High Court (England and Wales)

City of Gotha  and Federal Republic of Germany v. Sotheby's and Cobert Finance S.A.

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Background Facts

The following facts are not in dispute. Duke Ernst the Pious started to buy paintings in 1656. The painting was in the possession of the Ducal Family of Saxe-Coburg-Gotha for many years. It appears in the 1826 catalogue of the paintings in the Ducal gallery in Gotha. In 1855 by a settlement between the reigning Duke and His Royal Highness the Prince Albert, by then married and abroad, and the Ducal State Ministry of Gotha, the art collection was acknowledged as property of the Dynastic House of the Duke. The painting remained in the Ducal picture gallery at Schloss Friedenstein, the history of which was described in a catalogue in 1883. It appears that the painting was available for public view at least from the time when the museum was opened in 1879. In July 1905, pursuant to an Act partitioning state property and a related settlement between the Duke and the Duchy, the art collection was declared part of the entailed estate.

On 9th November 1918 the workers’ and soldiers’ council of Gotha deposed the Duke of Saxe-Coburg-Gotha. The constitution of the German Reich of 11th August 1919 required the dissolution of entailed estates, the assets of which included the art collection.

Faced with the revolutionary zeal of the socialist Weimar Republic, the entailed estate was voluntarily dissolved. In November 1927 a settlement agreement between the Ducal House and the Land of Thüringia provided for the establishment of:-

"The Duke of Saxe-Coburg-Gotha Foundation for Art and Science". The Foundation (to which I will refer as the "Art Foundation") was to have its seat in the city of Gotha. Its purpose was to be the perpetual preservation and further enhancement of, amongst other things, the Art Collection. Since subsequent documents may confuse in their references to Ducal Foundations it is important to note that a distinct Foundation was formed known as the Family Foundation. That Foundation was obliged to pay annuities to the Art Foundation. In January 1928, a Thüringian law gave effect to the agreement of November 1927 and in March 1928 the Art Foundation was established.

The charter of the Art Foundation stated that it was located in Gotha (section 1). It was to preserve and enlarge the collections and to further art, science and national education. It was stated that the collections would be made available for public use to the same extent and in the same manner as previously (Section 3). The Ministry for National Education and Justice was responsible for supervision. (Section 4).

On mobilisation the museum was closed and the most valuable and irreplaceable pieces were brought to a place of safety at Reinhardsbrunn, a hunting lodge about fourteen kilometres east of Gotha. Baron Dr. von Schenk zu Schweinsberg, the museum director, reported in the annual report for the Art Foundation (July 1938 to 31st December 1939) that the selection had to be "considerably restricted". Further paintings were stored and protected from splinters in a ground level room at the home of the museum, Schloss Friedenstein. It is clear from the catalogue that the painting was one of the more distinguished pieces within the Art Collection. It continued to attract interest even during the war and, in 1942, in reply to a correspondent in Holland who wanted a photograph of the painting, it was reported that it was in safe keeping. A reply, in May 1942, to a further inquiry from the editor of the artist lexicon in Leipzig stated that:-

"The picture by Wtenwael (an alternative spelling) is, as ever, located in the Ducal Museum. ... I believe to have seen the pictures and will keep you informed. Heil Hitler". Thus the painting was still within the collection during the war although it is not clear whether it had been moved to Reinhardsbrunn.

I.1 The location of the painting in 1945 and 1946 (facts in issue relating to title).

It is not disputed that the painting was taken from Gotha to the Soviet Union in the 1940s. Nor is there now any dispute that the painting was stolen from the art collection which had formerly belonged to the Ducal Family. The issue is: when did it leave Thüringia? This issue is central to the resolution of the question whether the Federal Republic of Germany is the owner of the painting, because, in order to establish its ownership, it must rely upon laws which only had effect within Thüringia or, although there is no relevant difference, in the territory over which the Soviet Military Administration had jurisdiction. It is only if the Federal Republic of Germany can rely upon the dissolution of the Foundation that the location of the painting in the Soviet Union may not matter.

