- gupement no. Z/) 7h CATCHWORDS TRADE PRACTICES - Alleged misleading conduct - Sale of paintings - Representations made as to authorship - Accuracy of representations - Whether adequate disclaimer by representator - Whether purchaser relied upon representations. Trade Practices Act 1974 ss.52, 87. NSW G.596 of 1986 WARREN DOUGLAS PLUMMER v THE SAINTS GALLERY PTY LIMITED Wilcox J Sydney 18 December 1987 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSW G.596 of 1986 were vrw GENERAL DIVISION BETWEEN: WARREN DOUGLAS PLUMMER Applicant AND: THE SAINTS GALLERY PTY LIMITED Respondent AND: THE SAINTS GALLERY PTY LIMITED Cross-Claimant AND: WARREN DOUGLAS PLUMMER First Cross-Respondent STEPHEN B KEHOE Second Cross-Claimant CORAM: WILCOX J PLACE: SYDNEY DATE: 18 DECEMBER 1987 MINUTES OF ORDER THE COURT ORDERS THAT: The contract made between the applicant and the respondent on 1 August 1986 for the sale to the applicant of two paintings said to be the work of Ian Fairweather be declared void. Subject to the applicant, upon such day as may be mutually agreed between the applicant and the respondent -- or, failing agreement, upon the 28th day after the making of this order -- re-delivering to the respondent the said two paintings, the respondent pay to the applicant the sum of five thousand two hundred and fifty dollars ($5,250) together with interest on that sum at the rate of 15 per cent per annum calculated from 2 August 1986. The contract made between the applicant and the respondent on 20 August 1986 for the sale to the applicant of two watercolour and pastel drawings said to be the work of Lloyd Rees be declared void. Subject to the applicant, upon such day as may be mutually agreed between the applicant and the respondent -- or, failing agreement, upon the 28th day after the making of this order -- re-delivering to the respondent the said two watercolour and pastel drawings, the respondent pay to the applicant the sum of five thousand dollars ($5,000) together with interest on that sum at the rate of 15 per cent per annum calculated from 21 August 1986. 5. The Cross-claim by The Saints Gallery Pty Limited against Warren Douglas Plummer be dismissed. 6. The Cross-claim by The Saints Gallery Pty Limited against Stephen B Kehoe be stood over generally with liberty to restore to the list on seven (7) days' notice. 7. The Saints Gallery Pty Limited pay to Warren Douglas Plummer his costs of the proceeding, including the costs of the Cross-claim against him. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSW G.596 of 1986 wee ee GENERAL DIVISION BETWEEN: WARREN DOUGLAS PLUMMER Applicant AND: THE SAINTS GALLERY PTY LIMITED Respondent AND: THE SAINTS GALLERY PTY LIMITED Cross-Claimant AND: WARREN DOUGLAS PLUMMER First Cross~Respondent STEPHEN B KEHOE Second Cross-Respondent CORAM : WILCOX J PLACE: SYDNEY DATE: 18 DECEMBER 1987 REASONS FOR JUDGMENT One issue in this case is whether two watercolour and pastel drawings, sold on consignment by the respondent, The Saints Gallery Pty Limited, to the applicant, Warren Douglas Plummer, are the work of the famous contemporary artist, Lloyd Rees. In a further demonstration of the naivete of Juliet's question about the importance of a name, the expert evidence is that, if the drawings are the work of Mr Rees, they are together worth about $25,000. If they are not, they have no market value. Yet the drawings are what they are: two skilfully executed and pleasing harbourscapes, showing a late afternoon view across the water to what may be the Balmain peninsula. The authenticity of these two works is the lesser of two factual conundrums in the case. The more difficult problem is to determine whether these two drawings, and two paintings attributed to Ian Fairweather which are now conceded to be forgeries, were sold to Mr Plummer under circumstances attracting liability under s.52 of the Trade Practices Act 1974. That section provides that a corporation shall not, in trade or commerce, engage in conduct that 1s misleading or deceptive or is likely to mislead or to deceive. Mr Plummer claims that The Saints Gallery engaged in such conduct when ut represented these works to be those of Mr Fairweather and Mr Rees. There is no question that The Saints Gallery -- through its Gallery Director, Edward Peter Flannery -- did so represent. At the time Mr Flannery believed those representations to be true. But, of course, that circumstance would not relieve the company of liability under s.52. And there 1s no doubt that, at the time of purchase, Mr Plummer believed that each of the works was genuine. Ordinarily, little more would need to be said. In most cases a person who had purchased a painting in the belief that it was the work of a particular artist, and after an assurance to that effect by a gallery owner, would easily satisfy the Court that he or she had relied upon the statement in making the purchase; so that there was a causal connection between the statement and the throwing away of moneys upon the purchase of a worthless work. But this case is unusual because it is clear ~- and this is accepted by both parties -- that, at the time of the purchases, Mr Plummer knew more about the work of Fairweather and Rees than did Mr Flannery. Moreover, Mr Plummer knew that Mr Flannery lacked the capacity to determine the authenticity of work claimed to be that of these artists. So it is necessary to consider the nature of their relationship and to evaluate, in some detail, the evidence given by Mr Plummer and by Mr Flannery as to the relevant discussions between them. Upon that evaluation depends the answer to the question: which of these two innocent, but incautious, parties shall bear the loss occasioned by what appears to be a fraud by the owner of the works, the absent Stephen B Kehoe? Mr Plummer describes himself as a fine art salesman and consultant. He commenced those activities on a part time basts 1n 1975. Since 1981 they have been his only occupation. In the period since 1975, and particularly during more recent years, he has attended numerous art auctions. On most occasions he has watched the whole of the proceedings, often noting in his catalogue the prices reached by the works on offer. As he explained in evidence, he has been keen to build up his store of knowledge about all Australian art. But he has recognized that, in practical terms, some specialization of interest is essential and so he decided to concentrate his major interest upon the period commencing with the advent of