Sotheby's put £15,000 price on £4m picture

Sotheby's has agreed to pay a six-figure sum to the family of a wealthy recluse after its experts failed to recognise a long-lost masterpiece worth millions, it emerged today.

The London auction house reached an out-of-court settlement with the estate of pigswill merchant Ernest Onians, who kept the 17th-century oil painting by Old French Master Nicholas Poussin in a chicken shed on his farm in Suffolk.

Following Mr Onians' death at the age of 90 in 1995, Sotheby's was approached to sell The Sack Of Jerusalem.

However, its experts wrongly attributed its creation to Pietro Testa - an artist in Poussin's circle - and valued it at £15,000 before it was snapped up at auction for £155,000 by St James's art dealers Hazlitt, Gooden and Fox, who recognised its potential.

Three years later, by which time its true identity had been established after restoration, it was sold again to philanthropist Sir Jacob Rothschild - this time for £4.5 million.

Mr Onians's family sued Sotheby's for £4.5million for alleged negligence on the basis that they were misled into selling the masterpiece for only a fraction of its true value. Recent valuations have estimated its value to be up to £12million.

Today a Sotheby's spokesman confirmed: "We have reached a settlement on mutually agreeable terms which are confidential."

Any doubts over the painting's true identity were cast aside by X-rays which revealed an under-drawing consistent with Poussin's technique.

The final stamp of authenticity was provided by Pierre Rosenberg, director of the Louvre, and London-based art expert Sir Denis Mahon.

Mr Onians, a childless widower who lived in a dilapidated water mill in Baylham Mill, near Stowmarket, Suffolk, made his fortune selling "Tottenham Pudding" pig feed made from leftovers collected from London boroughs.

He became an avid art collector and amassed more than 1,000 works, including 175 Old Masters. The Sotheby's auction of his collection, including The Sack Of Jerusalem, fetched £1.2 million in total. Mr Onians is said to have bought the Poussin for £12 at a country house sale in the 1940s. The picture, commissioned in Rome in 1626 by Cardinal Francesco Barberini, now hangs in the Israeli Museum in Jerusalem after Sir Jacob donated it.