Cobert submits that such was the chaos in Germany both before the arrival of the American army in Gotha in April 1945 and after Thüringia was ceded to Soviet occupation, in consequence of the Allies agreement at the Yalta Conference in July 1945, that the Federal Republic of Germany is unable to prove that the painting was within the Soviet occupied zone even in July 1945, let alone in July 1946. The evidence relevant to this issue consists of documents, vividly illustrating the situation within Thüringia at the time, evidence from Professor Erickson Honorary Fellow in Defence Studies and Professor Emeritus at the University of Edinburgh, an expert in Soviet Military History, called on behalf of the plaintiffs, and historical material produced by a recognised expert on the fate of European art in the Third Reich, a respected academic, Lynn Nicholas. The Federal Republic of Germany contends that the painting did not leave the Soviet occupied zone until after July 1946 and probably not until about 1947 to 1948. The significance of the dates will become apparent when I examine the legislation upon which the Federal German Republic relies to prove its title.

Even before Allied Forces crossed the Rhine wandering bands of foreign workers scoured the countryside, looting. But I accept Professor Erickson’s evidence that it is pure speculation whether the painting was looted by foreign workers or casually by a local German. Contemporary documents show that some items belonging to the Art Foundation were taken to Coburg by the Americans when they were in occupation in Thüringia. However, there is evidence that, at least the important items from the collection which had been removed to Coburg, were properly recorded. A note from Rentmeister Doetschel in Coburg, dated 27th March 1945, records that three Rubens, one Hals and nine manuscripts were handed to him for safe keeping. That items taken to Coburg arrived safely was also confirmed in a letter to the Lord Mayor in Gotha dated 4 July 1945. Although American Forces were guilty of looting, (soldiers stole two Dürers from a castle in Thüringia), in relation to the Art Foundation it appears that the Americans acted with a sense of responsibility and concern, all the more remarkable in the light of the military situation. A memorandum of 16 July 1945 recorded that the author had been ordered by the American Military Administration to take an inventory and to note possible damage. He said that an American officer visited the exhibition rooms at the palace shortly before the Russian occupation. By chance, the former Duchess of Saxe-Coburg-Gotha was also there with the Director von Schenk. The Duchess asked that the American Military Administration provide two freight trains to transport some of the collection to Coburg, to save them before the Russians moved in. The American officer refused. The Duchess said she would approach the General. There is no evidence he was more compliant. Further, when a Canadian physician, Morton Shulman, with a particular interest in the museum of the Art Foundation, heard of the painting in 1982 he spoke to Dr von Schenk and asked him what had happened to the contents of the museum. Dr von Schenk replied that when the Russians had arrived nothing was missing. Dr von Schenk is no longer alive but wrote in June 1982 that he had left his books and papers in Gotha saying:-

"We were glad enough to save our souls!" Much later, on 12th June 1950, it was stated that approximately one hundred and twenty-six large crates of art objects stored at Schloss Reinhardsbrunn were not opened before 1945 and when the Americans opened them they removed nothing from the crates but re-closed them properly.

For these reasons I agree with the conclusion of Heinz Wiegand, museum director until 1986, that the painting did not go missing during the occupation of Thüringia by the American forces. It thus remained, probably in Reinhardsbrunn, until the arrival of Russian forces on 2nd or 3rd July 1945. Moreover, if it had been taken by a member of the American forces it is unlikely to have been taken to Moscow. It is speculation to suggest that a member of the American forces took it to Berlin. By 26th April 1945, as Professor Erickson points out, Germany had been cut in half, after Soviet and American troops had met at Torgau on the Elbe the day before, and it would have been virtually impossible to travel from Gotha to Berlin.

Soviet Military Occupation 3rd July 1945 to 24th July 1946

The most serious losses from the museum occurred when "official" trophy brigades, probably under the control of Professor Major Alexeyev, looted the museum in January 1946. According to Professor Erickson it is unlikely that unofficial looting occured earlier. From the very outset of Soviet occupation in July 1945 members of SMERSH were in Thüringia. SMERSH was the pre-cursor of the KGB; it was formed in 1942/3 by Stalin and represented the most formidable and dangerous element in the Soviet military structure. It had power of life and death over all ranks in what was then the Red Army. The effectiveness of its control was such, says Professor Erickson, that it is unlikely that any Soviet soldier, even if he had been interested in a painting, which is to be doubted, would have risked severe punishment or death by looting an art treasure which would have been regarded as state property. Thus, Professor Erickson concludes that the painting is likely only to have been taken either as part of an official consignment or by a senior officer with the agreement of SMERSH. The trophy brigades set out from the beginning of their occupation not only to recover Soviet treasures but also to seize paintings and other "cultural artefacts" as trophies of war. Russian historians, Akinsha and Kozlov, record that, under the control of the operational representative of the counter-intelligence department of SMERSH, art valuables were removed from Schloss Friedenstein on 4th March 1946 and that Alexeyev received authorisation from the main trophy department of the Red Army, to confiscate the castle’s "museum objects" at the end of January 1946. Professor Erickson thought that the removals had occurred earlier in the year and that the trophy brigade assignment in Thüringia and Saxony was probably completed by January 1946. According to Akinsha and Kozlov, the "rich haul" included fifty-three paintings from Danzig and Reinhardsbrunn. They were taken to Leipzig where they remained for some ten days, during which sixty soldiers filled nineteen carriages with two hundred tons of objects and books. The train left Leipzig on 11th March 1946. Major Alexeyev accompanied the train. This account by those historians is confirmed in contemporary documents referring to the "official" looting in January 1946. On 16th January 1946 the director Dr. von Schenk wrote:-

