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Varying a Charitable Trust of a Park

Philanthropic landowners frequently want to devise all or part of their property to the municipality in which they live for a park. The trust provides that the municipality shall establish the park and maintain it as a park in perpetuity The municipality accepts the devise, but sometime later concludes that having a park in the designated location is not in the best interests of the municipality. So it proposes to sell the property and use the proceeds of sale to purchase other lands for a park. That means that it will need to have the trust varied. Can that be done?

This issue and others, at least one of which had not been considered before by the courts, arose in the recent case, West Vancouver (District) v. British Columbia (Attorney General).[1]

An older couple, Mr. and Ms. Brissenden, owned a house and some 2.4 acres of surrounding property in West Vancouver. The property was largely undeveloped and was covered by mature second growth forest. Since they had no close relatives to whom they could leave the property, they decided that they would like to leave it to the District for a nature park in which the mature trees and natural growth would be preserved. They entered into discussions with the mayor and with senior municipal staff in 1987. The District informed them that the site would be highly appropriate for a neighbourhood park. Mr. Brissenden predeceased his wife. She died in 1990 and left the property to the District by her will. So far as relevant the devise directed that the property be used and maintained by [the District] for public park purposes and I express the wish that in developing the said [property] as a public park the trees and natural growth be preserved as far as may be practical.

The District accepted the devise, but, although it named the property “Brissenden Park”, it did not develop it as a park between 1990 and 2018. It did, however, rent out the house and collected the rent. The District had been acquiring land along the waterfront over a number of years and developed it into a park. It still needed to acquire two more waterfront properties to complete that park and decided that it would be desirable to dispose of a portion of the Brissenden Park to finance the acquisition of those two properties. To be able to do that, it would have to seek a variation of the trust of the Brissenden Park. Ultimately it decided to dedicate the northern portion of the property as a park, but planned to subdivide and sell the southern portion and use the proceeds of sale to fund the acquisition of the remaining two waterfront properties. It planned to call the newly acquired waterfront properties the “Brissenden Waterfront Park”. The District then brought an application to determine whether it was entitled to proceed with its plan. The Attorney General opposed the application and also filed an application for a determination whether the rental income collected by the District over the years was trust property.

The court concluded that the following issues needed to be decided:

  1. Whether the moneys the District collected from the rental of the house on the property were trust property.
  2. Whether the sale of the southern part of the Brissenden property would be consistent with the existing purposes of the trust. This involved seeking the opinion, advice, and direction of the court under s. 86 of the Trustee Act.[2]
  3. Whether the court should authorize the sale of the southern portion of the Brissenden property as part of an administrative scheme.
  4. Whether the court should vary the terms of the charitable trust under s. 184 of the Community Charter.[3]

I shall consider these four issues under the discrete headings used by the court in its reasons for judgment.

Is the Rental Income Held in Trust?

This issue was a no-brainer. It is axiomatic that any income generated by a trust is trust property. Moreover, case law makes clear that the trustee must account for it and would breach its fiduciary duty if it were to appropriate the income for its own purposes, since then its interest would conflict with the interests of the trust objects. Consequently, the District breached the trust by using the rental income as part of it general parks operating budget.

Is the Proposed Plan Consistent with the Purpose of the Trust?

In seeking an answer to this question, the District sought the opinion, advice, and direction from the court under s. 86 of the Trustee Act. The court considered whether the District was entitled to do so. By reference to a number of cases, it concluded that it was entitled to bring the application for directions. This was also really a no-brainer.

However, for the purpose of answering the question whether the District’s plan was consistent with the purpose of the trust, the court had to make a number of findings about the trust’s purpose. It concluded that Ms. Brissenden’s will, interpreted subjectively in accordance with the modern judicial approach, which includes reference to the surrounding circumstances, indicated that she intended that the Brissenden property itself become a local neighbourhood park. That being the case, the court declined to make the declaration sought by the District.

Should the Court Authorize the Disposition as Part of an Administrative Scheme?

The court has power to vary a charitable trust under the cy-près doctrine if it is impossible or impracticable to carry out the trust in accordance with its terms.[4] Impracticability means that there is no (longer) a need for the purposes the testator intended and therefore the purposes cannot be carried out. It does not mean that practical reason suggests that the funds would be better applied for similar purposes. Thus, for example, a trust to maintain a cottage hospital is not impracticable, even though it might make more sense to give the money to a regional hospital.[5] Impossibility means that the trust cannot be carried out at all, for example, because the trust named a particular institution that has never existed or has ceased to exist, or because there is no longer a need for the charitable purpose.[6] Thus, if the trust can be carried out, that is, it is not impracticable or impossible to carry out the trust, the court has no power to apply the cy-près power to vary the trust.

That is why the District did not seek to have the trust varied under the cy-près doctrine, but sought to have it varied under the court’s power to impose an administrative scheme instead. Under this power the court can vary the administrative terms of the trust if they are inadequate to carry out its charitable purposes. The court does this by imposing a scheme that will achieve the desired result. In this case the court is not constrained by the concepts of impracticability and impossibility. However, this power is restricted to varying the administrative provisions of a trust. Moreover, there is a conflict in the Canadian authorities about the extent of this jurisdiction. Some cases hold that the court cannot approve a “total return” investment and distribution policy pursuant to this doctrine,[7] whereas others hold that the court can do so.[8] In Sidney and North Saanich[9] Justice Dardi discussed and considered the two lines of cases, but found that she did not have to resolve the conflicting jurisprudence in that case, since it did not involve an endowment trust. Thus she amended a trust deed on the basis either that the terms had become impracticable or impossible, or on the basis of the court’s jurisdiction to make an administrative scheme.

