October 2, 2018

Facts

On his death in 2003, Lynn Chadwick, one of the leading British sculptors of his time, left a prodigious artistic legacy.

In 2005, one of his daughters, Sophie Chadwick (the second defendant), raised the question of whether ownership in her father’s artworks, together with the copyright therein, was vested in his estate or in the first defendant company, Lypiatt Studio Ltd, which Mr Chadwick had acquired in 1973.

The issue eventually came to trial with Lypiatt Studio seeking declaratory relief as to the legal and equitable title to both the physical property and copyright, and (to the extent necessary) an order for the claimants (the executors to Mr Chadwick’s estate) to assign any legal rights from Mr Chadwick’s estate to Lypiatt Studio.  The relief was sought in respect of the bulk of Mr Chadwick’s works (which were mostly sculptures, but also included drawings and lithographs), including works created both before and after his acquisition of Lypiatt Studio in 1973, i.e. before and after Lypiatt Studios began trading.

Sophie Chadwick argued that ownership of her father’s artworks, whether created before or after the initial trading date, together with the copyright therein, was vested in his estate, rather than in Lypiatt Studio.

Judgment

Before the initial trading date

Sitting as a Deputy High Court Judge, Richard Spearman QC held that Lypiatt Studio had, via an express or implied agreement, acquired title to the tangible artworks in Mr Chadwick’s stock from his sole trader business, which included all the unsold works pre-dating the trading date, because it was clear from the documentary evidence that this had been Mr Chadwick’s intention.

As for the copyright in the works, it was common ground that Mr Chadwick 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 the Copyright Act 1956 (in force from 1 June 1957 until Lypiatt Studio’s initial trading date).  Further, the parties agreed that a transfer of the property in a work did not automatically carry with it the copyright in the work.

In addition, the parties agreed that, due to the absence of the necessary documentation, the legal title to the copyright in pre-existing works had not been transferred to Lypiatt Studio (s 36 of the 1956 Act required an assignment to be “in writing signed by or on behalf of the assignor”).  Accordingly, it was common ground that the legal title was currently vested in the claimants.

The question was, however, whether there had been an assignment of the beneficial interest in the copyright to Lypiatt Studio.  Sophie Chadwick relied upon the lack of a legal document assigning the beneficial interest and her belief that Mr Chadwick had no intention to assign the copyright to Lypiatt Studio. In response, Lypiatt Studio said that the arrangements and agreement made in 1973 when Mr Chadwick acquired the company were plainly intended to transfer the copyright to it.  As a result, it said, the company owned a beneficial interest in that copyright.  Lypiatt Studio said that there was no requirement for the creation of a beneficial copyright interest to be in writing and it could be created by an express oral agreement or an agreement implied from conduct.

The Deputy Judge agreed with Lypiatt Studio, finding that, for artworks created by Mr Chadwick before the initial trading date, there was ample evidence of intention and subsequent conduct pointing to an agreement to assign the copyright, which was sufficient to vest the beneficial interest in Lypiatt Studio.

Further, Mr Spearman QC said, since Lypiatt Studio was entitled to this beneficial interest, it could call upon the claimants to assign the legal title to it.

After the initial trading date

As for ownership in the artworks created after the initial trading date, Mr Spearman QC found, on the evidence, that Lypiatt Studio was the owner of the tangible property in the works.  Importantly, he also found that Mr Chadwick was at all times an employee of the company, as well as one of its directors.  Further, both stock and materials were transferred from Mr Chadwick’s sole trader business to the company in 1973.

As for ownership of copyright, Mr Spearman QC found that Lypiatt Studio owned both the legal and beneficial titles due to Mr Chadwick’s position as employee of the company and because he had produced the works in the course of his employment.  Lypiatt Studios was therefore the first owner of the copyright, pursuant to s 4(4) of the 1956 Act and then s 11(2) of the Copyright, Designs and Patents Act 1988.  There was a significant number of documents in support of this finding, including payslips, P60s, board minutes, accountants’ letters and tax returns, the company’s accounts and the Lypiatt Pension Scheme documents in which the company and Mr Chadwick were described, respectively, as employer and employee.

Mr Spearman QC rejected Sophie Chadwick’s argument that Mr Chadwick could not have been an employee because he was a director of the company and virtually no control was exercised over him by any superior.  In Mr Spearman QC’s view, it was “plain beyond argument” from the documents, not least the payslips, that both Lypiatt Studio and Mr Chadwick genuinely and consistently (over many years) regarded Mr Chadwick as an employee.

The Deputy Judge therefore allowed Lypiatt Studio’s claim in its entirety.  (Éva Yvonne Chadwick v Lypiatt Studio Ltd [2018] EWHC 1986 (Ch) (31 July 2018) — to read the judgment in full, click here).