Miller, Justin --- "Droite De Suite: A Flawed Concept" [2006] IndigLawB 20; (2006) 6(18) Indigenous Law Bulletin 12

• Droite De Suite: A Flawed Concept

---

Droite De Suite: A Flawed Concept

by Justin Miller

On Monday 27 March 2006, the Sydney Morning Herald article ‘In a World where Gain can be Loss’[1] discussed a number of issues relating to the system of droite de suite, or resale royalty, on the sale of artworks. Under this system, historically operational in France, visual artists receive a royalty payment when one of their artworks is resold in the secondary art market.

In the coming months Attorney-General Philip Ruddock will make a decision as to whether or not resale royalties should be introduced in Australia. While I am sure that Labor MP Bob McMullan’s Private Member’s Bill advocating a resale royalty system[2] is well-intentioned, unfortunately in practice the whole system of droite de suite is fundamentally flawed. In the vast majority of cases, it does not redistribute money to the artists who most need it.

Firstly, the only significant beneficiaries of this proposal will be a small group of highly successful artists and their estates, together with those who administer the collection of fees. Advocates for this system speak of the ‘rights’ of artists to receive a resale royalty. In reality, the imposition of a tax on sales curtails the basic right of art vendors, including artists, to sell their works of art and receive appropriate compensation for each sale. It substitutes a straightforward form of compensation by involving an arbitrary and administratively complex royalty scheme. Interestingly in France, three quarters of the proceeds of droite de suite are enjoyed by the families of six prominent artists, all of them deceased and all of them wealthy. This does not suggest an even distribution across the visual arts community by any stretch of the imagination.

A second argument in favour of the proposal for resale royalties argues that all artists can share in the ongoing increase in the sale of their works as they are traded in years to come. Such payments, as and when an artist’s work comes up for sale, are more akin to the handing out of lottery tickets. Assuming on one hand that an individual artwork does in fact appreciate in value, there is no guarantee whatsoever that it will be sold by its owner in the foreseeable future. On the other, a fortunate artist may find that one of his or her works changes hands a number of times, therefore resulting in multiple resale royalties. Such an arbitrary source of income is surely of limited use to the artist in planning future financial affairs because this system proposes rewarding an artist not so much on how much their work does or does not increase in value, but on the basis of how many times it is resold.

Thirdly, implicit in the suggestion of a resale royalty right is the notion that a visual artist has a continuing financial relationship with a work they previously sold for an agreed sum to a collector. If the proposal is introduced, younger artists will in fact be adversely affected because this imposition of a resale tax on art will logically affect the prices consumers are willing to pay in the first place for an emerging artist’s work.

I do not feel the government has any right to second guess the priorities of living artists by suggesting they may prefer to take part in the lottery of a resale royalty at some future point, as opposed to reaping the immediate benefit of a higher return at the initial point of sale for their work.

If a resale royalty were to be introduced into this country, up to 50 per cent of those royalties would go to the estates of Sir Russell Drysdale, Arthur Boyd, Brett Whiteley, Fred Williams and Sir Sidney Nolan. Not a living artist among them.

A further question that has not been properly addressed is the definition of what constitutes an artistic work. The Copyright Act 1968 (Cth) defines an artistic work as

(a) a painting, sculpture, drawing, engraving or photograph, whether the work is of artistic quality or not;
(b) a building or a model of a building, whether the building or model is of artistic quality or not; or
(c) a work of artistic craftsmanship whether or not mentioned in paragraph (a) or (b)...[3]

Clearly the definition of art is always a difficult one, however, the term ‘works of artistic craftsmanship’ call into question just where the buck stops. If this proposal were to be introduced, it may only be a matter of time before other artists such as architects assert their right to a resale royalty. How would one administer such a complex scheme whereby talented architects and the beneficiaries of their estates felt they too were entitled to receive resale royalties? Tens of thousands of homes and apartments, all unique, architect-designed creations, may become entangled in a resale royalty scheme. The size of the administrative functions needed to oversee the collection of resale royalties on the sale of architectural works – homes, apartments, offices – is quite mindboggling.

Not unlike the property exit tax in New South Wales which was recently dropped by the Iemma Government, a proposal to introduce a resale royalty on art in this country retrospectively curtails the rights of current owners of art. Whether the work of art they own has gone up or down in value, they will be levied a resale royalty. I believe the resale royalty proposal places an impediment on a visual artist’s freedom to trade his or her work in an open manner. The imposition of such a royalty may well incline many art sales to be removed from high profile public auctions to private sales, thus reducing the visibility of artworks and promotion of artists across the board. To impose a royalty which will advantage a small subset of wealthy artists and their estates makes no sense.

Justin Miller is Chairman of Australian Art at Sotheby’s.

---

[1] Sunanda Creagh, ‘In a World where Gain can be Loss’, Sydney Morning Herald (Sydney), 27 March 2006.

[2] Artist’s Resale Rights Bill 2006 (Cth).

[3] Copyright Act 1968 (Cth) s 10.