 By Allan Seckel, QC
The Charitable Purposes Preservation Act1 has now been brought into force.
The Act, which took effect March 8, addresses potential uncertainty in the law of charitable giving in British Columbia. It follows the 2000 Ontario Court of Appeal decision involving the Christian Brothers of Ireland in Canada.2
That case involved whether two Vancouver Catholic schools run by the Christian Brothers should be sold and the proceeds made available to help pay claims for sexual abuse at the Mount Cashel orphanage in Newfoundland.
The Vancouver schools had been established from charitable donations over the years. The schools had been held in trust by the Christian Brothers. There was no other connection between the Newfoundland claims and the Vancouver schools. Yet, the Ontario court held that the schools were available to meet those claims.
In response to the uncertainty raised by the Ontario decision, the British Columbia government decided to create additional legislative safeguards for charitable giving in this province.
The Charitable Purposes Preservation Act does not change or restate the law of charitable trusts. Instead, it provides supplementary protection in certain circumstances.
To be protected under the Act, charitable gifts must fall within the definition of “discrete purpose charitable property.” Then, if such property is kept and administered separately from the charity’s other property and used in accordance with the discrete purpose, it will remain protected under the Act. In particular, such property will not be available to meet unrelated liabilities of the charity, even in a bankruptcy or winding up.
Certain provisions of the Act are specifically designed to answer key features of the case.
First, the Act makes clear that a charity, itself, has no beneficial interest in discrete purpose charitable property. Accordingly, in a winding up of the charity, there would be no value in that property for creditors and other claimants and no reason for the liquidator to pursue it on their behalf.
Second, the Act provides for the circumstance where a charity is no longer able to use that property to advance the discrete purpose. Like the law of charitable trusts, the Act is based on the principle that certain gifts should not fail for lack of a person able and willing to advance the gift’s charitable purpose. To that end, the Act creates a process which mirrors the cy-pres powers used by the courts in charitable trusts cases.
Third, the Act specifically provides for what happens to discrete purpose charitable property on a bankruptcy or winding up of the charity. It allows for payment of any debts relating to that property, with the remainder to be transferred to a new charity and applied to the same or a similar discrete charitable purpose.
In sum, the new Act is not intended to replace the British Columbia law of charitable trusts. Rather, it creates parallel statutory protections that apply in certain circumstances, ensuring charitable donors’ intentions in that regard may always be fulfilled.
Allan Seckel, QC, British Columbia Deputy Attorney General
1 S.B.C. 2004, c. 59
2 (2000) 47 O.R. (3d) 674
This article was published in the June 2007 issue of BarTalk. © 2007 The Canadian Bar Association. All rights reserved. |
