Link: Case Summary Document
Citation:  ONSC 7711 (CanLII)
Acknowledgement:The Pemsel Case Foundation thanks The Australian Centre for Philanthropy and Nonprofit Studies for its contribution in the drafting of this Case Note.
The main applicant in this Canadian case is a non-profit corporation, Friends of Toronto Public Cemeteries Inc (FTPC). This is a group which interests itself in the operations of what has become known as the Mount Pleasant Group of Cemeteries (MPGC), a cemetery operation originally set up in 1826 as a trust, but since incorporated. MPGC operates extensive burial facilities over 1,222 acres, four crematoria, 14 mausoleums and five visitation centres.
The applicants alleged that MPGC is now governed by unaccountable, self-appointed directors acting in disregard of the legislation by which it is intended to be governed. The gist of their complaint was that none of the directors or members of MPGC had been appointed in accordance with the procedures established by an 1849 Act called “An Act to amend an Act therein mentioned and to vest the Toronto General Burying Ground in certain Trustees, and their successors”, S.C. 12 Vic. c. 104. Since MPGC ceased complying with the procedures established in the 1849 Act after 1987, FTPC alleged that none of the current ten directors had been properly elected.
The applicants also took issue with certain decisions made by MPGC’s directors that they contended strayed beyond the narrow statutory trust MPGC was set up to discharge. They claimed that the operation of funeral centres and crematoria on the cemetery grounds was outside the terms of the governing statutory trust. They sought a series of declarations dealing with these matters, and an order under s. 10 of the Charities Accounting Act, R.S.O. 1990, c. C.10 requiring the Public Guardian and Trustee to conduct an investigation.
MPGC resisted all aspects of the application. They contested the applicants’ standing and denied any violations of the governing statutes. MPGC took the view that the 1849 Act rules for the appointment of trustees were entirely spent when MPGC was incorporated in 1871 and that the procedures stipulated in the Corporations Act, S.O. 1990, c. C.38 now governed it instead. The Public Guardian and Trustee (PGT) was joined as a party and supported the bulk of the relief sought by the applicants, with the exception of the claim for an investigation.
The court found for the applicants for the following reasons:
- The incorporation of MPGC in 1871 neither repealed prior Acts (of which there were several) nor made any direct provision for the appointment of trustees or directors. No statute of general application at the time so provided either. This left unchanged the provisions for the appointment of trustees contained in the 1849 Act. Subsequent general company law statutes have neither expressly nor impliedly repealed the specific provisions of the 1849 Actdealing with the appointment of replacement trustees. The directors or trustees of the corporation (which terms were used interchangeably by the court) were thus still required to be appointed in accordance with the terms of the 1849 Act. That Act had not been complied with since 1987 and therefore all of the current directors of MPGC had been appointed since that time. It followed that none of the current directors of MPGC had been validly appointed.
- MPGC is itself a trust that holds all of its lands and all proceeds of them as a trust. The trust prohibits using the lands dedicated to it for anything other than the operation of a ‘cemetery or cemeteries or places for burial of the dead’. MPGC had undergone a variety of corporate mutations in recent years. These included establishing an affiliated funeral home operation that carries on business on MPGC cemetery lands. The court agreed with the applicants and the PGT that operating – directly or via subsidiary or affiliated corporations – a visitation centre on the trust lands went beyond the terms of the governing statutory trust. The court was unable to make a determination as regards the operation of the crematoria on the records before it.
- The court agreed with the PGT that this was not a case for a formal investigation under s. 10 of the Charities Accounting Act. The trust that was incorporated and continued under the 1871 Act was a charitable one and MPGC was subject to the provisions of the Charities Accounting Act. However, the court was not satisfied that the public interest would be served by ordering an investigation. Moreover, there was no finding of bad faith by the directors, merely of error.
