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Cite as: [2008] EWHC 1483 (Comm)

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Neutral Citation Number: [2008] EWHC 1483 (Comm)
Case No: 2006 Folio 654

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

Royal Courts of Justice
Strand, London, WC2A 2LL
18 July 2008

B e f o r e :

THE HON. MR JUSTICE TOMLINSON
____________________

Between:
MICHEL KAMIDIAN
Claimant
- and -

(1) ANTHONY WAREHAM HOLT
(on behalf of certain underwriters at Lloyd's subscribing to Policy No. HF00ABA9)
(2) ALEXANDER VON SOLODKOFF
(3) ERMITAGE LIMITED
(4) GEZA VON HABSBURG
(5) BROUGHTON INTERNATIONAL INC.
Defendants

____________________

Alison Padfield (instructed by Messrs ELS) for the Claimant
Andrew Neish (instructed by Messrs Ince & Co) for the First Defendant
John Kimbell (instructed by Messrs Pritchard Englefield) for the Second Defendant
The Third Defendant was not served with proceedings
Raymond Davern (instructed by Messrs De Cruz) for the Fourth Defendant
The Fifth Defendant does not appear and is not represented
Hearing dates: 21,22,23,24,28,29,30,31 January; 4,5,6,11,12 February 2008

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    Mr Justice Tomlinson :

    Introduction

  1. The creations of Carl Fabergé are well known and highly prized. Foremost amongst such creations are "Fabergé Eggs". Carl Fabergé was born in 1846 in St Petersburg of Huguenot descent. He succeeded his father as a jeweller and manufacturer of objets d'art. Regarded by many as a designer of unsurpassed ingenuity and delicacy, he became a prolific supplier to the royal houses of Europe. Central to his fame is the creation of the so-called Imperial Easter Eggs, the first of which was created in his workshops in 1884 or 1885 for Tsar Alexander III who presented it to the Tsarina, Maria Feodorovna. Thus began a tradition of Imperial Easter gifts by the Tsar to his wife, a tradition continued after the death of Tsar Alexander by his son Tsar Nicholas II. Tsar Nicholas not only bestowed an annual Easter gift upon his Tsarina, Alexandra Feodorovna, but also dutifully presented his mother, the Dowager Empress, with an annual Easter Egg created by Fabergé. An Easter Egg given by the Tsar either to his wife or to his mother is uncontroversially described as an Imperial Easter Egg. Opinions vary as to how many such eggs were created in the Fabergé workshops, but there were probably not more than fifty, not all of which survive. It is generally accepted that there is another category of Easter eggs created by Fabergé which should be regarded as of similar quality although lacking the cachet of having been created to be an Easter gift by the Tsar to his wife or mother. Into that category falls the collection of seven "Kelch" (or Kelkh) eggs made for the family of that name, successful merchants in Russia. Another such egg is the so-called Duchess of Marlborough Egg, acquired by the Duchess (née Consuelo Vanderbilt) during her visit to St Petersburg in 1902. As recently as 28 November 2007 there was auctioned at Christie's in London the "Rothschild Egg" which would by common consent be placed into the same category of non-Imperial Eggs of Imperial quality. The Rothschild Egg is generally regarded as being of impeccable provenance, including not just relevant markings but also a surviving photograph of it apparently under construction in the workshop of the celebrated Fabergé workmaster Mikhail Perchin.
  2. This case concerns another object which it is alleged by the Claimant should be placed into the same category of Imperial quality, the so-called Dr Metzger Egg Clock. The context is however prosaic and more familiar to this court than is the world of fine art. A claim is made against insurers and those alleged to have been bailees of the egg clock in respect of damage caused whilst the egg clock was in transit between Europe and the USA for the purpose of being shown at an exhibition in Wilmington, Delaware. That exhibition opened as long ago as September 2000, closing in February 2001. By the end of March 2001 the damaged egg clock was back in London in the custody of its alleged owner, the Claimant in this action. One of the many curiosities of this extraordinary case is that this artefact, which is on any view of a contemporary value of £100,000 or so even if not of the pedigree claimed, has remained unrepaired in a safe deposit ever since.
  3. The Claimant, Michel Kamidian, is an art collector and dealer. He was born in Armenia in the former USSR, acquiring the French nationality of his father. He was educated in the USSR before studying Russian philosophy at the Sorbonne. He now lives in or near Paris from where he conducts his dealing activities. He has a life-long interest in items manufactured in the workshops of Carl Fabergé.
  4. In November 1991 Mr Kamidian was involved in the purchase at auction at Sotheby's, Geneva, of a nephrite and silver gilt mantle clock, to which I shall refer hereafter as the "Dr Metzger Egg Clock". It was Lot No. 394. The description in the Sotheby's Sale Catalogue was:
  5. "394
    A TIMEPIECE
    retailed by Fabergé, unmarked, probably St Petersburg, the movement signed: 'Hy. Moser & Co., St Petersburg', late 19th century
    the urn-shaped nephrite body with two-coloured gilt-metal mounts, the opaque white enamel dial band with blue enamel Roman numerals, the hours indicated by the head of a snake, resting on a tapering base within snake-entwined branches terminating in elaborate scrolls, surmounted by a bouquet of lilies, the rim of the vase as a cluster of roses, the rectangular nephrite stand applied with gilt classical scrolls, on stepped plinth
    height 29cm.
    in original fitted wood case, the silk interior stamped with the Imperial warrant and inscribed: 'K. Fabergé. St Petersburg, Moscow', the paper lining in the wood case underneath the later frame with blind stamp: 'K. Fabergé, St Petersburg, Moscow', below the Imperial warrant.
    Provenance
    Presented by the Dowager Empress Maria Feodorovna to Dr Johann Georg Metzger.
    Dr Metzger (1838-1909), a Dutch doctor specialising in therapeutic gymnastics and famed for his use of massage treatment, was summoned by Emperor Alexander III to St. Petersburg and arrived there on April 2nd, 1886 to treat the Imperial Consort. On 26th May of the same year Dr Metzger was awarded the Order of St. Stanislaus for his services.
    Early in 1892 he was again called to St. Petersburg to treat the back injury of Grand Duchess Olga Alexandrovna who had been hurt in the 'Borki railway disaster': on 29 October 1888 the Imperial train had been travelling to Kharkov in the Caucasus when two explosions severely damaged the carriages. Emperor Alexander II (sic) escaped first from the crushed dining car and held up the heavy iron roof which had collapsed to release the children and the Empress.
    During his second visit Dr Metzger was presented with this clock and he later received the Order of St. Stanislaus First Class with diamonds, in addition to an honorarium of 1400 marks.
    Dr Metzger's other patients included the Empress of Austria, Empress Eugenie of France, the Duke of Nassau and the Duchess of Saxe-Coburg-Gotha.
    For a detailed description of his life and work, see Exhibition Catalogue, Dr Johann Georg Metzger 1838-1909 en zign tijd, Leiden, 1978, and Grote Winkler Prins Encyclopedie, Amsterdam, 1971, deel 13.
    Photocopies of documents relevant to Dr Metzger are available with this lot.
    This clock is close in design and size to the Imperial Egg presented to the Empress Alexandra Feodorovna in 1899 and called the 'Madonna Lily Egg'. Made by the Fabergé workmaster M. Perchin it is now at the Armoury Museum of the Kremlin in Moscow, see G. Hill, Fabergé and the Russian Master Goldsmiths, New York, 1989, plate 33. SF25,000-35,000"

    As appears above, the price estimated by Sotheby's and noted in the catalogue was SF25,000-35,000. It is common ground that that is not a price consistent with what would have been commanded by a piece generally recognised to be by Fabergé. The Sotheby's description bestows that accolade only upon the wooden case, not upon the timepiece itself, although one is left to wonder whether Sotheby's intended their description of the case to be read as referring to "the" original fitted wood case or rather to "an" original fitted wood case, an uncertainty which I do not find entirely resolved by the use of the word "fitted" although Ms Alison Padfield, counsel for Mr Kamidian, suggested that it should be regarded as conclusive in favour of the former rather than the latter meaning. The piece was knocked down for SF148,500, obviously a price considerably in excess of Sotheby's estimate. SF148,500 was then equivalent to about US$105,000. Mr Kamidian says that it was obvious to him from the moment he saw the clock that it was a genuine Fabergé piece and that Sotheby's had made a mistake in failing to attribute it appropriately. The trial proceeded upon the assumption that Mr Kamidian was the successful bidder in the room, and on re-reading Mr Kamidian's evidence I think that this is what he intended to convey by his evidence that "I was in the – in this sale, I bought this piece. So everybody saw that I bought this piece". Mr Kamidian says that at the time he acquired only a half share in the Dr Metzger Egg Clock, since he made the purchase as to 50% on behalf of another, who in turn possibly represented yet others. Mr Kamidian says that he acquired full ownership in 1998 by buying out the then owner of the second half share for US$145,000. Again, US$145,000 falls very far short of what would in 1998 have been 50% of the value of an egg clock generally recognised as having been created in the Fabergé workshops.

  6. The Fifth Defendant, Broughton International Inc., to which I shall refer hereafter as "Broughton", is or certainly was in 2000/01 a company incorporated in Florida. It has aptly been described as a "for profit arts organisation". One of its activities at that time was the organisation, on a commercial basis, of large scale art exhibitions. It organised "The World of Fabergé" exhibition held at the Riverfront Arts Center in Wilmington, Delaware in 2000 and 2001 to which I have already referred. It is common practice for collections and collectors to lend pieces free of charge for display at such exhibitions. So common are art loans of this type that a whole chapter is devoted thereto by Professors Norman Palmer and Ewan McKendrick in their work "Interests in Goods", Second Edition 1998. I hesitate to describe such an arrangement as a gratuitous loan because that begs a question, much debated, as to the generation of an expected benefit constituting consideration. It is accepted that one advantage possibly to be derived from the loan of a piece for exhibition is the achievement of wider publicity for the piece which may well bring with it either an increased acceptance of a hitherto doubtful provenance or an enhancement in the realisable price or, of course, both. Naturally for some lenders such considerations will be of little moment. There were over one thousand items on display at the Wilmington exhibition, although for the loan of some a fee was paid, for example for those from the Forbes Collection. Twenty-one or twenty-two items, including the Dr Metzger Egg Clock, were lent by Mr Kamidian to the exhibition. For this purpose they had to be transported from London to Wilmington and then returned at the end of the exhibition. It is usual, where artefacts are lent for this purpose, for the borrower to arrange at its expense packing and shipment of the objects and also appropriate insurance against the risk of loss or damage. Ordinarily this will be done pursuant to a formal Loan Agreement in writing.
  7. At page 528 of the work of Professors Palmer and McKendrick to which I have just referred there appears the following passage:
  8. "No observer, schooled in the adversarial rites of the common law, can fail to be impressed by the village atmosphere in which art loans are conducted, by the sense of common purpose and by the prevalence of trust and good will."

    I have tried to bear this observation in mind in evaluating the evidence in this case. It certainly supplies a partial explanation for some of the unbusinesslike arrangements about which the court was told.

