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News / February 7, 2019

Unprecedented Art-Law Appeal Heads to Court

A number of Canadian art museums are interveners in the appeal, arguing that the results affect public collections in a huge way
Canada's Federal Court offices in Ottawa are inside this building at 90 Sparks Street. Photo: Google. Canada's Federal Court offices in Ottawa are inside this building at 90 Sparks Street. Photo: Google.
Canada's Federal Court offices in Ottawa are inside this building at 90 Sparks Street. Photo: Google. Canada's Federal Court offices in Ottawa are inside this building at 90 Sparks Street. Photo: Google.

This morning, the Federal Court of Appeal in Ottawa is home to a case unlike any other it has seen before.

At 9:30 a.m., Justice Boivin, Justice Gleason and Justice Rivoalen began weighing the evidence on whether to overturn a prior decision that several Canadian art museums have said deeply degrades their ability to build strong public art collections.

That earlier decision, which the group of museums are challenging along with the Attorney General, was issued in June 2018. At the time it was called “a once-in-a-generation case” by Alex Herman of the Institute for Art and Law in the UK.

In that original, exceptional June case, Heffel Fine Art challenged an export ruling of the Canadian Cultural Property Export and Review Board in court for the first time, and won. But there was immediately a problem for museums: because of the way Canada’s Cultural Property Export and Import Act is structured, the Heffel win also changed interpretation of law that many Canadian museums, since 1977, have been leveraging to snag significant art donations. In the past, museums were able to argue that, under the act, many artworks were of sufficient “national importance” to earn art donors a tax credit based the market value of their donated artwork. Since the June ruling, though, and the earlier judge’s narrower interpretation of “national importance” as having an artwork pertain more directly to Canada, many museums haven’t been able to secure tax receipts for donors for donation of more international or less strictly “Canadian” artworks. Hence fewer art donations—and hence the legal appeal begun this morning.

“This is the first time since the enactment of the Canadian Property Export and Import Act in the 1970s that there has been a debate about its criteria for national importance and outstanding significance,” says lawyer François Le Moine.

“This is the first time since the enactment of the Canadian Property Export and Import Act in the 1970s that there has been a debate about its criteria for national importance and outstanding significance,” says lawyer François Le Moine of Montreal’s Sarrazin+Plourde. Le Moine will be in court today as one of the lawyers representing the art museums (and one university library) that are acting as interveners in the case. “This is not something that happens very often.”

Le Moine says there have been some legal cases brought in the past that have to do with financial value CPERB has assigned to a work of art, but in this case there is something “more fundamental” at play. He hopes to demonstrate, at least in part, to the appeal judges that the original June 2018 decision had an “impact was not intended by the Federal Court”—that is, a negative impact on Canadian museums’ abilities to build diverse public collections. Today, LeMoine hopes to have the museums’ affadavits entered as fresh evidence of that unintended impact, which has dried up art donations to public collections, or at least stalled hundreds of donations already in process.

In total, eight art-related museums are intervening in the appeal: the Beaverbrook Art Gallery, the Musée d’art contemporain de Montreal, the Winnipeg Art Gallery, the Vancouver Art Gallery, the Royal Ontario Museum, the Remai Modern, the Art Gallery of Ontario, and the Musée des beaux-arts de Montreal. The university library intervening is the Thomas Fisher Rare Book Library at the University of Toronto.

“Canadians go to art museums and art galleries across the country expecting to experience art of all kinds, from all places and from all time periods,” says Moira McCaffrey of CAMDO-ODMAC.

“In an ideal world, what we are asking is for the court to reverse the [June 2018] decision,” says Moira McCaffrey, executive director of the Canadian Art Museum Directors’ Organization (also known as CAMDO-ODMAC).

CAMDO-ODMAC has coordinated the intervener effort, and it says the appeal is of importance to all Canadians in that it challenges the June 2018 decision’s interpretation of what art, exactly, is important to us.

“Canadians go to art museums and art galleries across the country expecting to experience art of all kinds, from all places and from all time periods,” says McCaffrey. “There are museums and libraries where we have the opportunity to experience, to learn about, to appreciate, and to enjoy art from anywhere in the world and from any time period, and we have come, I think, to see that as our right as Canadians.”

