Judgments

[1994] 3 F.C. 691

T-1181-92

Art Gallery of Ontario (Applicant)

v.

Canadian Cultural Property Export Review Board and the Attorney General of Canada (Respondents)

Indexed as: Art Gallery of Ontario v. Canada (Cultural Property Export Review Board) (T.D.)

Trial Division, Rothstein J.—Toronto, May 18, June 2 and July 5, 1994.

Judicial review — Application for direction Canadian Cultural Property Export Review Board redetermine by oral hearing fair market value of proposed donation of Inuit sculpture to Art Gallery of Ontario — Board valuing collection at 60% of average of two appraisals submitted by AGO after consultation with appraiser — AGO having neither prior notice of information passing between Board and appraiser, nor opportunity to make representations prior to Board’s decision — Credibility of appraisal relied on by Board suspect as done without examining art works, apparent prior relationship between appraiser and Board Chairman — Respondent conceding breach of rules of natural justice, procedural fairness, Cultural Property Export and Import Act, s. 26 (requiring Board to make substance of information received by it available to applicant) — Quorum of entirely new members not possible, due to requirements of s. 18(4) — Board not having cross-examined AGO’s appraisers — Unusual circumstances such that oral hearing required to “clear the air,” restore confidence in fairness of Review Board procedures — Directions given governing reconsideration.

This was an application for a direction that the Canadian Cultural Property Export Review Board redetermine by way of an oral hearing the fair market value of a proposed donation of Canadian cultural property, namely 224 works of Inuit sculpture, to the Art Gallery of Ontario, a designated institution. Pursuant to the Cultural Property Export and Import Act, subsections 32(1) and (4) the Review Board has the authority to determine the fair market value of gifts of Canadian cultural property to designated institutions. The Gallery submitted two appraisals and claimed the average as the fair market value of the collection with its application for certification of cultural property for income tax purposes. The Review Board was concerned about the proposed market value and requested a third appraisal, which was provided. The Review Board was still concerned and indicated that it had commissioned an appraiser to evaluate the collection. When that individual was unable to perform the appraisal, the Board consulted another appraiser without so informing the applicant until it had released its decision. The Board valued the collection at sixty percent of the average of the first two appraisals submitted, being of the view that the Gallery appraisals were far too high given today’s art market crisis. The applicant had neither prior notice of any information passing between the appraiser and the Review Board, nor an opportunity to make representations prior to the Board making its decision. The evaluation relied upon by the Board consisted of one and one-quarter handwritten pages. The Board’s appraiser had not viewed the collection, but merely looked at 42 photographs. The Review Board refused the applicant’s request for an oral hearing, because it did not “conduct its proceedings in this fashion.”

Section 26 requires that the Review Board make the substance of information received by it, in respect of a determination that it is to make, available to the applicant and allow an applicant the opportunity to make representations respecting that information. Section 24 permits the Review Board to make its own rules of procedure. The Review Board may receive information either orally or in writing (section 25). Section 27 provides that in certain circumstances, upon request, applicants are to be afforded a public hearing. Section 28 provides that the Review Board is to operate informally and expeditiously, in a manner consistent with its duty of fairness. Section 22 permits the Board to call on any person with professional, technical or other special knowledge to assist it.

The Board argued that, while nothing prohibited it from convening an oral hearing, because of the volume of work, the fact that Board members are situated throughout the country, and the cost involved in convening an oral hearing, it would be undesirable to require an oral hearing. The issue was whether the Court should direct an oral hearing.

Held, the application should be allowed.

The matter should be referred back for an oral hearing and reconsideration. If the Review Board obtains outside advice or wishes to rely on the information currently in its possession, it should produce that information, the authors for cross-examination, and permit the applicant to make representations in accordance with section 26. The reconsideration panel shall, as far as possible, consist of members who did not take part in the original decision. The Chairman should not participate. The Board’s decision should be detailed, explaining and justifying the conclusions reached.

