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The Court of Queen's Bench hearing into the Beaverbrook art dispute set for Thursday and Friday has been delayed. ((CBC))

The next legal battle between the Beaverbrook U.K. Foundation and the Fredericton-based Beaverbrook Art Gallery has been postponed again as the British foundation faces growing financial pressure.

The scheduled hearing in the ongoing Beaverbrook art dispute was set for Thursday and Friday in the Court of Queen's Bench in Saint John.

The British-based Beaverbrook Foundation wants the court to quash two earlier arbitration decisions that awarded 85 disputed paintings to the Fredericton art gallery. 

The foundation couldn't be reached to explain why the hearing has been put off.

But the postponement coincides with increasing scrutiny of the foundation in Britain.

The U.K. Charities Commission, the regulator that ensures charities spend their money on charitable causes, says it's monitoring the legal battle between the foundation and the Fredericton art gallery and is pursuing inquiries with the foundation about its governance and finances.

The Beaverbrook Foundation has spent millions of its money on the legal battle with the Fredericton gallery. The most recent audit of the foundation warned that its legal bills from the dispute were jeopardizing its ability to continue functioning.

The August 2009 report, which was filed with the U.K. Charities Commission last summer, said the foundation spent more than $3 million Cdn in 2007-08 but brought in only $450,000.

The foundation's total loans have hit roughly $10 million Cdn to pay the legal bills in the art dispute.

The foundation has borrowed from British banks to pay those bills using Cherkley Court as collateral.

Cherkley was the home of the original Lord Beaverbrook in Surrey, U.K., and the foundation wanted to sell some of the paintings in the gallery to pay for expensive renovations to the house.

Now the foundation has applied to rezone the house as a family residence, which may be a sign it's planning to sell it.

Cherkley Court has been valued at between $21 million and $28 million Cdn.

Beaverbrook was a Canadian-born, British politician and businessman who died in 1964. Beaverbrook founded the Fredericton gallery in 1959.

Legal battle

The U.K. foundation has been locked in a legal battle for seven years with Fredericton's Beaverbrook Art Gallery over ownership of 133 works of art.

The two arbitration hearings have continued to award the Fredericton art gallery some of the most expensive paintings in dispute, including J.M.W. Turner's Fountain of Indolence, valued at $25 million, and Lucian Freud's Hotel Bedroom, valued at $5 million.

Former Supreme Court of Canada justice Peter Cory's 2007 ruling awarded 85 of the 133 paintings to Fredericton's Beaverbrook Art Gallery. The 45 paintings awarded by Cory to the foundation are worth $6 million Cdn.

An appeal panel, comprised of retired judges Edward Bayda, Coulter Osborne and Thomas Braidwood, said in September 2009 that Cory's original decision was reasonable and did not make any mistakes in his original judgment.

The U.K. foundation, which is controlled by Beaverbrook's descendants, said the paintings were only on loan to the gallery and wanted to take some of them back.

The art gallery argued Lord Beaverbrook had given the works as gifts in the 1950s.