THE FINE ART OF QUANTUM
FROM EXPERT WITNESS MAGAZINE, JUNE 2012
It was June. I hesitated in putting a Lucian Freud etching of a sleeping female nude back on the wall, hearing the distinctive voice of my client's soon-to-be ex-husband talking on his mobile in the shared garden of the divided house. Should I lean out of his wife's bedroom window and introduce myself? Perhaps not. I took an unframed Warhol dollar sign painting from the back of the dressing table and carried on, quietly.
For the arts surveyor, valuations for the purposes of divorce can be quite demanding, not just because it is essential to be trusted equally by all parties and not only if appointed as Single Joint Expert, as is usually the case with divorce these days. Often husband and wife have a different idea of the level at which their art and antiques should be assessed, the one leaving the marital home arguing for insurance prices, as they probably have to dig deeper in their own pockets to finance a new home, and the one remaining claiming forced sale values, thus attempting to maximise the anticipated cash pay-out.
Emotional attachment to a work of art frequently leads to one party claiming it to be worth far more than could possibly be achieved at auction, the accepted level for assessing a fair value on anything not screwed down.
Indeed my first case in court as an expert witness reflected this, although it was an insurance matter and not a divorce. The owner of a Vorticist painting was so emotionally attached to the work that he kept it in a store cupboard. There it was when water egressed the flat above and ingressed his flat, damaging the painting so badly that it could not be restored and was therefore deemed to be a total loss. Quantum was then argued. The owner's valuer proclaimed the work to be the masterpiece by the artist and thus worth considerably more than any other painting by him had made at auction. I was one of two arts surveyors arguing for the other side. I spoke for the landlords, and my fellow professional for the tenant of the flat above, as it was not established until we were in court whether the damage had been caused by a leak in the central heating system, which was the landlord's responsibility, or by the overflow from a bath or sink, which was the tenant's liability. Both my fellow professional and I produced comparables that were within 10% of each other, but the judge decided that he would take 50% of our two combined values, splitting the difference with that of the opposing valuer, who had argued for a much higher figure.
One interesting case arguing quantum was that involving a drunk squaddie who, late one Saturday evening, crashed his Land Rover into the home of my client, demolishing much of her living room and destroying most of her core ceramic collection housed in a single display cabinet. She is an internationally renowned ceramicist, whose work is featured in many public collections around the world. Much of my initial role involved the jigsaw puzzle of fitting the shards together to distinguish one pot from another bowl and thus work out exactly what had been destroyed. Then came the research into the retail prices charged by my client's Californian agent so that I could provide an expert witness report in case the matter had to go to court.
Certainly the claim was well over 60% higher than the sum she had originally assessed. She had not realised just how much had been damaged, given that the original twenty or so items now amounted to several hundred rather smaller ones. The claim was settled at 50% of retail values, as the other side argued that the agent took 50% as his standard commission. My contention that the destruction of items prized by my client as examples of her best work stretching back over her career was not agreed. I believed that those which she had chosen to keep herself were worth the full retail replacement figure, particularly for those works of which the only examples left were now on show in museums. I still feel that this argument had merit, but it was felt that settlement could be reached to the agreement of all parties and so did not reach court.
A recent divorce case involved six properties including one in Ireland, a large house in the Home Counties, a flat in the arty part of East London, a store in west London and two other locations. Three contained a large collection of musical instruments, used by my client in his business, the majority guitars. It was important that I appraised the guitars for their memorabilia value, despite many still being used, and not as intellectual property. The recordings for which particular instruments had been used was a factor; another was noting the iconic concerts or tours during which an instrument had been used. There was also a large collection of digital recordings of my client's solo work, much unreleased. Of course this was in addition to all the paintings, antique furniture and jewellery.
One term that still causes confusion is 'willing buyer/willing seller', so let's clarify what this should mean. Some argue that it could equally apply to a standard auction sale or to a retail sale, both occasions where clearly both sides are voluntarily in agreement as to the contract made between them. My profession however has developed an interpretation of wb/ws that we believe it would be equitable for all to follow.
This takes the retail price and the auction value and calculates the mid-point. This then allows the 'seller' a value more than they would achieve at auction and the 'buyer' a value at a lower level than if they had to go to the shops.
The reason for this is to be fair. Such items as carpets, curtains, chairs and settees are frequently expensive to buy new and cost a fraction of the retail price, often less than 10% when purchased second hand. The party setting up a new house will then pay costs that the party remaining in the marital home does not incur. This is not a significant problem in the average home, but where high net worth clients are involved, usually the case in divorce proceedings involving my profession, it often is.
So how do we appraise a graffiti Banksy for divorce? Particularly if both husband and wife want to keep it and you can't easily remove a wall. This is where the formula above works best – after all, few would wish to get the chisels out.
Whether this could apply across all disciplines is open to question, but we believe it is good practice in the field of fine art and chattels.
Keeping track of the constant changes in values and prices is a full time involvement and all arts surveyors have to be up to the mark. It is generally known that antique furniture values are a fraction of what they were 10 years ago, and jewellery values, many involving gold, silver and platinum, have increased markedly over the last 2–3 years. But were you aware that most ceramics are down and pop and cinema memorabilia are up?
Andrew Acquier, FRICS
Originally published in Expert Witness Magazine, June 2012.