The reasons for an oral hearing were: (1) the credibility of the appraisal utilized by the Review Board was suspect; (2) breaches of the rules of natural justice or procedural fairness and section 26 of the Act have been admitted; (3) there is doubt as to whether an entirely fresh panel of the Review Board may be convened to consider the case on review; (4) the Review Board did not accept applicant’s appraisals but did not cross-examine the applicant’s appraisers.

(1) The Board’s appraiser did not view the collection. His appraisal seemed somewhat informal. Further, there seems to have been a previous relationship between the Chairman of the Review Board and this appraiser. The latter had been curator of the Lavalin Corporation art collection for twelve years, and the Review Board Chairman is a former Chief Executive Officer of Lavalin.

(2) The respondents conceded that section 26 had been breached. It was also conceded that the Review Board’s original determination of fair market value had been made in a manner that contravened the rules of natural justice or procedural fairness.

(3) A quorum of entirely new members was not possible, having regard to the quorum requirements of subsection 18(4).

(4) The circumstances of this case were such that an open process with the opportunity for cross-examination was desirable. The applicant quite properly did not have confidence in the Board’s original decision. An oral hearing would provide the best opportunity to restore the applicant’s confidence in the ability of the Board to be objective. It would also allow the Board to cross-examine the applicant’s appraisers. It was the unusual circumstances of this case that mandated an oral hearing.

While the Review Board is to operate informally and expeditiously and make its own rules of procedure, sections 25 and 27 clearly provide that oral submissions and public hearings are contemplated. Workload and inconvenience suggest that the Board should not be required as a regular process to hold oral hearings, but in particular circumstances, there may be a need for an oral hearing. The Court should not direct that new appraisals and new evidence be provided so that the matter can be decided on fresh evidence as that would put the Court in the position, without knowing the details or merits of the case, and without having an interest in its outcome, of participating in the formulation of the parties’ evidence. A reviewing Court should not assume that function. As part of its jurisdiction to determine the fair market value of cultural property, the Review Board should decide the appropriate date for such determination.

STATUTES AND REGULATIONS JUDICIALLY CONSIDERED

Cultural Property Export and Import Act, R.S.C., 1985, c. C-51, ss. 18, 22(1) (as am. by S.C. 1991, c. 49, s. 217), 24, 25, 26, 27, 28, 32(1) (as am. idem, s. 218), (4).

Income Tax Act, R.S.C. 1952, c. 148.

Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1, ss. 39(1)(a)(i.1) (as am. by S.C. 1991, c. 49, s. 22), 118.1(10) (as enacted idem, s. 88).

CASES JUDICIALLY CONSIDERED

APPLIED:

Cashin v. Canadian Broadcasting Corporation, [1984] 2 F.C. 209; (1984), 8 D.L.R. (4th) 622; 8 Admin. L.R. 161; 5 C.H.R.R. D/2234; 84 CLLC 17,009; 55 N.R. 112 (C.A.).

REFERRED TO:

Northwestern Utilities Ltd. et al. v. City of Edmonton, [1979] 1 S.C.R. 684; (1978), 12 A.R. 449; 89 D.L.R. (3d) 161; 7 Alta. L.R. (2d) 370; 23 N.R. 565.

APPLICATION for a direction that the Canadian Cultural Property Export Review Board redetermine, by way of an oral hearing, the fair market value of a proposed donation of 224 Inuit sculptures to the Art Gallery of Ontario. Application allowed.

COUNSEL:

Peter F. C. Howard and William I. Innes for applicant.

Marlene I. Thomas and Tanya L. Jorgenson for respondents.

SOLICITORS:

Stikeman, Elliott, Toronto, for applicant.

Deputy Attorney General of Canada for respondents.

The following are the reasons for order rendered in English by

Rothstein J.:

THE ISSUE

The issue in this case is whether this Court should direct the Canadian Cultural Property Export Review Board to redetermine, by way of an oral hearing, the fair market value of a proposed donation of Canadian cultural property to the Art Gallery of Ontario by Mr. Samuel Sarick.

