Court Finds County’s Breach of Trust ‘Reprehensible’
June 2022 Charity & NFP Law Update
Published on June 29 2022

By Jacqueline M. Demczur
   
 

The Ontario Superior Court of Justice has stated that a breach of trust by a public body is reprehensible and awarded significant costs to the party bringing the matter before the court. In making its decision on this matter, the court concluded that the improper use of funds held in trust by a public body such as a county is so serious that “there can be few issues that are more starkly in the public interest.” The court’s reasoning is outlined in its May 13, 2022 costs endorsement, County of Bruce v Office of Public Guardian and Trustee, 2022 ONSC 2905.

As described in the Feb 2022 Charity & NFP Law Update, the court’s earlier decision outlined how the County of Bruce (“County”) had received a restricted gift from an individual’s estate to be used “for the archives building for the storage and display of the archives of the county.” However, the County instead used the majority of the funds received from this restricted gift to purchase property adjacent to the County’s museum with no clear intent to use the property for the archives building. The court found that the County’s property purchase amounted to a breach of a restricted purpose charitable trust.

In the follow-up costs decision, the court found that the County’s behaviour and its delays to produce relevant records demonstrated that “the County ‘acted unreasonably and in its own self-interest’.” Further, the court emphasized that “[a] breach of trust by a public body is reprehensible, scandalous, and outrageous.” As a result, the court ordered the County to pay $140,000 in actual costs to the other parties.

Charities and other qualified donees are reminded that non-compliance with the terms of a restricted charitable purpose trust is a serious issue in the eyes of the court and that – when necessary – they should obtain legal advice to assist in complying with the terms of any of its restricted trusts.

   
 

Read the June 2022 Charity & NFP Law Update