"On Monday 7.1.1946, about midday, Major and Professor Alexeyev and 1st Lieutenant Lutscheweit ... appeared at the library, with directives from the Commandant of Gotha, to look over the museum, castle and library premises. On Wednesday, I was called to the museum, where I was informed of the directive of General Kolesnitschenko that all the objects from the museum that were already packed up were to be taken away." The director complains that receipts he was promised were not given. On 28th January 1946 the Director of Administration requested orders from the Presidential Chancellery at Weimar to prevent the depredation saying that if that was not successful total loss would be unavoidable. No inventory of the heavy losses was made until 1965 when the "Verlorene Werke der Malerei" identified lost works and paintings including the missing Wtewael Holy Family.

The Federal German Republic, however, deny that this painting was part of the rich haul taken from the museum in January 1946. Professor Erickson’s view is that it is unlikely that it was taken other than as part of that haul or by a senior officer with the agreement of SMERSH. His reasons are the same as those which applied in relation to the period before the beginning of 1946. Casual theft was unlikely under the watchful eye of SMERSH. If the painting was taken as a trophy of war, it would have left the area of Soviet military occupation and been taken to Russia at the beginning of 1946. I must, therefore, consider whether there is any evidence that it did not form part of the official collection of trophies.

According to Akinsha and Kozlov, the Gotha collections were shared between the Committee on Cultural Education or Institutions of the Council of Peoples Commissars of the Russian Federation and the Arts Committee, which received the best works of art. There is no evidence of this painting forming any part of their collection. Of particular importance is the list of thirty-seven paintings which had been in the Soviet Union and which were returned to the museum at Gotha in December 1958. Although I received no expert evidence from an art historian or curator, I think it is open to me to observe that, whilst amongst the paintings returned were a Jan Brueghel and a Cranach, some of those returned were of no greater distinction than the Wtewael. Yet the Wtewael was not returned on that occasion. Moreover, whatever account of the history of how the painting came to light in the 1980s is accepted, both sides assert that the painting was transferred from the possession of a Russian officer. If the painting was not part of the official haul, then I accept Professor Erickson’s evidence that it is likely it could only have been taken by a senior officer who had made an arrangement with SMERSH or even a senior officer who was a member of SMERSH. Professor Erickson’s evidence is that it is unlikely that an officer in the Red Army could have left Thüringia until late 1946 at the earliest. I accept Professor Erickson’s evidence on this point. Thüringia was of particular importance to the Soviet Union because of uranium deposits. The Soviet Army was and remained in a state of operational readiness to protect that area from attack. It would only be under special circumstances, on orders, that Soviet officers would have been allowed to leave Thüringia in 1946. Soviet officers remained in that area as the army changed from the Red Army to the Soviet Army in 1946 because they were being prepared for admission to higher military academies. Attestation took place in the area of Soviet military occupation; movement was very restricted and carefully controlled. In those circumstances I conclude that only in rare circumstances would a senior officer have left the area of Soviet military occupation in 1946 and the chance that, among the few officers directed to return to the Soviet Union, there was one who had taken the painting is, in my judgment, remote.

But that, of itself, does not establish that the painting remained in the area of Soviet military occupation during 1946. There is no evidence that the painting was taken by a senior officer other than as part of the official collection of trophies. Nor is there any clear evidence as to what happened to all the paintings taken as part of the official collection in January 1946. I am unable to conclude that because the painting was not returned to Gotha in 1958 that it was not part of the official collection of trophies sent to the Soviet Union from Leipzig at the beginning of 1946. I conclude that the most likely explanation for the loss of the painting is that it was taken at the time the trophy brigade, under Alexeyev, was collecting trophies of war from Gotha. By July 1946 the painting had gone.