  9. It is common ground that the Dr Metzger Egg Clock was at all material times, i.e. from 17 July 2000 until 27 March 2001, covered by a Fine Art Exhibition All Risks Insurance policy to which the First Defendant, a representative underwriter, subscribed. It was a valued policy. The value attributed to the items from the Kamidian Collection was US$3,831,000. Of this sum, it is common ground that US$2.5 million was attributed to the Dr Metzger Egg Clock. Of the balance, US$700,000 was attributed to a hardstone parrot said to be by Denisov-Uralski which was at a late stage withdrawn from the items lent to the exhibition and never therefore travelled or came on risk. I mention this since (a) the parrot plays a significant part in the story and (b) it demonstrates that the value attributed to the Dr Metzger Egg Clock was by far the greatest part of the overall value attributed to items from the Kamidian Collection.
  10. The "Director of Academic and Curatorial Affairs" at Broughton was Dr Robert Bianchi. He was the Curator in overall charge of the exhibition. It is however customary for the organisers of such exhibitions to employ as "Guest Curators" persons of standing in the particular subject matter of the exhibition. This exhibition was no exception. Pursuant to a "Consulting Agreement" dated 1 December 1998 the Fourth Defendant, Archduke Dr Geza von Habsburg, was retained as Chief Curator. I intend the Fourth Defendant no disrespect by continuing in this judgment the convention adopted at trial of referring to him as Dr von Habsburg, the title which he himself customarily uses. Dr von Habsburg is acknowledged amongst the cognoscenti to be an authoritative voice in the world of fine art in general and of Fabergé in particular. Dr von Habsburg had various duties under the agreement one of which was to "arrange for the collaboration and assistance of Alexander von Solodkoff who shall be compensated by Broughton as defined in Paragraph 6 below". Thus it was that the Second Defendant, Mr von Solodkoff, became the guest "co-curator". The responsibilities of Mr von Solodkoff were set out in a short fax message from Dr von Habsburg sent on 21 January 1999. One of his responsibilities was to arrange loans chiefly from Germany but also from clients of the Third Defendant, Ermitage Limited. Ermitage Limited was an English company of which Mr von Solodkoff was a Director but which no longer exists, having been dissolved in 2006. It has accordingly not been served with these proceedings. Ermitage appears to have had no relevant involvement but the responsibility of Mr von Solodkoff seems to have extended to arranging loans from European collections or collectors. Mr von Solodkoff is an art historian with a particular interest in the work of Carl Fabergé. Again, he is recognised and respected by the cognoscenti as an expert in the field. In 1979 Dr von Habsburg and Mr von Solodkoff co-authored "Fabergé, Court Jeweler (sic) to the Tsars" published in the English translation version in New York by Rizzoli, a work of acknowledged scholarship with a foreword contributed by Kenneth Snowman, a noted English authority associated with the house of Wartski.
  11. Mr Kamidian becomes involved in the Wilmington Exhibition

  12. It was as a result of a chance meeting in the summer of 1999 between Mr Kamidian and Mr von Solodkoff, who already knew each other, that Mr Kamidian came to participate in the Wilmington exhibition. There is no suggestion that Mr Kamidian sought out Mr von Solodkoff for this purpose. Following initial discussions between Mr von Solodkoff and Mr Kamidian, a further meeting took place in Paris, probably on 14 or 15 December 1999, attended this time also by Dr von Habsburg. The meeting took place in a bank, probably in or close to the Place de la Madeleine, in the vault of which Mr Kamidian at that time stored various items, one of which was the Dr Metzger Egg Clock. During this meeting a list of exhibits to be lent by Mr Kamidian for display at the exhibition was agreed, Dr von Habsburg having the ultimate power of choice. The list agreed included the Dr Metzger Egg Clock.
  13. In due course on 31 March 2000 Mr Kamidian delivered the items or at any rate most of them and in particular the Dr Metzger Egg Clock to Mr von Solodkoff in London. They met for this purpose at the London Safe Deposit in Lower Regent Street, a venue suggested by Mr von Solodkoff who knew it to have appropriate facilities for the safe storage of antique items.
  14. The egg clock is sent to the USA

  15. The items including the Dr Metzger Egg Clock remained at the London Safe Deposit until 26 July 2000. Broughton instructed their US transport agents, Alexander International, to arrange the packing and carriage to Wilmington of items then in London. Alexander in turn appointed Messrs Constantine, Wingate & Johnston, to whom I shall refer hereafter as "Constantine". Constantine are recognised as professional packers and transporters of fine art. On 26 July 2000 representatives of Constantine met Mr von Solodkoff at the London Safe Deposit. They collected the items whose loan had been arranged through Mr von Solodkoff as intermediary and which were then in safe storage at Lower Regent Street. They took the items, including the Dr Metzger Egg Clock, to their own security warehouse in Queen's Road. Mr von Solodkoff accompanied the items to Queen's Road. Somewhat unwillingly Mr von Solodkoff prepared condition reports describing the condition of the items on their arrival at Queen's Road. He was unwilling because this was not part of his prescribed responsibilities for which he was paid only a modest fee – US$12,000. He did so nonetheless at Dr von Habsburg's request. Six months after the end of the exhibition Mr von Solodkoff received from Constantine a package containing the Condition Reports and photographs of every item the loan of which he had arranged, save only for the Dr Metzger Egg clock. A copy of the Condition Reports, both as executed by Mr von Solodkoff and as subsequently annotated by Dr Bianchi, has been recovered, but not the photograph taken on 26 July 2000.
  16. The Condition Report completed by Mr von Solodkoff for the Egg Clock and case stated:
  17. "Nephrite on base 'cloudy', flowers bent white enamel scratched/wooden case torn, lining damaged."

    By "bent" Mr von Solodkoff did not mean to imply that the flowers or the stems to which they were attached were damaged, rather that the stems were curved in appearance. Polaroid photographs of the items were taken by Constantine. Mr von Solodkoff did not keep copies of the Condition Report or of the photographs. It seems likely that the originals travelled with the items to Wilmington.

  18. Mr von Solodkoff did not discuss the packing of the items with Constantine in other than general terms. Constantine are acknowledged experts in their field.
  19. The clock was at this stage in its wooden case, a brief description of which is at paragraph 4 above. Although controversial, it is to my mind obvious that the box, which I have seen, is unlikely to have been designed in its original construction to contain the Dr Metzger Egg Clock. Indeed it is obvious that this box has itself been the subject of a modification. The exposed raised wooden block on the base has been altered and recessed in order the better to accommodate the clock. This inner base was not at the material time securely fixed into the bottom of the box, allowing the clock to move upwards within the box. Plastic anchors used in an attempt to overcome this problem were ineffective. The vertical padding to each side of the case was insufficient to provide support to the clock and to prevent it rocking from side to side. However for the purpose of transit to the USA a particular problem was presented by the bouquet of flowers which surmounts the piece. The packing adopted consisted of wrapping the top part of the clock in tissue paper and replacing it in its box. It is agreed between the packing experts instructed on the opposing sides in this action that this method of packing meant that the petals were likely to be crushed once the box was closed. It is agreed that the clock should not have been transported in its own wooden presentation box.
  20. Discovery of damage to the egg clock (1)

  21. Upon unpacking at Wilmington it was found that a bud on one of the floral branches at the top of the clock had broken off. Although this too is controversial, I find that this bud had been in place when Mr von Solodkoff last saw the clock at Queen's Road. The experts were agreed that the only reason why the damage was not worse on the outward journey was because Constantine did put the presentation box into a large airfreight crate along with other pieces, thereby lessening the movement of the clock within the presentation box.
  22. The exhibition opened on 9 September 2000 and included the Dr Metzger Egg Clock in its damaged and unrepaired condition. It was in a glass case. Mr Kamidian attended the opening of the exhibition. He did not notice that one bud was missing from the Dr Metzger Egg Clock and no-one told him about the occurrence of the damage. At least Dr Bianchi, Dr von Habsburg and Mr von Solodkoff, all of whom were also present at the opening of the exhibition, were aware of the damage. Dr Bianchi and Dr von Habsburg had seen the damage and discussed it but Dr von Habsburg and probably Dr Bianchi might well not have recognised Mr Kamidian at the exhibition. Mr von Solodkoff had not seen the damage for himself although he was told about it over the telephone by Dr von Habsburg before the exhibition opened. Mr von Solodkoff knew that Mr Kamidian was present at the opening of the exhibition and he would have recognised him had he seen him. He did not seek him out to tell him about the damage. For reasons upon which I will elaborate in due course I think that as a result of his dealings with Mr Kamidian, and the view he had formed about him, Mr von Solodkoff would have been unlikely to have sought out Mr Kamidian's company. There were between 500 to 800 people present at the opening. Mr von Solodkoff had had neither the time nor, apparently, the inclination, to inspect the damage to the Dr Metzger Egg Clock for himself in the light of the information he had received. Dr von Habsburg had already given it to him as his opinion that the depreciation caused by the parting of the bud could not be more than of the order of 5%. The damage was capable of a relatively straightforward repair. Mr von Solodkoff did not see it as his responsibility either to check the condition of the piece or to discuss it with Mr Kamidian. However Mr von Solodkoff was wholly unaware that no-one had yet told Mr Kamidian about the damage and he could fairly have assumed that at the very least Broughton and possibly Dr von Habsburg would by now have done so. In fact it was only ten days later on 19 September 2000 that Dr Bianchi wrote to Mr Kamidian to tell him of the damage.
  23. A claim was notified under the insurance on 18 October 2000. Insurers appointed Nicole Sheley, hereinafter "Ms Sheley" of Messrs Crawford Technical Services in New York as loss adjusters. Ms Sheley liaised with Mr Kamidian and looked into the question of restoration. She herself reported, in due course, on 13 March 2001:
  24. "Interestingly, when viewing the clock, you cannot actually tell that there is a bud broken off, aesthetically the clock looks fine. It took one restorer about twenty minutes just to locate the damage."

    That restorer was a Ms Carol Aiken, a conservator from Baltimore. She quoted for restoration. She expected that it would take not longer than one day of her work, which was charged at US$700 per day plus expenses. She advocated the use of a small, and ultimately invisible, wire dowel and adhesive rather than solder, since the application of heat could melt original materials or change their colour.

  25. Mr Kamidian had agreed that the clock should be looked at by a restorer. He was however anxious that depreciation should be agreed before restoration. Ms Sheley explained that underwriters would not assess depreciation prior to restoration. At some stage Mr Kamidian became aware of Dr von Habsburg's assessment that depreciation would not be more than of the order of 5%. He was unhappy with this assessment and it may be that it was in the light thereof that he ultimately decided that he wished the clock to be returned to London in its unrepaired state.
  26. In the course of these discussions Ms Sheley spoke to Dr von Habsburg. She recorded in a contemporaneous note of her discussions with him that the Dr Metzger Egg Clock was a "controversial piece". In the course of these discussions Dr von Habsburg indicated to Ms Sheley that, although he and Mr von Solodkoff had thought that the clock was of a sufficient quality to be in the exhibition, they had debated the clock's attribution as being by Fabergé as they felt that it was "not quite right" and that the piece was not of the calibre expected of a Fabergé item. Dr von Habsburg said words to the effect that he did not want or had not wanted to disappoint Mr Kamidian by telling him this. Ms Sheley also contacted an appraiser called Marie Betteley whose name she was given by Ms Aiken. Ms Betteley did not have the opportunity to inspect the clock itself but was supplied with a slide and photographs together with the exhibition catalogue. She thought that the piece looked "awkward" and she had reservations about it. She was sceptical as to whether it was necessarily of the value attributed to it, US$2.5 million, in its hitherto undamaged state.
  27. Ms Aiken had advised in her restoration proposal that consideration should be given to the use of a specially customised container for the clock on its return journey, with the wooden case packed separately. She gave it as her opinion that the clock could not be adequately secured within its own wooden case for the purposes of transport, a view which the parties' experts in packing are agreed is correct. In the light of the obvious inadequacy of the packing for the outward journey and the advice of Ms Aiken, Ms Sheley raised with Broughton the need for the clock to be shipped separately from the wooden case. Broughton referred Ms Sheley to Alexander who in turn referred her to the specialist packers Artex of New York who had been contracted to do the packing on site for the return of the exhibits to the various overseas lenders. Artex agreed to build both an inner box and a crate for the clock. They also agreed to pack the presentation box separately in the original crate used for the outward journey. Artex made the new inner box and crate for the clock. Ms Sheley advised both underwriters and Mr Kamidian of these arrangements by fax messages sent on 2 March 2001. Her fax to Mr Kamidian read:
  28. "I apologise for the delay in sending this fax; however, due to the American Airlines cargo strike there has been some difficulty in making shipping arrangements for the exhibition.
    At this time, a travel box to bring the clock from Wilmington, DE to New York has been made. Once in New York, the piece will be crated for transit to London. We are hoping that the crate will be made in time to return the clock with the rest of the exhibition going back to London. I should be able to confirm the details of this next week.
    Once the piece arrives in London, please advise how you wish to proceed. Shall we have the piece delivered directly to the restorer? Please advise who you have arranged to restore the clock.
    I await your further instructions."

