When I was a teenage political science undergraduate at University, I was taught that ‘the more institutions there are the more stable society is’. In order for fascism to displace democracy, institutions must first crumble – which is a slow and gradual process. Mussolini compared accumulating power to ‘plucking a chicken one feather at a time, go slowly and no one notices’. As the late Madeleine Albright, former US Secretary of State, argues in ‘Fascism: A Warning’ (2019), fascism in pre-World War II Europe did not happen all of a sudden. It was incremental. Step-by-step democracy was undermined by eroding liberty. There was no overt overthrow. It can begin with the dehumanising of vulnerable people. In their book, ‘How Democracies Die – What History Reveals About Our Future’ (2018), Professors of Government at Harvard University, Stephens Levitsky & David Ziblatt argue, ‘Democracies may die at the hands not of generals but of elected leaders – presidents or prime ministers who subvert the very process that brought them to power … More often … Democracies erode slowly, in barely visible steps. … Many government efforts to subvert democracy are legal, in the sense that they are approved by the legislature or accepted by the courts. They may even be portrayed as efforts to improve democracy – making the judiciary more efficient, combating corruption, or cleaning up the electoral process. … People do not immediately realise what is happening. Many continue to believe they are living under a democracy. … Because there is no single moment- no coup, declaration of martial law, or suspension of the constitution -in which the regime obviously crosses the line into dictatorship, nothing may set off society’s alarm bells. Those who denounce government abuse may be dismissed as exaggerating or crying wolf. Democracy’s erosion is, for many, almost imperceptible. … The tragic paradox of the electoral route to authoritarianism is that democracy’s assassins use the very institutions of democracy – gradually, subtly, and even legally – to kill it.’ The professors developed a set of 4 behavioural warning signs which can help us to recognise an authoritarian when we see one – ‘we should worry when a politician (1) rejects in words or actions, the democratic rules of the game, (2) denies the legitimacy of opponents, (3) tolerates or encourages violence, or (4) indicates a willingness to curtail the civil liberties of opponents. … A politician who meets even one of these criteria is cause for concern.’ So one day, and without realising what has been happening over a period of years, you may wake up and find that you are living in an autocracy. That is why speaking out is critical to the resilience of democracy and safeguarding the rule of law so that politicians who are not above the law are held to account for their rhetoric and actions which are destructive of the institutions that bind society together in a democracy.

See:

Madeleine Albright on the slow rise of fascism | CNN

My article – ‘Mediating probate and trust disputes—process challenges and tools: part 1’ has been published in print in Trusts & Trustees, Volume 29, Issue 1, February 2023, Pages 19-27: https://academic.oup.com/tandt/issue/29/1

I am currently writing part 2 for publication by Oxford University Press. The Abstract for Part 2 states:

‘Although life can only be understood backwards, it must be lived forwards. Litigation is a backwards looking process, at the end of which a Judge must make a binary choice between competing narratives. Mediation is a forward-looking process in which the participants (‘P’s’) work out their own solution through a process of engagement. Therefore, the first challenge for a Mediator (‘M’) is to understand what each P wants, needs, and prioritizes, and why. This requires empathy and affirmation. The second is to facilitate engagement. As discussed in Part 1, the ‘hook’ is the making of an ‘interesting offer’. On paper, a theoretical settlement zone exists somewhere in the gap between:

(i)     the maximum net capital value of each P’s claim; and

(ii)     each P’s BATNA (‘best alternative to a negotiated agreement’) – which in litigation is trial, i.e. the amount below which P will walk away from the table. The challenge in reducing the size of the gap is to make adjustments. …

In this Part, the author discusses the challenges and tools available to a Mediator during the Mediation Day, to help the P’s:

·       overcome psychological barriers to engagement; and

·       develop their own simple or complex solution through engagement with M in private sessions, and with each other in plenary sessions,

in order to agree and sign-off on binding terms of a Settlement Agreement in overall and final settlement of their dispute.

Mediation is the art of knowing how, when and why to ask questions which can bring about a ‘cognitive shift’ in each P’s thinking and behaviour, i.e. a paradigm shift about what they perceive to be at stake and the value of settling. This includes each P’s analysis and evaluation of potential:

(i)         gains;

(ii)        opportunities;

(iii)       risks;

(iv)       costs (including intangibles e.g. health, relationships, reputation); and

(v)        losses (including the time-value of money).

