By Terrance S. Carter and Adriel Clayton

In a recent decision dated May 21, 2025, the Supreme Court of Newfoundland and Labrador (the “Court”) addressed a dispute over the ownership and sale of the Holy Rosary Church property (“Church” or “Property”) in Portugal Cove South on the Southern Avalon Peninsula in Newfoundland and Labrador. The case, Roman Catholic Episcopal Corporation of St. John's (Re), involved the Roman Catholic Episcopal Corporation of St. John’s (RCECSJ), whose bankruptcy proceedings have been converted to the Companies’ Creditor Arrangement Act (CCAA), and which is in the process of selling its assets to raise funds to pay off creditors. While this case concerns the ownership of a Catholic church and a community which is 98% Catholic, it may also be of interest to other faith groups because of its discussion and decision on the property rights of those who contributed funds to a Catholic parish.

The RCECSJ entered CCAA proceedings as a result of the multiple abuse claims that arose out of the Mount Cashel Orphanage in St. John’s, NL. The Court of Appeal of Newfoundland and Labrador had found that the RCECSJ was vicariously liable for these claims in John Doe (G.E.B. #25) v The Roman Catholic Episcopal Corporation of St. John’s, as discussed in our Church Law Bulletin No. 58. As referenced above, as part of the insolvency and CCAA proceedings, the RCECSJ is required to liquidate assets to raise funds to pay creditors. One such asset is the Church.

The RCECSJ sought two court orders: one declaring its legal and beneficial ownership of Holy Rosary Church and its right to sell the Property, and another for a permanent injunction to prevent interference with the sale by local residents and the PCS Historical Corporation.

The PCS Historical Corporation and some residents of Portugal Cove South opposed the sale of the Church. They did not claim legal ownership of the Property but claimed that their significant efforts and expense in renovating the Church entitled them to an equitable interest in the Property and to prevent the sale

Evidence presented highlighted the community's deep connection to the Church, which included a community committee and later the formation of the PCS Historical Corporation, which spearheaded fundraising and much needed renovations of the Church between 2015 and 2019. The community expressed strong opposition to the sale, referring to the Church as “our Church” and stating they would stop the sale “by all means possible”.

The Court first examined the RCECSJ's claim to legal ownership. While the RCECSJ lacked formal title documents, the Court noted this is not uncommon in rural Newfoundland, where land ownership has historically been less formalized. The RCECSJ's claim was supported by evidence of long, continuous, and exclusive possession of the Property since at least 1956, which could establish ownership through a concept akin to “adverse possession” or “squatters' rights”.

Furthermore, the Court found that the RCECSJ’s incorporating legislation, Act to Incorporate the Roman Catholic Bishop of Saint John’s, passed in 1913 (the “1913 Act”), vested in the RCECSJ all land and property legally held or used as property of the Roman Catholic Church and its related religious or educational institutions at that time. Evidence suggested the land may have been used for church or educational purposes near 1913, potentially bringing it under this Act. Based on the evidence of long, exclusive possession and the effect of the 1913 Act, the Court was satisfied that the RCECSJ is the legal owner of the Property.

The Court then considered the PCS Historical Corporation's claim of an equitable or beneficial interest in the Church based on their renovation efforts. While the PCS Historical Corporation claimed to have fundraised over $131,000 for the renovations to the Church, the Court found that the RCECSJ actually provided the majority of the funds, contributing $93,500 compared to the PCS Historical Corporation's $43,902.05. The RCECSJ's contribution included a $50,000 grant obtained by the parish and funds from within the Archdiocese.

The Court rejected the claim for an equitable interest in the Church under the doctrines of property being held in trust as well as unjust enrichment. With regard to a claim of a trust, the Court found that there was no evidence of a clear intention to create a trust, that there was nobody to maintain the trust, and that the RCECSJ was not aware of the alleged terms of trust involving what was donated.

Concerning unjust enrichment, while the RCECSJ received a benefit (increased property value from renovations) and the PCS Historical Corporation/residents suffered a deprivation (costs and effort), the claim of unjust enrichment failed because the Court found there was a “juristic reason” for the benefit. The Court found the contributions were made with “donative intent” – intentional giving without expectation of remuneration. The community residents, as parishioners, responded to a challenge to rebuild their Church, acting as members of the parish, not signalling they expected compensation or ownership in return. Parishes are expected to fund their operations and maintenance, often through volunteer efforts. The Court concluded that the claim was a form of “strategic revisionism” in response to the RCECSJ’s need to sell assets under court order, noting that the sale was not for the RCECSJ’s enrichment but to pay creditors.

Given the strong and active opposition, including changing locks and preventing access to the site, the Court found that the PCS Historical Corporation and residents had committed or threatened torts, including trespass, nuisance, and interference with economic relations. Their clear statements of intent to continue obstructing the sale demonstrated the likelihood of recurrence. The Court determined that a monetary award would be difficult to enforce and inadequate; only an injunction could restore control and access to the RCECSJ. No equitable considerations prevented the granting of the injunction.

The Court granted a permanent injunction that is broad in scope, restraining the PCS Historical Corporation, its directors, officers, agents, members, and anyone else acting under its instruction or with notice of the order, from unlawfully obstructing or interfering with the RCECSJ, its employees, representatives, and agents from accessing, possessing, and selling the Church.

While the RCECSJ sought costs, the Court declined to award them against the PCS Historical Corporation or residents, acknowledging their passion but emphasizing they were wrong in law and must cease their interference.

This case offers several valuable lessons for churches and other faith groups with regard to contributions from their adherents or other members of the community:

1. Notwithstanding the common practice in rural Newfoundland and Labrador of not always documenting legal ownership, it is paramount to do so, because even long-standing community use and significant contributions may not be counted on to override established evidence of legal ownership. Organizations should ensure property ownership is clearly documented and understood by all stakeholders. When receiving community support, especially for capital projects on property owned by a charity, such as a faith group, the nature of contributions from the community should be clearly defined. Absent a formal trust agreement or clear restrictions on donations, community efforts and contributions may very well be treated, as they were in this case, as unconditional gifts with no expectation of return or equitable interest in the property, even if there is a substantial increase in the value of the property.
2. Courts overseeing insolvency, CCAA, or other similar statutory proceedings have wide discretion, including the power to make orders against third parties interfering with asset realization, to ensure the successful completion of the restructuring or liquidation process.
3. Finally, while fostering community involvement is often vital for faith-based organisations, managing expectations regarding property ownership and disposition of assets, especially during times of financial distress, is critical. Clear communication about the organization’s legal structure and property ownership can help to prevent misunderstandings.

​Read the May 2025 Charity & NFP Law Update