In this case the court distinguished the Sidney and North Saanich case, because Ms. Brissenden’s will and the surrounding circumstances clearly indicated that she intended to preserve the Brissenden property as a park with its trees and natural growth. The District’s plan would conflict with Ms. Brissenden’s intention, since it would remove a significant number of the trees and the proposed “Brissenden Waterfront Park” would not have mature trees or substantial natural growth. The court concluded, rightly in my opinion, that the District’s proposal was not a mere administrative matter, but affected the charitable purpose of the trust itself.

Should the Disposition be Authorized under Section 184 of the Community Charter?

This is the issue that had not been considered in a previous case. Section 184 of the Community Charter provides in part:

184

(2) If, in the opinion of a council, the terms or trusts imposed by a donor, settlor, transferor or will-maker are no longer in the best interests of the municipality, the council my apply to the Supreme Court for an order under subsection (3).

(3) On an application under subsection (2), the Supreme Court may vary the terms or trusts as the court considers will better further both the intention of the donor, settlor, transferor or will-maker and the best interests of the municipality.

The province only granted municipalities the ability to apply for an order to vary the terms of a trust in 1994. It granted other public bodies a similar right around the same time. It appears that it was thought advisable to make provision for such a variation so that a municipality (or other public body) would not have to be saddled with restrictions in perpetuity when they were no longer in the best interests of the municipality (or other organization).

In considering its power under s. 184(3), the court took into account the limitations of the cy-près doctrine and of administrative schemes which, as the court noted,[10] were discussed Waters’ Law of Trusts in Canada.[11] It concluded that the legislature therefore intended to permit a greater flexibility in varying trusts of which a municipality is a trustee.[12]

Section 84(3) can be invoked if there is a conflict between the intentions of the creator of the trust and the wishes of a municipality. The court must consider whether the proposed variation will better further both the intention creator of the trust and the best interests of the municipality. The court took the view, rightly I believe, that it should make its assessment of both of those elements together, rather than independently.[13]

As regards the intentions of Ms. Brissenden, the court repeated that her specific intention was that her property become a neighbourhood park in which the mature trees and natural growth would be preserved, all for the use and enjoyment of the community. The District’s plan would have an adverse impact on that intention, but it would further the best interests of the District in light of the change in circumstances since the District had accepted the trust and its legitimate desire to expand another park.

The court took into account that the District had demonstrated consideration for Ms. Brissenden’s intentions and had made a number of changes to its plan to accommodate those intentions. Therefore it concluded that this was an appropriate case in which to allow a variation. The proposed order took into account the changes in the District’s plan and imposed a tree protection covenant. It authorized the District to sell the southern portion of the Brissenden Park and to use the proceeds of sale to acquire the remaining two properties on the waterfront. Those two properties would be named “Brissenden Waterfront Park” and it would be subject to the trust.

In reaching its conclusion, the court considered the potential chilling effect on charitable giving in the future. Will people hesitate to give land for a park knowing that the municipality can change the terms of the trust to be imposed? The court recognized the danger, but expressed the view that it will be mitigated by an approach that does not create a low threshold for a variation under s. 184(3). I believe that this is the correct approach. And indeed, in this case the court carefully balanced the terms of the trust, the needs of the municipality, and the power conferred by the legislation.

Legislation such as s. 184(3) became necessary because the limitations of the cy-près doctrine effectively prevented municipalities from using the property they hold on trust in the best interests of the municipality.

However, it is also true that the limitations of the cy-près doctrine have a deleterious effect on the proper application and administration of trust property generally. Since the common law has failed to address these limitations adequately, a statutory replacement of the doctrine would be desirable. Section 70 of the Uniform Trustee Act[14] contains a robust replacement of the doctrine and this is yet another reason why this Act should be enacted by Canadian common law jurisdictions sooner rather than later.

[1]    2020 BCSC 966. I am grateful to my colleague, Joel Nitikman of Denton’s Vancouver, for drawing this case to my attention.

[2]    R.S.B.C. 1996, c. 464.

[3]    S.B.C. 2003, c. 26.

[4]    See Sidney and North Saanich Memorial Park Society v. British Columbia (Attorney General), 2016 BCSC 589, para. 47, per Dardi J.

[5]    See, e.g., Re Weir Hospital Estate, [1910] 2 Ch. 124 (Ch. Div.); Re Baker (1984), 47 O.R. (2d) 415, 11 D.L.R. (4th) 430 (H.C.). And see Bloorview Children’s Hospital Foundation v. Bloorview MacMillan Centre (2002), 44 E.T.R. (2d) 175 (Ont. S.C.J.), which explains Weir and Baker.

[6]    See, e.g., Re Y.W.C.A. Extension Campaign Fund, [1934] 3 W.W.R. 49 (Sask. K.B.).

[7]    See, e.g., Re Stillman Estate (2003), 5 E.T.R. 260, 68 O.R. (3d) 777 (S.C.J.).

[8]    See, e.g., Re Killam Estate (1999), 185 N.S.R. (2d) 201 (S.C.); Re Sprott Estate, 2011 NSSC 327.

[9]    Footnote 4, supra.

[10]   Para. 89.

[11]   4th ed. by Donovan W.M. Waters, Mark R. Gillen, and Lionel D. Smith (Toronto: Thomson Reuters/Carswell, 2012), p. 823.

[12]   Paras. 91, 95, 101.

[13]   Para. 100.

[14]   This Act was promulgated by the Uniform Law Conference of Canada. It can be found at: https://www.ulcc.ca/en/component/jifile/?filename=images/stories/2012_pdfs_eng/2012ulcc0029.pdf. Thus far, New Brunswick is the only jurisdiction that has enacted (most of) it. See Trustees Act, S.N.B. 2015, c. 21, s. 69.

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