by Dev User | Apr 29, 2021 | Uncategorized
April 2021 Charity & NFP Law Update
The Advisory Committee for the Charitable Sector (“ACCS”), whose mandate is to advance emerging issues relating to charities and to ensure that the regulatory environment enables the important work of the sector, will be hosting a webinar on May 17, 2021 at 2 pm to explain its work to date. During the webinar, co-chairs Hilary Pearson and Bruce MacDonald, along with representatives from the Advisory Committee, will discuss the recommendations contained in ACCS Report #1 and other progress updates. Join the webinar to learn more about the Report #1 and the work of the Committee. Register today.
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by Dev User | Apr 29, 2021 | Uncategorized
April 2021 Charity & NFP Law Update
Ontario issued its third declaration of emergency on April 7, 2021 through Ontario Regulation 264/21 under the Emergency Management and Civil Protection Act (the “EMCPA”). On the same day, the provincial government issued a stay-at-home order as Ontario Regulation 265/21 under the EMCPA, stating that “[e]very individual shall remain at the residence at which they are currently residing at all times unless leaving their residence is necessary […]” for permitted activities, such as work, volunteering, school and child care; obtaining goods and services; moving residences; gathering for the purpose of a wedding, funeral or religious service; or for health, safety and legal purposes. Both the declaration of emergency and the stay-at-home order were extended on April 16, 2021 for another period of 14 days past April 21, 2021 until May 5, 2021, unless they are extended again.
The extension until May 5, 2021 applies to all orders issued under the EMCPA, including Ontario Regulation 272/21: Transfer of Hospital Patients and Ontario Regulation 271/21: Work Redeployment for Local Health Integration Networks and Ontario Health, both made on April 9, 2021, and Ontario Regulation 8/21: Enforcement of COVID-19 Measures, made on January 12, 2021. Of note, Ontario Regulation 8/21: Enforcement of COVID-19 Measures was initially amended to provide police officers and other provincial offences officers enhanced authority to support the enforcement of Ontario’s stay-at-home order, including the power to “require any individual who is not in a place of residence to (a) provide the address of the residence at which they are currently residing; and (b) provide their purpose for not being at their residence” and require the driver of a vehicle to stop to answer such questions. However, a subsequent amendment to Ontario Regulation 8/21 clarified that such powers may only be exercised where “a police officer or other provincial offences officer has reason to suspect that an individual may be participating in a gathering that is prohibited […] and believes that it would be in the public interest to determine whether the individual is in compliance”.
As well, orders under the Reopening Ontario (A Flexible Response to COVID-19) Act, 2020 (“ROA”) have been extended until May 20, 2021. Of note, Ontario Regulation 82/20: Rules for Areas in Stage 1, has been amended and now provides that a gathering, whether indoors or outdoors, for the purposes of a wedding, a funeral or a religious service, rite or ceremony is limited to no more than 10 people.
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by Dev User | Apr 29, 2021 | Uncategorized
April 2021 Charity & NFP Law Update
Not all jobs and skillsets have suffered an economic downturn during the pandemic, and should not receive a longer period of reasonable notice for termination during the pandemic without additional evidence, according to a recent Ontario employment case. Marazzato v Dell Canada Inc. is an Ontario Superior Court decision, released January 12, 2021. This decision adds further judicial commentary to the impact of the COVID-19 pandemic on calculating reasonable notice where an employer, including a charity or not-for-profit, terminates the employment contract without cause. The plaintiff’s employment terminated in March, 2020, but he worked in computers, a field that the judge noted may actually have benefited economically from the increase in using the internet. Further evidence is necessary to demonstrate that the pandemic led to an economic situation that made it more difficult for the employee to find work, according to the judgment. That evidence was not presented in this case, and so the decision rested on the already established common law precedent for calculating reasonable notice.
G. Dow J first went through the factors to consider for calculating reasonable notice from Bardal v Globe & Mail, being age, duration of service, character of employment, and availability of similar employment. Applying the factors to this case, the court found that the plaintiff, Dan Marazatto, was 59 years old at the time of his termination on March 4, 2020. He had worked for the employer for 14 years. His income ranged from $464,580.06 in 2017 to $466,502.24 in 2018, to $465,695.75 in 2019. As “Senior Manager Director Sales” he supervised nine employees and was the “top executive of the defendant for direct sales in Canada.” Marazatto had made efforts to find new employment but remained unemployed as of the date of the hearing on December 9, 2020. “Mr. Marazzato was paid for two weeks of working notice, 14.2 weeks of statutory service and eight weeks of termination pay pursuant to the Employment Standards Act, 2000. Eight weeks of continuing benefits were also paid,” Dow J noted.
