Tribunal Rules that Eligibility to Work Permanently in Canada is Discriminatory

by | Sep 27, 2018 | Uncategorized

Sept 2018 Charity & NFP Law Update

On July 20, 2018, the Human Rights Tribunal of Ontario (“HRTO”) released an interim decision in Haseeb v Imperial Oil Limited (the “Haseeb Decision”), holding that a company’s policy requiring all job applicants for an entry level position to disclose proof of their eligibility to work in Canada on a permanent basis was discriminatory on the ground of “citizenship.” In reaching its decision, the HRTO adopted a novel analysis on the protected ground of “citizenship” and its relationship to other statuses of non-citizenship. In doing so, the tribunal expanded the meaning of “citizenship” in certain contexts under the Ontario Human Rights Code to include people who are permanent residents or domiciled in Canada and intending to obtain citizenship. It also held that the addition of a non-prohibited ground to a policy did not cure the discriminatory nature of the policy. The Haseeb Decision may be significant to charities and not-for-profits that may want to hire non-Canadian citizens, either on a temporary or long term basis.

For the balance of this Bulletin, please see Charity & NFP Law Bulletin No. 430.

​Read the September 2019 Charity & NFP Law Update

Appeal Court in England Upholds Decision that Members of Charity are Fiduciaries

by | Sep 27, 2018 | Uncategorized

Sept 2018 Charity & NFP Law Update

On July 6, 2018, the England and Wales Court of Appeal released its decision in Lehtimäki v The Children’s Investment Fund Foundation (UK) & Ors, which was an appeal of the decision in The Children’s Investment Fund Foundation v AG et al (“CIFF Decision”) that was reported on in the September 2017 Charity & NFP Law Update. While the courts’ decisions in the above matters involve consideration of legislation and case law in England and Wales, given the shared common law jurisprudence, charities in Canada may find the English appeal court’s comments regarding the fiduciary duties of members of charities to be of interest.

In the CIFF Decision, the English High Court of Justice considered a request by The Children’s Investment Fund Foundation (UK) (“CIFF”), a registered charity, for direction concerning the proposed payment of a US$360 million grant (the “Grant”) to another English registered charity. It is beyond the scope of this article to provide a complete overview of the background facts to the CIFF Decision and reference can be made to the September 2017 Charity & NFP Law Update for a summary. However, in general terms, in the CIFF Decision, the question before the court was whether the only member with a right to vote on approving the payment of the Grant could use his discretion to vote for or against the Grant. The court stated that since the payment of the Grant was approved by the Charity Commission (which governs registered charities in England and Wales) and was also approved by the court as being expressly in the best interests of CIFF, the particular member in question did not have the discretion to vote against the Grant. Instead, the court stated that the member was “bound by the fiduciary duties” owed to CIFF and subject to the court’s inherent jurisdiction over the administration of charities in that regard.

In the appeal, the member in question, Lehtimäki, challenged the lower court’s decision, arguing that members of an organization are not fiduciaries and that even if they were, courts do not have jurisdiction to intervene in directing their votes. The appeal court rejected Lehtimäki’s argument that members of a charitable organization are similar to that of corporate shareholders and stated that “membership of a charitable company… is very different from ownership of shares in a non-charitable company. … a share is property and the right to vote attached to it ‘an incident of property to be enjoyed and exercised for the owner’s personal advantage’, membership of a charitable company confers no proprietary rights.” Instead, the appeal court held that votes of a member function “in connection with assets appropriated to charity in which the member has no personal stake.”

In its decision, the appeal court upheld the trial court’s determination that members of CIFF were fiduciaries, but further held that courts could not direct a fiduciary in the exercise of their powers unless the fiduciary was breaching his or her duty.

In rejecting the lower court’s order to direct Lehtimäki to vote in favour of the Grant, the appeal court noted that the UK Charities Act 2011 requirement for member approval in relation to such a grant indicated that Parliament intended these matters to be handled internally rather than by the courts. On that basis, the appeal court confirmed that it would only intervene in the event that the member breached his or her fiduciary duties. The appeal court also stated as follows:

Powers relating to the administration of trusts have thus been held to have a fiduciary character. An analogy can be drawn with the powers that members of CIFF have in connection with its administration. It is noteworthy, too, that the Charity Commission has said as regards ‘Members’ voting obligations’ that it ‘considers that the rights that exist in relation to the administration of a charitable institution are fiduciary, regardless of the identity of the person or persons on whom the rights are conferred’ (see “RS7 – Membership Charities”).