    I should record here, since it is arguably relevant to a subsidiary issue, that I do not regard Ms Sheley's fax as containing a clear and unambiguous representation made on behalf of underwriters that they would ensure the safe return of the clock. It was simply a factual statement by Ms Sheley as to the arrangements which had been made. At no stage did Ms Sheley say anything to Mr Kamidian over the telephone which he could reasonably have interpreted as an assumption of responsibility by her on underwriters' behalf for the suitability of the return transport arrangements. Nor, as I find, did Mr Kamidian rely to his detriment upon anything said by Ms Sheley, whether orally or in writing, in not himself taking charge of the packaging/transport arrangements or making alternative arrangements. Mr Kamidian took no interest in the packaging/transport arrangements, and would, as I find, simply have allowed matters to take their course even had he not been advised of the arrangements made.

  29. Shortly before the items were due to be shipped back to London Ms Sheley was told that Alexander had replaced Artex with a different packer, "Art in Motion". It is unclear why Alexander did this. Art in Motion were now short of time, however Artex would not allow them to use the inner box and crate for the clock which they had already manufactured. Artex were understandably concerned about the potential liability to which such a course might expose them. Art in Motion agreed to build a foam box for the clock on site in Wilmington and then to pack that into a separate crate. The clock's presentation box would be packed separately in the crate used for the outward journey. Ms Sheley confirmed these arrangements with Mr Mark Broughton of the eponymous firm – Mark Broughton is one of the sons of the company's President and founder, Mr James Broughton. All this notwithstanding, when the clock was handed over to Art in Motion by Broughton at Wilmington, it was pre-packed in tissue paper in its wooden presentation box. The box was then packed into a small foam lined crate, considerably smaller than a standard airfreight crate. It appears that all this was done on the instruction of Mark Broughton. Art in Motion's Transport Order records "Clock packed in original box as per Mark B". It is agreed that the unsuitability of the presentation case for transporting the clock was in this way compounded. Packing the presentation case into a small crate as opposed to a larger airfreight crate was a mistake. A larger airfreight crate is safer than a small crate because it is less likely to be tipped over or dropped in handling. It would be an unsurprising consequence if on its return journey to London the clock sustained further damage.
  30. Discovery of damage to the egg clock (2)

  31. The items were transported to the London Safe Deposit where unpacking took place in the presence of Mr Kamidian, Mr von Solodkoff and Mr Iain Fairley, a loss adjuster appointed by underwriters. It was apparent upon the unpacking that two of the floral branches had become detached from the floral spray at the top of the clock. One was a "single bud branch", in fact the same branch from which the bud had become detached on the outward journey. The other was a "two bud branch". It is now common ground, although it was not accepted by Mr Kamidian until shortly before the trial, that the two branches became detached at the site of earlier soft solder repairs or attempted repairs, indicating that the branches had earlier fractured in precisely the same place and been the subject of repair or attempted repair. It had earlier been said by Mr Kamidian, buttressed by metallurgical reports obtained in Russia and France, that the soft solder in question was part of the original manufacturing process. The significance of the earlier damage is its relevance to depreciation. It is accepted, or if it is not I find, that if the piece had already sustained damage through the fracture of the two stems before 2000, then neither the damage to the single bud on the outward journey nor the subsequent renewed detachment of the two stems at the site of the earlier repair can have given rise to any depreciation in the value of the clock. The same is true of the introduction of a "slant" into the assembled clock which is said to have occurred at the same time as and for the same reason as the fracture of the two floral stems. However Mr Kamidian has since December 2007 asserted that the earlier, and first, fracture and repair or attempted repair of the two floral stems in fact took place in Wilmington whilst the clock was in the custody of Broughton. The suggestion is that the two stems were cracked during the outward journey and bent inwards and that either Broughton "or their appointed restorers", in an attempt to restore the sprigs to their correct position, bent them outwards and thus completed a reverse bending fracture. The soft solder deposits on the sides of the stem fractures are said by Mr Kamidian to be the product of an unsuccessful attempt to repair the fractures whilst the clock was still in the USA. This theory, if correct, preserves a claim for depreciation in value of the clock arising out of the detachment of the single bud on the outward journey and adds to it a claim for depreciation arising out of the detachment of the two floral branches, all of which damage is alleged first to have occurred during the currency of the all risks insurance. There would also be a claim for any depreciation arising out of the alleged slant introduced at the same time. Ms Padfield, for Mr Kamidian, did not I think commit herself as to when or precisely how the fracture of the two floral stems thus occurred. It is accepted that the single bud stem was in place when Ms Aiken took twenty minutes to locate the point from which the bud had become detached. Ms Padfield's preferred case was that after the end of the exhibition someone attempted to push the two flower stems back into position and broke them. She suggests that an unsuccessful attempt was then made to effect a repair using soft solder. She suggests further that Mr Mark Broughton deliberately departed from the previously made return packing arrangements and directed that the clock be packed into its own presentation case for the return journey to the UK in an attempt to provide a plausible explanation for the damage which would not "implicate Broughton and their attempt to repair". On this footing the stems were already detached before the clock was finally put into the presentation case for the return journey and simply packed loose in a manner which would and did give rise to the inference on arrival that they had been detached during transit. Another possibility consistent with this conspiracy theory, although I do not think that Ms Padfield embraced it, is that a successful repair was carried out at Wilmington but that it was insufficiently robust to withstand the rigours of the return journey. On either view, dishonest and discreditable conduct is attributed to Broughton and possibly to others who may have been involved in concealing the damage and the unsuccessful or ineffective repair.
  32. Mr Fairley made arrangements for a firm of specialist conservators, Messrs Plowden & Smith Ltd, to collect the piece and provide an estimate for restoration. Their estimate was £740-780. This did not include correction of the as yet unnoticed slant damage. As before, Mr Kamidian seems to have been unwilling to countenance repairs being effected prior to insurers agreeing a measure of depreciation. Mr von Solodkoff and Dr von Habsburg were again consulted. Mr von Solodkoff considered that in the light of a successful repair depreciation would be in the range 15% to 20%, although it seems that he also expressed the view "privately" to Mr Fairley that the damage could result in a loss in value of 30% to 50%. Dr von Habsburg, shown photographs in the United States, advised that he considered depreciation in the area of 15% to be appropriate. All these expressions of opinion were of course premised on the assumption that the clock was, before it travelled to and from Wilmington, in pristine condition without previously repaired damage.
  33. Mr Justin Hill, a metals specialist at Plowden & Smith, inspected the clock, presumably in connection with the envisaged repair. Based on his advice Miss Sarah Giles of that firm sent to Mr Fairley documents dated 26 April 2001 and 2 May 2001 headed "Report and Estimate". These brief reports, the second being an expanded version of the first, raised for the first time the possibility that the branches, hitherto presumed on all sides to have become detached during the return journey of the clock, had previously been broken and repaired. The second report included the following passage:
  34. "Two branches have broken off at their base and a bud has also become detached. On the break edges of the sprays there is evidence of solder which is not evident on the break edge of the bud. This indicates that the stems may have had previous repair using lead solder. The piece would likely have been originally constructed using silver solder, however it cannot be guaranteed that lead solder was not used when the piece was first made."
  35. I have already mentioned the obvious relevance, to the assessment of depreciation in value consequent upon later damage, of repaired damage occurring earlier in the life of a piece. The significance of Miss Giles' report was not lost on Mr Fairley. On 3 May 2001 he sent to Mr Kamidian a copy of the later report with a covering note which read:
  36. "I attach the latest report from Plowden & Smith together with the earlier report you requested.
    I take the view that if the two branches have previously been detached, and if they can be re-joined and re-gilded well, this ought not to effect (sic) value of the clock.
    We had previously proposed that loss of the single bud would bring about a loss of about 5%. It has to be said that this was on the assumtion (sic) that the clock had no previous repairs. I shall however still recommend this settlement plus cost of repair."
  37. Mr Kamidian approached Plowden & Smith direct to discuss the report. He met Miss Giles and Mr Hill. He expressed his concern that, if Plowden & Smith were not certain whether the lead solder was part of the original construction, that uncertainty should be reflected in the report. He also pointed out that there was, in his view, a slant or lean to the clock and asked that reference be made to that also. As a result Miss Giles issued a revised report of 8 May 2001 which in material part read:
  38. "Two branches have broken off at their base and a bud has also become detached. On the break edges of the sprays there is evidence of solder which is not evident on the break edge of the bud, suggesting that this part (sic) or original construction. The stems may have had previous repair using lead solder, but the minor amount of solder present on the break edges suggests that it is part of the original construction rather than a repair.
    The whole piece is at an angle suggesting a possible impact. An impact such as this is the probable cause of damage."

    Miss Giles was then less experienced than she is now and she gave no thought to the implications for depreciation of the change in view which this revised report represented. Miss Giles was concerned only with the cost of repair to which the change was of no relevance. I attach little importance to this episode. Mr Kamidian was of course acutely conscious of the implications, but I do not consider that he brought undue pressure to bear on Miss Giles and Mr Hill to alter Plowden & Smith's conclusion. On the other hand, for what it is worth, I do not consider that the revised report of 8 May 2001 represented Plowden & Smith's real view. Miss Giles described in evidence a discussion in which Mr Kamidian was very persistent and which seemed to go round and round in circles without getting anywhere. That is in light of the experience at trial an entirely plausible description. Miss Giles and Mr Hill were no doubt anxious to get rid of Mr Kamidian and saw no harm in humouring him.

  39. Mr Fairley plainly formed the view that Messrs Plowden & Smith had, in acting in this way, been somewhat naive, and had probably not been aware of the significance of the change to their report. He remained firmly of the view that it was improbable that the original construction would have used lead solder. He recommended settlement of the depreciation claim at 5% on the basis that the detachment of the bud was new damage. Underwriters agreed with this proposal.
  40. Mr Kamidian remained unhappy with underwriters' stance. Mr Fairley instructed metallurgists at Oxford University to examine the clock with a view to determining whether the breaks were recent or old. The first to inspect the clock and to assess what analyses could be undertaken was Dr Peter Northover of the Materials Science-Based Archaeology Group in the Department of Materials. Interestingly his first, unprompted, reaction was to express scepticism about the provenance of the clock which he had been told by Mr Fairley was by Fabergé. After his first inspection he e-mailed Mr Fairley as follows:
  41. "I have now inspected the clock at Plowden & Smith and can see what raised the concerns of their metal restorer.
    First, although I am no expert in Fabergé's output one must question whether the clock is really by his workshop. The workmanship appears inferior, as does the case."

    Thereafter non-destructive X-ray fluorescence analysis was carried out. Dr Brian Gilmour reported that there was clear evidence that the branches had been broken before the most recent occasion and re-attached using a soft lead-tin solder. The original construction was "tack-soldering" using a hard, lead-free silver solder before the whole assembly was gilded. Later Dr Gilmour concluded that the bud detachment had occurred at a point where there was a flaw in the stem. In November 2001 insurers withdrew their offer to pay 5% in respect of the depreciation claim. They remained prepared to entertain a claim for cost of restoration.

  42. Since no reliance is any longer placed upon them, I need not describe the conclusions reached by metallurgists in Russia and France which were deployed by Mr Kamidian in 2002 in an effort to persuade underwriters that the solder found on the broken branches was part of the original construction. Underwriters remained unpersuaded. The clock remained unrepaired.
  43. Solicitors are instructed

  44. In February 2004 Mr Kamidian instructed solicitors, Messrs Roiter Zucker, to press his claim against underwriters. Underwriters instructed Messrs Ince & Co. Ince raised the question of possible breaches of a Packing Condition in the insurance cover as well as the need to have experts consider the provenance of the clock. In response to a question concerning acquisition of the clock Messrs Roiter Zucker, on 7 October 2004, said, presumably on Mr Kamidian's instructions:
  45. "The clock was purchased by a group in an auction in November 1991 at Sotheby's in Geneva. No invoice has been found but the relevant catalogue is attached."

    Production to insurers of the Sotheby's catalogue entry to which I have already referred above not unnaturally led them to question whether the clock was indeed by Fabergé and, perhaps more importantly, to question the basis upon which they had been induced to insure it as a Fabergé piece valued at US$2.5 million. Proceedings were issued in June 2006 by which time Mr Kamidian's present solicitors had replaced Messrs Roiter Zucker.