Although the Canadian Cultural Property Export Review Board was the only respondent named in the originating notice of motion, because of the general rule that boards and tribunals are not to be heard in review proceedings of their own decisions (see Northwestern Utilities Ltd. et al. v. City of Edmonton, [1979] 1 S.C.R. 684), the Attorney General of Canada brought a motion to be added as a respondent in the proceedings. By order of Giles A.S.P., dated July 17, 1992, the Attorney General of Canada was added as a respondent. Hereinafter, I shall refer to the Attorney General of Canada as the “respondent” and the Canadian Cultural Property Export Review Board as the “Review Board.”

At the outset, the respondent concedes that the original determination of fair market value by the Review Board was made in a manner that contravened the rules of natural justice or procedural fairness as well as the Review Board’s own constating statute and that the fair market value must be redetermined. The applicant concedes that there is no right to an oral hearing but that, in the circumstances of this case, the Court should exercise its discretion to order an oral hearing.

In addition, the applicant asks that the reconsideration panel of the Review Board should, as far as possible, consist of Review Board members other than those involved in the original decision and that the Review Board give detailed written reasons for its decision.

The respondent says that it is sufficient to return the matter to the Review Board for redetermination without further direction. However, the respondent would be agreeable to an order directing that, as far as possible, Review Board members other than those involved in the original decision form the reconsideration panel. The respondent would also accept a direction that detailed written reasons be provided. However, the respondent objects to a direction requiring an oral hearing. Instead of an oral hearing, the respondent submits that the Court could direct that fresh evidence be tendered by the applicant and that, if the Review Board chooses to seek out information itself, it should be from different sources than those relied upon in the rendering of its original decision.

The only issue then is whether or not the Court should direct an oral hearing.

THE SCHEME OF THE CULTURAL PROPERTY EXPORT AND IMPORT ACT

A brief summary of the workings of the Cultural Property Export and Import Act, R.S.C., 1985, c. C-51, as amended, (the CPEIA) and the Income Tax Act, R.S.C. 1952, c. 148,[1] as amended, will place the issue, as well as the participants, in perspective. I am indebted to Mr. William Innes, one of the applicant’s counsel, for a brief on the subject, from which I borrow freely.

The CPEIA came into force on September 6, 1977, as did certain complementary amendments to the Income Tax Act. The purpose of this legislation is to provide a mechanism to preserve the national heritage of Canada through a combination of export controls, preferential rights of purchase for designated cultural institutions and income tax incentives for those who donate Canadian cultural property to such designated institutions.

The basic scheme of the CPEIA and its companion provisions in the Income Tax Act is to combine an incentive—preferential tax treatment on the gift or sale of Canadian cultural property to designated institutions, with certain restrictions on the export of Canadian cultural property, and a limited right of expropriation after Canadian cultural property has been offered for sale.

Since its inception in 1977, the Review Board constituted under the CPEIA has had the authority to designate recipient institutions as well as determine whether objects donated or proposed to be donated to such institutions meet the requirements of being Canadian cultural property. Originally, the Review Board exercised an informal valuation oversight function by agreement with Revenue Canada. Since the introduction of subsection 118.1(10)[2] of the Income Tax Act, which applies to gifts made after February 20, 1990,[3] the Review Board, pursuant to subsections 32(1) [as am. by S.C. 1991, c. 49, s. 218] and (4) of the CPEIA, has had the authority to determine the fair market value of gifts of Canadian cultural property to designated institutions. Subsections 32(1) and (4) of the CPEIA provide:

32. (1) For the purposes of subparagraph 39(1)(a)(i.1), paragraph 110.1(1)(c), the definition “total cultural gifts” in subsection 118.1(1) and subsection 118.1(10) of the Income Tax Act, where a person disposes of or proposes to dispose of an object to an institution or a public authority designated under subsection (2), the person, institution or public authority may request, by notice in writing given to the Review Board, a determination by the Review Board as to whether the object meets the criteria set out in paragraphs 29(3)(b) and (c) and a determination by the Review Board of the fair market value of the object.

