an award will enable the Claimant to purchase a replacement sculpture if and when one comes up for sale. (If one does not come up for sale until the market has risen further such an award may be regarded as insufficient. But so would an award based upon the market value as at the date of the judgment.)
47. On behalf of the Defendant it was objected that a claim for consequential damages had not been properly pleaded. The Amended Particulars of Claim state that the Claimant has suffered loss, the particulars being the alleged present value of the sculpture and the Claimant's expenses in seeking to recover the sculpture. The latter is not particularised or pursued. The former, the present value of the sculpture, is pursued. It is not pleaded that in the alternative the Claimant's loss is the value of the sculpture plus consequential damages in respect of the rise in value of the sculpture until the date of judgment, but that point was in fact taken in the alternative in the Claimant's Closing Note. Whilst the pleading point was taken in the Defendant's Skeleton Argument counsel went on to say why consequential damages could not be recovered on the grounds of causation and foreseeability. It is plain that the absence of an express plea claiming the increase in value as consequential damages has not prejudiced the Defendant in dealing with the claim for the increased value as consequential loss. For these reasons it is just to allow the Claimant to advance this claim for consequential loss in the alternative.

The value of Hole and Vessel II in September 2004

48. On this topic I have had the benefit (and enjoyment) of expert evidence from Mr. Ben Brown who was called by the Claimant and from Mr. Michael Thompson-Glover who was called by the Defendant. The valuation of Hole and Vessel II is a difficult task for at least two reasons. Firstly, it is common ground that between 2004 and 2006 prices for Kapoor's sculptures have risen between two and three times. Secondly, whilst several works from his later period have been sold at public auction in the last two years or so, the most recent sale of a work from his transitional phase (of which Hole and Vessel II is an example) was in May 2004, namely, a work created in 1984 and known as Untitled 1984.
49. The Claimant bought the sculpture in June 2004 for US$35,000. Ordinarily that would be good evidence of the market value in September 2004. However, it appears that the Claimant bought the sculpture at a price well below its market value, for in November 2002 Christies had estimated its value at US$60-80,000 and the market price had risen substantially since then. The sale price does not therefore appear to be a good indication of its market value.
50. The range of opinion as to the value of Hole and Vessel II both in September 2004 and at the present time is considerable. Mr.Brown considered that the minimum price at which a gallery would offer the piece for sale at present would be £500,000 and that at auction it might make much more. With the buyers' premium a hammer price of £500,000 would mean a total outlay of £580,000. He considered that in September 2004 the piece would have been worth about £200,000 plus the buyer's premium of £40,000. Mr. Thompson-Glover, on the other hand, assessed the present day value at about £250,000 and the value in September 2004 at about £65,000. In his report he stated that these values included the buyer's premium though in his oral evidence he appeared to have forgotten that and suggested that the premium was to be added.
51. The value of a work of art, at any rate for the purposes with which I am concerned, is the price which a willing purchaser will pay to a willing seller in an arm's length transaction. A buyer at auction knows that his total outlay must include the buyer's premium. Although it is paid to the auction house rather than to the vendor he must be willing to pay it. I consider that an assessment of value must include the buyer's premium.
52. Mr. Brown's expertise was that of a dealer in modern and contemporary art. He has his own gallery and prior to that he had been director of the Contemporary Art Department at Sothebys and had managed a gallery specialising in modern and contemporary art. He was familiar with Anish Kapoor's sculptures and had seen many of them but not Hole and Vessel II. Mr. Thompson-Glover had a different expertise. Prior to this case he had no particular familiarity with Anish Kapoor's sculptures but had considerable experience of valuing works of art, firstly at Sothebys and secondly in his own firm of valuers. It was submitted on behalf of the Claimant that Mr. Brown was the expert to be preferred. On behalf of the Defendant it was submitted that Mr. Thompson-Glover's approach was the more empirical and was independent whereas Mr.Brown's views were coloured by his personal likes and dislikes. In addition he regarded himself as a friend of Kapoor with whose work he had been commercially involved.
