Citation: 2009 TCC 599
Date: 20091123
Dockets: 2006-3539(IT)G,
2006-3540(IT)G
BETWEEN:
MARTINE NANTEL,
DENIS LAROCQUE,
Appellants,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
Bédard J.
[1]
These two appeals were
heard jointly under the General Procedure. Martine Nantel and Denis Larocque
(the appellants) are appealing from the reassessments made September 25, 2003,
by the Minister of National Revenue (the Minister) for their 1999 and 2000
taxation years. In issue in this case is the fair market value (FMV) of works
of art by the artists George Delfosse (Delfosse) and Henri Hébert (Hébert) that
the appellants donated to the Laurier Museum (museum) in 1999 and 2000.
Background
[2]
On December 30, 1999,
Ms. Nantel gave the museum 90 works by Delfosse. That same day, Mr. Larocque
gave the museum 24 works by Delfosse and 50 by Hébert. On February 7,
2000, Ms. Nantel and Mr. Larocque gave the museum 73 works by Hébert and Mr.
Larocque gave the museum 55 by Delfosse. The works the appellants gave the
museum are part of a set of works (242 by Delfosse and 50 by Hébert) that Mr.
Larocque had acquired in 1981 and 1982, from Madeleine Delfosse, Delfosse's daughter,
for around $3,000.
[3]
To determine the value
of these donations, Richard Pedneault, the manager/curator of the museum since
1988, hired Bernard Desroches, an art gallery owner in Montreal since 1970. Mr. Desroches assessed the value of the works Ms. Nantel
donated to the museum at $33,910 in 1999 and $35,095 in 2000.
Moreover, Mr. Desroches assessed the value of the works Mr. Larocque donated to
the museum at $30,292 in 1999 and $37,057 in 2000.
[4]
In her tax report for
the 1999 taxation year, Ms. Nantel indicated she had donated works of art
valued at a total of $33,910 to the museum and, as a result, applied for an
in-kind charitable donation tax credit. Moreover, in her tax return for the
2000 taxation year, she indicated she had donated works of art valued at a
total of $33,095 to the museum and, as a result, applied for an in-kind
charitable donation tax credit. Relying on the appraisal report of these works
donated by Ms. Nantel, that had been prepared by Kathryn C. Minard (an
independent art appraiser) on January 30, 2003, offered in evidence as Exhibit
I-7, the Minister determined the FMV of the works of art so donated at $1,933
in 1999 and $1,567 in 2000, and therefore, in the reassessments made September
25, 2003, reduced the non-refundable charitable donation tax credits Ms. Nantel
applied for in 1999 and 2000.
[5]
In his tax return for
the 1999 taxation year, Mr. Larocque indicated he had donated works of art
valued at a total of $30,292 to the museum and as a result, applied for an
in-kind charitable donation tax credit. Moreover, in his tax return for the
2000 taxation year, he indicated that he had donated works of art valued at a
total of $37,057 to the museum and as a result, applied for an in-kind
charitable donation tax credit. Relying on the appraisal of these works donated
by Mr. Larocque that had been prepared by Ms. Minard on January 30, 2003
(Exhibit I-7), the Minister determined the FMV of the works of art so donated
at $1,939 in 1999 and $1,236 in 2000, and therefore, in the reassessments made
September 25, 2003, reduced the non-refundable charitable donation tax credits
Mr. Larocque had applied for in 1999 and 2000.
[6]
Following these
reassessments the Minister made on September 25, 2003, against the appellants,
Mr. Pedneault retained a second art appraiser, Gianguido Fucito, for the
purpose of convincing the Minister that his assessment of the works of art the
appellants gave the museum was erroneous. I note that Mr. Fucito's appraisal
report of May 12, 2003, and led in evidence as Exhibit A-9, determined the FMV
of the Delfosse works donated by Ms. Nantel at $66,260, the FMV of the Delfosse
works donated by Mr. Larocque at $50,240 and the FMV of the Hébert works
donated by Mr. Larocque at $19,705.
[7]
Lastly, the Minister retained
Ms. Minard for a technical review of the appraisal report of the Delfosse and
Hébert works prepared by Mr. Fucito on May 12, 2003. On July 15, 2008, Ms.
Minard gave her report to the Minister as required, a report that was offered
in evidence as Exhibit I-6. It must also be noted that the Minister retained on
Ms. Minard for a technical review of the Delfosse and Hébert works prepared by
Mr. Desroches on December 15, 1999, and January 27, 2000. On October 7, 2008,
Ms. Minard sent the report to counsel for the respondent, Anne-Marie Boutin, as
required; this expert report was also offered in evidence as Exhibit I-6.
[8]
Messrs. Larocque,
Desroches, Pedneault and Fucito testified in support of the appellants'
position. Only Kathryn C. Minard testified in support of the respondent's
position.
Biography of the artists and general
description of the works donated
[9]
The biographies of
Delfosse and Hébert and a general description of the works donated by the
appellants are found in the appraisal report (Exhibit I-7) prepared by Ms.
Minard and are worth citing in their entirety because they seem complete and
the result of thorough research. Ms. Minard summarized the history of
Delfosse's life as follows:
[translation]
Artist—Georges Marie Joseph Delfosse (1869-1939)
Born in Saint-Henri-de-Mascouche, Quebec, Delfosse studied in Montreal under William Brymner and Edmond Dyonnet, and in Paris under Alexis Harlamoff and Léon
Bonnat (1908) where he was influenced by Impressionism. He painted portraits of
Sir Wilfrid Laurier and other notables and did over 200 large canvases for
churches in Canada and the US.
He also painted landscapes, flowers, historic subjects and buildings in old Montreal working in oil, watercolour,
pastel, pencil and ink. He travelled to Quebec, eastern Ontario, New York and Chicago. His
work is in the NGC. He exhibited with the RCA from 1899-1929 and the AAM from
1892-1936.
In 1908 and 1909, Delfosse
completed a commission for seven historical paintings of heroic tableaux for
St. James Cathedral in Montréal. The subjects include a celebration of mass in
the early days of French Canada (1615), the Martyrdom of Father Nicolas Viel
and his Disciple Ahuntsic (1634), The Martyrdom of Jesuit Fathers Bréboeuf and
Lallemant (1649), The Venerable Marguerite Bourgeoys teaching the young Indians
near the ancient towers of Fort des Messieurs (1694) and Jeanne Mance and the
Sisters of Hôtel Dieu with the sick (1642). In 1915 he was commissioned to
make paintings for the high nave and the choir of the Shrine of the Blessed
Sacrament in Montréal, including full portraits of saints, the Birth of Christ,
Last Supper, Jesus Preaching and the Wedding at Canaan. Other commissions
included 18 ecclesiastical paintings for St. Peter's Roman Catholic Church on Pelée Island, Ontario (1920), paintings for
the Cathedral of Marie-Reine-du-Monde in Montréal and churches in East-Angus, Joliette, Sault-aux-Rècollets and de
Terrebonne.