the Australian impressionists 1n about 1885 and running through until about 1935. The early work of Lloyd Rees falls within that period and, in evidence, Mr Plummer acknowledged some familiarity with that early work. He also conceded that, upon a few occasions, he has seen at auctions more recent Rees' paintings and drawings. But he disclaimed anything more than a superficial knowledge of this recent work. And it is common ground that Mr Rees' style of painting and drawing changed dramatically between the early 1930s and the date -- 1981 -- shown upon the two pastels with which this case is concerned. Mr Plummer's position in relation to Mr Fairweather, who died 1n 1974, is similar to his position concerning the recent work of Mr Rees. His acquaintance with Mr Fairweather's work may be described as being merely superficial. The Saints Gallery owns an art gallery in the Sydney suburb of Carlton. Mr Flannery and his wife took over the gallery in 1979. The respondent company was formed in 1980 to conduct the gallery. It also operates a gallery at Wamberal on the New South Wales central coast. The main business of the company is the sale of paintings on consignment; the company receiving a commission, usually one third of the price realized on sale. According to Mr Flannery, the "overwhelming majority" of the paintings offered to the company "are modern Australian realist paintings" which are sold for prices ranging from $300 to $500. Mr Flannery said that one of the services offered by the company is the valuation of paintings offered on consignment. In the case of paintings produced by artists whose work the gallery has previously handled, Mr Flannery himself undertakes the valuation. In other cases he arranges a valuation by an outside valuer. From 1981 until the present dispute arose, the valuer primarily used by Mr Flannery was Mr Plummer. The parties agree that authentication 1s a central part of the task of valuation of a painting. Consequently, upon those occasions upon which Mr Flannery invited Mr Plummer to value paintings offered to the gallery on consignment, Mr Plummer had to satisfy himself that they were the work of the artists they purported to be. Until the subject purchases, so far as Mr Flannery could recollect, Mr Plummer had never purchased a painting offered by The Saints Gallery. Consequently, it is a little surprising to find that, in the first conversation between Mr Plummer and Mr Flannery about the two "Fairweathers", reference should have been made to the possibility of Mr Plummer purchasing the paintings. However, 1t is common ground that this did occur. The occasion was a telephone conversation about the end of July 1986. Mr Plummer said in evidence that, after identifying himself, Mr Flannery said: "I'm about to get two paintings in by Tan Fairweather. Are you interested?" and that he replied "I could be Peter. It depends on the price". He claimed that Mr Flannery said that he did not yet know about price as he had to talk to the owner. Mr Flannery said that the paintings had to be framed and that he would come back to Mr Plummer. Shortly afterwards, possibly upon the following day, Mr Plummer rang the Carlton gallery and spoke to Mrs Yvonne Swan, a gallery employee. Mr Flannery was apparently at Wamberal. According to Mr Plummer, he was told that the paintings had arrived and that "another interested party, a Mr Ted Craig" was expected between 4.30 pm and 5.00 pm. So he went to the gallery at about 3.30 pm on that same day. Mrs Swan showed him a book about Mr Fairweather's work. He inspected the two "Fairweathers" which were displayed upon easels. He then telephoned Mr Flannery. In evidence he recounted the following conversation: "I said 'Hi Peter I've looked at the two Pairweather paintings. How much do you want for them?', he said 'You make me an offer Warren and I'll get back to you tonight', I said 'Do they have a good history?', he said "Yes, these two Fairweathers came straight from Fairweather direct to my client's legal firm in lieu of payment of fees', I said 'OK, well, I'm prepared to offer $7,000.00 for the pair', he said 'OK mate, I'1l find out if it's accepted and get back to you tonight sometime.'" Mr Plummer said that Mr Flannery rang him back that evening and said: "I've spoken to my guy about the Fairweathers and he'll sell for $7,000". Mr Plummer indicated that he would send his nephew into the gallery upon the following day with a cheque. Upon the following day Mr Plummer's nephew attended at the gallery with a cheque for $7,000. He received a receipt dated 2 August for $7,000. The transaction was identified on the receipt as: "Artist Ian Fairweather Ref 2 original oils full payment" The client of The Saints Gallery was a person who gave the name of Stephen B Kehoe. Mr Flannery accounted to Mr Kehoe for the sale of the "Fa1rrweathers", paying to him $5,250; $7,000 less a commission of 25%. Mr Plummer was emphatic that at no stage was he asked to value the "Fairweathers". He agreed that, in a statement made to the police on 19 September 1986, he said, in relation to his first telephone call from Mr Flannery, "I was asked about a price". However, he explained that, in the art world, a request to a person to "put a price" on a painting is a request to that person to make an offer. I see nothing strange in this and I do not think that the statement to the police contradicts Mr Plummer's evidence in this Court. Mr Flannery, however, was adamant that he did ask Mr Plummer to value the "Fairweathers". In his affidavit he said that, when he first telephoned Mr Plummer, he said to him: "Are you interested in buying some Ian Pairweathers? If you are, would you come in and value them and if the owner accepts the price, you can buy them." Mr Flannery agreed that Mr Plummer telephoned him at Wamberal, from the Carlton gallery on 1 August 1986. He said that the conversation was to the following effect: "Mr Plummer: 'Hi Peter. I have looked at the Fairweather paintings. What do you want me to do?' Myself: 'Warren, 1t''s your job to value them and put a price on them you are prepared to pay. I will present your offer to the owner and 1f it 1s satisfactory the paintings are yours.' Mr Plummer: 'Okay. I am prepared to offer $7,000 for the pair.' Myself: 'All right Warren, I will ring my client straight away and see if he accepts this.'" Mr Flannery also agreed that he told Mr Plummer later that evening that his client would accept the offer of $7,000 and that payment was made upon the