Article from Sydney Morning Herald 20/4/2012
Register or regret: artists alerted to new ownership law
A new consignment regime seems to have taken many by surprise.
Artists risk losing work they have consigned to commercial galleries if the galleries go bust, thanks to a new federal government law that few in the art world know about.
The Personal Properties Securities Act, which came into effect on January 30, requires artists to lodge ownership of their consigned work with an electronic register that can be searched by potential buyers. Artists previously relied on consignment notes to prove they owned their work.
Artists should be prepared to either comply with the new law or risk losing any security interest over their work when they give it to galleries for sale or exhibition, says the Arts Law Centre of Australia.
The law change is timely in light of charges against Cameron Hall, the director of failed Sydney art gallery Smith & Hall, of obtaining money by deception. When Hall's companies were placed into administration in late 2010, hundreds of artworks were caught up in the collapse, including paintings owned by self-managed superannuation funds.
The new register replaces 40 asset registers and 70 laws across Australia that covered security interest in assets other than real estate. The government says the system was introduced to help consumers and businesses manage credit risk.
''If artists don't register their interest, then an administrator [of a failed gallery] is able to just presume all the property held at the gallery is owned by the gallery,'' said the executive director of Arts Law, Robyn Ayres. The paintings could be sold to help pay other creditors owed money by the gallery, Ayres said.
''The register involves an extra step and increased expense for artists to secure their interests … It is a shield for the administrator, not for the artist if the artist is not on the register.''
The Arts Law Centre and the National Association for the Visual Arts are worried a lack of publicity about the new system means many artists aren't aware they need to register their work.
The Australian Commercial Galleries Association knows little about the scheme and is unclear what role galleries play in registration.
The visual arts association had not been contacted formally by any government agency about the scheme, ''let alone explaining it to us,'' said the association's executive director, Tamara Winikoff.
''This is something that everyone needs to know about,'' she said.
The one government advertisement about the scheme seen by the Herald makes no mention of artists or art galleries.
A spokesman for the Attorney-General's office said the new register provided improved protection for artists.
''For less than $8, artists can register their entire interests in one gallery for up to seven years, which should give artists great peace of mind to know their works are secure,'' the spokesman said. ''It's important to note that artists who have their works in a gallery before January 30 can register their interests for free on the register.''
He said the register provided ''improved protections for artists over and above the past use of consignment notes''.
A spokeswoman for the Insolvency and Trustee Service, which administers the register, said a single registration could cover all artworks delivered on consignment to one gallery.
The Sydney artist Camille Masson-Talansier might have been better protected if the register had been in place when Smith & Hall went into administration.
Masson-Talansier became aware the gallery had folded only when she discovered the four paintings she had verbally consigned to Smith & Hall had been sold by auction company GraysOnline, on behalf of the administrator, at prices dramatically lower than those she usually commanded.
The artist said she produced emails that made it clear Smith & Hall had received the paintings from her but she said they did not convince the administrator, who used the money to pay other Smith & Hall creditors.
''The artist is always in a vulnerable position,'' Masson-Talansier said.
''My situation is a case in point, because I didn't even realise that my work could be considered the gallery's asset.''