Delfosse's body of work also
included many paintings that document Old Québec's architecture and he was noted
for his highly detailed imagery and use of contrasting light and shadow (e.g. Un
coin de la maison mère, a painting of the 17th century farm house, Maison
Saint-Gabriel in Montréal and The House of Cavelier de La Salle (1919)
in the NGC, Côte de la place d'Armes après 1818, Le Vieux Séminaire
de Montréal and La maison de Gédéon de Catalogue. He was
known in his time as "Le peintre du Vieux-Montréal" (the painter of
Old Montréal).
His portrait work included Emiliano
Renand, Composer (in the Musée de Québec Collection), Judge A. Ouimet, Marie C.
Mount and Henriette Mount, Senator L.O. David, Sir Wilfrid (1897) and Lady
Laurier and Sir William Hingston.
Delfosse's work is in the
collections of Château de Ramezay, Montréal, Collection of Paul Gouin, La
Bibliothèque Municipal de Montréal, Musée de Québec, Québec City (portrait of
composer Emiliano Renand, a larger version of Normal School for Girls, Le
manoir de Varennes), Musée des beaux-arts, Montréal, Musée du Séminaire de
Québec, Musée Laurier, National Gallery of Canada, Ottawa (2 paintings: Normal
School for Girls, Notre-Dame-de-Pitié (1908), The House of
Cavalier de La Salle (1919) and a drawing, A Walk in Lafontaine Park
(1910) and Power Corporation du Canada, Montréal.
Moreover,
she provides the following general description of the Delfosse works donated by
the appellants:
[translation]
General
description of the donated works
The 241 donated works by Delfosse
are unframed sketches, studies and drawings of various subjects and mediums
including lead pencil, coloured pencil, charcoal, chalk, ink, pastel and
watercolour. A sketch is defined as "a preliminary drawing, often
rough and sometimes rapidly executed, that presents the characteristic lines
and feeling of the thing drawn, while it necessarily neglects some of the
details. In this respect it differs from a "study", which tends to be
detailed and in no way spontaneous."
A study is "a preliminary rendition of a projected work or, more often, a
detail of that work, such as a head, figure or flower. The artist makes a
study to explore an idea for future development, if not for immediate use, and
to become familiar with the problems involved in its depiction… Because a study
is the artist's vehicle for working out themes and techniques, it is a
more carefully detailed representation than a sketch." A drawing is a
more detailed work and " It may be further elaborated with applications of
colour, highlights, and shading with hatching or washes to produce the effect
of light and shadow… Some drawings are independent and finished works of
art. Others, although distinct from the final product, also have
intrinsic artistic value."
The subject matter of the sketches
and drawings can be categorized as follows:
landscape, landscape with
buildings, unidentified houses and church buildings, houses and church
buildings in known locations, portraits and figures, religious figures and
scenes, architectural details, animals, and historic figures and events. A
photograph of each item is included in the addenda of this report.
[10]
Ms. Minard also
summarized the biography of Hébert and provided the following general
description of the Hébert works donated by the appellants:
[translation]
The Artist - Henri Hébert, RCA
FRCA (1884-1950)
Born in Montréal, Québec, Hébert
studied at the Monument National, Montréal under Edmond Dyonnet (1896-98); he
followed evening classes at l'École de la Ville, Paris (1898); interior and
exterior decoration at l'École des Arts Décoratifs, Paris under Corbel, De
Corchement, Labrie and Debrie (1900-1902); painting at the Art Association of
Montréal with William Brymner (1902-1904); and sculpture at l'École des
Beaux-Arts in Paris with Jules Thomas and Antoine Injalbert
(1904-1906). Working in plaster, bronze and marble, he is best known for
his portrait heads, nudes and public monuments such as the Evangeline Monument
in Grand Pré (1920), the Outremont War Memorial, Montréal (1925, with John
Roxborough Smith) and the Sir Louis-Hippolyte Lafontaine Monument, Montréal
(1930). He decorated public buildings with bas-reliefs. Working in
watercolour, pastel and charcoal, he also painted portraits, symbolic figures
and signs of the zodiac. Some of his work was influenced by Art
Deco. Hébert taught clay modeling at the Monument National (1923-1925) and
in the architecture department at McGill University, Montréal (1909-c.1920), and received an honorary
doctorate from the University of Montréal in 1940. He was the son of
(sculptor) Louis‑Philippe Hébert and the brother of (painter) Adrien Hébert.
He exhibited with the Royal Canadian Academy between 1910-1949 and extensively
with the Art Association of Montréal between 1910-1947. His work is in the
collections of the Art Gallery of Ontario, the Musée de Beaux Arts, Montréal,
the Musée de Québec and the National Gallery of Canada.
During his career Hébert was
commissioned to create more than 40 works including commemorative plaques,
funerary monuments and public statuary, with the best-known public work being
his Evangeline monument. His other works included bas-reliefs for Moyse Hall at
McGill University in Montréal and numerous sculptures such as Father Lefebvre,
Memramcoo, N.S. (1914), Abraham Martin, Québec (1922), Yarmouth Boy, Yarmouth,
N.S. (1923), Sir Rodolphe Forget, Saint Irénée (1923), Senator L. O. David,
Montréal Cemetery (1929), Jacques De Lesseps, Gaspé (Aviator, 1932) and Louis
Francoeur, Montréal (1940). Subjects for his sculpted busts include Viscount R.
B. Bennett, Sir Andrew MacPhail, Alphonse Jongers (Artist, 1926), Sir A. Lacosto,
Sir Rodolphe Forget and John Murray Gibbon.
From October 4, 2000 through
February 11, 2001 the Musée du Québec showed Hébert's sculptures, sketches and
illustrations of his public monuments in an exhibition called "Henri
Hébert: Un Sculpteur Moderne 1884-1950" [Henri Hébert: A Modern
Sculptor 1884-1950].
Hébert's Works on Paper
Hébert was a prolific draftsman and
produced a large number of sketches and drawings in charcoal, pencil,
watercolour and pastels as well as a few etchings. Very few of Hébert's
drawings relate to his monumental sculpture. Rather, he used drawing to record
rapid gestures and attitudes rather than as preparation for a sculpture.
Many of his studies are of female figures, nude and clothed, including his
sister Pauline, and Clorinthe and Cécile Perron, who often served as Hébert's
models. In addition to his frequent studies of the Perron sisters, Hébert also
sketched his brother Adrien and other unidentified men as well as prostitutes
from the red light district near his Labelle St. studio. (11) His work in pastel is considered weak and while Hébert
exhibited this work it was not well received. Hébert had greater success with
watercolour, which he used to submit designs for sculpture competitions.
His watercolours are characterized by strong execution and colour that is
reminiscent of the Fauve painters. In describing Hébert's work in watercolour,
Janet Brooke said:
[translation]
The way in which reserves are
integrated in the composition and the majestic use of the brush also show a
true mastery of the medium.
