Chadwick & Ors v Lypiatt Studio Ltd & Anor [2018] EWHC 1986 (Ch)

[2018] EWHC 1986 (Ch)Case No HC-2014-000330IN THE HIGH COURT OF JUSTICEBUSINESS AND PROPERTY COURTSINTELLECTUAL PROPERTY LISTVenue Royal Courts of Justice, Strand, London, WC2A 2LLDate 31 July 2018
Before
RICHARD SPEARMAN Q.C.(sitting as a Deputy Judge of the Chancery Division)
Between
(1) ÉVA YVONNE CHADWICKClaimants(2) SARAH RUSSELL MARCHANTClaimant(3) DANIEL SEBASTIAN CHADWICKClaimant(4) TIMOTHY JAMES BARTERClaimant
Amanda Michaels (instructed by Foot Anstey LLP) for Issue ClaimantSophie Russell Chadwick the Issue Defendant in person for in personHearing Hearing dates: 13, 14, 15 June 2018
JudgmentRICHARD SPEARMAN Q.C.:Introduction and nature of the dispute
[1]Lynn Chadwick (“the Artist”) was one of the leading British sculptors of his time. He was born on 24 November 1914 and died on 25 April 2003, leaving a prodigious artistic legacy. The Artist made a will dated 2 February 2000 (“the Will”). Probate was granted on 10 February 2005. However, these many years later, the Artist’s estate has still not been wound up due to a long-running dispute concerning the bulk of his works.[2]In a sentence, that dispute centres on whether those works, both in terms of physical property and in terms of copyright, are owned by the Artist’s estate or by the First Defendant, Lypiatt Studio Limited (“the Company”). That is the issue that is now before the Court. The Company seeks declaratory relief as to the legal or equitable title to the physical property and copyright, and (to the extent this is necessary) an order for the Claimants to vest or assign any legal rights from the Artist’s estate to the Company. That relief is sought in respect of the bulk of the Artist’s works, including both works created before and works created after his acquisition of the Company in mid-1973.[3]The Artist worked as an architectural draughtsman before and after serving in the Second World War. He started making mobiles in the late 1940s, and turned to sculpture around 1950. He rose to fame when he won the International Prize for Sculpture at the Venice Biennale in 1956, and thereafter achieved global success and acclaim. He carried on working until about 1996. During his long career he produced a variety of artworks including drawings and lithographs, but he was principally a sculptor. His works are exhibited at leading galleries and museums around the world.[4]The CPR Part 8 claim that is now before the Court relates primarily to the rights in the Artist’s works of sculpture (including mobiles and stabiles), but also includes the Company’s claim to numerous drawings and lithographs, many but not all of which are associated with his three-dimensional works. The hundreds of works that are in issue in the present trial are identified in the Amended Confidential Schedule to the Re-Amended Particulars of Claim (“the Confidential Schedule”).[5]Not least because a number of them share the Artist’s surname, it is convenient, and involves no disrespect, to refer to the principal protagonists by their first names.[6]The Claimants in these proceedings are the Artist’s executors: his widow (“Éva”), one of his daughters (“Sarah”), one of his sons (“Daniel”), and his solicitor (“Mr Barter”).[7]The Company was transferred to the Artist and Éva in 1973. They were appointed as directors on 18 June 1973, and they became equal shareholders, each being allotted 50 of the 100 issued shares in the Company. At the time of its incorporation, the Company was called Godolphin Foundry Limited. Its name was changed to Lypiatt Foundry Limited on 15 July 1973, and to Lypiatt Studio Limited on 21 June 1988.[8]The Artist was married three times. With his first wife, he had a son, Simon, born in 1943. Simon became a director of the Company in 2004. Simon suffered a heart attack in December 2017, and sadly died suddenly in May 2018. With his second wife, the Artist had two daughters: Sarah, born in 1958; and the Second Defendant (“Sophie”), born in 1960. With his third wife, Éva Reiner, he had a son, Daniel, born in 1965.[9]As well as being his executors, Éva, Sarah, and Daniel are also currently the directors of the Company. Éva has been a director since 1973, Sarah since 2000, and Daniel since 2004. Sophie was also appointed a director in 2004 (on her case, without her knowledge or consent), but resigned later that year (on her case, as soon as she found out she had been appointed a director, as this was without her knowledge or consent).[10]Since 1958, the Artist had lived in Lypiatt Park in Gloucestershire, which was in his sole name. This was a family home, in which various members of the family lived at different times. In addition, outbuildings were used as a studio, at one stage to house a small foundry for the Artist’s works, and to store hundreds of his works; and the house and grounds were used to showcase his works. In 1988, the Company purchased a parcel of land adjoining Lypiatt Park to be used as a sculpture park, and many of the Artist’s more monumental sculptures have since been displayed in that sculpture park. Sophie states that this land was not on the market, and she identified this opportunity.[11]By the Will, the Artist left one half of Lypiatt Park to Éva absolutely, and the other half upon trust to pay the income to Éva for life, and then on the same trust for his four children as his residuary estate, which was left on trust for the four children equally. The Will made no mention of the Artist’s artworks or of copyright in them. His chattels (but not his own works of art) were divided informally between members of the family.[12]The Artist also left 2 of his shares in the Company to Éva. In the result, her holding increased to 52 of the 100 issued shares, and she obtained a controlling interest in the Company. The rest of his shares fell into residue. A Deed of Variation was executed on 13 April 2005, giving his children 12 shares each. As the estate has not been wound up, 50 shares remain registered in Éva’s name, and 50 shares in the name of the estate.[13]The issue that is now before the Court was raised by Sophie in about 2005. The Company and Sophie were the only parties in the trial. The dispute was first brought before the Court by the Claimants, and they plainly have an interest in its outcome. However, the Claimants ceased to be actively involved in the action pursuant to the Order of Master Teverson dated 25 March 2015. (The time that this dispute has taken to come to trial is partly due to the grant of a stay while attempts were made to resolve it.)[14]Before me, Ms Amanda Michaels appeared for the Company, and Sophie appeared in person. Ms Michaels conducted the hearing robustly in her client’s interests, but also with scrupulous fairness to Sophie. For her part, Sophie presented her case calmly and with dignity. She is an intelligent person, and I believe she did justice to her own case.[15]The resolution of the dispute in her favour might have some advantageous financial consequences for Sophie, although that would not be without its price. First, it seems inevitable that, in the event that the Company loses its claim, a substantial part of the residuary estate would need to be liquidated in order to pay inheritance tax. Second, that would have the effect of dispersing the Artist’s works, when it seems clear, and appears to be common ground between the parties, that this would be contrary to his wishes in his life time. In any event, from her second witness statement in particular, it seems that the prime driver behind Sophie’s stance is to be found in much more personal considerations. Sophie made that statement to correct factual errors, and to respond to certain evidence concerning her personally, contained in the first round of witness statements. That statement details some of the unhappy history of the break-up of the marriage between the Artist and Sophie’s mother, her mother’s tragic death at an early age, her disaffection with Éva and Daniel, and her strong feeling that the Artist wanted to be fair to all four of his children, and that the stance advanced by the Company and supported by the Claimants does not accord with what the Artist wanted.[16]This hearing is not the occasion to explore these matters. However, in these respects, the current dispute has some of the characteristics that are familiar in many probate cases.As Lord Neuberger MR observed in Gill v Woodall [2011] Ch 380 at [16]:
“Wills frequently give rise to feelings of disappointment or worse on the part of relatives and other would-be beneficiaries. Human nature being what it is, such people will often be able to find evidence, or to persuade themselves that evidence exists, which shows that the will did not, could not, or was unlikely to, represent the intention of the testatrix, or that the testatrix was in some way mentally affected so as to cast doubt on the will.”