following day. Mr Flannery denied that he was asked by Mr Plummer about the history of the paintings before the1r sale. He said that he did not obtain any information from Mr Kehoe about that matter until 20 August 1986, when he was given some information during the course of a luncheon at Mr Kehoe''s city apartment. Mr Flannery took back to the gallery from that luncheon the two "Lloyd Rees" drawings. He telephoned Mr Plummer. According to Mr Plummer, Mr Flannery told him that he had "two lovely blue paintings by Lloyd Rees". He asked whether Mr Plummer was interested. Mr Plummer said that he was and asked their medium and period. Mr Flannery replied "They've mixed medium. They look like watercolour and pastel. They're both dated 1981". Mr Plummer said that he replied "They're late Peter. How much are they?". Mr Flannery replied: "I don't know. You'll have to make an offer". Mr Plummer said that he would call in on the following day and "have a look". On the following day Mr Plummer attended the gallery. His account of the visit is as follows: "He said, 'The two paintings are out the back'. He and I then walked out the back of the gallery. Mr. Peter Flannery pointed them out to me and said, 'They're lovely blue paintings, aren't they?'. I said, 'Where did your client acquire them, Peter?'. He said 'They originally came from an exhibition of Rees' work at a gallery in Brisbane. My guy 1s selling them because of a divorce settlement'. I said 'What exhibition and gallery did they come from?' He said, 'It was one of three galleries that my client had dealt with in Brisbane, but I'm not sure which one.' He and I then walked to the front of the gallery and he placed one of the works on an easel which he kept in that room. I then said, 'OK, would you take $3000 for them, Peter?'. He said 'No way mate! My guy knows that Rees' work is worth more than that'. I said 'Well I'm not familiar with his later works Peter so it's difficult for me to give a price. Will you take $6000 for them?' He said 'No, but I'll take $6250 and I'll reduce my cut'. I said, 'OK Peter, how would you like to be paid?' He said 'It must be cash as my guy has smashed up his car and he needs to buy a new one as soon as possible'. I said "All right, but would you mind accepting a cash cheque to save me the time of making a special trip to the bank'. He said 'Yes, that's OK.' I then handed to Mr. Peter Flannery a cash cheque for $6250 and he handed to me a receipt, and I collected the paintings." Mr Flannery's version of the telephone conversation on 20 August was as follows: 10. "I have two more paintings from the same source as the last one and the owner wants to do the same sort of deal as the last time. They are by Lloyd Rees. Would you like to value these too and, if the valuation is acceptable to the owner, you can buy them." Mr Flannery agreed that Mr Plummer asked about medium and period and arranged with him to inspect the drawings upon the following day. Mr Flannery disputed part of Mr Plummer's account of the conversation which took place at the gallery upon the following day. He recalled no reference to a gallery in Brisbane but he believed that he did say: "The paintings were purchased by the owners ex-wife at one of the three galleries in Queensland from which they used to deal". He did say that his client "is now divorced and needs to sell some of his collection". Mr Flannery denied the detail of Mr Plummer's account of his initial offer of $3,000 but he did agree that an initial offer of $2,500-$3,000 was made. He said that this was increased after Mr Plummer made a telephone call to The Artarmon Gallery, which has something of a specialty in Mr Rees' work. Mr Flannery also said that, during the course of this visit, he telephoned Mr Kehoe for instructions. Mr Flannery then told Mr Plummer that the vendor required $5,000 cash. He asked Mr Plummer to raise his offer to $6,250 in order to yield a commission of $1,250. Mr Plummer agreed and the transaction was completed. There was tendered in evidence a receipt dated 21 August 1986 in favour of Mr Plummer for $6,250, particulars being as follows: "Artist Lloyd Rees Title 2 Mixed Media Paintings." ll. In his statement to the police on 15 September 1986 Mr Flannery gave this account of the "Lloyd Rees" transaction: "9. I remember now that I left his apartment with three paintings to sell on consignment. One was a Pro Hart which was damaged and the other two were Lloyd REES scenes. He said, 'These are part of a series on Sydney Harbour. My wife bought ten of these from an exhibition in Brisbane several years ago.' or words to that effect. We struck the same arrangement, that I would get a quote from a buyer and contact him to see if the price was agreeable. 10. %I rang Warren PLUMMER from Arncliffe, he came up and had a look at the paintings. I then rang Stephen KEHOE and we discussed the price for the two Lloyd REES paintings for a while and he indicated that he would like to have got more and finally he agreed to let me sell them as long as he got $5000.00 in cash the next day. Warren Plummer gave me a cash cheque for $6250.00. When I spoke to Stephen Kehoe on the phone he said, 'I want $5000.00 I want to buy (sic) porsche.' I had told him that Warren would pay six thousand. He said, 'If that's all you can get, that's all you can get but I want five.'" Mr Plummer purchased all four paintings with the intention of reselling them at a profit. He sent one of the two "Fairweathers" to Christie's for sale but he was informed by Christie's that it was not genuine. He thereupon withdrew the painting from sale and took the matter up with Mr Flannery. Mr Flannery told him that he would speak with Mr Kehoe. A few days later, Mr Flannery informed him that he had spoken to his client, who said "it depends upon the Provenance. If the provenance is not right, you will get your money back". But Mr Kehoe was not heard from again. On 1 September 1986 Mr Flannery agreed to refund to Mr Plummer the commission of $1,750 which he had earned on the "Pairweathers". This was paid on the following day. 12. Mr Plummer sent one of the two "Lloyd Rees" works to Sothebys for sale. However, when the problem of the "Fairweather" arose, he withdrew 1t. He took the two drawings to Mr Rees himself. In cross-examination Mr Plummer was asked to recount what had been said. He answered: "I went to Mr Rees' place and met him, either his daughter and his son-in-law or his son and daughter-in-law, I am not entirely sure who was