Marazatto sought 20 months of pay in lieu of reasonable notice. The employer argued instead for 16 months of pay-in-lieu. Although not “old” by today’s standard, according to Dow J, Marazatto’s age favours a longer period of reasonable notice, as does his 14 years of service. The senior management position he held along with the high-end of salary also favours a longer period of reasonable notice. While the difficulty for him to find a similar position favours longer reasonable notice as well, applying Bardal, Dow J did not consider the COVID-19 pandemic to further lengthen that period in this case. No evidence of “extra difficulty in finding and obtaining a new position” was presented, Dow J stated, and it would not be appropriate to speculate. In fact, it may actually be the case that certain positions and skill sets, such as working in computers as Marazatto did, would have gained an economic benefit from the pandemic because of the greater internet use and “remote practices”. Considering all the Bardal factors, Dow J decided that 18 months of reasonable notice was appropriate.
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by Dev User | Apr 29, 2021 | Uncategorized
April 2021 Charity & NFP Law Update
The Federal Court of Appeal dismissed an appeal by Loblaws Inc. (“Loblaws”) from a decision of the lower court that held that Columbia Insurance Company, The Pampered Chef, Ltd., and Pampered Chef – Canada Corp. (“Pampered Chef”) had not infringed Loblaws’ well-known “PC” trademark. This case, Loblaws Inc. v Columbia Insurance Company, released on February 15, 2021, will be of interest to charities and not-for-profits that use acronyms or short-form trademarks.
The case arose when Loblaws, the owner of the well-known family of registered and unregistered trademarks “PC”, reflecting its “President’s Choice” brand, brought an action before the Federal Court alleging that the Pampered Chef, through its use of the “PC” acronym with a spoon between the letters “P” and “C”, was infringing Loblaws’ trademark rights. At the trial level, after an analysis of the legal test for confusion, the court found that despite the fact that the Loblaws’ PC mark and the Pampered Chef mark bore a certain degree of resemblance, there was no likelihood of confusion. Amongst other factors, the court reasoned that the Pampered Chef uses its PC acronym with a spoon between the “P and the “C” and with its full corporate name or the full “Pampered Chef” trademark, therefore negating any likelihood of confusion.
The Federal Court of Appeal upheld the trial court’s decision, dismissing Loblaws’ appeal and finding that there was no likelihood of confusion between the two PC acronyms.
This decision is a reminder to charities and not-for-profits of the importance of conducting due diligence searches prior to using trademarks in order to avoid any potential confusion with another organization’s trademarks and therefore minimizing the risk of a trademark infringement lawsuit. Similarly, charities and not-for-profits that currently own and use acronyms as registered or unregistered trademarks should keep in mind that acronyms are afforded a very narrow scope of protection and third parties may use variations of the acronym without the charity or not-for-profit having the ability to stop such use. If acronyms are used, it is important that they at times be used without the full corporate name or the full trademark so that rights can accrue in the acronym. Lastly, charities and not-for-profits should diligently monitor the marketplace to ensure that third parties are not using confusingly similar trademarks, and to take appropriate action to enforce their valuable trademark rights where necessary.
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by Dev User | Apr 29, 2021 | Uncategorized
April 2021 Charity & NFP Law Update
Galloway Estate v British Columbia Society for the Prevention of Cruelty to Animals (“Galloway”) is a March 10, 2021 judgment of the Supreme Court of British Columbia regarding an interesting application of the cy-près doctrine in the case of testamentary gifts.