Metaphorically, ‘questions’ are the ‘steering-wheel,’ whereby M can navigate a ‘difficult conversation’ with each P in order to bring closure by helping each P to sort out their dispute for and by themselves. … [T]he author has attempted to set out a Mediator’s Toolkit, i.e. a ‘conceptual framework’ for the structuring of questions by M whilst conducting private sessions with each P, using tools to respond to the challenges that typically arise in the Mediation of a Probate/Trust Dispute.’

I am currently writing the 2nd edition of the ‘Contentious Probate Handbook’ for the Law Society for publication in 2024, which will include an extended chapter on ADR in contentious probate disputes, including JENE and mediation. There is a link to the article on the ‘Publications’ Page at www.carlislam.co.uk

In his article, ’Museums Restitution And The New Charities Act’, published in Art Antiquity and Law, Vol. XXVII. Issue 3, October 2022, Alexander Herman, who is the Director of the Institute of Art and Law in London, and also my tutor for the Diploma in Art Law course at IAL’s wrote, ‘The Charities Act 2022 was passed this year. … The entry into force of the legislation [is] not immediate, but instead [will] be staggered over the course of 2022 and 2023 according to its commencement provision. The legislation does not represent a complete overhaul of charity law in the way the Charities Act 2011 repealed and replaced its predecessor, the Charities Act 1993. Instead, the new act will make targeted changes to the Charities Act 2011, which will remain the primary legislation in this area. Some of the new changes include giving charities additional powers and flexibility in amending their governing documents, in deciding how to procure goods and services, and in borrowing from their permanent endowments in specific circumstances. But the most important change in the context of art and antiquities – that is, the change that could have a significant impact for years to come on the museum sector – will be the expanded situations in which charity trustees can make ex-gratia applications of charity property.’

At the IAL’s training forum on 25.02.2023 I asked about section 331A of the Charities Act 2022 – ‘Limited power for charity trustees to make ex-gratia payments’. Subsection (4) states, ‘The power conferred by this section may be restricted or excluded by the trusts of the charity.’ My question was – ‘Can this provision be applied in order to vary the terms of a governing trust deed so as to provide that determination of the existence of a moral duty to take action (see the conditions in subsection (3)), may be determined by an expert panel for the purposes of the trustees obtaining independent legal advice upon which they may rely, either with or without the authorisation/blessing of the Charity Commission/Attorney General/Court, for the purposes of making a decision about repatriation?’ In commenting on my question Alex noted that a model exists as a precedent – the ‘Spoliation Advisory Panel’ (‘SAP’). In his article Alex mentions  that following the decision in Re Snowden and the making of a claim to the SAP, ‘Parliament introduced legislation to override the restrictions imposed on trustees of national institutions insofar as they affected their ability to return art looted in the Nazi era to claimants.’ Therefore, provided such an expert panel were created, it appears that a practical model exists, which has been successful, to make determinations/provide guidance about the ethical question – ‘What is the right thing to do?’, after a repatriation request has been made on moral grounds.

This is the title of one of my three essay for the Diploma in Art Law Course at the Institute of Art & Law in London, see the ‘Mediation of Art & Cultural Heritage Disputes’ page at www.carlislam.co.uk. ‘In determining whether a person is a fiduciary, it is first necessary to consider whether that person is in a relationship with another that falls within one of the recognized categories of fiduciary relationships. If it does not, it is then necessary to examine the factual circumstances of the relationship to determine whether there are sufficient hallmarks of a fiduciary relationship to enable the court to conclude that the relationship is indeed fiduciary. Once it has been recognized that the defendant is a fiduciary in a fiduciary relationship, it is necessary to consider the nature and ambit of the fiduciary duties to which he is subject. Outside of the paradigm settled cases, the content of fiduciary duties is flexible and fact-sensitive. In that context, it is therefore necessary to examine with some care what is the precise content of the particular fiduciary obligations arising in the specific circumstances of the individual case. Fiduciary duties only subsist as long as the fiduciary holds the office or position that gives rise to them.’ (My article – ‘Breach of fiduciary duty claims and the quiet fiduciary thesis’, published by Oxford University Press in ‘Trusts & Trustees’, March 2019). There is a link to the article of the ‘Publications’ page at www.carlislam.co.uk. Breach of FD, third party (including accessorial liability), and equitable remedies are discussed in my book the ‘Contentious Trusts Handbook’, published by the Law Society in 2020. In the essay I will also discuss accessorial liability arising from breach of the self-dealing rule by an executor/beneficiary who purchases a work of art e.g. a painting by/owned by the deceased testator (which is an estate asset) at an undervalue, and who then consigns it for sale, and the equitable remedies available to restrain a sale. This along with ‘Freezing Orders’, will also be discussed in the 2nd edition of my book, the ‘Contentious Probate Handbook’, which I am writing for publication by the Law Society in 2024.

