Guest Work Agency is your go-to source on art-related court cases presently taking place within Australia, as well as select cases internationally. In this story our Paralegal Associate, Reetika Khanna profiles a number of interesting misleading and deceptive conduct, breach of contract and copyright cases.
Birubi Art Misleading & Deceptive Conduct Dispute
In June 2019, the Federal Court ordered Birubi, a large wholesaler of Australian souvenir products supplying over 150 retail outlets, to pay a $2.3 million penalty for making false and misleading representations in contravention of s 29(1)(a) and s 33 of the Australian Consumer Law (Sch 2, Competition and Consumer Act 2010 (Cth)) (‘ACL’). The misleading representations related to five product lines: didgeridoos, boxed and loose boomerangs, message stones, and bullroarers. The Court ordered a penalty for conduct relating to each product, totaling $2.3 million.
Section 29(1)(a) provides that a person must not, in the supply or promotion of goods, make a false or misleading representation that the goods are of a particular style or have had a particular history. Section 33 provides that a person must not engage in conduct that is liable to mislead the public about the nature, manufacturing process and characteristics of any goods.
In October 2018, the Court declared that Birubi had falsely represented that the five products, containingvisualimages, symbols and styles of Australian Aboriginal art, were authentic. Contrary to the representations, the products were manufactured in Indonesia and the labels did not disclose this fact. In addition to s 29(1)(a) and s 33 of the ACL, Justice Perry also held that Birubi contravened s 18 and s 29(k) of the ACL. Section 18 of the ACL provides that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or likely to mislead or deceive. Section 29(k) bars the making of false or misleading representations about the place of origin of goods. However, pecuniary penalties under s 224 of the ACL only apply to contraventions of ss 29 and 33.
In his reasons, Justice Perry did not find that Birubi had any intention to mislead purchasers but nonetheless, the question of whether the ACL was contravened was objectively made out. It was held that the price of the products, the target audience of tourists rather than sophisticated consumers of Aboriginal art, and the nature of the retail outlets, render it likely that a reasonable hypothetical purchaser would believe the products were made by Australian Aboriginal people. Further, statements on the labels and packaging of the products as ‘hand painted’, ‘handmade’ or ‘hand crafted’ negated any reason to interpret the products as mass-produced overseas.
In a press release issued after the findings were announced, the ACCC expressed their hopes that the $2.3 million penalty will deter others from passing off fake Australian Aboriginal-style art as genuine or authentic products. While such conduct unfairly misleads consumers, they stressed that the Court had emphasised the serious economic, social and cultural harms also caused to Indigenous Australians.
The ACCC has stated they will be monitoring traders of Indigenous Australian style art closely and that they will take action against those who mislead consumers about the nature of such products. Birubi is currently in voluntary liquidation.
Gould Galleries Misleading & Deceptive Conduct Dispute
Gould Galleries, a Melbourne art dealer, is being sued for misleading or deceptive conduct by a Sydney art collector under the now repealed s 52 of the Trade Practices Act 1974 (Cth) (‘TPA’). The dispute concerns the sale of a painting entitled ‘Well Suited Brick Veneer’, allegedly by artist Howard Arkley. Section 52 of the TPA provides that a corporation cannot engage in conduct, in trade or commerce, that is misleading or deceptive, or likely to be misleading or deceptive.
The collector bought the work for $205,000 in 2002. In June 2018, the collector filed a claim that Gould Galleries made representations regarding the authenticity, provenance and attribution of the painting that were misleading or deceptive, in contravention of s 52 of the TPA. The collector is seeking a refund of the purchase price, as well as interest and costs.
Gould Galleries denies the allegations, claiming that they bought the work from a well-known art dealer, John Playfoot, and its authenticity was endorsed by the Estate of Howard Arkley when copyright was granted to include the work on the cover of a Gould Galleries catalogue in 2002.
The Grimwade Centre for Cultural Materials Conservation has concluded the work is not a genuine Arkley due to factors including the preparation of the canvas, the uncharacteristic style of the underdrawings and the paint application. The work has also been excluded from the official Arkley catalogue, which was launched online eight years after the sale.
The matter is currently awaiting the next hearing date to be set.
‘Fearless Girl’ Replica Dispute
The replica ‘Fearless Girl’ Sculpture in Melbourne’s Federation Square is the subject of a copyright infringement action brought by the commissioner of the original New York Stock Exchange version, State Street Global Advisors. State Street brought proceedings in the Federal Court against Maurice Blackburn, an Australian law firm which specialises in personal injury and compensation claims, as well as super funds HESTA and Cbus, who had commissioned the replica ‘Fearless Girl’ Sculpture in Melbourne’s Federation Square to celebrate International Women’s Day earlier this year.
In May proceedings against HESTA were dismissed on the basis that the super fund agreed to cease conducting events and promotions relating to the replica ‘Fearless Girl’ Sculpture and what State Street have claimed to be their ‘Fearless Girl’ trade mark. The dispute with Maurice Blackburn continues and is set for trial later this year, on the 25 November.
State Street commissioned the original statue to promote their investment fund dedicated to gender-diverse companies, particularly in the boardroom. It features a plaque that reads: “Know the power of women in leadership. SHE makes a difference”. Maurice Blackburn’s CEO, Jacob Varghese, stated that they wanted the replica to “serve as a powerful reminder that Australia still has a long way to go in the fight for gender equality”. The press release containing this statement has since been removed from the Maurice Blackburn website, following a court order to refrain from marketing or promoting the replica while the dispute remains unresolved.
De Pury Commission Contract Dispute
In January 2018, the England and Wales High Court held that Simon and Michaela de Pury, art advisors, were entitled to a $10 million commission for the sale of a Paul Gauguin painting entitled ‘Nafea faa Ipoipo (When Will You Marry)’ to the Emir of Qatar for $210 million in 2014. The art advisors sued their client, the trustees of the Rudolf Staechelin Family Trust, for refusing to pay commission for the sale. The Court held that this agreement was contractually binding, even though the decision to pay the commission was made by only two of the three trustees involved in the negotiation.
The trustees subsequently appealed the decision, asserting that the de Purys had breached their fiduciary duty by concealing the truth about a previous higher offer of $230 million in 2013, from the same buyer.
On examination of the evidence, the Court of Appeal found that one of the trustees, Mr Staechelin, had been told about the $230 million offer at least three times; twice by Mr de Pury via email in 2013, and once at a meeting with the buyer’s agent in 2014. Furthermore, the Court held that irrespective of whether the figure of $230 million was explicitly mentioned, Mr Staechelin clearly understood there had been a previous higher offer for the work as the buyer’s agent, Mr Bennett, made efforts to explain why the offer had decreased in a meeting on 16 June 2014. In May 2019, Lord Justice Lewison, with the other judges agreeing, found there had been no breach of fiduciary duty.
In addition, the Court upheld the decision that the de Purys were entitled to the $10 million commission on the basis that there was a consensus between two of the three trustees that Mr de Pury would receive $10 million in commission. As the trustees did not inform Mr de Pury at any stage that the commission would only be paid with the approval of the third trustee, the consensus was enough.