Fears of ‘fair price’ precedent

A precedent appears to have been set in the case of Kim-John Webb, a Southampton jeweller found guilty of deceiving a pensioner as to the value of a watch – a piece of Titanic memorabilia worth thousands – taking it off her “for scrap” at £15 valuation.

The case turned on whether Webb knew the true value of what he was buying at the time: he denied any knowledge of its significance, but the jury chose to believe a member of his staff who reported Webb to the police, saying he had gloated over his luck at the time.

Police took their enquiries further after a similar watch sold for £20,000 several months later at auctioneers Henry Aldridge & Son of Devizes, Wiltshire – it turned out to be the pair of the first watch, both having been engraved and presented to the two seamen who helped save the Countess of Rothes from the sinking Titanic.

The watches were engraved with a presentation inscription from the Countess, the date of the sinking and the seamen’s initials. The prosecution maintained that its significance would have been immediately obvious even to a non-specialist dealer like Webb.

In court, acknowledged Titanic specialist Peter Boyd-Smith, also of Southampton, said he would have valued the watch conservatively at between £2000 and £3000; Aldridge’s had estimated the second watch at between £5000 and £10,000.

Webb was convicted on the basis that he offered the pensioner an unfair price knowing what he was buying, but in light of the later £20,000 price for the similar watch, the question is raised as to whether Mr Boyd-Smith would have paid a fair price if he had been offered the watch and paid the £3000 he genuinely thought it was worth.

In other words, according to expert witnesses called in the case, the definition of a ‘fair price’ is a matter of degree, but that degree has not been defined.

Expert witness Colin Reed of Reed Associates, who specialise in professional practice, provenance and point of sale dealings, told the Antiques Trade Gazette that the implications of the case could be far-reaching for the trade as any dealer hoping to avoid a similar situation would need to ensure that they obtained an expert opinion on an item’s provenance before making an offer for it.

Andrew Aldridge, of Henry Aldridge & Son, acknowledged that the degree of difference in price given and true value would prove the crucial factor in deciding whether a fair price had been paid, but he added that his firm was one of very few that specialised in Titanic memorabilia and had close contact with the four or five main collectors, so the £20,000 price was higher than might otherwise have been the case.

In his book Buying and Selling Art and Antiques, The Law, published last year by LAPADA, Professor Brian Harvey points out that the precedent of case law suggests that a dealer can offer a low price but must not give false reasons for doing so which reflect unjustifiably on the quality of the goods being offered. He takes as his precedent the case of a car bought for scrap which was later repaired and resold.

He advises that a dealer may simply offer a low price without comment or, if the seller enquires further, say “you might find you get a better price elsewhere” or “that is the most I could justify myself”.

However, writes Professor Harvey, if the dealer draws the seller’s attention to defects in the goods being offered, which in the dealer’s opinion adversely affect their marketability, the dealer must make sure that the criticism can be independently substantiated.

This was not done in Webb’s case when he dismissed the watch as scrap and the court believed he had deliberately set out to deceive.

The judge has delayed sentencing Webb to allow reports on him to be prepared. “The possible sentences are either a short term of imprisonment or a heavy financial penalty,” he said.