53. In my judgment both experts had their merits and their demerits. Mr.Brown's familiarity both with the work of Kapoor and with the market's views of it plainly gave his opinion cogency. But it was apparent that his views on valuation were to an extent affected by his own likes and dislikes and possibly by the heated nature of the present market for Kapoor's works. Mr. Thompson-Glover, on the other hand, had no personal knowledge of the market for Kapoor's works but brought analytical skills to the process of valuation.
54. I shall first summarise their opinions. Mr.Brown considered that Hole and Vessel II was one of the more important works from Kapoor's early years and of museum quality. It was unique in the sense that it was not one of a series of editioned sculptures from the same mould. His opinion was supported by the fact that Germano Celant, curator of the Prada Foundation in Milan included it an exhibition of Kapoor's work at the Hayward Gallery in 1998 and in a book to accompany the exhibition. Further, Mr.Brown considered that Hole and Vessel II, being a red pigment sculpture, is a most desirable work and, being free standing, is more desirable that a wall mounted work and yet not so large that it cannot be exhibited in a collectors' home.
55. Mr. Brown assessed its present day value by comparing its desirability with other sculptures by Kapoor which have been recently sold at auction. Thus he considered that it was at least as desirable as an alabaster work Untitled from 1999 which sold for £456,000 (hammer price plus buyer's premium) in London in June 2006. Both pigment and alabaster works are rare. Pigment works from the early period are rare because many were sold to museums and so do not often come on to the market. Two blue pigmented works from 1989 and 1991, Mother as a Ship and Goddess (Void), sold in November 2004 and June 2006 for £173,000 (hammer price plus premium) and £254,000 (hammer price plus premium). Mr. Brown considered Hole and Vessel II more valuable than both of these because they were more commonly found, were less complex and were wall mounted. Mother as a Ship was too large for the typical collector and Goddess (Void) was in black, a less desirable colour. Neither was as sensuous and sexy as Hole and Vessel II. In his report dated 12 October 2006 he valued Hole and Vessel II at about £450,000. In his further report dated 13 February 2007, having taken account of some very recent sales in London in February 2007 he valued it at £500,000. With the buyer's premium added the purchaser would pay £580,000.
56. So far as the value in September 2004 is concerned Mr.Brown found this a more difficult exercise. His valuation in September 2004 was £200,000 plus a buyer's premium of £40,000. He reached this valuation by noting the sale of of Untitled 1984 in May 2004 for £80,000 (inclusive of premium) and forming the opinion that Hole and Vessel II was worth 2-3 times more than Untitled 1984.
57. Mr. Thompson-Glover assessed the value of Hole and Vessel II by considering its importance relative to other comparable sculptures of Kapoor that have appeared on the market. He spoke to those whom he believed to be specialists in the field and has reviewed the available literature. He concluded that Hole and Vessel II cannot compare with the later works which emphasise the void, such as Mother as a Ship. Whereas the early works, such as Hole and Vessel II, illustrated the artist's interest in the polarity between male and female, the later works explored the void, bringing the viewer into an unsettling relationship with the sculpture. "The eye is unable to gauge the exact depth of the deep blue void which has an unsettling effect and invokes a strong spiritual and physical response." Having considered auction prices, the relative importance of the work and the views of those to whom he spoke he assessed the value of Hole and Vessel II in his report dated 19 October 2006 as follows: September 2004 at about £50,000 and October 2006 at about £130,000. In his later report dated February 2007, having taken into account an estimate by Christies' estimate of the value of Hole and Vessel II and the latest sales he increased his assessment of the value in September 2004 to £65,000. His revised assessment of the value in October 2006 was £175,000 and its present day value was £250,000.
58. The submission made on behalf of the Claimant is that the opinion of Mr. Brown is to be preferred and is not displaced by either by Christies' estimate of value in November 2002 or by consideration of the sale of Untitled 1984 in May 2004. The submission made on behalf of the Defendant is that Mr. Thompson-Glover's opinion is supported by the Christies' estimate and by consideration of the sale of Mother as a Ship in November 2004.
