Is It Okay for an Art Advisor to Profit from a Friends Distress?

The fascinating Australian court case revealing details of the inner workings of the Australian art market continues to fascinate the Sydney Morning Post. To recap, Louise McBride is upset that her former friend and art advisor, Vivienne Sharpe, was making money from her debt-driven sale of artworks at auction:

Ms McBride has alleged Ms Sharpe and her son Andrew advised her to sell a Jeffrey Smart painting through Menzies auction house using an agreement for a guaranteed sale price.

Instead of the usual commission being paid to the auction house, Menzies proposed to guarantee $300,000 for the sale of the work and to pay Ms McBride 40 per cent of the upside.

The remaining 60 per cent would, Ms McBride believed, go to Menzies.

Menzies had offered Ms Sharpe a 50/50 split of its 60 per cent upside. Ms Sharpe received $42,000.

Under cross examination, Ms McBride told the court she had believed Ms Sharpe was acting for free because she was a friend who was helping her with her serious financial predicament in 2010.

Her counsel, Francis Douglas, QC, has accused Ms Sharpe of having a conflict of interest because her undisclosed interest in the upside meant she had a motive to advise Ms McBride to take a lower guaranteed price.

Ms Sharpe, through her counsel, is strongly contesting she ever agreed to act for free and that she did significant work on the sale.

Former friends in court battle over painting (Sydney Morning Herald)