discriminatory charities – is it charitable to … revenue commissioners that a “purpose...

Draft. Not for circulation or quotation.

Discriminatory Charities – Is it Charitable to Discriminate?

Adam Parachin* Who can be excluded from a charitable trust before the trust will be considered non-

charitable on the ground that it is discriminatory? Can charitable scholarship funds be

established to benefit only persons of a particular ethnic background or religious

affiliation? Will a cultural centre fail to qualify as charitable if it targets its services

toward a discrete ethnic demographic to the deliberate exclusion of all others? Will an

organization created to combat male recidivism qualify as charitable? How about a

centre providing treatment only to male alcoholics? We can safely say that charitable

status does not require that every member of society qualify for a service or benefit. The

question I aim to consider in this paper (more accurately to begin to consider) is how the

law should determine what is discriminatory for purposes of charity law.

The Civil Marriage Act,1 which extended the meaning of marriage to include same-sex

relationships under Canadian federal law, provides some unexpected guidance on this

issue. This statute enacted subsection 149.1(6.21) of the Income Tax Act.2 This little

discussed provision provides that, subject to the usual restrictions on political advocacy,

charities organized for the advancement of religion will not have their charitable

registration revoked solely because they or any of their members exercise freedom of

conscience and religion in relation to the meaning of marriage.3

What is interesting about this provision is the mere fact that it was thought necessary.

The provision appears to be responsive to a perception that constitutional equality

jurisprudence dealing with marriage and consequent changes to statutory law somehow

* Adam Parachin, Associate Professor, Faculty of Law, University of Western Ontario, [email protected]. 1 S.C. 2005, c. 33. 2 R.S.C. 1985, c. 1 (5th Supplement), as amended [the “Act”]. 3 Subsection 149.1(6.21) provides as follows:

(6.21) Marriage for civil purposes -- For greater certainty, subject to subsections (6.1) and (6.2), a registered charity with stated purposes that include the advancement of religion shall not have its registration revoked or be subject to any other penalty under Part V solely because it or any of its members, officials, supporters or adherents exercises, in relation to marriage between persons of the same sex, the freedom of conscience and religion guaranteed under the Canadian Charter of Rights and Freedoms.

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threatened the charitable status of conservative religious charities. Specifically, the

rationale behind the provision would appear to be this: If restricting the legal meaning of

marriage to heterosexual relationships violates the human dignity of same-sex couples,

which is what both the equality cases and the preamble to the Civil Marriage Act say,

then perhaps a future authority might reason that religious organizations teaching the

traditional view of marriage are promoting discriminatory beliefs and are for that reason

no longer eligible for the income tax privileges of charitable status. Whether this

reasoning follows ultimately turns on the extent to which, if at all, constitutional equality

jurisprudence currently does or should in the future constrain the range of institutions that

may qualify (or continue to qualify) as charitable.

The starting point of the analysis is Lord Simonds’ observation in National Anti-

Vivisection Society v. Inland Revenue Commissioners that a “purpose regarded in one age

as charitable may in another be regarded differently.”4 Charitable status once conferred

on an institution is available only for so long as its purposes continue to be regarded as

charitable at law. Each generation must decide for itself in light of contemporary values

whether the purposes previously considered charitable should continue to so qualify.

What happens then when what is preached from a church pulpit or practiced by a charity

seems to deviate from constitutional equality jurisprudence or an evolving public law

equality norm? More specifically, what happens when a church promulgates and acts on

a traditional, heterosexual theology of marriage? Is there a case for concluding that the

church should no longer remain eligible for charitable status because it is promoting what

some might now describe as a discriminatory view of marriage?

Subsection 149.1(6.21) weighs in on the issue of discriminatory charity. We can abstract

from this provision the general principle that there should not be a direct link between the

public policy against discrimination applied in charity law and the concept of

discrimination developed in constitutional equality jurisprudence. This tells us a few

things about the relationship between the legal definition of charity and equality

jurisprudence. First, a charity should not necessarily risk losing its charitable status by

4 [1948] 1 A.C. 31 at 74 (per Lord Simonds).

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taking positions on issues and engaging in practices that constitutional equality

jurisprudence prohibits the state from taking. Second, the state should be able to

privilege through grants of charitable status institutions with positions and practices that

constitutional equality jurisprudence prohibits the state from itself taking.

Is there a case in support of subs. 149.1(6.21)? I think that there is and I propose to

approach the matter as first a question of property law and second as a question of charity

law. Specifically, I think that (i) there is a case for concluding that the settlement of a

discriminatory charitable trust is not per se an invalid exercise of property rights and that

(ii) there are reasons to be wary of allowing public law anti-discrimination norms to

constrain the boundaries of legal charity.

Before proceeding, I offer the following disclaimer: I do not question whether equality is

a worthy social goal, nor do I deny that discriminatory exercises of property rights could

in some instances lead to significant social harm. That is, I do not wish to be taken as

denying that the policy concerns at play here are real and need to be taken seriously. I

provide this disclaimer because I can attest anecdotally to the fact that increasingly

equality arguments seem difficult to critically and candidly scrutinize without concerns

over suspect motives arising. It seems to have become taboo in some circles to raise

objections – even conscientious objections – to equality claims. To do so is not to

participate in a debate over equality but rather to stand in the very way of it, or at least

this seems to me how the debates are sometimes made to play out. This has led me to

sometimes wonder whether with the advent of human rights we have substituted an

orthodoxy of discrimination with a new (and at times equally fundamentalist) orthodoxy

of anti-discrimination. To the extent that this hinders candid and open reflection on

significant issues of law and policy involving equality, it is not a good thing. I proceed

on the basis that I will be permitted the indulgence to think critically and openly about

some of the arguments that have been made in support of striking discriminatory

conditions in trusts without my concerns being dismissed out of hand on the erroneous

basis that they mask “anti-equality” policy preferences.

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I – Limits on Freedom of Property Disposition:

The issue considered in this part is how anti-discrimination values find expression in the

common law of property generally. This may seem at first to be a diversion from the

more immediate task of identifying precisely when discrimination is incompatible with

charitable status and how discrimination should be defined for purposes of charity law.

However, at its most basic level, the settlement of a charitable purpose trust is an exercise

of property rights. So before even exploring any potential discordance between

discrimination and charity, it is helpful to first consider how anti-discrimination values

generally find expression in the common law of property.5 If this analysis reveals that

there is a property law basis for refusing to enforce property transfers subject to

discriminatory conditions, then the legal meaning of charity becomes of secondary

importance to the problem of discriminatory charitable trusts.

Common law property rights afford property holders with a great deal of freedom

regarding the use and transfer of property. As a general rule, a property holder is at

liberty to exclude others from his or her property for any reason. A property holder also

has the freedom to transfer (or to not transfer) for any reason property to others through

inter vivos and testamentary gifts and trusts. In fact, the idea of “disinheritance”

generally has no resonance in Canadian law, since, subject to meagre family law and

dependant relief legislation, it is entirely up to the property holder to determine how his

or her property should be distributed on death. In addition, a property holder may attach

conditions to donative transfers as a way of inducing or discouraging certain behaviour

on the part of donees. Since these conditions can remain enforceable many years after a

testator’s death, property rights effectively allow property holders to influence the

5 For a similar view, see see B. Ziff, Unforeseen Legacies: Reuben Wells Leonard and the Leonard Foundation Trust (Toronto: University of Toronto Press, 2000) at p. 149. Commenting on the Canada Trust Co decision, Ziff observed as follows: “One can understand the problem as pitting the protection of private property against the promotion of equality. This is the essence of the Leonard Foundation controversy, in which concerns over discrimination were set against the rights of private property.” Similarly, Matthew Harding offers the view that the law should not distinguish between private and charitable trusts when it comes to enforcing anti-discrimination rules. See M. Harding “Testamentary Freedom to Discriminate: The Case Against” Unpublished Conference Proceeding, (p. 3).

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conduct of the living from beyond the grave, hence the image of the “dead hand” that is

so often invoked in property law analysis.

Given the breadth of traditional property rights, there is the obvious potential that these

rights could be exercised in a discriminatory fashion. A property holder could restrict

access to “whites only”. Parents could decline to make inter vivos or testamentary gifts

to a child who defied them by, say, entering into an interracial marriage. The settlor of a

trust could make beneficial interests conditional upon a discriminatory condition, e.g.,

“only if my son is not the spouse of a Jew”. That is, of course, unless property law itself

restrains property rights where they conflict with anti-discrimination values.

Conditions in common law land grants and trusts are void if they contravene public

policy. Therefore, inasmuch as there is a public policy against discrimination, the

doctrine of public policy could be used to strike discriminatory conditions in such

instruments. The jurisprudence is notable, however, for just how few cases have struck

conditions on the express ground of a public policy against discrimination. The

overwhelming tendency of the cases has instead been to protect the property law right of

disposal. The relevant cases tend to deal with conditions that restrain religion (either

requiring or prohibiting the practice of a particular religion) or marriage (either requiring

or prohibiting marriage to a person of a particular religious persuasion, ethnicity or class).

