Kurtha v Marks

Where goods have been stolen, limitation does not run in favour of a thief or against a person whose possession is related to the theft. The relevant period begins only when the goods are purchased in good faith. A purchaser relying on that defence bears the burden of proving a qualifying purchase within the required period.

Whether a purchase was made in good faith is assessed on all the circumstances. Later conduct may be relevant to deciding whether the earlier purchase occurred and whether it was genuinely made in good faith, although later bad faith does not itself deprive an earlier good-faith purchaser of the defence.

The claimant sought the return of two paintings by Francis Newton Souza. He alleged that he had acquired them from the artist and that they had later been stolen from his collection. The defendant possessed the paintings and relied on an alleged chain of transactions, including a purchase by an earlier dealer in November 1999.

The central issues were whether the claimant owned the paintings, whether they had been stolen, and whether the defendant had proved a good-faith purchase more than six years before the action was commenced. The court also considered the credibility and provenance evidence surrounding the alleged transactions.

1. Claim succeeded. The claimant had acquired title to the paintings and had proved, on the balance of probabilities, that they were stolen. The competing explanations, including loss, disposal or sale by storage companies or members of the claimant’s family, were improbable.
2. The court applied the limitation regime in the Limitation Act 1980. In a theft case, the six-year period does not run in favour of a thief or against a person whose possession is related to the theft. It begins only when a purchaser acquires the chattel in good faith. The defendant bore the burden of proving such a purchase before 26 February 2001.
3. The alleged sale by the claimant’s predecessor in November 1999 was not proved. The evidence did not establish either the date of the transaction or that the paintings sold were the claimant’s paintings. The defendant therefore failed independently on those issues.
4. The fact that a later purchaser acted in bad faith would not itself defeat an earlier purchaser’s defence, if the earlier purchase had genuinely been made in good faith. However, later events and conduct were relevant evidence when deciding whether the alleged earlier purchase had occurred and whether it was genuine.
5. The defendant’s evidence concerning the January 2006 transactions was not credible. The unexplained cash dealings, absence of records, concealment of the paintings and failure to obtain provenance information supported the conclusion that the alleged transactions were not as described. Observations concerning the defendant’s possible exposure under the Proceeds of Crime Act 2002 were expressly obiter.