who, and Mr Rees looked at the paintings, the two paintings. His son and his daughter-in-law also looked at them. He basically - they examined them and they could not say that they were his work, but then he was also, to be in all fairness to this court - he also said he could not say that they were not his work and he said, I said, 'We will leave it at that, and perhaps we could discuss 1t later', so I left them with the paintings at that time. I rang Mr Rees a week later. He said he had had a lot of time to think about 1t and discuss them with his daughter and son-in-law, or son and daughter-in-law, and he came to the conclusion that they were not his work. I said, 'Would you say that categorically?' He said, 'I would be completely prepared to say that they are not my work' and he gave me the reasons over the phone, including the type of purple that was in the work. He sald they were done by a reasonably competent painter. He said they were not amateurish but that he definitely did not, and without any doubt - there was no doubt when he stated this, that they were not done by him. After that statement, after that conclusive statement by Lloyd, I rang Peter Flannery and requested a refund on the two pictures." [The evidence of Mr Rees' opinion contained in this answer 1s, of course, hearsay evidence. But, no objection to the evidence having been taken, 1t constitutes evidence upon which the Court may act, making due allowance for the fact that it has not been tested in cross-examination: see Cross on Evidence (3rd Australian edition) paras.1.125-1.132.] 13. Mr Flannery did not make a full refund to Mr Plummer of the price paid by him for the two "Lloyd Rees" drawings. But he did refund the commission of $1,250 which he had received. A further request for payment having been refused, this proceeding was commenced on 16 December 1986. The Application, as now amended, claims damages of $10,250, being the total sum paid, $13,250, less the $3,000 commission refunded; or, alternatively, declarations that the contracts are void, with consequential orders. By its Defence, the respondent puts in 1ssue the question whether the four Paintings were forgeries, as alleged. By a Cross-claim against Mr Plummer it seeks to recover back the two sums, $1,750 and $1,250, repaid to Mr Plummer as being moneys paid under a mistake of fact, namely that the respective pairs of paintings were forgeries. However, as mentioned, at the trial the respondent abandoned its denial that the "Fairweather" paintings were forgeries. The Defence and Cross-claim should be read accordingly. There is a second Cross-claim, whereby The Saints Gallery claims an indemnity from Mr Kehoe, but this has not proceeded. Mr Kehoe has disappeared and has not been served with the Cross-claim. I have already set out the evidence of Mr Plummer and of Mr Flannery relating to their conversations. There being no doubt that Mr Flannery, on behalf of the respondent, did represent that the paintings were respectively the work of Mr Fairweather and of Mr Rees, the critical questions are whether 14. he disclaimed responsibility for those representations so as to cast upon Mr Plummer the onus of satisfying himself as to the authenticity of the paintings and whether Mr Plummer in fact relied upon the representations made by Mr Flannery in deciding to purchase the paintings. In Yorke v Lucas (1985) 158 CLR 661 at p.666 Mason ACJ, Wilson, Deane and Dawson JJ referred to the possibility of an effective disclaimer of responsibility: "It is, of course, established that contravention of that section does not require an intent to mislead or deceive and even though a corporation acts honestly and reasonably, it may nonetheless engage in conduct that is misleading or deceptive or 1s likely to mislead or deceive: ... That does not, however, mean that a corporation which purports to do no more than pass on information supplied by another must nevertheless be engaging in misleading or deceptive conduct 1f the information turns out to be false. If the circumstances are such as to make it apparent that the corporation 1s not the source of the information and that it expressly or impliedly disclaims any belief in its truth or falsity, merely passing 1t on for what it is worth, we very much doubt that the corporation can properly be said to be itself engaging in conduct that is misleading or deceptive." See also Abundant Earth Pty Limited v_ RC Products Pty Limited (1984) 59 ALR 211 at p.217 and Hutchence v_ South Seas Bubble Co Pty Limited (1986) 64 ALR 330 at p.338. The second question, in conceptual terms, is an altogether different one. Even though no disclaimer is made by the representor, the representee may choose to make his or her own inquiries and to rely upon those inquiries to the exclusion of the representation. If, in such a case, 1t turns 15. out that the representation is false, damages will not be recoverable from the representor. The representation not having been relied upon, no damage can flow from its falsity. However, in the present case, the two questions overlap. If Mr Flannery used words calculated clearly to indicate to Mr Plummer that he, Mr Flannery, disclaimed any responsibility for the representation as to authorship, 1t would be difficult not to find that Mr Plummer accepted the responsibility of authenticating the paintings for himself, and that he acted upon his own conclusions rather than upon what he had been told by Mr Flannery. In practical terms the issue resolves itself, in relation to each of the two sales, into the question whether Mr Flannery requested Mr Plummer to "value" the paintings; using the word "value" in its true sense. This question 1s critical because 1t 1s conceded that a request to value includes a request to authenticate. Therefore, such a request would have involved a clear indication that Mr Plummer was being instructed to satisfy himself as to authentication. Such an instruction would have constituted an implied disclaimer of responsibility by Mr Flannery for his representations as to authorship. And, as Mr Plummer would have understood that Mr Flannery was casting the responsibility upon him, his subsequent decisions to purchase could be regarded as flowing from his own judgment rather than from his reliance upon Mr Flannery's representations. 