Forget the National Gallery or the Tate: if you want to learn about fine art, head to the High Court and the Rolls Building.

Just this year, two Chancery judges have had cause to examine The Cardsharps by Caravaggio in Thwaytes v Sotheby’s [2015] EWHC 36 (Ch), a professional negligence claim against auctioneers, and Art Buff by Banksy in The Creative Foundation v Dreamland Leisure [2015] EWHC 2556 (Ch), which concerned a landlord and tenant dispute as to the ownership of the mural. Sadly, this article discusses not the artistic merit of the two works, but rather, it considers the interesting landlord and tenant implications of the decision in the Creative Foundation case.

On the night of 28 September 2014, during the Folkestone Triennial, a public art project organised by the Creative Foundation, Banksy spray-painted a mural on the external flank wall of an amusement arcade occupied by Dreamland. Subsequently, at the beginning of November 2014, Dreamland caused the section of the wall with the mural on it to be removed and shipped to an art fair in Miami with the intention of selling it. It went unsold and was subsequently transferred to the Keszler Gallery in New York.

Having taken an assignment of the causes of action relating to the mural from Dreamland’s landlord, the Creative Foundation sought an order declaring that it owned the mural and requiring it to be delivered up, pursuant to section 2 of the Torts (Interference with Goods) Act 1977.

There were two issues for Mr Justice Arnold to resolve in the Creative Foundation case. First, Dreamland argued that it was entitled to remove the mural (because it was graffiti) in order to comply with its repair obligations. Second, Dreamland contended that, having undertaken repairs to the building, it owned the chattels removed as part of such repair works.

As to Dreamland’s repairing obligations, Arnold J accepted it was not fanciful to suggest that the spraying of the mural rendered the wall on which it was sprayed ‘out of repair’. Thus, despite the mural not adversely affecting the repair or condition of the wall, and there being no obligation upon the tenant to repaint or redecorate during 2014, Dreamland’s repairing obligations were said to be engaged.

But the method by which Dreamland complied with its repairing obligations was not reasonable. Whereas it could have simply painted over or cleaned the mural, it chose a significantly more invasive method of dealing with the graffiti, which involved an interference with the fabric of the building. This, the court held, could not be justified as reasonable compliance with Dreamland’s repairing obligations. Standing back, this seems a sensible conclusion. After all, it is somewhat artificial to suggest Dreamland’s actions were motivated by a need to repair the building.

Perhaps more interesting, though, is the decision about ownership of the mural. It was common ground that it was necessary to imply into the lease a term to address the question of what happened to parts of the building (whether they be structural, decorative, or landlord’s fixtures) which were removed or replaced as part of repairs. What was in issue was whether such chattels should be regarded as the landlord’s or the tenant’s. On the one hand, the Creative Foundation accepted that if the chattels were of no value, Dreamland was both obliged and permitted to dispose of them. But, on the other, the Creative Foundation said that if the chattels were of more than de minimis value, Dreamland ought to deliver them up to the landlord.

Although Arnold J acknowledged that tenants ought not to be required to obtain valuations of parts removed during repairs, or to negotiate with landlords over disposal of such parts, he did not find that these considerations assisted Dreamland. He found that the default position was that every part of the building belongs to the lessor. It was therefore for Dreamland to justify any implied term that finally transferred ownership of some part of the building. While it was possible to justify an implied term permitting Dreamland during the course of repairs to remove (and possibly dispose of) items formerly forming part of the building, this did not necessitate a term transferring title. Certainly, no officious bystander would say that a chattel with substantial value removed during repairs would obviously belong to the tenant. Accordingly, the Creative Foundation owned the mural and was entitled to its return.

Although the appropriate implication will depend upon the terms of the particular lease, it would seem to follow that chattels removed during repairs with material value (albeit perhaps not as significant as a Banksy mural) belong to the landlord and not the tenant.

This may come as a surprise to many tenants, who have probably treated the value of the waste as the quid pro quo for the obligation on the tenant to undertake the repairs and dispose of the waste. SJ

Andrew Bruce is a barrister practising from Serle Court, and Tim Maxwell, pictured, is a partner and Becky Shaw a solicitor at Boodle Hatfield


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