Unintended consequences for the "last man standing": the Wedgwood tale of woe

Here, via Louise, comes a guest contribution from Bruce Tattersall, barrister and sometime curator of the Wedgwood Museum.  Bruce writes:

"Legislation often has implications never envisaged by Parliament.  Recently one of the most egregious examples of the law of unintended consequences was the predicament in which the Wedgwood Museum finds itself.  This fine institution (winner of the Museum of the Year 2009) has fallen foul of legislation intended to penalize companies which go into liquidation and try to evade their pension obligations.  Under this legislation in the Pensions Acts, if there is a subsidiary company still trading it can be liable for all the pensions of the parent company-- the doctrine of the “last man standing”.  This is the unenviable position of the Museum.

When the parent company, Waterford Wedgwood, went into receivership in January 2009 it left a pension debt of £134m in respect of some 7,000 members of the scheme.  There were five members of museum staff in the scheme whose total indebtedness was some £60,000.  The Pension Protection Fund (PPF) has sought to apply the relevant parts of the Pensions Act 2004, 2005 as amended in 2008 also known as the “Captain Bob” (after Robert Maxwell) provisions.

Consequentially the Museum put itself in the hands of the receivers while asking the Charity Commission if the museum collection was inalienable. 

The position of the museum and its holdings is complicated.  The museum was established in 1906 in the Etruria factory.  The initial collection comprised material gathered from all over the factory.  It was not until 1962 that an independent trust, the Wedgwood Museum Trust, was incorporated with trustees from the parent company and the Wedgwood family, then including the historian, C V Wedgwood.  At this point the collection was transferred to the Trust.  It was only in 1998 that it became a charity.  Along the road to charitable status the museum acquired further collections either purchased by the parent company and donated to it; such as the Calland Collection or, as with the Leith Hill collection (donated by Ralph Vaughan Williams), by gift. 

Presumably it was the complex nature of the Museum’s accumulation which led the Charity Commission to make its decision, which is not legally binding, that the collection was not protected and could therefore be sold.  The Commission have not made their finding public, so this deduction can only be speculative. 

The question has now been put to the courts.  What they decide may have serious consequences, not only for the Wedgwood Museum but other trust-based museums.  On a strict interpretation of the law it is possible the Museum will lose.  However, following the mischief rule, it might not. 

Lord Flight in a letter to the Daily Telegraph states, “I was involved with the legislation that set up the Pension Protection Fund; there was no intent that this could result in it taking the assets of a museum which is a charity.” 

If the mischief is what is essentially a form of fraudulent conversion, then the legislation should not apply.  Thus the question to the court is

1.         Is the collection inalienable?  If so there is no claim against it

2.         If not was the legislation intended to apply to cases such as that faced by the Museum?

In a Commons Adjournment debate on 19 October 2010 Tristram Hunt. MP for Stoke Central, pointing out that if the Museum were sold it would scarcely raise a half of the revenue needed ( in fact Christie’s has valued the collection at £20M), raised the issue with Ed Vaizey, Parliamentary Under Secretary for Communication, Culture and the Creative Industries who was fairly uncommitted but emphasized that the final decision lay with the court.  He conceded that they were in a “walk-on part in an obscure Dickensian novel in which a complicated piece of legislation has the most dramatic and unintended consequences.”  He also announced that the Museum had received a grant of £200,000 from the Museums Libraries and Archives Council and £25,000 from his department towards its legal costs.  Bill Cash, in whose constituency the Wedgwood Museum falls, intervened, inter alia wondering if a private member’s bill might solve the impasse.  Ed Vaizey assured members that the government would keep a close eye on developments and would deprecate any dismembering of the collection.

A further debate in the House of Lords, instigated by the Earl of Clancarty, elicited a reply by Baroness Rawlings who was emollient but inconclusive

“My Lords, I am grateful to the noble Earl, Lord Clancarty, who has tirelessly campaigned on this issue. We hope that museums will learn from this case and make certain that collections held in trust have legal protection to safeguard their objects. The court will determine whether the collection is available to an administrator and is put up for sale. DCMS will attempt to secure the collection for the nation. As the noble Earl said, clearly this is an extraordinary case. DCMS has helped all along, but it cannot provide further funding”,

effectively but elegantly washing her hands of it.

The case is now for consideration by the court in May 2011, the Museum’s lawyers needing more time.  Despite Ed Vaizey’s assurance that the Victoria and Albert Museum could be involved in any dispersal of the collection it may be, in the current economic climate, that the government may be unable or unwilling to organize any rescue.  Such a result would be a disaster for the Museum, Staffordshire and the nation.  Individual items such as the Wedgwood Family portrait by George Stubbs (illustrated at the top of this article) with depictions of Josiah, himself; his wife, Sarah; their daughter Susannah, mother of Charles Darwin; their sons, John a founder of the Royal Horticultural Society and Tom, a pioneer of photography surely would be refused an export licence.  Similarly, the export or dismemberment of the archive would be unthinkable.  Whatever the court’s decision it will have profound impact on the museum world.  The final question is why did the museum not pay the £60,000 to relive itself of the burden?"