16. Relevant to this question 1s a subsidiary one: did Mr Flannery give information to Mr Plummer about the provenance of the paintings. This second question is important because -- 1t being conceded that Mr Plummer had no confidence in Mr Flannery's ability to judge the authenticity of a Fairweather or a Rees -- 1n the absence of any information about provenance, Mr Plummer would be left in the untenable position of arguing that he did not rely upon his own judgment but of conceding that, in deciding to buy, he had nothing but his own judgment with which to support authenticity. Upon the primary question, I have reached the conclusion that Mr Flannery did not ask Mr Plummer to value the paintings, on either occasion. Having regard to the nature of their previous association, in which Mr Plummer had frequently valued but never purchased, it would not have been surprising if Mr Flannery had given evidence that, on these two occasions and confronted with the works of two artists whom he had not previously hung, he had called in his regular valuer, Mr Plummer, and asked him to value the paintings. If an offer to purchase had arisen out of that request, it might cogently be argued that Mr Plummer well understood that Mr Flannery had passed to him the responsibility to authenticate. However, 1t is Mr Flannery''s own evidence that his opening question to Mr Plummer was: "Are you interested in buying some Ian Fairweathers?". Only 1f he was interested in purchasing was Mr Plummer to "value" them. This would have 17. been an unusual valuation. There 1s an inherent inconsistency between an expert being asked to value a work of art so as to provide independent advice to the owner as to the price which he or she should ask and that same person being simultaneously encouraged to make an offer to purchase. Mr Flannery said in evidence that he recognized this inconsistency, but that he told his client that the valuer was also the purchaser and that the client accepted that position. This recognition and acceptance indicates that Mr Flannery appreciated that what was happening was not a valuation in the true sense. Indeed, his own words, as given in evidence, suggest as much. He said that, in the first conversation regarding the "Fairweathers", he asked Mr Plummer to "value them and if the owner accepts the price, you can buy them". In the second conversation, upon the following day he told Mr Plummer "to value them and put a price on them you are prepared to pay". Mr Flannery obviously did not expect any formal valuation. There was never any suggestion of payment for the valuation. The invitation to value was really an invitation to make an offer. I doubt whether the word "value" was in fact used. If 1t was, 1t was used, and understood, in that sense. It 1S interesting to note that, in the statement which Mr Flannery gave to the police, not long after the relevant events, he described the procedure agreed between him and Mr Kehoe as being to "get a quote from a buyer and contact him to see 1f the price was agreeable" (my emphasis). 18. I should mention that I asked Mrs Swan what was her understanding of the task which Mr Plummer was to perform on the day when he came in to inspect the "Fa1lrweathers". She said that she understood that he was to value the paintings. However, I do not think that this evidence affects the views I have just expressed. Mrs Swan was not asked the basis of that understanding. As Mr Plummer was the gallery's regular valuer, and had not previously purchased works from the gallery, it would be natural for her to assume -- if she were told that Mr Plummer was expected to call in to see the paintings -- that his purpose was to make a valuation of them. It is clear from Mr Flannery's evidence that he intended to adopt the same course, in relation to the "Rees" Paintings, as he had adopted for the "Fairweathers". According to his own evidence, he used very similar language upon this occasion. He asked Mr Plummer "to value these too and if the valuation is acceptable to the owner, you can buy them". In other words, he sought an offer. As to the second question, Mr Plummer says that, 1n each case, he sought information from Mr Flannery upon the provenance of the paintings before deciding to purchase, and that he relied upon the answers he received in deciding to proceed with the transation. I accept this evidence. Mr Plummer was not himself an expert upon the work of either Fairweather or Rees. Undoubtedly he trusted Mr Flannery, but he knew that Mr Flannery knew even less about these painters than he did himself. He would not have relied upon Mr 19. Flannery's knowledge of the work of those artists. He did not seek the advice of any independent expert, although such advice would seem to have been readily available. In my impression, Mr Plummer is a cautious man. It 1s conceded that he sought information about the history of the "Lloyd Rees" drawings before purchasing. I cannot believe that he would have been prepared to spend $7,000 on the "Fairweathers" without seeking some information as to the history of those paintings. To seek information about provenance is normal in the trade, as Mr Plummer knew. Mr Flannery does not dispute that he did tell Mr Plummer that the "Fairweathers" had come to his "client's legal firm" from the artist. However, he says that this was said much later, after the letter from Christie's, and that he only obtained the history from his client on 20 August. TI think that this is unlikely. There would have been no reason for Mr Kehoe to tell Mr Flannery this fictitious history on 20 August. By then the "Fairweathers" had been sold. It 1s much more likely that he armed Mr Flannery with the story when he first instructed him to try to sell the paintings. Counsel for the respondent criticizes Mr Plummer's evidence because of his failure to require more details of the alleged transaction between Mr Fairweather and the legal firm. Mr Plummer agreed, with the benefit of hindsight, that he should have made more rigorous inquiries. But 1t 1S important to note that, according to his evidence, he did not understand Mr Flannery to be merely repeating what he had been told. 20. According to him ~- and I accept this evidence -- Mr Plummer understood that Mr Flannery had satisfied himself as to the accuracy of the information which he had been given. As he said in evidence: "I took it as a fact". Mr Plummer trusted Mr Flannery. He did not know the identity of Mr Flannery's client but it would be natural for him to assume that Mr Flannery would know whether or not he was a solicitor. If he was, it would be a small step then to accept the alleged history. My conclusion 15 that there was no effective disclaimer of responsibility in this case and no break in the causal connection between the representation and the loss. Consequently, it is necessary to consider the question whether the "Lloyd Rees" drawings are genuine. It might be thought that, in a case where the relevant works are said to be those of a living artist who has inspected the works and disclaimed responsibility, there is little need to resort to expert evidence to determine their authenticity. The evidence in this case is that Mr Rees has considered the genuiness of the two drawings attributed to him on two separate occasions. The first occasion was that recounted by Mr Plummer, when the works were taken to his then home in Northwood, Sydney and left with him for about a week. The second occasion was a visit paid by Mr Rees to the Art Gallery of New South Wales 1n mid-1987; he having travelled up from his present home in Hobart for some other purpose. 