The case filed earlier this month by a South Korean gallery over a Francis Bacon painting that it consigned to be sold via private treaty claims that Christie’s acted unreasonably by eventually trying to offload the work below its market value.
Christie’s has stated to Courthouse News Service that it acted in accordance with its agreements with the vendor who had failed keep up with the interest payments due on a $4.89m loan arranged as part of the consignment.
The court documents submitted by the Seoul-based One and J art gallery include the seller’s agreement from October 2017. It states that Christie’s would attempt to arrange “a private treaty sale of not less than $10m” for the painting. The identity of the painting has not been disclosed and its title has been redacted in the filing.
The agreement states that “if, as of September 2, 2019, a private treaty sale of the property has not been entered into by [Christie’s] then, unless otherwise agreed in writing, Christie’s will offer the property for sale at public auction”.
It has been widely known in the trade for some time that some works appearing at auction have been touted privately beforehand, but this case provides documented evidence of how this practice has now become formalised as a method for top auctioneers to gain consignments.
The documents filed show that, at the same time as the consignment agreement for the Bacon was concluded, an arrangement was also made whereby Christie’s agreed to advance a $4.89m loan to the vendor with interest to be paid on a quarterly basis and the painting serving as collateral.
After around a year, the painting had not been sold and, according to the filing, with interest payments outstanding, Christie’s wrote to the Korean gallery claiming that it had defaulted on the loan and that Christie’s was therefore entitled to sell the painting “under any terms, at any time, as we see fit”.
According to One and J’s court petition, this was in spite of the gallery consigning to Christie’s a work by Andy Warhol with the sale proceeds to be used to repay the loan. However, on the eve of the sale in China on September 2018 the work was withdrawn. The gallery’s filing states that “Christie’s withdrew it from the sale based on a purported lack of interest”.
Shortly afterwards, Christie’s informed the gallery that it had negotiated the sale of the Bacon to a separate party, according to the court documents. The gallery maintains in its filing that the sum charged for the work was “below a fraction of the painting’s fair-market value” and it was sold “at a bargain-basement price as a ‘sweetener’ for a more favoured client doing other business with Christie’s”.
The filing also claims that Christie’s had rejected a $6.8m offer from One and J to return the painting “to stave of this “fire-sale” – an amount purportedly in excess of the recently brokered price.
One and J’s court filing states that Christie’s had effectively switched sides, no longer acting for the seller but instead representing the buyer and that, in doing so, Christie’s had “frustrated the gallery’s rights under the contract”.
It has also launched separate claim against the buyer in question – dealers Christophe Van de Weghe and David Rogath – seeking an injunction to prevent them from “selling, transferring, or otherwise disposing of the Plaintiff’s multi-million-dollar painting”.
In terms of the potential value of the work itself, the Korean gallery claims that Christie’s original $10m appraisal of the painting was conservative, pointing out that “multiple Bacon works of comparable size have sold recently at auction for prices ranging from just under $20m to just under $50m”.
ATG approached Christie’s for comment on this case but was told “Christie’s does not comment on pending litigation”. A spokesman for the company had earlier told The Korea Herald that “Christie’s has acted in accordance with its obligations under the Uniform Commercial Code and its agreements with the Plaintiff”.
The assigned judge for the case, the Hon. Andrea Masley has ordered Christie’s to respond to the court by the end of January.