In case after case, conditions of this nature have been upheld.6 The reasons for judgment

6 For example, see Renaud v Lamothe (1902) 32 SCR 357 (SCC) (upheld condition requiring children to be married in Roman Catholic church and grandchildren to be educated in Roman Catholicism), Ramsden Estate [1996] P.E.I.J. No. 96 (upheld a scholarship fund for Protestants), University of Victoria v. British Columbia (A.G.) [2000] B.C.J. No. 520 (upheld a scholarship fund for Roman Catholics), Patton v. Toronto General Trusts Corporation [1930] A.C. 629) (upheld condition to be “of the Lutheran religion”, Re Kennedy Estate [1950] 1 W.W.R. 151 (upheld condition requiring marriage to a Protestant of good repute); Re Forbes, Harrison v. Commis [1928] 3 DLR 22 (upheld condition requiring membership in the Church of England), Re Patton [1938] O.W.N. 52 (O.C.A.) (upheld condition requiring practice of Lutheran religion), Re Curran [1939] O.W.N. 191 (H.C.J.) (upheld condition requiring membership in Roman Catholic parish and restricting marriage to a Roman Catholic), Hodgson v. Halford (1879) 11 Ch. D. 959 (upheld condition against forsaking Jewish religion or marrying a non-Jew), In re Joseph, Pain v. Joseph [1908] 1 Ch. 599 (upheld condition requiring adherence to Judaism), Blathwayt v Lord Cawley [1976] 1 A.C. 397 (H.L.) (upheld condition prohibiting becoming a Roman Catholic), In re May, Eggar v May [1932] 1 Ch. 99 (upheld condition prohibiting practice of Roman Catholicism), In re Morrison’s Will Trusts, Walsingham v. Blathwayt [1940] Ch. 102 (upheld condition against becoming or marrying a Roman Catholic), Clavering v Ellison (1859) 7 HLC 282 (upheld condition requiring education in Protestant religion), Hay v. Brown (1883) 10 R (Ct. of Sess.) 460 (upheld condition requiring practice of Roman Catholic religion), In re Allen

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vary. Some courts treat the validity of these sorts of conditions as axiomatic.7 Others

emphasize that courts should be reticent to strike conditions on grounds of public policy.8

The mere fact that a condition is “inconsistent with standards now widely accepted” has

thus been held to be insufficient to justify a finding of invalidity.9 The public-private

dichotomy is a recurring theme in the cases. One Canadian case emphatically concluded

that restrictive conditions “do not involve any question of public morality”.10 Similarly,

in a leading case, Lord Wilberforce famously observed that “[d]iscrimination is not the

same thing as choice: it operates over a larger and less personal area, and neither by

express provision nor by implication has private selection yet become a matter of public

policy.”11 Some of the cases expressly reason that anti-discrimination values restraining

[1953] 1 Ch. 810 (upheld condition membership in and adherence to doctrines of Church of England), Wainwright v Miller [1897] 2 Ch. 255 (upheld condition requiring membership in Roman Catholic church or any sisterhood), Duggan v Kelly (1847) 10 Ir. Eq. R. 295 (upheld condition against marrying a Papist), Re McKenna [1947] I.R. 277 (upheld condition against marrying a Roman Catholic), Re Knox (1889) 23 L.R. Ir. 542 (Ch.) (upheld condition restricting marriage to a Protestant wife with Protestant parents), In re Estate of Max Feinberg (2009) 235 Ill. 2d 256 (upheld condition prohibiting marriage outside the Jewish faith), Perrin v. Lyon (1808) 9 East 170 (upheld condition against marrying a Scotchman), Kay v South Eastern Sydney Area Health Service [2003] NSWSC 292 (upheld a fund restricting medical treatment to white babies), Greene v Kirkwood (upheld condition prohibiting marriage to a person of a lower “social position”) and Jenner v Turner (upheld condition prohibiting marriage to a domestic servant). Even conditions requiring a minor beneficiary to adhere to a particular religion have been upheld provided that the beneficiary not required to comply with the condition until reasonable time after attaining majority. See Blathwayt v Lord Cawley [1976] 1 A.C. 397 (H.L.) and In re May [1917] 2 Ch. 126. 7 The enforceability of unambiguous religious conditions has been described as “beyond question” (Clayton v Ramsden [1943] 1 A.C. 320 at 332 per Lord Romer). Similarly, Naish J. observed in Re Knox (1889) 23 L.R. Ir. 542 (Ch.) at 544 that, since such conditions have been “repeatedly held valid…it is now too late to question their validity”. Hall V.C. observed in Hodgson v. Halford (1879) 11 Ch. D. 959 at 967 that property holders are “perfectly justified” in imposing such conditions. 8 In Hodgson v. Halford (1879) 11 Ch. D. 959, Hall V.C. observed at 966 that invalidity should follow where the condition is “unquestionably against public morality”. In Blathwayt v Lord Cawley [1976] 1 A.C. 397 (H.L.), Lord Wilberforce reasoned at 427 that the case against the condition must be “concrete” and Lord Edmond-Davies similarly reasoned at 441 that invalidity follows only where a condition is “self-evidently against public policy”. 9 Blathwayt v Lord Cawley [1976] 1 A.C. 397 (H.L.) at 426 per Lord Wilbefforce. 10 Re Curran [1939] O.W.N. 191 (H.C.J.) (per Godfrey J.) Emphasis added. 11 Blathwayt v Lord Cawley [1976] 397 (H.L.) at 426. Emphasis added.

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state action pose no restriction on property rights.12 Property rights are consistently cast

as sacrosanct – something that should only rarely be restricted.13

But not all interests in trusts conditioned on grounds that might be considered

discriminatory have survived judicial scrutiny. Periodically, courts have used the

doctrine of public policy to strike conditions that restrain marriage on religious grounds

or that require a beneficiary to raise (or, as it were, not raise) a child according to a

particular religious tradition. Although these cases might initially appear to vindicate

anti-discrimination values drawn from public law, they ultimately do very little to restrain

property rights in the name of human rights. The cases do not actually preclude an

interest in a trust from being conditioned on the beneficiary marrying (or, as it were, not

marrying) a person adhering to a particular religion.14 All that is impermissible is for a

settlor to use the enticement of property to induce the termination of an existing

marriage.15 The reason is that the policy of the law is said to favour marital union. So if

a beneficiary is already married to (or about to marry) a person of a particular faith, it is

against public policy for a settlor to either delay vesting until this is no longer the case or

to divest the beneficiary if this still remains the case by a future date.16

12 See, for example, Blathwayt v Lord Cawley [1976] 397 (H.L.) where Lord Cross reasons at 429 that “it is widely thought nowadays that it is wrong for a government to treat some of its citizens less favourably than others because of differences in their religious beliefs; but it does not follow from that that it is against public policy for an adherent of one religion to distinguish in disposing of his property between adherents of his faith and those of another.” Similarly, in In re Estate of Max Feinberg (2009) 235 Ill. 2d 256 Garman J. observed at 284 that “[b]ecause a testator or the settlor of a trust is not a state actor, there are no constitutional dimensions to his choice of beneficiaries.” 13 This is certainly implicit in all of the cases upholding restrictive conditions. It is sometimes expressly identified as the reason for judgment. See, for example, Blathwayt v Lord Cawley [1976] 1 A.C. 397 (H.L.) at 425, 427, 441 and 443, University of Victoria v. British Columbia (A.G.) [2000] B.C.J. No. 520 at para 17 and In re Estate of Max Feinberg (2009) 235 Ill. 2d 256 at 266. 14 See the marriage cases above in supra, note 6. For an overt statement that religious restraints on marriage are valid, see Trustee of Church Property of the Diocese of Newcastle v. Ebbeck (1960) 104 CLR 394 at para 5 (per Windeyer J.) 15 See Trustee of Church Property of the Diocese of Newcastle v. Ebbeck (1960) 104 CLR 394, Re Hurshman, Mindlin v. Hurshman (1957) 6 D.L.R. (2d) 615, and In re Estate of Max Feinberg (2009) 235 Ill. 2d 256 at 266. 16 It was key in both Ebbeck and Hurshman that the testator was aware at the time of drafting the restraint on marriage that the beneficiaries would be in breach due to existing marriage relationships and/or a marriage that was about to happen. See Ebbeck at paras 1 and 6 (per Dixon CJ) and para 5 (per Windeyer J) and Hurshman at p. 617 (per McInnes J.)

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But even here it seems that the condition is invalid only if it is capable of interfering with

an existing relationship, which turns on factors that have nothing to do with anti-

discrimination norms.17 If a beneficiary is single, there is no existing marriage being

interfered with. In this context, a condition restraining marriage on religious grounds will

be enforceable as either a condition precedent or a condition of forfeiture.18 If the cases

were truly about enforcing anti-discrimination norms in property law, it would not matter

whether an existing or a future marriage was being targeted.

A similar point applies in relation to conditions requiring beneficiaries to provide (or not

to provide) certain religious instructions to minor children. The basis for striking such

conditions is not that they are discriminatory but rather that it is against public policy to

interfere in a parental-child relationship.19 Again, if the cases were really about equality,

the controlling issue would be the religious distinction not the context in which it was

being drawn.20

Uncertainty is another basis on which courts have frequently struck conditions. Some

authors speculate that the certainty requirement is used by courts as a veiled way of

striking conditions due in reality to their discriminatory character.21 While it seems

17 If A, who is already married to B, a Protestant, can vest only if A first satisfies the condition precedent of not being married to a Protestant, then it matters when this condition must be satisfied. If the condition must be satisfied as of the date of settlement, the condition would appear to be valid even though it penalizes participation in an existing marriage. The reason is that the trust instrument does not afford the beneficiary a vesting period within which to comply with the condition (as would be the case if the condition could be satisfied anytime between the date of settlement and the termination of a prior life interest) and thus does not provide an inducement to divorce or separate. See, for example, In re Estate of Max Feinberg 235 Ill. 2d 256 at 280. 18 Such a condition is valid because it “involves the decision to marry, not an incentive to divorce.” See In re Estate of Max Feinberg 235 Ill. 2d 256 at 274 19 See, for example, In re Tegg [1936] 2 All E.R. 878. 20 Contrast cases such as In re Tegg (where the beneficiary is the parent and the condition requires the parent to provide a certain kind of religious instruction to a child) with cases where the beneficiary is the minor and the condition requires the minor to meet a religious adherence requirement. Courts have struck the former but upheld the latter, though the minor must be given until a reasonable time after attaining majority to meet the religious condition (see Blathwayt v Lord Cawley [1976] 1 A.C. 397 (H.L.) and In re May [1917] 2 Ch. 126). If equality were the controlling factor no distinction would be recognized between the two contexts. 21 See, for example, H.R. Hahlo, “Jewish Faith and Race Clauses in Wills” (1950) 67 South African Law Journal 231 at pp. 241-242, M. Harding, “Testamentary Freedom to Discriminate: The Case Against” Unpublished Conference Paper at p. 4 and S. Gardner, An Introduction to the Law of Trusts (2nd ed., Clarendon, Oxford, 2003) at p. 47 f.n. 58.

