Ontario Court Strikes Part of OSPCA’s Special Act for Charter Violation

Jan 2019 Charity & NFP Law Update

In another case concerning special act corporations, the Superior Court of Ontario released its decision in Bogaerts v Attorney General of Ontario on January 2, 2019. In this case, Mr. Bogaerts challenged the constitutionality of certain provisions in the Ontario Society for the Prevention of Cruelty to Animals Act (“OSPCA Act”). Specifically, he alleged that the OSPCA Act violates the section 7 right to life, liberty and security and the section 8 right against unreasonable search and seizure under Canadian Charter of Rights and Freedoms (“Charter”), as well as the division of powers in the Constitution Act, 1867, as it dealt with criminal matters.

The OSPCA Act is special legislation incorporating and governing the registered charity, Ontario Society for the Prevention of Cruelty to Animals (“OSPCA”). It administers and enforces animal welfare and protection throughout Ontario, and is given police powers to do so. While it is neither a Crown agent nor part of the provincial government, it is an independent charitable organization that has been given certain statutory powers relating to animal welfare in Ontario.

The court dismissed two of Mr. Bogaert’s claims. It found that the OSPCA Act does not violate the division of powers in the Constitution Act, 1867 because the pith and substance of the OSPCA Act is animal protection and the prevention of cruelty to animals rather than criminal law. It also found that the OSPCA Act does not violate the section 8 Charter right, holding that there would be no reasonable expectation of privacy because the OSPCA’s search and seizure powers are necessary to meet the objectives of the OSPCA Act.

However, the court held that the delegation in the OSPCA Act of police and other investigative powers to a private organization violates section 7 of the Charter, even though these provisions have been in the OSPCA Act prior to the creation of the Charter. The court recognized a new principle of fundamental justice that “law enforcement bodies must be subject to reasonable standards of transparency, integrity, and accountability.” In this regard, it found that the OSPCA is a private organization and private organizations “by their nature are rarely transparent, and have limited public accountability” and that “[a]lthough charged with law enforcement responsibilities, the OSPCA is opaque, insular, unaccountable and potentially subject to external influence, and, as such, Ontarians cannot be confident that the laws it enforces will be fairly and impartially administered.” The court therefore found the provisions in the OSPCA Act granting warrantless search and/or seizure powers to the OSPCA to be unconstitutional. As it found that the offending provisions could not be modified or read down to comply with the Charter, the court declared those provisions to be of no force and effect. However, this declaration of invalidity has been suspended for one year to allow the legislature sufficient time to consider the range of possibilities or to start from scratch in making policy choices, because immediate implementation of the declaration would deprive animals of their current protections under the OSPCA Act, and could adversely impact staff at the OSPCA and its affiliates.

This case demonstrates the importance of ensuring special act legislation does not conflict with legislation, such as the Charter or other portions of the Constitution of Canada. Where they do, such corporation can become, as stated by Mr. Bogaerts, “a victim of the legislation.” Special act corporations should therefore be aware that where their legislated powers run counter to Charter rights or other Constitutional provisions, those powers may be declared invalid by the courts, even where those provisions had been in place prior to the Charter or Constitution’s creation.


Read the January 2019 Charity & NFP Law Update

Corporate Update

Jan 2019 Charity & NFP Law Update

Ontario Announces Legislative Review of the Co-operative Corporations Act

The Ontario Ministry of Finance and Ministry of Government and Consumer Services announced in December 2018 that Ontario would be conducting a legislative review of the Co-operative Corporations Act (“Co-op Act”) on how to modernize the legislative framework and make it easier for co-operative corporations (“co-ops”) to do business in Ontario. A consultation paper, Helping Co-ops Thrive in Ontario: Modernizing the Legislative Framework for Co-operative Corporations in Ontario was also released. The public may provide written submissions by January 31, 2019.

Broadly speaking, co-ops are corporations owned by members who seek to meet common needs, and can be formed on a not-for-profit basis. The Consultation Paper states that co-ops face certain challenges that may impede their growth potential and long-term viability, such as being under an outdated legislative and regulatory framework that is not well aligned with other Ontario business and corporate legislation. The consultation seeks input from the public on the following areas: how to make it easier for co-ops to do business in Ontario; how to better enable co-ops to self-govern while reducing red tape in the sector; which government body should be responsible for administering the Co-op Act; as well as whether the “50 per cent rule” (i.e., co-ops cannot do more than 50 per cent of their business with non-members), audit requirements, and rules for raising capital for co-ops should be changed.

The government’s review of the Co-Op Act will be its first ever review of the Act since its introduction in 1974. While this may appear to some as overdue, it will be welcome news for co-ops in Ontario, including those formed on a not-for-profit basis, and it is hoped that this review will lead to a more competitive legislative framework for co-ops in Ontario. While the nature of changes to the Co-op Act remains to be seen, co-ops in Ontario will want to keep an eye open for future changes to their corporate legislation.