    The claims in outline

  46. In the result Mr Kamidian claims against underwriters under the policy damages consisting of (a) the cost of repair and (b) depreciation in value consequent upon the damage. The policy being a valued policy, depreciation is claimed at whatever is the appropriate percentage of the insured value. The Claimant's evidence on what would be the cost of repair and what would be an appropriate depreciation in value consequent upon the damage was in some disarray, to the extent that on the first issue he had no evidence at all. I shall deal with that aspect when I come to deal with the quantum of any recovery. Mr Kamidian claims against Mr von Solodkoff, Dr von Habsburg and Broughton on the basis that they were all bailees of the egg clock who failed to return it in the like good order and condition as when received. In effect the damages claimed are the same as are claimed against underwriters. A pleaded claim by reference to the alleged present value of the egg clock was not pursued at trial. Accordingly the claim is again for the cost of repair and depreciation consequent upon the damage. It was not in dispute that the insured value would have been an appropriate value to adopt in the period 2000-2001 in respect of a piece of this nature generally accepted to be by Fabergé.
  47. Broughton has been served with the proceedings but has neither acknowledged service nor served a defence to the claim. By its President, James Broughton, it has asserted that it is without assets and has ceased trading, although as at the date of the last letter from Mr Broughton which I have seen, 15 July 2007, Broughton still existed as a Florida corporation. Mr Broughton has asserted in correspondence that the Fabergé exhibition completely ruined both the company and his family, although I have no idea whether or why that is or should be so. Broughton is not I think aware of the case advanced against it at trial to the effect that it concealed or attempted to conceal its own breakage of the piece, and its repair or attempted repair, of the two floral sprays. There was accordingly some discussion at trial whether I should allow the allegation to be pursued – c.f. the observations of Ackner J in Rustenburg v. PanAm [1977] 1 Lloyd's Rep. 564 at pages 570-571. Ms Padfield suggested that in that case the considerations were different as criminal conduct, theft, was alleged against persons who were not even party to the action. She suggested that the conduct of which Broughton is now alleged to have been guilty, although serious, is not criminal, and moreover she pointed out that Broughton is a party to the action who has chosen not to participate. I am not sure that I can regard either of those points as either relevant or particularly telling, but in light of the view I have formed as to the likely age of the two fractures I need not consider the point further. Initially Ms Padfield sought judgment in default of acknowledgement of service (and Defence) against Broughton but in the light of indications from the court that a reasoned judgment would be both more appropriate and preferable in any event she did not press this request. It is right to say that I also indicated that I could not see that Broughton had any defence to the claim save as to quantum. In that regard I am grateful to Mr Kimbell for undertaking the task of addressing the court on the question whether Broughton could avoid liability by establishing that Mr Kamidian had no title to the egg clock, or by relying on his failure to prove his title. The general rule is that a bailee cannot avoid liability in this way and there is present in this case no feature which would, exceptionally, permit any of Broughton, Mr von Solodkoff or Dr von Habsburg to deny Mr Kamidian's title if, as he asserts, all or any of them were at material times bailees of the clock.
  48. The same is not true of insurers. An insurable interest in goods can be constituted by an interest short of full ownership. However in this case it was not suggested that Mr Kamidian could succeed in his claim against insurers without proving his title to the clock. The issue of Mr Kamidian's title was hotly disputed. Before I turn to discuss that issue I should sketch in as briefly as I can how the insurance was placed.
  49. Execution of the Loan Agreement and placement of the insurance

  50. At the meeting on 31 March 2000 Mr Kamidian signed a "List of Items for the Wilmington Delaware Exhibition 'The World of Fabergé' 2000" which had earlier been prepared by Mr von Solodkoff. The list included as item no. 10 "Nephrite clock with silver-gilt mounts. Provenance: Dr Metzger".
  51. As is customary the lenders to the exhibition were required by Broughton to sign a standard form "Loan Agreement". Pursuant to that agreement Broughton undertook an obligation at its expense to provide adequate and appropriate all risks insurance for the objects described in "Attachment A" in the amount indicated therein. The Borrower was to provide to the Lender at least 30 days prior to shipment an appropriate certificate of insurance. It is plain from the documentary evidence that without a loan agreement signed by or on behalf of a lender Broughton could not procure the issue of a certificate of insurance in respect of the items lent. Without a certificate of insurance no item could travel. Pursuant to the standard form of agreement Broughton also undertook when and if necessary at its expense to arrange for and provide appropriate and adequate packing and crating of the objects and appropriate and adequate secure shipping arrangements.
  52. Mr von Solodkoff had great difficulty in completing the necessary paperwork in the absence of co-operation from Mr Kamidian. For whatever reason, Mr Kamidian wanted there to be as little documentary record of the transaction as possible. He made it clear to Mr von Solodkoff that he wished to receive no correspondence on the subject and that he wished to receive no copies of any documentation that the transaction might naturally generate. He showed no interest in such documentation and declined to co-operate in its production.
  53. Although he denied having done so, I find that by 27 June 2000 Mr Kamidian had given to Mr von Solodkoff over the telephone the values for which he wished the pieces lent by him to be insured. The value given for the egg clock was US$2.5 million. Mr von Solodkoff jotted down these values on a draft of the exhibition catalogue on which he and Dr von Habsburg were by then working. On 27 June 2000 Mr von Solodkoff prepared a typed schedule headed "FABERGÉ Exhibition Wilmington, Delaware 2000/2001, Insurance Prices". This set out the values which Mr von Solodkoff had been given by Mr Kamidian which totalled US$3,831,000 for 24 items. It was suggested to Mr von Solodkoff that, using his knowledge and experience, he could easily have come up with these figures himself, and that he did so, without any involvement of Mr Kamidian. I think it most unlikely that Mr von Solodkoff would have taken upon himself the responsibility of attributing to a piece for insurance purposes a value which had not been agreed by the lender. I think it most unlikely that Mr von Solodkoff would in any event of his own volition have come up with the figure of US$2.5 million, or indeed any figure. As I shall later describe, he had already had a debate with Mr Kamidian as to how the provenance of the piece was to be described in the exhibition catalogue. He and Dr von Habsburg had been persuaded to describe it therein as "by Fabergé" but its valuation for insurance purposes would have remained a delicate matter on which he would have wanted Mr Kamidian's input. It is simply not credible to suggest that Mr von Solodkoff would not have asked Mr Kamidian what value he wished to be placed upon this piece, and other pieces, for insurance purposes. It was as I understand it Mr Kamidian's evidence that at the 31 March 2000 meeting Mr von Solodkoff said that he had no time to waste with the discussion of formalities such as insurance values, or the completion of documentation, and that Mr Kamidian thereafter left it to Mr von Solodkoff to deal with these matters as he saw fit. It is not credible that Mr von Solodkoff would have proceeded in this manner. So far as the documentation reveals he was correct in his dealings with other lenders and, in my judgment, he would have attempted to be correct in his dealings with Mr Kamidian. In fact the situation was as I find the very reverse of that depicted by Mr Kamidian. It was Mr Kamidian who said that he did not wish to be bothered with documentary formalities. In time Mr von Solodkoff came to question why Mr Kamidian harboured such an antipathy to the generation of normal paperwork and he thought it appropriate to distance himself from him. It is in my judgment wholly unlikely that he would in such circumstances have unilaterally supplied Broughton with the values for which items in the "Kamidian Collection" were to be insured.
  54. Broughton instructed its United States insurance brokers, Messrs Wallace, Welch & Willingham, hereinafter "WWW", to arrange insurance. WWW in turn approached HSBC Insurance Brokers Limited, "HSBC" in London. HSBC held a Worldwide Fine Arts All Risks limited binding authority for certain Lloyd's underwriters for the 12 month period from 14 January 2000 in respect of "Specie Risks" of up to US$250 million. Under the terms of the binder all risks to be bound had first to be presented to three leading underwriters for ratification and agreement as to attachment of cover, conditions and premium to apply. Although the documentary trail is not entirely clear, it is common ground that Mr von Solodkoff's typed schedule of 27 June 2000 was provided by WWW to HSBC. It listed 24 items for Mr Kamidian. Item MK10 was "nephrite mantle clock, 46822, Fabergé Moser" against which the "insurance price" was US$2,500,000. That this had occurred by 24 July 2000 is demonstrated by the fact that on that date WWW faxed to Constantine, the packers for the loan items to be collected from London, a "Memorandum and Certificate of Insurance" relating to Kamidian Collection, C/o Alexander von Solodkoff, 2-7 Ongar Road, London, SW6 1SH, England". "Kamidian Collection" as so described was said to be the "Memorandum Holder" and "Additional Insured" under what became Broughton's insurance placed under the binder. The Memorandum certified that the cover was effective from 17 July 2000 to 18 February 2001, "with respect to each object insured as listed and valued hereon or on the attached listing of objects insured" and confirmed that: "subject to the Conditions, exclusions and limitations contained herein, the below mentioned policies insure said property on the 'wall to wall' basis against risks of physical loss or damage from any external cause except: … inherent vice". The insured property was described as "per Schedule on File with HSBC Insurance Brokers Limited", and the Amount of Insurance was stated to be US$3,831,000.
  55. The leading underwriters were shown various schedules of insured values of items for Broughton's "Fabergé Exhibit" (sic) and in due course scratched a Master Certificate for the Exhibition Insurance which attached a declaration schedule confirming all risks physical damage cover to Broughton "and/or for whom they may have instructions to insure each for their respective rights and interests" backdated to 17 July 2000 "at locations and whilst in transit" in respect of "Fine Art Objects belonging to the WORLD OF FABERGÉ Exhibition as per schedule retained in the offices of HSBC" with Conditions "As per attached Wording". In addition to the express exclusion of cover in respect of loss or damage caused by inherent vice, to which reference was made in the Memorandum as set out above, the attached wording included the following express terms:
  56. "4. BASIS OF VALUATION
    Each Fine Arts object is covered with respective valued amounts as per schedule on file. In respect of partial losses indemnity includes any costs or expenses associated with restoration plus any resulting depreciation…
    11. PACKING AND SECURING OF PROPERTY IN STORAGE OR TRANSIT
    It is a condition of this Certificate that the Assured will take reasonable steps to ensure that property, the subject-matter of this Certificate, will be stored or packed in such manner as to withstand the normal hazards associated with storage or transit."
  57. It is unlikely that the leading underwriters ever saw the actual description of item MK10, although it was contained within an inch-thick pile of schedules of items from individual lenders which the broker may well have shown to them and made available for perusal if required. This is however academic. One of the leading underwriters, Mr Keith Nichols, gave evidence at the trial. He was not challenged on his assertion that, so far as concerned the entire placement, the way the material was presented to him at the time indicated to him that all the items in the Exhibition were genuine Fabergé items. Of course that statement needs some unbundling so as to determine precisely what is meant by "genuine Fabergé items" but it suffices as a description of the broad thrust of the placement. As it happens not all of the items were in fact said to be by Fabergé – quite a number were expressly attributed to different houses. It is accepted by Ms Padfield for Mr Kamidian that in the course of the placement of the insurance an implied representation was made to underwriters that Mr Kamidian honestly believed that the "Kamidian Collection" had a total value of US$3,831,000 including US$2.5 million in respect of the egg clock and consisted of genuine Fabergé items in the sense of items which were made by the House of Fabergé. This approach again needs to be modified slightly to accommodate the fact that the individual schedules occasionally list items which were expressly not said to be by Fabergé but be someone else, a good example being item MK15 "Hardstone Parrot – Denisov Uralski" and indeed there were other expressly non-Fabergé items in the schedule for the Kamidian Collection. However it is not in dispute that underwriters were induced to attribute to the egg clock a value consistent with it being a Fabergé piece in the above sense. It is controversial whether the implied representation made should be regarded as going further than is accepted by Ms Padfield, but this is a debate as to what implied representation is properly to be spelled out of a placement effected as I have described. It is not in dispute that nothing was said to indicate to underwriters that there was any doubt concerning the provenance of the egg clock. This is significant because it was clear from the evidence of Mr Nichols that had it been said to him that there was some doubt as to the provenance of the clock he probably would have declined to quote for its inclusion in the cover. It is unlikely that underwriters would have sought an independent valuation for what was only one item within the total value being covered of about US$120 million. Their attitude would almost certainly have been one of being unprepared to get into a debate about whether the suggested valuation was correct. They would simply have been uninterested in including within a valued fine art insurance a piece the provenance of which was doubtful. Again without question it will sometimes be necessary to consider what constitutes a doubt as to provenance, although in the circumstances of this case I do not think that that gives rise to any real difficulty.
  58. On 12 July 2000 Mr von Solodkoff signed a Loan Agreement in standard form with Broughton on Mr Kamidian's behalf. I find that both Mr von Solodkoff and Dr von Habsburg had already made it abundantly clear to Mr Kamidian that they were not the organisers of the exhibition at Wilmington but that Broughton was and that they were merely acting on Broughton's behalf in selecting items for the exhibition and as Broughton's intermediaries in assisting with the arrangements for carriage and insurance of the pieces. Mr von Solodkoff and Dr von Habsburg explained to Mr Kamidian that Broughton had just organised a very successful exhibition in Wilmington, the "Nicholas and Alexander" exhibition. Indeed this had been explained to Mr Kamidian by Mr von Solodkoff in the course of the first meeting at which Mr Kamidian's possible involvement had been discussed, the meeting in the summer of 1999. Mr von Solodkoff and Dr von Habsburg explained to Mr Kamidian where Wilmington is and how one gets there, Mr Kamidian being interested in the logistics. Mr Kamidian was I find at all material times fully aware that the organisers of the exhibition were Broughton and that the role of Dr von Habsburg and Mr von Solodkoff was that of co-curators, with Dr von Habsburg having the principal and Mr von Solodkoff a subsidiary role. Signature of the Loan Agreement on Mr Kamidian's behalf therefore formalised in writing a structure and arrangements of which Mr Kamidian was already fully aware. I find that Mr von Solodkoff explained to Mr Kamidian over the telephone the contents of the agreement, none of which would have come as any surprise to him. I find that Mr Kamidian authorised Mr von Solodkoff to sign the agreement on his behalf and asked him to insert as his address "Iconastas, 5 Piccadilly Arcade, London SW1", dealers who were friends of his in London. It is I think inconceivable that Mr von Solodkoff would have given as Mr Kamidian's address that of Iconastas unless Mr Kamidian had asked him so to do. Mr von Solodkoff had at least three other addresses for Mr Kamidian – it would have been more natural to have used one of these if, as Mr Kamidian asserts, the document was being signed without his authority. Mr von Solodkoff himself knew of Iconastas but it was not suggested to him that he had any reason to connect them with Mr Kamidian. When signing at any rate one other loan agreement, that on behalf of Hansen Gmbh, Mr von Solodkoff signed it with his normal signature, which is recognisably A. Solodkoff or something close thereto, and used the abbreviation "pp" to indicate that he was signing in a representative capacity. He did not sign Mr Kamidian's Loan Agreement with his usual signature, and the letters "pp" were not used. Under the rubric "Lender" on the third page of the agreement he wrote in "M. Kamidian" and then underneath that appended what is to all intents and purposes a meaningless squiggle composed of two lines, of the type which is often used as an illegible personal signature. Mr von Solodkoff described it in evidence as his personal manuscript mark which he frequently uses and which means "Alexander" in Arabic. He had, he said, learned it when he was sixteen years old. Having regard to the view which Mr von Solodkoff had formed concerning Mr Kamidian's reliability and having regard to his suspicions concerning Mr Kamidian's reluctance to allow the transaction to be documented in the usual way, Mr von Solodkoff did not wish his name to be associated with Mr Kamidian. I find this explanation entirely credible. I think it unlikely that the significance of the "manuscript mark" is something which Mr von Solodkoff either could or would have invented. Albeit it emerged only on Day 6 of the trial, it was an explanation which could readily have been refuted, if untrue, by an Arabic speaker. It is of course an unfortunate consequence of acting in this way that the agreement looked for all the world as if it had been signed by Mr Kamidian himself. However in the ordinary course of things, since Mr Kamidian did not want to receive a copy, the agreement would be seen only by Broughton, and Mr von Solodkoff told Dr von Habsburg, through whom his dealings with Broughton were conducted, that he had signed the agreement on Mr Kamidian's behalf. I think that it was probably only with reluctance that Mr von Solodkoff signed the agreement on Mr Kamidian's behalf at all, and that his conversations with Dr von Habsburg both before and after signature reflected this reluctance. I do not find it surprising that Dr von Habsburg has no recollection of this so long after the event. It was in any event common practice for Mr von Solodkoff to sign similar such loan agreements on lenders' behalf, albeit usually of course with their authority. In the ordinary course of events therefore no-one should have been misled by the manner in which Mr von Solodkoff handled the signature of the agreement. It was suggested to Mr von Solodkoff by Ms Padfield that he signed the agreement without speaking to Mr Kamidian because he did not want Mr Kamidian to come to London because "something had happened to the egg before it went to the packers". Presumably the suggestion was that the single bud had become detached. That however could not have been concealed from Constantine. They were responsible for packing the clock, and for that purpose they removed the clock from its case and wrapped it in tissue paper. They would hardly have packed the bud loose and detached from the clock without generating a document recording the breakage in order to safeguard their own position.
  59. Ownership of the clock