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plausible that equality concerns may have played a role in these cases, it would be a

mistake to view them as going very far to surreptitiously channel public policy based

concerns over discrimination into property law. At least one reason for this is that

religious conditions, especially those crafted in terms of a beneficiary’s “degree of

adherence”, could readily be said to be uncertain.

Also, certain aspects of the cases seem inconsistent with the theory that courts are

ultimately concerned here with combating discrimination. Some religions have

apparently been treated more harshly than others.22 Conditions subsequent have been

held to a higher standard of certainty than conditions precedent, even though both kinds

of conditions can be put to discriminatory use. These are not distinctions that one would

expect to find in a body of cases driven by a concealed pursuit of equality. Most

important, however, is that the certainty requirement ultimately does nothing to prohibit

discrimination – it merely requires property holders to be unambiguous when

discriminating.23

Now some cases have indeed restricted property rights on the express ground of the

public policy against discrimination. But even these cases do not go so far as to support

the general conclusion that discriminatory exercises of property rights are per se against

public policy. In Re Drummond Wren, a restrictive covenant prohibiting the sale of land

to “Jews or persons of objectionable nationality” was famously found to be against public

policy.24 While anti-discrimination values were an important consideration identified by

the court, there are limits as to how far the case goes in establishing that property rights

should be restrained where they conflict with human rights. Apart from the public policy

22 While Jewish conditions have been struck for uncertainty, Catholic conditions have been repeatedly upheld. See, for example, H.R. Hahlo, “Jewish Faith and Race Clauses in Wills” (1950) 67 South African Law Journal 231. 23 In Re Hurshman,Mindlin v. Hurshman (1957) 6 DLR (2d) 615, McInnes J. held at p. 619 that “while it may be open to a testator to lay down the conditions upon which his children may or may not share in his bounty, yet insofar as those conditions involve racial discrimination, his language must be precise and explicit and clearly within the law if he expects the Courts to assist in the fulfilment of his aims.” (emphasis added). 24 [1945] 4 D.L.R. 674.

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rationale, there was also an independent property law rationale identified by the court for

striking the covenant.25

Interestingly, when the Supreme Court considered a similar covenant a few years later in

Re Noble and Wolf,26 it struck the covenant solely on the basis of property law

considerations, casting doubt on the precedential value of the public policy finding in Re

Drummond Wren. Also, discriminatory restrictive covenants raise unique concerns that

do not necessarily arise in other contexts where property rights are exercised

discriminatorily. A discriminatory restrictive covenant undermines something essential

to private property – a marketplace within which each person is presupposed to have an

equal capacity and equal permission to acquire property regardless of individual features,

purposes, interests or needs. So a discriminatory restrictive covenant not only restrains

alienation, it does so in a way that is inconsistent with the normative conception of the

person assumed in property law. This is not necessarily true of a discriminatory

condition in a private trust. What is at stake here is access to benefaction, something that

the beneficiary could be entirely deprived of for any reason without violating any rule or

principle of property law.

The leading decision dealing with discriminatory conditions in trusts is Canada Trust Co.

v. Ontario Human Rights Commission.27 The Ontario Court of Appeal concluded that

discriminatory provisions of a scholarship fund were void on the ground that they were

against public policy. The case is discussed in greater details below. The point to

emphasize here is that, since the case dealt with a charitable trust, its reasoning does not

necessarily apply outside of the charitable context. While it is important to avoid

overstating the public nature of charitable trusts, it is uncontroversial to assert that the

public aspect of charitable trusts is more pronounced relative to private trusts and other

25 The covenant was uncertain and restrained alienation. 26 [1951] SCR 64. 27 (1990) 69 D.L.R. (4th) 321 (Ont. C.A.) [Canada Trust Co.]. For very helpful analyses, see B. Ziff, Unforeseen Legacies: Reuben Wells Leonard and the Leonard Foundation Trust (Toronto: University of Toronto Press, 2000), J. Phillips, “Anti-Discrimination, Freedom of Property Disposition, and the Public Policy of Charitable Educational Trusts: A Comment on Re Canada Trust Company and Ontario Human Rights Commission” (1990) 9:3 Philanthropist 3 and J.C. Shepherd, “When the Common Law Fails” (1988-1989) 9 E. & T.J. 117.

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modes of private wealth succession. Charitable trusts must after all meet a public benefit

test in recognition for which they receive extensive state support unavailable to other

trusts. This furnishes courts with a basis for a more robust application of the doctrine of

public policy to charitable trusts. The court in Canada Trust Co. certainly seems to have

seen the matter this way as all judges on the panel seem to have viewed the charitable

nature of the trust as an important, if not decisive, factor. The concurring judgment of

Tarnopolsky J.A. explicitly stated that the decision is restricted to charitable trusts.28

While the majority judgment of Robins J.A. was less explicit on this point, emphasis was

nevertheless placed on the fact that, though the fund “may have been privately created”, it

had a “public or, at the least, a quasi-public character” owing to its status as a charitable

trust.29 Elsewhere Robins J.A. reasoned that a “settlor’s freedom to dispose of property

through the creation of a charitable trust…must give way to current principles of public

policy”.30

Shortly after Canada Trust Co was decided, the court in Murley Estate v Murley struck a

religiously restrictive condition in a private trust on the ground of public policy. Riche J.

cited no authority or principle to explain the finding. Nor was any effort made to

distinguish the innumerable authorities (including binding decisions from higher courts)

that have arrived at the opposite conclusion. The decision is noteworthy for its finding

but of little assistance to the legal analyst.31

The doctrine of public policy was next used by the Ontario Court of Appeal in Fox v. Fox

Estate to set aside a trustee’s exercise of a power of ecroachment motivated by her desire

to punish the remainder beneficiary for marrying a person not of the Jewish faith.32 The

28 Para 100. 29 Ibid. at para. 33. 30 Para 38 (emphasis added). 31 The sole comment on the issue of public policy was the following: “I am satisfied that such a provision which restricts the religious affiliation of any person is, in Canada, contrary to public policy.” (per Riche J at para 6). By not providing reasons in support of this conclusion, Riche J. only served to lend credence to concerns that have been repeatedly expressed that the doctrine of public policy is unconstrained, leaving courts with too broad a discretion to set aside transactions. 32 [1996] O.J. No. 375 (Ont. C.A.). The judges were divided as to whether there was the sole motive. Justice Galligan concluded that punishing the remainder beneficiary for his choice of marriage partner was

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trustee exercised the power of encroachment to distribute all capital of the trust to the

objects of the power thereby ensuring that there was no remainder to vest in the

possession of the remainder beneficiary. One of the judges, Galligan J.A. expressly

found that “[i]t is now settled that it is against public policy to discriminate on grounds of

race or religion.”33 The other judges on the panel, Justices McKinlay and Catzman,

agreed that religious bias was an improper basis for exercising trustee discretion.34

Galligan J.A. explicitly reasoned that, “[i]f a settlor cannot dispose of property in a

fashion which discriminates upon racial or religious grounds, it seems to me to follow

that public policy prohibits a trustee from exercising her discretion for racial or religious

reasons.”35 The implication is that express authorization by the trust instrument to

discriminate will not immunize discriminatory trustee conduct because such authorization

is itself against public policy.

Upon reflection, however, it is not clear that Fox Estate supports the general conclusion

that discriminatory conditions in trusts are per se against public policy. The only

authority cited by Justice Galligan in support of the proposition that it is against public

policy for testators to discriminate was Canada Trust Co. Justice Galligan did not

acknowledge that Canada Trust Co. dealt with a charitable trust even though this was a

controlling factor in that decision. Further, Justice Galligan’s comment that testator’s are

unable to “dispose of property in a fashion which discriminates” is obiter and was not

adopted by either Justice McKinlay or Justice Catzman.

All three judges in Fox Estate instead made a point of situating the impugned transactions

within a broader context of dereliction of duty. The ultimate problem in Fox Estate was

not discrimination per se but the fact that the trustee acted outside of the scope and

intended purpose of the power of encroachment.36 The trustee’s use of the power of

appointment to manifest her personal disapproval of the remainder beneficiary’s marriage

the sole motive (para 7) but Justice McKinlay and Justice Catzman recognized other potential motivating considerations (paras 23 and 60). 33 Para 16. 34 See paras 16, 17, 40 and 43. 35 Para 17. 36 See paras. 13, 15, 45-48, 34,49 and 51.

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was but one example of a broader pattern of conduct demonstrating that she was ignoring

the terms of the trust, essentially treating the trust property as though it were her own. In

addition, the power of encroachment was not broad enough to authorize the trustee to

wind up the trust. Moreover, the purpose of the power of encroachment was not to

punish the remainder beneficiary but rather to benefit the objects of the power. In short,

the trustee in Fox Estate had committed several breaches of trust and it is this broader

pattern of conduct that ultimately explains the outcome in Fox Estate. The outcome

would likely have been the same had the trustee’s motive been to punish the remainder

beneficiary for a non-discriminatory reason.

In summary, discriminatory exercises of property rights have only rarely been curtailed

on the basis of the doctrine of public policy. The orthodox approach has been to favour

traditional property rights over equality. Discriminatory exercises of property rights

have from time to time been set aside but hardly ever on the express basis of a public

policy against discrimination. More typically, the cases interfering with property rights

have drawn on considerations, e.g., the need for certainty in property transactions, that

ultimately do very little to preclude property rights from being exercised discriminatorily.

A limited number of property cases have expressly relied on the public policy against

discrimination to strike discriminatory exercises of property rights but they do not go so

far as to establish a general rule that all discriminatory exercises of property rights are

against public policy. So if there is a basis for ruling against discriminatory charitable

trusts, it is not to be found in property law generally. We must look to the unique

considerations raised by charitable trusts.

II – Public Law and the Definition of Charity:

If there is no general property law impediment to the settlement of a discriminatory

charitable trust, the question is whether there is anything unique about “charitable” trusts

to suggest that the boundaries of charity should necessarily be constrained by public law

anti-discrimination norms. The U.S. literature has focussed extensively on whether

charities are “state actors” or whether the subsidization of charities through tax

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expenditures is state action subject to constitutional scrutiny. These issues have not

figured prominently in Canadian law. The Supreme Court of Canada has resolved that

charities will generally not be considered governmental for purposes of constitutional law

unless they are controlled by government or appointed by government to implement a

specific government program or policy. This test is rarely made out and is thus not a

controlling consideration for my analysis.