II.1 Facts relating to Limitation; the arrival of the painting in West Berlin from Moscow, 1987-1989

The following facts are common ground:-

i. The painting was taken from the Soviet Union to West Berlin in the 1980s;

ii. The painting was acquired by Mina Breslav in 1988 and received by Sotheby’s in London on 29th November 1988.

iii. It was bought by Cobert from Mina Breslav in March 1989. There is a substantial difference between the accounts given by the witnesses on behalf of the plaintiffs and those on behalf of Cobert as to when and how the painting arrived in West Berlin and as to who was involved. The important dispute is whether, after it came into the hands of the person who smuggled it out of the Soviet Union (a Mrs Sunguza or a Mrs Dikeni), she misappropriated the painting or whether it was misappropriated by a subsequent possessor. The issue is of importance because the plaintiffs argue that, if there was a misappropriation, the claim is not barred by effluxion of time under the German law of limitation, if it applies. Cobert contends that even if its account of how the painting came into Mina Breslav’s hands is not accepted, the plaintiffs’ account is so flawed and inconsistent that I should not be satisfied that any misappropriation took place. There is little of the Mannerist chiaroscuro to be expected in the world of art contraband, more a prevailing gloom.

Cobert’s account of how the painting came to West Berlin

Cobert’s account of how the painting came into the hands of Mina Breslav has an unpromising start. Until the first day of this trial it was Cobert’s case that a German family had given the painting as a gift in return for food and other assistance to a colonel in the Soviet Army, Adolf Kozlenkov. He had taken it to Latvia. From 1955 it was in the possession of the Nowakowski family, friends of the Kozlenkovs. In March 1982, when Adolf Kozlenkov died, a Mrs Gambourger, a member of the Nowakowski family, gave the painting to Kozlenkov’s son Alexander. In March or April 1985, Alexander Kozlenkov sold the painting in Moscow to Itela Sunguza an engineer, who was resident in Berlin in 1989 but who had lived in Moscow with his Soviet wife. In 1985 an African diplomat, Mrs Mukoko, took the painting at Sunguza’s request to West Berlin.

In 1987 the painting was given to an acquaintance of Mr Sunguza in West Berlin, Holger Martin, for valuation purposes. Martin, anxious to defend his reputation as a serious arts dealer, made a statement in March 1987 saying he had been asked by Wolosow, who owned an antiques and art shop, to have the painting valued. It is not disputed that Martin took the painting to the Dahlem Museum on 24th March 1987. There it was confiscated whilst the police investigated its ownership. In September 1987 it was released to Martin. Thereafter the account of what happened to the painting is, again, in dispute. Cobert conceded, on the first day of the trial, that neither it nor anyone else acquired the painting in good faith.

It is important to record that Cobert’s concession was limited. Its concession was made, so I was told by Mr Brindle QC, on the basis that it would accept that it and its predecessors knew or suspected that the painting might be stolen but made no inquiries to allay such suspicion. However, Cobert persisted in relying upon the evidence in witness statements and of the witnesses whom it called to give oral evidence to demonstrate that the account given by the plaintiffs’ witnesses was incorrect. In those circumstances it is necessary to make findings about the evidence called on behalf of Cobert before I turn to consider the evidence upon which the plaintiffs rely.

The story that the painting was a gift was not only implausible for reasons I have given in relating the facts concerning the whereabouts of the painting in 1945 and 1946 but the witnesses’ statements recounting the story were inconsistent. I do not rely upon the absence of any reference to a Colonel or General Adolf Kozlenkov in central archives, but it is of note that the statements of Mrs Gambourger nee Nowakowski and Alexander Kozlenkov as to what was sold are inconsistent with the receipt and the statement of Itela Sunguza. Moreover there is no explanation as to why the painting was not valued until March 1987 if it had been brought to Berlin as Cobert alleges in the summer of 1985. Sunguza’s statement and that of Mrs Breslav are inconsistent as to how much was paid for the painting. Sunguza says he was paid in cash the sum of DM300,000, Mina Breslav says she agreed an initial payment of DM20,000 and was to pay further sums after she had disposed of the painting. There is a receipt dated 23rd November 1988, signed by a Mohammed Gerard, showing the receipt of cash of DM20,000 saying that the painting was sold by him on behalf of a female African owner to Mina Breslav. There is a second receipt signed by Mohammed Gerard, dated 28th November 1988, showing the figure of DM20,000 crossed out and a purchase price of DM200,000. Mina Breslav does not explain why the first receipt is not signed by Itela Sunguza and says she cannot recall the significance of the second.

