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CHARITABLE TRUSTS - Termination, revocation and variation

Tuesday, May 12, 2020 @ 9:16 AM  


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Appeal by the Foundation from an order requiring it to return all moneys in a Benevolent Fund to the respondent Society. The respondent, a registered charity, provided $175,000 to the appellant to establish the Benevolent Fund. The terms under which the Fund was established required the Foundation to disburse the income to the Society for the charitable purposes of supporting the Society’s programs. After 14 years, the Society determined that the income from the Fund and another fund it had established was insufficient to cover the costs of operating its programs. The Society directed the Foundation to return the capital invested in the Fund and any undistributed income. The Foundation refused, saying that the Fund’s terms did not permit such an action. The Society issued a petition seeking return of the Fund capital and undistributed income. The chambers judge found that the Foundation was obliged by s.11(1) of the Vancouver Foundation Act to accept the Society’s direction to return the capital and undistributed income. The chambers judge found that the Fund was a charitable purpose trust and was therefore not voidable and that the Fund was not established to be permanent, in the sense that the capital was to remain with the Foundation.

HELD: Appeal allowed. The order was set aside. Although the appeal was moot as all moneys in the Fund had been returned by the Foundation, there remained a dispute between the parties as to the proper interpretation and application of the Act. The fact that trust funds had been paid out pursuant to a court order that was under appeal could not put an end to the trust. The chambers judge erred in finding that the Fund was not a gift or donation and that “permanent” did not mean that the fund was to be held in perpetuity. These errors were overriding as they were fundamental to the conclusions drawn by the chambers judge in his interpretation of s.11 of the Act. The judge erred by failing to consider all the surrounding circumstances, including the Fund Terms in their full context, and the fact that the Fund was established as a trust with the Foundation pursuant to the Act. The Fund was set up as a donation to the Foundation and was a gift. When considering the Fund Terms and the ordinary meaning of s.11 and other provisions of the Act in their entire context, properly construed, s.11(1) of the Act did not oblige the Foundation to follow directions to alter or revoke the terms of a donation after the gift was complete. The Fund Terms did not reserve to the donor the right to give future directions as to the use or investment of the funds and did not reserve the right to revoke the donation.

Doukhobor Heritage Retreat Society #1999 v. Vancouver Foundation, [2020] B.C.J. No. 368, British Columbia Court of Appeal, L.A. Fenlon, G. Dickson and G.B. Butler JJ.A., March 10, 2020. Digest No. TLD-May112020003