Adam:

Thanks much for this.

As you know, I have become a convert to your view of Canada Trust, at least in so far as you suggest it appears to be a case of a trust that does not appear to pursue a charitable objective.

I'm a bit more sympathetic to Dewar J's interpretation, however, since she seems simply to be taking Canada Trust at face value. Although your conclusion is, I think, the correct one, I think the fact remains that all of the justices in Canada Trust allowed motive to guide the decision. In the absence of the recitals, Canada Trust could conceivably have come out a different way.

Indeed, in thinking about your article on SSRN (which is terrific by the way and I recommend it highly to anyone on the list who is interested in this subject), I wonder whether your conclusion that "the best explanation" for Canada Trust is that the trust had "an express discriminatory purpose and therefore failed the exclusive charitableness requirement."

Whilst I agree that might have been a better conclusion, it doesn't actually seem to be the way the court looked at the case. After all, if your suggestion is correct, then it would seem to me that cy pres would have been inappropriate, Since it seems clear that cy pres cannot be used to make a non-charitable trust charitable.

I wonder, then, that if the Leonard Foundation was really not a charitable trust to begin with, then shouldn't the remedy have been to declare a resulting trust and have the corpus returned to the settlor or the ROM?

It seems to me that the justices proceeded upon the assumption that it was a charitable trust and, therefore, they were able to use cy pres to amend the provisions. I would suggest that Canada Trust was all about motive, which allowed the justices to call it charitable and then use cy pres to change it terms.

As a result, in my view Dewar J correctly interprets the importance of motive in Canada Trust, although, as you know, I strongly disagree that motive should be considered at all. In my view, Canada Trust's consideration of motive was misguided and the idea that courts will consider motive in construing a trust or, as we have recently seen in McCorkle’s Estate, an unrestricted gift takes us down a very dangerous road, one that will ultimately result in a substantial limitation in the principle of donor freedom.

Sorry for the long rant, but I hope that if others on the list see huge holes in my analysis they will let me know.



Sent from Surface

From: Adam Parachin<mailto:aparachi@uwo.ca>
Sent: ‎Tuesday‎, ‎May‎ ‎19‎, ‎2015 ‎11‎:‎06‎ ‎AM
To: obligations@uwo.ca<mailto:obligations@uwo.ca>

The doctrine of public policy was recently considered by another Canadian trusts case in Re The Esther G. Castanera Scholarship Fund, a decision of the Court of Queen's Bench of Manitoba available at http://www.canlii.org/en/mb/mbqb/doc/2015/2015mbqb28/2015mbqb28.html?resultIndex=1.

At issue was a charitable trust restricting scholarships to female graduates of the settlor's high school majoring at the University of Manitoba in chemistry, physics, mathematics, biochemistry or molecular biology. The University of Manitoba declined to administer the fund according to its terms on the basis that women were no longer underrepresented in all of the specified programs of study. An application for advice or direction was brought to determine whether the scholarship fund violated either public policy or the Manitoba Human Rights Code. Not surprisingly, Dewar J. upheld the fund.

With respect to public policy, the following points (explicit and implicit in the court's reasoning) are of interest:

* Proportionate representation is not the definitive factor for determining whether a scholarship exclusive to a particular group violates public policy. That is, a scholarship can be exclusive to a particular group even if that group is not underrepresented.
* A scholarship can be upheld even if it is targeted on the basis of criteria that are ultimately unrelated to the end game of advancing education. This point is of particular importance, as some have argued that the eligibility criteria for charitable goods and services must somehow relate to the nature of goods and services.
* Respect should be shown to the wishes of a settlor / testator.
* A settlor's motive is relevant to whether a targeted charitable trust violates public policy.

For what it is worth, I question the correctness of the last point, which Dewar J. based on Canada Trust Co v Ontario (Human Rights Commission) (1990) 74 O.R. (2d) 481. In my view, a better interpretation of Canada Trust Co is that the trust in that case was void not due to the settlor's motive but rather because its terms disclosed a non-charitable purpose.


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Adam Parachin
Associate Professor
Faculty of Law
University of Western Ontario
(519) 661-2111 Ext. 81445