There is no explanation of the part played by a Larissa Leontiew who was to receive a proportion of the purchase price of the painting pursuant to the purchase agreement between Mina Breslav and Cobert, nor any explanation of a payment to a Lola Minchin of DM25,000. Mina Breslav’s son was called to give evidence; I shall deal with his evidence when I consider the plaintiffs’ account but Mina Breslav was not available to give evidence. Not even her son knew where she was. Some light may have been thrown upon the purchase of the painting by Cobert by a Mr Douglas Montgomery who has some involvement in the activities of Cobert. He was present during part of the hearing but left, not to return, after evidence was given as to his presence at a time when money was offered to one of the plaintiffs’ witnesses.

I accept that Itela Sunguza existed. Ülo Salm, a German lawyer and notary public, took an affirmation from him. Apart from confirming the existence of Mr Sunguza, Mina Breslav, Alexander Kozlenkov and Mrs Gambourguer, Mr Salm’s evidence was not of further assistance. I also accept that Sugunza worked for a Peter Rohde, a dealer in Russian icons. But on the evidence before me I do not accept that he bought the painting in the Soviet Union or arranged for it to be smuggled into West Berlin in 1985. If he played some part in the transactions thereafter, that part was of no significance to the question I have to decide.

The Plaintiffs’ Evidence as to how the Painting came to West Berlin

The plaintiffs’ account depends on the evidence of witnesses involved in smuggling art from the Soviet Union. They were Makhin, Greshnikov and a German national, Helmut Fürst. Makhin and Greshnikov were convicted by the Leningrad Criminal Court for smuggling works of art, including the painting, and sentenced to five years imprisonment. The milieu of their trade was so murky that their evidence should not be relied upon unless it withstands the closest scrutiny.

Makhin gave oral evidence through an interpreter. He described seeing the painting at the flat of Bishkinsky where he learnt that Bishkinsky and his partner Bezuevsky were selling the painting on behalf of a Russian owner. He does not say he ever met that owner but he did say he knew his name but did not want to risk his own life by revealing it. He says he can confirm that the owner was an officer in the Soviet army. Makhin asked Greshnikov to make enquiries because Makhin did not know whether the painting was an original. Greshnikov contacted Fürst who was able to smuggle works of art under the cloak of his tourist business, taking groups to St Petersburg. According to Makhin, Fürst telephoned to confirm that the painting was authentic. He said that it was a war loss and would, as a result, be difficult to sell in the West. According to Makhin, Fürst said that he was not sure whether he wanted to buy it. Several days later he agreed to do so. Makhin then contacted a Mrs Mariouena Dikeni, the wife of the Togo ambassador in Moscow, who had in the past smuggled works of art including icons on behalf of Makhin. He persuaded her to meet Fürst. A meeting took place, according to Makhin, in an embassy car. He says that, afterwards, Fürst explained that he had proposed to Mrs Dikeni that she should pay DM50,000 and that Fürst would repay her with a commission of DM30,000. Alternatively, if she was not willing to invest DM50,000, her commission would be DM10,000. Apparently Fürst had already given Greshnikov DM50,000. Mrs Dikeni, having taken time to think about the proposal, later agreed to act as a courier but would not invest any money.

According to Makhin, in early February 1987 he handed 130,000 roubles to Bezuevsky in Bishkinsky’s flat and agreed to pay 20,000 roubles commission, after Fürst had disposed of the painting. He says he handed over the painting to Mrs Dikeni late one night in Moscow, and returned to St Petersburg. He says Greshnikov told Fürst that Fürst would receive the painting in a week. A week later Fürst rang to say he had not received the painting. Makhin was unable to contact Mrs Dikeni. In March 1987, two or three weeks later, she telephoned him, saying she had been unwell and unable to take the painting to Berlin. Three days later she said that she was well again and ready to take it to Berlin. Makhin says he left a message on Fürst’s telephone answering machine and later learnt that Fürst was in the USA. Mrs Dikeni, on her return to Moscow, said that she had left the painting with a relative in Berlin. He learnt that Fürst never recovered the painting. Greshnikov, who also gave oral evidence before me but without a translator, supports Makhin’s account.