General description of the
donated works
The 50 donated works are unframed
sketches of female nudes, many with multiple figures per page, and a few works
that may be categorized as studies. The studies appear to be for a funerary
monument, a bas-relief and an architecturally integrated fireplace
design. Forty-five works are executed in pencil, one incorporating some
watercolour and several with red pencil. Five are rendered in ink or
incorporate ink. A sketch is defined as "a preliminary drawing, often
rough and sometimes rapidly executed, that presents the characteristic lines
and feeling of the thing drawn, while it necessarily neglects some of the
details. In this respect it differs from a "study", which tends to be
detailed and in no way spontaneous. A study is "a preliminary
rendition of a projected work or, more often, a detail of that work, such as a
head, figure or flower. The artist makes a study to explore an idea for
future development, if not for immediate use, and to become familiar with the
problems involved in its depiction… Because a study is the artist's vehicle for
working out themes and techniques, it is a more carefully detailed
representation than a sketch." The donated figurative works reflect
Hébert's habit of using sketches to record rapid gestures and movements. None
of the donated works can be described as drawings because the detail is very
limited, most of the figures depicted have no facial features, there is little
or no hatching or shading and no attempt has been made to replicate the effects
of light and shadow. A photograph of each item is included in the addenda
of this report.
[11]
I accept, on the basis
of the testimony of Mr. Larocque, whose credibility is not questioned, that he
purchased these Delfosse and Hébert works not to speculate or sell but to
eventually contribute to the development of his province's heritage. He
explained that after keeping the works for more than 20 years, at high
conservation fees, he and his spouse decided that it was time to donate them to
a museum, in bulk so that the works would not be separated, since he considered
they made up a "corpus."
Testimony of Mr. Pedneault
[12]
Mr. Pedneault first
stated that the museum is located in Arthabaska in a building that was once the
residence of Sir Wilfrid Laurier and that the museum was created in 1929 to
honour his memory. Then, Mr. Pedneault provided a long summary of how the works
acquired corresponded to the nature of the museum. To this end, he explained that
the museum specialized in works of art of historic nature, and particularly,
works by artists who lived in the Arthabaska region and who had crossed paths
with Sir Wilfrid Laurier. He reminded the Court that the museum had many works
by Suzar Côté, Alfred Laliberté and Louis Philippe Hébert (Henri Hébert's
father), many artists who had given their works to commemorate the life of Sir
Wilfrid Laurier, the great protector of the arts and literature who wanted to
sponsor them. Lastly, Mr. Pedneault gave a lengthy explanation of the bond
between Delfosse, the great portrait artist and religious painter of 1869 and
Sir Wilfrid Laurier. On this, he noted that Delfosse began his career with the
portrait of Sir Wilfrid Laurier with whom he was friends. Mr. Pedneault added
that the museum had Delfosse works before acquiring those donated by the
appellants.
[13]
Then, Mr. Pedneault
testified on the museum's capacity to purchase works of art. He explained that
since he took up his post, in 1988, the museum never missed out on purchasing a
work of art for financial reasons. The museum's financial records and a summary
of the museum's art purchases in 1999 and 2008 were offered in evidence as
Exhibit A‑12. This documentary evidence shows that, to acquire works
of art, the museum spent $329,000 in 2003, $173,000 in 2005, $185,496 in 2006,
and $226,000 in 2007.
[14]
The appellants, who had
the burden to show that the FMV of the works of art they donated to the museum
was greater than that determined by the Minister, relied mainly on the
appraisals of Messrs. Desroches and Fucito. Before reviewing the opinions and
findings of Messrs. Fucito and Desroches on the value of these works, I would
like to immediately note that, when the Court is to determine the FMV of an
object and it is presented with many different figures, it does not fulfill
that duty by selecting the highest value. It is not bound by any of the
assessments and is not required to choose one of figures it was presented. It
must do all that it can to determine the actual value of the object, even if
this is difficult. For this purpose, it may dismiss all the assessments or use
certain elements from some or all of them and reach a different conclusion. It
is not a mechanical process. It is one that requires the Court to weigh all the
elements at its disposal and to use its judgment to reach the correct
conclusion.
[15]
In his appraisal
reports (Exhibits A‑5 and A‑6), Mr. Desroches describes each work
donated by the appellants very succinctly, determines the value, then provides
an overall justification for that value. Since the justification is very short,
it should be cited in its entirety:
[translation]
Property of Denis Laroque -
December 15, 1999
Donation of Henri Hébert works
JUSTIFICATION
Born in Paris
in 1884, Henri Hébert, son of the renowned Québécois sculptor Louis-Philippe
Hébert and brother of artist Adrien Hébert, devoted himself to sculpture from a
young age.
He was one of the most noted sculptors of
the early 20th century and he is credited for many sculptures including a
masterpiece located in the city of Westmount.
The exceptional corpus that is being
appraised consists of preparatory studies for sculptures.
Considering the scarcity of Henri Hébert's
graphic works, considering the quality of these works, considering the
exceptional character of this corpus, we do not hesitate to appraise these
works for the amount indicated regarding each piece.
Our determination of the value of these
works is based on two sales of sketches by a contemporary of Henri Hébert,
Georges Delfosse. One was at the Hôtel des encans in December 1999, a 23cm X
12.5cm drawing for $375; the other was at the Musée Laurier in November 1999, a
22.4cm X 16.6cm drawing for $500.
These two sales are used only as guides to determine
the value because the scope and importance of this corpus increases the overall
value of these works compared to the value of each appraised individually.
Property of Denis Larocque – January 27,
2000
Donation of works by Georges Delfosse
JUSTIFICATION
Born in St-Henri de Mascouche in 1869, Delfosse studied
under Abbé Joseph Chabert at the Institut national des beaux-arts de Montreal,
William Brymer at the art association of Montreal, and Edmond Dyonnet. Then,
Delfosse went to Paris to
further his training under L. Bonnat and Alexei Harlamoff.
Delfosse was a conscientious and skilled drawer and drew
non-stop, the sketch pad in his hand, incessantly drawing historical subjects
that fascinated him. This inclination earned him the nickname "the
archivist" and the "painter of Old Montreal".
This corpus of drawings is therefore a collection of
various subjects that are particularly well done: landscapes, street scenes,
ancestral homes, portraits, religious images, historical monuments, etc.
Although these drawings are sketches, they are detailed works and of interest.
These drawings represent a rare, important and exceptional
archival collection. They have not only an artistic value but also an
uncontested historical and documentary value.
Delfosse was able to contribute to the great cultural
movement of the late 19th and early 20th century, and this contribution
continues to have poetic undertones today.
Considering the importance and rarity of this corpus of
George Delfosse works, considering its artistic quality, considering its
archival and heritage characteristics, and considering the condition of the
works, we do not hesitate to appraise these works for the amount indicated
regarding each piece.
Our justification of the value of these works is based on
a sale at the Hôtel des encans in December 1999 of a 23cm X 12.5cm drawing for
$375, and on a sale at the Musée Laurier in November 1999 of a 22.4cm X 16.6cm
drawing for $500.
These two sales are used only as guides to determine the
value because the scope and importance of this corpus increases the overall
value of these works compared to the value of each appraised individually.
[16]
I immediately note
that, Mr. Desroches' findings on the FMV of these works do not seem credible to
me because of the following:
(i)
First, in his reports,
Mr. Desroches cites the sale of two Delfosse works to support his findings on
the FMV of the Delfosse works the appellants donated, and neglected to cite the
many works donated and sold at auctions around the same time as the donations.
