Apr 2019 Charity & NFP Law Update
On March 19, 2019, the Ontario Superior Court of Justice denied leave to a non-profit corporation, the Humane Society of Canada for the Protection of Animals and the Environment (the “Society”), to be represented by a person who is not a lawyer. This motion, which was decided in Canada Trust v Public Guardian and Trustee, 2019 ONSC 1768, was in the context of an estate matter where the deceased had willed the residue of her estate to be divided equally among four charities, including the Society. The executor sought court direction on the question of whether it would be in the public interest to execute the gift, worth approximately $90,000, to the Society due to the Society’s “serious deficiencies in its management” that resulted in its charitable revocation, as reported in the July/August 2015 Charity & NFP Law Update. The Society moved for leave to be represented by Mr. Michael O’Sullivan, a non-lawyer who is the chairman and CEO of the Society, the Humane Society of Canada Foundation, and also a director of a the Ark Angel Foundation, whose charitable revocation was reported in the February 2019 Charity & NFP Law Update. Mr. O’Sullivan further deposed that it was his view that “a charity’s money should not be spent on lawyers.”
In finding that Mr. O’Sullivan was not reasonably capable of advocating on behalf of the Society, the court looked to his past conduct representing the other corporations as well as his conduct so far in the present application. The court commented that Mr. O’Sullivan’s advocacy in one proceeding “doubled the Society’s liability to the plaintiff” because of unfounded allegations and frivolous requests, while another proceeding resulted in the award of substantial costs against the corporation “taking into account its vexatious conduct and unfounded allegations of impropriety against others.” In the present application, the court noted that Mr. O’Sullivan’s written materials demonstrated that he did not understand the issues nor how to present them to the benefit of the Society, which would result in frivolous positions and cost more money to the Society and parties impacted by the proceeding. Further, because he was also the sole witness to proceeding, the court found that taking on an additional role as an advocate would cause confusion.
As such, the court denied leave to the Society to be represented by Mr. O’Sullivan and ordered it to file a notice of appointment of solicitor within 15 days, exceeding which it would not be entitled to participate in the application. Further, the court awarded costs to the executor, fixed at $22,000, to be deducted from the gift at issue, and the remaining $68,000 to be paid into court until further order. The court also added the Public Guardian and Trustee (“PGT”) to the application as a party to have conduct over the application, despite the Society’s objection. The court commented that the PGT had a “long-established role in the exercise of the parens patriae function of the Crown”, had the expertise in the matter, and also conducted the investigation. As a result, the court stated that the “Public Guardian is the only logical candidate” to have carriage over the application.
It is not uncommon for charities to receive gifts from the estate of donors. When executing gifts from the estate to charities, the executor may raise concerns regarding the public benefit of such a gift if the organization has been shown to have issues in the way it is operated. As such, charities need to ensure that their assets and operations are properly managed. Further, the case serves as a reminder that it is best to consult with legal professionals when dealing with court proceedings. While being self-represented may appear to save money at the outset, a representative who is unfamiliar with court procedure or unable to advocate effectively for the organization may end up costing it more money and more reputational damage. Since the finance of charities come primarily from donors, the use of its assets, especially in court proceedings, should be spent responsibly and carefully.