Fürst, who gave oral evidence, says that he had given DM50,000 to Greshnikov in anticipation of making a purchase. But he was clearly a part of the organisation which smuggled works of art from the Soviet Union. He accepted that he was not doing this in order to earn a medal. He says Greshnikov offered to sell the painting which he identified from the signature as being an Wtewael. He instructed Greshnikov to secure the painting for him using the DM50,000 towards the purchase. The offer price was 150,000 roubles (approximately DM100,00 at black market rates). He confirms meeting Mrs Dikeni who was referred to as "Big Mamma". According to him she said she needed to discuss the matter with her husband. He says that the arrangement was to pay her DM80,000 when he took possession of the painting in Berlin.

Fürst says that he returned to Germany and learnt that the painting had been taken from the Schlossmuseum Gotha when he saw a copy of the Verlorene Werke der Malerei in Munich. He telephoned Greshnikov in Leningrad asking him to cancel the transaction because he did not want to be involved with art works looted from East Germany. He says that Greshnikov told him the painting had already been handed over by Makhin to "Big Mamma". In March and April 1987 he telephoned Greshnikov on several occasions to find out about "Big Mamma’s" visit to Berlin. Greshnikov told him that "Big Mamma" had said to Makhin that her children were ill and her trip to Berlin was delayed. Fürst says he heard nothing throughout the summer of 1987 and then learnt that Makhin and Greshnikov had been arrested by the KGB for their black market activities. In March 1993, shortly after Greshnikov’s release from prison, he learnt that "Big Mamma" had only paid half the agreed amount namely DM25,000 and that they had never seen her again.

By means of a somewhat labyrinthine route which it is unnecessary to detail, Fürst met Peter Rohde in November 1988 in Berlin. As I have recorded, Rohde dealt in Russian icons. According to Fürst Rohde eventually agreed that he had the painting in his possession and offered him the opportunity to recoup the money he had lost in marketing the painting. He says he saw the painting at Rohde’s shop in December 1988. Negotiations with Rohde broke down. He says that he visited the museum in Gotha, and spoke to the director in January 1990. The museum was unable to pay the price Rohde was asking of DM400,000. He says that in autumn 1989 Rohde had told him that he had given the painting away against a down payment but would be able to retrieve it. In June or July 1990, when the painting had not been retrieved, Fürst says he told Rohde that he could no longer accept his excuses and required payment of some money. He says he eventually received DM25,000. Dr Hebecker, the specialist director of the Schlossmuseum, confirmed that he was approached by Fürst but was unable to raise the DM400,000.

In a written statement made to the cultural attaché to the German Embassy in Togo on 23rd June 1993 Mrs Dikeni says that she did take the painting to Berlin at the request of Fürst. There she contacted Rohde who advised her to have the painting examined. She says Rohde gave the painting to Martin and that it was never returned to her. She says that she lost the possession of the painting against her will.

Findings of Fact as to Misappropriation

The crucial issue is whether either Mrs Dikeni or Rohde, once they had acquired possession of the painting, misappropriated the painting; in other words whether they kept it or dealt with it contrary to the wishes of the person by whom the painting was transferred to them. But, since the story of the misappropriation depends upon the credibility of particularly Fürst and, in part, Makhin and Greshnikov, it has been necessary to set out their account and I must make findings as to their credibility.