…

(4) The Review Board shall consider a request made under subsection (1) and, unless the circumstances of a particular case require otherwise, make a determination within four months after the date the request is received.

The following comparisons generally describe the incentive provided by the CPEIA to sell or give Canadian cultural property to designated institutions. If a taxpayer sells a painting commercially at a price greater than that which he or she originally paid for it, he or she is taxed on the capital gain, being the difference between the proceeds of sale of the painting and its adjusted cost base. On the other hand, if the taxpayer sells a painting to an institution designated under the CPEIA and if the painting has been designated by the Review Board as Canadian cultural property, subparagraph 39(1)(a)(i.1) [as am. idem, s. 22] of the Income Tax Act has the effect of deeming the capital gain to be nil, resulting in no capital gains tax liability.

While the sale of Canadian cultural property to designated institutions does occur, the funds for such acquisitions are limited and Canada’s major cultural institutions rely upon gifts of Canadian cultural property by donors. The transaction in question in this application is an example of such a gift.

If a donor gifts a painting to a charity or anyone else who is not an institution designated by the Review Board under the CPEIA, or if the painting is not certified as Canadian cultural property by the Review Board, two hardships flow. First, being a gift, there would be no proceeds of disposition of the painting. Nonetheless, the taxpayer must recognize a capital gain on the disposition of the painting and pay relevant capital gains tax. Second, the usual charitable tax credit under the Income Tax Act (or deduction in the case of a corporation), is normally limited to twenty percent of the taxpayer’s income in a year. While the unused credit or deduction may be carried forward for a maximum of five years, where the value of the painting is large in comparison to the donor’s income, the five-year period may run out before the credit or deduction can be used.

On the other hand, in the case of a gift of Canadian cultural property to a designated institution, the two hardships are eliminated. The capital gain is considered to be nil and no capital gains tax is payable. In addition, there is no twenty percent of income limitation on the tax credit or deduction in respect of the gift, and thus the taxpayer may utilize the total value of the gift to shelter income in the year of the donation, carrying forward any unused credit or deduction to be used up as soon as possible within five years.

THE FACTS

The Canadian cultural property in this case consists of 224 works of Inuit sculpture which formed part of the Sarick collection of 3,200 pieces of Inuit sculpture. The Art Gallery of Ontario is a designated institution and there is no doubt that the property in question is Canadian cultural property. In December, 1991, or January, 1992, the applicant filed with the Review Board an application for certification of cultural property for income tax purposes. The applicant submitted two appraisals, one from Miriam Shiell Fine Art for $1,643,650 and the other from Images Art Gallery for $1,525,250. The average of the two appraisals was $1,584,450 which the applicant said was the fair market value of the collection.

The Review Board considered the application at its meeting at the end of January, 1992, and by letter to the applicant dated February 7, 1992, indicated it had concerns about the proposed fair market value of the collection and requested a third evaluation. The applicant then obtained a third evaluation from Michael Neill of Willowdale, Ontario for $1,517,150.

Each of the three appraisals involved an attendance for viewing by the appraisers of each individual piece. The respondent, in these proceedings, did not challenge the qualifications of the applicant’s appraisers.

The Review Board considered the appraisals at its March, 1992 meeting and on April 3, 1992, wrote to the applicant, advising that it remained concerned about the applicant’s appraisals. The Review Board indicated that it had commissioned Duncan McLean of Waddington & McLean to provide an evaluation of the collection. In its letter, the Review Board stated that it anticipated Mr. McLean would contact the applicant to arrange to view the collection.

