Thank you very much.
Mr. Chair and members of the Standing Committee on Finance, the Canadian Art Museum Directors Organization-Organisation des directeurs des musées d'art canadiens, or CAMDO-ODMAC, represents close to 85 art museum directors who lead a diversity of visual arts institutions situated across Canada. Our mission statement asserts that “CAMDO-ODMAC strengthens the ability of Canadian art museum and public art gallery directors to champion art and its significance in society.” It's in this spirit that we address the committee today.
CAMDO-ODMAC is a lean organization, with a volunteer board and one employee; that would be me. Today I'm joined by François Le Moine, a lawyer specializing in art law with the firm Sarrazin Plourde, who was mandated by our board to prepare the museum's intervention in the appeal case.
Last June a Federal Court decision by Justice Manson regarding the application of the Cultural Property Export and Import Act had a significant impact on art museums and galleries in Canada that have an international collecting mandate. The following discussion provides an overview of that discussion and its impact. That includes CAMDO-ODMAC's decision to coordinate an intervention in the appeal of the Manson decision and the April 16 decision of the Federal Court of Appeal in which the Manson decision was set aside.
The Canadian Cultural Property Export Review Board, known as CCPERB, is an independent administrative tribunal constituted by 10 cultural property experts. Under the act, CCPERB is mainly responsible for granting export licences and certifying cultural property for tax purposes. On July 13, 2017, CCPERB rendered a decision on an export licence for Iris bleus, jardin du Petit Gennevilliers, painted in 1892 by French Impressionist painter Gustave Caillebotte. The request for the permit was filed by Heffel Gallery Limited in order to export the work to the United Kingdom after it was acquired by a British commercial gallery during a public auction in Canada. CCPERB decided that the painting met the two criteria of “outstanding significance” and “national importance”, commonly referred to as the “OS/NI” framework, and thereby delayed the granting of the export licence by six months, a period during which a Canadian institution could offer to buy the artwork.
Heffel applied for judicial review of CCPERB's decision by the Federal Court. On June 12, 2018, Justice Manson of the Federal Court found that CCPERB's decision was not “reasonable”. In particular, Justice Manson wrote that the board had misinterpreted the second criteria of “national importance”, and preferred a much narrower definition requiring:
...a direct connection to Canada, such as having been recovered in Canada, made in Canada, made by a person who once resided in Canada, or otherwise having some relation to Canadian history or a Canadian theme or subject.
As a result, the Federal Court quashed CCPERB's decision and referred it back to the board for reconsideration.
Regarding the impact on cultural institutions, the Federal Court ruling placed serious restrictions on the ability of Canada's art museums and galleries, as well as libraries and archives, to have non-Canadian works of art certified by CCPERB as cultural property. Given the structure of the act, the OS/NI criteria are not merely used for export permits. They are also the criteria that govern the granting of tax benefits to those who give works deemed cultural property to a Canadian institution. In other words, following the Manson ruling, a Canadian museum, art gallery, library or archive was far less likely to be able to offer tax benefits to potential donors who wished to donate non-Canadian works. As a result, there was considerable risk that owners of such works would prefer to sell their property on the international market, which would trigger a decrease in gifts of such works to Canadian institutions.
For more than 40 years, and given the very restricted acquisition budgets of many museums, this system has been the main method by which Canadian institutions have acquired works of art. This is demonstrated by the number of major international art donations currently in public collections that have been certified for tax purposes under the act. In addition, donations made under the act contribute to creating educational programs aimed at all audiences; to advancing knowledge, including university research; and to facilitating the negotiation of loans for temporary exhibitions. The tax incentive system thus contributes to Parliament's objectives of preserving and enhancing cultural heritage in the interest of the Canadian public.
On July 11, 2018, the Attorney General of Canada filed an appeal before the Federal Court of Appeal. Responding to members' concerns, CAMDO-ODMAC coordinated the preparation of a motion for leave to intervene in the appeal.
On March 19, 2019, the Minister of Finance announced amendments in the 2019 budget to the Cultural Property Export and Import Act and corresponding provisions in the Income Tax Act. Overall, this is very good news for Canadian cultural institutions, as it would no longer be necessary to demonstrate that cultural property donations meet the criterion of national importance, specifically “such a degree of national importance that its loss to Canada would significantly diminish the national heritage”, in order to qualify for tax incentives.
On April 16, 2019, art museums and galleries received excellent news. The Federal Court of Appeal rendered its decision in Canada v. Heffel Gallery. The judgment set aside the Federal Court ruling and reinstated CCPERB's decision from July 13, 2017. This was the outcome we were hoping for, and it stands as a major victory for art museums and galleries across Canada.
In closing, Canadian art museums and galleries are mandated to collect work of national significance. Many are also mandated to collect and showcase global art and heritage for the Canadian public and for future generations. The Cultural Property Export and Import Act has made it possible, over the course of its 40 years of application, to acquire major artworks, artifacts, archives, books, etc., many of which are acknowledged masterpieces that would have been sold or otherwise given to non-Canadian institutions. We are both reassured and extremely pleased that the ability of art institutions to continue fulfilling their mandates is now protected by the amendment in the budget bill and the recent ruling of the Federal Court of Appeal, which reverses the Manson decision.
Thank you.