Link: Case Summary Document
Citation: [2012] ONSC 6855 (Superior Court of Ontario, van Rensberg J.)
Acknowledgement:The Pemsel Case Foundation thanks The Australian Centre for Philanthropy and Nonprofit Studies for its contribution in the drafting of this Case Note.
Summary:
In this Canadian case, the plaintiff was a corporation which was incorporated in 2011. Its objects included the provision of camping experiences for girls and young women resident primarily in Bruce and Grey Counties, Ontario (the Local Guides). This involved the maintenance and operation of Camp Aneesh, a camping site of some 50 acres, and the provision of a site for the training of personnel involved in the camp.
The defendant was the Girl Guides of Canada, which is currently the legal registered owner of Camp Aneesh. The defendant announced in 2010 that it would sell Camp Aneesh and retain the proceeds of sale.
The allegation of the plaintiff was that although the land had been transferred to the defendant in 1984, it was to be ‘held in trust’ for the plaintiff. The 1984 transfer was without consideration, in good faith and in reliance on express representations that the transfer was for housekeeping purposes only, to allow for insurance to be placed against the property. The Statement of Claim alleged that the camp had been purchased and developed exclusively through the generosity of area residents who had a passion and commitment for guiding, and alleged that the local girls, their families and guide leaders had raised substantial funds to improve the camp over the years, and had contributed ‘sweat equity’ through their voluntary labour.
The relief sought was:
- an order for mandamus compelling the defendant to transfer the camp property to the plaintiff, or in the alternative, a declaration that the defendant held the camp on a resulting, constructive or bare trust for the plaintiff;
- damages for misrepresentation in the amount of $500,000;
- an order that, if the camp was sold, all net sale proceeds be paid to the plaintiff;
- an order prohibiting the defendant from encumbering or transferring the camp without a court order; and;
- an accounting of all monies expended by the defendant on the camp since the defendant acquired ownership of same.
The defendant claimed that there was no cause of action disclosed by the Statement of Claim.
The key to the outcome of this case was the date of incorporation of the plaintiff (2011). All of the activities alleged to have given rise to a trust in favour of the plaintiff took place before the plaintiff was incorporated. Her Honour therefore said that there was no prospect of success for the claim that the defendant held the camp property by resulting or constructive trust for the plaintiff, which did not exist at the time of the transfer (at [20]–[22]).
The Public Guardian and Trustee (PGT) of Ontario became involved at this point. The PGT’s role includes the supervision of charities in Ontario. The PGT’s argument suggested an alternative framework for a claim that had as its focus the need to ensure the proper execution of an alleged charitable trust. The PGT referred to the relief available under the inherent jurisdiction of the court with respect to charities, and the Charities Accounting Act, R.S.O. 1990, c.C.10 (the CAA).
The Superior Court of Ontario has inherent jurisdiction to supervise the activities of a charitable corporation to ensure that they accord with its charitable purpose and to intervene if the charity is not administered in accordance with its purpose, or its charitable funds are misapplied. The CAA provides for a mechanism for any person to complain to the Superior Court of Justice if charitable property is not being used for the intended purposes. The complaint would be brought under section 6(1), and would permit the court to require the PGT to investigate the allegations. Section 10(1) provides that an application may be brought to the Superior Court of Justice by ‘any two or more persons’ who allege a breach of a trust created for a charitable purpose or who seek the direction of the court for the administration of a trust for charitable purposes.
Her Honour held that there was no basis for the plaintiff’s current claim, saying (at [29]):
…In a case such as this, where no cause of action is evidenced by the Statement of Claim in favour of the plaintiff who commenced the action, where a different legal framework is warranted, and where no proposed amendments have been placed before the court (although the plaintiff was requested by the defendant to do so several months ago), it is preferable to strike the Claim without leave to amend and to dismiss the action. There is no limitation period or other reason to keep the existing action alive. The better approach is to terminate the action, while permitting the plaintiff or some other party or parties to commence suitable proceedings.
The claim was dismissed without prejudice (meaning it could be recommenced with the same or different pleadings, presumably using the suggestions of the PGT), and without an order as to costs.
The case may be viewed at: http://www.canlii.org/en/on/onsc/doc/2012/2012onsc6855/2012onsc6855.html
Implications of this case
This case turned on the issue of the date of incorporation of the plaintiff (because of the importance of its legal status at the time of the events). The events which the plaintiff raised in support of its claim had occurred before it became an incorporated body. Therefore, the claim made no sense legally because there was no entity (it was not a legal person) for any trust to have been established for it in 1984 when the land was transferred to the Girl Guides of Canada. Thus the Girl Guides of Canada became the legal and beneficial owners at that time. However, the intervention of the PGT might suggest a line of pleading which the plaintiff could pursue in a further action.