The courtroom today is booked for four hours, from 9:30 a.m. until 1:30 p.m., but it’s unclear how long the proceedings will actually run. The justices already have the decision and evidence from the original June trial, as well as hundreds of pages of intervener submissions, in hand. And it is up to them whether they will want to probe any of the parties further for additional information.

“Curators have to make a very strong case as to why [the submitted artwork] is of outstanding significance and national importance. Not that we didn’t have to do that back then [in the 80s], but there is a higher burden of proof now,” says Tom Smart of the Beaverbrook Art Gallery.

Tom Smart is CEO of the Beaverbrook Art Gallery, which is one of the interveners in the appeal—and he says there is much, indeed, for its judges to consider.

For one, he says, the art-donation tax-credits made possible under previous interpretations of the Cultural Property Export and Import Act have been important to help build art collections at Canadian museums and galleries for decades. The use of them is far from new.

“I was here in late 80s and 90s [as a curator] and we were able to acquire a number of works through donation” under the old interpretations of outstanding significance and national importance, says Smart.

And while the Federal Court’s Justice Manson, in his June 2018 decision, implied that CPERB had been interpreting “outstanding significance” and “national importance value” too loosely in recent years, Smart says that he’s noticed the rigour of the board on these criteria has actually tightened up significantly since the 1980s.

“One thing I have noticed in recent years is that the process is taking longer, and it is more rigorous in the way the act is being applied—and rightly so,” says Smart. “Curators have to make a very strong case as to why [the submitted artwork] is of outstanding significance and national importance. Not that we didn’t have to do that back then [in the 80s], but there is a higher burden of proof now.”

A decision on the appeal could take up to six months, though could possibly come sooner. Depending on how the decision falls, art institutions and art dealers will have to adjust.

“If the appeal fails and if institutions don’t have the money to go to the market regularly to buy million-dollar-plus things, what they will have to do is work harder with the community of collectors,” contends independent art historian Gregory Humeniuk.

“If the appeal fails and if institutions don’t have the money to go to the market regularly to buy million-dollar-plus things, what they will have to do is work harder with the community of collectors,” contends independent art historian Gregory Humeniuk. “The museums will have to work harder to actually borrow those things that are in private hands, and use those things in private hands, and exhibit them, and publish them, and make them part of the national culture that way.” (That is, once an artwork’s importance to national culture has been established by exhibiting, it may then meet newer, narrower interpretations of “national importance” criteria.)

“And if the appeal is successful,” considers Humeniuk, “it will continue to be an impediment to [art] trade.…. Canadian dealers who might be selling a painting to a Belgian or American could have their livelihoods are affected by these things.”

Humeniuk has worked in multiple sectors affected by the appeal: from the institutional side at the Art Gallery of Ontario, to the commercial side as a freelance author of essays for auction catalogues. Is it possible, should the appeal fail, that Canadian art collectors could ever return to a pre-CPERB, pre-1977 norm of simply donating artworks to Canadian museums without a special tax credit available? Humeniuk doubts it: “I cannot tell you what it would take to reignite that kind of civic engagement,” he says.

Whatever the outcome is of today’s appeal for museums, dealers and collectors, it is due to be historic.

“I teach courses on art law,” says lawyer François Le Moine, “And I will have to teach quite a long time to come across one of these cases again.”

The lawyers for Heffel Fine Art, as well as the Attorney General and the Department of Canadian Heritage, were also contacted for comment on this appeal.

Heffel’s lawyers at Conway Baxter LLP in Ottawa said no comment was available at this time.

Response from a government spokesperson stated: “The Department of Canadian Heritage cannot comment on this issue while it is before the court. The Government of Canada is aware of the worries that the case has caused within the museum and gallery sectors. That is why a timetable for expediting the appeal was agreed upon by the parties and was endorsed by the Federal Court of Appeal.”

Leah Sandals

Leah Sandals is news and special sections editor at Canadian Art. She has also written for the Toronto Star, National Post and Globe and Mail, among other publications. She welcomes tips, corrections and comments anytime at leah@canadianart.ca.