The Momart Fire

At 3.40am on Monday May 24 2004 fire fighters received the alarm call, and the blaze at one of Momart’s warehouses lasted five days.

Media coverage was extensive and worldwide, for what was a devastating single act of mass destruction of contemporary art. At the time of writing (three weeks afterwards) the full nature and extent of the cause of the fire, the identity of destroyed works and their owners, and the financial and cultural impact of the losses, are beginning to emerge and are likely to take considerable time to be revealed fully.

Momart was founded in the 70’s by Jim Moyes and Rees Martin, and became Europe’s premier art storage and transportation company, with an annual turnover of around £10m, and specialist storage facilities in East London. Its clients are major galleries, museums, collectors, and artists, including: Tate, The National Gallery, The Metropolitan Museum in New York, Buckingham Palace, White Cube, Gagosian, Sadie Cole’s HQ Gallery, Maureen Paley’s Interim Art, Charles Saatchi and Damien Hirst.

According to preliminary reports by London’s Metropolitan Police and Fire Services, one of Momart’s three buildings, 10,000 sqft located at an industrial estate in Leyton, was burgled on the morning in question. The perpetrator(s) broke into one of the building’s 34 units to steal computers, watches and cell phones, and may have started the fire in an attempt to cover up their trespass. A 23-year-old man was arrested by police on suspicion of the crime, and has been released on bail. Forensic enquiries continue, but the seat of the fire appears to have been within the burgled unit.

Destroyed works are reported to include a significant proportion of Charles Saatchi’s collection of BritArt bought over the last 15 years (those not at his County Hall Gallery or his London home) and of the Crafts Council’s permanent collection; as well as important works by many recently deceased, as well as living, contemporary artists: Patrick Heron, Adrian Heath, Paula Rego, Barry Flanagan, Patrick Caulfield, Gillian Ayres, Gary Hume, Sarah Lucas, Chris Ofili, Damien Hirst, Jake and Dinos Chapman, and Tracey Emin. There are works owned by Buckingham Palace, Tate, and The National Gallery that are not reported to have been destroyed.

Media coverage, letters to editors, and vox pops have chiefly focused on the sensational and difficult-to-access nature of most of the lost works, and whether they ever had any meaningful cultural value. Little coverage has explored the legal and business issues involved, which are complex and numerous.

Who did this work of mass destruction? It currently appears to be the perpetrators of the burglary-cum-arson, not as yet charged or convicted before the courts; but there is no prospect of such people having the means to pay compensation for losses, which will run into millions of pounds. So, who will pay for them? The answer will depend on many factors, including especially the legal relationships between the depositors of the lost works and Momart; those depositors and the owners of the works (if not those depositors); those depositors and their insurers; the owners and their insurers; Momart and their insurers.

Works will have been deposited under a contract of bailment, in which Momart will have been under a fundamental legal duty to take care of the works. Although Momart’s premises and contents were insured against loss or damage, it is unlikely that the overall financial level of cover would be sufficient to compensate for all the losses from this fire, and depositors would have been advised – at the outset of contractual negotiations – to maintain their own insurance cover for works while stored at Momart. Momart’s insurers and the insurers of each losing depositor would work together to settle each claim and, where those depositors were not also the owners of the lost works, with the insurers of those owners. When trying to settle each claim for financial loss, the insurers will try to determine responsibility for the loss, taking into account such factors as the cause of the fire, Momart’s fundamental duty to provide a safe and secure environment for the works, contractual terms and conditions between Momart and the depositors, and insurance terms and conditions with each of their clients.

Having determined responsibility for each loss – which may fall upon more than one party’s insurers – there then arises the thorny question of value: market value or replacement value. Key market value considerations will include the last sale price paid for the work (if any), how long ago, and whether the market would be likely to pay higher or lower prices today and whether there are any reliable records of the physical condition of the work before it was destroyed. Key replacement value considerations will include whether the artist is alive, and willing or able to remake the work, the costs of doing so, and whether it is appropriate to do so. Insurers will naturally be keen to choose the least costly option, if possible, and this will depend on the willingness of living artists to cooperate and the costs of their doing so. For example, it was widely reported that one of the Chapman brothers’ initial reactions to the destruction of their work, Hell, was ‘we will just make it again. It’s only art.’ If they were willing, the insurers might well offer to pay them the costs of doing so, on condition that they would give (not sell) the remade work to Charles Saatchi (who had bought the original from them). In this way, the insurers might fulfil their contractual obligations to compensate for the loss – perhaps at a cost equal to, if not lower than, the original purchase price – and the artists would be financially rewarded for their work. Whether such artists would be willing to cooperate, and whether it would be appropriate for them to do so, are important professional and ethical – not legal or commercial – issues for the artists.

Further considerations in relation to compensation claims include consequential losses directly flowing from the destruction of the work. For example, the loss of a large number of works from one artist, in respect of whom there had already been arranged a major exhibition which could no longer occur because of the lost works, might cause significant financial losses to the artist or their estate, the exhibition organisers, sponsors, and so on. Then there is the Artist’s Resale Right due to operate in the UK from 2006 (giving artists or their estates, for 70 years after death, the legal right to a percentage of the resale price paid for their works). Might the loss of this potential income be attributed directly to the destruction of the work and, if so, how might this be actuarially quantified for compensation purposes?

Finally, there is the question of the impact of these losses, and the payment of compensation upon the art insurance business. It appears that Guernsey-based Hiscox plc, specialising in fine art (and kidnap and ransom) insurance, have insured many of the lost works on behalf of their owners. Quoted in the FTSE 250, with an annual turnover of around £1,000m, they have protected themselves by having ‘catastrophe cover’ from the reinsurance market. Being at the end of the reinsurance chain, this in effect means Lloyds of London will ultimately bear the losses. This, in turn, may well cause premiums for art insurance to rise substantially in future and, as so often happens after catastrophic losses and claims, is likely to cause many more collectors to take out insurance – on appropriate terms and conditions, and for the right value.

© Henry Lydiate 2004

NOTE (added November 2009): All claims were settled out of court in January 2007 through a confidential agreement with Momart. Total losses were rumoured to have been between £30 and £50 million.

 

 

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This article is from the Artlaw Archive of Henry Lydiate's columns published in Art Monthly since 1976, and may contain out of date material. The article is for information only, and not for the purpose of providing legal advice. Readers should consult a solicitor for legal advice on specific matters. Artists can get free online legal information from Artquest.