21. There were present at that time Mrs Free and Mr Pearce, to be mentioned in a moment, and officers of two other Australian galleries. According to the evidence, all five people examined the two drawings and agreed that they were forgeries. Mr Rees was not called to give evidence in this Court, but there is no dispute that he did inspect the drawings on these two occasions and that, on each occasion, he disclaimed authorship. Although I have not had the benefit of Mr Rees' full reasons for his conclusion, and, of course, he has not been cross-examined in order to test those reasons, I think that I should give weight to that conclusion. However, without disrespect to Mr Rees, I accept the submission of counsel for the respondent that Mr Rees' opinion ought not to be regarded as concluding the issue of genuiness. Mr Rees is now aged 92 years. Sadly, his eyesight has deteriorated in recent years. The evidence 1s that Mr Rees is able to examine a picture only at close quarters and with the aid of a magnifying glass. He would apparently have difficulty in considering either of these drawings as a whole. Moreover, insofar as Mr Rees may have referred to his memory 1n deciding that the drawings were not his, the evidence shows that -- although he has an excellent recollection of his early work -- there have been occasions upon which his recent memory has let him down, occasions upon which he has failed to recall work which was undoubtedly his. 22. Consequently, although I take into account the fact that Mr Rees believes the drawings not to be his work, I must consider the evidence given by the expert witnesses called in the case. Two experts testified to an opinion that neither drawing was a genuine Lloyd Rees. Those witnesses were Mrs Renee Free and Mr Barry Pearce, both senior officers of the Art Gallery of New South Wales. Mrs Free, who holds a post graduate degree in the history of art from the Courtauld Institute of History in London, has been employed at the Art Gallery for some 21 years. In 1972 she was appointed as Curator of European Art at the Gallery, a position she still holds. Although that particular appointment may not be directly relevant to the work of Lloyd Rees, 1t appears that Mrs Free has taken a special interest in that artist's work. Whilst she was assistant to the Director of the Gallery, she organized a retrospective exhibition of Mr Rees' work, which was held in 1969. Out of that exhibition came a book, written by Mrs Free and published in 1972, entitled "Lloyd Rees". This book is a history of Mr Rees' artistic life up until the year 1970. Each period of his development is separately treated and 1s illustrated by reproductions of paintings and drawings. In 1982 Mrs Free, 1n collaboration with Mr Rees himself, published a further book, "The Later Work of Lloyd Rees", This book covered the years 1973 to 1982. At the time she gave evidence in this case, a further work, "Lloyd Rees, 23. An Artist Remembers", edited by Mrs Free, was about to be published. Mrs Free said that, in the course of her collaboration with Mr Rees, she had frequently visited his studio at his home at Northwood and that she was familiar with the work which he had done in recent years. Mrs Free first saw the disputed drawings in November or December 1986. On 22 December 1986 she wrote a letter to Mr Plummer, which 1s 1n evidence and which summarizes her reaction to them: "The pastels are no longer in front of me, but from what I remember my considered opinion is that these are not by Lloyd Rees. He never paints pictures in pairs. Each Rees work 18 a response to a specific impression of nature. Something which caused this response becomes marked, emphasized in the work so that the viewer can share this feeling. These works which have even segments for foreground land, water, distant land, sky, are standard compositions showing no specific motivation. The colour is the same in both which 1s uncharacteristic. I can think of no purple pastel used in that way. Rees paints and uses pastel with the movement of his arm in broad sweeping strokes which tie the composition in a rhythm. There 1s hardly a line in these works. They are fussy, made up of frangmented strokes. I can only remember such stark buildings standing high in the foreground in one painting Dusk on the Derwent which was painted in 1982, and the houses are standing high in that because of rapid repainting of the water. If the subject 1s the Derwent, then the far bank is too high and close. If the subject is Sydney Harbour, then it does not correspond with his painting spots. The signature is startlingly obvious and not his usual signature, or in his usual medium, pencil for pastels. This 1S my opinion and is a subjective opinion but based on twenty years knowledge of his work." 24. In her evidence in this proceeding Mrs Free elaborated upon the reasons for her opinion. She thought that the blue in the paintings was not typical of Mr Rees. She said that he mixes yellow with his blue, to give a turquoise effect. Mrs Free was worried by the fact that the two subject paintings were impressions of the same scene. She explained that this would be unusual for him: "Lloyd Rees did a series on Sydney Harbour called 'Tribute to Sydney', which he exhibited in the Macquarie Galleries, large paintings which all had pastel works from which they were done; and no two looked alike although a lot of them were done from specific spots, like several were done from Balls Head, and so forth; but they did not look the same. They were different moments of inspiration which