Link: Case Summary Document
Citation:  BCSC 54 (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 petitioner in this Canadian case, the Doukhobor Heritage Retreat Society #1999 (DHRS), is a registered charity formed in the mid-1990s by the Doukhobor Cultural Association. Its mandate is ‘to preserve the heritage surrounding the Doukhobors’ migration from Russia to Canada at the end of the 19th century, and to promote the Doukhobors’ values of peace and harmony’. It was created specifically to build and operate a retreat as a not-for-profit, non-denominational venue with the object of promoting the study and practice of good health and habits, spiritual, moral, physical and social development, non-violent conflict resolution, cooperation and tolerance for all people, and environmental stewardship.
In October 2001, DHRS sent a cheque for $175,000 to the Vancouver Foundation to establish a ‘permanent open fund’ known as the ‘Allan T. Markin Benevolent Fund’ (the Fund). The capital, which had been donated to DHRS in trust by Mr. Markin, was to be ‘held permanently by Vancouver Foundation (VF) and invested in accordance with the provisions of the Vancouver Foundation Act’. The income was to be disbursed each year to DHRS ‘to be used for the charitable purposes of supporting the Whatshan Lake Retreat and supporting programs that will assist in the sponsorship of youth as well as adult camps, seminars and other events’.
However, the sum of money invested proved over time to be insufficient to support the stated purpose relating to the retreat. Consequently, DHRS (supported by Mr. Markin) requested the money back so that it could be redirected to other, more suitable purposes. Not unnaturally, VF opposed this, and refused to release the money back to DHRS. VF took the view that, although it had no issue with the alternative purposes proposed, the money had been given for a ‘permanent’ fund, and it could not change that aspect of the Fund.
DHRS contended that it could take the money back on four alternative grounds:
- that the Fund was a non-charitable purpose trust, and was therefore voidable pursuant to section 24 of the Perpetuity Act, RSBC 1996, c 358.
- that, if the trust was for a charitable purpose, then DHRS relied upon the terms of its agreement with VF, together with VF’s obligation under section 11 of the Vancouver Foundation Act, RSBC 2000, c 1 (VFA), to ‘carry out the directions of donors if definite directions in writing are given’.
- that, in the further alternative, the Fund trust was alterable under the Court’s charitable trust jurisdiction, either by way of the cy-près doctrine, or pursuant to the court’s administrative scheme-making power.
- Or that DHRS could rely on the court’s statutory authority under the Charitable Purposes Preservation Act, SBC 2004, c 59 [CPPA].
It was held that the Fund was a charitable purpose trust and not voidable. However, in the particular circumstances of the case, the court held that VF was obliged to return the Fund to DHRS by reason of its obligations under the VFA. Grounds 3 and 4 were not considered.
To qualify as a charitable purpose trust, a trust must have a purpose that falls within one of the four recognized heads of charity, and be concerned with public benefit rather than private advantage. The four recognized heads of charity are relief of poverty, advancement of education, advancement of religion, and other purposes beneficial to the community. VF contended that the Fund fell within these heads of charity. The court agreed, citing the advancement of education and other purposes beneficial to the community. Therefore, the Fund was a charitable purpose trust, and could not be voidable under the Perpetuity Act.
The relevant section of the VFA was section 11(1):
- (1) For the purpose of giving effect to the objects of the foundation, the board must carry out the directions of donors if definite directions in writing are given.
DHRS, supported by the Attorney General of British Columbia, submitted that, having given its directions in writing to VF to return the capital, the board was obliged by section 11(1) to carry out those directions. VF argued that, properly construed, section 11(1) contemplates only directions given at the time of the gift of property that concern how the fund is to be structured. Once delivery of the gift was completed, the donor relinquished ownership and was no longer in a position to give directions of any kind, let alone request the return of the fund. This was consistent with the terms of the gift, which expressly stated that the fund was to be held ‘permanently’ by VF and invested in accordance with the provisions of the VFA.
The court did not agree with these interpretations. The Fund was given to VF to be managed for its own purposes. It was not a situation where individuals made gifts to VF to be administered and used for charitable purposes, benefitting parties other than the donor (at ). Moreover, the court did not think that ‘permanent’ meant that the funds must remain with VF for all time (at 46]). Nor did section 11(1) of the VFA contemplate only directions given at the time that the fund was created (at ). The limiting provision in section 11(1) was one of purpose, not time (at ).
Therefore, in the particular circumstances of the case, DHRS’ written direction to return the funds held by VF, so that they could be invested otherwise, was a valid direction with which VF was obliged to comply.
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