Similarly, when constitutional claims involving charities have arisen in the past, e.g., the

constitutional proprietary of mandatory retirement at universities, the Supreme Court of

Canada has not treated the direct funding of charities by government as a discrete form of

state action subject to constitutional scrutiny. In other words, if a charity undertakes a

discriminatory action the state is not automatically implicated in the discrimination by

virtue of directly funding the charity. So even accepting that tax expenditures and direct

expenditures are not only economic equivalents but also constitutional equivalents (a key

point of debate in the U.S. literature), it would not appear to follow under Canadian law

that subsidizing charities through tax expenditures is sufficient to invoke constitutional

scrutiny. I do not therefore consider the tax expenditure issue below but rather focus on

the nature of charity as a juridical construct.

When the issue of discrimination and charities initially came before courts,

discriminatory provisions (in some but not all cases) were removed without consideration

being expressly given to whether discrimination and charitable status are incompatible.

Eventually, courts came to acknowledge that the two are sometimes incompatible. These

cases reasoned that the legal privileges that exist for charities, including the tax

concessions, are evidence of the public nature of charitable trusts relative to private trusts

and other private modes of wealth succession. By emphasizing the public aspect of legal

charity, this approach provides a convenient way to allow constitutional values to inform

the definition of legal charity all while avoiding the thorny issue of whether tax and direct

expenditures are constitutionally equivalent. Specifically, emphasizing the public aspect

of legal charity provides courts with a basis on which to readily conclude that the

definition of charity must conform with established public policy against discrimination.

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Constitutional considerations discretely find their way into the analysis inasmuch as the

constitution is deferred to as a determinant of the public policy against discrimination.

The issue taken up in this part of the Article is the extent to which constitutional

pronouncements should constrain the definition of charity via the public policy doctrine.

Is everything that is discriminatory for purposes of constitutional law necessarily against

public policy and thus non-charitable?

(a) Early Authorities:

It was only somewhat recently that charity courts began to squarely address the potential

disharmony between discrimination and charitable status. Prior to Canada Trust Co v.

Ontario Human Rights Commission (discussed below), no case in Anglo-Canadian

jurisprudence had ruled against a discriminatory charitable trust on the express ground

that it violated public policy. In fact, several American authorities upheld overtly

discriminatory charitable trusts on the theory that such trusts (at least when the trustees

are not public officials) are essentially private arrangements, unaffected by public law

equality norms.37

This does not, however, mean that prior to Canada Trust Co there was no evidence of a

judicial discomfort with discriminatory charitable trusts. As public attitudes over human

rights began to change in the post-war era, the judicial response to blatantly

discriminatory charitable trusts began to change too. But rather than expressly reason

that discrimination was incompatible with charitable status, courts instead employed what

may be described as less overt ways of dealing with the problem of discriminatory

charities.38 The approach of the early cases was to reason that discriminatory clauses

rendered charitable trusts impracticable or impossible to administer. This conclusion

37 For a discussion and critique of the U.S. jurisprudence, see J. Colliton, “Race and Sex Discrimination in Charitable Trusts” (2002-2003) 12 Cornell J.L. & Pub. Pol’y 275. 38 The insinuation that judges sometimes mask the true reasons for judgment will prove controversial to some. I agree that reasons for judgment need to be taken seriously as reasons. There are, however, those cases where the proffered reasons seem inadequate, leaving the analyst left to wonder whether the true reasons for judgment remain unarticulated somewhere in the subtext of the case.

15


allowed courts to excise discriminatory provisions from charitable trusts using the

doctrine of cy-prés.39

The leading cases are Re Lysaght40 and Re Dominion Students Trust.41 In Re Lysaght, a

testatrix established a testamentary scholarship fund that restricted eligible scholarship

candidates to male medical students “not of Jewish or Roman Catholic faith”. The Royal

College of Surgeons, the named trustee of the fund, refused to administer the fund due to

the religious restriction. No objection was made over the gender restriction.

Notwithstanding the well-established principle that no trust can fail for want of a trustee,

the court characterized the College’s refusal as an “impossibility”. The court then used

its cy-prés jurisdiction to remove the religious condition.42

Similarly, in Re Dominion Students Trust, the court considered a charitable trust to

provide a student hostel for male students “of European origin”. The trustees sought a

cy-prés order to remove the ethnic restriction (though, again, not the gender restriction).

The court concluded that the ethnic restriction made the purpose of the fund, promoting

community of citizenship, impracticable and thus used its cy-prés jurisdiction to remove

the ethnic requirement.

While there is something to be said in support of the outcomes, the reasoning of Re

Lysaght and Re Dominion Students Trust is strained.43 It is likely that unspoken equality

39 When the terms of a charitable trust become impossible or impracticable to carry out, the doctrine of cy-prés allows courts to modify the terms to remedy the impossibility or impracticability. The trusts are left “as near as possible” to their original design. 40 [1966] Ch. 191. 41 [1947] 1 Ch. 183. 42 The Court expressly rejected the argument that the impugned provisions of the trust were contrary to public policy. Buckley J. acknowledged that the exclusion of Jews and Roman Catholics was “undesirable” and “unamiable” but not against public policy. Re Lysaght [1966] Ch. 191.at 206. 43 J. Phillips describes the reasoning of Re Lysaght as “fiction” and concludes that the outcome in Re Dominion Students Trust reflected the judge’s “dislike of the condition”. See J. Phillips, Anti-Discrimination, supra, note 27 at 19-20. B. Ziff concludes that the “court employed this reasoning to as a convenient means to eliminate the discriminatory provisions without departing radically from the basic law governing charitable trusts.” See B. Ziff, Unforeseen Legacies: Reuben Wells Leonard and the Leonard Foundation Trust (Toronto: University of Toronto Press, 2000) at 117. For a similar criticism of the U.S. cases using the doctrine of cy-prés to remedy discriminatory charitable trusts, see J. Colliton, “Race and Sex Discrimination In Charitable Trusts” (2002-2003) 12 Cornell J.L. & Pub. Pol’y 275 at 284. Colliton

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concerns played a decisive role in both cases.44 The use of the cy-prés jurisdiction in

these cases arguably contradicts the general principle that cy-prés is not to be used merely

to enhance the public benefit of a charitable trust.45 Also, it is arguable that the

discriminatory provisions under review did not render either trust impossible or

impracticable to carry out, at least not in the strict sense that those terms are normally

understood in the cy-prés jurisprudence. The doctrine of cy-prés is usually restricted to

events that outright halt the administration of the trust (e.g., the inability to find persons

within the described class of beneficiaries) or pose serious difficulties to the

administration of the trust (e.g., funds grossly inadequate to achieve the charitable

purpose).46 In neither Re Lysaght nor Re Dominion Students Trust was this kind of

difficulty present. An alternative trustee could have been appointed in Re Lysaght. Also,

since the gender restriction was left in Re Dominion Students Trust, presumably so could

have the ethnic restriction without insurmountable difficulty. Given the artificiality of

the reasoning of these cases, one is left with the impression that the ultimate reasons for

judgement, concerns over equality, lie dormant in the subtext of these judgments.

Cases such as Re Lysaght and Re Dominion Students Trust therefore provide little insight

as to how courts today should deal with discriminatory charitable trust provisions. These

cases studiously avoid directly taking up the issue of when and why discrimination is

incompatible with charitable status. This is perhaps because they were decided before

anti-discrimination norms became firmly established in law and public policy. Given the

ascendancy of human rights in the modern era, this furtive approach to the problem will

no longer suffice. At this point in time, courts can and must squarely address how anti-

discrimination norms impact the definition of charity.

observes that racially discriminatory provisions would be “embarrassing and inconvenient” but “would not be impossible or impractical”. 44 For comments on these cases, see J. Phillips, “Anti-Discrimination”, supra, note 27, F.H. Newark, “Trustee Who Dislike the Terms of the Trust” (1966) 17 Northern Ireland Legal Quarterly 123 and P. Lamek, “Case Comment” (1966) 4 Osgoode Hall Law School Journal 113. 45 See D. Waters, M. Gillen and L. Smith, Waters’ Law of Trusts in Canada, 3d ed. (Toronto, Thomson Carswell, 2005), p. 777. 46 Ibid at pp. 773-780.

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(b) The More Recent Authorities:

The leading U.S. decision dealing with the public policy against discrimination is Bob

Jones University v. United States.47 In 1970, after a court issued an injunction

prohibiting the Internal Revenue Service (“IRS”) from awarding tax-exempt status to

racially discriminatory schools,48 the IRS released a revenue ruling indicating that such

schools could no longer qualify as charities under U.S. tax law.49 Further to this revenue

ruling, the IRS concluded that two religious schools (Bob Jones University and

Goldsboro Christian Schools) could not qualify as educational charities under federal

income tax law on the ground that they were discriminatory. These schools engaged in

racially discriminatory practices further to religious beliefs against interracial dating and

marriage.50 The matter wound up before the U.S. Supreme Court, which agreed that

neither of these educational institutions could qualify as charities for tax purposes.

Writing for the majority, Justice Burger adopted what is essentially a tax expenditure

based view of the tax treatment of charities. He observed that “[w]hen the Government

grants exemptions or allows deductions all taxpayers are affected; the very fact of the

exemption or deduction for the donor means that other taxpayers can be said to be

indirect and vicarious ‘donors’.”51 He did not, however, conclude that the government is

constitutionally prohibited from subsidizing discriminatory charities through tax

concessions. Instead, Justice Burger reasoned that, given the income tax privileges of

charitable status, charities “must serve a public purpose and not be contrary to established

public policy.”52

47 Bob Jones University v. United States, 461 U.S. 574 (1983). 48 See Green v. Kennedy, 309 F. Supp. 1127 (D.D.C.). 49 Rev. rul. 71-447, 1971-2 CB 230. 50 The Goldsboro Christian Schools enforced a racially discriminatory admissions policy. Bob Jones University initially declined to admit any African American students. This policy was changed in the 1970s, when the university began to admit African Americans, but it nonetheless maintained a disciplinary rule that made interracial dating and marriage grounds for expulsion. 51 Supra note 47 at 591. 52 Ibid. at 586.

