In review: art disputes in Canada

An extract from The Art Law Review, 1st Edition

Art disputes

For reasons relating to Canadian federalism, questions about property and ownership of personal or movable property are of provincial concern. This is because property and civil rights fall within the provincial jurisdiction under the Canadian Constitution. As a result, there is no pan-Canadian set of rules that applies when it comes to purchasing art and obtaining title, but rather one that will rely on the relevant province in which the transaction occurs. That said, certain generalities exist across the nine English-speaking provinces, which take their lead from English common law principles.

For instance, the common law principle of nemo dat quod non habet applies across Canada's English-speaking jurisdictions. The consequence of this is that title remains with the original owner of movable property and a subsequent possessor will not be able to pass on any better title than the possessor actually has. By this principle, a thief will never be able to pass on any better title than he or she has (that is, it can always be trumped by superior title on behalf of the true owner). However, this is subject to the limitation or prescription periods, which will be different depending on the province (see Section III.iii).

In the French-speaking province of Quebec, the situation is rather different. This is because Quebec operates a private law system on the basis of a Civil Code, similar in many ways to those found in Continental Europe, drawing their inspiration from the Napoleonic Code of 1804. As a result, some of the rules relating to acquisition and title share more with principles of French law than with the systems of Quebec's neighbouring provinces. This is one example of a challenge that has existed since Canada's inception: French and English embodying two solitudes at work within a single state. The Civil Code of Quebec, for instance, repeats the famous French adage that 'en fait de meubles, possession vaut titre' ('regarding movable property, possession equals title'), though this is of course subject to the rules of prescription (see Section III.iii).

In Canada, there have been surprisingly few restitution disputes relating to Nazi-spoliated art. As reported in the press, there have only been three returns by Canadian museums to the heirs of Holocaust victims: a Vuillard returned by the National Gallery of Canada in 2006, a van Honthorst returned by the Montreal Museum of Fine Arts in 2013 and a Verspronck returned by the Hamilton Museum in 2014. As far as reported, these returns were all made upon moral, as opposed to legal, grounds. This is because of the issues relating to limitation and prescription periods (see Section III.iii) by which it would be almost inconceivable for the heirs of a spoliation victim to retain title despite the passage of time. Nevertheless, provenance work by some of the major museums has been undertaken and certain results made public.

On the topic of the recovery of Nazi-spoliated art, something must be said about the work of the Max Stern Art Restitution Project (MSARP). This is a restitution campaign run out of Concordia University in Montreal that seeks to recover the more than 200 works sold by German Jewish dealer Max Stern at a forced-sale auction in Düsseldorf in 1937. After fleeing Germany, Stern had ended up in Canada where he had made a life for himself as a successful dealer in Canadian art. When he died in 1987 his beneficiaries were Concordia University, McGill University and the Hebrew University in Jerusalem. After learning about the 1937 forced sale, the beneficiaries decided to attempt to track down the paintings, scattered as they were around the world, and for this purpose established the MSARP. Beginning operations in 2002, it has successfully recovered over 20 works of art, including in the United States and Germany.

As with title and ownership, limitation periods are a matter of provincial jurisdiction. They will therefore differ across Canada's 10 provinces. For example, the general limitation period in Ontario, Canada's most populous province, is two years. This period generally begins when the claim has been discovered. If a claim in conversion is brought against a purchaser of personal property for value acting in good faith, it must be brought within two years of the conversion.

In Quebec, the Civil Code covers matters of 'prescription' (the term also found in France and most Continental European jurisdictions). The general rule is broadly as follows: a good faith possessor acquires title in movable property through acquisitive prescription three years from the original loss or theft. If the possessor is not in good faith, the acquisitive prescriptive period is 10 years. However, in both cases the possession must be peaceful, continuous, public and unequivocal to qualify. This matter was recently dealt with by the Quebec Superior Court, which decided that, in the case of a stolen painting held by a good faith possessor, hanging the painting in his home was sufficient to qualify as 'public' possession. As such the possessor gained title through acquisitive prescription.

Like most advanced countries, the Canadian legal system is very familiar with arbitration as a method for resolving disputes, including art disputes. Each province will have specific laws recognising the validity of arbitration awards, which in cases of dispute may need to be approved through the courts. There are no specific alternative dispute procedures for art-related disputes.

One of the longest and most bitterly fought arbitrations in the art world took place in Canada. This was the dispute over the collection of Lord Beaverbrook, a Canadian-born UK statesman and newspaper magnate who had assembled works during his lifetime and disposed of them in the 1950s. A man of great wealth, Beaverbrook had established a gallery in his boyhood province of New Brunswick and had transferred his collection to the gallery through the legal vehicle of a UK-based foundation. The near-entirety of the collection remained at the New Brunswick gallery for some 40 years following Beaverbrook's death in 1964. In 2003, a dispute arose when the UK foundation sought formal recognition of its ownership, as well as the return of the two most valuable works in the collection for the purposes of sale (JMW Turner, The Fountain of Indolence and Lucian Freud, Hotel Bedroom). The gallery fought back, claiming that these had been the subject of a gift by Beaverbrook to the gallery upon its opening in 1959.

The parties agreed to resolve the dispute through arbitration, and decided on a hearing by a single arbitrator, a retired justice of the Supreme Court of Canada. The arbitrator found in favour of the gallery, deciding the matter on the law of gift. The rules for gift in New Brunswick that applied were the same as in other common law jurisdictions: because there had been delivery, intention to give and acceptance, a gift of the collection works was found to have occurred in 1959. The UK foundation was not satisfied with the result and decided to appeal the award. The parties had provided for an appeal mechanism in their arbitration agreement, so an appeal was heard in Toronto by an appellate arbitral tribunal, this time consisting of three retired Canadian judges. Despite attempts by the appellant to undermine the original award (presenting, in the tribunal's words, a 'tsunami' of written and oral submissions), the tribunal approved the original arbitrator's award. The gallery was therefore victorious and the vast majority of the works – including the Turner and the Freud – remained in Canada, at the Beaverbrook Gallery in New Brunswick.