In my essay ‘Mediating Cultural Heritage Disputes’ (NB the working draft appears on the ‘Mediation of Art & Cultural Heritage Disputes’ page at www.carlislam.co.uk), I am developing a ‘Matrix of Ethical Principles’ which include the following principles extracted from ‘DCMS Guidance for the Care of Human Remains in Museums’, as these principles appear to have a wider application to the deaccessioning and repatriation of cultural property held in museums generally. At the Institute of Art & Law Training Day on Saturday, I will ask – ‘As a tool for starting the Mediation conversation/engine -what generic ethical principles can a Mediator invite the participants to discuss at the start of the Mediation Day in order to identify both common ground and constraints?’

The Ethical Principles set out in the Matrix in my essay are:

·       ‘Non-Maleficence – doing no harm’

Avoiding doing harm wherever possible to an individual, a community or the general public, e.g. by not taking an action that would cause distress to a particular community.

·       ‘Respect for diversity of belief – respect for diverse religious, spiritual and cultural beliefs and attitudes to cultural property – i.e. tolerance and respect.’

This requires demonstration of humility and modesty regarding one’s own opinions, and the showing of respect for individuals, cultures, groups and communities. Decision-makers must be seen and heard to give consideration to the cultural and historical backgrounds, beliefs and values relevant to all parties concerned. E.G. it would require a museum to recognize and respect that a community may place a particular cultural value on cultural property that is not shared by others.

·      ‘Respect for the value of research and science.’

·      ‘Solidarity – furthering humanity through co-operation and consensus in relation to cultural property.’

The principle of solidarity recognizes that we all have a shared humanity and an interest in furthering common goals and tolerating differences that respect fundamental human rights. Mutual respect, understanding and cooperation promote solidarity by fostering goodwill and a recognition of our shared humanity. This principle emphasizes the importance of rising above our differences to find common ground, co-operation and consensus. It would be reflected, for example by seeking to find a consensus in relation to competing claims over cultural property that all parties can accept.

·       ‘Beneficence – doing good, providing benefits to individuals, communities or the public in general.’

Beneficence would dictate that your actions have good outcomes wherever possible. This might include advancing knowledge that is of benefit to humanity, for example, by using human remains for scientific research, or respecting the wishes of an individual for example, by returning the remains of their relative for the burial.

The exercise of:

(a)     following the original asset; and

(b)     then tracing that asset into a substitute,

are distinct processes. The goal of tracing is to identify substitutions. Substitutions locate the value of the original assets in the form of the substitute. What is being traced is not the physical asset itself but the value inherent in it.

Once:

(a)     tracing is completed; and

(b)     the value inherent in the original asset is identified in its proceeds,

the question which then arises is what claims to those proceeds can be made. Tracing enables the claimant to substitute the traceable proceeds for the original asset as the subject matter of his claim. It does not affect or establish his claim.  The content of the claim will depend on various other factors. Therefore, there is nothing inherently legal or equitable about tracing. Consequently, the rules of tracing must be the same, whatever:

(a)     the basis of the claimant’s claim to the original asset; or

(b)     the content of the claim he eventually makes to the substitute.

There is a distinction between tracing at:

(a)     common law, which adopts a ‘materialistic’ approach; and

(b)     in equity, which adopts a more ‘metaphysical’ approach, which allows tracing into a mixture of money, whereas the more rigid, ‘physical stance’ of the common law does not.