On April 7, 1992, Michael Hazley, President of the applicant and Dr. Glenn Lowry, Director of the applicant, met in Montréal with Bernard Lamarre, Chairman, and David Walden, Secretary of the Review Board. Dr. Lowry asked to see the appraisals to be obtained by the Review Board prior to the Review Board making its decision. Mr. Lamarre said that the applicant would not be allowed to see appraisals prior to the Review Board making its decision, but that after the decision of the Review Board was made, the Review Board would advise the applicant who performed the appraisals and the substance of those appraisals.

On April 22, 1992, Dr. Lowry telephoned Mr. Walden because the applicant had not been contacted by Mr. McLean, the Review Board’s appraiser. Mr. Walden informed Dr. Lowry that Mr. McLean had declined to perform the appraisal because he was too busy. The Review Board had arranged for someone else to conduct the appraisal. Mr. Walden refused to reveal the name of the selected appraiser or any report. Mr. Walden indicated that the Review Board had determined that the value of the collection would be sixty percent (60%) of the first two appraisals submitted by the applicant.

The applicant received the Review Board’s decision by letter dated April 24, 1992. The Review Board decided that the fair market value of the collection was $950,670. The Review Board stated:

In making it’s [sic] determination, the Board reviewed the three appraisals submitted with the application, and consulted Mr. Leo Rosshandler of Communications Rosshandler & Associates Ltd. of Montreal. The Board then concluded that the appraised value was high given the current state of the art market, and determined that $950,670 (60% of $1,584,450—the average of the first two appraisals) represented the fair market value of this collection.

The applicant was not given prior notice of any information passing between Mr. Rosshandler, or anyone else, and the Review Board, nor, obviously was it given an opportunity to make representations to the Review Board with respect to Mr. Rosshandler’s involvement prior to the Review Board making its decision.

The Review Board also appears to have sought advice from the National Gallery of Canada. The Gallery’s observations included the following comments:

Without a detailled [sic] list and with only 42 photos, it is difficult to give [an] accurate assessment of the evaluations. This being said my general feeling is that they are on the high side of a reasonable range.

The comments of the Gallery had not been provided to the applicant.

Mr. Rosshandler’s evaluation consisted of one and one-quarter handwritten pages as follows:

I have examined and collated the four lists (2 evaluations, one computer printout with description, one general name list), as well as photographs from the A.G.O.

It is my conclusion that the valuations are by far too high and unrealistic in today’ [sic] art market crisis.

In general terms the quality of this sculpture collection is good…. truly outstanding pieces, but perhaps it is not quite possible to assess all the objects from lists and selected photographs.

Karoo Ashevak’s photographed sculptures S.2403 and S.2687 are powerful and important works but cannot be put in the same league as the Ashevak I had the opportunity of getting for the MMFA.

Joe Talirunili good examples of his work,—no more. Compare “Boat and Six Men” c 1965 (S-357) with boat in the MMFA.

This should not detract from the quality and meaningfulness of these two great artists!

I would like to suggest that the value of the collection be reconsidered at a level of about 60% of the average sum indicated by the evaluators.

Thus $950,670.00.

Mr. Rosshandler did not view the collection. It appears he had some 42 photographs to look at. His appraisal was performed some time between April 9 and April 11, 1992. The Review Board appears to have adopted Mr. Rosshandler’s evaluation exactly as it was put forward.

After receipt of the Review Board’s letter dated April 24, 1992, containing its decision, counsel for the applicant requested an oral hearing. In a letter from counsel for the Review Board to counsel for the applicant, counsel for the Review Board acknowledged that the applicant was entitled to the substance of any information received by the Review Board with respect to the proposed Sarick donation. She indicated that the Review Board was prepared to consider written representations made by the applicant and make a decision after consideration of the representations. However, in respect of the applicant’s request for an oral hearing, counsel for the Review Board stated:

You have requested, on behalf of the AGO, that the Review Board convene an oral hearing for consideration of the representations. The Review Board does not conduct its proceedings in this fashion, thus we are instructed to inform you that no oral hearing will be convened.

