Timothy John Olsen and Louise Sarah Olsen (as executors of the Estate of the late Valerie Marshall Olsen) v Second East Auction Holdings Pty Ltd t/as Sotheby's Australia

Background facts 24Within the court file are a number of affidavits which set out the history of the matter. Although only one affidavit was formally read before me at the hearing, it is implied from a previous judgment of Stevenson J in this matter (see Executors of the Estate of the late Valerie Marshall Olsen v Second East Holdings Pty Ltd t/as Sotheby's Australia [2014] NSWSC 1675) that the affidavit of Mr Timothy Olsen at least was read. Nevertheless, I am of the view that I am entitled to have regard to the other affidavits even if merely on the question of costs. 25The plaintiffs, Mr Timothy Olsen and Ms Louise Olsen, are the executors of the estate of their late mother Mrs Valerie Olsen. The plaintiffs are the children of Mrs Valerie Olsen and Mr John Olsen. 26Mrs Valerie Olsen passed away on 14 October 2011 and probate of her will dated 23 August 2011 was granted on 2 December 2012. It is unnecessary to set out the terms of the will, other than to note that plaintiffs are entitled to the whole of her estate as tenants in common in equal shares (clause 3) and that an art collection is listed as an asset of the estate without any reference to specific paintings (Annexure C). 27It cannot be gainsaid that Mr John Olsen is an artist of international repute. 28In or about 1964, Mr John Olsen painted an artwork known as "The Mother" (the painting). It is signed by him in the lower left hand corner, and an inscription on the back of the painting in Mr John Olsen's hand reads "For my darling Valerie, John Olsen '64". That painting was given it seems as a gift by Mr John Olsen to his wife Valerie to mark the birth of their daughter Louise (who was born on 24 January 1964). 29It is asserted that in or about 1966, the painting was lent by Mrs Valerie Olsen to the Commonwealth Festival Exhibition in Nottingham, England. An exhibition label to this effect is still attached to the painting. 30Mr John Olsen gave evidence (paragraph [18]-[19] of his affidavit dated 24 November 2014) that he last remembered seeing the painting hanging in his house at Watson's Bay, in which he lived from approximately 1961 until 1967. At some point he moved to Dural and he did not remember seeing the painting hanging in that location. He also gave evidence that the painting "may never have returned from England" although he could not remember if he saw the painting after the Nottingham Festival or not (paragraph [25]-[26] of his 24 November affidavit). 31Ms Louise Olsen gave evidence (in her affidavit of 25 November 2014) that as a teenager, her mother had told her that there were artworks belonging to her mother which had gone missing in the United Kingdom. Ms Louise Olsen asserts that her mother appeared angry and frustrated and said words to the effect of: There were paintings [sic] that never came back from England. I don't know what happened to them. They were a beautiful, special gift to me from your father. It really annoys me. 32Ms Louise Olsen asserts a similar conversation occurred approximately once a year throughout her mother's lifetime, and more frequently in the last few years. On one occasion, Ms Louise Olsen gives evidence that her mother said words to the following effect: I don't know what to do about the paintings that went missing in England. Your Dad has better connections to chase them, but everyone strings us along or gives us the run around. So much time has gotten away. 33Mr Tim Olsen gave evidence for example (in his affidavit of 20 November 2014 at [7]) that he spoke to his mother in the last few years of her life when she said words to the effect of: There was a painting that John did for me when Louise was born that disappeared and it has constantly worried me throughout my life. 34Mr John Olsen and Mrs Valerie Olsen had separated in 1979 "on amicable terms" but appear to have remained in frequent and friendly communication until her passing in 2011. 35In or about July 2014, the first plaintiff became aware that the painting was being offered for private sale by the defendant, Second East Auction Holdings Pty Ltd trading as Sotheby's Australia (Sotheby's Australia). Mr Tim Olsen became aware of the proposed sale through a business acquaintance, Mr Marcus Seow, who rang him to enquire about the provenance of the painting. 36Sotheby's Australia is an auction house, and is in the business of selling art in Australia by auction or private treaty. It apparently has possession of the artwork and has consistently, as will become apparent, refused to disclose the identity of the apparent owner even after requested by NSW police. 37It is necessary in considering the question of costs to examine the conduct of the parties, as can be gleaned from some of the correspondence passing between them. 38On 29 July, the solicitors for the plaintiff (at that point Nicholas Eddy and Company) wrote to the directors of the defendant in the following terms: We are the solicitors for the Olsen Family. We are instructed that you have in your possession the above painting painted by John Olsen in 1964 and inscribed "For my darling Valerie, John Olsen '64' " on the reverse of the painting. John Olsen gave the painting to his wife Valerie on the birth of their daughter. Valerie Olsen never sold the painting and it was always in her possession and ownership. Mrs. Olsen is now deceased. The late Mrs. Olsen had an emotional attachment to that painting as did the family and she would not have parted with possession of the painting under any circumstances. Our client, Tim Olsen had requested you to provide him with the provenance of the painting and you have refused to give this information to him. Our clients believe whoever gave you the painting to sell are not the rightful owners of the painting and the rightful owner is the Estate of the Late Mrs. Olsen. We note from the condition report that the canvas was rolled and not in a frame. The painting was in a frame when it was in our client's possession. We require your undertaking not to part with possession of the painting and not to sell the painting until this matter is resolved. Should we not receive your undertaking within 24 hours we have been instructed to commence legal proceedings