59. I shall first consider the Christies' estimate. Christies gave an estimate of the price likely to be achieved at auction by Hole and Vessel II in November 2002 in the sum of US$60-80,000. Even if one factors in the evidence of Mr.Brown that the market had doubled between 2002 and 2004 this suggests a valuation in September 2004 of only US$120-180,000 which is considerably less than Mr. Brown's estimate of £200,000. However, Mr. Brown gave a cogent reason for not placing weight on estimates, namely, that auction houses tended to estimate values as low as they could without losing the sale to the opposition. The lower the estimate the greater the interest in the object. Against that it is to be noted from the "Table of Works Sold" (helpfully prepared for the use of the Court) that in the period 1995-2004 some estimates of the value of Kapoor works proved to be a reasonable guide to value. Whilst I do not consider that Christies' estimate in 2002 (when uplifted to 2004) provides convincing evidence of the value of Hole and Vessel II in 2004 it does provide reason to question whether the value could really have been as high as suggested by Mr. Brown in 2004.
60. Untitled 1984 is a wood, aluminium, gesso and red pigment sculpture created in 1984. It sold for £80,000 in May 2004. It is smaller than Hole and Vessel II, has to be wall mounted and, in the opinion of Mr.Brown, is less sensuous and less desirable than Hole and Vessel II. Mr.Brown considered that Hole and Vessel II was 2-3 times as valuable as Untitled 1984 and therefore the sale was not inconsistent with his valuation. Indeed, it supported his valuation. This illustrates the importance of Mr. Brown's subjective appreciation of a work to his valuation (as did his dismissal of Untitled 1985, a red pigmented sculpture, which achieved £30,550 in February 2002, as "a dog"). By contrast Mr. Thompson-Glover expressed the opinion that Untitled 1984 had more commercial appeal than Hole and Vessel II. I consider that the price achieved by Untitled 1984 in May 2004 provides a further reason at least to question whether the value of Hole and Vessel II could really have been as high as suggested by Mr.Brown in 2004.
61. Mother as a Ship is a fibreglass on blue pigment sculpture created in 1989. It was sold in London in 1998 for £47,500 (including premium) and was sold again in November 2004 for over £170,000 (including premium). It was a later work than Hole and Vessel II, it features the void and, by not exploring "the male/female dichotomy", is of a simpler form than Hole and Vessel II. Mr. Brown considers Mother as a Ship to be less valuable than Hole and Vessel II because it comes from a later period. Pieces from that period are not as rare as pieces from the earlier period. It is larger than Hole and Vessel II and has to be wall mounted. He considers that it falls outside the optimal size range for a typical collector. By contrast Mr. Thompson-Glover considers that Hole and Vessel II cannot compare in appeal with works from the later period such as Mother as a Ship.
62. There are indications in the "Table of Works Sold" that Kapoor's later works are valued more highly than works from the earlier, transitional period. Thus in October 1998 Mother as a Ship (1989) sold in London for £47,700 including premium whilst in December 1998 In the search of the mountain II (a blue pigmented sculpture in wood from 1985) failed to sell in London (with an estimate of £12-15,000). In June 2000 Untitled 1985 (a red pigmented sculpture in wood with gesso) also failed to sell (with an estimate of £35-40,000). In May 2004 Untitled 1984 sold for £80,000 whilst in November 2004 Mother as a Ship (1989) sold for £170,000. On the other hand one has to be cautious in drawing conclusions from these comparisons because Pot for Her (a blue pigmented sculpture from 1985 sold for £45,500 in 1998 (the same year as Mother as a Ship achieved £47,700) and Vessel (a blue pigmented sculpture from 1985) sold in 2000 for £58,000 (the same year that Untitled 1985 failed to sell).
63. When one compares the Christies' estimate for Hole and Vessel II in 2002, up rated to $120-160,000 for 2004, with the Sotheby's estimate for Mother as a Ship in 2004 of $250-350,000, the comparison indicates that Mother as a Ship was considered to be more than twice as valuable as Hole and Vessel II. But having regard to the warnings given by Mr. Brown about auctioneers' estimates it is necessary to exercise caution in drawing conclusions from this comparison.