made different compositions of them. That is what worries me. These are two so much the same and one cannot really get at what made him paint them. One cannot think of one magic instant of nature that revealed something when you look at these. These are much more conventional viewpoints." Mrs Free also remarked upon the signatures in each drawing: the initials "LR". She said that "his signatures are tucked away in the corner, usually in pencil, because they are not important things. The picture will sell itself, because 1t 1s a Lloyd Rees, without signature". As she sald, the initials on the two drawings "are defined and blobby and thick". Finally, she commented upon the composition of the drawings: "Well, in my Opinion, they are too deliberately divided into that much for the foreground, that much for the water, that much for the hill, that much for the sky. Now, I can think of no paintings of Sydney like that. Lloyd is charmed with the shape of the bays or he is 25. emphasizing the light on the bu1ldings in the distance or he 1s emphasizing the big rocks in the foreground; but I cannot understand what has motivated these pictures. Your eyes are not drawn to any special effect. It is just too even and there seems to be no subject almost. It is just an even quality all over it; and he is always inspired by some effect of light or some curve or formation but these seem to be just standard views. Also I cannot work out where they are from exactly. If 1t is looking at Balmain from the north, then I do not know how the skyscrapers get in there because he does not paint from North Sydney looking over there; he paints from his home in Northwood which does not have skyscrapers in there. So I really do not know exactly where these are painted from; and although he is not topographically accurate, you have always a sense of place; he does not just put any place or something for compositional reason." Under cross-examination, Mrs Free agreed that she had not seen everything which had been produced by Mr Rees in recent years and that she could be mistaken in her view. She agreed that her knowledge that Mr Rees disclaimed authorship had strongly influenced her opinion but she claimed to have formed her own independent opinion. She expressed herself as being "98% sure" of that opinion. Mr Pearce 1s the Curator of Australian Art at the Art Gallery of New South Wales, having held that appointment since 1978 after study and experience overseas and with the Art Gallery of South Australia and the Art Gallery of Western Australia. Mr Pearce also inspected the subject drawings in November/December 1986. He wrote a letter to Mr Plummer on 4 December 1986 in which he set out his opinion: "Thank you for bringing in two pastel watercolour works attributed to Lloyd Rees for appraisal. 26. Whilst these two works appear to be based upon the style of the late works on paper by Lloyd Rees, and signed with the initials "L.R." to give the impression that they are by him, they are in my opinion not by the artist. The inferior handling of the medium, colour of the palette, the lack of certainty in shapes and composition, and finally the method of signature (Rees has not usually signed his pastels in pastel), all support my opinion. I have been a professional officer in Australian art museums since 1967, and have a long and close familiarity with Dr. Rees's work in all media. During my years in Sydney, since 1978, I have frequently visited Dr. Rees''s studio and have studied his working methods. I have written texts on him and been responsible for numerous acquisitions of his works by the Art Gallery of New South Wales. My opinion in this matter therefore is not given lightly." In his evidence Mr Pearce was asked to elaborate his comment about the signatures on the drawings. He illustrated his answer by referring to three paintings -- two pastels and one watercolour -- owned by the Art Gallery of New South Wales and dated 1983, 1984 and 1978. Each of these paintings was finely signed, either "L. Rees" or "Lloyd Rees", in pencil or crayon. Mr Pearce described this as "typical of the artist, who cared a great deal about the effect of his signature on the pictorial impact of the work". He said that Mr Rees occasionally signed drawings with his initials but described this as "very rare". Mr Pearce also dealt with the composition of the drawings: 27. "What worries me more than anything about them 1s the lack of certainty in the composition and the lack of unity in the compositions. Even in the most slight of Lloyd Rees's works there is a feeling of unity. One does not worry about little parts of a picture not fitting in with the other parts. These two pictures have a great deal of hesitancy about them and a lack of conviction in their composition." Mr Pearce was not so concerned about the problem of whether the two drawings were a pair: "Well, I am not so sure about calling them a pair. It seems to be a fortuitous thing that they have come together. They may have been made at different times. I would not even be surprised if they were made by two different artists. I find it very unusual for Lloyd Rees to have made a pair of pictures. He has made series of pictures but not pairs, to my knowledge." Mr Pearce commented on the paper used in the drawings, which he thought inferior and not typical of that used by Mr Rees in the 1980s. Asked about his level of confidence that the two drawings were forgeries, Mr Pearce said that he was "99% certain". Mr Pearce said that he had not been influenced by his knowledge that Mr Rees disowned the works because he had been "quite dogmatic" from the first. The expert evidence on the other side was given by Dr GM Berger, an art historian, art critic, art valuer and art assessor. Dr Berger has been an active member of many art societies including the Contemporary Art Society of Australia (NSW). He said that he had known Mr Rees, and his work, for almost 50 years. Dr Berger inspected the subject drawings on 28. 3 August 1987, when he reached the conclusion that both were the work of Lloyd Rees. Dr Berger's descriptions of the drawings are as follow: "5. The larger of the two is the more accomplished work, the blue pastel being offset by the glowing, warm water colours of the right half of the sky. Rees's concept of the landscape as a living think of knolls and plains is quite noticeable, as is his blocking-in of related features, while the freedom of some of the artist's horizontal lines reminds one of his accomplishments, also, as an etcher. I value this larger landscape at $14,500.00. 