Read the January 2019 Charity & NFP Law Update

CRA News

Jan 2019 Charity & NFP Law Update

Report on the Charities Program 2016 – 2018

In helping to fulfil the Federal Government’s pledge to share information about the regulation of charities, the CRA published its Report on the Charities Program 2016 to 2018 (the “Report”) on January 11, 2019. The Report provides an overview of the charitable sector across Canada by outlining various statistics of registered charities between 2016 and 2018, as well as programs and other resources implemented by the CRA. In terms of statistics, it indicates that during that time, the number of applications for charitable status decreased from 3,306 to 3,142; the number of charitable registrations decreased from 1,693 to 1,569; and total revocations increased from 1,372 to 1,562. An increase in revocations does not equate with an increase in enforcement related matters by the CRA, as the vast majority of revocations is a result of voluntary revocations or due to a registered charity failing to file their annual return when due, while revocations related to audits decreased from 28 to 26.

The Report also highlights the Charities Education Program (CEP), indicating its expansion in the 2017 – 2018 period with 277 visits to registered charities by CRA. It is indicated in the report that the CRA is considering further expanding the CEP to conduct more visits in the future.

Next steps for the CRA discussed in the Report include the launch of the Charities IT Modernization Project (CHAMP) in June 2019; administrative changes to help charitable registration; upcoming guidances, such as a guidance on advancing religion, advancing education, relieving poverty and carrying out related business activities; and additional educational tools for charities.

With respect to compliance-related projects, the Report highlights future focuses of the CRA, including a review of charity boards to identify whether there are concerns related to ineligible individuals and a review of real estate acquisition and construction activities to ensure they further a charitable purpose. The Report also highlights the Charities Directorate’s growing collaboration with other areas of the CRA in order to address “highly complex and offshore transactions.”


Read the January 2019 Charity & NFP Law Update

“PPDDA” In, “Political Activities” Out: CRA’s New Draft Guidance on PPDDA Open for Comment

Jan 2019 Charity & NFP Law Update

On December 13, 2018, the omnibus Bill C-86, Budget Implementation Act, 2018, No. 2 (“Bill C-86”) received Royal Assent and modified the rules in the Income Tax Act (“ITA”) concerning “political activities” by registered charities and registered Canadian amateur athletic associations. In doing so, Bill C-86 removed reference to political activities from the ITA, including the quantitative limits on non-partisan political activities in particular, and instead introduced the concept of “public policy dialogue and development activities” (“PPDDAs”). Although the Bill C-86 amendments were well received by the charitable sector, they did not include a definition of PPDDAs. In the wake of the amendments, the Canada Revenue Agency (“CRA”) released a substantive and carefully written draft administrative guidance CG-027, Public policy dialogue and development activities by charities (the “Draft Guidance”) on January 21, 2019, shedding some light on its interpretation of PPDDAs and how it may administer the new rules. Further information on Bill C-86’s application to political activities and PPDDAs has also been published by the CRA on a new Questions and Answers webpage, released simultaneously with the Draft Guidance (“PPDDA Q&A”). This Charity & NFP Law Bulletin provides a summary of the Draft Guidance and its impact on charities.

For the balance of this Bulletin, please see Charity & NFP Law Bulletin No. 438.


Read the January 2019 Charity & NFP Law Update

2018 – Carters Charity & NFP Webinar Series

2018 – Carters Charity & NFP Webinar Series

Carters will be holding its Spring 2018  Webinar Series to assist charities and not-for-profits with current and essential legal issues. Register for any or all of the following webinars. These complimentary one-hour webinars provided a detailed and practical explanation of the following topics.

  Summer 2018  – Webinar Materials and On Demand/Replay  
Terrance S. Carter

Wednesday, July 18th – 1:00 – 2:00 pm ET
Legal Issues in Fundraising On Social Media
Terrance S. Carter    B.A., LL.B., TEP, Trade-mark Agent. 
Webinar Materials and On Demand/Replay available

Register for Each Webinar Individually

  Spring 2018  – Webinar Materials and On Demand/Replay  
Terrance S. Carter

Wednesday, March 28th – 1:00 – 2:00 pm ET
The Expanding Investment Spectrum for Charities, Including Social Investments  
Terrance S. Carter    B.A., LL.B., TEP, Trade-mark Agent. 
Webinar Materials and On Demand/Replay available

 
Barry W. Kwasniewski  

Friday, April 6th – 1:00 – 2:00 pm ET
The Impact of Bill 148 on Charities and Not-for-Profits
Barry W. Kwasniewski, B.B.A., LL.B. 
Webinar Materials and On Demand/Replay available.
 
Theresa L.M. Man Wednesday, April 25th – 1:00 – 2:00 pm ET
Recent Changes in Corporate Law Affecting Federal and Ontario Corporations 
Theresa L.M. Man, B.Sc., M.Mus., LL.B., LL.M. 
Webinar Materials and On Demand/Replay available.

Download Brochure

Esther Shainblum Wednesday, May 9th – 1:00 – 2:00 pm ET
Critical Privacy Issues Involving Children’s Programs 
Esther Shainblum, B.A., LL.B., LL.M. CRM 
Webinar Materials and On Demand/Replay available.
 
Ryan Prendergast Wednesday, May 30th – 1:00 – 2:00 pm ET
Remuneration of Directors of Charities: What’s New? 
Ryan M. Prendergast, B.A., LL.B 
Webinar Materials  and On Demand/Replay available.
 
Esther S.J. Oh Wednesday, June 13th – 1:00 – 2:00 pm ET
Drafting Bylaws:  Pitfalls to Avoid  
Esther S.J. Oh, B.A., LL.B. 
Webinar Materials and On Demand/Replay available.