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While emphasizing that the public policy doctrine should be applied “only where there

can be no doubt that the activity involved is contrary to a fundamental public policy”,53

he concluded that this test was met, since there was “no doubt” that a public policy

against racial discrimination existed.54 There are, he observed, “few social or political

issues” that have “been more vigorously debated and more extensively ventilated than the

issue of racial discrimination.”55 He cited as evidence of this public policy constitutional

equal protection jurisprudence, civil rights legislation and Executive Orders. Since the

Goldsboro Christian Schools and Bob Jones University discriminated on the basis of

race, it was clear that they contravened an established public policy against

discrimination. Neither the sincerity with which the underlying religious beliefs were

held, nor the fact that education is itself a qualifying purpose made any difference.

The leading Canadian decision, Canada Trust Co. v. Ontario Human Rights

Commission,56 is a trust case rather than a tax case. Canada Trust Co. dealt with a

scholarship fund (the “Leonard Fund”) established in 1923 by the late Colonel Reuben

Wells Leonard. The recitals in the trust deed set out the views of Colonel Leonard on

race, religion and citizenship. They state his belief that “the White Race is, as a whole,

best qualified by nature to be entrusted with the development of civilization and the

general progress of the World”, that the “progress of the World depends in the future, as

in the past, on the maintenance of the Christian religion” and that “the advancement of

civilization depends very greatly upon the independence, the stability and prosperity of

the British Empire”.57 The terms of the fund provided that a student could qualify for a

scholarship only if he or she was a “British subject of the White Race and of the Christian

Religion in its Protestant form” and only if “without financial assistance” he or she

53 Ibid. at 592. 54 Ibid. at 588. 55 Ibid. at 596. 56 (1990) 69 D.L.R. (4th) 321 (Ont. C.A.) [Canada Trust Co.]. For very helpful analyses, see B. Ziff, Unforeseen Legacies: Reuben Wells Leonard and the Leonard Foundation Trust (Toronto: University of Toronto Press, 2000), J. Phillips, “Anti-Discrimination, Freedom of Property Disposition, and the Public Policy of Charitable Educational Trusts: A Comment on Re Canada Trust Company and Ontario Human Rights Commission” (1990) 9:3 Philanthropist 3 and J.C. Shepherd, “When the Common Law Fails” (1988-1989) 9 E. & T.J. 117. 57 Canada Trust Co., ibid. at para. 12.

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“would be unable to pursue a course of study”.58 No more than one quarter of the

scholarship moneys awarded in any given year could be given to women.59 The racial

and religious restrictions also limited who could participate in the management and

administration of the fund.60

The Leonard Fund operated for many years without complaint. In fact, after his death,

Colonel Leonard was heralded as “one of Canada’s finest citizens.”61 The eligibility

criteria, however, eventually raised concerns as views about discrimination began to

change. Concerns were raised as early as 1956 when the then leader of the Co-operative

Commonwealth Federation, Donald MacDonald, called for the Ontario government to

investigate the trust’s discriminatory terms.62 No action was taken at the time, but the

concerns over the fund continued to be raised by students, parents, academics and the

media over the next several decades.63 Eventually, several universities (beginning with

Queen’s University) declined to participate in the administration of the Leonard

scholarships.64 The controversy culminated in 1986 when the Ontario Human Rights

Commission filed a formal complaint against the Leonard Fund alleging that it violated

the Human Rights Code.65 The trustee of the Leonard Fund sought advice and direction

of the court “as to the essential validity” of the trust.66

The court of first instance upheld the validity of the trust. McKeown J. concluded that

the Human Rights Code was inapplicable and the trust was not contrary to public policy.

The decision was overturned by the Ontario Court of Appeal, which unanimously found

that the Leonard Fund’s provisions violated an established public policy against

discrimination. Writing for the majority, Robins J.A. emphasized that, though the fund

“may have been privately created”, it had a “public or, at the least, a quasi-public

58 Ibid. at para. 16. 59 Ibid. at para. 16. 60 Ibid. at para. 14. 61 Toronto Telegram (17 December 1930). Quoted in Shepherd, supra note 112 at 117. 62 Ziff, supra note 5 at 118. 63 Canada Trust Co., supra note 56 at para. 22. 64 See Ziff, supra note 5 at 120-21. 65 S.O. 1981, c. 53. 66 Canada Trust Co., supra note 56 at para. 28.

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character.”67 He cited as evidence of the public character of the trust the fact that it was a

charitable trust permitted by law to operate in perpetuity.68 Curiously, he made no

mention of the preferred tax treatment of charities. While he acknowledged that a trust

should be found to violate public policy “only in clear cases, in which the harm to the

public is substantially incontestable”, he had no difficulty in concluding that this test was

met.69 Little time was spent coming to the conclusion that there is a public policy against

discrimination, describing this finding as “obvious”.70 Robins J.A. referred (without

explanation) to the following indicia of this public policy: democratic principles,

constitutionally protected equality rights, the multicultural heritage of Canada and the

public criticism of the Leonard Fund.71 The doctrine of cy-prés was then applied to

remove the eligibility criteria based on race, gender, religion and nationality.

The concurring judgment of Tarnopolsky J.A. more fully addressed the relevance of the

public nature of charitable trusts and also the determinants of the public policy against

discrimination. Emphasizing that it is the “public nature of charitable trusts that attracts

the requirement that they conform to the public policy against discrimination”, he

discussed the privileged legal treatment of charities, specially mentioning the favourable

tax treatment of charities, as indicia of this public nature.72 As for identifying the content

of the public policy against discrimination, Tarnopolsky J.A. referred to the following

sources: human rights codes, the Charter (specifically, s. 15, s. 28 and s. 27), Charter

jurisprudence and international human rights instruments ratified by Canada. He did not,

however, illuminate how specifically these sources inform the public policy against

discrimination to which charities must conform. He did, though, observe in obiter that

scholarships exclusively for historically disadvantaged groups are not contrary to public

policy because they are consistent with affirmative action programs constitutionally

authorized by subs. 15(2) of the Charter.73

67 Ibid. at para. 33. 68 Ibid. at para. 33. 69 Ibid. at para. 34. 70 Ibid. at para. 37. 71 Ibid. at para. 37. 72 Ibid. at para. 100. 73 Ibid. at paras. 97-8.

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Canada Trust Co. cuts through the somewhat artificial reasoning of Re Lysaght and Re

Dominion Students Trust and, like the decision of the U.S. Supreme Court in Bob Jones

University, explicitly addresses the incompatibility of discrimination and charitable

status. When cast at this level of generality, the point hardly seems objectionable. Put

simply, trusts that promote invidious discrimination could hardly be described as

charitable. The more difficult question is not whether discriminatory institutions should

qualify as charities but rather what constitutes discrimination for purposes of charity law.

On this point, Canada Trust Co. raises more questions than it answers. Bruce Ziff, for

example, concludes that it is “not the light that it shines, that makes the case worthy of

study, but rather the complexity that it exposes”74 and that the case “forms only a starting

point of analysis.”75 Canada Trust Co. (like Bob Jones University) cited constitutional

equality jurisprudence as a source for the public policy against discrimination. However,

neither case resolved the extent to which constitutional equality jurisprudence constrains

the definition of charity through the doctrine of public policy. Is everything that is

discriminatory under s. 15 of the Charter discriminatory for purposes of charity law?

More recent decisions reflect something of a retreat from the high standard established by

Canada Trust Co. In Ramsden Estate76 and University of Victoria v. British Columbia

(A.G.),77 scholarship funds with religiously restrictive eligibility criteria were upheld. In

Kay v South Eastern Sydney Area Health Service,78 a fund for the treatment of white

babies was upheld as charitable. The court relied in part upon the somewhat surprising

ground that “the receipt of a fund to benefit white babies would just mean that more of

74 Ziff, supra note 5 at 161-2. 75 Ibid. at 166. See also Ontario Law Reform Commission Report on the Law of Charities (Toronto: Ontario Law Reform Commission, 1997) at 217 and Phillips, supra note 27 at 32. There is a parallel here to Retail, Wholesale and Department Store Union, Local 580 v. Dolphin Delivery, [1986] 2 S.C.R. 573 (S.C.C.). in which the Supreme Court concluded at para. 39 (per McIntyre J.) that courts should develop the common law “in a manner consistent with the fundamental values enshrined in the Constitution.” Just as Dolphin Delivery (surprisingly not cited in Canada Trust Co.) did not illuminate precisely how constitutional values should inform the development of the common law, Canada Trust Co. did not resolve what degree of conformity is required between constitutional equality jurisprudence and the legal definition of charity. For an analysis of Dolphin Delivery, see D. Friedmann & D. Barak-Erez, eds., Human Rights in Private Law (Portland: Hart Publishing, 2001). See also Hill v. Church of Scientology, [1995] 2 S.C.R. 1130. 76 [1996] P.E.I.J. No. 96 77 [2000] B.C.J. No. 520 78 [2003] NSWSC 292

22


the general funds of the hospital would be available to treat non-white babies so that, in

due course, despite the testatrix’s intention things will even up.”79 These cases imply

that not everything that is discriminatory for purposes of constitutional law should

necessarily be discriminatory for purposes of charity law. The issue then becomes one of

assigning content to the public policy against discrimination, which is what I turn to next.