6. The smaller work is one of great simplicity and only an old artist - Rees was born in 1895, with these works dated 1981 - would release a work so simple. Yet there are telling details like the prominence of the small boat with the funnel, and even the swelling of the right down-stroke of the ''R' of his signature which are to me clear signs of the work's authenticity. The paper used is the good quality aquarelle paper which Rees would naturally be using. I value the smaller painting at $10,500.00." Notwithstanding those comments, Dr Berger conceded that, by comparison with the generality of Mr Rees' work, these drawings are inferior works. But he added: "Lloyd Rees has been a very uneven artist to my mind all his life. That is one of the outstanding features of my experience with Lloyd Rees, that he did a lot of work which I do not consider of the highest standard of an artist." He conceded that he did not know of any other picture of Mr Rees, executed around 1981, which was signed in pastel. Dr Berger thought unconvincing the point made by Mrs Free about the tone of the blue colouring. He commented that "Lloyd Rees is an experimenter". 29. None of the experts has suggested that one of the disputed drawings is genuine, whereas the other has not. Consequently, notwithstanding that -- as 1t seems to me -- the points made by Mrs Free and Mr Pearce are more applicable to the larger drawing than to the smaller, I do not pursue this possibility. I must choose between the two views which have been expressed. Having given full consideration to the views expressed by Dr Berger, I am nevertheless satisfied, upon the balance of probabilities, that the subject two drawings are not the work of Lloyd Rees. Notwithstanding the submission of counsel for the applicant, I leave out of account their unpromising start; having come from the same source as the, admittedly forged, "Fairweathers". Even confidence men may peddle honest goods. As mentioned, I do place weight upon the fact that Mr Rees believes that these are not his work. But, even if I did not know of that belief, I would be persuaded by the evidence of Mrs Free and Mr Pearce. Each of these two witnesses has had a considerable exposure to Mr Rees' work. Each knows him well, having visited his studio on many occasions. Mr Pearce has had the responsibility of selecting works by Mr Rees for purchase by the Art Gallery. Mrs Free has made a speciality of Lloyd Rees; having been involved in the production of no less than three books relating to his artistic life and work. Each of these witnesses formed a clear view when first shown the drawings late in 1986, well before the discussion this year when other experts became involved. Each was an impressive witness who gave clear and 30. cogent reasons for the view expressed. I am particularly impressed by the comments made by both witnesses about the obtrusiveness of the initials and the tone of the blue colouring. I have no doubt that Dr Berger gave the genuiness of the drawings his earnest consideration and that he sincerely holds the opinion which he offered. But it does not appear that he has the same familiarity with Mr Rees' work as do the other experts. Nor did I find convincing his explanation of some of the matters put to him by counsel for the applicant. He did not persuade me that there were cogent reasons for preferring his view to that advanced by the other witnesses. A final observation should be made upon the expert evidence. It was suggested, both by counsel and by Dr Berger, that Mr Pearce and Mrs Free, as officers of the Art Gallery, may have been influenced in their opinions by an unwillingness to adopt a position on the matter which was opposed to that already adopted by Mr Rees. There was a further suggestion that, once Mr Pearce had adopted a position, there was a "closing of the ranks" behind him by Mrs Free and the other experts who inspected the works this year. These allegations are serious, imputing serious impropriety to all those involved. If the allegations were to be made, they should have been put directly to Mrs Free and Mr Pearce. The suggested motivation was not really spelled out. It 1s difficult to see how the Art Gallery is beholden to Mr Rees. But, 1n any event, I am satisfied that they are unfounded. 31. Whether their opinions be right or wrong, I am in no doubt that they are genuinely held. Mrs Free and Mr Pearce care deeply about art. They value the work of Lloyd Rees. I could not imagine either of them conniving in the condemnation as a forgery of a work which they privately believed to be his. I find that all four works sold on consignment by the respondent to the applicant were forgeries. I further find that, 1n each case, the respondent represented to Mr Plummer that the works were genuine, without any disclaimer of responsibility, and that Mr Plummer relied upon those representations in deciding to purchase the paintings. Prior to the commencement of the proceeding, Mr Plummer offered to return the four works to the respondent in return for a refund of the balance of his money. Mr Flannery refused this suggestion, but I think that this is the appropriate course to be taken. It is the course primarily urged by counsel for the applicant. Upon the evidence, the effect of the concession made about the "Fairweathers" and of my finding about the "Rees" is that they have no commercial value. But they may have an aesthetic value to some people. It would be wrong to allow Mr Plummer to have both the money and the works. The appropriate course 1s to make orders under s.87 of the Trade Practices Act declaring void each of the contracts of purchase and ordering the respondent to refund the balance of purchase price paid in connection with each transaction, subject to re-delivery of the works. "2 32. The respondent's Cross-claim ought to be dismissed, Its Cross-claim against Mr Kehoe ought to be stood over generally, against the possibility that it may be able to proceed at some future time. The respondent must pay the costs of the applicant. I certify this and the thirty-one (31) preceding pages to be a true copy of the Reasons for Judgment of his Honour Justice Wilcox. Associate: raone, fora Date: 18 December 1987 Counsel for the Applicant: Mr J B Maston Solicitors for the Applicant: Conway MacCallum & Co Counsel for the Respondent: Mr P F Esler Solicitors for the Respondent: Forshaws Date(s) of hearing: 23, 24 and 25 November