To ground an equitable proprietary claim, an equitable ‘proprietary base’ is required. (Christopher Clarke J. In OJSC Oil Company Yugraneft (in liquidation) v. Abramovich [2008] EWHC 2613 (Comm), at [349]). A beneficiary under an express, resulting, or constructive trust clearly has an equitable proprietary right. Such a right may arise as a result of there being a vitiating factor, such as misrepresentation or mistake. But an equitable proprietary base may also arise under other circumstances such as proprietary estoppel.  The governing principles were stated by Lord Millett in the leading case of Foskett v. McKeown [2001] 1 AC 102.

For a discussion of the governing principles and proprietary remedies which are available to beneficiaries against the trust property or its traceable proceeds, see paragraph 8.8 of my book the ‘Contentious Trusts Handbook’ published by the Law Society in 2020.

Where, as in Tang Ying Loi v. Tang & Others [2016] the fiduciary has treated the trust fund as his personal bank account, even if he repays the money to the estate, the principal still has the right to elect and
trace into anything else the fiduciary purchased with that money which is now of higher value, e.g. another property/shares. The judgment in that case is discussed in my article ‘Electing between equitable remedies’ published in Trusts & Trustees by Oxford University Press – to which there is a link on the ‘Publications’ page at www.carlislam.co.uk.

A judge who puts a claimant to an early election before making a finding about breach (i.e. at trial), would appear to be acting in excess of their case management powers.

The without prejudice rule is founded partly in public policy and partly in the agreement of the parties. In appropriate circumstances, the without prejudice rule will apply in tax proceedings, see The Leasing Number 1 Partnership; The Leasing Number 2 Partnership [2015] UKFTT 601 (TC).’ In that case, Judge Robin Vos stated at [74] to [77], ‘in litigation generally, it is accepted that ADR proceedings constitute, at the very least, some form of without prejudice discussions. … It is equally clear that without prejudice material (subject to certain exceptions) cannot be allowed in evidence in any proceedings relating to the dispute in question (see Unilever v the Proctor & Gamble Co [2000] 1 WLR 2436). The general rule therefore is that material arising from any ADR process cannot be used in relation to subsequent proceedings before the Tribunal. [Furthermore] Robert Walker LJ in Unilever [at 2446B] [stated] that: “one party’s advocate should not be able to subject the other party to speculative cross examination on matters disclosed or discussed in without prejudice negotiations simply because those matters do not amount to admissions”….’ I am not aware of any authority to support the legal proposition that as a matter of public policy, and by way of any statutory exception to the general rule, the WP rule does not apply to ADR in a tax appeal. Consequently, subject to any agreed contractual carve-out in HMRC’s ‘Mediation Principles’, HMRC is subject to the rule of law and must apply it in their decision-making processes. Furthermore, paragraph 28 of the Chancery Guide 2022 (‘Revenue List’) states:

‘… [T]he proposed claim [may] be brought in the Revenue List …. by way of Part 7 or Part 8. The general provisions of the Civil Procedure Rules, Practice Directions and this Guide apply to claims issued in the Revenue List.’
It therefore appears that:
(i) An interim order can be granted to stay the hearing of an application in the Revenue List for Mediation.
(ii) Part 36 applies, consequently the WP rule applies to structured Part 36/Calderbank Offers made in Mediation whilst proceedings in the Revenue List are stayed.

Even though the CPR does not apply to proceedings in the FTT, based upon the policy of the court underlying the application of the WP rule, can the FTT consider a Part 36/Calderbank Offer at the conclusion of a trial? If they can, that would open a door to the making of structured offers/proposals in the Mediation of a tax appeal, that: (i) are protected by the WP rule; and (ii) have teeth, for the benefit of both parties.