In my opinion, these omissions reduce the credibility of the findings on the
value of the works because the number of sales cited is simply not sufficient
to support Mr. Desroches's findings on the FMV of the Delfosse works the
appellants donated. The somewhat absurd explanations Mr. Desroches provided to
justify these omissions, which, I must point out, only confirmed my doubts as
to the credibility and reliability of his analysis and findings, are worth
repeating:
[translation]
[671] Q. Ok. And you said that was all you
had?
A. That was available to me.
[672] Q. Right. But this is in 1999, 2000,
around there; didn't you have access to the databases about the various…the
auctions in particular, for example, artnet, artprice and others?
A. Yes, I have some of those volumes.
[673] Q. Yes, you had them in 1999 and
2000?
A. Yes. Yes, I had them.
[674] Q. Yes. And you did not consult them?
A. No, I did not consult them because you get
a drawing, you do not see it, it is difficult to base a judgment on that. Then,
the results of these auctions, they could be overestimated or underestimated
too. So it is a criterion but not a basis.
(ii)
Although Hébert works,
both drawings and sculptures, had been sold at public auctions, Mr. Desroches
did not quote any of these sales in his reports. Instead, he compared the
Hébert works to the Delfosse works. In my view, the FMV is more accurately
determined by comparing the work being appraised with another work by the same
artist. On this, I completely agree with Ms. Minard that the comparison of
Hébert to Delfosse is fundamentally wrong because the works are not similar
enough since Hébert is known as a sculptor and Delfosse as a painter. I would
add that the two Delfosse sales Mr. Desroches quoted as comparable, a drawing
of a church and an oil portrait, do not seem to me to be reasonable comparisons
for the nude sketches by Hébert;
(iii)
Mr. Desroches neglected
to include information on the condition of certain works in his reports (such
as stains, tears and loss of paper) that, in my opinion, generally have an
unfavourable impact on the FMV of a work of art;
(iv)
In his reports, Mr.
Desroches describes the Delfosse works as [translation]
"detailed productions". In fact, many works are not fully completed
drawings and to describe them as "detailed productions" seems
inaccurate to me. In fact, many of these works are sketches, studies or drafts
at best. The donated works do not seem to be described properly in the
appraisal reports. Mr. Desroches should have provided specific identification
of each piece being appraised. He should have indicated whether the donated
item was a drawing, a study or a sketch. Mr. Desroches does not seem to
differentiate between these forms of art, although there are qualitative differences
between them that, in my opinion, must be considered when appraising the
aesthetic value of a work of art;
(v)
In his reports, Mr.
Desroches indicates that several Delfosse sketches were used to create
the illustrated works in the volume, "Le Vieux Montréal vu par George
Delfosse" published in 1983 by the City of Montreal. However, when asked to identify these works, Mr. Desroches could
only identify a single work in support of his claims in this regard. In fact,
Mr. Desroches was constantly making statements and claims that were unfounded
and unjustified. Another example must be noted: during his testimony, Mr.
Desroches claimed that he gave a higher value to the Delfosse works that were
used later for his oil paintings (although his reports do not reflect this).
Again, when asked to identify the Delfosse works that were used for these
purposes, Mr. Desroches could not provide a single example;
(vi)
Mr. Desroches stated
that the value of the works donated as a collection is higher than the value of
each work appraised individually. Again, this statement was not supported by
examples from market sales;
(vii)
Lastly, I note that no
definition of the FMV appears in these reports.
[17]
In all, the evidence
shows that Mr. Desroches relied on his art salesman's flair to determine the
FMV of the donated works instead of using the recognized appraisal standards.
Mr. Fucito's appraisal
[18]
The appellant's other
expert, Mr. Fucito, has 25 years of experience in the art field. He is the
expert advisor and resource person for 17th century art to today. He has also
carried out many appraisals for museums and institutions. He was the founding
member and vice-president of the Association des galeries d’art contemporain de
Montréal since 1986. He is the director of the Bernard art gallery. He was
mandated by the appellants to provide a second opinion following the Minister's
reassessments.
[19]
Since Mr. Fucito's
justification for the values he attributed to the donated works is relatively
short, I will reproduce it in its entirety:
[translation]
Donation: Martine Nantel and Denis
Larocque.
APPRAISAL JUSTIFICATION
Artists: Georges Delfosse and Henri Hébert (respective lists in the
appendix)
Introduction
People today are hungry for an identity. Man has a strong desire for
history, a definite history that can sustain an intellectual tradition likely
to ensure development, growth and confidence in one's destiny and abilities.
The 20th century artist who explored the various fields of art outside
those of Europe and the Orient opened our eyes and sharpened our awareness,
allowing us to appreciate the quality and dimension of cultural and artistic
values.
Moreover, in the current world of reproduction, recycling and direct
manipulations of images through the use of electronic gadgets and virtual
reality, etc., planimetric and plastic works of art become increasingly
important for furthering originality and authenticity in creativity and
research. Elements must be rediscovered through the spring of our artistic
endeavours, which becomes an important asset for both preparatory education and
heritage reasons.
Art is an ideal guardrail that prevents us from falling under the spell
of an invasive technology that threatens to restrict free thought and, as a
result, human freedoms.
There is a market of museums, conservatories, experts, galleries, antique
dealers, framers, lawyers, dentists, doctors, second-hand goods dealers,
auctioneers, brokers, restorers, amateurs, collectors, artists, editors,
critics, journalists, press agents; and there are also counterfeiters,
mythomaniacs, speculators, con artists, mafia, thieves, receivers of stolen
goods, the independently wealthy, and many other related people or services.
The art market is different from other markets because purchases are generally bound
up with desire and pleasure. There is the desire to show others up and the
pleasure of owning something unique, rare and beautiful. In short, there is a
definite visceral person-object connection involved in a purchase.
Thanks to government donations, artwork has regained its notion of
longevity, with museum collections making a statement that art is
irreplaceable. Without support from governments and benefactors to museums, and
considering the lack of fair funding to public institutions for artwork acquisitions,
it would be impossible to preserve the authenticity of art and artistic
creation.
Art must not lose its ability to stand the test of time and creativity
must not become fully dependent on consumer behaviour. Based on current trends,
it seems the only sanction that applies to a cultural product is its success or
failure on the market. Museums do not have acquisition budgets and the State imposes
more and more cutbacks, hoping that the private sector will take over. Museums
also owe their existence to taxpayers and are required to rely on donations to
expand their collections, rather than on informed choices by their experts and
curators, among the artists and galleries.
The current arts support system shows that essentially everything is
directly or indirectly supported by the State. The State helps with all types
of creations through various support systems. The State supports the
implementation of the works (movies, dance, visual arts, etc) by helping art
galleries, parallel galleries, self-directed centres, artists associations. And
again, it is the State, through federal-provincial sharing, that becomes the
buyer through a system than encourages individual and corporate tax credits.
Today, philanthropy is practised by the State, whose generosity and
support make artistic creativity possible and contribute to the preservation of
the cultural heritage. This is not irony but simply a statement. Even if
today's utopia is leading us to austerity, the new moral principle is one of
long-term responsibility.
