Courts have the power to alter the terms of a special purpose charitable trust, but only in very specific circumstances. This principle was reaffirmed recently in the case of Boys and Girls Club of Greater Victoria Foundation v British Columbia (Attorney General), decided on January 22, 2024.
The case was a petition by the Boys and Girls Club of Greater Victoria Foundation (the "Petitioner") for a cy-pres order to alter the terms of a trust upon which they held a 98-acre property (the "Property") and two investment funds associated with it (the "Capital Funds") (together, the "Trusts"). The petition was opposed by the Attorney General of British Columbia (the "Respondent"). The doctrine of cy-près allows a court to alter the terms of a trust if it finds that it would be impossible or impractical to achieve the purposes, but the amended purposes must be "as near as possible" to the original purposes.
The petition was brought because, according to the Petitioner, the Property, intended as a wilderness camp for youth, was underused and increasingly costly to maintain. The Petitioner found a buyer for the property, but the transaction could not be finalized without court approval as a result of the trust conditions.
The Petitioner's argument was that by selling the land it could use the sale proceeds for more popular programs in other geographic areas operated by the Boy and Girls Club Services Society (the "Services Society"), which included programs such as free breakfasts, summer camps for children and before and after school programs. The general charitable purposes of the Petitioner were to promote and further the aims of the Services Society, which also ran the wilderness camp.
If the doctrine of cy-pres were to be applied, it would change the specific purpose of the Trust from the purchasing and upkeep of the Property to a more general goal of supporting the Services Society in other programming and capital costs.
The Respondent opposed the petition pursuant to its mandate to ensure that trustees comply with the purposes of charitable purpose trusts and meet donor expectations in this regard. While the Respondent admitted that the Petitioner could possibly sell the Property under certain circumstances, the Respondent could not allow the sale to go through at the present time because the Petitioner had:
- not disclosed its role as trustee in relation to the Property and Capital Funds;
- proceeded in a rushed manner with limited disclosure;
- not established the level of impracticability that would allow it to forgo its role as trustee of the charitable purposes for which it held the Property and Capital Funds; and
- not established that its plan would uphold the specific purposes of the trusts as closely as possible, pursuant to the doctrine of cy-près
The Petitioner purchased the property from the Province in 2004. Before this, it had been used as a camp on agreement between the Province and the Services Society. From 2010 onward, attendance at the camp had halved from what it had been in years prior, and from then until 2016, the Petitioner lost major sources of funding. The Property required major upgrades to ensure its continued usability, was subject to taxation, and required (according to the Petitioner) tens of thousands of dollars of maintenance every year. The Petitioner stated that the camp would suffer a $200,000 shortfall for the 2024 year if it was not able to sell the property, and that the organization would have to use its general purpose charitable funds to make up the short fall. This formed the crux of its desire for an order cy-près to be made. The court criticized the Petitioner for "lack of disclosure and supporting documentation" and discrepancies between the projected costs in 2024 and actual costs in years prior. It did, however, accept its argument that there were many other Services Society programs in the area which were under supported.
The Petitioner admitted that it was not "impossible" for it to comply with the terms of the Trust. It therefore had to establish that it was "impractical" for it to comply with the terms of the Trust and to propose a remedy which would be as close as possible to the original purpose of the donated funds. It failed on both counts.
The court found that the necessary level of impracticability had not been demonstrated by the Petitioner, for a number of reasons. It had failed to prove that it lacked the funding to maintain and operate the Property. The fact that the Petitioner may have to use its general purpose charitable funds to do so did not equate to impracticability. The court found that, based on what had been provided, the Petitioner would be able to continue maintaining and operating the Property. Though enrollment in the summer camp had declined from 2011 to 2022, the fact that enrollment increased in 2023 led the court to conclude there was still value in continuing to operate the camp. Finally, the Petitioner did not argue that the continued existence of their organization would be jeopardized should the Property not be sold. The situation therefore did not meet the standard of impracticability required for the court to apply the doctrine of cy-près.
Notably Justice Marzari stated as follows at paragraph 67 of the decision:
In my view, the Foundation's petition relies on a concept of impracticability that is much broader than the law of trusts supports. [...] impracticability requires more than a conviction by the trustee that the funds held pursuant to a specific purpose charitable trust could be used more productively for other charitable purposes. Impracticability also requires evidence of more than a decrease in usefulness or cost-effectiveness of trust property.
The court then considered if the Petitioner's proposal was as close to the intentions of the original specific charitable purpose. It noted that a charitable gift will not fail for want of a trustee. Despite the fact that the Petitioner did not wish to continue operating as a trustee, this did not necessitate cy-près being applied and the funding from the Trust being applied to other charitable endeavors. The court recommended that the first and most appropriate action would be to find another entity willing to serve as trustee, rather than selling the Property and reallocating the Capital Trust funds elsewhere. Justice Marzari stated at paragraph 77 of the decision:
It must be remembered that, so long as the Foundation holds the Property pursuant to specific charitable purposes, the Foundation holds the Property as trustee, not as beneficiary, and it is required to administer the Property not just to service its general charitable purposes, but also the specific charitable purposes pursuant to which it raised funds for the purchase and endowment of the Property.
This case serves as a reminder that the court has a high standard to apply the doctrine of cy-près. Mere inconvenience to an organisation will not justify its application. Charities which hold special purpose trusts should explore other avenues to rectify issues before seeking a declaration of cy-près from the courts. Further, the duty to donors was underlined at paragraph 69 of the decision as follows:
The public, who donated to the public appeal [...] must continue to have confidence that the purposes for which they donated funds will only be altered by the Court in limited and narrow circumstances. This is not only to protect the over 600 donors in relation to the Trusts in this case, but charitable giving and trusts more broadly [...]
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