The directions for trial[17]The directions given by Morgan J on the pre-trial review on 21 May 2018 included(a) that no oral evidence should be permitted at the trial and(b) that none of the witnesses who had made witness statements on behalf of the Company or Sophie was required to attend the trial for cross-examination or should be cross-examined at trial.[18]Prior to that:(1) the Company had filed witness statements of Éva, Sarah, Daniel, Rungwe Kingdon (a foundry owner), and Roland Schäppi (an art dealer), and two witness statements each of Mr Barter and Michael Sanger-Davies (an accountant); and(2) Sophie had filed two witness statements of her own, and a witness statement of Franck Cornaz (a former partner of hers).[19]At the pre-trial review, Morgan J also granted permission to the Company to make amendments to the Particulars of Claim, to the Confidential Schedule, and to the List of Issues that had been produced in advance of a case management conference that was held on 5 August 2015. The amendments were made to reflect the Company’s decision not to pursue its claim to copyright in a small number of personal paintings and a few pieces of jewellery made by the Artist. The Company accepts that these items were not made in the course of the Company’s business, but essentially as personal gifts to friends and family or for personal use. Copyright in these works will therefore remain with the Artist’s estate. At the time of the pre-trial review, the Confidential Schedule referred to a category of approximately 388 uncatalogued drawings by the Artist. The process of cataloguing those drawings was then ongoing. Since then, a document has been completed which identifies those works, and this was included in the trial papers.[20]Although it ends with a table identifying no fewer than 17 issues, the amended List of Issues essentially breaks down into four questions. At the heart of these questions is the date at which the Company began trading, which is said by the Company to be either Sunday 1 or Monday 2 July 1973 (“the Trading Date”). Nothing turns on which of those two dates is correct. These questions ask(1) whether the Company had legal or equitable title (a) to tangible property and (b) to copyright in works created by the Artist before the Trading Date and(2) whether the Company had legal or equitable title (a) to tangible property and (b) to copyright in works created by the Artist after the Trading Date. The Company contends that each of these questions should be answered in the affirmative; whereas, subject to limited exceptions, Sophie contends the contrary. The limited exceptions relate to casts which the Company made or had made and to works (including working models) which the Company bought back from collectors. Sophie admits that the Company owns the tangible property in these classes of works. The evidence about the Trading Date[21]Mr Sanger-Davies first met the Artist in or about 1971, and he became the Artist’s accountant in around 1972. He continued working as the accountant for the Artist, Éva, and the Company until he retired in 1997, and even after that he continued to do some bookkeeping for the Company.[22]Mr Sanger-Davies explains that at the time when they first met one another the Artist was essentially a sole trader, although he was greatly assisted by Éva, who took on the main responsibility for administrative matters and so freed him up to be creative. Mr Sanger-Davies advised them that it would be more tax efficient if they moved their business from sole trader status to a limited company, because the company could claim tax relief for the use of the house and grounds, in respect of which an allowance would be deductible subject to the approval of the Inland Revenue. Further, the Artist was a higher rate tax payer, and moving the ownership of the artwork to the Company would enable the Company to reinvest the proceeds made from sales of casts, while at the same time the Artist would only have to pay tax on the remuneration that he received from the Company. The Artist and Éva (unsurprisingly) accepted this advice.[23]Mr Sanger-Davies had previously arranged for a number of companies to be incorporated for another client, Mr Sidgwick, in or about 1972. One such company was called Godolphin Foundry Limited (i.e. the Company), which Mr Sidgwick intended to use to produce bronzes of racehorses, and the Articles of Association of which named Mr Sidgwick and his wife as the first directors. However, Mr Sidgwick never used the Company and it had remained dormant and had never traded. Accordingly, Mr Sanger-Davies obtained Mr Sidgwick’s consent to the Company being transferred to the Artist and Éva, in return for Mr Sidgwick being repaid the set up costs that he had incurred.[24]Mr Sanger-Davies’ understanding and belief is that, in accordance with his advice, the Artist and Éva agreed to and intended a complete transfer of the entire trading business and all its property to the Company. The only exception to this was the house and grounds at Lypiatt Park, which he advised should remain the personal property of the Artist, albeit that a proportion of the costs of running and maintaining the house, outbuildings and grounds could be treated as the costs of the Company for tax purposes.[25]This is supported by the contemporary documents. For example, the balance sheet for the Artist’s sole trading business as at 30 June 1973 shows that the stock of works had a value at a cost of £5,376. The balance sheet and profit and loss statement for the Company in the Company’s first set of accounts, which cover the trading period from 30 June 1973 to 31 March 1975, show that, as at 31 March 1975, stock was valued at £13,522, and the increase in stock value was £8,146. This means that the opening stock value of the Company was exactly the same as the closing stock value of the sole trader business, namely £5,376. Mr Sanger-Davies explains why these and other entries in the accounts of the Company support his evidence and recollection that:
“In essence, save for land and buildings at Lypiatt Park, the entire trading business in works of art produced by [the Artist] was transferred by him to the Company as at 30 June 1973 and this included all stock (existing sculptures, working models, and other works produced by [the Artist]) and equipment, vehicles, fixtures, fittings etc; the whole shooting match.”
[26]Mr Sanger-Davies further states:
“When transferring the sole trader assets to the Company, there was no separate consideration given to tangible property and intellectual property. The intention was simply to transfer ‘everything’. I appreciate that when selling or gifting a work of art, the transfer of a tangible item does not necessarily include the right to reproduce that work of art. However, the scenario in 1973 was not one of the sale or transfer of tangible items only but all rights to reproduce would also have been included since this was the very purpose of the corporate vehicle into which the sole trader business was being transferred. It was certainly not my understanding that those rights remained with [the Artist]. If they had, provision would have been made for the payment of royalties from the Company.”
