Spencer-Churchill v Faggionato Fine Arts Ltd & Ors

On an application for an interim injunction, the claimant must show a serious question to be tried, followed by an assessment of the balance of convenience. Damages may be inadequate where ownership is disputed and the value of unique or difficult-to-value property is uncertain. The court may tailor relief to the circumstances rather than impose an unqualified restraint. A notice-based injunction may preserve the claimant’s position while allowing a proposed transaction to be assessed on its merits. The existence of foreign proceedings or the location of the property abroad is not decisive where the dispute has substantial connections with England and the injunction operates in personam against a party within the court’s jurisdiction.

The claimant sought an interim injunction restraining Jombihis Corporation from dealing with a Basquiat painting pending determination of claims arising from its alleged unauthorised sale. The claimant alleged that the sale had been made contrary to his instructions and that the art dealer had received secret commissions from the purchaser. Jombihis disputed the need for relief and contended that New York was the appropriate forum, where related proceedings had been commenced.

The court considered whether there was a serious question to be tried, the balance of convenience, the adequacy of damages, and the significance of the foreign proceedings and the painting’s location in New York.

1. Serious question to be tried. Applying the approach in American Cyanamid v Ethicon [1975] AC 396, the claimant had a real prospect of succeeding in arguing that title remained with him because the purported sale was unauthorised. There was also an arguable case that secret commissions rendered the transaction voidable and that rescission had been sought. Ratification required full knowledge of the material circumstances, which the claimant arguably lacked when he congratulated the purchaser.
2. Balance of convenience. The dispute itself impaired the painting’s marketability, whether or not an injunction was granted. A sale in the existing circumstances was unlikely to achieve the best reasonably obtainable price, and damages were inadequate because the value of a unique work of art was difficult to assess. The claimant was also entitled to protection against possible further wrongdoing. The reasoning in Accidia v Simon C. Dickinson Ltd [2010] EWHC 3058 (Ch) supported the conclusion that undisclosed dealing arrangements were objectionable unless made with fully informed consent or properly accounted for.
3. The appropriate relief was narrower than the injunction sought. Jombihis was restrained from dealing with the painting without first giving the claimant 28 days’ notice of any proposed dealing. The claimant could then return to court if the proposal was not shown to be beneficial.
4. Foreign element. Applying Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460 at 477, Jombihis was unlikely to show that New York was clearly or distinctly the more appropriate forum. The dispute had substantial connections with England, and the early stage and limited scope of the New York proceedings gave them little weight. The injunction was personal, not proprietary, and the painting’s presence in New York was not decisive.
5. The court noted that failure to obey its orders could affect Jombihis’s ability to defend the English proceedings, following Derby v Weldon (Nos 3 and 4) [1990] 1 Ch 65 at 80–81. The injunction was granted in the qualified form stated. Costs remained to be addressed on handing down.

The judgment records that the claimant had previously applied for permission to serve out and for a freezing order. Permission was granted, but the freezing order was initially refused. The Court of Appeal later granted the freezing order on 19 July 2012. The present application for an interim injunction was then determined by the High Court.