During cross-examination on affidavits, counsel for the respondent conceded that nothing prohibits the Review Board from convening an oral hearing and that the real question is whether an oral hearing is necessary in the circumstances of this case. She submits that because of the volume of the Review Board’s work and the fact that the Review Board members are situated throughout the country and because of the cost involved in convening an oral hearing, it would be undesirable to require an oral hearing.

THE REVIEW BOARD

The Review Board is established pursuant to section 18 of the CPEIA. The Review Board is to consist of a Chairman and not less than six and not more than twelve other members. I was advised that at the time of the Review Board’s decision in this case, and presently, the Review Board consists of nine members. The Review Board is to be selected from the population generally and from selected interest groups. Three members of the Review Board constitute a quorum. Section 18 provides:

18. (1) There is hereby established a board to be known as the Canadian Cultural Property Export Review Board, consisting of a Chairman and not less than six or more than twelve other members appointed by the Governor in Council on the recommendation of the Minister.

(2) The members of the Review Board, other than the Chairman and two other members who shall be chosen generally from among residents of Canada, shall be chosen in equal numbers

(a) from among residents of Canada who are or have been officers, members or employees of art galleries, museums, archives, libraries or other similar institutions in Canada; and

(b) from among residents of Canada who are or have been dealers in or collectors of art, antiques or other objects that form part of the national heritage.

(3) The Review Board may authorize one of its members to act as Chairman in the event of the absence or incapacity of the Chairman or if the office of Chairman is vacant.

(4) Three members, at least one of whom is a person described in paragraph (2)(a) and one of whom is a person described in paragraph (2)(b), constitute a quorum of the Review Board.

While I was advised that there are four new members of the Review Board who were not involved in the Review Board’s original decision in this case, it does not appear, at this time, that a quorum of entirely new members is possible, having regard to the quorum requirements of subsection 18(4), as no new members have been appointed from persons described in paragraph 18(2)(b).

The Review Board’s procedures are set forth in sections 24 to 28 of the Act. The Review Board makes its own rules of procedure. Section 24 provides:

24. The Review Board may make rules not inconsistent with this Act for the conduct of its proceedings and the performance of its duties and functions under this Act.

The Review Board may receive information either orally or in writing. Section 25 provides:

25. The Review Board may receive any information presented to it orally or in writing that it considers to be relevant to any matter before it and in so doing it is not bound by any legal or technical rules of evidence.

The Act requires that the Review Board make the substance of information received by it, in respect of a determination that it is to make, available to the applicant and allow an applicant the opportunity to make representations respecting that information. Section 26 provides:

26. The Review Board shall make the substance of any information received by it in respect of a matter before it known to the person who applied for an export permit in respect of the object to which the matter relates, or to the person, institution or public authority that applied for a determination under subsection 32(1), as the case may be, and, before the Review Board decides the matter, it shall give that person, institution or public authority an opportunity to make representations in respect of that information.

It is section 26 that counsel for the respondent concedes was breached by the Review Board.

In certain circumstances, upon request, applicants are to be afforded a public hearing. Section 27 provides:

27. The Review Board may exclude any person not directly interested in a matter being heard before it from the hearing unless, where the matter is in respect of an object in respect of which an application for an export permit has been made, the applicant for the permit requests that the hearing be held in public, in which case it shall be so held.

The Review Board is to operate informally and expeditiously, in a manner consistent with its duty of fairness. Section 28 provides:

28. The Review Board shall dispose of any matter before it as informally and expeditiously as, in its opinion, the circumstances and considerations of fairness will permit.

In conducting its business, the Review Board may call on any person with professional, technical or other special knowledge to assist it. Subsection 22(1) [as am. by S.C. 1991, c. 49, s. 217] provides:

22. (1) The Review Board may call on any person who has professional, technical or other special knowledge to assist it in any matter in an advisory capacity.