without further notice. We put you on notice that you should inform the person who gave you the painting to sell and any prospective purchasers of the contents of this letter. [emphasis added] 39On 30 July, solicitors for the defendant (at that point, John F Morrissey and Company) replied in the following terms: We act for Second East Auction Holdings Pty Ltd trading as Sotheby's Australia. Our client has today provided us with a copy of your letter dated 29 July 2014 addressed to our client and received after 5:00 PM on 23 July 2014. Your letter contains various assertions, including an assertion that "the rightful owners of a painting known as The Mother" is the property of the Estate of the Late Mrs. Olsen. We are instructed that the painting was not the property of Mrs. Olsen when she died. However, so that our client may consider the assertions set out In your letter, we would be grateful if you would let us have the following: 1. A copy of the grant of probate and inventory identifying the painting referred to in your letter. 2. The name and details of the executor or executors of the estate of the Late Mrs. Olsen. Should your client elect to commence legal proceedings, we would ask that you give us 24 hours' notice of any application and that you attach this letter to any material your client intends to rely on. We note that although you have sought an undertaking from our client you have not offered any undertaking as to damages. Our client otherwise reserves its rights to rely on this correspondence in any application that your client may bring including in relation to an application that your client or clients pay our client's costs on an indemnity basis. We would also be grateful if you would clarify precisely on whose behalf you are acting as we are unsure from your letter whether you act for the executor or executors of the Estate of the Late Mrs. Olsen and whether that Is the capacity in which you act for Mr Tim Olsen. [emphasis added] 40On 4 August 2014, the solicitors for the plaintiff replied in the following terms: We refer to your letter of the 30th July, 2014. You state that the property was not the property of Mrs. Olsen when she died. Our client Tim Olsen requested your client to provide to him the provenance of the painting which they refused to do. We have given you the provenance, it was Mrs. Olsen's painting. The Executors of the estate were Tim and Louise Olsen the children of the late Mrs. Olsen. We are not required to provide you with an undertaking as to damages and we note that your client has not given the undertaking that we requested. We confirm that we have instructions to act on behalf of the Executors of the Estate. If your client asserts that our client is not the true owner of the painting then this can be easily resolved by you providing us with evidence of the provenance of the painting which to date you have failed to do. Your client has also failed to provide the undertaking and our correspondence with be used in any evidence should your client choose to sell the painting. [emphasis added] 41On 11 August, the solicitors for the defendant replied in the following terms: We refer to your letter dated 4 August 2014. As nothing in your letter advances your client's claim of ownership of the painting, we are instructed our client will proceed to offer the painting for sale. 42On 12 August, the solicitors for the plaintiff replied in the following terms: We refer to your letter of 11th August, 2014. Despite our request and our clients request for your client to provide the provenance of the painting you have failed to do so. It is clear that your client is unable to establish ownership of the painting. We have put you on notice that the painting belongs to the Estate of the late Valerie Olsen and that the painting was a gift from her husband John painted by him to celebrate the birth of their daughter Louise. The painting was never sold by the late Mrs. Olsen or by any member of the family. It is clear that the painting has been stolen from Mrs. Olsen and our clients are referring the matter to the police. We again request that you provide evidence of ownership and provenance. We will be using all of this correspondence in any proceedings. [emphasis added] 43The solicitors for the defendant replied on the same day in the following terms: We confirm that we act for Second East Auction Holdings Pty Ltd trading as Sotheby's Australia. We refer to your recent telephone conversation with Mr Morrissey on 12 August 2014 and to your letter dated 12 August 2014. You have advised Mr Morrissey that your instructions were that the painting was stolen after being sent to a restorer. You advised Mr Morrissey that our client had not disclosed the basis on which it had established provenance. Mr Morrissey reminded you that Sotheby's Australia had satisfied itself in respect of provenance and ownership of the painting and it did not propose to disclose any further matters. In your letter, you state that it "is clear that the painting has been stolen from Mrs. Olsen" and you have not provided any particulars. So that our client may properly respond to these allegations, please provide the following further and better particulars; 1. When is it alleged that the painting was stolen? 2. Who was the restorer that the painting was allegedly stolen from? 3. What action, if any has your client taken against the restorer regarding the alleged stolen painting? 4. Has the matter been reported to the police prior to 29 July 2014? 5. If it has not been reported, why hasn't it been reported? 