Purpose of charity must clearly exist for declaration of charitable trust: court

Funding the prosecution of wrongful dismissal claims could even worsen poverty: court

Purpose of charity must clearly exist for declaration of charitable trust: court

The B.C. Supreme Court recently refused to declare that a charitable purpose trust was created because the petitioner failed to show that the trust alleviated poverty or benefitted the community.

In Jim Crerar Charitable Trust (Re), 2022 BCSC 60, the petitioner felt at some point in his life that he had been wrongly dismissed from his job, but he had no money to hire counsel. Eventually, his financial situation improved considerably, so he wanted to set up a trust to provide funds to people who wished to prosecute wrongful dismissal claims. He sought the court for a declaration that a document entitled, “Jim Crerar Charitable Trust Agreement” created a valid charitable purpose trust (CPT).

The court said that CPT is favoured in law and is exempted from the rule against perpetuities because of the social benefit gained from having the trust continue to exist indefinitely. In addition, the validity of CPT had been upheld by courts “in recognition and encouragement of acts of giving which are concerned to improve the welfare of society or sizeable groups within it.”

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Case law provided four purposes of charity — relief of poverty, advancement of education, advancement of religion and other purposes beneficial to the community. The petitioner claimed that the aim of the trust in this case was either the relief of poverty or other purposes beneficial to the community.

The court found that despite the petitioner’s assertion that the trust aimed to alleviate poverty, the word “poor” was not defined in the agreement, so the category of person who could access the trust was ill-defined and uncertain. The court also said that funding the prosecution of wrongful dismissal claims does not alleviate poverty; rather it merely provides payment to legal counsel. The court pointed out that if a person’s wrongful dismissal claim fails, they may even face a cost order which would drive them further into poverty.

The court likewise concluded that the petitioner failed to show that the purpose of the trust was beneficial to the community. According to case law, the trust must benefit an appreciably “important or sizable segment of society.” In this case, the court found that the petitioner failed to show any evidence to support its contention that an important or sizable segment of society faced access to justice issues related to wrongful termination.

Ultimately, the court concluded that the petitioner failed to establish any of the charitable purposes recognized in law and, as a result, a charitable purpose trust had not been created.

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