Collapse of a Charitable Legacy

Fate of city’s prized art collection is uncertain as gallery and benefactor’s heirs battle for ownership

His name is hard to escape in this sleepy provincial capital. A downtown street, a leading hotel, a public auditorium, counseling center, and university dormitory are named for him, while his wife’s name graces a gymnasium. There is a bronze statue of him prominently displayed in the central park, near his greatest legacy, the world-class art gallery that bears his name.

William Maxwell Aitken, the first Lord Beaverbrook, was one of New Brunswick’s most famous sons and greatest benefactors. Now, 43 years after his death, the future of the art collection Lord Beaverbrook brought to New Brunswick is in the hands of judges and lawyers, the result of his own machinations regarding his most prominent gift to the people of his native province.

The dispute involves a collection of 211 paintings in the possession of the Beaverbrook Art Gallery, an institution founded and built by Lord Beaverbrook in the late 1950s to display a collection he hoped would become “imperishable relics of our time.”

It pits his heirs and the foundations they control against the gallery’s directors and curatorial staff, with each side maintaining that they are the owners of the paintings, worth an estimated $130-million.

The dispute demonstrates the importance of good record keeping when gifts are made, how understandings of the letter and spirit of a gift can diverge over time, and how even symbiotic institutions can become estranged from one another two or three generations down the road.

When Peter Cory, a retired justice of Canada’s Supreme Court who is serving as an arbitrator in the dispute, makes his ruling in a case involving 133 of those paintings, the only thing that’s certain is that everyone — one of the foundations, the gallery, and the people of New Brunswick — will be the poorer for it.

Court expenses have soaked up millions of dollars, and the loss of goodwill between the parties may, in the long run, prove even more costly. The rulings are expected this month or in March.

Grandsons Seek Works

On one side are the benefactor’s grandsons, Timothy Aitken of Toronto and the current Lord Beaverbrook, and Max Aitken III, CEO of the Cheeky Monkey gambling Web site, who control the two foundations the first Lord Beaverbrook created to provide for the gallery and other charitable pursuits.

In 2004, the Aitkens asked that the two most valuable paintings — Lucien Freud’s “Hotel Bedroom” and J.M.W. Turner’s “Fountain of Indolence” — be returned to England, where they would probably be sold. The Beaverbrook UK Foundation, controlled by Max Aitken, would give the gallery $4.3-million in compensation, and direct the other $20-million or more in expected proceeds to other causes, including the rehabilitation of the family estate, Cherkley Court, in England, now a nonprofit center for scholars.

The U.K. foundation sent a proposed loan agreement under which 131 other paintings would remain on loan for nine years, after which they could be withdrawn from the gallery at any time.

A similar proposal covering an additional 78 paintings arrived from Timothy Aitken’s Beaverbrook Canadian Foundation, the conduit through which the family provided support to Canadian institutions. The works included paintings by Salvador Dali and Sandro Botticelli.

For the gallery, the proposals potentially imperiled 211 of its most important works of art, notes its chief executive, Bernard Riordon.

“When the request arrived, the board engaged lawyers to do a due-diligence exercise to determine what our fiduciary responsibilities were,” he says. “It was during that exercise that it was determined that these were gifts, not loans, as had been our belief.”

Indeed, for four decades, both the Aitken family and the gallery staff and directors had been under the impression that the paintings and dozens of others were owned by the Beaverbrook UK Foundation. Mr. Riordon and his predecessors had regarded them as on essentially permanent loan from the parent foundation, whose ownership was acknowledged in display placards and in exhibition catalogs published by the gallery.

In the process of responding to the loan proposal, however, the gallery’s board found evidence that the accession records may have been tampered with in 1960, a year after the gallery’s opening. Their investigators soon uncovered a body of evidence strongly suggesting that Lord Beaverbrook had given the gallery 133 of the works outright in 1959.

This was greeted with shock by the foundations, to put it mildly.

“Ownership was never even an issue. It had never crossed anyone’s mind,” says Vincent M. Prager, a Montreal lawyer who served on the gallery’s Board of Governors and is one of the three trustees of the Beaverbrook Canadian Foundation. “The only thing I can give the gallery credit for is imagination and theatrics. They’ve built a case out of nothing but innuendo and whatnot.”

Things quickly turned sour. In March 2004, the gallery board received a letter from Timothy Aitken that many members perceived as threatening personal lawsuits against them. Thirteen trustees resigned, leaving only Mr. Prager, Mr. Aitken, and another trustee, Howard Cowans, the three members of the Beaverbrook Canadian Foundation board. The province of New Brunswick stepped in, facilitating the return of many of the board members with an assurance of legal support.

Not long thereafter, the parties were in court. The gallery and the U.K. foundation agreed to binding arbitration under Justice Cory. The Beaverbrook Canadian Foundation pursued a separate case in the New Brunswick courts, which is expected to go to trial late in the year.

The Lord’s Intent

When the gallery opened its doors in 1959, Lord Beaverbrook was 80 and one of the most powerful men in the British Commonwealth.

After becoming a millionaire through several business mergers, he moved to England, where he built the Express newspaper group into a news-media empire and propaganda machine worthy of William Randolph Hearst.

The newspapers opened his way to politics, and during World War II he served as Winston Churchill’s minister for aviation, where his organizational skills helped win the Battle of Britain. The writer Rebecca West was his mistress for a time, and Churchill, Rudyard Kipling, and H.G. Wells were among his house guests at Cherkley Court.

