by Dev User | Jan 13, 2020 | Uncategorized
January 2020 Charity & NFP Law Update
On January 6, 2020, the Alberta Court of Appeal (the “Court”) released its decision in UAlberta Pro-Life v Governors of the University of Alberta, which found that the Charter applies to how the University of Alberta (the “University”) sets conditions which affect the freedom of expression by its students on campus. This summary is only a very brief overview of a complicated decision with extensive reasons.
On March 3 and 4, 2015, a student association, UAlberta Pro-Life (“Pro-Life”), with the approval of the University, organized an on-campus demonstration. On both dates, the event attracted groups of counter-protestors, including University students, faculty, staff, and the general public, who objected to the Pro-Life event on the basis that it was “not conducive to maintaining ‘safe spaces’ on University campus.”
Pro-Life submitted a complaint to the University alleging that a number of individual counter-protestors were in breach of the University Code of Student Behaviour. However, after an internal investigation, the University decided not to take disciplinary action against any of the counter-protestors. As well, in early 2016, when Pro-Life requested permission for another demonstration, the University required Pro-Life to pay $17,500 for the cost of security, with $9,000 to be deposited in advance of the event, and suggested, in the alternative, that Pro-Life hold the event “in an indoor location like a classroom,” which would presumably reduce the level of security required.
After exhausting the University’s internal appeal channels, Pro-Life applied to the Alberta Court of Queen’s Bench for judicial review challenging both the decision not to take disciplinary action against the counter-protestors (the “Complaint Decision”) and the decision regarding the cost of security (the “Security Costs Decision”). The Alberta Court of Queen’s Bench dismissed the application with respect to both decisions.
The Court of Appeal dismissed the appeal with regard to the Complaint Decision. However, regarding the Security Costs Decision, the court held that the University’s regulation of freedom of expression of students on campus should be considered a form of “governmental action” subject to the Charter.
The court stated that the University was subject to the Charter because education by means of free expression has been the core purpose of the University since it was established by the government and the grounds of the University are physically designed to ensure that students learn, debate and share ideas in a community space that is “hospitable to a pursuit of the truth about all things without a prescribed pre-definition of truth before the pursuit begins.”
Recognizing the degree of deference available to the University under the frameworks of “proportionality” and “reasonableness” established by the Supreme Court of Canada in its decisions in Dore, Loyola High School and Trinity Western University, the Court stated that this decision “does not threaten the ability of the University to maintain its independence or to uphold its academic standards or to manage its facilities and resources.”
The University alleged that the content of the expression of Pro-Life was “designed to be controversial”, “evoke a vigorous and emotional response”, and sought “public controversy”. However, recognizing that the tone and content of the expression is relevant in determining whether any conditions imposed constitute a reasonable and proportional limitation, the Court held that this consideration could not justify a complete suppression of the event as would be the case with the cost barrier imposed in this situation. The Court also suggested that, as a matter of reasonable and proportional limitation, the University could propose alternative pamphlets or displays that would be less provoking as a condition of the University providing appropriate security for the event. This was “not to suggest any specific answer for this situation if something like it comes up again. It is to suggest that if the University had the burden of establishing the limitation, it would have a full opportunity to do so.”
It is important to note that this decision extends only to the University’s regulation of freedom of expression of students on its grounds, which should be considered a form of “governmental action” subject to the Charter. The Court did not decide that all of the University’s activities are subject to the Charter. In addition, the judgment is only binding in Alberta.