(c) The Content of the Public Policy Against Discrimination

Having set out the history and purpose of the doctrine of public policy in charity law, the

intended function of subs. 149.1(6.21) of the Act now becomes more apparent. The

provision is meant to preclude the argument from being pursued that, since restricting

marriage to heterosexual relationships has been found to be discriminatory under s. 15 of

the Charter, it is discriminatory and thus against public policy for religious charities to

advance a traditional heterosexual theology of marriage. The recitals to the Civil

Marriage Act, the statute through which subs. 149.1(6.21) of the Act was enacted,

explicitly state that, though denying marriage to same-sex couples would “violate their

human dignity, in breach of the Canadian Charter of Rights and Freedoms”, it is

nevertheless “not against the public interest to hold and publicly express diverse views on

marriage”. The statute seems specifically designed to preclude a future court from

concluding that advancing any particular view of marriage violates an established public

policy. The insight behind the subs. 149.1(6.21) is that, even accepting that s. 15 equality

jurisprudence is one of the determinants of the public policy against discrimination

applied in charity law, there is no direct link between them.80

Why is it that s. 15 equality jurisprudence should not be automatically carried into charity

law through the channel of public policy? The obvious answer is that the Charter only

governs relations between the state and the citizenry. Inasmuch as charities are not state 79 Ibid. at para 19. 80 Human rights legislation also recognizes that the legal conception of discrimination normally enforced in law should not apply with the same strictness to charities. In particular, sections 18 and 24 of the Human Rights Code R.S.O. 1990, c. H. 19 allow charities to enforce membership and employment criteria that would ordinarily be considered discriminatory. These provisions do not, however, speak to what institutions should qualify as charities in the first place. See OLRC, supra note 75 at 213-214 for a discussion of this.

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actors (and they rarely are) and inasmuch as conferring tax and other legal advantages on

charities is not itself discrete state action subject to constitutional scrutiny (and Canadian

courts have not considered this to be constitutionally reviewable state action) then it is

not necessary for charity law courts to defer to constitutional principles when defining

charity.

Consistent with this view, it has been argued that charities should not be prohibited from

drawing distinctions between people simply because the state is constitutionally

prohibited from drawing those distinctions. For example, Professor Mayo Moran

observes that “the legitimacy of some preferences may depend on who is expressing

them.”81 Since a “charity is not simply an arm of the state”,82 we should not, she

contends, constitutionally evaluate preferences expressed in charitable trusts as though

they were preferences expressed by the state. Similarly, Professor David Brennen argues

that significantly relying upon constitutional equality jurisprudence to assign meaning to

the public policy against discrimination applied in charity law is “for theoretical

reasons…inappropriate”.83 He notes that the prevailing theory in support of tax

concessions for charities – subsidy theory – “espouses a separate-from-government role

for tax-exempt charities”.84 In particular, subsidy theory justifies tax concessions for

charities on the ground that charities provide beneficial “goods and services that

government either cannot or will not provide.”85 Given the stark delineation drawn by

subsidy theory between government and charities, he argues that it would be incoherent

to demand that the definition of charity applied for income tax purposes conform

perfectly with constitutional law jurisprudence that espouses restrictions on government

activity.

81 M. Moran, “Rethinking Public Benefit: The Definition of Charity in the Era of the Charter” in J. Phillips, B. Chapman and D. Stevens, eds., Between State and Market: Essays on Charities Law and Policy in Canada (Montreal: McGill-Queen’s University Press, 2001) at 259. 82 Ibid. at 258. However, she concludes elsewhere in the same paper that “any body that discriminates within the meaning of section 15 of the Charter should not be eligible [for charitable registration]; otherwise the government would effectively be supporting discrimination through the provision of tax benefits.” See ibid. at 255. 83 David Brennen, “Charities and the Constitution: Evaluating the Role of Constitutional Principles in Determining the Scope of Tax Law’s Public Policy Limitation for Charities” (2002) 5:9 Fla. Tax Rev. 779 at 844-5. 84 Ibid. at 847. 85 Ibid. at 845.

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Not everyone agrees with this. Some argue that this view unduly marginalizes

constitutional values. According to this line of argument, the Charter does not merely

limit state power but also plays an important role in elucidating and enforcing

fundamental values. In other words, the Charter does not arbitrarily limit state power.

Instead, the limitations on state power contained in the Charter reflect supreme principles

that are foundational to the polity as a whole. It is precisely for this reason, so the

argument goes, that the relevance of the Charter cannot be exclusively restricted to

limiting the actions of the state. Lorraine and Ernest Weinrib describe the point as

follows:86

The constitution serves a double function. On the one hand, it sets out the limits to which the idea of human dignity constrains government action. On the other hand, it provides a catalogue of values that can guide courts in the elaboration of the principles and standards that govern the private law relationships.

The Supreme Court of Canada has to some extent embraced this position. In Retail,

Wholesale and Department Store Union, Local 580 v. Dolphin Delivery,87 the court

established that, even though the Charter does not directly apply to the common law,

courts should attempt to develop the common law consistently with Charter values.

In my view, there are good reasons to be sceptical over just how far charity courts should

go in referencing the Charter when defining charity. The Dolphin Delivery principle is

often described as the indirect application model. Rather than directly apply the Charter,

courts indirectly apply it by allowing Charter values to influence common law

judgements. Perhaps not surprisingly, the distinction between the direct and indirect

application of the Charter has never been unambiguously illuminated. One might say that

the distinction is at some level false since either way common law is required to conform

with constitutional values. Thus “application” is the operative word in the phrase

“indirect application.” The concern here, which seems to have some merit, is that the

86 L. Weinrib & E. Weinrib, “Constitutional Values in Private Law in Canada” in D. Friedmann & D. Barak-Erez, eds., Human Rights in Private Law (Portland: Hart Publishing, 2001) 50-1. 87 [1986] 2 S.C.R. 573 (S.C.C.).

25


Charter could be made to apply to a realm of private activity where it was simply never

meant to apply.

More fundamental is the problem of trying to isolate just what exactly from the Charter

charity courts would be applying to the common law definition of charity. One might

point to the Charter’s equality provisions and posit that equality values should shape the

definition of charity. While this might provide a basis for concluding that it should not

be charitable to discriminate, it would leave open the vexing problem of identifying what

should constitute discrimination in the first place for purposes of charity law. It will

often be very difficult to distil from constitutional cases normative principles that can be

applied outside of the context of constitutional litigation involving state action. In other

words, constitutional equality jurisprudence does not speak to what is discriminatory per

se so much as it speaks to what is discriminatory state action. Once we remove state

action from the equation it is not at all obvious that the reasoning of constitutional cases

provide us with very much that can be applied in charity law.

The same-sex marriage jurisprudence illustrates perfectly the ambiguities of

constitutional equality jurisprudence, which is perhaps one of the very reasons why

subsection 149.1(6.21) was enacted. There are a few ways to read these cases. What

these cases essentially establish is that restricting marriage to heterosexual relationships

violates human dignity in a way that cannot be justified in a free and democratic

society.88 The reasoning of these cases clouds what precisely is the source of the affront

to human dignity. Is it the state’s adoption of the traditional view of marriage or the

traditional view itself? If the latter interpretation is adopted, then the traditional view of

marriage has become a stigmatized view under Canadian law. It is not difficult to see

how this interpretation could have spillover effects into other areas of law like charity

law. If the traditional view of marriage is a stigmatized view that stands in opposition to

constitutional values, then one might argue that a church’s theology of marriage is 88 For example, in Halpern v. Canada (Attorney General), [2003] O.J. No. 2268, the Ontario Court of Appeal held at para. 108 that “the dignity of persons in same-sex relationships is violated by the exclusion of same-sex couples from the institution of marriage” and that as a result the “common-law definition of marriage as ‘the voluntary union for life of one man and one women to the exclusion of all others’ violates s. 15(1) of the Charter.”

26


something the law should consider when determining whether the church will achieve a

public benefit.

However, this is not the only way to read these cases. Another view might be that all the

same-sex marriage cases establish is a limit on state power. That is, the cases simply

signify that, if the state is going to legally recognize marriage, then of the competing

views of marriage that vie for acceptance, the state must adopt the more inclusive view.

Adopting the traditional heterosexual view of marriage is discriminatory state action not

because the traditional view is a discriminatory view per se but instead because there

exists a tenable view of marriage that includes same-sex relationships that the state could

have but chose not to adopt. Equality simply requires that the state, if it is going to adopt

any view of marriage, must adopt the more inclusive view from among the tenable views.

The traditional view of marriage is therefore not a stigmatized view for all purposes of

Canadian law. It is simply not a view that the state is permitted to adopt in priority to a

competing and more inclusive view of marriage.

Further, how is a charity court supposed to balance the various values that find

expression in the Charter? Equality is a Charter value but so is freedom of religion. So

which value should prevail if a religious charity advances a theology or engages in a

practice that although legal contradicts a constitutional equality norm? Section 1 of the

Charter provides a normative framework for resolving these sorts of competing

considerations but it only applies to the analysis of state action. It is not at all clear how

charity courts would go about balancing the various (and sometimes competing) Charter

values.

Given these concerns, there is the risk that superficial references to Charter values in

charity cases could distort both the Charter values themselves and the meaning of charity.

There must be a way forward that candidly acknowledges the importance of equality

values without introducing these risks. To date, the issue remains unresolved in both

Canada and the U.S.

27


(d) Testing for Motive:

The Ontario Law Reform Commission (the “OLRC”) proposed a motive based test to

deal with discriminatory charitable trusts. Specifically, the OLRC concluded that a

charitable trust should either be declared void or modified if it contains “discriminatory

provisions that are motivated predominantly by antipathy or malevolence towards another

group identified by race, religion, or sex”.89 One problem with this approach is that

motive is usually considered irrelevant in charity law. Courts normally ask whether the

purposes described by the settlor of a trust are charitable. A virtuous motive can’t

transform a non-charitable purpose into a charitable one any more than an objectionable

motive can transform a charitable purpose into a non-charitable one.

More importantly, even if we accept that motive is relevant, we still need a referent for

the meaning of “discrimination” to identify discriminatory motives. The OLRC, for

example, concluded that trusts targeted at disadvantaged groups, though they draw racial

or other distinctions, should be permitted because the settlor’s motive is not to

discriminate but rather to “redress a disadvantage”.90 Of course, this conclusion follows

only if we accept a conception of discrimination that views affirmative action as

ameliorative rather than discriminatory. The same point applies to distinguishing

between discriminatory distinctions and what the OLRC calls “mere chauvinism or

favouritism”.91 A conception of discrimination is necessary to draw this distinction.

A motive based test is therefore incomplete because it doesn’t escape the necessity to

define what constitutes discrimination for purposes of charity law. Asking whether the

settlor’s motive was discriminatory is therefore ultimately not much different than asking

whether any given provision in the trust is discriminatory.