6. If it has been reported, please provide us with any police records relating to that report. You further indicated to Mr Morrissey that the only course available to your client was to take the matter to the police and you have advised us in your letter that your clients are referring the matter to the police. We are instructed that Sotheby's Australia would be happy to respond to any investigations made by the police and they will cooperate with any police investigation. In this regard, could you ensure that any complaint your client makes to the police has attached to it a copy of this correspondence. For the purposes of completeness, we are attaching to this correspondence the following letters: 1. Your letter to Second East Auction Holdings Pty Ltd of 29 July 2014; 2. Our letter to you of 30 July 2014; 3. Your letter to us of 4 August 2014; 4. Our letter to you of 11 August 2014; and 5. Your letter to us of 12 August 2014. In the event that the NSW Police wish to speak to any representative of Sotheby's Australia, they are happy to meet with the representatives of the NSW Police or other police forces in this office. Could you provide a copy of this letter to the police force that your client may elect to refer the matter to. [emphasis added] 44On 13 August, the solicitors for the plaintiff replied in the following terms: We refer to your email of 12th August, 2014. Your third paragraph is incorrect. At no time did I state that the "painting was stolen after being sent to a restorer". I stated that the painting had been stolen. At no time did our client or the executors sell the painting. We have given you the provenance of the painting namely that it belonged to the late Mrs. Olsen and at no time did she sell the painting. You have been unable to provide a provenance and we can only assume that you are unable to. The fact that "Sotheby's Australia had satisfied itself in respect of provenance and ownership of the painting" means nothing. The fact you are not prepared to "disclose any further matters" is to say the least unhelpful. We will provide copies of all correspondence to the Police. [emphasis added] 45Some further correspondence passed between the parties in relation to service and notification of instructions to commence legal proceedings on 15 October and 16 October, but it is not presently relevant. 46In August 2014, Mr Tim Olsen went to see the NSW Police Force in order to commence investigations into the possibility that the painting was stolen. He suggests in his affidavit that this occurred in September, but the correspondence would seem to suggest an earlier date. 47On 25 August, Mr Morrissey received a phone call from a Detective Michael Capon from the NSW Police with a number of queries regarding the painting. Mr Morrissey then sent a letter to Detective Capon in the following terms: We refer to our earlier telephone correspondence and confirm that we act for Second East Auction Holdings Pty Ltd trading as Sotheby's Australia. We are currently awaiting instructions from our client in regards to your earlier queries and anticipate being in a position to provide you with further information shortly in assistance with your investigation. In the meantime, please feel free to telephone myself or Chris Lowe of my office on 02 9331 0266. 48On 26 August, Mr Morrissey sent a further email to Detective Capon in the following terms: We refer to our letter dated 25 August 2014 and confirm that we act for Second East Auction Holdings Pty Ltd trading as Sotheby's Australia. We are attaching our letter to Nicholas Eddy, the solicitor for the Olsen Family dated 12 August 2014 (including the attachments referred to therein) as well as Mr. Eddy's letter in response dated 13 August 2014. You will note that there has been a fair amount of correspondence between this firm and Mr. Eddy between 29 July 2014 and 13 August 2014. We have requested that Mr. Eddy provide our office with various information and material. Mr. Eddy has failed to provide that information and material. We do not know the basis on which the Olsen family is making a claim and our client maintains its position that they have satisfied itself in respect of provenance and ownership of the painting. 49On the same day, Detective Capon replied to Mr Morrissey in the following terms: Dear Sir/Madam, Thankyou for the attached correspondence. To further this investigation can you please provide me with: 1. The identity and contact details of the current owners of the painting. 2. The current location of the painting 50On 10 September, Mr Morrissey received an email from Detective Chelsea Funnell from the Rose Bay Local Area Command. That email was in the following terms: Good Morning Sir, Please see correspondents [sic] below dated 26 August 2014. Detective Sergeant Capon requested the following information in relation to the John Olsen oil canvass, 'The Mother', 1. The identity and contact details of the current owners of the painting. 2. The current location of the painting Ample time has been given for the requested information to be provided however it is yet to be supplied. It is requested that Sotheby's Australia are forthcoming with the requested information within the next 24 hours. If the requested information is not supplied the matter will be investigated in full. Many thanks for your prompt assistance. [emphasis added] 51Mr Morrissey replied the same day in the following terms: Thank you for your email of 10 September 2014. We are currently obtaining instructions from our client, Second East Auction Holdings Pty Ltd trading as Sotheby's Australia and we will provide you with a response shortly. 52On 11 September, Mr Morrissey sent a letter to both detectives in the following terms: As previously advised, we act for Second East Auction Holdings Pty Ltd trading as Sotheby's Australia. We refer to previous correspondence and to your email of 10 September 2014. Briefly, in response to your two questions, we advise that our client is obliged to keep the identity of the owner of the painting and other details about it confidential. That our client is subject to such obligations of confidence should not be interpreted as an admission of any sort; such obligations are commonplace. We have, on behalf of our client, attempted to ascertain details underpinning the assertions set out in the letter dated 29 June 2014 of Nicholas Eddy & Company. We provided Detective Michael Capon with a copy of that letter on 26 August 2014, together with copies of other correspondence between our office and of Mr Eddy. As you will have seen in that letter, Mr Eddy asserted that the painting was "always in [the Late Mrs Olsen's] possession and ownership" and is owned by the Estate of the Late Mrs Olsen. Mr Eddy stated that unless our client undertook not to part with possession or to sell the painting until the matter raised by him was resolved, he was instructed to commence legal proceedings without further notice. We responded to Mr Eddy by letter dated 30 July 2014, a copy of which was provided to Detective Michael Capon on 26 August 2014. As you will see from our letter, we did not offer any undertakings. We