[27]This is also the evidence of Éva, which includes the following statements:
“I recall that at the time this transfer to the Company was taking place, an inventory was taken of all [the Artist’s] work, including casts which had already been made and working models, although the accountant applied a nil value to the working models, as these were not for sale … [The documents reflect] exactly my understanding from the time that all artworks which were originally owned by [the Artist] as part of his trade were transferred in their entirety to the Company – lock stock and barrel. Although a nil value was assigned to the working models because their cost to make was so small and they were not items that were themselves intended to be sold by the business, [the Artist] and I believed that they were included in the transfer. There were two main reasons for this: first, because the reproduction of working models as cast sculptures was a very significant part of the business that was being transferred, and without ownership of the working models and the rights to reproduce casts from those working models the Company would not have been able to carry on the business; and, secondly, because it was always [the Artist’s] stated intention and wish that his working models be kept together so far as possible. It was logical to keep the ownership together too. In addition to the works of art being transferred to the Company, anything else that had been part of [the Artist’s] trade was also transferred, including materials, tools, fixture and fittings in the studio and storage areas. The only exception was the house, gardens, outbuildings and land at Lypiatt Park and the associated mortgage.”
[28]Although Sophie has put the Company to proof of these matters, she has adduced no direct evidence in response. This is unsurprising in light of the fact that she was only a child when these events took place. However, Sophie does make a number of points based on the evidence that is available to her. These points are discussed below. The parties’ contentions relating to the Trading Date Tangible property[29]Ms Michaels submitted that the Company has provided ample proof of the transfer to it of the property in the Artist’s stock from his sole trader business which included all the unsold works pre-dating the Trading Date. In particular:(1) It is clear from all the evidence, and especially that of Mr Sanger-Davies and Éva - who were involved at the time - that the intention of the Artist was to transfer the property in all of his works from his sole trading business to the Company. There was an express or implied agreement to that effect made between the Artist and the Company (represented by the Artist and Éva as its directors) as one of the steps necessary to give effect to the accountancy advice received.(2) There is no requirement for any formality in the transfer of personal property.(3) Here, it is clear that a transfer was advised by the accountant, intended by the Artist, agreed between the Artist and the Company, and put into effect.(4) Ms Michaels made reference to Day v Harris[2014] Ch 211 and to sub-paragraphs 1, 2, 6, 7, and 8 of paragraph 3-014 of Palmer on Bailment, 3rd ed. In my opinion, the legal tests discussed in that case were not directly relevant to the present case, because they concerned (a) differentiating between a gift and a bailment and (b) the effect of a delivery of chattels other than pursuant to an agreement. Similarly, paragraph 3-014 of that textbook contains a discussion of circumstances in which there has been a delivery of goods and the question is whether this constitutes a gift or a loan. In the present case, there was, according to the evidence summarised above, a clear agreement, as set out in (1) and (3) above, as indeed there needed to be in order to give effect to the whole purpose of setting up the Company, which was to achieve a more tax efficient structure.(5) Although it does not appear that any of the items of property were formally delivered to the Company at the Trading Date, that would have been unnecessary as the Company was based at Lypiatt Park. The Company’s accounts, stock records, and so forth, all show that the Company took possession of the property, and the transfer of ownership is reflected by the freedom with which the Company subsequently dealt with all of the items as if it was the absolute owner of them, and in exactly the same way as with any works generated after the Trading Date. In June 1990, the Company purchased an industrial unit in Chalford, Stroud, which it called “the Factory,” which was used to display and store the Artist’s works, regardless of their date of creation. See, for example, the following extracts from Sarah’s evidence:
“I want to emphasise that throughout my role as a director in the Company, in addition to my knowledge of the Company before I became a director, there has never been any differentiation in the treatment of [the Artist’s] Works of Art in respect of those made pre-incorporation of the Company and those created post-incorporation. Works of Art created in both periods were treated the same by the Company … Further, through my role as a director of the Company, from the documents I have seen, there was never any differentiation between the casting commissioned by the Company in respect of Working Models still in its possession and which had been transferred from the ownership of [the Artist] as a sole trader to the Company and those Working Models which the Company had subsequently re-purchased on the open market and which were added to Company stock lists as a result.” (6) The Artist’s wish to keep all of his works together through use of the Company, including having the Company buy back his own works, is also significant. In addition to Éva’s evidence on this topic, Sarah’s evidence includes the following: “Further [the Artist] directed the purpose of the Company, in part obviously to sell copies of the Works of Art in order to generate an income, but also specifically to seek to keep his Works of Art together, notably the Working Models. [The Artist] was the force behind the decision for the Company to buy back Working Models and 2D Works for example … In his later years, I had conversations with [the Artist] about items belonging to the Company. I recall a specific conversation which took place in or around 1988. [The Artist] asked me to ensure that certain items of the Works of Art which were displayed in his wing of Lypiatt Park were on the Company stock lists … I believe that [the Artist] was happy that the collection of Working Models was being brought together by the Company …”
[30]Although (understandably, as she was acting in person), Sophie’s points did not always differentiate between separate issues, I believe that her evidence and arguments relating to the transfer of ownership in tangible property may be summarised as follows.[31]First, based on the Company’s original name, and, further, the fact that when that name was first changed it was changed to Lypiatt Foundry Limited, Sophie contends that what was acquired at the Trading Date was a foundry. Building on that premise, Sophie contends that there would have been no point in transferring ownership to the Company of works that could not be cast, such as “Unique” sculptures, drawings, watercolours, oil paintings, furniture such as metal and marble tables, and large concrete works.[32]It is understandable that Sophie should advance this argument, relying on the name of the Company. However, the argument is based on a misapprehension, as appears from the evidence of Mr Sanger-Davies (which is entirely supported by the evidence of Éva). In light of that evidence, the basis for this argument falls away, and it cannot prevail.[33]Second, Sophie makes a number of points based on what the documents show about stocks. Her first point under this heading is that although the Company’s balance sheet as at 31 March 1975 mentions “stock” that is valued at £13,522, no description is given of the nature of the stock in question. In my view, however, what matters is not whether the “stock” is described, but whether and to what extent the value attributed to “stock”, together with all the other evidence before the Court, accords with the proposition that all the stock of the Artist’s business as sole trader (in whatever form it took) was transferred to the Company. There is detailed and cogent evidence that this is, in fact, what occurred, which far outweighs the point made by Sophie about lack of description.[34]Sophie’s next points under this heading depend on the contents of a stock list that was compiled by the Company in 2005 (“the 2005 List”). According to Sophie, the Artist created some 570 working models prior to the incorporation of the Company, of which up to 100 are said to have been sold, and approximately a further 420 thereafter. Therefore, if the Company’s case is right, one would expect to see far more than 29 working models on the 2005 List, and yet it contains only 29 working models (which Sophie suggests the Company bought on the open market). Sophie contends that this material shows that property in all the other working models was retained by the Artist.