Read the January 2020 Issue
The CRA’s Guidance on Journalism: Clarifying Tax Credits, QCJOs and RJOs
Advisory Committee on the Charitable Sector Holds December Meetings
Legislation Update
– Provisions of Budget Implementation Act No. 1, 2019 Now In Force
– Proposed Changes to Employee Stock Option Regime Delayed
– 2020 Budget Consultations in Ontario
– Ontario Regulations under the Connecting Care Act, 2019
– Alberta Senate Election Act
– Nova Scotia’s Plastic Bags Reduction Act
– Yukon’s New Liquor Act
Corporate Update
– ONCA Coming into Force Delayed
– Updated Policies on Corrections of Articles or a Certificate for Business and Not-for-Profit Corporations
– Corporations Canada Makes Changes for Online Services to Not-for-Profits
– Certain Amendments to Ontario’s Co-operative Corporations Act in Force
– New Brunswick’s Cooperatives Act Proclaimed in Force
Voluntary Association’s Constitution and By-Laws Found to be Contractual
Tax Court Decision on Split Receipting and Donative Intent Upheld on Appeal
Federal Court of Appeal Holds that Atheism is not a Religion
CRA Technical Interpretation Regarding Loanbacks by a Qualified Donee
CRA Technical Interpretation on Prescribed Rates and Undue Benefits
Termination Clause Found to be Void and Unenforceable by the Court of Appeal
The Federal Court Establishes the Test for a Site-blocking Order
Alberta Court of Appeal Rules that Charter Applies to Freedom of Expression by Students on University Campus
Anti-Terrorism/Money Laundering Update
– Global Fragility Act of 2019
– EU Renews its Terrorist List
– OSFI Ceases Publishing Lists of Designated Persons
Charities Legislation & Commentary, 2020 Edition Now Available
by Dev User | Jan 13, 2020 | Expertise, Intellectual Property Law
Charity & NFP Law Update
In Bell Media Inc v GoldTV.Biz the Federal Court issued a ground-breaking “site-blocking” order requiring third party Internet Service Providers (“ISPs”) to block access to certain websites operated by anonymous defendants that distribute infringing television and motion picture content. The decision by the Federal Court is important for copyright owners, as it is the first time a site-blocking order has been issued by the Federal Court, and therefore offers a new remedy for copyright holders to prevent access to infringing content.
The order arose after the plaintiffs, three Canadian media companies, filed a copyright infringement action against a number of anonymous developers that operate an unauthorized streaming service that allows users to access television and motion picture content online. After attempts to enforce prior injunctions against the website operators were ignored, the plaintiffs sought a site-blocking order to compel third party ISPs to block customers from accessing the infringing content. Although there is established case law to allow a remedy which compels innocent third parties to provide documents and information for the purposes of a lawsuit, this type of injunctive relief to provide an avenue of redress for those who wish to compel innocent third parties to block access to a website was not previously established in Canadian law.
Although unopposed by most ISPs, one ISP (Teksavvy) opposed the order on various grounds, including arguing that the court did not have the requisite jurisdiction to issue the site-blocking order. In conducting its analysis, the court reached into both the law of the United Kingdom (“UK”) and Canada to justify the court’s jurisdiction to grant the site-blocking order, pursuant to its equitable powers to issue injunctions. Canadian law to issue injunctive relief (or the power to order a party to carry out an action or refrain from it) includes the judicial discretion to order it where it is “just and convenient,” relying on both jurisprudence from the UK, and the decision of the Supreme Court of Canada (“SCC”) in Google Inc v Equustek Solutions Inc (“Google”), discussed in the August 2017 Charity & NFP Law Update. In Google, the SCC referred to its basic injunctive relief powers when it found used this jurisdiction to order the tech giant Google (the non-party respondent) to delist from its search engine all websites associated with infringing content. What had not previously been specific relief that a party could request under injunctive relief was this “site blocking” order, and in this way, the SCC is taking established equitable principles and remedies and applying them to the modern context.
The court had to develop a test for this new type of injunctive relief, and gave lengthy reasons for ultimately granting the site-blocking order. In particular, the court applied the standard test for interlocutory injunctions (i.e., there is a serious issue be tried; that irreparable harm will result if the injunction is not granted; and that the balance of convenience favours the plaintiffs). However, in determining the balance of convenience, the court considered a variety of factors that had been applied in similar copyright infringement cases in the UK, including Cartier International AG v British Sky Broadcasting Ltd. (“Cartier”), to ensure the order was proportional. The eight factors considered were necessity, effectiveness, dissuasiveness, complexity and cost, barriers to legitimate use or trade, fairness, substitution, and safeguards.
The court noted that the “necessity” factor in Cartier was tied to the “irreparable harm” and therefore considered it as part of the irreparable harm analysis. In the final element of the test, the court used the remaining factors set out in Cartier as a framework in determining the “balance of convenience” in the test for injunctive relief. Using this approach, the court found there was a serious issue to be tried, that the plaintiffs would incur irreparable harm given that the defendants were unknown and there was a strong case of ongoing infringement, and that the balance of convenience favoured the plaintiff given that the need to prevent the harm outweighed any impact of the order on the ISPs or Canadian customers.
