Lyon & Turnbull

Street Art - Finders Keepers? Jonathan Colclough & Kitty Sokol, New Quadrant Partners

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Street Art and graffiti raise particular issues of ownership and provenance, but with the work of some street artists fetching considerable sums, these issues need to be clearly understood. Bidding for the Banksy mural known as “The Painter” in Notting Hill was bid up to £1 million in 2008 but is now estimated to be worth £2.3 million.

As the prices and popularity of street art and graffiti rocket, sellers and potential buyers should be aware of the pitfalls surrounding this medium. In order to illustrate the issues, we have set out the following scenario: 

Kittykat the famous graffiti artist has painted the iconic “pink punk kitty” logo on a wall behind a shop in South London. The shop is rented on a long lease by Robert, and the property is owned by George. 

The first issue is that Kittykat may have committed the crimes of criminal damage and trespass. In order to prove criminal damage it must be shown that Kittykat destroyed or damaged property belonging to someone else. Even if the paint can be removed, the wall may have been damaged. Even if the wall has increased in value because of the pink punk kitty logo, the wall may still have been damaged. In this scenario, it is unlikely that the wall behind the shop is open to the public, and so Kittykat will have committed trespass. George could bring a civil action against Kittykat and claim also an injunction or damages. However Kittykat has never been identified, so George will not have recourse here.

George has decided to visit his property interests in South London. When he reaches the shop he sees that there’s a new patch of bricks in the wall behind the shop. Robert, the leasee, recognised the value of the pink punk kitty logo and has removed it to sell via auction, believing that as he has a long lease on the shop, the wall is his property. Once the paint is on the wall, it becomes part of the land, and therefore part of George’s property. The wall, and the tangible piece of art, belong to the property owner, here George. He finds out about the pink punk kitty logo and starts proceedings against Robert to halt the sale. 

Kittykat the famous graffiti artist has painted the iconic “pink punk kitty” logo on a wall behind a shop in South London.

Robert’s defence is that there was a clause in his lease stating that he must repair the building and that removing the graffiti was satisfying this obligation. The recent case of Art Buff by Banksy, discussed this issue and the judge decided in favour of the landowner; the default position is that every part of the property belongs to the landlord and not the tenant. Secondly that just because the tenant is complying with his implied term to repair the property, he does not acquire ownership of the items removed (be it an original bathroom or a Banksy mural). Thirdly even if there was an implied term in the lease which transferred the ownership of such items of minimal value (i.e. an original bathroom), it does not follow that the same term would be implied for items of substantial value, here the Kittykat mural. Fourthly, and crucially, the judge stated that, where the uplift in value is as a result of a third party, it is the landlord who has the stronger right to the value over the tenant. George was able to halt the sale and has recovered the pink punk kitty mural.

The mural has now become famous and George is thinking about putting it up for sale, can he do this without the artist’s permission? Yes he can. As mentioned above George owns the wall and everything on it, so he can sell the mural without Kittykat’s permission. In theory the intellectual property rights remain with the artist, however this is of little use to an artist who wants to remain anonymous. As yet, the issue of intellectual property rights and copyright have not come to court, and given that most graffiti artists wish to remain anonymous they are unlikely to want to challenge the rights of property owners. However, if Kittykat decided to break cover and become known, then the copyright of the work would remain with him. As such, even though George owns the work, he would not be able to reproduce it in any material form, without sharing the profits with Kittykat. 

George’s wife has seen the Kittykat mural and wants to display it in their house in Cape Town.  Can George remove the work from the UK? Under English law, cultural objects older than 50 years, and over a certain value, require an export licence to leave the UK. The work is less than 50 years old so does not require an export licence. If the work was deemed to be of national importance, then the Secretary of Sate could place a temporary export bar on the item, which gives institutions such as museums and private individuals time to raise funds to purchase such works. It is extremely unlikely that the Kittykat mural will be deemed of national importance, and so George can take it to South Africa. 

Tom, a friend of George’s wants to buy the Kittykat mural but requires provenance and proof of George’s ownership. Unlike with other forms of modern art, where a purchaser can trace the work back to the artist, street art can only be traced back to a location. As the wall was removed by Robert, George is able to prove where the mural came from and his ownership of the property. Tom is lucky that he is buying the mural from the original owner. A subsequent purchaser would have a greater risk that the true owner of the work is not the seller. If this turned out to be the case, the innocent purchaser could find himself being sued by the true owner of the work, and even facing a charge of handling stolen goods. If Robert had been able to sell the work himself, and George later found the subsequent purchaser, then George would be perfectly entitled to sue as the true owner of the work. Caveat emptor, let the buyer beware!

Unfortunately George has now died and his estate has passed to his children. There is a large Inheritance Tax bill. George died domiciled in England, therefore his entire estate is subject to Inheritance Tax at 40%. George amassed a large collection of graffiti and street art, and it forms a substantial part of his estate. Can George’s children reduce the charge to Inheritance Tax on the collection of graffiti and street art? Heritage property can be given for the purposes of or for the public benefit without any charge to Inheritance Tax. George’s children do not share their father’s enthusiasm for street art and graffiti. If the collection qualifies as Heritage Property, they may be able to leave it to the nation in lieu of the Inheritance Tax. For a work of art to be eligible, it must: (a) appear to HMRC to be pre-eminent for its national, scientific, historic or artistic interest; or (b) be part of a collection or group of relevant objects which, taken as a whole, appears to HMRC to be pre-eminent for its national, scientific, historic or artistic interest. As yet a collection of street art and graffiti has not been given to the nation under the Heritage Property scheme but there is no reason to suppose that such a collection would not qualify. 

Jonathan Colclough is a Partner who advises both UK resident and international clients on UK tax, trust, estate and succession issues at New Quadrant Partners
Kitty Sokol is an Associate who assists with a wide range of private client matters and legal research.

 

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