[35]Sophie makes like points in respect of other categories of work, which may be summarised as follows:(1) Sophie referred me to the contents of the third impression of the first edition, dated 1997, of a hardback book edited by Dennis Farr and Éva entitled “Lynn Chadwick, Sculptor”, which the family refers to as the Catalogue Raisonné (“the CR 1997 edition”). This contains plates of a number of works which contain the attribution “Collection: the Artist”. (The Company also made the 4th edition, dated 2014, available to the Court.) The Artist created 24 “Unique” sculptures, which feature in the CR 1997 edition with that attribution, but only 3 are listed in the 2005 List, and these appear to have been bought by the Company. Based on these materials, Sophie contends that the Artist owned the remaining 21 “Unique” sculptures.(2) The Artist created 8 Formica works, but none appear on the 2005 List. Therefore, the correct inference is that the Artist also owned these works.(3) Sophie accepts that various drawings and lithographs are listed on the 2005 List, but she has not had access to such earlier stock lists as may exits to compare the same. Sophie therefore does not know whether any drawings and lithographs do not appear on the 2005 List, but if and in so far as they exist and they do not appear on the 2005 List she contends they belonged to the Artist.(4) Sophie also contends that the Confidential Schedule contains over 900 original works (including works that had been sold) which do not appear on the 2005 Stock List, as follows: (a) the 2005 Stock List details 43 original sculptures and 63 original drawings, whereas (b) the Confidential Schedule details 569 original sculptures (both working models and “Uniques”), 11 templates for Stainless Steel works, and 469 drawings. It is her case that all these original works which appear on the Confidential Schedule but not on the 2005 List belonged to the Artist.[36]Sarah explains that she first became involved in helping the Artist and Éva to run the Company in or about 1998 because, although her background was in marine biology rather than art, she was “very methodical and organised”, and they were very happy with the idea. As she worked at the Company for many years she is able to give direct evidence as to the way it operated and its record keeping. Her over-arching point is that “A stock list was never designed to be a comprehensive inventory of all Works of Art held by the Company”. However, she also makes other points about the stock lists.[37]First, with regard to working models, it is the evidence of both Sarah and Éva that in the 1980s the Company began to use its funds to buy back Working Models which the Artist had sold near the outset of his career in the 1950s and 1960s. This was done at the instigation of the Artist, who wanted(a) to keep all the Working Models together and(b) to be able to make bronze casts of the Working Models, in limited editions, and thus generate income. Sarah states that:
“Where the Company purchased a Working Model, it was recorded on the stock list for accountancy purposes … It is important to note that no comprehensive list of all Works of Art held by the Company ever existed. For example, those original Working Models, which were never sold in the open market, do not feature on any stock lists since they had no value for accountancy purposes … Working Models which were bought back by the Company had a value ascribed to them, as required by HMRC, and as such were categorised on stock lists of the Company.”
[38]Second, with regard to stock lists generally, Sarah makes clear that there were many such lists. The trial papers also include loan lists, factory lists, casting lists and sold sculpture lists. By way of example, a sold sculpture list dated 31 March 1993 records sales (by the Company) of works created both before and after 1973. The papers also contain many other examples of works of all classes being sold or otherwise dealt with by the Company in spite of the fact that they were created by the Artist prior to 1973.[39]Third, with regard to Sophie’s reliance on the CR 1997 edition, Éva states as follows:
“With regard to the Catalogue Raisonné … the line “Collection of the Artist” was to denote that those works were not for sale, i.e. that they were part of a private collection. This expression is, I believe, a convention when referring to works of art – in my opinion, it would not be appropriate to simply write “Not for Sale”
. I referred … above to the way in which gifts were sometimes credited to Lynn or “the Artist” by recipients as a convention in the art world. In a similar way, copyright notices will often be included alongside images featuring [the Artist’s] work and galleries, museums etc will simply insert © Lynn Chadwick without giving any real thought to the issue as they merely want to credit the artist. Ever since the Company began trading, any consents or authority to photograph or reproduce images of [the Artist’s] works have been given by the Company. It is only more recently, when asked for permission to reproduce images of [the Artist’s] works that the Company has requested that the credit be provided to [the Company]. Credit of provenance in listings of items for sale is also dealt with in a similar way. I have exhibited [a document which] confirms how Sotheby’s list the provenance of art in its catalogues.”[40]In addition, the terms of a letter dated 17 September 1993 from Mr Barter’s firm, Rickerby Jessop Flint, to Éva, relating to the proposal that a charitable trust should be set up as a foundation for the Artist’s works, are difficult if not impossible to reconcile with the notion that the Company’s ownership of works created by the Artist was and is as limited as Sophie suggests. That letter states, among other things, as follows:
“When we obtained the Charity Commissioner’s approval to the Foundation it was intended that sufficient assets would be settled so as to produce an annual income from which could be paid all outgoings relating to the premises at which the working models would be stored and employ a Manager/Caretaker of the works … In addition to the working models, [the Company] could transfer to the Charitable Trust the right to cast all uncast models. This hopefully provides sufficient income to discharge the liability as set out in the preceding paragraph and indeed make gifts to other Charities. However, as you rightly point out, there will be no future salaries or other dividend from [the Company] …”
[41]Weighing this evidence against the points Sophie makes, those points must be rejected. This seems to me to be particularly clear in respect of the working models, but I emphasise that the documents support the Company’s case with regard to all the classes of works which remain in issue in the present proceedings.[42]Sophie’s evidence and arguments also addressed issues relating to personal paintings and jewellery, but claims in respect of these items are no longer pursued by the Company.[43]For these reasons, I have no hesitation in accepting Ms Michaels’ submissions, and in holding that the Company acquired title to the property in the Artist’s stock from his sole trader business, which included all the unsold works pre-dating the Trading Date. Copyright[44]Turning from tangible property to copyright, Ms Michaels submitted as follows, in part by reference to the parties’ statements of case (which, on Sophie’s side, were settled by Counsel on her behalf at a time when she had legal representation in this claim):(1) It is common ground that the Artist was the first owner of the copyright in the works as their author, pursuant to the Copyright Act 1911 (in force up to 1 June 1957) and Copyright Act 1956 (in force in from 1 June 1957 to the Trading Date).(2) A transfer of the property in a work does not automatically carry with it the copyright in the work (see Copinger & Skone James, 17th edn, at 5-02, 5-68).(3) The legal title to the copyright in pre-existing works was not transferred to the Company due to the absence of the necessary documentation (section 36 of the Copyright Act 1956 required an assignment to be “in writing signed by or on behalf of the assignor”). Accordingly, it is common ground on the parties’ statements of case that the legal title is currently vested in the Claimants.(4) The dispute is therefore as to whether there was an assignment of the beneficial interest in the copyright to the Company. The relevant paragraphs of the Defence essentially contain bare denials: the intention to transfer the copyright is denied without further explanation. Reply 7 to the CPR Part 18 Request for Further Information takes matters no further: Sophie relies upon the lack of a legal document and her belief that the Artist had no intention to assign the copyright to the Company. Sophie’s position may have been based upon her view that the Artist wished to keep his work as an artist separate from the Company (see Defence [19] and CPR Part 18 Replies numbered 4 and 6), but this is impossible to reconcile with her acceptance in her letter of 2 September 2015 that the Artist did not continue to operate as a sole trader after the Company was acquired.(5) The Company’s case is that the arrangements and agreement made in 1973 plainly were intended to transfer the copyright to it. As a result, the Company owns a beneficial interest in that copyright. There is no requirement for writing for the creation of such a beneficial interest. In Lakeview Computers plc v Steadman (CA, 26 November 1999, unreported), Mummery LJ said at page 8:
“That provision [i.e. section 90(3) of the Copyright Designs and Patents Act 1988, the statutory successor to section 36 of the Copyright Act 1956 Act] does not, however, apply to an agreement to assign copyright, which may be an express oral agreement or an agreement implied from conduct. A binding and enforceable agreement to assign is effective as an equitable assignment which may be carried into execution by an order for specific performance or by a vesting order transferring the legal title to the equitable owner.” (6) The facts of the present case are fundamentally similar to those in the Lakeview Computers case. Copyright works (in that case software) were created by an individual who was trading as a sole trader and whose business depended upon the exploitation of those copyright works. A company was incorporated specifically as a successor to the business to continue to exploit those works. The author became a director and 50% shareholder of the company. The rights were exploited by the company for a number of years after incorporation. Lakeview Computers plc treated the software as its principal asset, just as in the present case the Company treated all of the Artist’s works as its principal assets. No licence was ever granted by the author. There were additional factors in Lakeview Computers pointing to an assignment as at the date of incorporation, such as the author’s subsequent acknowledgement of the company’s rights. Nevertheless, the Court of Appeal held that the evidence showed “conduct from which the implication of an agreement to assign” was “irresistible”
. In reaching that finding, the Court of Appeal relied upon all of the circumstances in which the company was incorporated and the parties’ subsequent conduct as indicating that there was a binding and enforceable agreement to assign. (7) Similarly, in the present case, the evidence irresistibly shows that it was the mutual intention and understanding of the parties that the Company (a) would own the copyright as well as the property in the Artist’s existing works, (b) would own and exploit such copyright, and (c) would take over from the Artist’s business as a sole trader all the work of production, reproduction, exploitation, storage and preservation of his works, including the liabilities arising in running the business and the process of buying back working models for the purpose of protecting the Artist’s oeuvre. The whole and sole purpose of the incorporation of the Company was to run the identical business in a more tax efficient way, and to continue to exploit the Artist’s works, including in particular his copyright, precisely as he had done previously as a sole trader. That is what it did. (8) The Company relies on: (a) Mr Sanger-Davies’ first witness statement at [19], and his second witness statement at [20]; (b) Éva’s witness statement at [23], [27], [49], [62]; (c) Sarah’s witness statements at [73], [74], [86]; Mr Kingdon’s witness statement at [12-13], [16]; (d) the minutes of meetings of the board of directors of the Company dated 2 July 1982 and 16 August 2000, where the directors dealt with the issue of who should decide on casting of works; (e) the fact that the Company’s accounts do not refer to a licence or show payment of royalties to the Artist; (f) the fact that the Company (not the Artist) bought back the working models; and (g) the fact that any consents for reproduction or use of images of any works were given by the Company (see Éva’s witness statement at [62]), and that this included licences granted by the Company in respect of pre-Trading Date works and casting done after the Trading Date.[45]Sophie’s points concerning the Company’s ownership of copyright are as follows. Those points are made in support of her case at trial, which was that the Artist retained all intellectual property rights in all his works of any type whenever they were created.[46]First, Sophie believes that the Artist had an undocumented agreement with Éva pursuant to which bronze casts (to the extent that they could be reproduced) would be produced by the Company, which accordingly operated as if it had an exclusive licence to make such casts. Sophie considers that she has seen no evidence that the Company owned or had an exclusive licence in respect of copyright in any other types of work.[47]Second, Sophie argues that if the Company had become the owner of the copyright in the Artist’s works he “would have disappeared in 1973” in the sense that: “… all his subsequent works [would have been] known as [the Company’s] (not [the Artist’s]) whereas he continued to exhibit in his sole name and was internationally acclaimed. He received prizes for his lifetime work as a sculptor, [the Company] did not receive these honours and awards”.[48]Third, and consistent with the above, Sophie has not found a single instance of the Company claiming, by a notice, copyright in any of the Artist’s works prior to 2003. I understood Sophie’s reference to the contents of the CR 1997 edition to have been made in support of this point (as well as the argument she advanced about ownership of tangible property). In any event, whether or not that understanding is correct, Sophie’s point about the absence of such claims to copyright is not limited to those contents.[49]Fourth, the minutes of meetings of the board of directors of the Company dated 2 July 1982 support the case that the copyright in the Artist’s works had not been transferred to the Company, because if they had been transferred “there would have been no point in spelling out in this document who has the right to decide which works to cast, because the directors of [the Company] would have automatically had this right”. The fact that this document makes reference to someone who is external to the Company, namely Tony Reichardt, “proves that that [the Artist] distinguished the IP rights from the other executive and commercial functions of [the Company]”.[50]Fifth, the Artist “intended his 4 children (in the longer term) to inherit his IP and therefore I claim that this remains with the Estate”.[51]Sixth, the Artist did not only have a single trading vehicle, namely the Company, but instead “at about the same time (1972) from memory [the Artist and Éva] bought a secondary company based in Switzerland, Atelier Apollo … [which] ceased to trade in about 1995”.[52]Seventh, if the Company’s “claims to ownership of extensive original works been true, then why were these works not exploited by the Company”.[53]In my view, Sophie’s first point is really no more than assertion and a reiteration of the fact, which it accepts, that the Company is unable to rely on a written assignment.[54]As to Sophie’s second point, there is no doubt that the Artist personally created original works before 1973, and that he continued to do so after 1973. It therefore makes sense that he exhibited in his own name, and that he, rather than the Company, received prizes, honours, awards and acclaim in respect of his personal creative endeavours. In my opinion, however, those matters do not assist in determining whether the Artist transferred the copyright in his pre-existing original works to the Company in 1973. Nor, for that matter, do they assist in determining whether he created post-1973 works original works in his capacity as an employee of the Company, such that the Company became the first owner of copyright in those works although he was their author.[55]In the latter regard: (1) Section 4 of the Copyright Act 1956 provided that (subject to exceptions which are not material to the facts of the present case):
“Where … a work is made in the course of the author’s employment by another person under a contract of service or apprenticeship, that other person shall be entitled to any copyright subsisting in the work by virtue of this Part of this Act.” (2) Section 11 of the Copyright, Designs and Patents Act 1988 provides: “(1) The author of a work is the first owner of any copyright in it, subject to the following provisions. (2) Where a literary, dramatic, musical or artistic work is made by an employee in the course of his employment, his employer is the first owner of any copyright in the work subject to any agreement to the contrary.”
