UK: The Butler Family Collection – Butler v Butler

Bircham Dyson Bell (BDB) recently acted for the Claimants in the case of Butler and Butler v Butler and Butler [2016] EWHC 1793 (Ch) concerning a dispute between the four children of the late Sir Michael Butler GCMG in respect of the Butler Family Collection – a collection of approximately 500 pieces of 17th century Chinese porcelain. BDB's Litigation Partner, James Freemantle, led the successful claim on the Claimants' behalf.

The case has been prominent in the media given its connection with Sir Michael Butler as a former Thatcher aide and the importance of the Butler Family Collection to the study and appreciation of Chinese art and culture in the 17th century. It has also sought to clarify the effect of s.188 Law of Property Act 1925 in dealing with the division of chattels.

What did the collection consist of?

The Butler Family Collection (the BFC) was a jointly owned collection of 502 items of 17th central Chinese porcelain from the Transitional period between the Ming and the Qing imperial dynasty period. All but one of the pieces were purchased by the late Sir Michael Butler and the vast majority were gifted by Sir Michael and Lady Butler, as joint owners and donors, to their children Caroline, James, Katherine and Charles by Deed of Gift in 1987. The BFC was added to by further, smaller gifts made annually over 5 subsequent years from 1989 to 1993 as a means of passing it on to Sir Michael Butler's children in a tax-efficient manner.

The terms of the gift were that the BFC was to be held for the four children as beneficial tenants in common in equal shares absolutely. In his letters of wishes and his Will, Sir Michael expressed he would like the BFC be kept together after his death, though he had also made it formally known that it could be divided in the manner ultimately sought by the Claimants, stressing that family harmony was more important than keeping the BFC together.

The case

Between September 1987 and May 1988, the children of Sir Michael considered making a written agreement to decide how to deal with the BFC, but in the end none was made. It was generally agreed between them that it would be preserved during their father's lifetime, subject to the financial needs of the siblings, and would be available for scholarly study and exhibition. Various suggestions as to how to deal with it thereafter were discussed but none were agreed upon.

Following Sir Michael's death in December 2013, there was disagreement amongst the siblings. Caroline and James, the Claimants, wished to distribute the BFC so that they could personally enjoy their respective shares in their own homes, as the pieces held strong sentimental value and had been a feature of family life from childhood. Katherine and Charles, the Defendants, sought to keep it together on display at the private family museum, owned and attached to the home of Charles only, purportedly to preserve its scholarly importance.

Family disputes

After protracted efforts to resolve the situation, the relationship between the siblings broke down and Caroline and James issued proceedings in 2014 asking the court to divide the BFC between the four owners. They sought an order that the siblings would take turns in selecting a piece until there were none left, in keeping with an earlier suggestion by their late Father, Sir Michael, thereby converting the siblings' joint interest into an absolute interest.

The legal foundation for the order sought by Caroline and James is s.188(1) of the Law of Property Act 1925 ('LPA 1925') which provides :

This was a relatively unexamined provision of the LPA 1925, and indeed there were only two English decided cases and a small number of additional Commonwealth cases to which the Judge could refer. None of these had ordered physical division of the items concerned as they had been indivisible by nature, such as a racehorse and a ship.

Let the courts decide

The initial point for the court to examine, which was raised by the Defendants in an effort to end the Claim on a technical issue, was whether the Claimants possessed a 'moiety', i.e. a 'half share' in the context of s.188, to enable them to have standing to apply for this order. After substantial analysis of factual evidence, the Court found that Caroline and James did hold a moiety and therefore had standing to apply for the s.188 order.

The court then had to consider the position under s.188(1) and its discretion as to whether and how to divide the BFC. The Claimants sought that the division of the BFC would be undertaken by each sibling taking turns selecting a piece according to the order in which the siblings were named as donees in the Deed of gift – Caroline, Charles, James, Katherine – until none remained. The Defendants opposed the making of such an order and suggested in the alternative that the court make a 'Syers' order where they would be able to buy out the Claimants' interest up to a monetary limit which they could afford and if this did not reach the value of the Claimants' moiety, the Claimants would select pots until the difference in value was made up. The Claimants had previously rejected these offers to be 'bought out' as they had not sought financial gain when bringing the case and as such a financial proposal was not relevant to them.

Judgment

In his judgment, HHJ Barker QC distinguished previous case law on the basis that the BFC could be divided without destruction to its very nature, in contrast to previous cases. He dismissed the Defendants' argument that the Claimants' motivation was purely financial, highlighted by the fact that they did not accept the 'bought out' option proposed, and found that the 1-2-3-4 selection process could produce a just result. Following the 8 day trial, the Judge heard submissions on costs and ordered that the Defendants pay 80% of the Claimants' costs. Accordingly, the BFC has been distributed amongst the siblings, with each selecting a piece in turn.

The Defendants applied for permission to appeal the judgment which was refused by the court.

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