However, because the procedures found in the governing 1849 Act were unwieldy, involving democratic voting for directors via town hall meetings after advertisement in at least two town newspapers, the court held that (at -):
Relatively informal town hall meetings to make legally-binding decisions may have been an appropriate mechanism in a town of less than 30,000. That town is now a city of nearly 3 million. Should more than a small number of those residents take a direct interest in the appointment of trustees of MPGC, no venue in the City of Toronto would be large enough to contain them. How long there shall be two or more newspapers published in the city in which notices may continue to be published can only be guessed at. However, only the Legislature can make permanent changes to the method of appointing trustees and our job as judges is to apply the law as best it can be done, not to write a new one. Since this court has jurisdiction to appoint trustees in these circumstances under s. 288(4) of the Corporations Act, I have determined that it is appropriate for me to utilize that jurisdiction and act to fill the void that my declarations will create. I shall appoint the seven most senior existing directors of MPGC as trustees of the corporation but shall require such appointments to be subject to confirmation in accordance with the 1849 Act while retaining jurisdiction to ensure an orderly public meeting process.
Another issue of interests was whether the FTPC had standing to bring this application. Pursuant to s 332 of the Corporations Act, an application to order a corporation to perform any duty ‘imposed by this Act’ may be made by a ‘shareholder, member or creditor’ of a corporation. MPGC contended that the applicants had no standing to complain regarding the actions of the board of directors of MPGC and this application amounted to that of a mere outsider seeking to meddle in the domestic affairs of MPGC. In addition, MPGC submitted that the applicants could not assert public interest standing because they did not raise a substantial or important constitutional issue.
The court held that both parties had demonstrated standing (at ). Public interest standing was not limited to constitutional cases (at -):
The requirement that a “serious justiciable issue” be raised is clearly met in this case. The evidence that the 1849 Act is not being complied with is not disputed – its very application (a legal question) is at the core of the dispute here. The applicants are not mere busybodies and the issues they raise were considered serious enough to motivate the rejection of the 2008 application to continue MPGC under the Corporations Act. As neighbours of the cemetery and members of the community, they have a stake in the question of the governance and accountability of the corporation charged with running the cemetery for these past 147 years. They have also demonstrated a serious and longstanding interest in the issues raised over the past decade and more. Furthermore, while residents of Toronto are not “members”, they are the most analogous thing to the concept of “members” that can be identified as of the time of incorporation of the trust in 1871 since it was to their judgment that the 1849 Act ultimately turned when it came to validating the election of replacement trustees. If the applicants are correct that the residents of Toronto have a statutory right to consider whether to accept or reject the appointment of replacement trustees, this application is a reasonable avenue open to residents such as the applicants to vindicate that right.
The following declarations were made in favour of the applicants:
a. MPGC is required to be governed by a board of not more than seven trustees each of whom is required to be appointed in accordance with the provisions of the 1826 Act as amended by the 1849 Act;
b. None of the ten current directors of MPGC has been validly appointed as a trustee of MPGC and none has the authority to appoint a new or replacement trustee;
c. MPGC continues to hold its assets as trustee for the purposes of the trust created by the 1826 Act as amended by statute thereafter;
d. The trust administered by MPGC is a charitable trust;
f. The funding and operation of visitation centres and the CMS funeral home business is beyond the scope of the existing statutory trust administered by MPGC.
The public meeting process required under the 1849 Act was also dealt with by the court (at -):
It shall be open to the applicants to call a public meeting in accordance with the provisions of the 1849 Act which public meeting may, if so advised, elect one or more inhabitant householders of the City of Toronto in replacement of one or more of the seven trustees named by me. I am directing the parties to negotiate a protocol to govern the calling and holding of the public meeting in question for approval by me. If a consensual protocol cannot be worked out, I may be approached for directions in that regard. It would be preferable were the timing of the notice in the Ontario Gazette to be co-ordinated with the intended date of such public meeting and the publication of notices as stipulated by the 1849 Act. A neutral chair of the public meeting should be provided for. Such chair will need authority (i) to retain neutral advisors and assistants; (ii) to adjourn and reschedule the meeting to a larger venue should the selected venue prove inadequate; and (iii) to seek directions from the court if needed.
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