Justification
The market value of artwork is not its only value. A comparison with
other artists who have more support in terms of sales is called for. Delfosse
and Hébert did not have the same dissemination as other artists such as
Gérard Tremblay, Robert Taylor. Stanley Cosgrove, Jean Dallaire, Charles
Daudelin, Rolland Giguère, Alfred Pellan and many others, or even Riopelle, who
has one piece in the same technique and dimension as Delfosse and Hébert valued
at $7,000, while those of Delfosse and Hébert are not valued any higher than
$1,500 even if an analysis of their works shows us they are very important
artists.
In the present case, we are essentially talking about a corpus of 242
drawings by Delfosse and 50 by Hébert as if we were talking about documents of
a parliamentarian or minister, or Commodore's baton (that was part of a
donation made a few years ago for a very significant amount) and not objects on
the consumer or speculative market. In fact, for all the artists in the same
situation, consideration must be given to their documentary importance, which
is indispensable for enhancing our collections. We must put an end to the idea
that an artist's success can be measured solely in market terms by adding up
the amounts of his bills. There is also an aesthetic movement in art that does
not have a price and that is directly proportional to the importance it might
have for a museum, as well as for the province or the artist's country of
origin.
In the case of Delfosse and Hébert, this corpus of works is sufficiently
important that it can be considered a presence and an aesthetic, historical and
preparatory education experience that honours both the Museum's collection and
every one of us. Experience teaches us that it is important to safeguard artistic
heritage by giving it an adequate market value corresponding to a moral
responsibility to history.
On this point, I believe the importance of Delfosse's and Hébert's
artistic contribution should prevail, since it is a major donation. The works
being appraised will have to be considered a testament to a period or era
rather than a simple value linked to market fluctuations.
While respecting the Commission's rules and provisions, I appraise the
works of Delfosse and based on sale prices set by the Simon Blais Gallery and
the Maison des Encans de Montréal (Iegor de St-Hyppolite); those of Hébert sold
at auction and at the Laurier Museum and to comparable works by other artists
that are part of our artistic and cultural heritage. I also think that the works
generously offered to the Laurier Museum reflect a great aesthetic quality and
quality of execution equal to that of other famous artists of that and
subsequent periods (see Ozias Leduc, M.A. Fortin, F. Taylor, A. Dumouchet, to
name but a few). I believe the range of values of the works being appraised is
probably even larger: a price that would bring the recognition of Delfosse and
Hébert closer to the artists mentioned above, who also contributed a great deal
to our heritage on the search for aesthetics and art.
Knowledge of the artistic, aesthetic and historical environment of the
works is of utmost importance when appraising a corpus such as the one being
considered in this document. These works might be comparable to artists from
the same region, process and culture. In general, it is clear that citizens
from other provinces do not have an interest in artists who are not from their
region or province because the cultural and/or heritage value for Quebec is not the same as that for other Canadian provinces.
The relevance of the artist is measured within the parameters of his
cultural space and also based on the distribution and/or conservation of the
works created during his life.
Georges Delfosse and Henri Hébert are artists essentially relevant to the
province of Quebec and both their popular and academic histories
belong to us. Any other consideration leads us to potential errors of
interpretation, prejudice or unclear connotations.
The only way to look at the corpus being appraised is to consider the
importance these works within the institutional collection of the Laurier Museum, which preserves the regional and
provincial history and creativity of this country for the public. Otherwise,
there may be further cultural and historical damage.
As a specialist and appraiser of 17th century to modern art, I find the
entire donation is fair and reflects the values obtained on a difficult, but
current, market.
It is thanks to the generous patrons that the works were saved from
probable destruction or dispersal. This is the true historic and heritage
significance of the works, beyond personal opinions or prejudices. The history
of these two artists does not need to be made. Often, the artists to whom some
people try to grant lesser importance have emerged as those who have opened the
field to new methods and influences that deserve our highest consideration.
It is important to remember that the most important construction site in Quebec, before Manic and James Bay, was the construction
of churches. The most intense period is from 1866 to early 1914. A look at our
history will show us the importance of religion in Quebec, which is actually considered the cradle of Catholic faith in America. Parish churches, for example, were and still are
the centre of community life, witnesses to all events. It is natural that
artists such as Georges Delfosse, Henri Hébert and many others looked at
religion in our daily life with interest and passion and expressed their
artistic feelings in drawings, sculptures and paintings.
The art market
The art market evolves differently than other markets because it is
sensitive to trends, personal opinions, modern critics, and the public's
ability to understand and be available to the arts.
A work of art is not merchandise or a consumer product, and is even less
so an industrial product or utilitarian object; it is a symbolic and
psychological symbol of an era and represents a cultural and social moment in
time of a people, a country or a region. The artist (I am talking here of the
authentic artist, such as Delfosse and Hébert) expresses himself and creates
works by vocation and not in response to any market.
The works on paper by the two artists (Delfosse and Hébert) being
appraised are not aesthetic stereotypes of a common language, but represent the
originality and perseverance of the authors and their convictions. The sketches
are also the necessary material (the work table) without which they
would not have been able to create more important works. The impact of a sketch
is proportional to what the artist wishes to impart on the collective memory
and leave as a permanent sign of his presence and existence. The works of art
are books whose pages are never turned.
Often, artists are asked how much time they spent to create a specific
work of art because we are used to allocating a price based on hours of
work…and authentic artists reply 25 years or more…the number of years it took
them to become artists; this answer is very significant and thought-provoking.
To further justify the fair market value of the works submitted for my
analysis and appraisal, we could refer to the works on paper (serigraph and
other techniques) according to the Group of Seven or the works of Joe Fafard,
etc, on the Canadian market or even in signed reproductions or those certified
by foundations, museums or other organizations, that often surpass the original
prices of the works being appraised, which are unique and original works.
Inspection and analysis of works at the Laurier Museum
After an inspection and visit of the Laurier Museum's storage area on the morning of Saturday, April 26, 2003, I was
able to see the works that are the subject of this appraisal (Delfosse and
Hébert) and handled them with white gloves for many hours. I can state that the
works, without exception, are in excellent condition. They were duly
deacidified and mounted on a two-ply cloth to further ensure handling was
possible and help preserve their physical condition. This treatment ensures
their durability, resistance and a better classification, exposition and/or
storage in the Museum's storage area or in possible portable expositions or
loans in the future.
The significant collection of Delfosse works, for example, at the
National Museum of Quebec, is additional confirmation of the importance of
these two artists and their artistic actions at the time. Original works on
paper that contributed to determining their personal journeys, it is no
surprise that today they represent a gain, financially but also in terms of
culture and heritage.
I hope the people in charge will be able to appreciate the contribution
of the artists in question and in this case, allocate, as in other cases, a
lump sum amount worthy of their contribution, especially since they are no
longer here to defend themselves.
The value of the works analyzed is determined on the basis of the
following characteristics: size (dimensions), medium, style, subject, state
(condition), alterations and restoration, where relevant.
Sales of works by Georges Delfosse
Portait de femme (drawing)
sold for $650 on July 3, 2002; 22 X 17 cm = 374 cm2 ($1.73 per cm2) – Simon
Blais Gallery.
Les trois soeurs (drawing)
sold for $1,380 on October 22, 2002; 22.0 X 15.2 cm = 334.40 cm2 ($4.12 per
cm2) – Iegor (Hôtel des encan).
