Art can become the subject of debate in the most unexpected areas of law; as was demonstrated in a recent case in which the property rights in artwork came into question.

The case of The Creative Foundation v Dreamland Leisure Limited [2015] EWHC 2556 concerned a Banksy mural entitled ‘Art Buff’ that appeared on the wall of a property in Folkestone, Kent. When the mural appeared it became a focal point in the community and at some stage the Council even covered the mural in Perspex in order to preserve it.

Dreamland Leisure Limited (“Dreamland”) was the tenant of the property on which the mural was painted. Dreamland claimed to have been advised that the mural could fetch a substantial amount of money if it were to be removed from the property and sold. Press reports at the time suggested the mural could be worth around £470,000. Accordingly, Dreamland removed the cross-section of the wall containing the mural and it was sent to the USA for sale.

The Creative Foundation (“the Foundation”) was the assignee of the benefit of a cause of action Dreamland’s landlord had against it and brought a claim against Dreamland for delivery up. Dreamland cross-claimed on the basis it had removed the mural in pursuance of its repairing obligations under its lease and, at the moment it was removed, it belonged to Dreamland pursuant to an implied term of the lease.

The Foundation applied for summary judgment in which the main question to be decided by the High Court was, if part of a building is removed by a tenant, who does it belong to; the landlord or the tenant? It is important to note that the Court in this case was not concerned with copyright in the artistic works, which it considered prima facie belonged to Banksy.

The property leased to Dreamland includes the structure and exterior of the building and its lease contains tenant’s covenants to keep in good and substantial repair, to paint in every fourth year, and to yield up‘together with all buildings and erections now or hereafter to be built upon’. It also prohibits Dreamland from maiming, cutting or injuring any of the walls without the landlord’s consent.

The Foundation argued that when the mural was removed by Dreamland that cross-section of the wall became a chattel, which belonged to the landlord along with any proceeds of sale from the mural. It also argued that Dreamland was in breach of its covenant not to cut, maim, or injure the wall, by removing part of it. It argued that it was not vital for Dreamland to undertake a complete removal of a piece of the wall to ensure compliance with its repairing obligation.

In reaching its decision, the High Court restated the well-known principle that the obligation to repair pursuant to a repairing covenant only arises if that part of the building is actually out of repair or condition. Dreamland contended that as a result of the graffiti, the wall was indeed out of repair and that the presence of the mural was likely to attract further graffiti. The Court was narrowly persuaded by this argument.

The Court went on to say that where the repairing covenant applies, as it did here, the next step is to consider what method of repair is reasonable and this should be assessed objectively. In this case the Court agreed with The Foundation’s argument that Dreamland could have used alternative solutions to remove the mural, such as painting over it or by chemically cleaning it. Therefore the removal of the section of the wall containing the mural was not, the Court said, a reasonable method of complying with its repairing covenant.

The High Court went on to deal with the main question before it, which was what happens to parts of a building that are removed by a tenant in compliance with its repairing obligation. It was common ground that those parts revert to the status of chattels but it was necessary to imply a term into the lease as to the ownership of those chattels. The Court held that, even if a term could be implied which said that parts having no scrap or salvage value became the property of the tenant, where the part removed was of substantial value, as it clearly was here, it belonged to the landlord. ‘Art Buff’ has now been returned to The Foundation which intends to put it on public display.