Whose Work of Art?
11 / 02 / 2016
The Creative Foundation v Dreamland Leisure Limited and others  EWHC 2556 (Ch) is an interesting case, relating to the ownership of a Banksy art work spray painted on a building. Although the circumstances of the case are unique, it provides helpful guidance on the matters to consider if there are any valuable chattels at a building.
In September 2014 a work of street art was spray painted on the side of a building in Folkestone. The work known as “Art Buff” was attributed to Banksy and became popular locally as well as attracting attention from the press. One valuation suggested the art work was worth £300,000; subsequently a higher valuation of up to £470,000 was also suggested. The art work was created without the consent of the landlord or the tenant of the building.
A month or so after the art work appeared, the tenant of the building, Dreamland Leisure, removed the section of the wall on which the art work had been spray painted and made good the damage to the building. The tenant then shipped the art work to New York to be sold. This was all done without the approval of the landlord. No buyer was found for the art work.
The Creative Foundation is a charity which contributes to the regeneration of Folkestone by promoting creativity and the arts. The Foundation took an assignment of the landlord’s title to the art work and then brought legal action for its return. In the meantime they obtained an injunction preventing the tenant from selling or dealing with the art work. The Foundation said that if it won its claim, it would put the art work back on public display in Folkestone.
The tenant’s lease of the building
The tenant’s lease included the structure and exterior of the building on which the art work was painted. It contained a normal repairing covenant under which the tenant was to keep the premises, its fixtures and additions in good and substantial repair and condition and to paint the exterior of the building every 4 years. The tenant was also required to obtained the landlord’s consent to any works it wished to carry out to the building and the tenant was not permitted to maim or injure the walls of the building.
The arguments put to the court by the tenant and the Foundation
The tenant claimed that it was under an obligation, or at least entitled, to remove the art work from the building in order to comply with the tenant’s covenants in the lease and once removed from the building, the art work became the property of the tenant.
The Foundation argued that the art work became part of the building and the tenant had no right to remove it. Removal was in breach of the tenant’s covenants in the lease. The tenant was not entitled to cut the walls of the premises and remove and treat as its own the bricks and cement comprising part of the building. Once removed from the building the art work became a chattel which belonged to the landlord and thereafter the Foundation. “Chattel” is the legal term for an item that a person can possess in physical moveable form (such as an item of jewellery or in some cases a piece of equipment or machinery).
What was the decision of the court – who owned the art work?
The court decided that the default position is always that a landlord owns every part of a property. As a consequence, a landlord will own anything which is removed from a property, especially where the items have a substantial value. A tenant only has its lease for a limited period of time and so it is for the tenant to prove if this should not be the case.
The tenant’s argument that it was repairing the building to comply with the lease covenants did not convince the court that the tenant owned the art work.
The court decided that the art work should be returned to the Foundation as it had the better right to the windfall created by Banksy!
What does this decision mean for landlords and tenants?
Although the case related to a piece of art, similar issues could arise in relation to the ownership of chattels such as equipment and machinery:
- If there is a valuable chattel, the parties should consider who owns it and what is to happen to it at the end of the term of the lease, in a sale and purchase situation or if it is removed from the property. What is to happen should be expressly set out in the contract, including which party is to make good or repair any damage caused by removal.
- Prior to commencement or completion of any sale, purchase or letting an inspection of the property is recommended. The inspection could be useful to identify expensive chattels at the property which a landlord or purchaser may not otherwise have been aware of.
- Where a chattel has no value the Creative Foundation case said that it is implicit that such an item should be removed from the property. The parties should consider who is obliged to get rid of items of this nature and make good or repair any damage caused.