In Galloway, the wills of twin sisters, Sheila Holland (“Sheila”) and Lea Galloway (“Lea”), contained similarly worded residual provisions which provided, on the death of the surviving sister, a testamentary gift to the Pacific Coast Public Television Association (“PCPTA”), among other charities. PCPTA was, at the time that these wills were made, a Canadian registered charity. Each bequest stated that the gift would only be made if PCPTA continued to be “in existence” at the time of the respective testator’s death. Sheila passed away on September 4, 2010 and Lea on May 3, 2020. Both testamentary gifts would, therefore, be distributed upon Lea’s death. However, while PCPTA had been in existence at the time of Sheila’s death, it was dissolved during Lea’s lifetime. The petition of the estate trustee sought direction from the court for the distribution of the estates. Of note, in relation to the testamentary gifts to PCPTA, the court issued a cy-près order in favour of the US corporation which had been earlier designated to receive all “flow through gifts” from PCPTA.
In terms of the key background facts, PCPTA was incorporated in 1987 and was registered as a charity in Canada in order to issue tax receipts to Canadian donors wishing to support the programming of KCTS Television (“KCTS”), a US public broadcasting company that owned and operated a commercial-free educational channel, KCTS 9 or PBS Channel 9. KCTS was succeeded in 2015 by a US non-profit, Cascade Public Media (“CPM”).
A key piece of information that was not included in the reasons for judgement in Galloway was that CPM is a 501(c)(3) organization in the US, which is generally considered to be the equivalent of a charity in Canada, with the ability to issue donation receipts for tax purposes. In addition, from the date of PCPTA’s incorporation, a Sponsorship Agreement had been in place which directed all donations to PCPTA over to CPM (or its predecessor, KCTS, before 2015).
In 2017, the CRA began investigating organizations established for similar reasons as PCPTA and, as a result, determined that they were not independent, arms-length Canadian charities. PCPTA, anticipating that it would likewise be investigated by the CRA and assessed to be “merely an agent” for CPM under the Sponsorship Agreement then in place, filed to have its Canadian charitable status voluntarily revoked. This revocation became effective on March 24, 2018. PCPTA subsequently took steps to dissolve itself as a not-for-profit corporation on October 18, 2018.
CPM took the position that it was “in substance” the successor to PCPTA because, prior to PCPTA”s dissolution, a gift to PCPTA was effectively a gift to CPM for which a Canadian tax receipt would be issued. In addition, CPM submitted that, pursuant to a separate Agency & Assumption Agreement between the parties for a period of ten years, CPM, as PCPTA’s agent under this Agreement, assumed the debts and liabilities connected with PCPTA’s wind-up and dissolution. Accordingly, it was CPM’s position that a gift to PCPTA was “in effect, a flow through gift”, and, therefore, fulfilled the testators’ intention. Finally, given the “exclusive relationship” between PCPTA and KCTS 9, now operated by CPM, it was argued that there were no other British Columbia- or Vancouver-based charitable organizations whose purposes were similar in nature to the purposes of PCPTA.
The Attorney General of British Columbia (“AG”) took the position that the gift given by Sheila disclosed a general charitable intent because PCPTA was in existence at the time of her death in 2010 and the gift should be subject to distribution under a cy-près scheme due to the exclusive relationship between PCPTA and KCTS 9, which was succeeded by CPM. However, the gift given by Lea, in the opinion of the AG, did not disclose a general charitable intent and should not be distributed to CPM under the cy-près doctrine because PCPTA was no longer in existence at the time of Lea’s death. The AG argued that Lea’s gift to PCPTA fails and should become part of the net estate to be divided among the remaining charitable organizations in existence at the time of her death.
Ultimately, the court agreed with CPM that there was an important relationship between PCPTA and CPM, and stated that the concept of a “successor” under the cy-près doctrine is not limited to a strict corporate successor but that the focus should be on which organization “succeeds” in meeting the testator’s charitable intent. As such, the court held that the testator “can be taken to have known that the sole purpose for the incorporation of PCPTA was to flow donations intended for the public broadcaster […], now operated by CPM, through a Canadian charity which could issue charitable tax receipts to Canadian donors”. As a result, the court concluded that the gift left to PCPTA should be distributed to CPM under the cy-près doctrine.
The decision is important to emphasize to charitable corporations which dissolve themselves to ensure that they take appropriate steps prior to dissolution to appoint their successors in the event that future estate gifts may be received. As well, the decision is significant in making clear that courts will not be limited to applying the cy-près doctrine to benefitting only Canadian registered charities, particularly where a donor’s charitable intent is clear that they wished to benefit an intermediary with whom a Canadian charity worked closely.
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