ANALYSIS

In my opinion, the respondent’s arguments respecting the volume of the Review Board’s work, the fact that the Review Board members are situated throughout the country, and the cost involved in convening an oral hearing, must be rejected. While the Review Board is to operate informally and expeditiously and make its own rules of procedure, sections 25 and 27 of the CPEIA clearly provide that oral submissions and public hearings are contemplated. It is true that the volume of the Review Board’s work and the location of its members suggest that, as a regular process, the Review Board should not be required to hold oral hearings in its decision-making process. But in particular circumstances, there may be a need for an oral hearing. This is recognized by the statute. The desirability of an oral hearing in particular circumstances cannot be defeated by arguments about the Review Board’s workload or matters of inconvenience to members. In Cashin v. Canadian Broadcasting Corporation, [1984] 2 F.C. 209 (C.A.), Thurlow C.J. stated at page 212:

The other comment is that, where the principles of natural justice must be observed, it is no answer to say that the Commission is not organized or set up to conduct its proceedings by way of oral hearings of witnesses with opportunities for cross-examination by opposing parties. That the Commission is the master of its own procedure is not in issue. But its authority to prescribe a procedure for a case such as this is itself subject to the dictates of natural justice and what natural justice will require in the particular instance.

I am of the view that these observations of Thurlow C.J. are applicable to the Review Board in the case at bar.

Respondent’s counsel submits that an alternative to an oral hearing is to have the Court specify that the applicant and respondent provide new appraisals and new evidence so that the matter can be decided on fresh evidence. In her submission, if the Review Board deals with the matter on the basis of fresh evidence, this case would be no different from others dealt with by the Review Board without an oral hearing. In my view, it is not desirable for the Court to take the action suggested by counsel for the respondent. Normally, parties must be given the freedom and the responsibility of deciding what evidence they wish to put forward. Whether new appraisals are possible or whether they are more desirable than the ones originally before the Review Board is not known. For this Court, on a judicial review, to direct that certain evidence is permissible or even desirable, places the Court in the position, without knowing the details of the merits of the case, and without having an interest in its outcome, of participating in the formulation of the parties’ evidence. In my view, a reviewing court should not, except in the most compelling circumstances, assume that function.

Here, the applicant put forward three appraisals. The Review Board rejected all of them and instead, accepted the Rosshandler appraisal. Mr. Rosshandler did not view the collection. The National Gallery, from which the Review Board also sought advice, hesitated to provide an evaluation without viewing the collection. Mr. Rosshandler’s appraisal seems somewhat informal, being contained on a one and one-quarter page, handwritten memo. Further, there seems to have been a previous relationship between the Chairman of the Review Board and Mr. Rosshandler. Apparently, Mr. Rosshandler was the curator of the Lavalin Corporation art collection for twelve years. The Chairman of the Review Board is the former Chief Executive Officer of the Lavalin Corporation. For these reasons, the applicant questions the validity of the Rosshandler appraisal.

In Cashin, supra, Thurlow C.J. stated at page 211:

First, while there is no general rule that in order to observe the principles of natural justice an oral hearing must be held and an opportunity to examine every document and to cross-examine witnesses must be afforded to a person whose rights may be adversely affected by the decision of an administrative authority, the nature of what had to be decided in this instance, that is, whether the action by the CBC in refusing to renew the applicant’s contract was indeed because of the bona fide occupational requirement that the applicant be publicly perceived to be objective in carrying out her duties, coupled with the fact that it rested on the CBC to establish what motivated its decision, appear to me to present a situation which cried out for an opportunity for the applicant to test by cross-examination what the CBC alleged to have been the reasons for its decision.

As in Cashin, supra, the present case is one in which, in my view, there are compelling reasons for an oral hearing. These reasons include:

(1) Based on reasons which at least, in my opinion, raise a suspicion, the credibility of the appraisal utilized by the Review Board in its decision in this matter is at issue.

