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Charitable Trust Declined By Court

Charitable Trust Declined By Court

In Jim Crerar Charitable Trust 2022 BCSC 60 the court interpreted the trust document prepared by the deceased and  created to provide funds to people to prosecute wrongful dismissal claims against former employers as a means of alleviating poverty.

The court reviewed the criteria necessary to establish a charitable trust, and declined to do so on the basis that the trust failed to establish that it was beneficial to the community.

The Law

In general, the requirements of a valid trust are certainty of intention, certainty of subject matter, and certainty of objects. Trusts set up for purposes often fail, as there is no specified beneficiary to enforce the obligations of the trustee.

Charitable Purpose Trusts (“CPTs”) have found favour in the law, in spite of this shortcoming. Courts have recognized their validity “in recognition and encouragement of acts of giving which are concerned to improve the welfare of society or sizeable groups within it.”: Rowland et al. v. Christian Brothers et al., 2000 BCSC 1221 [Rowland] at para. 71 (aff’d: 2001 BCCA 527; leave to SCC ref’d: [2001] S.C.C.A. No. 652). In Rowland at para. 72, Levine J. deals with “the rule against perpetuities”. While the rule against perpetuities exists to prevent a person from “controlling their property for too long a period into the future”, CPTs are exempt from this rule because there is a social benefit in having them continue to exist indefinitely: Rowland at para. 72.

Courts have historically been, and continue to be, generous in considering and determining whether the purpose of a trust is charitable.

There are four aims or purposes of charity that are accepted as legitimate heads of charitable purpose.

These arise from the case of Pemsel v. Special Commissioners of Income Tax, [1891] A.C. 531 (H.L.) and are known as the Pemsel heads:

1. relief of poverty;
2. advancement of education;
3. advancement of religion; and
4. other purposes beneficial to the community

The court was not comfortable taking judicial notice that were sufficient numbers of people in the community that are suffering poverty by reason of not being able to sue for wrongful dismissal And dismissed the claim.

In Cox (Re) (1952), 1952 CanLII 13, [1953] 1 S.C.R. 94 (S.C.C.), the Supreme Court of Canada said that when the trust is for the benefit of a class of persons, the question is whether that class can be regarded as such a “section of the community” as to satisfy the test of public benefit (at 98). The Court further stated that the beneficiaries must not be numerically negligible.

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