He maintained an affection for his home province — much of it rugged, rural, and poor — and built the gallery here as his lasting legacy. As for the art housed within — which in 1959 included at least 85 of the disputed paintings — Lord Beaverbrook and his associates repeatedly referred to them as gifts up until immediately after the opening.

“No gallery has such a wealth of gifts at its birth,” he said at the opening dinner, and noted that 12 of the 323 pictures then hanging in the gallery were on loan.

Indeed, until 1960, many of the disputed paintings were consistently described as gifts in Lord Beaverbrook’s correspondence, including formal reports to the New Brunswick Legislature, foundation and gallery trustees, and customs authorities, according to legal briefs submitted to Justice Cory.

Works on loan were duly noted in the gallery’s official 1959 catalog, which Lord Beaverbrook vetted and included none of the disputed works. Lord Beaverbrook’s Daily Express noted that after the opening “the gallery and its almost priceless collection will cease to be the property of Lord Beaverbrook and will become the property of the people of New Brunswick,” a message repeated in a magazine article he commissioned and distributed to friends.

“This whole rich contextual narrative is one of gift,” says Larry Lowenstein, the Toronto lawyer who presented the gallery’s case. “Certainly with respect to the pre-1960 works, the gallery maintains that the legal requirements of a gift were met: intention, delivery, and acceptance.”

At the hearing, Mr. Lowenstein argued that after the opening, Lord Beaverbrook experienced some form of donor’s regret and, in 1960, orchestrated a change in terms after the fact.

“Both sides agree that if Lord Beaverbrook was anything, he was, in modern language, a control freak,” he explains. “The thesis we put forward is that there was an effort to attach strings to the gift after the fact, to maintain control in the U.K., to perhaps strangle the gift with strings.”

Starting in 1960, correspondence began referring to the disputed paintings as loans. In October Lord Beaverbrook sent his personal secretary to Fredericton. The secretary later reported back: “I have destroyed all the old accession sheets.” Replacement sheets and painting labels indicated that many works were property of the foundations, as did decades of museum catalogs from then on.

Rare Approach

Altering accession documents is extremely unusual, according to Philip Temple, a lawyer in White Plains, N.Y., who specializes in planned giving and is not involved in the case.

“Accession documents speak for themselves, and ordinarily if you got into legal trouble, you would look there and go no further,” he says. “Provenance is the first word in any major collection, so museums are very careful to cross their t’s from the outset, and that was absolutely true in the 1950s.”

Mr. Prager, a board member of the Canadian foundation, says that Lord Beaverbrook would never have had to resort to such cloak-and-dagger tactics to get what he wanted.

“All he would have needed to do was get the board to pass a resolution saying there was a mistake in the records,” he says. “He was Churchill’s right-hand man in the Second World War and an extremely powerful person. One call from Beaverbrook to the premier of New Brunswick and any one of those people would have been wiped off that board so fast.”

The U.K. foundation’s lawyers argue that the disputed paintings have always been owned by the foundation, a fact never contested by anyone before 2004, and understood by everyone involved in the gallery’s creation.

When the gallery opened, the foundation had not decided which paintings would be donated to it, but had left them in its custody. Final decisions were made in 1960, at which point accession records were drawn up. Max Aitken III, one of the grandsons, testified that his grandfather’s public remarks exaggerated his generosity.

Demands to Display

The real dispute, Mr. Prager says, started in the late 1990s, when he and the other gallery board members from the Canadian foundation began pressing the gallery to display more of the paintings, more often, in exchange for the $171,000 the foundations contributed to it each year.

“For years nobody asked questions and the board just rubber-stamped the gallery’s decisions,” he says, noting that some directors preferred to show work by contemporary provincial artists. “The problem was, all of a sudden we were saying, if you want to keep our money you need to be showing these paintings.”

One thing both sides agree on is that the real losers will be the people of New Brunswick. The Canadian foundation has withdrawn its longstanding support for the gallery, the University of New Brunswick, and other local causes, citing the loss of good will.

“That’s tragic, as this was Beaverbrook’s legacy for us,” says Mr. Riordon. “It’s very unfortunate that it came to this.”

“The money of the gallery and foundations shouldn’t be going to pay lawyers at $500 or $600 an hour,” says Mr. Prager, who estimates total legal bills by all sides will exceed $8.6-million.

He said that he and the Aitkens had been deeply hurt by hostile Canadian news accounts, and because, after all their years of charitable giving, nobody in New Brunswick had spoken up on their behalf. Mr. Prager, who gave the gallery many paintings by his grandfather, Joseph Oppenheimer, said when he visits his summer home in St. Andrews, New Brunswick, many old acquaintances won’t speak to him.

“It’s a warning to philanthropic organizations that even when you have good relations with people, you need to properly document everything,” he added. “Otherwise, it might come back and punch you in the face.”

The dispute has been a particularly public one, given considerable attention by provincial and Canadian news organizations. From July 2005 to March 2006, the gallery put on a special exhibit of the 211 contested paintings in its possession titled “Art in Dispute,” which marked the first time they had been displayed in their entirety since the gallery’s early years. The number of visitors to the gallery rose by 25 percent.

Brad Woodside, the mayor of Fredericton, says the public is extremely upset that the foundations would consider taking back part of what has long been regarded as Beaverbrook’s gift to them.

“There was no question in anybody’s mind that the treasures in the gallery were not meant to be taken away and sold off,” he says. Such an occurrence, he added, “would be a dark day for New Brunswick and Canada as well.”