![Mossgreen founder Paul Sumner photographed in 2016 at the opening of the auction house’s Sydney rooms.](http://web.archive.org./web/20180330232837im_/http://www.afr.com/content/dam/images/h/0/v/t/b/d/image.related.afrWideArticleLead.940x529.h0jir3.png/1519358971262.jpg)
Over dumplings at Fei Jai restaurant in Sydney’s Potts Point, siblings Mark, Victoria and Richard Coppleson – the latter the high-profile Bell Potter stockbroker – drew straws. The three were having supper after packing up their parents’ possessions at the 1930s penthouse apartment in which they had lived. Their glamorous mother, who had been an editor-at-large at Vogue through the 1980s, had passed away in 2005. Their father had died in April 2017.
A few months after his death, the apartment was sold for almost $9 million to Gretel Packer and the Copplesons’ artworks and antiques were consigned for auction at Mossgreen. Having already taken the artworks they wanted to keep for themselves, the three siblings decided in a last-minute change of heart to save from the auctioneer’s rostrum a set of four lithographs by Brett Whiteley. Mark and Richard took one Whiteley each. Victoria took two, having drawn the longest straw drawn from the clenched hand of an obliging waitress.
As it turned out, all three of the Copplesons drew short straws. On December 21, three weeks after the auction of the Malcolm and Patricia Coppleson Collection, Mossgreen called in administrators, with debts of $12 million and just $3 million in cash and receivables. The Coppleson auction had raised $466,000 (after Mossgreen’s commission) but the family had not been paid a cent.
“There are times when my stomach churns,” says Mark. “It’s not about the money. It’s the fact that this whole thing has tarnished Mum and Dad’s memory. This was a collection they spent 50 years putting together and the proceeds of that were not supposed to go into a bottomless pit created by Mossgreen.”
Mossgreen creditors lose out
The Copplesons are just one of 400-odd creditors owed $5.8 million who consigned art, antiques, decorative arts, cars, rare stamps, books and photographs to Mossgreen, which had grown rapidly from its founding in 2004 to become, at one point, Australia’s third-largest art auction house. Especially galling: Mossgreen had cornered the market for single-vendor auctions; they were the go-to for people looking to sell their family’s patrimony.
Creditors include Perth couple Sophie and Paul Chamberlain who are owed $1.7 million from the sale of rare, historic books collected by Sophie’s father, the late Martin Copley. The Hickinbotham family, prominent in Adelaide, are owed $1.2 million from the auction in June of their art collection, which included Russell Drysdale’s Grandma’s Sunday Walk hammered down for $3 million – an artist record. One man from Nambour, Queensland, is owed $20,000 from the sale of a small piece of the Eureka flag, given to his great-grandfather by Peter Lalor who led the Eureka Rebellion. The money was supposed to go towards an orphanage in India.
Coming as a complete surprise to virtually everyone, Mossgreen was not obliged to keep auction proceeds in a trust account. Sell your house, and your real estate agent cannot touch money paid by the purchaser that is owed to you. Sell a Russell Drysdale for $3 million, and your auctioneer can treat your money as their own.
“It’s all unregulated,” says Mark Fraser, the former chairman of auction house Bonhams and now an independent art consultant. “That’s the ridiculous thing about the Australian art market. You don’t need a licence, you don’t need any form of training. Apart from the general consumer laws, there’s nothing that governs what an auction house can do.”
Journeying back though the rise and fall of Mossgreen reveals just how much fun an auction house can have with other people’s money. For years Mossgreen’s competitors – Sotheby’s, Deutscher and Hackett, Menzies, Bonhams – wondered how the company was staying afloat and keeping on the lights in its sumptuous Melbourne and Sydney showrooms. They’re now beginning to find out. The Australian Financial Review Magazine can reveal that Mossgreen lost money in each of the five years before it went under. Its client account, where funds from auctions were held before being disbursed to vendors, had a shortfall going all the way back to December 2013.
Lavish Mossgreen events
It’s the evening of November 29, 2017, and Mick Fleetwood is regaling a small crowd at a ticketed event with stories of how Fleetwood Mac almost fell apart as it recorded its legendary 1977 album, Rumours. The venue is the top floor of Mossgreen’s auction rooms in Sydney’s Woollahra, a stately, three-storey, late 19th-century building rented for $440,000 per year from noted antiques dealer Anne Schofield.