Interestingly, this decision shows the court’s willingness to work with existing equitable relief and the need to find new and relevant ways to apply it in the context of new technology and culture. This case may well be a steppingstone to using this equitable remedy to fashion other types of specific orders that are important for copyright owners, especially when online infringers are unknown, or are located in foreign jurisdictions. Corporations, whether they are charities, not-for-profit, or for-profit should carefully consider how this may both impact their operations, both from the perspective of inadvertent infringement (including by employees or volunteers); and, how it provides an established way for copyright holders to protect themselves online by requesting the court to impose this new “site blocking” injunctive remedy.
Read the January 2020 Issue
The CRA’s Guidance on Journalism: Clarifying Tax Credits, QCJOs and RJOs
Advisory Committee on the Charitable Sector Holds December Meetings
Legislation Update
– Provisions of Budget Implementation Act No. 1, 2019 Now In Force
– Proposed Changes to Employee Stock Option Regime Delayed
– 2020 Budget Consultations in Ontario
– Ontario Regulations under the Connecting Care Act, 2019
– Alberta Senate Election Act
– Nova Scotia’s Plastic Bags Reduction Act
– Yukon’s New Liquor Act
Corporate Update
– ONCA Coming into Force Delayed
– Updated Policies on Corrections of Articles or a Certificate for Business and Not-for-Profit Corporations
– Corporations Canada Makes Changes for Online Services to Not-for-Profits
– Certain Amendments to Ontario’s Co-operative Corporations Act in Force
– New Brunswick’s Cooperatives Act Proclaimed in Force
Voluntary Association’s Constitution and By-Laws Found to be Contractual
Tax Court Decision on Split Receipting and Donative Intent Upheld on Appeal
Federal Court of Appeal Holds that Atheism is not a Religion
CRA Technical Interpretation Regarding Loanbacks by a Qualified Donee
CRA Technical Interpretation on Prescribed Rates and Undue Benefits
Termination Clause Found to be Void and Unenforceable by the Court of Appeal
The Federal Court Establishes the Test for a Site-blocking Order
Alberta Court of Appeal Rules that Charter Applies to Freedom of Expression by Students on University Campus
Anti-Terrorism/Money Laundering Update
– Global Fragility Act of 2019
– EU Renews its Terrorist List
– OSFI Ceases Publishing Lists of Designated Persons
Charities Legislation & Commentary, 2020 Edition Now Available
by Dev User | Jan 13, 2020 | Uncategorized
Charity & NFP Law Update
The CRA released its technical interpretation, Document 2017-0683831I7, on December 5, 2019, in which it considered subsection 189(1) regarding non-qualifying investments of a private foundation (“NQI”) and subsections 188.1(4) and (5) regarding undue benefit provisions under the ITA. The technical interpretation addressed the question of whether a loan advanced by a charity to a person at prescribed rates could result in an undue benefit. Although the technical interpretation is not particularly determinative, it does provide a helpful explanation of the process undertaken by the CRA in analyzing the questions at hand.
In this case, a registered charity that is a private foundation had advanced a loan to individuals or businesses (i.e. a debtor) at a prescribed rate of interest “because of the debtor’s relationship with the private foundation or the foundation’s board of directors.” The foundation requested clarification from CRA concerning whether a private foundation could be subject to a penalty for undue benefits pursuant to the ITA where subsection 189(1) does not apply to such debt owing by the debtor.
The CRA stated that under subsection 189(1), where certain debts owing by a taxpayer to a private foundation and where, at that time, those debts are a NQI of the foundation, then “the taxpayer is required to pay a tax for the year equal to the amount that is the interest that would be payable on the debt based on rates prescribed from time to time during the taxation year less any interest paid on the debt by the taxpayer not later than 30 days after the end of the taxation year.” In providing its comments, the CRA also reviewed the definition of NQI under subsection 149.1(1) of the ITA, which generally defines a NQI of a private foundation as “a debt owing to the foundation, or a share held by a private foundation that is issued by certain persons who are in a position to control or influence the operations of the foundation, as well as a right held by the foundation to acquire such a share.” Specifically, in the context of debt, the NQI definition refers to a debt (which excludes a pledge or undertaking to make a gift) that can be owing to the foundation either by certain persons outlined in subparagraph (a)(i) of the definition of NQI under subsection 149.1(1) of the ITA, or by corporations controlled by certain entities outlined in paragraph (b) of subsection 149.1(1). Certain corporations are excluded from the NQI definition, as outlined in paragraphs (d)-(f), inclusive. The CRA’s summary of the above subsections in the technical interpretation is set out below for ease of reference:
Specifically, in the context of debt, the NQI definition refers to a debt (other than a pledge or undertaking to make a gift) owing to the foundation by a person (other than an excluded corporation)
1) who is a member, shareholder, trustee, settlor, officer, official, or director of the foundation;
2) who has contributed, or is a member of a group of non-arm’s length persons who have contributed, more than 50% of the foundation’s capital; or
3) who does not deal at arm’s length with any person described in (1) or (2).