64. Of most significance is Mr. Brown's evidence in re-examination when he was asked, if Mother as a Ship and Hole and Vessel II came up for auction at the same time, which would sell for more. He thought they would make about the same though possibly Mother as a Ship would make more at auction. It was a "classic void"; it was an "easier piece"; there is a "larger market" for it. On the other hand "amongst certain cognoscenti in the art world [Hole and Vessel II] could be arguably a more valuable piece because there ain't no more."
65. I consider that this evidence is important and helpful in comparing Hole and Vessel II with Mother as a Ship. It shows that Mr. Brown recognised that the later works, emphasising the void, were more marketable. The earlier works such as Hole and Vessel II were less marketable but could be of particular attraction to knowledgeable collectors anxious to possess an earlier and rarer example of Kapoor's work. This coincided to some extent with Mr. Thompson-Glover's assessment of the appeal of the later works compared with the earlier works.
66. I have therefore concluded that the price likely to be achieved by Hole and Vessel II between a willing buyer and a willing seller in September 2004 would not be more than the sale price in fact achieved by Mother as a Ship in November 2004 of over £170,000 (including buyer's premium) and would probably have been less.
67. Mr. Thompson-Glover has estimated that Hole and Vessel II was worth about £65,000. However, whilst he went about the task of valuing Hole and Vessel II in a conventional manner his cross-examination exposed reasons for doubting the reliability of his conclusions. He had seen none of Kapoor's work save for one piece in 2000. He relied heavily upon other people's opinions which could not be tested in cross-examination. There was reason to believe that he had misunderstood what at least one of his interviewees told him and others to whom he spoke were not experts. Whilst his analysis of Kapoor's work was helpful his valuations ultimately lacked cogency.
68. On the other hand there were elements of enthusiasm in Mr. Brown's reports and evidence which were coloured more by his own likes and dislikes rather than by an objective analysis of the price likely to be achieved by Hole and Vessel II. Nevertheless, he was very knowledgeable of Kapoor's work and had an understanding of the market's appreciation of it. In valuing Hole and Vessel II in September 2004 and assessing how much less it would fetch than Mother as a Ship it is necessary to have regard to the sale of Untitled 1984 in May 2004 and in comparing the appeal of that work and Hole and Vessel II Mr. Brown's evidence is of assistance.
69. Untitled 1984 sold for £80,000 (including premium) in May 2004. It was estimated by Sothebys at £22-34,000. It is a wood, aluminium, gesso and red pigmented sculpture created in 1984, the same year as Hole and Vessel II. It is smaller than Hole and Vessel II and has to be wall mounted. Mr. Brown described it as less sensuous than Hole and Vessel II. They both featured a void but to a lesser extent than the later works.
70. In his reports Mr. Brown considered that Hole and Vessel II was worth 2-3 times the value of Untitled 1984. This would value it at £160-240,000 in September 2004 which would suggest that it was worth rather more than Mother as a Ship. For the reasons I have given this is unlikely to be the case. However, whilst Mr. Brown has, I think, exaggerated the value of Hole and Vessel II by comparison with Untitled 1984 I do accept his evidence that Hole and Vessel II is worth more than Untitled 1984. It is larger, but not so much larger that it would not appeal to many collectors. It is more complex. Whilst that means that it is not an "easy piece" or "a classic void" like Mother as a Ship and so not as valuable as that work, it contains, as Mr. Brown said, and I accept, more of "the key elements of Kapoor's oeuvre, which collectors look for." Mr. Thompson-Glover's opinion was that Untitled 1984 had more commercial appeal than Hole and Vessel II but in matters of commercial appeal I prefer the evidence of Mr. Brown.