  60. Mr Kamidian's evidence on this topic was inconsistent, contradictory, confusing and by any standards unsatisfactory. For an intelligent man he adopted an extraordinarily naïve approach to the question of proof of ownership, an enquiry which he affected to regard as either an irrelevance or an impertinence. I am afraid that I was wholly unconvinced by this stance.
  61. The egg clock was bought at auction in 1991. In 1992 Mr Kamidian exhibited the egg clock at "The Fabulous Epoch of Fabergé" Exhibition at the Catherine Palace in Tsarskoye Selo, St. Petersburg. Mr Kamidian was one of the three organisers of this exhibition and one of the two compilers of the catalogue. Mr Kamidian caused a photograph of the Dr Metzger Egg Clock to appear on the front cover of the catalogue, notwithstanding that two Imperial Easter Eggs of undoubted provenance and fame were also included or intended to be included in the exhibition, the Memory of Azov Egg and the Steel Military Egg. Madame Tatiana Fabergé, great grand-daughter of Carl Fabergé and a noted authority in the field, attended the exhibition. She could not remember the Memory of Azov Egg being on display, notwithstanding it appears in the catalogue, and Ms Padfield told me on instructions from Mr Kamidian that that egg was not in fact exhibited. I shall return in due course to what Mr Kamidian said in the catalogue about the Dr Metzger Egg Clock.
  62. The Dr Metzger Egg Clock was not again exhibited until 2000/2001 at Wilmington. It has not of course been exhibited since. It remains unrepaired, although the absence of two branches is not overwhelmingly destructive of its appearance.
  63. Paragraphs 76 and 108 of Mr Kamidian's main witness statement, part of his evidence in chief at trial, read as follows:
  64. "76. Due to all the facts set out above I decided that the Egg was definitely real Fabergé and decided to purchase the Egg. The price of the Egg was 25,000 to 35,000 Swiss Francs. I purchased the Egg with a co-purchaser for 148,000 Swiss Francs. At this point I paid for a 50% share in the Egg along with a co-owner.
    108. As I explained earlier above in my witness statement I purchased 50% of the share of the Egg with somebody else who purchased the other 50%. I cannot remember his name. His (sic) subsequent sold his interest in the Egg to a third party. In or around 1998 I purchased the other 50% of the Egg from the third party whom I cannot remember their name either."

    In response to questions raised in correspondence before trial between the solicitors concerning the identity of all the co-owners of the clock, including the alleged third party co-owner, it was said on Mr Kamidian's behalf:

    "Our client was only introduced to the co-owners from intermediaries. Our client genuinely cannot remember the name of the person as he had a very complicated surname. Our client has confirmed to us that he remembers his first name as being Roger and will attempt to find out his surname."

    The "Roger" there identified was apparently the co-purchaser at auction. In his oral evidence Mr Kamidian suggested that Roger was himself acting on behalf of others, although it was unclear whether these unnamed financial backers had authorised the purchase in advance or were persons from whom Roger obtained finance subsequent to the purchase at Sotheby's. Sotheby's invoice was, said Mr Kamidian, settled in full by Roger and he did not know what had become of the invoice. There is no evidence as to the identity of the person to whom the invoice was addressed. Mr Kamidian has been able to obtain from Sotheby's a document recording the prices paid at the Geneva auction on 21 November 1991 but no document evidencing the participation of Mr Kamidian or anyone else in the transaction in question has been produced. It was not explained whether the unnamed financial backers provided the money with which to complete the purchase before or after the auction and there are some obvious question marks over the logistics of a purchase carried out as this is said to have been achieved. None of these arrangements were apparently documented, or if they were no documents have been produced. According to Mr Kamidian he contributed his 50% share of the price by giving to Roger jewels and Fabergé items to an equivalent value. No documentary record of this part of the transaction has been produced and Mr Kamidian says that there was none. At no stage did Mr Kamidian give any coherent evidence concerning the profitability of his trading activities, either now or in 1991. There is no evidence upon the basis of which I could reliably conclude that in 1991 Mr Kamidian had the personal means to acquire jewels and other Fabergé items to the value of approximately US$52,500 in order to complete this alleged transaction. Roger was allegedly a person who had a stall or stand at the Louvre Antiquaire and Mr Kamidian said that he had asked Roger's former partner at that establishment as to Roger's current whereabouts. Even if the former partner does not know where Roger is currently to be found it seems unlikely that he could not have supplied the apparently forgotten surname.