The NQI definition also refers to a debt owing to the foundation by a corporation (other than an excluded corporation) controlled by
a) the foundation,
b) any person or group of persons referred to in (1), (2) or (3) above,
c) the foundation and any other private foundation with which it does not deal with at arm’s length, or
d) any combination of (a), (b) and (c);
An excluded corporation for purposes of the NQI definition is (1) a limited-dividend housing company; (2) a corporation all of the property of which is used by a registered charity in its administration or in carrying on its charitable activities; or (3) a corporation all of the issued shares of which are held by the private foundation.
With respect to the meaning of “undue benefits”, the CRA referenced subsection 188.1(5), indicating that: an undue benefit conferred on a person (beneficiary) by a registered charity includes “a disbursement by way of a gift; and the amount of any part of the income, rights, property or resources of the registered charity that is paid, payable, assigned or otherwise made available for the personal benefit of” certain persons listed in that subsection. Further, the CRA stated that “an undue benefit also includes any benefit conferred on a beneficiary by another person, at the direction or with the consent of the charity that would, if it were not conferred on the beneficiary, be an amount in respect of which the charity would have a right.” Exclusions are also outlined in subsection 188.1(5).
The CRA went on to explain that an undue benefit does not include a disbursement or a benefit to the extent that it is a gift made or a benefit conferred in the course of a charitable act in the ordinary course of the charitable activities of a charity. This exclusion would apply unless it could be reasonably considered that the eligibility of the beneficiary related solely to the relationship of that person to the charity. An undue benefit also does not include a gift to a qualified donee or reasonable consideration or remuneration for property acquired by or services rendered to the charity.
In addition, the CRA advised that the determination of whether or not a charity has conferred an undue benefit can only be made on a case-by-case decision based on all the facts and circumstances surrounding that specific situation, and would include a review of the underlying documentation.
In this case, the CRA concluded that, “given that subsection 189(1) of the Act and subsection 188.1(4) of the Act apply to different parties, each of these provisions must be considered independently of each other.” In this regard, the CRA indicated that the fact that a taxpayer is not subject to the subsection 189(1) tax in respect of a loan received from a registered charity, in and of itself, does not preclude the charity from being assessed a subsection 188.1(4) penalty where the facts and circumstances establish that the loan is an undue benefit conferred on that taxpayer.
Read the January 2020 Issue
The CRA’s Guidance on Journalism: Clarifying Tax Credits, QCJOs and RJOs
Advisory Committee on the Charitable Sector Holds December Meetings
Legislation Update
– Provisions of Budget Implementation Act No. 1, 2019 Now In Force
– Proposed Changes to Employee Stock Option Regime Delayed
– 2020 Budget Consultations in Ontario
– Ontario Regulations under the Connecting Care Act, 2019
– Alberta Senate Election Act
– Nova Scotia’s Plastic Bags Reduction Act
– Yukon’s New Liquor Act
Corporate Update
– ONCA Coming into Force Delayed
– Updated Policies on Corrections of Articles or a Certificate for Business and Not-for-Profit Corporations
– Corporations Canada Makes Changes for Online Services to Not-for-Profits
– Certain Amendments to Ontario’s Co-operative Corporations Act in Force
– New Brunswick’s Cooperatives Act Proclaimed in Force
Voluntary Association’s Constitution and By-Laws Found to be Contractual
Tax Court Decision on Split Receipting and Donative Intent Upheld on Appeal
Federal Court of Appeal Holds that Atheism is not a Religion
CRA Technical Interpretation Regarding Loanbacks by a Qualified Donee
CRA Technical Interpretation on Prescribed Rates and Undue Benefits
Termination Clause Found to be Void and Unenforceable by the Court of Appeal
The Federal Court Establishes the Test for a Site-blocking Order
Alberta Court of Appeal Rules that Charter Applies to Freedom of Expression by Students on University Campus
Anti-Terrorism/Money Laundering Update
– Global Fragility Act of 2019
– EU Renews its Terrorist List
– OSFI Ceases Publishing Lists of Designated Persons
Charities Legislation & Commentary, 2020 Edition Now Available