71. Having considered the evidence of the experts and the arguments of counsel I have concluded that the value of Hole and Vessel II was significantly more than Untitled 1984 and significantly less than Mother as a Ship. Mr. Brown's opinion expressed in re-examination that Hole and Vessel II might fetch about the same as Mother as a Ship was, I think, optimistic and out of step with his acceptance that Mother as a Ship was a classic void, an easier piece and more marketable. However, I accept that interest from connoisseurs anxious to acquire a good example of an early Kapoor might well push up the price of Hole and Vessel II. I have also taken into account that the market value was increasing between May and September 2004. For these reasons I consider that the value of Hole and Vessel II was probably closer to Mother as a Ship than to Untitled 1984.
72. I therefore find that the value of Hole and Vessel II in September 2004 was about £135,000. Since the sculpture required renovation costing £3,000, that sum should be deducted to give a value of £132,000.

The value of Hole and Vessel II at the date of judgment

73. The experts agreed that between 2004 and October 2006 the prices for Kapoor's sculptures increased between 2 and 3 times. Thus in October 2006 the value of Hole and Vessel II (in sound condition) was about £337,500. There is agreement between the experts that by February 2007 the prices had increased still further. Mr. Brown increased his value by over 10% and Mr. Thompson-Glover increased his value by over 40%. I prefer Mr. Brown's estimate of the increase. Thus as of the date of this judgment I find that the value of Hole and Vessel II is about £371,250 (in sound condition).

Remedies

74. The Claimant is therefore entitled to damages in the sum of £132,000, being the value of what he lost in September 2004. He also claims as consequential damages the subsequent rise in value of the sculpture since then.
75. It is submitted on behalf of the Defendant that no consequential damages have been suffered by the Claimant as a result of the loss of the sculpture, alternatively that the losses claimed are too remote.
76. The first point on causation is that the sculpture was bought as a wedding present for the Claimant's wife and so he would not have enjoyed ownership of the appreciating asset. The fullest statement of the Claimant's intentions with regard to the sculpture was as follows: "I bought the piece intending to give it my wife as a wedding anniversary present and so that it would form part of our own personal collection of artworks." The exact meaning of this intention was not explored in evidence. A "gift" does of course suggest that the Claimant was intending to transfer ownership of the sculpture to his wife. However, he also said that the intention was that the sculpture would form part of "our own personal collection of artworks." This suggests that the Claimant's intention was that he and his wife would retain ownership of the sculpture jointly. In these circumstances I consider that the Claimant would have continued to enjoy the ownership of Hole and Vessel II as it appreciated in value.
77. The second point on causation is that there has been delay in the prosecution of the claim and as a result the Claimant cannot claim for the increase in value during such delay. It was said that the failure to commence proceedings until November 2005 was an unreasonable delay. I disagree. No doubt proceedings could have been commenced earlier but I am not persuaded that the delay was unreasonable. This is an unusual case and proceedings were commenced 12 months after the Defendant had concluded that the sculpture was missing. It was further said that the original trial window of November/December 2006 was pushed back to February 2007 because the Claimant changed solicitors. There has been no explanation as to why this was necessary and accordingly I am unable to find that the loss represented by the increase in value from November/December 2006 until February 2007 was caused by the loss of the sculpture. Had there been no change of solicitors it is likely that judgment would have been delivered before January 2007 when the value of Hole and Vessel II would have been about £354,375 (allowing about a 5% increase in value from October 2006).
78. So far as remoteness is concerned it is said that the rise in value of Kapoor works from September 2004 was not reasonably foreseeable. It was said that the rise in value was comparable with the "particularly lucrative dying contracts" in Victoria Laundry (Windsor) v Newman Industries [1949] 2 KB 528. However, there was no evidence that the recent appreciation in value of Kapoor's works, though striking and substantial, was not a reasonably foreseeable phenomenon in the world of modern and contemporary art. There had also been a substantial rise before 2004 and neither expert suggested that the rise after 2004 was not reasonably foreseeable. I therefore do not accept that the consequential loss suffered by the Claimant was too remote.
79. There will therefore be judgment for the Claimant in the total sum of £351,375 made up of £132,000 damages for the loss of the sculpture and £219,375 consequential damages. I shall hear submissions on interest and costs, if they cannot be agreed.