I did not think that Makhin was a witness upon whose evidence I could rely. Stephanie Burras, who was at the time employed by the plaintiffs’ solicitors, stated that at a meeting in February 1993 Makhin had asked what he would be offered in return for making a statement. She also recalls that Fürst raised the question as to whether he might be entitled to a finder’s fee. Makhin denied that he asked for money but said he asked for political asylum in return for assistance. He also admitted that he had accepted $10,000 from Solomon Breslav, Mina’s son. Solomon Breslav was called, mainly to provide a basis for an attack on the credibility of Makhin. He said that Makhin had asked for money and that he had given $10,000 to Makhin in the foyer of the Savoy Hotel in February 1998. He denied that that was with the agreement of Montgomery although apparently Montgomery had been present in the building shortly before he handed the money over. At the same time he passed him a list of questions. Those questions came from Montgomery and were headed "Queries Breslav should put to Makhin". They were questions designed to test Makhin’s evidence and, coupled with the payment, were calculated to try to use Makhin to bolster Cobert’s account. There was no reference to payment of money in Solomon Breslav’s written statement. Nor was there any reference to the questions. Indeed, in my judgment paragraph 20 of Breslav’s written statement was designed to conceal the fact that Montgomery had been present on the occasion that money was paid to Makhin. I did not believe Breslav’s attempts to distance Montgomery from the payment of what I regard as a bribe to Makhin. Montgomery did not remain in court for long enough to give his explanation for the questions. Whilst that, quite apart from my observations of Breslav, destroyed Breslav’s credibility, it provides no support for the plaintiffs’ account let alone for the credibility of Makhin. At the end of his evidence when asked whether he was prepared to sell his evidence to the highest bidder he replied:-

"What else would you expect from a person who has spent five years in prison, became an invalid while behind bars in the camp and invested 150,000 Roubles?" I have sympathy for anyone serving a sentence at that time in the Soviet Union. But I cannot reflect that sympathy in any finding as to credibility. His own evidence contained unexplained inconsistencies. I do not believe him when he said he discovered the identity of the painting from the "Verlorene" when, as he accepted, he does not speak German. His attempts to persuade me that he was acting merely to ensure that the painting returned to its rightful owner were unsuccessful. Like the others, he was not engaged in this venture "to earn a medal".

Greshnikov’s evidence was more convincing. I accept his evidence as to how Fürst came by the painting from Bishkinsky and Bezuevsky and as to the introduction to Mrs Dikeni. His evidence is of importance in assessing the evidence of Fürst because he says that Fürst exhibited no reluctance in buying the painting although he did say that it would be difficult to sell. Moreover, he says that after the painting had been given to Mrs Dikeni, Fürst telephoned to say that he had not received the painting. Those two pieces of evidence were inconsistent with the account of Fürst. Greshnikov denied that he was ever given a deposit of DM50,000 to show the painting.

It is Fürst’s evidence which is central to the plaintiffs’ contention that there was a misappropriation once the painting came into Mrs Dikeni’s hands. There are ample grounds for suspecting his credibility. He was heavily involved in smuggling works of art from the Soviet Union. In 1993 Fürst was claiming that the courier was called Mrs Sunguza (according to an affidavit sworn in September 1993 by Dr Carl a partner in the plaintiffs’ solicitors). His evidence that he was reluctant to sell the painting finds no support in the evidence of Greshnikov. Importantly, Fürst accepted that he expected a fee for assisting the plaintiffs in the litigation. Notwithstanding these considerations which taint his evidence, having seen and heard Fürst, I believe him when he says that he gave the painting to Mrs Dikeni and, contrary to his instructions, that it was never returned to him. It was argued on behalf of Cobert that his familiarity with Rohde’s business, and the facts that he was paid DM25,000 and that Mrs Dikeni was a courier who acted on behalf of Rohde show that Fürst expected Rohde to be involved in the sale of the painting all along and that the subsequent sale to Mina Breslav was with Fürst’s connivance. Thus, there was no misappropriation.

I do not think that Fürst’s evidence that he accepted DM25,000 from Rohde supports the conclusion that Rohde’s possession was with the permission or connivance of Fürst. On the contrary it seems to me that Fürst’s admission that he did receive DM25,000 from Rohde provides an indication that he was telling the truth. I see no reason why it was necessary for Fürst to reveal that he had received any payment from Rohde. I accept that Fürst would have a motive for concealing any part which he played in transferring the painting to Rohde and any responsibility he might bear for the painting coming into the hands of Cobert. By distancing himself from those transactions he might expect to be viewed more favourably by the plaintiffs and increase his chances of a fee. But if that was a motive underlying his evidence, I do not see why he should have revealed as much as he did about his negotiations with Rohde and the acceptance of DM25,000. Although I have viewed his evidence with suspicion, I do believe him in relation to his dealings with Mrs Dikeni.

Accordingly I find that the painting was handed to Mrs Dikeni in 1987 and misappropriated by her. If she herself had been the victim of a misappropriation, I would have expected her to tell Fürst at the time. In any event, for the purposes of the limitation issue, it matters not whether she, or a succeeding possessor, misappropriated the painting.


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