The case highlights the problems that can arise when an auctioneer conducts business without a client account to keep buyers’ and sellers’ money separate from general business accounts.
The Toy Auctioneer is part of West London company Clockworx Ltd, (best known as its former trading name, Auctioning4u) who opened some of the UK’s first eBay drop-off shops in 2003.
As previously announced in ATG, The Toy Auctioneer, a subsidiary for selling better quality antique toys via eBay and through traditional auctions, was launched last autumn and based around the expertise of teddy bear specialist Daniel Agnew, who left Christie’s in August. The sale at the Chelsea Town Hall on December 12 was the first ‘bricks and mortar’ auction staged by the firm. It included an early Steiff pull-along dancing bear or ‘Tanz-Baer’ sold at £7200.
However, the experience began to turn sour for Mr Agnew and some of his vendors when it emerged that, after five years of trading, Clockworx Ltd had gone into receivership.
Following changes to the original business model (helping consumers sell unwanted possessions on eBay for a percentage), their core business had become selling problem stock for retailers of fashion and electrical goods.
According to Price Waterhouse Cooper, who are acting as receivers in the case, the firm’s liabilities include £1.8m lent in venture capital. Many more smaller claimants are believed to have bought merchandise over eBay although as the Clockworx Paypal account was held in the name of the director’s wife rather than the company name, Paypal have asked that PWC produce a court order before they are willing to disclose any information about individual transactions. This will certainly take time, particularly as PWC believe this case is the first of its kind in the UK. However, Paypal appear to be settling most disputes whenever raised, up to a value of £500.
But Paypal’s buyer protection scheme offered no security for vendors at the £80,000 teddy bear sale conducted by The Toy Auctioneer in more traditional circumstances at the Chelsea Town Hall on December 12.
The vendor of the best-selling lot of the sale – the Steiff pull-along dancing bear – is among those who are yet to receive money.
Upon the advice of Daniel Agnew, Harry Hanham, an 18-year-old trainee auctioneer working at John Nicholson’s saleroom in Fernhurst, Surrey, consigned the bear for sale in August 2007 in the hope of raising funds to embark upon a travelling expedition.
By the middle of January he had yet to receive his cheque (the terms and conditions of sale stated vendors would be paid within 28 days) and he began a regular exchange of emails with an apologetic Mr Agnew. The correspondence continued until February 25 when Mr Hanham was told by the firm’s departing accountant that his contact should now be a case manager at Price Waterhouse Cooper. He later visited The Toy Auctioneer’s West London premises at 5-7 Park Royal Road to find them boarded up.
It does, however, seem that in this case the vendor will receive his money. Fortunately for Mr Hannam, the buyer of the bear, a leading collector, had been very late in settling his bill and collecting the merchandise. He paid after a Natwest client account was belatedly set up by Clockworx on January 15.
When funds were received on February 9, they were seemingly sent back to the buyer by the bank in error following PWC’s decision to freeze all company outgoings. A representative of PWC told ATG that the bill for the Tanz-Baer had since been honoured and the vendor will be paid providing legal counsel for the administrators are satisfied the account was set up correctly.
Daniel Agnew, who told ATG he was not made aware of the dire financial position of the company until some time after the escrow account was set up in mid January, says around ten of his vendors from the sale are yet to be paid. He believes the large majority of consignors to the Chelsea sale were issued cheques within 28 days as promised and he is hopeful other money is safe in the eleventh hour client account.
However, although only a short-term employee of a start-up company, he conceded the experience had tarnished his reputation.
“I feel very responsible. It has left me in a very awkward position and [in regards to my career] I really can’t do anything until this matter is resolved.”
By Roland Arkell
