An auction house and negligence law

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An auction house had not been negligent in appraising a gold chain, known as the Coleridge collar, as having been made in the late 17th Century, but it had advised the owner negligently about the price to sell it for on a private sale.

The claimant (C) claimed damages for losses alleged to have been suffered as a result of the negligence of the defendant auction house (S) in advising him to sell a gold chain, known as the Coleridge collar, to a private buyer for £35,000.

C claimed that, based on the method of manufacture and the carat of the gold, he ought to have been advised that the collar was made prior to 1576 and was likely to achieve over £300,000 at auction, alternatively that even if it their advice that it had been made in the late 17th Century had been correct, S had acted in breach of duty by advising him to sell the collar for £35,000. The collar had been appraised by one of S’s employees by a physical inspection and by reference to portraits and literature. C had originally intended to sell the collar by auction with other items and S had sent him a draft auction contract to sign. By the time that C signed the contract he had agreed a private sale of the collar based on S’s valuation and it had been removed from the list of items to be auctioned. The collar was later appraised by another auction house, having been scientifically analysed as being made of 20 carat gold, as being made prior to 1576 and was sold by its new owners for £260,000. The issues were whether

(i) there was a contract that applied to the valuation of the collar that included S’s standard terms limiting liability for valuations;

(ii) no reasonably competent auction house appraiser would have given an unqualified attribution of manufacture in the late 17th Century on the basis of the material available, and arrived at a conclusion without having the composition of the material scientifically tested;

(iii) even if the collar was late 17th Century, S was negligent in advising him to sell at the top end of the auction estimate rather than for double the bottom end of the auction estimate.

HELD: (1) There was nothing in the conduct of either party that unequivocally suggested the existence of a contract prior to the date when C signed the draft contract, so the provisions limiting liability could not be relied on by S in respect of the collar valuation. Even if there had been a contract, its terms did not apply to advice on a private sale because a private sale had not been contemplated at the time .

(2) The value to be obtained by an appraiser from a scientific analysis depended critically on the question that the tester was seeking to resolve. In deciding the question of whether the collar was Tudor in origin no reasonably competent appraiser would have had it scientifically analysed: there was no academic writing justifying such an approach or justifying a conclusion that items manufactured of 20 carat gold should, without more, be regarded as probably of pre-1576 manufacture. A responsible body of appraisers in the position of S’s appraiser would have appraised the collar as she did by reference to the historical context, the portraiture and literary evidence and by the craft techniques used in its manufacture. It had not been proved that no reasonably competent appraiser would have reached the conclusion that the collar was made in the late 17th Century. Evidence about the possible method of manufacture was of no assistance in dating the collar (para.106). There was no primary literary material allowing the collar to be dated back further than the last few years of the 17th Century (para.108).

(3) C had not shown that the auction estimate arrived at by S was one that no reasonable valuer in its position could have arrived at, but if S had followed its own practice on a private sale of advising a valuation figure of twice the lowest end of the auction estimate it would have advised C to sell for £50,000. Accordingly, S was liable to pay C the difference of £15,000 .

Judgment for claimant in part

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