![Mark Coppleson at home: “There are times when my stomach churns. It’s not about the money. It’s the fact that this whole ...](http://web.archive.org./web/20180330232837im_/http://www.afr.com/content/dam/images/h/0/v/t/r/y/image.imgtype.afrArticleInline.620x0.png/1518503969992.jpg)
Melbourne-based Mossgreen had moved into the Queen Street address in 2016 and spent about $600,000 on refurbishments, installing heating and airconditioning, glass walls to divide offices and new lights. It dwarfed the single-storey building occupied by Sotheby’s two doors down.
The Sydney showrooms were much larger than was needed to simply auction art. But Mossgreen’s ambitions were larger still. It was both an auction house and commercial art gallery, an unusual hybrid straddling two different markets. From its headquarters in Melbourne’s Armadale it operated tea rooms (run by catering king Peter Rowland, now owed $134,000). In both Sydney and Melbourne its premises were available for “private and corporate events including cocktail parties, stylish weddings and fashion trunk shows” through Mossgreen Events, run by Amanda Swanson, the partner in business, and in life, of Paul Sumner, Mossgreen’s founder and chief executive.
Invariably described by all who know him as charming, Paul Sumner, 51, was born in Bath in Britain, the son of art and antiques dealers. He is a skilful auctioneer with a provenance that includes senior roles at Christie’s, Sotheby’s Australia, Sotheby’s in London and, briefly, at Lawson Menzies. He started Mossgreen in 2004 by selling artworks from his Potts Point apartment, in the same building as the senior Copplesons’. (Mark recalls his mother would sometimes invite Sumner up for a drink.)
“Paul is very good at winning business, he can be very persuasive,” says one close colleague. But at that November event starring Mick Fleetwood there was a crispness to his smile. As guests were served champagne by attentive wait-staff, and implored to buy Fleetwood’s limited-edition book (recommended retail price £325, or $565), Sumner would have known his business was almost out of time.
![Mick Fleetwood was the star attraction at a ticketed event held at Mossgreen’s auction rooms in Sydney in November 2017.](http://web.archive.org./web/20180330232837im_/http://www.afr.com/content/dam/images/g/z/u/n/m/4/image.imgtype.afrArticleInline.620x0.png/1518570513328.jpg)
Paul Sumner's image management
At its peak in early 2017, Mossgreen had 55 staff, almost double the workforce of Sotheby’s which auctioned three times as much art. It spent $1.3 million kitting out its Melbourne premises – vacated in 2013 by Sotheby’s – with new lifts, new lighting and even a photographic studio for cataloguing. “It was like something you’d see in Madison Avenue or New Bond Street in London,” says one senior Mossgreen employee. “It was OK when it was Sotheby’s, a bit worn. But Paul took it to a whole new level of style.”
Which speaks to another trait that those who’ve worked alongside Sumner, an expert in decorative arts, agree on: his taste. “Paul’s greatest strength is presentation. He has a great eye for interior design. He knows what it costs to make something look beautiful,” says one long-time associate who worked with him before he founded Mossgreen. He would insist on being involved right down to the layout of catalogues. And the catalogues, it was widely agreed, looked very good.
For its single-vendor auctions that were its core strength, Mossgreen created catalogues that beautifully told the story of the people who had collected the items up for sale. “Patricia and Malcolm Coppleson were a formidable couple,” read the opening essay at the start of the catalogue for the Coppleson Collection. “Both influential and gregarious on the Sydney social scene, they were very well known and liked within society and within artistic circles.” On the catalogue’s back, a photo of printed invitations to balls, parties and dinners in the 1980s and 1990s that the couple had kept in a shoebox: invitations from Mr and Mrs Kerry Packer, Mr John Laws and Lady Fairfax.
![Paul Sumner at the Mossgreen headquarters in Amadale, Melbourne, that Jack Gringlas bought for $5 million, then spent ...](http://web.archive.org./web/20180330232837im_/http://www.afr.com/content/dam/images/h/0/d/z/q/h/image.imgtype.afrArticleInline.620x0.png/1516273268249.jpg)
Anyone still alive was tracked down and invited to the auction. “If you put in the good stuff, then you’ll clear everything,” Mark Coppleson was told by Mossgreen staff. Hence there were prized paintings by Fred Williams and Tim Maguire, but also tattered art books and wine that was almost certainly undrinkable. All but four of the 179 lots were sold.