advised that on our instructions the painting was not the property of the Late Mrs Olsen when she died. We sought information from Mr Eddy. To date, we have not been served with any legal proceedings. We asked for a copy of the grant of probate, which may have shed further light on Mr Eddy's claim, but we have not been provided with a copy of the grant of probate. Further correspondence, summarised below, was exchanged with Mr Eddy. Copies of that correspondence were provided to Detective Michael Capon on 26 August 2014. In his letter of 4 August 2014 Mr Eddy again asserted that the painting was that of Mrs Olsen. By our letter of 11 August 2014 we noted that as Mr Eddy's letter of 4 August 2014 did not advance the matter, our client would proceed to sell the painting. On 12 August 2014 we received a letter from Mr. Eddy stating, for the first time, that, contrary to his earlier assertion that the painting had always been in the possession of the Late Mrs Olsen, "tl]t is clear that the painting has been stolen from Mrs Olsen". No details supporting that claim were supplied. Accordingly, on 12 August 2014 we sought the following specific details (as taken from our letter): 1. When is it alleged that the painting was stolen? 2. Who was the restorer that the painting was allegedly stolen from? 3. What action, if any has your client taken against the restorer regarding the alleged stolen painting? 4. Has the matter been reported to the police prior to 29 July 2014? 5. If it has not been reported, why hasn't it been reported? 6. If it has been reported, please provide us with any police records relating to that report. Mr Eddy responded to our letter on 13 August 2014 but he did not respond in terms to any of our enquiries. It appears that Mr Eddy erroneously considers that our client bears the burden of disproving his bare assertion that the painting was stolen. We have not been provided with any information by Mr Eddy or any other person that could support Mr Eddy's claim made on 12 August 2014 that the painting had been stolen from Mrs Olsen. If Mr Eddy or any other person has provided you with any supporting information, we would be pleased to receive it so that we may pass it to our client, as our client takes these allegations most seriously. Our client, together with other entities in numerous locations around the globe, has a significant and well-established reputation. Mr Tim Olsen, the son of the artist Mr John Olsen, is an art dealer in Sydney controlling the sale of many artworks created by his father. To the extent that our client has occasion to offer for sale works by Mr John Olsen, there is commercial competition between Mr Tim Olsen and our client. If Mr Eddy has any basis on which to make good his clients' latest claim, that claim may be tested in court proceedings. Having declined to commence the threatened civil proceedings or to even provide us with any of the information we have requested, Mr Eddy, on behalf of his clients, has now agitated his clients' assertion through you. We are at a loss to understand the basis of the assertion that the painting has been stolen but we reiterate that our client remains open to the provision of any information, as previously requested, or otherwise. [emphasis added] 53On 12 September, Mr Morrissey sent a letter to both detectives in the following terms: I refer to my letter of 11 September, could you acknowledge receipt of same. I have had a further opportunity to review the totality of the material available to me and at the present time I am still not able to identify what is meant to be the alleged crime. Could you provide that detail to me. As you are aware I act for Sotheby's Australia. By acting for Sotheby's Australia I also act for its employees and Directors in this manner. If you wish to make any contact with Sotheby's Australia, its employees or Directors you should do so through this office. 54An email was sent to Mr Tim Olsen by Detective Chelsea Funnell from Rose Bay Local Area Command to the effect that the police would not be pursuing an investigation. That email was in the following terms: Afternoon, Tim I'm aware that you're still in the UK. I have just had a phone conversation with Mr Eddy in relation to the report you made to Paddington Police Station in regards to the John Olsen oil canvas 'The Mother' being stolen. I was asked by my supervisor Detective Sergeant Capon to seek advice from the Police Prosecutions Command, Operational Legal Advice in relation to the matter. Subsequently I have been advised that the matter is a civil matter as we are not able to prove larceny beyond reasonable doubt for the following reasons; - There is lack of documentary evidence concerning the agreement between the artist and the gallery in the UK who was loaned the art work - Considering the age of this matter and the fact that the owner was not aware that the property was missing for over 40 years - There does not appear to be any evidence of who may have originally stolen the painting - It may be the case that the painting was given to the gallery as a gift or permanent loan - How many owners has the painting been sold and bought by over the past 40 years? - Even if the current owner of the work is disclosed, without an admission from the person that stole the work larceny would never be proved due to the length in time since its last viewing. The matter will be suspended and not investigated as a criminal matter. It is recommended that a caveat is placed on the work to prevent it from being sold whilst the respective lawyers argue the legitimately or otherwise of the rightful owner of the property. It is also recommended that you contact the Department of Fair Trading. I made some enquiries with them and it's believed that Sotheby's may be breaching their auctioneers licence by not disclosing the current owner of the work. I have obtained a number of statements in relation to the matter. Please do not hesitate to contact Government Information Public Access services NSW to have all documentation subpoenaed. If you have any further questions please do not hesitate to contact me. [emphasis added] 55On 13 November, the solicitors for the plaintiffs (now a firm named Kay and Hughes) wrote to the solicitors for the defendant in the following terms: We act for the Olsen Family, and the Estate of the late Valerie Olsen. We