For comparison purposes, in Canada, members of charitable not-for-profit corporations have not been found to be fiduciaries by the Canadian courts. While an interesting case, the appeal decision in the CIFF case is limited to its unique facts and applicable English law. Whether or not this decision might have application in Canada is not clear.

​Read the September 2019 Charity & NFP Law Update

CRA News

by | Sep 27, 2018 | Uncategorized

Sept 2018 Charity & NFP Law Update

Release of Charities IT Modernization Project Delayed

In an e-mail sent to stakeholders on September 18, 2018, and through subsequent amendments to the Charities IT Modernization Project (“CHAMP”) website on September 19, 2018, the Canada Revenue Agency (“CRA”) announced the delay of its public release of CHAMP. While many aspects are nearing completion, the announcement stated that certain elements of CHAMP need further work before finalization. While CHAMP was originally scheduled to be released in November 2018, it has now been delayed until June 2019. Once in place, CHAMP will provide several new e-services, including the replacement of Form T2050, Application to Register a Charity under the ITA, with an online application, online filing of the T3010, Registered Charity Information Return, and the ability to update charities’ information and correspond with the Charities Directorate online through “My Business Account.”

Mailing Address for T3010 to be Amended

In an announcement on September 14, 2018, the CRA stated that the mailing address for the T3010, Registered Charity Information Return, will be changing as of October 8, 2018. The address change applies only to the T3010, and not to any other document filings. Charities filing their T3010s on or after October 8, 2018 will need to ensure that their annual returns are mailed to:

Charities Directorate
Canada Revenue Agency
105 – 275 Pope Road
Summerside PE C1N 6E8

All other mail should continue to be mailed to the Charities Directorate’s current address in Ottawa, at:

Charities Directorate
Canada Revenue Agency
Ottawa ON  K1A 0L5

​Read the September 2019 Charity & NFP Law Update

Corporate Update

by | Aug 30, 2018 | Uncategorized

Aug 2018 Charity & NFP Law Update

New Online Filing Service for Registered Intermediaries Available

Corporations Canada announced on June 26, 2018, that it is now providing an online service for registered intermediaries to file applications for certain exemptions under the Canada Business Corporations Act and the Canada Not-for-profit Corporations Act (“CNCA”). In this regard, Corporations Canada’s website indicates that CNCA corporations may seek approval for exemption from nine specific CNCA requirements, such as authorization to extend the time for calling an annual meeting. Instead of paper filings, the new service allows registered intermediaries to apply online. Online applications must include a cover letter (which may be typed directly into the relevant field online), in addition to a single PDF file that includes a statement of facts, arguments, a draft exemption order, and any other relevant documents. The online service allows the application examiner to follow up directly with the requestor. The requirements that must be met for an exemption to be granted have not changed with this new online service.

British Columbia Bill M 216, Business Corporations Amendment Act, 2018 Passes Second Reading

 

On May 17, 2018, British Columbia Bill M 216, Business Corporations Amendment Act, 2018 (“Bill M 216”) passed second reading. Bill M 216, which is a private member’s bill, seeks to amend the British Columbia Business Corporations Act by inserting a new Part 2.3 to create a new category of corporations known as a “benefit company.” If passed, BC will be the first jurisdiction in Canada to provide a legal framework for “benefit companies” to pursue social and environmental goals, rather than just profit. This legislation is intended to ensure mission-driven companies can stay true to their mission as they grow, while allowing them to attract capital by providing investors with certainty about the mandate of the company. Key features of a benefit company include the following:

  • A benefit company must include a benefit statement in its notice of articles that it “has purposes that include conducting its business in a responsible and sustainable manner and promoting one or more public benefits.” The term “public benefit” is defined to mean a “positive effect, including, without limitation, of an artistic, charitable, cultural, economic, educational, environmental, literary, medical, religious, scientific or technological nature, for the benefit of” (a) a class of persons (other than the company’s shareholders), a class of communities or organizations, or (b) the environment, such as air, land, water, flora or fauna, or animal, fish or plant habitat.
  • A benefit company must also set out a commitment in its articles to conduct business in a responsible and sustainable manner, and to promote the public benefits specified in its articles. This means that it must take into account the well-being of persons affected by the operations of the benefit company, and endeavour to use a fair and proportionate share of available environmental, social and economic resources and capacities.
  • A benefit company must include “Benefit Company” or the abbreviated “B.Co.” in its name.
  • Its directors and officers must act honestly and in good faith with a view to (i) the best interests of the persons who may be materially affected by the company’s conduct, and (ii) the promotion of the public benefits specified in the company’s benefit provision.
  • It must publish an annual benefit report that details how the benefit company demonstrated their commitment to responsible and sustainable conduct and to benefiting the public interest.
  • Its shares must include a conspicuous statement of the company’s status as a benefit company. It may not amalgamate with another corporation unless the amalgamation results in an amalgamated benefit company.

​Read the August 2018 Year Charity & NFP Law Update

Canadian Presence Not Always Required to Establish Use of Trademark

by | Aug 30, 2018 | Uncategorized

Aug 2018 Charity & NFP Law Update

On July 25, 2018, in Dollar General Corporation v 2900319 Canada Inc., the Federal Court considered the issue of “use” of a trademark in Canada in association with “retail variety store services” without a physical presence in Canada. This is an important issue for trademark registrants, including charities and not-for-profits, given that once a registration is three years old, any person can request that the registration be expunged (i.e., cancelled) for non-use. If an expungement proceeding is initiated, the trademark owner must furnish evidence of use of the trademark in association with each of the goods and services listed in the registration certificate in accordance with the definition of “use” provided in the Trademarks Act (“Act”). If the trademark has not been used in Canada during the relevant period or the requisite “special circumstances” are not presented to excuse the non-use, the Registrar can elect to expunge the registration or amend the registration (i.e., delete the specific goods and services that the trademark has not been used in association with). As a result, it is important for organizations, including charities and not-for-profits, to understand what constitutes “use” of a trademark in Canada.

In this case, the court overturned the decision of the Trademarks Opposition Board (“TMOB”) to expunge the DOLLAR GENERAL trademark registration. Dollar General Corporation (“Dollar General”) operates brick-and-mortar stores in the USA, but not in Canada. Although Canadian residents can access Dollar General’s website and make purchases online, the company does not ship directly to Canada. Instead, consumers in Canada must pay a fee to a third party to ship the goods to Canada. Based on these facts, the TMOB expunged the registration for non-use in Canada in association with “retail variety store services.”

In reversing the TMOB’s decision to expunge the mark, the court rejected the notion that goods must be shipped directly by the owner to customers in Canada to constitute use of the mark in Canada. In doing so, the court relied on the propositions that the definition of “services” in the Act requires a liberal and broad interpretation and that if members of the public receive a benefit from the activity, the activity is a service. While the court noted the evidence was not perfect, it held that the interactive nature of the website together with the benefit the website provided to Canadians were sufficient to establish “use” within the meaning of section 4 of the Act.

This decision provides some assurance to non-Canadian charities and not-for-profits who do not have a physical presence in Canada that having a website that Canadians can access and benefit from is likely sufficient to demonstrate the requisite evidence of use to maintain trademark registrations in Canada.

While this decision suggests that courts may take a broad interpretation of the definition of “use” in association with services, the court’s analysis indicates that the determination is subjective and each case will ultimately turn on its evidence. As such, charities and not-for-profits should be proactive in ensuring that trademark registrations can withstand non-use challenges. This includes ensuring that trademarks are used in accordance with the definition of use provided in the Act and maintaining adequate records of such use. Further, charities and not-for-profits should ensure that trademark registrations cover a broad range of services (e.g., primary, incidental and ancillary services) such that if an expungement proceeding is initiated, some of the services associated with the trademark may be maintained even if others are struck out for non-use. This approach will also avoid the necessity of a costly appeal to the Federal Court if the TMOB cancels a registration certificate for non-use. Lastly, legal counsel should be consulted to ensure that trademark registrations can therefore withstand such non-use challenges.

​Read the August 2018 Year Charity & NFP Law Update