89 OLRC, supra note 75 at 217. 90 Ibid. at 218. 91 Ibid.

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(e) Testing for Discriminatory Impact:

Professor Mayo Moran has proposed an alternative doctrinal test for identifying

discriminatory distinctions in charity law. I agree with some of her observations, but, in

my view, her test draws too heavily on the test applied in s. 15 Charter analysis, making it

difficult for her to explain why some distinctions that would be discriminatory under s.

15 should not be discriminatory for purposes of charity law.

Moran essentially transplants the test applied under s. 15 of the Charter into charity law.

Citing Law Society of British Columba v. Andrews,92 she observes that a distinction will

be discriminatory if (1) it is drawn on grounds enumerated under s. 15 (or on analogous

grounds) and (2) it has a discriminatory impact (intentional or otherwise) by perpetuating

or exacerbating historical disadvantage.93 For Moran, the unique nature of charitable

trusts factors into this test only inasmuch as, in her view, it is relevant to the second issue,

whether a distinction has a “discriminatory impact”. Moran observes that:94

On the critical question of whether a distinction or restriction has a discriminatory impact, it is necessary to be attentive to just how the state is implicated in charitable trusts.

She goes on to reason that, though a given distinction may have a discriminatory impact

if drawn by the state, it might not have a discriminatory impact if drawn by a charity,

owing to the “complex public-private nature” of charitable trusts.95 As an example,

Moran observes that a charitable trust that draws distinctions on religious grounds, such

as a “scholarship in favour of Presbyterians at a teacher’s college”, will be “very unlikely

to exacerbate or perpetuate a historical disadvantage” even though we may “take a very

different view of religious restrictions designed and enforced by the state”.96 Moran cites

two reasons why the religious distinction in her example has no discriminatory impact.

First, she observes that “state support of individually selected distinctions on religious 92 [1989] 1 S.C.R. 143. 93 Moran, supra note 81 at 259. 94 Ibid. at 259. 95 Ibid. 96 Ibid. at 259-60.

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grounds will rarely be problematic because we conceive of religion as the proper domain

of individual choice.”97 Second, referring to the Charter’s guarantee in section 2 of

freedom of conscience and religion, she observes that the “state’s support of religions

through the mechanism of charitable registration can be seen as a means of enhancing the

individual’s ability to exercise his or her constitutional rights.”98

Even accepting that a scholarship for Presbyterians should not be struck on the ground

that it is discriminatory, the reasoning invoked by Moran in support of this conclusion

doesn’t necessarily follow. Moran’s reasoning could support the conclusion that an

invidious distinction in a private trust has no discriminatory impact because this kind of

trust attracts only minimal state involvement.99 This seems to ignore that a

discriminatory impact is simply the practical consequence that follows when a distinction

exacerbates or perpetuates disadvantage. Surely any trust, including a private trust, is

capable of having such an impact. We might nevertheless conclude that discriminatory

distinctions in some trusts, e.g., private trusts, should be allowed to stand. In fact, this is

precisely the conclusion drawn by Tarnopolsky J.A. in his dissenting judgment in

Canada Trust Co. However, such a conclusion could not follow from the premise that,

because the state is not implicated to any significant degree with private trusts, they are

incapable of having a discriminatory impact. It could only follow from the conclusion

that, in the context of private trusts, we place a higher premium on the ideals of private

property, e.g., testamentary freedom, than on equality.100 This point, which I think is

foundational to understanding the debate over the role Charter analysis should play in

private law generally, seems to get lost in Moran’s analysis.

Also, the factors cited by Moran in support of her conclusion that a scholarship for

Presbyterians has no discriminatory impact (i.e., religion is the proper domain of

individual choice and freedom of religion is a Charter value) do very little, if anything, to 97 Ibid. at 259. 98 Ibid. 99 While this is not a conclusion that she draws in the paper, it follows from the positive correlation that she seems to draw between state involvement and discriminatory impact. 100 This is what Jim Phillips means when he says that “whether or not public policy is invoked in a given case represents a value choice” and that “testamentary and contractual freedom” are “factors to be considered”. See Phillips, supra note 27 at 22.

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support this conclusion. Again, to say that a distinction has a discriminatory impact is

simply to say that that distinction results in the exacerbation or perpetuation of

disadvantage, that this is the practical outworking of the distinction. The fact that

freedom of religion is a constitutionally protect freedom and the fact that religion is the

domain of individual choice in no way precludes a religious distinction from having this

practical consequence. It would be more accurate to say that freedom of religion and

equality, precisely because they can conflict, need to be balanced against one another.

But this is not how Moran frames the matter.

These problems derive more than anything else from the fact that Moran draws too

heavily on the Andrews framework used in s. 15 Charter analysis. Under this framework,

a distinction is by definition discriminatory if it has a discriminatory impact. This

approach makes sense in traditional s. 15 analysis involving claims of discrimination

against the state. In this context, we need to know whether (1) the state has drawn a

distinction and (2) whether that distinction has a discriminatory impact. But once we

start to consider the relevance of the Charter to non-state actors and to the common law

concepts more generally, the relevant questions change. Since Moran adopts the

Andrews s. 15 framework, the only way that she can “save” potentially suspect

distinctions is to reason that they have no discriminatory impact. She discusses factors

that, while potentially relevant to whether a charitable trust provision should be struck on

the ground that it is against public policy, don’t actually speak to whether there is a

discriminatory impact. The analysis therefore feels somewhat forced.

There is also the problem that the test developed under s. 15 of the Charter presumably

reflects the fact that state action that is found discriminatory under s. 15 may still be

saved under s. 1. Since it is not clear how s. 1 analysis would apply to a non-state actor

or even whether it should apply,101 this provides yet another basis on which to caution

against relying too heavily on the s. 15 framework for purposes of identifying

discriminatory distinctions in charitable trusts.

101 For the argument that s. 1 analysis is inappropriate when Charter values are applied to common law concepts, see Weinrib & Weinrib, supra note 86 at 56.

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(f) Considerations as the Law Moves Forward:

As the law in this area develops, I think that there are two issues that warrant greater

emphasis than what is reflected in the current literature: (i) the substantial private

component of legal charity and (ii) the diversity among the four heads of charity.

(i) Is Charity Private or Public in Nature?

I questioned above the implication of Professor Moran’s argument that the hybrid public-

private nature of charitable trusts is somehow relevant to whether a distinction in a

charitable trust has a discriminatory impact. In my view, the controlling issue isn’t

whether a given distinction in a trust (any trust – charitable or otherwise) results in

discrimination so much as it is whether a distinction should be allowed to stand

notwithstanding that it may have a discriminatory impact. It is in relation to the latter

issue that I would agree with Moran that the character of a trust as public or private might

be relevant. For example, under current law, there is absent a clear basis on which to

invalidate discriminatory provisions in private family trusts. As I indicated above, this

isn’t because private trusts are incapable of having a discriminatory impact but instead

because a choice is consciously being made to prefer traditional property rights in this

context.

Lorraine Weinrib and Ernest Weinrib argue that invalidating a discriminatory clause in a

non-charitable trust would grant “Charter values an unwarranted preference over

testamentary freedom” because in this context “Charter values are peripheral.”102 In

contrast, they conclude that in the context of a charitable trust, the public aspect of the

trust means that freedom of testation “has no application inconsistent with Charter

values.”103 Similarly, in support of the holding in Canada Trust Co., Jim Phillips argues

that “the charitable trust is a substantially public institution” because of the “tax

102 Weinrib & Weinrib, supra note 86 at 68. 103 Ibid. at 68.

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advantages” and other “special privileges” conferred by the law on this kind of trust.104

As a result, in this context, the “private right of free testation requires considerable public

intervention” and must yield to the public policy against discrimination.105 Other authors

have reasoned similarly.106

In my view, there is a tendency for people to overstate the public aspect of legal charity.

If I am right, then we may want to think very carefully about reasoning from the premise

that charitable trusts are public to the conclusion that public law equality norms should be

channelled into charity law. I begin to develop this point below in relation to the indicia

of “publicness” often cited as evidence of the public nature of charitable trusts.

Public Benefit Test:

The public benefit test represents one of the most difficult aspects of the common law test

for charitable status. My colleague, Professor Gerald Fridman, once described the public

benefit jurisprudence as “capricious”, “arbitrary” and “sometimes impossible to

reconcile”.107 Confusion over what specifically “public benefit” means in charity law has

at times distorted thinking over “charity” as a legal concept and the potential relevance of

public law equality norms to the meaning of legal charity.

The public component of the public benefit test has contributed to the perception that

charitable trusts are public in nature. As such, so the reasoning goes, there is a much

greater role for public law equality values to play in relation to charitable trusts than, say,

104 Phillips, supra note 27 at 25. 105 Ibid. at 25-6. 106 For example, it has been observed that:

A charitable trust serves two masters – the property owner who created it and society which is its beneficiary. On the initial assumption that the interests of each coincide, the law guarantees the trust’s enforcement, perpetual existence and tax immunity.

See E. Clark, “Charitable Trusts, the Fourteenth Amendment and the Will of Stephen Girard” (1957) 66 Yale L. J. 979 at 979. 107 See G.H.L. Fridman, “Charities and Public Benefit” (1953) 31 The Canadian Bar Review 537 at 539.

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private family trusts.108 While there is an intuitive appeal to this reasoning, it is arguable

that the public benefit test applied in charity law is not a test of publicness per se. The

public component of the public benefit test is more accurately understood as a stranger

test. The law is not testing for publicness so much as it is filtering out trusts conferring

benefits on the basis of personal relationship. We could understand the public

requirement as ultimately representing an arm’s length requirement. Trusts providing

scholarships to named persons or to children of employees of a particular employer fail to

qualify as charitable not because they are not public but rather because the persons

benefitting are not strangers to the settlor. The issue we are concerned with is less “does

the public benefit?” but rather “on what basis is it determined who benefits?”. Charitable

trusts need merely benefit strangers, not the public per se.