write further to your correspondence with our clients' previous solicitor, Nicholas Eddy, of Nicholas Eddy & Company, pursuant to which we understand that you act for Second East Auction Holdings Pty Ltd trading as Sotheby's Australia. As you are aware, our clients seek the immediate and permanent return of the oil painting "'The Mother", as painted by John Olsen in 1964 (the "Painting"). The painting was the property of the late Mrs. Valerie Olsen. There is (and will not be) any record or knowledge of Mrs. Olsen having transferred ownership of the Painting to any third party prior to her death in 2011. Further, and given that the Painting was created for her on a hors d'commerce basis to celebrate the birth of her daughter, Louise, there is no basis upon which anyone could assert that she would have contemplated transferring ownership of it to any party outside her immediate family. It is therefore of extreme concern to our clients that the Painting is currently in the possession and control of your client, and, as confirmed in your letter dated 11 August 2014, will be offered for sale in the immediate future by your client, acting as agent for an unknown third party (the "Seller"). As has already been detailed to your client extensively and repeatedly, our clients emphatically dispute your client's right to possess, retain, sell or otherwise deal with the Painting. Equally importantly, they dispute the Seller's legal title in the Painting, the provenance of which your client has refused to confirm despite several months of correspondence between solicitors. To be clear, it is our clients' firm position that the Executor of the Estate of Valerie Olsen is the true current owner of the Painting, and that Tim Olsen and Louise Olsen, as the sole beneficiaries of Valerie Olsen's Estate, are entitled to ultimate legal and beneficial ownership of that property. On behalf of these parties, we are instructed to demand the Painting's immediate safe return. In this, having reviewed the correspondence to date, it is perplexing that your client, despite consistently alleging that it has satisfied itself of the provenance of the Painting, and the Seller's legal ownership thereof, has been wholly unwilling or unable to provide even basic information that could support any such conclusion. As you will be aware, it is considered standard industry practice for auction houses such as your client to confirm the provenance and historical ownership of substantial artworks prior to their advertisement and sale, and experienced buyers will regularly require and be granted the provision of such information prior to their purchase of any work. In this contest, the information requested by our clients cannot in any logical sense be inherently confidential, which makes any request for it reasonable and commonplace. Your client's continued refusal to identify any legitimate right pursuant to which they are entitled to refuse our client's demand for the Painting's lawful return is concerning. Despite being given every opportunity, your client has failed to provide our clients with any information or records supporting any right of possession or ownership of the Painting as compared to that detailed and confirmed by our clients. Simply put, if your client genuinely believes that the Seller holds legal title in the Painting, and has access to facts or records that support that conclusion, the simplest course of action would be to provide that information to our clients as a matter of urgency and resolve this dispute. In the absence of such cooperation, our clients can only interpret your client's continuing intransigence as an effort to somehow delay, obfuscate, or confuse their efforts to recover their property. Accordingly, our clients will not tolerate any further obfuscation or delay in this matter. You client has two options, it can either immediately return the Painting or urgently provide the following information: i)Confirmation that the Painting remains in your client's possession and control; ii)The full name and contact details of the Seller claiming ownership of the Painting; iii)The full basis of the Seller's alleged ownership of the Painting; iv)All information that your client has relied upon in determining that the Seller holds full legal title in the Painting, and is entitled to sell it via your client; v)The alleged provenance of the Painting; and vi)Confirmation that you have provided all potential purchasers of the Painting with full details of our clients' claims in relation to the Painting. Further, in the event the Painting is not immediately returned, our client requires that you provide an undertaking that your client will not sell, auction, dispose of, transfer or otherwise deal with the Painting in any manner without first providing our client with forty eight (48) hours written notice of their intention to do so (the "Undertaking"). The Undertaking is of particular and urgent necessity given that your client is conducting an auction of Important Australian and International Art on Monday 25 November 2014. In the event that you fail to either return the Painting or supply the requested information and Undertaking, prior to 5pm on 14 November 2014, we put you on notice that our client intends to commence proceedings against your clients without further notice to you. Such a claim will include an injunction restraining your client and the unidentified Seller from selling or in any way transferring ownership or possession of the Painting. We will attach this correspondence (and all correspondence preceding it) in support of any application for damages and costs. Our clients will also be drawing the Court's attention to the conduct of your clients in concealing the identity of the Seller and the provenance of the Painting on any such application. Have no doubt that this is a deeply felt matter for our clients, as the Painting holds special, unique and personal value to their family that is not compensable by money. They will not cease until they have obtained the return of their rightful property, together with a satisfactory explanation for these events. We await your urgent response. In the interim, our clients continue to reserve their rights in this matter. [emphasis added] 56On 14 November, the solicitors for the defendant wrote to the solicitors for the plaintiff in the following terms: 1. As you are aware we act for Second East Holdings Pty Ltd trading as Sotheby's Australia. 