Reference value / cm2 of some sales used as examples
1980 lead pencil
drawing sold by Ritchie, 8.2 X 12 cm (98.4 cm2), $1.00 per cm2
1981 drawing
(Maison rustique) sold by Empire, 11.4 X 15.5 cm (108 cm2) $0.90 per cm2
1983 drawing – Lachine (1910), sold by Pinney's, 9 X 12 cm (108 cm2) $1.01
per cm2
1988 drawing –
Rivière Richelieu, sold by H. des Encans, 14 X 23 cm (322 cm2) $1.00
per cm2
1989 drawing –
vieil homme, sold by H. des Encans, 15.3 X 10.0 cm (153 cm2 ) $1.18 per
cm2
1989 drawing – Repentigny, sold by H. des Encans, 12.5 X 22.5 cm
(281 cm2) $1.16 per cm2
…
1998 drawing – À
la campagne, sold by H. des Encans, 7.0 X 4.0 cm (28 cm2) $1.79 per cm2
1999 drawing –
Eglise Repentigny (1916), sold by H. des Encans, 12 X 21 cm (252 cm2) $1.30
per cm2
1999 drawing –
Eglise St Jean Baptiste/village, sold by H. des encans, 15.2 X 10.2 cm (15 cm2)
$.096 per cm2
2002 drawing –
Portait de femme, sold by S. Blais Gallery, 22 X 17 cm (374 cm2) $1.73
per cm2
2002 drawing –
Les trois soeurs, sold by Iegor-Mtl, 22.0 X 25.2 cm (334.4 cm2) $4.12
per cm2
This shows an upward trend to today; if the donation had been made in
2002, the amounts of the appraisal would certainly have been higher.
Sales of Georges Delfosse drawings
1-
23 X 12cm = 287.50
cm2 – $1.35 per cm2 (sale at auction)
2-
22.4 X 16.6 cm =
371.84 cm2 - $1.35 per cm2 (sale at Laurier Museum)
1988-1989 = $1.25 cm2
1998-1999 = $1.54 cm2
1999 and 2000 = $1.35 per cm2
($1.79 + $1.30 + $0.96 = $4.05 : 3 = $1.35)
2002 = $2.92 per cm2
The same applies to the
works on paper (50) by Henri Hébert
Other supporting
documents for Henri Hébert's drawings
René Jean Richard (1895-1982)
1-
"Jeune
trappeur", 1945—drawing, pencil on paper, 30 X 24 cm – sold on November 14
1995, at Hodgins (lot 288) in Calgary for $425.
2-
"Campement",
drawing, pastel, pencil, 33 X 42 cm – sold May 16, 1995, at the Hôtel des
Encans de Montréal (lot 173) for $627.
3-
"Grand
Nord", drawing, pencil, 20 X 30 cm – sold on November 21, 1995, at the
Hôtel des Encans de Montréal for $518.
4-
"Trappeur",
drawing, pencil, 34 X 30 cm – sold on November 21, 1995, at the Hôtel des
Encans de Montréal (lot 40) for $720.
5-
"The
campfire/The dogs team", drawings, pencil, 24 X 28 cm (2) – (lot 275) sold
on November 15, 1995, at Sotheby's Toronto for $1,800.
Or:
a. John G. Lyman (1886-1967)
"Corinne", drawing, pencil, 25 X 20 cm
and
b. Frederick Horsman Varley (1881-1969)
"Portait de femme", drawing, charcoal, 33 X 27 cm
Both drawings sold at Sotehby's Toronto for $1,900.
From the sales of two works by Georges Delfosse and an extrapolation of a
parameter based on references of similar artists and works, I obtain a
multiplying factor of $0.56 per cm2 of surface area, applicable to each work of
Henri Hébert's being appraised.
Reference document
Here are a few comparisons with other artists who are part of our public
collections; these are graphic works (original prints and serigraphs) in
edition and not drawings.
Albert Dumouchel – "Arte Nova", 1954, serigraph, 25.5 X 25.5
cm, sold for $1,000 in 1996.
Albert Dumouchel – "L'étoile allait devant eux", 1960,
embossing, 13 ed., 50 X 32 cm, sold for $2,000 in 1995.
Albert Dumouchel – " Les amours du graveur Azechi", 1968, wood
engraving, 3 ed., 29 X 48 cm, sold for $2,500 in 1993.
Albert Dumouchel – "La victoire de Samotrace", 1961, etching,
13 ed., 50 X 32.5 cm, sold for $3,000 in 1995.
Albert Dumouchel – "Vient, rentrons Honorine", 1969, wood
engraving in black and white, 12 ed., 62 X 98 cm, sold for $2,550 in 1992.
Albert Dumouchel – "Le couple danois", 1969, wood engraving in
black and white, 14 ed., 58 X 54, sold for $1,750 in the spring of 1997 at the
Hôtel des Encans de Montréal.
Léon Bellefleur – "Les écureuils", 1968, lithograph, 18 ed. 49
X 38 cm, sold for $2,200 in 1994.
Gérald Tremblay – "Les familles", 1956, serigraph, 50 ed., 55 X
65 cm, sold for $2,000 in 1994.
Marcel Ferron – "La Ponche", 1957, serigraph, 50 ed., 55 X 65
cm, sold for $2,500 in 1995 (actual value $3,500).
Paterson Ewen –
"Blast", 1957, serigraph, 50 ed., 55 X 65 cm, sold for $2,800 in 1997.
Yves Gaucher – "Asagao", 1961, embossing, 50 ed., 31 X 46 cm,
sold for $3,000 in 1997.
Yves Gaucher – "Paysage", 1958, etching, 10 ed., 20 X 25 cm,
sold for $2,600 in 1997.
Yves Gaucher – "1", 1959, wood engraving, 20 ed., 20 X 25 cm.,
sold for $2,000 in 1997.
Conclusion
Having completed my analysis, I have found the following values for the
Georges Delfosse works donated by Martine Nantel:
taking into consideration a value of $1.35 per cm2:
163 works (total of 49,082 cm2): $66,260.00
In my opinion, the fair market value of the works donated by Ms. Nantel
is $66,260.00.
As for the Delfosse works donated by Denis Larocque, I find the following
values:
taking into consideration a value of $1.35 per cm2:
79 works (total of 37.215 cm2): $50,240.00
In my opinion, the fair market value of the works donated by Mr. Larocque
is $50,240.00.
Lastly, for the Henri Hébert works, also donated by Denis Larocque, I
have found the following values:
taking into consideration a value of $0.56 per cm2:
50 works: $19,705.00
In my opinion, the fair market value of the works donated by Mr. Larocque
is $19,705.00.
Attached hereto, you will find a complete list of each of the donated
works and their individual appraisals.
Main criteria used to assess the fair market value:
-
Current condition
of the works
-
significance of the
artists in the modern art context
-
significance of the
works and the relationship with the Laurier Museum's
collection
-
connection with the
art heritage movement in Quebec and Canada
For the purposes of this appraisal, I quote the definition of fair market
value as used by the Cultural Property Review Board in Ottawa:
Fair market
value: the highest price a property would bring between a willing buyer and a
willing seller who are knowledgeable, informed and prudent and who are acting
independently of each other.