[56]In my judgment, Sophie’s third point is answered by Éva’s evidence that is quoted in paragraph 39 above.[57]As to Sophie’s fourth point, the relevant Board minutes relate to “the right to decide which works of art should be cast, to authenticate works of art so cast, and to donate works of art to a gallery or museum for the furtherance or preservation of [the Artist’s] reputation”. Paragraph 1 records that “during his employment by the Company” the Artist has had and during his life will continue to have that right. Paragraph 2 records that after the Artist’s death, that right shall be exercised jointly by Éva and Tony Reichardt (whose name is misspelt in the minutes) during their joint lives, and after the death of either of them by the survivor together with the Artist’s four children.[58]I do not agree that the contents of these minutes support Sophie’s case that the Company was not the beneficial owner of copyright in the Artist’s works. In my view, there is no tension between these minutes and the Company’s claim to ownership of copyright. Indeed, Ms Michael relies on these minutes and the minutes dated 16 August 2000 as showing that the directors of the Company were dealing with the issue of (among other things) who should decide on casting of works, which she contends to be consistent with, and supportive of, the Company’s case. Having said that, the minutes are significant for another reason, in that they record that the Artist was an employee.[59]Sophie’s fifth point may well reflect her genuine belief, but, in terms of the present proceedings in which the Court is required to reach a determination on the evidence before the Court and the arguments of law presented to the Court, it is mere assertion.[60]Sophie’s sixth point is contradicted by the evidence of Mr Schäppi, which makes clear that(a) he is the sole director of Atelier Apollo A.G. (“AA”);(b) AA has been owned and controlled by him since its incorporation;(c) AA has never been a vehicle for the trade of the Artist, who has never held any interest in AA; and(d) AA only dealt with the Artist through the medium of the Company, and then only as an art dealer for the works created by the Artist, as indeed AA has done for many artists over many years. This evidence accords with a number of contemporary documents which were included in the trial papers, including a series of letters from AA to Éva dated both before and after the incorporation of the Company, which enclosed cheques in various sums with accompanying explanations such as “This payment represents a further installment (sic) deductable (sic) from the total of outstanding amounts due to your company”.[61]Sophie’s seventh point is in the nature of a rhetorical question. In any event, on the evidence before the Court, the Company did exploit the Artist’s works extensively.[62]For these reasons, I do not consider that any of Sophie’s points provide an answer to Ms Michaels’ submissions.[63]Moreover, Ms Michaels’ submissions appear to me to be well founded.[64]Accordingly, I find that the Company is right in contending that there is ample evidence of intention and subsequent conduct pointing to an agreement to assign the copyright in all the classes of pre-existing works created by the Artist to which the Company lays claim, sufficient to vest the beneficial interest in the same in the Company.[65]The Company further contends that if it is entitled to this beneficial interest, it can call upon the Claimants to assign the legal title to it (see Copinger & Skone James, at 5-188-189). This proposition is also supported by the passage from the judgment of Mummery LJ in the Lakeview Computers plc case that is cited above.[66]Ms Michaels suggested that this proposition was unlikely to be contested, and I am not aware that Sophie sought to raise any argument in response. In any event, I agree with it. The issues relating to what happened following the Trading Date Tangible property[67]It is common ground that the Artist ceased trading as a sole trader after the Trading Date (see paragraph 2 of Sophie’s letter to the Company’s solicitors dated 2 September 2015).[68]Ms Michaels submitted that all of the evidence filed on behalf of the Company supports its claim to own the “tangible” property in works made by the Artist once he had ceased to be a sole trader and was working for the Company. In particular:(1) The Artist was at all times a director of the Company and was also its employee.(2) As set out above, both stock and materials were transferred from the Artist’s sole trader business to the Company in 1973.(3) Thereafter, the Company paid for materials, casting and so forth. There is no basis for Sophie’s CPR Part 18 reply that “it is [her] understanding and case that in creating each of the works created following the cessation of operating as a sole trader, the Artist would have used the tools and materials acquired as a sole trader which remained in his possession, and even if materials were purchased at a later dated by [the Company] they would represent only a minimal fraction of the value of the artistic work created by the Artist”. The first part of this assertion is plainly unsustainable in the light of the undoubted transfer of the Artist’s stock including materials described by Mr Sanger-Davies. As to second part of this assertion, very substantial sums were spent by the Company upon materials after the Trading Date, as shown by the accounts, the ledgers, and the cheques.(4) All of the works produced by the Artist after the Trading Date were produced for the purposes of the Company’s business. They formed its stock in trade and were treated as such for 30 years from the Trading Date to the Artist’s death, as the documents show. There is no positive reason put forward in Sophie’s Defence or in her witness statements as to why the property in works made in those circumstances would not belong to the Company. It is obvious in the light of the evidence for the Company that it owns the property in all of those works.[69]I consider that some of the points put forward by Sophie in answer to the Company’s case in relation to the transfer of tangible property from the Artist’s business as a sole trader to the Company also apply, or are capable of applying, to the question of whether the Company owned and owns the tangible property in works made by the Artist once he had ceased to be a sole trader and was working for the Company. For example, if her point about stock lists was well founded, it seems to me that this would apply, or at least be capable of applying, to works created after the Trading Date as well as to those that were created prior to the Trading Date. By way of further examples, I believe that the same applies to Sophie’s point based on the contents of the CR 1997 edition and to her point relating to the disparity between the 2005 List and the Confidential Schedule. However, I have rejected those points for the reasons given above.[70]The only other point that I understood Sophie to advance in answer to the Company’s case and arguments that now fall to be considered relates to a conversation that she had with the Artist in France in 1993. The point that Sophie seeks to extract from this incident is that “My father clearly states that the Company was only responsible for his sculpture”. In support of that case, Sophie placed in evidence a typewritten note dated 2 September 2015. That note includes the following:
“At that time my father was 78. He talked to us [i.e. Sophie’s husband Stefano de Martino and her] about having projects in France … My father showed us a bathroom design he was doing for his friend … He had transported his draughting board from Lypiatt to his studio in Menerbes. During our stay, I found myself alone with my father at one moment and he took the opportunity to inform me of his intention to pursue design and graphic work, including furniture design, in France independently of Éva and the Company … He specifically mentioned that his work as Director of [the Company] did not extend to these domains.”