ADR may result in a better outcome all round because:
·       Judges generally lack connoisseurship in the field of art and art auction sales.
·       It is necessary to determine authenticity in order to prove and quantify loss.
·       This requires a reconstruction of the authentication process.
·       When deciding whether an attribution is accurate, or whether the auction house was diligent, courts use a preponderance standard.
·       In deciding questions of art authenticity judges rely on expert evidence, but do not have the requisite skill and knowledge to evaluate and critically assess such evidence. ‘Judicial conviction is based on expertise, experience of life and knowledge of human nature as well as intuition and feelings. Therefore, judges like experts, can determine authenticity based on rational considerations to only some extent. Furthermore, judges endorse the experts’ approach of judgement by eye. Such an approach is out of the judge’s competence.’ (‘The Sale Of Misattributed Artworks And Antiques At Auction’, by Anne Laure Bandle (2016), Edward Elgar, p.292).   
·       Consequently, ‘a judge’s lack of connoisseurship can result in decisions that do not assess the authenticity of the given art object, but rather the merits of their respective experts, both by considering the strength of their reputation and expertise and their performance in cross-examination. Thus, it may occur that instead of rendering a judgement based on the experts’ arguments substantiating a specific attribution, the judge decides that the specific expert is more eminent and established and therefore that expert’s attribution prevails. … The courts’ approach in attribution disputes can encounter incomprehension not only by the parties directly involved in the case, but also by the art market. … Overall, in authentication at court, the problem arises that judges do not understand the complexities associated with attribution in the art market.’ (‘The Sale Of Misattributed Artworks And Antiques At Auction’, by Anne Laure Bandle (2016), Edward Elgar, p.295).
·       Where the Mediation is structured as a co-mediation involving e.g. an art historian as an ’expert facilitator’ [‘E’], the Co-Mediators can help the participants obtain a more subjective appreciation of the merits and commercial value of their respective positions, because E knows how to interpret art expert evidence in light of art historical methodology and market rules, whereas in deciding whether the burden of proof has been discharged, a judge must apply the CPR, i.e. the procedural rules of the court.
See my essay, ‘Mediating Authenticity & Misattribution Claims’ on the ‘Mediation of Art & Cultural Heritage Disputes’ page at www.carlislam.co.uk.

I have started drafting my essay for the Diploma in Art Law Course at the Institute of Art & Law in London about the duties (including fiduciary duties) and powers of Museum & Gallery Trustees in relation to deaccessioning. The working draft is set out on the ‘Mediation of Art & Cultural heritage Disputes’ page at www.carlislam.co.uk. This is an ongoing work in progress. In the introduction I explain,

‘Deaccessioning of art/cultural heritage occurs when a museum decides to dispose of a work of art/cultural heritage. Whether a non-statutory museum which is a charity has the power to deaccession is governed first by its constitution, which may or may not provide an express power. In the absence of a power, the necessary power may be obtained. However, any such power:
(i) can only be exercised in furtherance of the objects of the charity; and
(ii) in exercising the power, and subject to limited exceptions, the trustees must perform their duties (including fiduciary duties requiring them to obtain the ‘best price’). In this essay I will discuss the legal mechanisms for deaccessioning by a non-statutory museum. …

In England, where a museum is found to have disposed of an object from its collection by sale, exchange, donation or transfer by any means to any person in consequence of financial and economic pressures and inadequate capital and revenue funding, it may be censured by Arts Council England and stripped of its accreditation. That in turn, renders the institution ineligible for various sources of public grant and a low priority for other public schemes. …

A museum or gallery cannot voluntarily dispose of its property, however compelling the moral demand, unless the disposal is lawful. …

As a general rule, trustees would be ill-advised to return a work of art unless they were able to look to the Attorney-General , the Court, or the Charity Commissioners, for approval. Trustees of a Charity must carry out the trust in accordance with the terms of the trust instrument. In the context of repatriation, the critical question is whether the trustees have the power, i.e. a lawful right, to make a disposition of trust property. Furthermore, in the exercise of a power conferred on trustees to enable them to discharge their duties, they must exercise the power for the purpose for which it was given, i.e. to further the purposes of the trust. In the exercise of a discretionary power trustees must act honestly and upon a fair consideration of the matter.’

The essay will also discuss the provisions of the Charities Act 2022,  and whether a National Museum, e.g. the British Museum and Louvre, owe a wider duty under IHL, to strive to be better ‘collaborative custodians’ of world heritage. 