2. We acknowledge receipt of your letter dated 13 November 2014 which adds nothing further to the correspondence of your clients' former solicitors and does nothing to advance the matter and provides no support for the claim being made. It is only a reiteration, albeit more aggressively, of a demand previously made and denied in July 2014. It contains no evidence new or otherwise to support your clients' demand. We refer you to our letters to Mr Nicholas Eddy, your clients' then solicitors dated 30 July 2014 and 12 August 2014 to which your client has failed to provide the requested further and better particulars necessary to advance or substantiate their claim. What we have requested would be mandatory in any proceeding commenced by your clients and they would be doomed to failure without any substantiation. 3. The last correspondence from your clients' then solicitors, on 15 October 2014, advised that they had instructions to commence legal proceedings against our client and requested whether we had instructions to accept service. We responded to Mr Eddy on 16 October 2014, another letter that you clients' have failed to respond to. 4. You would have been able to review our client's catalogue for the auction of Important Australian and International Art to be held on 25 November 2014 online and your client was sent a catalogue for the sale by our client. You will have noted and would have been instructed that no reference is made in the catalogue to the Painting. 5. Further, we are instructed that our client does not intend to include the Painting in that auction on 25 November 2014. More importantly your client would be fully aware of this as no request for copyright to reproduce the painting has been made which would be necessary to offer the painting for auction. We understand that all requests for copyright are forwarded to your client for approval from Viscopy. However, given your clients' persistent failure to address any of our previous correspondence, our client reserves the right to offer the painting for private sale if we again do not receive a full response to our letters of 12 August and 30 July 2014 within 7 days of this letter. 6. We note that you have copied a number of Sotheby's personnel in to your email of 13 November 2014. Please advise us the basis for you doing so. We require you to desist from circulating to third parties communications in which you make allegations against our client. We consider that your letter is both malicious and defamatory of the Directors of our client. The contents of your letter has the potential for interfering in the contractual relations between our client and Sotheby's, and, if any loss or damage is suffered by our client or its Directors, our client and its Directors will look to you, personally, and your clients for payment of additional costs and damages for your contumelious behaviour. Our client and its Directors reserve all of their rights in that regard and we will use this letter on the question of costs and punitive damages for malice should there be a repetition of this behaviour. 7. If, as you say, your client "emphatically" disputes our client's right to possession of the painting, we again ask that you provide us with a detailed response to our letters of 12 August 2014 and 30 July 2014 to your clients' former solicitors. 8. Should your clients be so ill advised to proceed with any application before the Court please provide all our correspondence to you and your clients' former solicitors to the Court and provide us with 7 days' notice of any such application so that we can provide answering material and be prepared to appear on the return date. [emphasis added] 57On 20 November, the solicitors for the defendant again wrote to the solicitors for the plaintiff in the following terms: I refer to Mr Ben Kay's telephone attendance on Mr Morrissey and Mr Lowe this afternoon. My client is fully engaged in preparation for holding an auction for Important Australian and International Art to be held in Sydney on 25 November 2014. It should be noted that this painting is not a part of that auction. It is suggested that you would be having a return date of this matter on Wednesday of next week. My client advises that it would not be in a position to provide instructions to this firm until after the conclusion of the auction on 25 November 2014. In this regard, my client will need five clear days on which to consider the material and provide instructions. On that basis, could you seek a return date for this matter in the latter part of the week commencing 1 December 2014. I note that the demands made by your client first originated on 29 July 2014. I note further that no response has been supplied to the matter requested in our letters of 14 November 2014,12 August 2014 and 30 July 2014. No reasonable explanation has been provided to my client or this firm as to the delay in the matter and there has been no urgency demonstrated. Accordingly, we cannot see the need to have this matter returnable next week. Please attach a copy of this letter and our letter of 14 November 2014 with any application made to the Court. 58A second letter was also sent by the solicitors for the defendant on 20 November. It was in the following terms: 1. We refer to our earlier telephone correspondence between your Mr Ben Kay and our Mr Morrissey and Mr Lowe as well as our enclosed letter dated 20 November 2014. 2. Our client advises us that it was served with a summons, affidavit of Timothy Olsen made on 20 November 2014 and affidavit of Benjamin Kay made on 20 November 2014, filed on 20 November 2014, at about 5:12pm earlier today. 3. The summons that you have purported to serve on our client issues proceedings against a defendant referred to as "Second East Holdings Pty Ltd t/as Sotheby's Australia, ACN 104 669 749". This is not our client and accordingly, the summons is defective. 4. At about 5:30pm, you then provided our Mr Lowe with the above filed documents as well as orders of the Court made on 20 November 2014 including an order that the summons be returnable at 10am on 21 November 2014. Our client has not been served with those orders. Accordingly, you have not effected proper service on our client. 