[71]With regard to that further point, however, I agree with Ms Michaels that, leaving aside altogether other matters, such as(a) that, with the best will in the world, it is inevitable that there must be room to doubt the reliability of a note that was only made some 22 years after the event, and(b) that it may be thought surprising that the Artist wanted to pursue a new business outside the Company at the age of 78, and(c) that there is no evidence that the Artist actually ever did so, the conversation relied upon by Sophie: (1) does not shed any, or any reliable, light on the ownership of tangible property or copyright in any of the works which are in issue in the present proceedings; and (2) even if it comprised or was tantamount to a statement that the Company did not deal with any of his works other than sculptures, it would be irreconcilable with, and heavily outweighed by, all the evidence adduced by the Company which demonstrates that it did in fact deal in and sell not only sculptures but also lithographs and drawings (the great majority of which were of sculptures).[72]I have already accepted Ms Michaels’ proposition (2) in paragraph 68 above, and I also accept her propositions (3) and (4). As to her proposition (1), the Artist was plainly a director of the Company, and for the reasons discussed below I consider that he was also an employee. It follows that I accept Ms Michaels’ proposition (1) as well. I uphold the Company’s claim to ownership of tangible property in works made by the Artist after he had ceased to be a sole trader and began working for the Company. Copyright[73]The Company contends(a) that it owns the copyright in the works created by the Artist after the Trading Date, and(b) that is has both legal and beneficial or title to such copyright. In contrast, as set out above, Sophie contends that the Artist retained all intellectual property rights in all his works of any type whenever they were created.[74]The Company puts its case in relation to these matters in two ways:(1) The Company’s primary position is that the Artist was an employee of the Company and produced the works after the Trading Date in the course of that employment. If that is correct, it is submitted that, as a matter of law, the Company will have been the first owner of the copyright, pursuant to section 4(4) of the Copyright Act 1956 and then section 11(2) of the Copyright, Designs and Patents Act 1988. (As appears from paragraph 55 above, the former section required the employee to have a contract for service, rather than a contract for services.)(2) In the alternative, if the Artist is not found to be an employee, he was at all times a director of the Company owing it the usual fiduciary duties. He was working for the Company and solely on its behalf when he created all of the works after the Trading Date and was involved in decisions treating the copyrights as assets of the Company’s business. As a result, it is submitted that the Artist held the copyright in works made after the Trading Date on trust for the Company: legal title to the copyright in such works would be vested in the Artist’s estate, but the beneficial ownership of such copyrights would be vested in the Company, and it would be entitled to call for an assignment of the legal title from the estate.[75]Dealing first with the Company’s primary case, many contemporaneous documents have been retained by the Company. One such document is a letter from Mr Barter’s then firm, Jessop & Son, to the Artist dated 9 October 1975, stating:
“On preparation of the Company’s accounts, to prepare service contracts between the Company and yourself which will amongst other things clarify that all working models and bronzes belong to the Company”
. Ms Michaels makes the point that if the Artist had not been intended to be an employee, that letter would have made no sense. She might have added that the passage quoted also supports the Company’s case on ownership of tangible property. However, no contract for service or for services for the Artist has been found, and the witnesses do not recall whether any such contract was drawn up.[76]Ms Michaels submits (in my view, correctly) that the lack of proof that there was a written contract for service does not preclude the possibility that the Artist was an employee. She further submits that, in addition to the above letter, there are a significant number of other documents which support Éva’s clear evidence that the Artist was an employee, not simply a director. That evidence includes the following:
“Once we began trading through the Company in 1973, [the Artist] and I became its employees as well as directors and shareholders. We were both paid a salary and the Company made National Insurance contributions on our behalf until we reached the age of 65 … No other payments were made to [the Artist] by the Company whether by way of royalty or otherwise. … After incorporation, [the Artist] was not paid for his works by any sales agents or galleries, but everything went through the Company. At some point we set up a Company pension scheme for [the Artist] and me. We were advised that this could be set up as an employee pension scheme since we were both employees of the Company. This is what we both believed, and this is how we always treated ourselves when it came to making payments, preparing our personal tax returns and preparing the Company accounts … It was obviously the case that Lynn and I owned and ran the Company and did not have to answer to anyone other than ourselves and each other. However, we would both ask each other to perform tasks for the benefit of the Company on a day to day basis …”
[77]The material documents include:(1) payslips, showing the payment of National Insurance contributions by the Company (until the Artist reached the age of 65);(2) P60s;(3) the reference in the minutes of the board meeting held on 2 July 1982 to the Artist’s employment;(4) letters from accountants and the tax returns of the Artist and Éva (such as the letter dated 5 September 1995 to them from Clark Whitehill);(5) the Company’s accounts (for example, the statement in the notes for the year ending 31 March 1988 that “The weekly average number of employees during the year was 4, made up as follows … Sculpturing 1”); and(6) the “Lypiatt Pension Scheme” documents in which the Company and the Artist were described, respectively, as employer and employee.[78]Turning to the law, the fact that an individual is a director of a company, and even that virtually no control is exercised over the individual by any superior, are not matters that lead inexorably to the conclusion that the individual is not an employee of the Company (see, for example, Parsons v Albert J. Parsons & Sons Ltd [1978] ICR 456).[79]In Humberstone v Northern Timber Mills (1949)79 CLR 389, Dixon J said at 404:
“The question is not whether in practice the work was in fact done subject to a direction and control exercised by an actual supervision or whether any actual supervision was possible but whether ultimate authority over the man in performance of his work resided in the employer so that he was subject to the latter’s order and directions.”
[80]In other cases, the judgment of Mackenna J in Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497 at 515 has been accepted as setting out essential necessary conditions for a contract of service:
“A contract of service exists if these three conditions are fulfilled. (i) The servant agrees that, in consideration of a wage or other remuneration, he will provide his own work and skill in the performance of some service for his master. (ii) He agrees, expressly or impliedly, that in the performance of that service he will be subject to the other’s control in a sufficient degree to make that other master. (iii) The other provisions of the contract are consistent with its being a contract of service.”
[81]As Lord Griffiths observed in Lee Ting Sang v Chung Chi-Keung [1990] 2 AC 374 at 382, in seeking to distinguish contracts of service from contracts for services “the courts have not been able to devise a single test that will conclusively point to the distinction in all cases”. In that case, the Privy Council endorsed the test of Cooke J in Market Investigations Ltd v Minister of Social Security [1969] 2 QB 173 at 184-185:
“The fundamental test to be applied is this: ‘Is the person who has engaged himself to perform these services performing them as a person in business on his own account?’ If the answer to that question is ‘yes’, then the contract is a contract for services. If the answer is ‘no’, then the contract is a contract of service. No exhaustive list has been compiled and perhaps no exhaustive list can be compiled of the considerations which are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor; and that factors which may be of importance are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task.”