$340,000 salary for Sumner
In 2011 Mossgreen had auctioned the estate of the late art patron Ann Lewis for a total hammer price of $7 million. In 2014 came the contents of Musk Farm, the country estate owned by the late interior decorator Stuart Rattle. A year later came the auction of the estate of Peter Elliott, which took three days and raised another $7 million.
By 2016 Sumner was drawing a salary of $340,000 while Amanda earned $120,000. His package included return flights to Paris twice a year for himself and Amanda so they could source items to be consigned to auction from their own trading company. In May 2017, Sumner became a brand ambassador for a Melbourne Jaguar dealership. “Off again in my Jaguar F Pace to an interstate client visit,” he wrote on Instagram in October. “It’s the most practical and luxurious car I have ever driven.”
But while Mossgreen had some blockbuster auctions, many others raised only a few hundred thousand dollars, well below the $1 million that industry veterans say is needed for an auction to make money. “It can cost you as much to auction off a $600 piece of Royal Doulton as it does to sell a $10,000 painting,” says Mark Fraser, who questioned whether Mossgreen spent too much on its premises. “If you’ve got good stuff to sell, you can sell it in a tin shed, you don’t need fabulous auction rooms.”
Mossgreen gave itself 60 days to pay clients, double the 30 days that is standard elsewhere. It used money in its client account as a spare line of credit and the shortfall, according to two sources, kept growing. The final hurrah was the auction in Adelaide on June 25 of the Alan and Margaret Hickinbotham collection, which raised $4.3 million, mostly thanks to the $3 million sale of the painting by Drysdale. The Hickinbothams were due to be paid their money in late August, but were asked to accept a deferred payment plan. Yet the purchaser, according to a source inside Mossgreen, paid the money in early July. A sudden change inside Mossgreen’s business in July meant the shortfall in the client account had become a very big problem. The money was still coming in, but it could not all flow out.
Jack Gringlas buys in
Melburnian Jack Gringlas collects stamps. He also collects stakes in auction houses. In 1998 his philatelic interests prompted him to buy into Charles Leski Auctions, a stamp specialist run by a close friend. In 2013 he bought into Mossgreen. His deep pockets would fuel five years of rapid growth for Sumner’s business. After he zipped those pockets shut it would take just five months for Mossgreen to collapse.
![Paul Sumner in an Instagram post from last June.](http://web.archive.org./web/20180330232837im_/http://www.afr.com/content/dam/images/h/0/j/w/m/6/image.imgtype.afrArticleInline.620x0.png/1516172469486.png)
Sumner declined to be interviewed by AFR Magazine, saying he had been warned not to talk to media by Gringlas’ lawyers. But he’s spent the weeks following Mossgreen’s collapse flying around the country talking to creditors, telling them that he will do everything possible to ensure they are paid all the money they are owed, and apportioning all blame to Jack Gringlas. According to Sumner’s version of events, as recounted by three creditors, Gringlas and Leski – who were on the board along with Sumner – resisted all of Sumner’s efforts to reduce costs. This is categorically rejected by Gringlas, who says Sumner is trying to blame others for the collapse of a company of which he was the managing director.
Gringlas, who has run successful engineering and manufacturing businesses, was Mossgreen’s non-executive chairman and also its magic pudding. In 2013 he invested $1.6 million into Mossgreen in return for 40 per cent of its equity. His friend Charles Leski bought a further 20 per cent, leaving Sumner with the rest. Gringlas outlaid $5 million to buy the building in Armadale that Sumner wanted for Mossgreen’s headquarters, and lavished $1.7 million on its refurbishment (plus, through his equity investment, he effectively funded the $1.3 million that Mossgreen itself spent). He also gave the business a line of credit, with interest charged at 8 per cent. By 2017 he had lent $6 million to Mossgreen.
He was fully aware that Mossgreen was helping itself to money out of its client account, but says he was diligent in ensuring he topped the money up. Each board meeting he asked Mossgreen’s company secretary, Kylie Jolley, for the size of the shortfall. “I would make sure my funding to the company matched that amount,” Gringlas tells AFR Magazine. “I wanted to make sure that if the company was using money from the client account, it had sufficient funds to pay all vendors.” This technical shortfall in the client account, he says, began in December 2013. His loan was secured against the company’s assets, and backed by a personal guarantee by Sumner.