5. As you are aware, our client is not able to provide us with instructions prior to Wednesday 26 November 2014, and certainly not by 10am tomorrow morning. Despite our request to do so, it would appear that you have not brought our earlier letter of 20 November 2014 to the attention of the Court when seeking an order for short service. Out of respect to the Court and to protect our client's position, we will appear under protest tomorrow morning. 6. We put you on notice that our client has incurred significant costs to date of $8,861.16 and we estimate our costs of appearing tomorrow including Counsel's costs to be $4,000. 7. We will seek an order for indemnity costs against the plaintiffs and you, as the solicitors for the plaintiffs who have failed to effect proper service, payable forthwith. In the event that the costs are not paid forthwith, we will be seeking that you, as the solicitors for the plaintiffs, indemnify our client for those costs. 8. There is no evidence in regards to the estate's current assets with respect to its ability to meet any undertaking to damages or any capacity to pay costs. We will seek leave to file a motion for security for costs and for these proceedings to be stayed until such motion is dealt with. 9. We will also be seeking a return date for a notice for the plaintiff to produce relevant estate documents [emphasis added] 59On 20 November, the solicitors for the plaintiffs wrote to the solicitors for the defendant in the following terms: We write further to your letter to Kate Hughes dated 14 November 2014 ("Your Letter"), together with our telephone conversation and your subsequent letter of today's date ("Today's Letter"). We note from this correspondence your confirmation that your client will not sell the Painting at the Auction on Tuesday 25* November 2014, or prior to tomorrow, Friday 21st November 2014. Nevertheless, as is reflected in all these communications, your client has failed to return the Painting or provide the information or the Undertaking detailed under our Letter, as is and was quite reasonably required by our clients. Instead, your client has consistently refused demands to lawfully return the Painting to its rightful owners, and confirmed its intention to sell the Painting via private sale at any time after Friday 21st November 2014. Accordingly, and as you are aware, our client has now served both your client and your offices with proceedings that were filed with the Supreme Court of New South Wales this afternoon. To be clear, our clients stand by their prior claims, and have no obligation to supply your client with any of the further information demanded in Your Letter. As is apparent from all correspondence to date, the last and only identifiable legal owner of the Painting was Mrs Valerie Olsen, as is detailed on the back of the Painting itself. Regardless of whether the Painting was misappropriated, who did so, or when, your client has offered no details of subsequent legitimate competing title or any legal basis for a superior right to possession. Given your client's consistent refusal to engage with our clients, and answer their reasonable questions, our clients can now only presume that no legitimate legal basis exists for your client or the Seller's continued retention of the Painting. This concern is amplified by Your Letter's reliance on information regarding the temporary halt on sale of the Painting that, whilst attempting to reassure our clients, in reality offers very little security, and severely understates the still very real risk of the Painting being sold without their consent or knowledge. In particular, as your client would be aware, copyright consent from Viscopy would not be required if photographs of the Painting are not being published in an auction catalogue, if it is included in the auction without prior advertisement, or if it is sold via private sale. In this context, and particularly as your client has refused to provide or extend the Undertaking, these concerns remain very real, and our clients have been left with no choice but to pursue this matter through litigation. Accordingly our clients filed a Summons with the Supreme Court of New South Wales today seeking an Order for Preliminary Discovery against your clients in relation to your possession of the Painting, the details of which you have been provided. We are also in receipt of your further letter of today's date, which was received at approximately 7pm on the 20th November 2014 ("Your Most Recent Letter"). In relation to the claims detailed in Your Most Recent Letter: i) You confirmed in your letters dated 30 July 2014 and 12 August 2014 to Nicholas Eddy and your letter to our firm dated 14 November 2014 that your client was "Second East Auction Holdings Pty Ltd trading as Sotheby's". This description also appears on your client's website. Any necessary clarification should therefore be easily achievable, particularly as we note that the AGN of the Company in the Summons is correct. Accordingly, we will contest any effort by your client to argue that the Summons is defective on such a basis; ii) In relation to the details regarding your client's alleged inability to provide instructions, and the accompanying timetable detailed in Your Most Recent Letter, as you are aware, Your Most Recent Letter was received after we entered Court to file the summons. In a gesture of good-faith, we contacted you immediately before entering the Court to confirm your instructions and you failed to convey this information, other than stating that you had no instructions to accept service or provide the Undertaking; and iii) When we contacted you earlier in the day to suggest the timetable of Wednesday 26th November 2014, supported by an undertaking that your clients would not sell or dispose of the Painting, you indicated that both these suggestions should be reasonably possible, pending instructions. For these reasons, our clients reject the claims detailed in Your Most Recent Letter, which in the above context are without any legitimate basis. Our clients have endeavored to deal with your clients on a good faith basis in this matter and look forward to detailing their position to the Court tomorrow morning. In the interim, our clients continue to reserve their rights in this matter. [emphasis added] 60On 21 November 2014, the matter came before Stevenson J as Duty Judge. The