When does an interest in possession [‘IP’] granted under the terms of a will arise?’ – In Hall and ors v. HMRC [10.01.2023] [TC 08691], Judge Allatt held that at the date of the testator’s [‘T’s] death the beneficiary of the IP ‘did not have’ an IP. The Judge correctly concluded that the trustees ‘may possibly not have been under a duty to sell’ property [‘P’], in which, the deceased testator [‘T’] had conferred an interest in possession [‘IP’] on [‘B’]. The Trustees were not, because:

(i)               ‘Executors are statutory trustees of land, s.1(i)(a) Trusts Of Land And Appointment of Trustees Act 1996. [NB] Where Box 10 of a HM Land Registry form TR.1 declares that executors ‘hold the property on trust’, they hold the property on an express trust of land, i.e. as trustees.

(ii)             The duties of executors, trustees, and trustees of land [‘Trustees’] are the same in relation to land, see Byrnes v Kendle [2011] HCA 26, (2011) 243 CLR 253, at paragraphs 67 and 119, which was cited in Brudenell-Bruce v. Moore [2014] EWHC 3679(Ch), by Mr Justice Newey at 88.’ [extracted from my article ‘Electing between equitable remedies’ published in ‘Trusts & Trustees’ by Oxford University Press, December 2021 – available to view on the ‘Publications’ page at www.carlislam.co.uk].

(iii)           ‘An executor is not under a duty (i.e. any legal compulsion) to sell land, because s.2 of the Trusts Of Land And Appointment of Trustees Act 1996 states:

‘Abolition of doctrine of conversion.

1. Where land is held by trustees subject to a trust for sale, the land is not to be regarded as personal property; and where personal property is subject to a trust for sale in order that the trustees may acquire land, the personal property is not to be regarded as land.

2. Subsection (1) does not apply to a trust created by a will if the testator died before the commencement of this Act.

3. Subject to that, subsection (1) applies to a trust whether it is created, or arises, before or after that commencement …’ [See my article above].

 (iv)           S.34 and the First Schedule to the Administration of Estates Act 1925 neither: (a) specify the way property could or should be applied to discharge debt,  nor (b) state that property ‘must’ be sold (which is the ‘litmus test’ of a duty imposed on Trustees – i.e. imperative wording).

 The Judge correctly observed that under s.6(5) of TLATA 1996, ‘trustees of land’ are under a duty to ‘consult’ beneficiaries, and to obtain their consent to the sale of land – see Lewin on Trusts 20th Ed, Vol 2 para 37-055).

Was the Judge wrong to conclude that at the date of T’s death B did not acquire an IP in P?

Note:

(i)           An IP conferred upon a person [‘B’] under the terms of a will is an equitable ‘right’ (Pearson v. IRC [1981]). ‘Interest in possession’ is a concept of general law. There is a statutory definition in Scotland (IHTM16071), but not in England and Wales or Northern Ireland. It is defined in IHTM16062 [Interests in possession: definition of an interest in possession], as an ‘immediate right to the income or enjoyment of property (irrespective of whether the property produces income’.  

(ii)         The will does not confer an interest on B in unadministered estate property. It confers a right exercisable in relation to estate/trust property, whether administered or not, from the moment that P becomes estate/trust property.

(iii)       ‘Where an executor is appointed by a will, he derives title from the will, and the property of the deceased vests in him from the moment of the testator’s [T’s] death, so that probate is said to have relation back to the time of [T’s] death. Thus, while an executor cannot rely on his title in any court without producing the grant of probate, that grant is merely the authenticated evidence of his title. … Because an executor’s title is derived from the will he may, before he proves the will, do almost all the acts which are an incident of his office, except some which relate to litigation.’ (Tristram & Cootes, para 5-04). 

(iv)           Therefore, following T’s death, title to P vested in the Trustees, subject to: (a) the ‘right’, i.e. ‘IP’ in favour of B conferred by T’s will; and (ii) the exercise by the Trustees of their ‘duties’ in accordance with their ‘powers’.

(v)            An unencumbered sale of P by the Trustees would have extinguished the ‘right’/’IP’, e.g. if Trustees had sold P to fund the payment of IHT.

(vi)           A logical corollary of that proposition, which is the converse, is that where P was not sold following occupation of P by B after T’s death, that the ‘present right to present enjoyment’ of  P conferred on B by T under the terms of her will, subsisted, i.e that the ‘IP’ subsisted.

(vii)         Therefore, B could not have been a ‘gratuitous licensee’ as a result of a decision made by the Trustees to not sell P.

Because of the far-reaching tax implications of this decision, I wonder if HMRC will appeal?