Gringlas gets out
Having agreed to fund Mossgreen’s growth, by mid-2017 Gringlas had had enough of funding its losses. Sumner had failed to hit profit targets and the business had lost money in every year since his 2013 investment. In July last year, Leski and Gringlas sold their combined 60 per cent in the business to Sumner for $2.4 million, the same price for which they had bought in four years earlier. Sumner didn’t have the money, so Gringlas agreed he could pay in four years’ time.
He also gave Sumner two years to find new backers so Mossgreen could pay back the $6 million. He sold the Armadale building for $10 million, which was touted by real estate firm CBRE as having an “extremely rare 12-year net lease to Australia’s leading international auction house Mossgreen”. And then, on July 31 he and Leski left the board.
The straw that hastened the breaking of Mossgreen’s back was A Contemporary Vision, an auction last September of contemporary artworks owned by a British entrepreneur and freighted at considerable expense from Britain to Melbourne. “There hasn’t been an auction like this in Australia,” Sumner told the Financial Review in August. “It’s very left field.”
Targeting wealthy Chinese collectors, the total lower estimate of the auction was $6 million, but it raised just $400,000. The commission earned by Mossgreen was less than the cost of the transport and insurance of shipping items across the world. In late September, Mossgreen sought advice from financial services firm BDO as to its position. BDO was formally retained one month later and told Sumner in November that Mossgreen might be insolvent.
![The Hickinbotham family are owed $1.2 million from the auction in June of their art collection, which included Russell ...](http://web.archive.org./web/20180330232837im_/http://www.afr.com/content/dam/images/g/w/b/s/1/w/image.imgtype.afrArticleInline.620x0.png/1495584630644.jpg)
On a December 21 post to its Facebook page, Mossgreen thanked customers for their support and said the business would reopen in mid-January. Sumner called in BDO that afternoon, but just before formally appointing the firm as administrators, he tried to cut a deal with Gringlas.
Haggling over the debt
Sitting in Mossgreen’s Melbourne boardroom, Sumner reminded Gringlas that if the company went under Gringlas would lose his entire investment. If Gringlas agreed to forgo his $6 million debt, Mossgreen could survive and Gringlas would eventually be paid the $2.4 million Sumner owed when he bought out his shares. Furthermore, Sumner added, Gringlas had made a handsome profit on selling the building, which was more valuable thanks to the 12-year lease to Mossgreen. Gringlas agreed to forgive the $6 million debt, on the proviso that Sumner could find a way to rescue the company. Even allowing for the waiving by Gringlas of its debt, Mossgreen was still short by about $2.5 million.
Sumner was due to provide a proposed deed of company arrangement, with details of his new financial backers, by January 15. He’s told creditors that he found new investors, but they were scared off when Gringlas told The Age on January 5 that the chance of creditors getting their money back “doesn’t look good”. Gringlas says he believes Sumner did not have new backers lined up, adding that Sumner refused to identify them to both him and the administrators.
On January 17 the administrators announced that Sumner was unable to restructure the debt and Mossgreen would be wound up. Creditors are still waiting for their next meeting to vote on liquidation. Gringlas says he’s upset by the whole affair, and points out that he’s lost millions yet did everything he could to help Sumner find a solution. “I never took money out; I never changed the financial structure of the business,” he says. “Everything Paul asked for, I gave him.”
Three weeks after the administrators said Mossgreen would be wound up, Sumner was still telling creditors the business would reopen. “Ultimately no auction clients will ... have lost money in the process,” he wrote in an email sent on 6 February. “We will however open with a trust account as this will protect everyone better than before.” He’s also told some creditors that Gringlas has threatened to bankrupt him. Gringlas denies this, but then adds, “that doesn’t mean I won’t. He owes me $6 million.”
Meanwhile auction houses are suddenly fielding inquiries as to whether they keep client money in an audited trust acount. Sotheby’s, Bonhams, Menzies and Deutscher and Hackett all say they do – although there is no industry standard. “Trust accounts should absolutely be a requirement,” says Chris Deutscher of Deutscher and Hackett. “The law should be changed, we’ve just seen the reason why.”
The Arts issue of AFR Magazine is out on Friday, February 23 inside The Australian Financial Review.
![This Mossgreen feature appears in our annual Arts issue, out Friday February 23 inside The Australian Financial Review. ...](http://web.archive.org./web/20180330232837im_/http://www.afr.com/content/dam/images/h/0/w/3/h/f/image.imgtype.afrArticleInline.620x0.png/1519110628676.jpg)