The widow of an art collector whose Rolf Harris painting disappeared from a Birmingham art gallery had her £135,000 damages claim reversed by the Court of Appeal.
Not only will Maxine Hardy have to return the compensation, she will also have to pay an estimated £150,000 in legal costs.
Lovers On The Seine - a version of one of the Australian entertainer’s best-known works - was bought by Mrs Hardy's husband Dean from Castle Galleries in 2005 as an investment for his children.
Mr Hardy arranged for the painting to be stored with other works of art he had purchased at the gallery’s head office and warehouse at Tachbrook Park, Warwick.
But it was noticed that the painting had disappeared from the warehouse later in 2005 and it has never been seen since.
When Mr Hardy died a year later, the family, from Nottinghamshire, took Castle Galleries and its associate company, Washington Green Fine Art Publishing Company, to court.
They won a ruling from a High Court judge sitting in Birmingham that the painting had been “dishonestly appropriated” or lost by Washington Green and he awarded £107,000 damages plus legal costs.
There was no finding against Castle Galleries, which had been put into administration a month before the hearing was due to begin.
But three appeal judges ruled the picture had never been in the possession of Washington Green whose appeal was allowed.
Lord Justice Longmore refused Mrs Hardy permission for a retrial and ordered her to pay the costs of the entire action, with an interim payment of £50,000.
Philip Marshall QC, representing Washington Green, had argued at the hearing that there was no evidence to support any allegation of dishonest appropriation against his clients or any of its officers, including managing director Udi Sheleg.
Mr Marshall said there was no evidence that Washington Green or Mr Sheleg were aware of the existence of the painting prior to its disappearance.
Lord Justice Longmore said that the High Court judge’s ruling was “so tainted by the conclusion that Mr Sheleg was a thief that the judge’s conclusion on possession cannot be allowed to stand and the judgment in Mrs Hardy’s favour will, unfortunately, have to be set aside”.
But the appeal judge said there was no reason why Mrs Hardy should not take action against the insurers of Castle Galleries.