Trust for Wrongfully Dismissed Employees Not Charitable
Feb 2022 Charity & NFP Law Update
Published on February 24 2022

By Jennifer M. Leddy
   
 

Mr. Jim Crerar sought a declaration from the Supreme Court of British Columbia that the trust agreement he created was a valid charitable purpose trust. In Jim Crerar Charitable Trust (Re), released on January 14, 2022, the court found the trust’s purpose – to provide funds to people to prosecute wrongful dismissal claims against former employers – was not “charitable”.

Mr. Crerar had been terminated from a job earlier in his life, but did not have the funds to pursue a wrongful dismissal claim. He decided to set up a trust to help others who might find themselves in similar circumstances and wrongfully dismissed. The trust would distribute funds to “any poor person, who […] requires funds for the prosecution of a wrongful dismissal claim against a former employer” no matter if they were a unionized or non-unionized employee, “as a means of alleviating his or her poverty”. There was no definition of poor person.

In considering whether the trust was valid, the court outlined that there must be a specific beneficiary of a trust or the trust must be recognized as a charitable purpose trust. In order to be a charitable purpose trust, the trust must be one of the four categories of charitable purposes which were set out in the case of Pemsel v Special Commissioners of Income Tax and include: relief of poverty, advancement of education, advancement of religion, and other purposes beneficial to the community.

The court found that providing funds to prosecute wrongful dismissal claims did not have “at its core the relief of poverty” because it would not “provide funding for retraining, job search, daily living expenses, or even compensation for what might have been a proper period of notification or termination”. Rather, the court found that such litigation may result in a settlement for the employee which they “may or may not be able to collect on”. The court also highlighted the concern that if an employee loses their claim “they may well face a costs order, which would drive them further into poverty”. Because “the only guaranteed beneficiary is legal counsel”, the court declined to find that the trust had a charitable purpose for the relief of poverty.

Mr. Crerar also argued that the trust was for a purpose beneficial to the community, but the court was not satisfied that he provided any basis for this assertion. Where there is a trust that is for the benefit of the community, the court will consider whether there is a section of the community that can be identified as being helped by the trust. However, there was no evidence of this and the court declined to take judicial notice that there was a sizable segment of society that faces access to justice issues related to wrongful termination.

In its conclusion, the court found that the Mr. Crerar failed to establish that the trust had a charitable purpose. While the court may have reached a different conclusion regarding whether there was a purpose beneficial to the community if more evidence had been provided, its analysis of whether there was a purpose for the relief of poverty was relatively narrow, as it was based on the Court’s conclusion that it was an “ineffective tool for that purpose” when compared to more “immediate, short term assistance”. This case serves as a reminder that whether a purpose is “charitable” is fact-dependent and grounded in the common-law understanding of the components of the four heads of charity.

   
 

Read the February 2022 Charity & NFP Law Update