(2) There has been an admitted breach of the rules of natural justice or procedural fairness and section 26 of the CPEIA. The Review Board originally proceeded in secret without giving the applicant the information it received from Mr. Rosshandler or the opportunity of making submissions with respect to it.

(3) There is doubt as to whether an entirely fresh panel of the Review Board may be convened to consider the case on review, having regard to the quorum requirements of subsection 18(4) of the CPEIA.

(4) The Review Board was not satisfied with the applicant’s appraisals and did not cross-examine the applicant’s appraisers.

The circumstances of this case are such that an open process with the opportunity for cross-examination is, in my opinion, desirable. The original decision of the Review Board is one in which the applicant, on the basis of the evidence before me, quite properly did not have confidence. There is sufficient evidence questioning the validity of the Review Board’s process and decision on the merits that justifies the applicant’s scepticism. The Review Board must now proceed to restore, as far as possible, the confidence of the applicant in the fairness of its procedures and the objectivity of its consideration of the applicant’s application. I would have thought it would have been in the interest of the Review Board itself to “clear the air” as far as possible. Further, with an oral hearing, the Review Board will be able, through its counsel, to cross-examine the applicant’s appraisers. In the circumstances of this case, an oral hearing would provide the best opportunity for achieving these objectives, and enable the Review Board to make a fair decision.

I should observe that nothing in this decision precludes the Review Board, in the normal case, from following its procedures as it sees fit. It is the unusual aspect of this particular case that mandates an oral hearing.

In the context of attempting to convince me that this Court should direct that fresh evidence be submitted by the parties as an alternative to an oral hearing, respondent’s counsel submitted that this Court should determine that the relevant date for the Review Board determining the fair market value of the Sarick collection is not when the original application or decision was made, but rather, when the Review Board reconsiders the matter. On this approach, new appraisals would be required.[4]

Applicant’s counsel argued that it should be for the Review Board, in the first instance, to decide the relevant date for determining fair market value. I agree with counsel for the applicant. The relevant date for determining fair market value in this case was not raised by the applicant in its application and indeed, was not raised by counsel for the respondent until oral argument. While it was raised in the context of whether, if fresh evidence was to be considered by the Review Board, an oral hearing was required, this is an issue in which the donor, Mr. Sarick, has a prime interest. Although he was a party to the original application to the Review Board, he was not a party in the proceedings before me in this Court. I do not find it appropriate to decide the issue of the date for determining fair market value without at least affording Mr. Sarick the opportunity of making submissions. Such submissions can be made by him or on his behalf before the reconsideration panel of the Review Board. Moreover, the determination of fair market value is within the jurisdiction of the Review Board and I can see no reason why, within the scope of that jurisdiction, the Review Board should not, at least in the first instance, decide the appropriate date for such determination.

CONCLUSION

This matter will be referred back, for an oral hearing, to a panel of the Review Board for reconsideration. The applicant should be at liberty to call such witnesses and evidence, including its original appraisers, if it intends to rely on their appraisals, as it considers appropriate. The applicant’s witnesses must be available for cross-examination by counsel for the Review Board. If the Review Board obtains outside advice or wishes to rely on the information currently in its possession, it should produce the information it presently has or obtains in the future and the authors of the information for cross-examination by counsel for the applicant and permit counsel for the applicant to make representations in accordance with section 26 of the CPEIA.

The reconsideration panel of the Review Board shall, as far as possible, consist of members of the Review Board that did not participate in the original decision. The Chairman of the Review Board should not participate in the reconsideration decision.

The decision of the Review Board shall be detailed, explaining and justifying the conclusions reached.

Counsel for the applicant shall prepare an order consistent with these reasons and submit it to counsel for the respondent for approval as to form and submit it to me for signature within fourteen (14) days of the date of these reasons. If there is any dispute between the parties as to the order, either party may apply to the Court and the Court will, upon hearing representations from the parties, issue an appropriate order.

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