  65. I find the suggestion that Mr Kamidian cannot remember Roger's surname the more incredible when I consider what is said to have been the nature of the agreement between them. Mr Kamidian said that they agreed that each of them would be free to attempt to sell the egg clock as a Fabergé piece for US$3 million. To that end sometimes the egg resided with Roger, sometimes Mr Kamidian had possession. When Mr Kamidian had possession generally the clock was kept in a bank vault, but sometimes it was kept in his house. The arrangement was not documented in any way. I think it implausible that Mr Kamidian would not know the surname of a person with whom he had an arrangement of this type concerning an artefact of allegedly great value. More than once Mr Kamidian said in evidence that the circle of people dealing with Fabergé works is extremely limited, evidence which I accept is likely to be true. In those circumstances, I regard it as implausible that Mr Kamidian would have been unable for the purposes of the trial to find out Roger's name, if indeed he had forgotten it. Indeed it is in my view unlikely that Roger's current whereabouts could not equally have been ascertained. I am afraid that I am forced to the conclusion that Mr Kamidian has been unwilling that Roger's identity or whereabouts should be known because he has wished to frustrate the underwriters' efforts to discover more concerning the circumstances of the purchase in 1991.
  66. The evidence concerning Mr Kamidian's alleged acquisition of the second 50% interest in the egg clock is equally unsatisfactory. I have already set out what was said in Mr Kamidian's witness statement concerning this transaction. Until trial the stance taken on Mr Kamidian's behalf by his solicitors, presumably on his instructions, was that he could not remember the name of the person from whom the second 50% share was bought. Answers given by his solicitors on 21 December 2007 and 16 January 2008 seem to proceed upon the assumption that there was only one co-owner from the outset until the time that Mr Kamidian acquired the full interest, rather than that there had been a disposal by "Roger" to a third party as Mr Kamidian had said in his witness statement and which in evidence he said occurred in around 1997. In his evidence at trial Mr Kamidian said that the new 50% owner came to him unheralded in the Louvre Antiquaire "with the documentation, additional information and he said that he would be willing to sell that piece to me". This was a person he knew from the small circle of dealers to which I have already referred although he knew him only as "Omeri". Not even this name had been provided before Mr Kamidian gave it in evidence on Day 3 of the trial, although on the same day Mr Kamidian produced a document to which he had referred the previous day. This purported to be a short, two-sentence statement written in the Russian language by Mr Omer Bar-Joseph, prepared and signed by Mr Bar-Joseph for the purposes of the trial. In translation it reads:
  67. "I, Omer Bar-Joseph, confirm, that the egg in the form of the clock, bought on auction Sotheby's in Geneva in 1991 Lot 394, sold to Mr Michel Kamedian (sic) for US$145,000 in 1998. Money were received by me personally."
  68. It was said by Mr Kamidian that he met Mr Bar-Joseph at the auction of the Rothschild Egg at Christie's on 28 November 2007 and that he asked him "to send me this paper". Mr Kamidian said that Mr Bar-Joseph did so after the Russian New Year in January 2008 although he had had difficulty in printing it off from his computer. I cannot attach any weight to this document. It is not probative of Mr Kamidian having paid US$145,000 to Mr Bar-Joseph in 1998. Nor is it supportive of the suggestion that Mr Bar-Joseph was by then an owner of 50% of the clock. If anything, the document suggests that Mr Bar-Joseph owned the entire clock. In the absence of documentation evidencing that Mr Bar-Joseph had an interest in the clock, I find it impossible reliably to conclude that he did. It is true that, in the course of the trial, Mr Kamidian released to underwriters' solicitors what were alleged to be contact details for Mr Bar-Joseph in the shape of the address of his shop in Russia, telephone number and e-mail address. I have heard nothing as to the outcome of any enquiries which underwriters may in consequence have made. I shall not speculate. The burden of proof on this issue is on Mr Kamidian. An apparent willingness to release information which might assist underwriters in verifying his case is no substitute for adducing evidence in support of that case. In any event I could without more attach little weight to any undocumented information which might emanate from Mr Bar-Joseph. He was not called to give evidence at the trial. I think it unlikely that Mr Kamidian would have paid US$145,000 to Mr Bar-Joseph without production to him of documentary proof that Mr Bar-Joseph had an interest to sell. Had Mr Bar-Joseph produced such documentation, as Mr Kamidian asserts that he did, I think it likely that Mr Kamidian would have retained it or copies thereof, precisely so that he could prove his own title. Furthermore Mr Kamidian claims to have paid the money to Mr Bar-Joseph by bank transfer. Naturally full disclosure was sought. Mr Kamidian's own evidence on this topic was evasive, confusing and inherently incredible. He claimed to be unable to remember the name of his own bank from which he made the transfer. The relevant bank was apparently in Switzerland, he could not remember definitively in which town or city although he thought Zurich. He also said "I don't use this bank by which I made the transfer at the moment". I am afraid that I cannot accept that Mr Kamidian would be unable to recall the name of the bank in Switzerland which he was at that time using. As I understood his evidence this bank was also being used to receive payments from clients to whom Mr Kamidian sold goods. Furthermore, Mr Kamidian would undoubtedly have received statements of account and other documentary records from the bank which he would have been likely to have kept as the records of his business. I cannot reliably conclude that Mr Kamidian made any payment to Mr Bar-Joseph in 1998.
  69. My inability to find on the balance of probabilities that Mr Kamidian is the owner of the Dr Metzger Egg Clock is compounded by the evidence, such as it is, about insurance arrangements for the clock and yet further compounded by the lack of evidence as to where responsibility has lain and currently lies for the payment of the costs incurred in storage of the clock in Paris and, as I understand it, for the last seven years at the London Safe Deposit in Lower Regent Street. As to the latter, Mr Kamidian has produced no documentary evidence that he is either the renter or a co-renter of the space and no documentary evidence of the payment of storage fees by him or, for that matter by anyone else, at any time during his alleged ownership of the clock, not even in respect of the most relevant period. That such documentation is ordinarily generated is shown by the production of a document showing Mr von Solodkoff and Dr von Habsburg as, respectively, renter and co-renter of space at the London Safe Deposit in Lower Regent Street in 1999/2000. Plainly Mr Kamidian has access to the piece whilst stored at the London Safe Deposit but that tells me nothing about ownership.
  70. The position about insurance is more complicated. In November 2007 underwriters' solicitors asked for disclosure of Mr Kamidian's insurance arrangements for the clock prior to, during and after the Wilmington Exhibition, showing, in particular, whether the clock was described as "by Fabergé" and the value for which it was insured. The relevance of this request to the issues in the case is self-evident. The answer given to this enquiry on 21 December 2007 by Mr Kamidian's solicitors was "all insurance arrangements for the Fabergé exhibition at Wilmington have been disclosed". On 9 January 2008 Messrs Ince for the underwriters pointed out that this did not address the question. On 16 January 2008 Mr Kamidian's solicitors responded:

    "We do not see what relevance this question has to the case. Section 18.1 of the CPR states that the Court may at any time order a party to (a) clarify any matter which is in dispute in the proceedings or (b) give additional information in relation to any such matter. We take the view that this question certainly does not clarify any matter which is in dispute and does not in any way relate to the matter in dispute."

    I need only say that I find that response surprising. In consequence an application for specific disclosure was made. It was unresolved by the date of the trial. On the first day of the trial Ms Padfield informed her opposite numbers and, subsequently, the court that her instructions were that the egg had not been insured by Mr Kamidian either before or after the exhibition at Wilmington. Mr Kamidian subsequently gave evidence to like effect. In and after September 2007 the question of insurance for the egg became of immediate practical importance in the light of arrangements for the egg to be examined in Cambridge. The solicitors had in fact been in correspondence about this topic since March 2007, the question being whether the assumed then current insurance arrangements would cover the proposed inspection and, if not, whether an extension to the arrangements could be obtained. On 6 June 2007 Mr Kamidian's solicitors said:

    "I would say that we would request that your client takes out an insurance policy as they will not be covered under the current policy in the event that your client damages it."

    On 11 June 2007 Mr Kamidian's solicitors returned to the point saying:

    "I am still awaiting my client's confirmation that he is happy for a joint inspection but pending his acceptance we would agree to it. However the current insurance arrangements do not cover your expert's inspection of the egg, and your client would have to insure (sic) that they have the appropriate insurance in place before we can proceed.
    I am meeting my client on Thursday so I will speak to him about this further and I will come back to you with further instructions."

    On 21 September 2007 Messrs Ince faxed their opposite number as follows:

    "You have in the past raised the question of insurance for the Clock during the inspection process and indicated that your client's current insurance arrangements would not extend to this. As you will no doubt appreciate, given that our clients dispute the provenance and value of the item, it would plainly be more appropriate and also simpler for your client to obtain an extension to his current coverage for the purposes of the inspection process, so that he can ensure that the insurance cover available meets his requirements. As indicated previously, the costs of any extension in cover should be costs in the case for the purposes of the proceedings but we can discuss with you the way in which the premium for such cover is to be met in the short term, if required. We would therefore be grateful if your client could make such arrangements with his insurance broker as he considers necessary in this regard."

    On 16 October 2007 the response to this was:

    "Our client has suggested that you organise your own insurance for the inspection. However, he requests to know as to what value you will insure the egg?"

    On 19 October 2007 Messrs Ince faxed European Legal Solutions as follows:

    "We note that your client is unwilling to consider seeking an extension to his current insurance arrangements in order to deal with the inspection. As indicated, this would plainly be the simplest and (in all likelihood) the most cost-effective way of dealing with this issue. We find your client's unwillingness to deal with this, in circumstances where this is an issue which he has himself raised, difficult to understand and extremely unhelpful. We would be grateful if you could provide us with a copy of Mr Kamidian's current insurance arrangements, including confirmation of the value which he has placed on the Clock, so that we can establish to what extent further cover is actually required."

    There was a chaser on 25 October, and on 26 October there was a telling response from Mr Kamidian's solicitors. It read:

    "Further, in relation to the insurance arrangements our client does not feel it is necessary to provide you with a copy of his current insurance arrangements."
  71. This correspondence is explicable only in terms that there was insurance cover in place in respect of the clock but that it would not cover the clock whilst under inspection in Cambridge or whilst in transit to and from Cambridge.
  72. If there was never any insurance in place, the consequence is that the clock was uninsured whilst being kept in Mr Kamidian's house and, presumably whilst in the custody of Roger while he was attempting to sell it. It was uninsured when Mr Kamidian carried it from Paris to St Petersburg for the purpose of the St Petersburg exhibition. In parenthesis I should add that a Deed of 3 June 1992 which was issued by the Tsarskoye Selo State Museum recording the value of items lent to that exhibition by Mr Kamidian is not on the face of it an offer to indemnify in respect of loss or damage. If there was "also an insurance policy" as asserted in evidence by Mr Kamidian, this is not it. Further, I am invited to find that the clock was uninsured when Mr Kamidian brought it from Paris to London in March 2000.
  73. I cannot come to any reliable conclusion as to whether Mr Kamidian ever insured the egg clock or whether, since it is a different enquiry, there was ever any insurance in place of which Mr Kamidian was aware. I think it inherently unlikely that the owner of this piece would leave it uninsured whilst outside a secure vault, whether it was believed to be a Fabergé piece or not. If there was a bona fide belief that the piece was by Fabergé, the absence of insurance would be startling. I agree with Mr Neish, counsel for underwriters, that there are two likely possibilities. The first is that Mr Kamidian's evidence about lack of insurance is simply an untruth told in furtherance of his design that there shall be no investigation of his ownership, the insurance very possibly being in his name but reflecting the interest of others, and that there shall be no disclosure of the basis upon which the piece has been insured, i.e. whether it is described for invoice purposes as being a Fabergé piece and valued accordingly. The second possibility is that neither Mr Kamidian nor anyone else who may have an interest in the egg clock has or have at any stage placed insurance in respect of its loss or damage but that that course of action is in recognition that a prerequisite of such insurance, if placed on the basis that the piece is by Fabergé, might be an independent appraisal by an appropriately qualified person or persons. As I understand it the clock has never since 1991 been subjected to such appraisal, save in the context of this action. I leave on one side the involvement of Mr Valentin Skurlov, and the circumstances in which Dr von Habsburg and Mr von Solodkoff came to be persuaded to describe the piece as by Fabergé in the catalogue for the Wilmington exhibition. A purely disinterested valuation for insurance purposes has apparently never been obtained. In particular the clock has never been subjected to the acid test of appraisal by an auction house and subsequent exposure to the market, save of course in 1991 when Sotheby's declined to describe it as by Fabergé. Of the two possibilities suggested by Mr Neish the first is I think the more likely in the light of the solicitors' correspondence and the fact that the piece is on any view of some considerable value even if not measured in millions.
  74. Wherever the truth may lie the evidence as to the insurance position does not assist me to the conclusion that Mr Kamidian owns the clock. Lack of evidence of insurance inclines me to the view that disclosure thereof would reveal either Mr Kamidian's lack of ownership or complete ownership, or an absence of an honest belief that the piece is by Fabergé. If however the piece was indeed not at any time insured, at any rate not to the knowledge of Mr Kamidian, whilst that may not necessarily take one much further on the question of ownership, it has profound implications for the resolution of the question whether the egg clock has at any time been thought in good faith by Mr Kamidian to have been a Fabergé piece.
  75. My conclusions thus far mean that the claim against underwriters must inevitably fail. The claim against the First Defendant must be dismissed. The same is not true of the claim against the other defendants. I propose next to consider the question of the damage to the clock and the related question of depreciation. If there is no claim for depreciation the question of the provenance of the clock is academic.
  76. Damage and depreciation