N.B. When taking photographs of these works, it is preferable to use
black and white film rather than colour film to avoid the colour film altering
the nuances of the image. The drawings, which are monochromatic, could be
weakened and the intensity diminished because of the inherent difficulty in
controlling the balance of whites and as a result tinting the paper, by
reverberation, in ivory tones, darker than in reality, giving the impression
the paper is dirty or stained rather than further defining the beautiful patina
of time. These papers cannot be photographed with a flash or light above 4000
lumens, for conservation reasons; otherwise, the stability of the graphite and
the molecular stability of the paper could be at risk, thus imperilling the conservation
of the works.
Appraiser's
certification
I, the undersigned, Gianguido Fucito, certify that I have no interest in
the works being appraised, I have analyzed the property in person, the services
and fees are in no way dependent upon the value of the appraisal, I have not
previously sold the works by Georges Delfosse and Henri Hébert being appraised.
Appraiser's
qualifications
More than 25 years of experience in transactions and analyses of artwork
on the national and international markets: known here, in Europe and in the US as an expert advisor and resource person for 17th
century art to today, including Inuit art. Appraiser and analyst for museums,
institutions, many US university collections and private
collections.
In the past, I have owned and been the director of art galleries and been
a partner in US and European galleries. I am a founding and signing member
(1986) of the Association des galeries d'art contemporain de Montréal. Since
December 1997, I have been the director and partner of the Galerie Bernard;
member and Vice-President of the Association des galeries d'art contemporain
(AGAC); my work includes the writing of articles and the creation of exhibition
catalogues.
The study of art in general and of modern and contemporary art in
particular, teaching, and expertise in private collections, estates, public
collections led me to build archives and references nationally and
internationally, and there have been contacts and verbal, electronic (Internet)
and written consultations with the network, my colleagues in Canada and abroad.
I also have an excellent reference library and documentation on Canadian,
Quebecois, Amerindian and European art. I also use the museums' libraries and
the Internet quite often to carry out my appraisals.
[20]
Here, I note that the
Mr. Fucito's analysis and findings on the FMV of the works donated by the
appellants are not credible for the following reasons:
(i)
I note that in this
report, Mr. Fucito named the four main criteria that he used to attribute a
value to the donated works:
-
The current condition
of the works;
-
The importance of the
artists in the context of modern art;
-
The importance of the
works and the link with the Laurier Museum's collection;
-
The connection with art
heritage movement in Quebec and Canada;
However, upon analysis of his report, it
can be seen that his appraisal method can be summarized simply as a calculation
of the average price per square centimetre of comparable sales, then multiplied
by the surface area of each work appraised. Mr. Fucito was unable to explain that
nonsense when questioned on the subject.
(ii)
I note that Mr.
Fucito's reports state that the works, without exception, are in excellent
condition whereas the evidence showed that many pieces were stained or torn;
(iii)
During his testimony on
his report, Mr. Fucito noted that the value of works donated as a collection is
higher than the value of each piece appraised individually. He explained that
the value he attributed to each of the works was increased to this factor into
account. First, I note that the report does not mention this. Moreover, it
seems impossible that he attributed an additional value to the works to take
into consideration the fact they were part of a collection, given the method
used in his report to determine the FMV of the works, the basis of which was
first to determine an average price per square centimetre from the sales of
comparable works that were definitely not part of a collection. I add that this
claim made by Mr. Fucito was not supported by any example whatsoever in the
market.
[21]
Lastly, I note that I
agree completely with Ms. Minard's findings against Mr. Fucito's report
(Exhibit A-6), which also deserve to be reproduced in whole:
[translation]
Conclusion
On the basis of my review of Mr. Fucito's
appraisal report, it is my professional opinion that the value conclusions are
not credible for the following reasons:
The appraiser demonstrates bias throughout
his report and advocates a valuation approach that is not consistent with recognized
appraisal methods and techniques.
In reporting the results of his appraisal,
Mr. Fucito expresses his findings in a manner that is difficult to understand
and could be misleading.
While market data is the fundamental
indicator of fair market value, the appraiser argues against its
significance.
While it is an appraiser's responsibility
to assess monetary value on the basis of evidence derived from the marketplace,
Mr. Fucito emphasizes non-monetary value and argues that it should be assigned
monetary worth.
The appraiser has not given consideration
to supply and demand which is a fundamental principle of value.
The appraiser attributes a "plus
value" to original works on paper without any market data as
substantiation.
The appraiser's description of the art
market on pages 2 through 5 is confused and does not provide the reader with relevant
information about the specific markets for the works of George Delfosse and
Henri Hébert.
The citations and descriptions of sales of
George Delfosse's work selected for comparison with the appraised properties
are incomplete.
The appraiser made irrelevant and
inappropriate comparisons between other artists and George Delfosse and Henri
Hébert.
All recorded sales of drawings and
watercolours by Henri Hebert are omitted.
A great number of sales of works by Georges
Delfosse are omitted from the appraiser's analysis.
The definition of fair market value cited
by the appraiser as being used by the Canadian Cultural Property Export Review
Board omits the reference to an "open and unrestricted market" and,
as such, is incomplete.
Moreover, the following elements of a
correctly prepared appraisal report are absent or incorrect, as follows:
The effective date of the appraisal is not
given.
The intended users of the report are not
specifically identified.
The names of the parties present at the
time of inspection are not included.
A statement limiting the use of the
appraisal to the assigned use is missing.
A statement that the report is either a
restricted-use, summary, or self-contained appraisal report is missing.
A statement regarding readily apparent
identity and/or authentications performed is missing.
A statement regarding any liens, fractional
interests, or other encumbrances understood to exist is missing.
A statement that the appraisal is not an
indication of ownership is missing.
A statement that facts contained in the
report are true and correct (USPAP) is missing.
A statement of any limiting conditions
encountered or critical assumptions made (USPAP) is missing.
A statement that the appraiser has no bias
towards the parties or property involved (required by the USPAP statement) is
missing.
A statement that initial engagement of the
appraiser is not contingent (required by the USPAP statement) is missing.
A statement regarding use of other
appraisers or experts who provided significant professional assistance (USPAP)
is missing.
A statement as to which standard(s) the
appraisal was written to, e.g. the ISA Appraisal Report Writing Standard, USPAP
(the latter required by USPAP), etc. is missing.
A statement(s) limiting the misuse and/or
alteration of the appraisal report is missing.
A statement of confidentiality is missing.
The USPAP certification statement prefaced
with "I certify that to the best of my knowledge and belief" or other
certification or attestation consistent with the Uniform Standards of
Professional Appraisal Practice is missing.
Ms. Minard's appraisal
[22]
Immediately, I must
point out that the appraisal report of Ms. Minard, whose expertise, competence
and experience are quite impressive, constitutes an analysis based on a strict
and structured method that is based on the recognized appraisal principles.