[82]In line with this passage, some of the cases which were gathered together in Beloff v Pressdram Ltd [1973] FSR 33, to which I was referred by Ms Michaels, emphasise that the degree of control is not the determining factor, and indeed may be of little, if any, use as a test in some instances: (1) In Stevenson Jordan and Harrison Ltd v MacDonald and Evans (1952) TLR 101, Lord Denning said at page 111:
“One feature which seems to run through the instances is that, under a contract of service, a man is employed as part of the business, and his work is done as an integral part of the business; whereas, under a contract for services, his work, although done for the business, is not integrated into it but is only accessory to it.” (2) In Morren v Swinton and Pendlebury Borough Council [1965] 1 WLR 576, Lord Parker LCJ held that an engineer was employed under a contract of service. Lord Parker observed at page 582: “The cases have over and over again stressed the importance of the factor of superintendence and control, but that it is not the determining test is quite clear … clearly superintendence and control cannot be the decisive test when one is dealing with a professional man, or a man of some particular skill and experience. Instances of that have been given in the form of the master of … a professional architect … In such cases there can be no question of the employer telling him how to do work, therefore the absence of control and direction in that sense can be of little, if any, use as a test.”
[83]In Hall (Inspector of Taxes) v Lorimer [1994] 1 WLR 209, the Court of Appeal agreed with the following views expressed by Mummery J at first instance at [1992] 1 WLR 939, 944:
“In order to decide whether a person carries on business on his own account it is necessary to consider many different aspects of that person’s work activity. This is not a mechanical exercise of running through items on a check list to see whether they are present in, or absent from, a given situation. The object of the exercise is to paint a picture from the accumulation of detail. The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole. It is a matter of evaluation of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another. The process involves painting a picture in each individual case. As Vinelott J said in Walls v Sinnett (1986) 60 TC 150, 164: ‘It is, in my judgment, quite impossible in a field where a very large number of factors have to be weighed to gain any real assistance by looking at the facts of another case and comparing them one by one to see what facts are common, what are different and what particular weight is given by another tribunal to the common facts. The facts as a whole must be looked at, and what may be compelling in one case in the light of all the facts may not be compelling in the context of another case.’”
[84]The authors of Chitty on Contracts, 32nd edn, state at [40-100] that the decided cases suggest that the following factors are relevant to the identification of whether a contract is one of employment:(1) the degree of control exercised by the employer;(2) whether the worker’s interest in the relationship involved any prospect of profit or risk of loss;(3) whether the worker was properly regarded as part of the employer’s organisation;(4) whether the worker was carrying on business on his own account or carrying on the business of the employer;(5) the provision of equipment;(6) the incidence of tax and national insurance;(7) the parties’ own view of their relationship; and(8) the structure of the trade or profession concerned and the arrangements within it.[85]Ms Michaels submits that in the present case:(1) The Artist was not in sole control: he and Éva had equal shareholdings.(2) Although it is clear that the Artist used his own skill and creativity to make new works, decisions about the exploitation of the works and so forth were taken by the board of directors of the Company.(3) The Artist did not enjoy the kind of autonomy that the director did in Ultraframe UK Ltd v Fielding [2004] RPC 24, but was in an analogous position to that of Mr Steadman in the Lakeview Computers plc case.(4) In all the circumstances, not only was it right for the Company to treat the Artist as an employee, but it is plain that he was indeed its employee.(5) Accordingly, copyright in the works produced in the course of his employment (i.e. all post Trading Date works) will have vested automatically in the Company.[86]Sophie contends that the Artist was not an employee of the Company because “he was the Chairman and a Director and took no orders but worked freely” and:
“He did not take orders from anyone in respect of his work. It is clearly outlined elsewhere that he and my stepmother had very separate roles – he created the sculpture and she dealt with the administration and the selling of the bronze casts. To mark the difference in their input see the Report to the Auditors of [the Company] … Directors’ Emoluments: Chairman £22,500, and Other Directors £3,500 - £4,000. I have no doubt that my father was the Chairman.”
[87]Sophie also relies on a conversation that she had with the Artist in late December 2001, in the company of Mr Cornaz and their baby. Sophie had earlier bought the domain name www.lynnchadwick.com in order to promote the Artist’s works. Sophie’s evidence is that her father gave her his verbal support for this project, and did not suggest that she should “get any official approval from the Company”. Mr Cornaz states that “Although my English is not fluent it is good enough to affirm that [the Artist] understood and approved of the project … No mention was made of the need to apply for copyright permission from third parties”. In fact, it seems from his evidence that the website “only went online in 2004, therefore after [the Artist’s] death”.[88]However, Ms Michaels submits that this conversation does not really help to resolve any of the issues that are now before the Court: there is nothing to suggest that the Artist did not agree to this plan in his capacity as a director of the Company, and in the expectation that the website would benefit the Company’s business. I agree.[89]Applying the guidance to be gleaned from the authorities discussed above to the facts of the present case, I am satisfied well beyond the balance of probabilities that the Artist was an employee of the Company. In my opinion, it is plain beyond argument not only from Éva’s evidence but also and perhaps even more persuasively from the contemporary documents, and not least the payslips, that both the Company and the Artist genuinely and consistently (over many years) regarded the Artist as an employee. In my judgment, and especially as the parties’ affairs were conducted with the assistance of professional advice from solicitors and accountants, that goes a long way towards establishing that he was in fact an employee. In addition to that, going briefly through the factors which are suggested as being important by the authors of Chitty:(1) the degree of control exercised by the employer is not determinative, and in any event the Artist was not in sole control - but, more importantly, I consider that absence of control and direction is of little, if any, use as a test in this case;(2) the Artist’s interest in the relationship did not involve any prospect of personal profit or risk of personal loss – as opposed to profit and loss for the Company;(3) the Artist was properly regarded as part of the Company;(4) the Artist was not carrying on business on his own account, but was instead carrying on the business of the Company;(5) the Artist’s equipment was provided by the Company;(6) the incidence of tax and national insurance are consistent, and only consistent, with an employment relationship;(7) the parties’ own view of their relationship was that it was one of employment;(8) the structure of the trade or profession concerned and the arrangements within it add nothing to the above, and certainly do not weaken the Company’s case.[90]For these reasons, I uphold the Company’s primary case that the Artist was an employee of the Company and produced the works after the Trading Date in the course of that employment.[91]It follows as a matter of law, and I did not understand this to be disputed by Sophie, that the Company will have been the first owner of the copyright, initially pursuant to section 4(4) of the Copyright Act 1956 and later, after the coming into force of the Copyright, Designs and Patents Act 1988, pursuant to section 11(2) of the latter statute.[92]In these circumstances, it is unnecessary to consider the Company’s alternative case under this heading, and I prefer not to do so where it is unnecessary to do so. Provisionally, however, I incline to the view that the Company would have been entitled to succeed on this alternative basis as well. Conclusion[93]I hope and believe that the above findings are sufficient to resolve, or sufficiently resolve, all the issues identified in the amended List of Issues. However, I will hear further submissions if either party considers that this view is not correct. I consider that, for all these reasons, the Company is entitled to succeed on its claim in its entirety.[94]I ask the parties to endeavour to agree an order which reflects the above determination of these proceedings. I will hear submissions on any points which remain in dispute as to the form of the order, and on any other issues such as costs and permission to appeal, not when judgment is handed down, as I am aware that occasion is unlikely to be workable for both sides, but instead on an adjourned hearing at another convenient date.