  77. The most important question here is whether the clock had been damaged and repaired before 2000. It was only in November 2007, during joint metallurgical investigations by Dr Anna Bennett for underwriters and Dr Victor Rollins for Mr Kamidian, that it was accepted on Mr Kamidian's behalf that the soft solder deposits on the broken stems amounted to clear evidence of previous repair. In evidence Dr Rollins agreed that suggestions to the contrary in the Russian and French metallurgical reports upon which Mr Kamidian had thitherto relied were "complete nonsense". Dr Rollins is an experienced forensic metallurgist who was candid in his evidence although in preparing his first report he allowed himself to be drawn into speculation about matters which fell outside his area of expertise. It is also unquestionably the case that whilst Dr Rollins is well qualified and experienced in matters of metal failure analysis and corrosion, his experience is very largely in marine and other heavy or relatively heavy engineering applications. It was perhaps because of this that Ms Padfield felt obliged to mount a sustained attack upon Dr Bennett's qualifications and experience and thus her competence to give evidence upon the matters in dispute. However that may be, the longer Dr Bennett gave her evidence the more it became clear that it would be difficult to find a person better qualified to comment on the nature and age of damage to an antique metal artefact. It is true that Dr Bennett is not and does not describe herself as a metallurgist. Dr Bennett is an archaeo-metallurgist with a doctorate in ancient metallurgy, a combination as she explained of regular metallurgy and ancient technology. In particular she has extensive learning and experience in the manner in which archaeological and historical metals deteriorate over time. She also has great experience in conservation. The crucial question here was not so much how the fracture to the stems occurred, the mechanism of which was not in doubt and involved no sophisticated analysis. The crucial question was rather when the fractures had occurred, as to which the evidence of the nature of the fracture surfaces and the surrounding areas was critical.
  78. The two stems, the two-bud stem and the single bud stem, were originally attached to the main stem. They had broken off near their base but above the point of original attachment. It was Dr Rollins' view that in light of the distribution of the solder on the fractures it was quite clear that the solder could not have supported the two stems. This coloured his entire approach. He concluded therefore that the attempted repair could never have been effective, so that it cannot have been in place prior to the dismantling of the exhibition at Wilmington and the preparation of the clock for its return journey. Dr Rollins' point was that there was no solder present on the fracture surfaces and that the amount of solder which could have been bridging the fracture surfaces was minimal so that the repair was simply too flimsy to support the stems. Dr Rollins also considered that had the solder repairs been in place before 2000, somebody must surely have seen them and yet they had never been reported upon. Finally Dr Rollins thought that the forces which broke the bud on the outward journey must inevitably have been sufficient to break the two branches if they had previously been repaired as described and if, as he thought unlikely, the repair had been sufficiently robust to hold the branches in place thitherto.
  79. In my judgment Dr Rollins' approach was flawed. Firstly, so far as concerns the fact that no-one had, so far as is known, reported on the soft solder repairs prior to 2001, little is known as to the thoroughness of such inspections as may have taken place. Neither the number scratched on the clock and alleged to be an inventory number nor the markings thereon alleged to be part impressions of a Fabergé hallmark and a St. Petersburg assay mark were reported on by Sotheby's in 1991. In any event, as Dr Rollins came very fairly to accept, when the two bud stem and the single bud stem were attached to the main stem in the floral spray neither the joins in the stems nor the soft solder deposits would have been visible to the naked eye. These features were situated at the very bottom of the stems and would have been hidden by the surrounding leaves and on anyone's case the difference in colouration between the gilding and the solder is not marked. There would have been no reason for anyone who did not know that a fracture had occurred to have been looking for these features. Dr Rollins thought that the solder could have been seen with a 5x magnification lens although leaving aside the point that one would need to be looking for it I thought that he underestimated the difficulty of focussing such a hand-held lens on the areas of the fractures in circumstances where the floral spray is intact. As Dr Bennett explained, a hand-held lens has little depth of field and it is necessary to hold the object under inspection close to the lens in order to focus on the area of interest. The hand-held lens could not have been introduced into the floral spray so as to permit an effective examination.
  80. Secondly, in my judgment Dr Rollins' view was coloured by his failure properly to appreciate the orientation of the fractured stems relative to the main stem. This was illustrated by a sketch which helpfully he drew and which became page 74A of Bundle 8. Naturally I do not suggest that Dr Rollins intended this sketch to be an entirely accurate depiction. Nonetheless, it was in my view plain both from the sketch and from Dr Rollins' evidence that he had failed properly to appreciate or to take into account that at the point of fracture the two broken stems were only just beginning to diverge from the main stem with which they were running virtually parallel. Although it was accepted that impurities on the actual fracture surfaces themselves had repelled the solder, Dr Rollins agreed that there was evidence of a collar of solder around the stems in way of the fractures. This collar had the capacity to support and to hold in position the stems in two ways. Firstly, the collar around the reverse section of the fractures supported the upper portion of the stem by connecting it physically to the stem stub in what I might call the vertical as opposed to the horizontal plane. Secondly, because the attitude of the detached or semi-detached stems was at this point virtually parallel with the main stem, the solder had the ability to attach the detached (or semi-detached) stems to the main stem, creating a bridge or splint between the two. There was therefore in my judgment a far greater prospect of the repair being effective to hold the stems in place than Dr Rollins appreciated, notwithstanding the failure of the solder to wet the fracture surfaces.
  81. Furthermore there was present a yet further feature which militated in favour of the likely success of the repair to the two bud stem. At one time it was common ground that the fracture here was generated by two cracks which formed opposite each other, one from either side of the oval section, no doubt in consequence of the flexing of the stem back and forth in routine cleaning. It remained common ground that there was present in the silver stem a narrow ridge, approximately one-third of a millimetre wide, which was the last part of the fracture to separate. Dr Bennett thought that the soldering operation on the two bud stem was probably undertaken before or immediately after the central ridge gave way. If the soldering had been attempted prior to the ridge giving way, in recognition that sooner or later the already damaged but not wholly fractured stem would be likely finally to part, the presence of the collar would have afforded to the stem extra support over and above that which it received from the surviving ridge.
  82. A further feature of the ridge on the two bud stem, accepted to be the last part of the material to fracture, was that it was the only area of the fracture surfaces which was not contaminated with impurities. These impurities included metal corrosion but consisted of, primarily, carbon, associated with silica, aluminium, potassium and magnesium. The carbon-rich deposits were particulate and would not derive from placing the object in a smoky room. These constituent parts are consistent with their deriving from wood ash, historically and still sometimes today used as a silver cleaner. The presence of large quantities of such contaminants on either side of the ridge is consistent with a historical and gradual development of cracks propagating from either side of the stem into which cracks over time the carbon from the cleaning materials was able to penetrate.
  83. Dr Bennett also considered that the physical appearance of the soldered repairs, the overlying patina, and the corrosion deposits present on the surface of the soft solder, suggest that the soft solder repairs were undertaken a considerable time ago and not in the last ten years. Her academic background, experience and conservation work rendered her uniquely qualified to express such a view with authority. Dr Bennett pointed out that examination of the surface of the single bud stem adjacent to the fracture which joins the main stem shows that the lead-tin solder, which was originally a shiny silvery colour, has corroded to a dull dark grey matt crystalline material. This type of alteration would not be expected to occur over a short period of ten years. Furthermore in whatever was the last incident of damage, solder attached to the main stem had been pulled away, exposing some fresh solder which was shiny and silver in colour. The appearance of this freshly exposed solder is in complete contrast to the surface of the solder on the single bud stem and the two bud stem which is tarnished and is covered in a grey corrosion layer. One would not expect repairs undertaken in the last ten years to be covered in such a dark grey corrosion layer. Over prolonged periods the lead in lead-tin solder forms lead carbonate. This alteration process would not occur in the short term and would not be expected on a recent soldered repair less than ten years old. Analysis of the composition of the soft solder found 73% tin, 16% lead and 11% oxygen. This ratio is attributed by Dr Bennett to corrosion of the lead-tin alloy over time. Although challenged in cross-examination her evidence on this point was I thought convincing. Indeed Dr Rollins had no convincing answer to any of these points. In any event for the reasons I have given I prefer Dr Bennett's evidence on this aspect.
  84. Finally, Dr Rollins had not been fully instructed or at any rate had not fully understood the difference between the packing arrangements on the outward and on the return journey. As I have already set out at paragraphs 12, 13 and 19 above there was one significant difference, viz that on the outward journey the presentation box was packed into a large airfreight crate along with other pieces, thereby lessening the movement of the clock within the box. On the return journey, packed into a small albeit foam-lined crate, it is entirely possible that the clock was subjected to much greater forces. It was agreed that the bud had broken at its weakest point, where hard silver soldered to the branch. The fracture occurred across the silver soldered junction between the bud and the stem. It was also agreed that the bud appeared to have broken off in a single stage, implying a single jolt or knock which resulted in failure at its weakest location. There is no basis upon which it can be asserted that the jolt or knock sufficient to cause this damage must necessarily also have caused the two stems to become detached. Although the clock was free to move within its case on both outward and return journeys, it was actually more at risk on the return journey.
  85. For all these reasons therefore I conclude that at some stage in the life of the clock, probably substantially before it was sold at auction in 1991, but at all events substantially prior to 2000, the clock had sustained damage in that the two stems had become detached or almost detached and a soft solder repair had been effected either with a view to reattaching the stems or with a view to providing extra strength at the site of a partial fracture. The fractures are likely to have been caused by the flexing of the stems caused in routine cleaning. Whilst it is the expert evidence that has compelled me to that conclusion, it is a conclusion which common sense tells one is inherently likely to be correct. It is also a conclusion which is overwhelmingly more likely to be correct than the suggestion that the stems were broken for the first time, after the exhibition, by Broughton or by those for whom they were responsible, and that not only was the occurrence of the damage dishonestly suppressed but also a cynical decision was taken to expose the clock to additional peril on its return journey in an attempt to make it appear as if it was during that journey that the damage must have occurred. The return packing arrangements, like the disappearance of the Polaroid photograph of the clock alone amongst the photographs taken of the Kamidian collection items at the time of compilation of the Condition Reports, are likely in my view to have derived from error, confusion and inefficiency rather than from conspiracy.
  86. It was I think common ground, and in so far as it was not I find, that if the two stems had been the subject of earlier repairs then neither their detachment in 2001 nor the earlier detachment of the bud has given rise to depreciation in value of the clock over and above the cost of repairs. The same is equally true of the alleged "slant" damage, to which I next turn.
  87. The slant damage

  88. It is a curious feature of the case that, on the unpacking of the clock on its return to London, none of Mr Kamidian, Mr Fairley or Mr von Solodkoff noticed or remarked upon any slant damage. It was only after Mr Fairley had advised Mr Kamidian of Plowden & Smith's view that there was evidence of earlier repairs that Mr Kamidian, at his subsequent meeting with Ms Giles and Mr Hill, pointed out that there was, in his view, a slant or lean to the clock and asked for reference to this feature to be made in the report. It seems overwhelmingly likely that it was Mr Kamidian himself who suggested that this was probably due to an impact.
  89. The evidence about the slant and its cause was limited. At the beginning of his first report Dr Rollins included a photograph of the Dr Metzger Egg Clock taken in 2001, his caption to which reads:
  90. "The Fabergé Egg, in 2001, showing the floral bouquet at the top slightly tilted relative to the plinth, with the broken sprigs missing."

    Then, in the body of the report, when dealing with the fracture of the bud in the period July to September 2000, Dr Rollins said this:

    "Technically, the results indicate that the bud was pushed inwards and upwards for some presently unknown reason, with sufficient force to bend its stem and break it off. This force had to be resisted in order for the failure to occur, and it must have been resisted by the stem of the sprig to which the bud was attached, i.e. the single-bud sprig. Whereas the force to break the bud stem may have needed only to be small, this does not necessarily mean that the force on the stem was small, as whatever applied the force could have been resisted not just by the bud but by other features at other positions on the sprig, which did not break off at the time. There is in fact evidence to support this. For instance, during the Experts' Joint Inspection on 13 November 2007, further partial fractures in this sprig were observed. A stem close to the fractured stem of the sprig was found to be cracked halfway through and, further up, a longitudinal crack in the silver solder between two parallel stems was observed. These secondary cracks are consistent with a relatively significant force having been applied to the sprig which obviously has direct implications with respect to the fractured stem of the single-bud sprig itself, which are discussed later. Furthermore, and perhaps more significantly, the whole Egg was moved to one side at the top by the force causing the slant which can be clearly seen in figure 1."

    I am not sure that Dr Rollins was asked any questions about this aspect during his oral evidence. However in her Supplementary Report Dr Bennett included photographs of the two secondary cracks to which Dr Rollins had referred. In the body of her report she said this:

    "Two other cracks are also visible on the Single Bud Stem. Because of the geometry involved, it was not possible to examine the internal surfaces of the these cracks but examination under the microscope suggests that they are not recent."

    She included photomicrographs showing the lateral and longitudinal crack in the Single Bud Stem. I am not sure that Dr Bennett was asked any questions about this feature of the damage during her oral evidence either. It is unclear whether the original Plowden & Smith repair estimate included the repair and re-gilding of these cracks.