plaintiffs however only sought an injunction restraining Sotheby's from disposing, selling or in any way transferring the painting until further order: see Executors of the Estate of the late Valerie Marshall Olsen v Second East Holdings Pty Ltd t/as Sotheby's Australia [2014] NSWSC 1675 at [9] and [23]. Indeed, His Honour suggested that in order to gain such relief, the plaintiffs must show that there is a prima facie case or a serious question to be tried that Mrs Olsen owned, and her estate now owns, the painting and that "the evidence adduced in support of that proposition is slender indeed". At that point, no evidence had been adduced from Mr John Olsen himself and Stevenson J further stated: [22] However, there is no evidence that, until this year, the painting has ever been reported stolen, despite the fact almost 50 years have elapsed since it "disappeared". There is no evidence at all before me of the circumstances in which the painting went to Nottingham. There is no evidence before me as to when or in what circumstance in which it "disappeared", or what steps were taken to recover it since then. There is no evidence as to what, if anything, was done by Dr Olsen, or Mrs Olsen, or anyone else concerning the painting's whereabouts for the 47 years that have passed since the Nottingham exhibition. 61Although refusing the interlocutory injunction, Stevenson J proposed to give the plaintiffs a chance to adduce further evidence from Mr John Olsen, and seek to renew their application in the light of that evidence. The plaintiffs took that opportunity by filing affidavits sworn by Mr John Olsen and Ms Louise Olsen to which I have already referred. 62The defendant also filed additional material. Mr John Morrissey, solicitor for the defendant, swore an affidavit dated 25 November 2014 in which he gave evidence that he had been informed by Mr Gary Singer (Chief Executive Officer of the defendant and a director of the defendant) that the terms and conditions of the defendant's sales are contained within the defendant's catalogues. One such catalogue was exhibited to Mr Morrissey's affidavit (described as the "Important Australian and International Art" catalogue, containing works to be auctioned on 25 November). A copy of the general conditions of business that the defendant has in respect of the sales of artworks and other items was also annexed to Mr Morrissey's affidavit. Those conditions of business, which I assume are routinely included in some form in the catalogues prepared by the defendant and updated from time to time, include a clause relating to the warranties of the seller which provides: 6.1 The Seller warrants to the Company [namely Sotheby's Australia] and the Buyer that: a)the Seller owns the Lot or the Seller is authorised to sell the Lot by the owner (in which case, an original signed authorisation by the owner must be provided to the Company); b)the Lot is free from all liens, charges, encumbrances (including registration on the Personal Property Security Register) and third party claims including a claim by a spouse; 63On the following page of the catalogue, a section titled "Information for Buyers" and subtitled "In accordance with the General Conditions of Business" includes the following clause: TITLE Sotheby's Australia guarantees good title to all lots. 64Mr Morrissey also gave evidence that he had been informed by Mr Singer that: [5] ... the defendant and Sotheby's Worldwide have a policy of not releasing the names or contact details of any vendor or purchaser of paintings. Any person who has authorised their name to be used in the Catalogue has given written instructions to the defendant to allow their name to be used in the Catalogue. [6] ...should the vendor's name be released without their authority, the commercial relationship between the vendors and the defendant would be adversely affected. 65I should say there is no clear indication that the disclosure of the vendor's identity forms part of the contractual relationship between the vendor and Sotheby's Australia, or that the policy described in Mr Morrissey's affidavit is incorporated into any such agreement. However, that may well be the case. 66In any event, on Monday 15 December a further affidavit of Mr Benjamin Kay, solicitor acting for the plaintiffs and dated that day, was read. That affidavit was read subject to in part a confidentiality order which I made for the purpose of preserving the identity of a certain individual named in the affidavit. 67That affidavit indicated that enquiries had been made by a private investigator which had prompted Mr John Olsen to recall that the painting had been given to an individual in the 1960s in gratitude for one or more periods of accommodation at that individual's property. 68Mr Kay gave evidence that the plaintiffs had engaged a private investigator, a Mr Guy Oatley, to conduct investigations in relation to the provenance and ownership of the painting. Although a date of 28 December is given as the date of engagement, it is clear from the following paragraph this is a typographical error and the date of engagement was 28 November. 69Mr Oatley apparently performed a number of investigative steps including a search of the archival collection of the Art Gallery of New South Wales, including the papers of Frank McDonald who was John Olsen's art dealer in 1966; contacting the Nottingham County Council in the United Kingdom seeking archival information in relation to the 1966 Commonwealth Festival; searching the archival collection of the Tate Museum in London in relation to the 1966 Commonwealth Festival; contacting acquaintances and colleagues of John Olsen who were believed to be in the United Kingdom in 1966; and contacting an art collector with whom the Olsen family had stayed. 70As a result of these investigations, Mr John Olsen rang the art collector on 12 December. That conversation prompted Mr John Olsen to recall that after leaving the United Kingdom, the Olsen family had lived in a house owned by a relative of the art collector in Portugal for several months in 1966 and that the painting was given to the relative to cover the cost of their stay. 71Prior to that point, Mr John Olsen I accept did not recall giving the painting to that individual, but frank disclosure of that fact clearly led to the result that the proceedings ought to be discontinued.