[23]
Ms. Minard first
testified on the extent of the work she undertook to write her report. She
explained that the work required, in particular, a review of the biographical
data and documentation of both artists; images of all their works in public
galleries, auction catalogues and museum Internet sites. In the case of
Delfosse she reviewed paintings, sketches, studies and drawings for sale at
auctions and in Toronto art galleries. Moreover, she met with Montreal art merchants to discuss representative samples of works
by these artists and the markets for these works. She added that she had
contacted the auction houses Les Encans Penney and the Hôtel des Encans de
Montréal. Ms. Minard also explained that she personally examined each of the
works appraised.
[24]
Ms. Minard then
explained that, to determine the FMV of the works, she also compared sales to
conduct the appraisal; this means comparing the property appraised with similar
property that had been sold on the market where they would normally be offered
for sale to the public. Ms. Minard added that her research showed her that
property that was comparable to the donated works was most frequently sold to
the public during auctions, mainly through regional auction houses and, as a
result, the market was appropriate for determining the FMV of the donated
works. It is of note that Ms Minard stated that the comparison of the donated
works with the works sold at auctions is limited because there are no
illustrations of the works sold since articles of lesser value are not usually
illustrated in the catalogues at auctions. She had to rely on the information
she obtained from the artwork merchants and auctioneer commissioners in Montreal, and on their opinions about the quality of the works
sold during the auctions compared to the donated works. Lastly, she explained
that she considered the prices paid at the auctions only reflected the value of
the design or sketch, and not the value associated with framing the works.
[25]
Ms. Minard determined
that the total FMV of the donated works was $26,599. She explained that this
figure represents the amount that would have been obtained if the works of art
had been sold separately or in small blocks, and would have been paid through
many auction houses across Canada, so that the unfavourable effect of a
simultaneous sale of a large number of similar works would be reduced. However,
she explained that if the works had been sold in a block, namely two blocks of
163 and 79 Delfosse works and one block of 50 Hébert works, the most
likely buyer would have been an artwork merchant, an archives centre or a
museum. She explained that if the property in question had been sold in one
block, the highest price that could have been obtained would have been around
25% of the price that could have been obtained from individual sales since,
generally, the price a purchaser pays in a block is lower than that paid if
each piece is sold individually.
Analysis and conclusion
[26]
For donations, the Act
does not define the FMV. The classical definition is found in the case law. The
one provided by Cattanach J. of the Federal Court of Canada, Trial Division, in
Henderson Estate and Bank of New-York v. M.N.R., 73 D.T.C. 5471 (F.C.),
Cattanach J.; confirmed in 75 D.T.C. 5332 (F.C.A.), is the commonly cited:
I do not think it necessary to
attempt an exact definition of the expression as used in, the statute other
than to say that the words must be construed in accordance with the common
understanding of them. That common understanding I take to mean the highest
price an asset might reasonably be expected to bring if sold by the owner in
the normal method applicable to the asset in question in the ordinary course of
business in a market not exposed to any undue stresses and composed of willing
buyers and sellers dealing at arm's length and under no compulsion to buy or
sell. I would add that the foregoing understanding as I have expressed it in a
general way includes what I conceive to be the essential element which is an
open and unrestricted market in which the price is hammered out between willing
and informed buyers and sellers on the anvil of supply and demand. These
definitions are equally applicable to 'fair market value and 'market value' and
it is doubtful if the use of the word 'fair' adds anything to the words 'market
value'.
[27]
In general, the FMV is
a question of fact. To determine the FMV of property, first the most relevant
market on which the property could be found at the time of the donation must be
determined. Since the existence of such a market is also a question of fact,
the specific market for the type of property in question must be determined, since
supply and demand are crucial factors.
[28]
In this case, since at
the time of the donations, there was no particular market for works similar to
those donated to the museum in ordinary business dealings, I share Ms. Minard's
opinion that the market, mainly that involving the sale of individual works at
public auctions and, alternatively, retail sales of individual works, should be
used as an indirect indicator for determining the FMV of the works donated to
the museum. Since it is a block disposition, I agree with Ms. Minard's opinion
that a discount (in this case, 75%) should apply to increase the offer and take
into consideration the lowering effect on retail sales caused by a large number
of works by the same artist being on the market at the same time. In short, I
agree that the FMV of the donated works Ms. Minard determined is correct since
she based her appraisal on a strict, structured process guided by the recognized
appraisal principles, which I agree with completely.
[29]
The appellants' general
claims are that the Minister, in his assessment, neglected to consider that the
museum is a special purchaser with a specific and different interest for this
collection of works, that after acquisition it wanted to use it for different
purposes than other potential buyers and therefore, this special purchaser was
ready to pay a higher price than other buyers would have been willing to pay.
In other words, the appellants claim that the most relevant market for this
collection of works was the museum because this collection of works
corresponded exactly to the museum's vocation, leading to its particular
interest in acquiring it, and at much higher price than other potential buyers
would have been willing to pay. The appellant cited some cases that recognized
the concept of the special purchaser with a particular interest in a property
and a desire to use that property after acquiring it for purposes other than
those of other potential buyers, and that the FMV could be the highest price
the property may have for this "special purchaser" compared to the
price others would be willing to pay. On this, counsel for the appellants
claimed that his clients had shown that this collection fit in with the
museum's vocation and the museum had the financial resources to acquire it.
[30]
In my opinion, the
theory of the special purchaser does not easily apply in the context of
donations. It cannot be retained if the application is hypothetical and is not
based on facts. The existence of a special purchaser must be shown by in the
evidence: it must be shown that a person would have paid a higher amount of
money than other buyers to acquire property. In the case of donations to a
museum, it must be shown that without the donations, the works would only have
been acquired by paying a higher price than what others would have paid. In
this case, the appellants, who have the burden of proof, must show that other
persons were seeking to acquire these lots of works and that the museum was
ready to pay a higher price to acquire them. They have not done so. The
appellants could have indirectly shown that the museum was a special purchaser
by showing that there were sales of comparable works to museums and that the
price these museums paid is generally higher than the price paid in the
ordinary course of business. Once again, the appellant's did not offer any
evidence on this subject.
[31]
The appellants claim
that the works donated to the museum were collections, that these collections
fit in with the museum’s nature and that the principle of a discount in cases
of increased offers do not apply in this case. In other words, the appellants
claim that the presence of a collection had a positive effect on the FMV.
[32]
It is true that the
appellant has shown that the works donated to the museum were collections and
that, at the time of the donations, the collections were in keeping with the
museum's nature. But again, to counteract the discount principle, the appellants
had to show that the museum, without the donations, would have been ready to
pay to acquire these collections and moreover, that the museum could not have
acquired these collections unless they paid more than the price other buyers
were ready to pay. In my opinion, without many other potential buyers with such
a particular interest, it is difficult if not impossible to quantify the
positive effect the existence of the collection in itself has on the FMV. In
other words, in such a case, it becomes nearly impossible to show that the
museum would have paid a higher price. The appellants could have proven this
indirectly by showing that museums, when there is no
other particular interest in acquiring a collection of artwork, are always
willing to pay a higher price than other purchasers that do not have this
particular interest.
[33]
Since the appellants have
not shown that the FMV of the works of art they donated to the museum was
higher than the FMV the Minister determined, the appeals are dismissed with
costs.
Signed at Bromont, Quebec, this 23rd day of November 2009.
"Paul Bédard"
on this 31st day
of March 2010.
François Brunet,
Revisor
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