  91. The only evidence which directly addressed the extent of the slant and the question whether it had been present before 2001 was that of Mr Kevin Smith, now the Managing Director of Plowden & Smith, himself an accredited conservator/restorer. He examined the clock in November 2007 and observed that, on partial reassembly, a tilt was apparent. A number of sections of the clock were misaligned. The base, gilded foot and gilded cup sections looked to be in line. The polished green stone body, holding the clock mechanism, at the joint with the cup was two or three millimetres higher on the right-hand side than on the left-hand side. The gilded ring below the numerical collar was also misaligned. The top section above the numerical ring appeared to be correctly aligned with itself. The gilded decoration that is over the surface of the green stone body looked to be in line because it is independent of the stone body. The difference in the design of the gilded decoration on each side of the clock visually magnifies the tilt as it is higher on the left than on the right. Mr Smith gave it as his opinion that if the clock were dismantled and then reassembled, bedding in each section correctly, the tilt would be resolved. He concluded that making this repair would not affect the value of the piece, and that the estimated cost of the realignment would be £800-£1200. He also inspected photographs of the clock taken prior to its being sent to America in 2000, two of which came from the catalogue to the "Fabulous Epoch of Fabergé Exhibition" in 1992. Although not putting himself forward as an expert in projective geometry, he thought that the misalignment was equally evident from these images. Whilst recognising my own limitations, I think that he is probably right. Indeed I think it possible that the discrepancy in height of the polished green stone body at the joint with the cup to which Mr Smith refers in his report is visible in the photograph in the Sotheby's 1991 catalogue. Mr Smith also gave it as his view, which I regard as simply common sense, that an impact of sufficient force to cause the slant in the clock would be likely to have caused far greater damage (by which he meant I think obvious damage) to the fragile floral spray than simply the detachment of a single bud. Mr Kamidian's reassembly of the clock from its constituent parts when showing it to the court before the trial began demonstrated that reassembly is not straightforward, particularly in the absence of appropriate tools. The scope for the introduction of misalignment through inexpert assembly is considerable. However that may be, Mr Kamidian has failed to satisfy me that the slant was introduced in consequence of the handling of the clock whilst it was lent for the purpose of the Wilmington exhibition, still less that it was another consequence of the incident which caused the parting of the single bud.
  92. That being the case there is obviously no depreciation claim arising out of the circumstance that the clock is in some respects misaligned. It has not been proved that any Defendant is responsible for any misalignment. Even if it had been, the misalignment could easily be resolved without affecting the value of the piece over and above the cost of realignment.
  93. Conclusions on quantum issues generally

  94. I should make clear that even had I concluded that the clock had not been the subject of previous repairs to the stem fractures, still I would have been unable to conclude that Mr Kamidian could maintain against a party liable therefor a claim for depreciation in value. The cost of repairing the damage to the bud and to the two stems would have been insignificant. Mr Smith updated Plowden & Smith's 2001 figure of £740-£780 to £920-970, exclusive of VAT, carriage and insurance. Mr Kamidian adduced no evidence as to the cost of repairs. His expert witness on depreciation was his friend, Mr Christopher Martin-Zakheim, a Director and one of the two principals in Iconastas Limited, dealers in Russian antiques including Fabergé items. It was Mr Martin-Zakheim's address which appears on the Loan Agreement, to his evident surprise when he discovered it for the first time in the witness box. By way of a somewhat opportunist submission Ms Padfield attempted to rely upon a throwaway remark by Mr Martin-Zakheim to the effect that an immaculate repair to the Dr Metzger Egg Clock might cost of the order of £20,000. This was I am afraid a hopeless attempt to plug a gap in the evidence. Mr Martin-Zakheim was not giving it as his considered opinion that it would cost of the order of £20,000 to repair the damage. He was never asked to consider the cost of repair. In the context of a question from me about depreciation, he gave an answer about the contemporary market for Russian art, in which he included the figure of £20,000 "for what would be an immaculate repair" simply because he had a few minutes earlier been shown Christie's estimate, or more accurately London-based restorer David Newell's quotation, of £20,000 for the cost of repair to the Rothschild egg sold in November 2007. In fact this quotation is only for repair to the mechanism, and not for repair to some other minor damage to the clock noted by Christie's in their condition report, although I doubt if Mr Martin-Zakheim appreciated this from his brief perusal of the copy supplied to him in the witness box. It was an unfortunate feature of Mr Martin-Zakheim's evidence that he had been supplied, in advance both of preparing his short report and of giving his evidence, with only one or possibly two pieces of documentation, one being the report of the French metallurgists upon which reliance was no longer placed and which in any event he had not read. However that may be Mr Martin-Zakheim was plainly not giving evidence to the effect that he considered that the repairs to the Dr Metzger Egg Clock would cost £20,000. Interestingly he had in fact only a few minutes earlier in his evidence described the quotation for the repairs to the Rothschild egg as "enormous". Ms Padfield also made the point that the type of repair for which Plowden & Smith quoted, soldering and re-gilding, was precisely the type of repair which the United States conservator Carol Aiken had deprecated, when quoting for repair to the bud damage, since the application of heat could melt original materials or alter their colour. That may be so, but I have no other evidence of the likely cost of repair to the two detached stems. Carol Aiken said that repair to the single bud using a small wire dowel plus adhesive would be completed within one day of her work, for which her charge-out rate was then US$700 per day plus expenses. Even if I assume, contrary to what is I think realistic, that repairs to the two stems as well as the single bud would take three days of Miss Aiken's time, still the cost is modest. There is of course no compelling reason why any defendant herein should, if otherwise liable, pay more by way of damages than what would have been the cost of repair in 2001. It has been the choice of Mr Kamidian or those who may stand behind him to defer repairs during the interim period. Doing the best I can, and making an assumption that Mr Kamidian would have had the clock repaired in London and that he would have had to pay and could not have recovered VAT, I assess the recoverable cost of repair of the damage to the bud and the two stems at £1,000. This is effectively Plowden & Smith's 2001 figure, rounded up. I can see no reason for substantial departure from it. I was given no materials on the basis of which I could add a figure for carriage and insurance associated with the repair, these items, like VAT, being excluded from Plowden & Smith's estimate.
  95. By any standards the cost of repair is insignificant in relation to the alleged value of the clock as a Fabergé piece and it is relatively insignificant in relation to its value even if not of that provenance. Mr Kamidian's only evidence on depreciation came from Mr Martin-Zakheim. That evidence was confused, because Mr Martin-Zakheim failed properly to focus on depreciation attributable to the damage as opposed to depreciation caused by rumour and innuendo generated or arguably generated by the current litigation. Once asked to ignore the effect of rumour and innuendo, and to concentrate upon the depreciation caused by the damage in question, assuming it to be capable of a proper repair, I am not sure that Mr Martin-Zakheim contended for any measurable depreciation in value. His answers were not always responsive to the questions put to him. There was also the difficulty, which he very fairly pointed out, that the market in Russian art has to some extent been transformed over the past few years by the interest and involvement of extremely rich Russian collectors. It was therefore difficult for Mr Martin-Zakheim to put himself back in time seven years to assess what the situation would have been in 2001. I did not understand him to seek to support the 40-50% depreciation figure quoted in his report as being a realistic appraisal of depreciation caused by the damage alone, measured as at 2001. It was "very difficult to say". This is not compelling evidence on an issue on which Mr Kamidian has the burden of proof. I found compelling the evidence of Mr Dale on this point. Mr Dale is a dealer specialising in Fabergé and Russian objects who was called as an expert witness by underwriters. His CV and a proffered description of his publications were castigated by Ms Padfield as being intended to mislead. I agree with Ms Padfield that it is unfortunate that Mr Dale should have said that he had lectured on Fabergé items at Cambridge University. This gave the impression that the relevant lecture or lectures was or were given under the auspices of the university, either in connection with undergraduate or post-graduate study or as a guest lecturer. In fact, it was a lecture to the British Gemmological Society which happened to be meeting on Cambridge University premises. The statement was on one reading literally correct, but I agree that on its natural interpretation it was misleading and I was not altogether convinced by Mr Dale's implicit protestation that it had not occurred to him that it could be read in that misleading sense. It was also true that an article written by Mr Dale which he described as being about Russian hallmarking might more accurately have been described as an article about the significance of the absence of hallmarking. Mr Dale came across as a somewhat prickly character who did not take kindly to his opinion being challenged. This did not detract from the fact that he had significant relevant experience in this specialised market. On the whole he gave his evidence with care and authority. On this point I found his evidence, buttressed as it was with actual examples, particularly compelling. He drew a distinction between damage that is significant and damage which is insignificant. That is not a crude comparison between large and small but rather relates to the nature and extent of the damage. Damage such as cracked enamelling on an egg is significant damage which affects its value. Defects in a clock mechanism or missing or broken parts could however be categorised as insignificant. Here the repairs required were small and moreover would be concealed from view. Mr Dale pointed out that there are many art objects that have been restored where the restoration does not affect the value of the piece in the market. It is expected that damage occurs to delicate items. Most Fabergé items appearing at auction have something wrong with them. He pointed out that the market value of the Rosebud and Rothschild eggs did not appear to have been adversely affected by damage, which in the former case was perhaps more significant than in the latter. I can well understand that in 2001 some irreparable damage to the nephrite body of the clock or the enamelling could have led to measurable depreciation in value, although in today's market I doubt if that is necessarily still true. However damage which is not to the main body but which is to metal components which can be easily and effectively repaired at minimal cost in a manner which it will be impossible to detect with the naked eye falls into an altogether different category. The piece can be, in Mr Dale's terminology, both restored and stabilised. I am not satisfied on the basis of the evidence which I have heard that the damage under consideration i.e. the bud and stem damage would, after proper and expert repair and restoration, have led in 2001 to a depreciation in the market value of the piece, on the assumption I make that it would have been sold as a generally accepted and authenticated Fabergé item. On the basis of the evidence I have heard and making the same assumption there would in my judgment be no depreciation in value in today's market.
  96. Ms Padfield not unnaturally relied upon the indications as to possible depreciation in value given by Dr von Habsburg and Mr von Solodkoff in 2000 and 2001, to which I have referred in paragraphs 16 and 21 above. Neither Dr von Habsburg nor Mr von Solodkoff was ever actually asked to carry out a formal appraisal of the piece with a view to giving a considered view on depreciation. Mr von Solodkoff never saw, or did not consciously see, the bud damage alone, as opposed to the bud damage together with the two separated stems. He proffered no opinion on depreciation in his witness statement beyond confirming that he and Dr von Habsburg had discussed briefly at the opening of the Exhibition that the loss in value consequent upon the severed bud would be in the region of 5% at most. Beyond confirming that he had said what he was reported to have said in 2001, Mr von Solodkoff was not asked in evidence to elaborate upon his reasons for so saying. Dr von Habsburg never saw the clock after the two stems had broken away. He proffered no opinion on depreciation in his witness statement. He was asked in cross-examination by Ms Padfield, after he had already been cross-examined by Mr Neish for underwriters and by Mr Kimbell for Mr von Solodkoff without this topic being raised, whether he would agree with the view expressed by Mr von Solodkoff in 2001 that depreciation arising out of the bud damage and the fracture of the two stems could be in the region of 30-50%. In reply Dr von Habsburg cast some doubt upon Mr von Solodkoff's acquaintance with the sort of work which involves assessment of damage and depreciation. He disagreed with Mr von Solodkoff's assessment. In the case of new damage his figure, in contrast to that of Mr von Solodkoff, "would have been probably more in the region of 15-20%". Older damage being repaired by invisible repairs, not visible with the naked eye, "would not detract from the value of a piece whatsoever, or minimally, 5% or less". Nobody sought leave further to cross-examine Dr von Habsburg, it being thought no doubt that Mr Kamidian's expert evidence on this aspect had been that of Mr Martin-Zakheim to which Mr Dale for underwriters had responded. The court is placed in a somewhat difficult position. On the one hand it would be foolish to ignore Dr von Habsburg's undoubted expertise in these matters. On the other hand he was not the witness called by Mr Kamidian to support his case on this point and he was never in fact asked to produce a reasoned justification for adopting any depreciation figure in the event of it being concluded that the piece is by Fabergé. In the light of my earlier conclusion on the probable age of the soft solder repairs this dilemma is of course academic. If I had to resolve it, I would conclude that it would be unsafe to prefer this untested and, with respect to him, relatively unconsidered evidence of Dr von Habsburg to the considered evidence of Mr Dale contained in two carefully prepared reports which was unshaken by cross-examination. The more I have thought about this point, the more it has seemed to me counter-intuitive that modern invisible repairs to metal components such as this floral spray can really detract significantly from the market value of so highly prized a piece as the clock on this hypothesis is, viz a Fabergé egg clock of not just Imperial quality but which was itself an Imperial gift, albeit to a commoner. Certainly the evidence of both Mr Martin-Zakheim and Mr Dale sugges