We might go one step further and posit that charitable trusts are actually not even

properly conceived of as public purpose trusts. Orthodox trust law analysis divides

express trusts into two categories – trusts for beneficiaries and trusts for purposes. It is

arguable that this taxonomy is premised on a false dichotomy. In a sense, charitable

trusts do have beneficiaries. One of the differences is that the stranger requirement

implicit in the public benefit test requires that the beneficiaries of charitable trusts remain

more vaguely described than what the certainty of objects test normally requires. So

when we say that a trust has been established for charitable purposes what we really

mean, or so I am suggesting, is that a trust has been established for a class of

beneficiaries to be selected by the trustees using selection criteria too vague to pass the

certainty of objects test but not so vague as to frustrate the conclusion that the trust will in

some way advance one or more of the established categories of charity.

What does any of this have to do with channelling public law equality norms into charity

law via the doctrine of public policy? I am responding here to a line of reasoning that

appears to have found favour in the cases and literature. The reasoning goes like this:

since charitable trusts must meet a public benefit test, they are by definition public. Since

108 See Shepherd, supra note 27 at 129-30, Phillips, supra note 27 at 24-25 and Weinrib & Weinrib, supra, note 86 at 68. The Ontario Law Reform Commission observed that applying equality norms to charities on the ground that charities are public is not the most persuasive approach. See OLRC, supra note 75 at 217.

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charitable trusts are public, public law equality norms must play a role in delimiting the

boundaries of legal charity. My point is simply that this line of reasoning, while

intuitively appealing, misses something fundamental about the so-called public benefit

test. It might be more accurate to posit that charitable trusts may be understood as private

arrangements designed to pursue common goods (e.g., poverty relief, education, religion,

etc) by providing benefits consistent with these common goods (e.g., food, shelter,

scholarships, religious instruction, etc) to strangers. When the essence of the public

benefit test is framed this way, the relevance of public law equality norms becomes less

clear.

Legal Privileges Exclusive to Charities:

Charitable status is a legally privileged status.109 The only reason the law distinguishes

between charity and non-charity is to benefit charity. The income tax advantages of

charitable status arguably represent the most profound way in which the law advantages

charity. However, there are numerous other legal privileges that accompany charitable

status, including exemption from the Accumulations Act,110 a relaxed application of the

rule against remoteness of vesting,111 a complete exemption from the rule against

indestructible trust (i.e., perpetual charitable trusts are permitted), property tax relief (for

some but not all charities) and numerous other legal advantages.

The income tax advantages of charitable status have in particular been a prominent

consideration in analyses of the relevance of public law norms to the legal meaning of

charity. It is not difficult to see why. If benefiting charities through tax expenditures is

itself constitutionally reviewable state action, then these tax expenditures provide a

foothold for constitutional scrutiny. Interestingly, however, Canadian courts have not yet

treated tax expenditures as discrete constitutionally reviewable state action, even in cases

involving equality based arguments brought against charities (e.g., mandatory retirement

109 See A. Parachin, “Legal Privilege As a Defining Characteristic of Charity”, Canadian Business Law Journal (2009) Vol. 48, No. 1, 36. 110 R.S.O. 1990, c. A.5. 111 See A. Parachin, “Charities and the Rule Against Perpetuities” The Philanthropist Vol. 21 No. 3 256.

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against universities). The preferred income tax treatment of charities has instead been

identified as evidence of the public character of charity and by extension as a basis on

which to apply public law equality norms to the definition of charity.

Again, this reasoning does not obviously follow. The state also subsidizes individuals

and corporations through tax expenditures without thereby rendering them public. The

state subsidy for charities is admittedly more extensive than many other subsidies

delivered through the Act. However, since the state subsidizes charities only to the extent

of the foregone tax revenue in relation to donations and the non-taxation of charities

(assuming that the latter is even a tax expenditure), it remains the case that most of a

charity’s assets derive from private sources. For these (and other) reasons, Evelyn Brody

and John Tyler conclude that “foundations and other charities are not inherently public

bodies and their assets are not ‘public money’”.112

(ii) Diversity Among the Four Heads of Charity:

The literature dealing with the application of the public policy doctrine to charitable

trusts tends to cast legal charity as a monolith, ignoring potentially relevant differences

among the various heads of charity. It may be the case that trust provisions problematic

under one head of charity will be less so or not at all under another. For example,

charities organized for the advancement of religion will necessarily advance theologies

on a range of issues that often will not correspond with established public policy.

Churches often take positions on issues that the state could not for constitutional and

other reasons adopt as established state policy. This includes positions on a number of

theological issues over which the state must remain agnostic, e.g., the divinity of Christ,

but also controversial issues with immediate public policy implications, such as abortion,

sexuality and marriage. A proselytizing religion will even recruit converts on the premise

that it – and it alone – represents the true religion.113 Inasmuch as it is not against public

112 E. Brody & J. Tyler, “How Public is Private Philanthropy? Separating Reality from Myth” (June 2009) The Philanthropy Roundtable at 63. 113 This is why we have to keep in mind the context of Justice Robins’ observation in para. 37 of Canada Trust Co., supra note 56 that the claim that “any one religion is intrinsically better than any other is

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policy to advance religion, the doctrine of public policy should not be used to conclude

that it is not charitable for churches to advance theologies dealing with these sorts of

issues. This is inherent in the advancement of religion – it is “what churches do”.

In Gilmour v. Coats,114 the House of Lords addressed whether granting charitable status

to a religion implies that the state affirms each individual doctrine of the religion. Lord

Reid famously observed that a “religion can be regarded as beneficial without it being

necessary to assume that all its beliefs are true” and that the “law must accept the position

that it is right that different religions should each be supported irrespective of whether or

not all its beliefs are true.”115 Also, in the context of religious charities, a broader array

of Charter values arises, since (as Moran alludes to) freedom of religion is

constitutionally protected. This doesn’t mean that religious charities have a constitutional

right to charitable registration, but it does mean that constitutional analysis in this context

must take account of more than s. 15 equality pronouncements. Also, the constitutional

right against discrimination on the basis of religion could itself give rise to equality

concerns if the state were to grant charitable status to some denominations but not to

others based on their respective theologies on issues such as marriage.

We might, however, draw somewhat different conclusions when we are dealing with

charities organized not for the advancement of religion but for another charitable

purpose. Specifically, distinctions that may have intrinsic relevance to a fund for the

advancement of a particular religious dogma can become suspect in another context.

Compare a trust for the purpose of funding a religious seminar series teaching a

traditional denomination’s theology of marriage with a scholarship fund that restricts

eligible recipients to persons in heterosexual marriages. Though both funds share a

common concern for the “true” view of marriage, we might conclude that, though the

patently at variance with the democratic principles governing our pluralistic society”. The law of charity does not altogether support Justice Robins’ observation, since proselytizing religions qualify for charitable status under the advancement of religion. However, the fund in Canada Trust Co. was an educational trust in relation to which different considerations may apply. 114 [1949] A.C. 426. 115 Ibid. at 459. Curiously, however, the House of Lords proceeded to deny charitable status to a priory in which nuns continuously prayed for the outside world on the ground that it could not find public benefit in intercessory prayer.

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first fund is charitable for the advancement of religion, the latter is discriminatory and

thus contrary to public policy. The reason for the different treatment is that, while a

theology of marriage is intrinsically related to advancing religious belief, it has no such

relevance to a scholarship fund. In this context, an exclusionary criterion of this nature is

presumptively discriminatory. The same point applies to the admissions criteria applied

by a private school. Distinctions that might inhere in the advancement of religion may

become suspect if they manifest in admissions criteria.

I am not suggesting that taking into account the differences between the various heads of

charity will resolve all of or even very many of the problems associated with applying

Charter values in charity law. Some might even argue that this approach is flawed,

noting that religious charities shouldn’t have a license to discriminate under the guise of

advancing religion and noting also that, even though there are four heads of charity, there

is only one public policy against discrimination. I do, however, think that there are some

insights to be had from keeping in mind the importance of context. At the very least, this

sheds some light on subs. 149.1(6.21) of the Act. Inasmuch as this provision applies only

in relation to charities organized for the advancement of religion, it codifies the idea that

it is relevant to keep in mind the head of charity under review when determining which

distinctions are discriminatory and thus contrary to public policy.

IV. CONCLUSION

Discriminatory exclusionary criteria in charitable trusts are unlikely to be struck on the

ground that such criteria represent an invalid exercise of property rights. Courts have

generally given property holders wide latitude to condition donative transfers through

trusts. So if discriminatory conditions in charitable trusts are unenforceable it is

presumably not owing to a property law based rule against such restrictions but rather to

some perceived discordance between discrimination and the legal understanding of

“charity”. What specifically is the source of the discordance and how do we determine

what constitutes discrimination for purposes of charity law?

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39

Jurists have turned to public law anti-discrimination norms to understand what is

discriminatory for purposes of charity law. They have tended to do so on the express

basis that charitable trusts are public in nature. I have identified reasons to be cautious

about this line of reasoning. Charities are in many ways more private than what often

seems to be thought. The perspective that charities are categorically public in nature

arguably misunderstands the public benefit test applied in charity law and overstates the

significance of the state subsidization of charities through tax concessions.

One of the other points to consider is that, even if conferring charitable status is not itself

constitutionally reviewable state action and even if charities are less public than is often

thought, a grant of charitable status represents the imprimatur of the state. This raises the

issue of whether the state should be seen as endorsing trusts with divisive provisions.

This is a real concern that needs to be taken seriously, but, again, it is not clear how far

this takes us. Courts have established that controversy is not a bar to charitable status.116

The fact that some segments of society find objectionable or offensive the objects of a

particular institution is therefore not in and of itself a basis for withholding charitable

status.

What makes the issue of discriminatory charity so difficult is that it lays bare all the

ambiguities surrounding the meaning of charity and compounds them with the difficulties

surrounding what is and what is not discriminatory. As the law moves forward I would

caution against any dogmatic approach that views charities as necessarily public in

nature, assumes that public law equality norms have immediate relevance to the

definition of charity and that approaches legal charity as a monolith without

differentiation among its various categories.

116 See Everywoman’s Health Centre Society (1988) v. Canada, [1991] F.C.J. 1162.

discriminatory charities – is it charitable to … revenue commissioners that a “purpose...

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