Delicata et al. v. The Incorporated Synod of the Diocese of Huron et al. The Incorporated Synod of the Diocese of Huron v. Delicata et al.

[Indexed as: Delicata v. Incorporated Synod of the Diocese of Huron]

Ontario Reports

Court of Appeal for Ontario,

Rosenberg, Rouleau and Pepall JJ.A.

September 4, 2013

117 O.R. (3d) 1 | 2013 ONCA 540

Case Summary

Churches — Church property — Parish members voting to leave Anglican Diocese as result of theological differences and seeking declaration that they were beneficial owners of church property and charitable foundation — Canon 14 of diocese providing that diocese held all real property in trust for benefit of parish or congregation — Trial judge correctly rejecting argument that "parish" means people who make up congregation at any given time and finding that "parish" is static concept that continues in perpetuity regardless of changes in membership.

Civil procedure — Costs — Discretion to award costs — Parish members who voted to leave Anglican Diocese as result of theological differences unsuccessful in action arising from dispute with diocese over church property — Costs judge erring in ordering each party to bear its own costs in order to promote harmony.

The membership of St. Aidan's, an Anglican church in the Diocese of Huron, voted to leave the diocese as a result of theological differences and to seek episcopal oversight from the Anglican Province of the Southern Cone, in South America. The plaintiffs (churchwardens of St. Aidan's and representatives of the members who had voted to leave) brought an action for a declaration that current members of the church were the beneficial owners of the church property and of a charitable foundation established and maintained by church members. The diocese counter-sued for declaratory relief relating to the same property. Canon 14 of the diocese provides that the diocese holds all real property "in trust for the benefit of the Parish or congregation". At trial, the plaintiffs submitted that a parish is a fluid concept that describes the people who comprise the congregation at any one time. The trial judge rejected that interpretation, dismissed the plaintiffs' action and allowed the defendant's action. The plaintiffs appealed. The defendant appealed the order that each party bear its own costs in order to promote "harmony".

Held, the plaintiffs' appeal should be dismissed; the defendant's appeal should be allowed in part. [page2 ]

The trial judge did not err in finding that the words "Parish or congregation" must denote a static entity that may not be severed from the diocese and that it is not defined by any particular group of members at any particular time. The plaintiffs' proposed interpretation was inconsistent with the language and purpose of Canon 14, which states that church property cannot be sold, mortgaged or otherwise disposed of without the bishop's prior consent. It was also inconsistent with s. 2(1) of the Anglican Church of Canada Act, S.O. 1979, c. 46, which provides that land "shall not be sold or leased, mortgaged or otherwise encumbered . . . except with the consent of the vestry of the church or congregation interested therein and of the bishop of the diocese and the executive committee of the diocese". The plaintiffs' argument also had to be considered in light of Canon 18, which provides that a vestry is composed of all baptized members of the congregation who meet certain qualifications. If the plaintiffs' argument was correct, then any group of worshippers who met the minimum requirements of Canon 18 could constitute a parish and could, by majority vote, leave the diocese and take the church property with them. That was clearly not what the canons intended.

It was an error to treat the pursuit of "harmony" as a reason to depart from the usual rule that a successful party is entitled to costs. Litigation over spiritual or religious convictions should not presumptively have a safe harbour from costs. Moreover, the parties clearly expected exposure to costs. Costs were fixed at $100,000 in the plaintiffs' action; no costs were ordered in the defendant's action.

Bentley v. Anglican Synod of the Diocese of New Westminster, [2010] B.C.J. No. 2201, 2010 BCCA 506, 297 B.C.A.C. 59, 326 D.L.R. (4th) 280, 11 B.C.L.R. (5th) 209, [2011] 2 W.W.R. 247, 62 E.T.R. (3d) 1, 195 A.C.W.S. (3d) 919, affg [2009] B.C.J. No. 2336, 2009 BCSC 1608, 52 E.T.R. (3d) 246 [Leave to appeal to S.C.C. refused [2011] S.C.C.A. No. 26], consd

Other cases referred to

Gulbenkian's Settlement Trust (Re), [1970] A.C. 508, [1968] 3 All E.R. 785, [1968] 3 W.L.R. 1127 (H.L.)

Statutes referred to

38 Vict. Cap LXXIV Ont. Stat, ss. 5, 6, 8

Anglican Church of Canada Act, S.O. 1979, c. 46, s. 2(1)

APPEAL by the plaintiffs from the order of Little J., [2011] O.J. No. 4083, 2011 ONSC 4403 (S.C.J.) dismissing the plaintiffs' action and allowing the defendant's action; APPEAL by the defendant from the costs order of Rady J. of the Superior Court of Justice dated September 26, 2012.

Peter R. Jervis, for appellants.

Brian T. Daly and Sean Flaherty, for respondents.

The judgment of the court was delivered by

PEPALL J.A.: —[page3 ]

Overview

[1] In September 2008, the membership of St. Aidan's Anglican Church in Windsor voted to leave the Anglican Diocese of Huron. This decision resulted from profound and long-standing theological differences relating to Biblical interpretation and the authority for Anglican doctrine found in the Scriptures. The catalyst for the vote was the position adopted by the Diocese of Huron and the Anglican Church of Canada on blessing same-sex unions, a position which was unacceptable to the members of St. Aidan's.

[2] Following the vote, the churchwardens of St. Aidan's Anglican Church, Christine Delicata and Pat Hyttenrauch, brought an action in Superior Court seeking a declaration that the current members of the church are the beneficial owners of the church property and of a charitable foundation established and maintained by St. Aidan's members. Ms. Delicata and Ms. Hyttenrauch were subsequently appointed as representatives of all the members of St. Aidan's Anglican Church who had voted to leave the Diocese of Huron.

[3] The Diocese of Huron and its bishop, Robert Bennett, disputed this claim and counter-sued for declaratory relief relating to the same property against Ms. Delicata, Ms. Hyttenrauch and certain other members of St. Aidan's congregation. For the purposes of this appeal, the plaintiffs in the Delicata/Hyttenrauch action and the individual defendants in the Diocese of Huron action are referred to collectively as the "St. Aidan's group".

[4] In essence, while the parties' disputes originated in theological differences, they ultimately devolved into this conflict over property.

[5] The actions were heard together in the spring of 2011. The outcome of the actions turned on the interpretation of Canon 14 which was approved by and governs the Diocese of Huron. It provides that the diocese holds all real property "in trust for the benefit of the Parish or congregation". At trial, the St. Aidan's group submitted that a parish is a fluid concept that describes the people who comprise the congregation at any one time. The diocese submitted that a parish is a static concept that continues in perpetuity regardless of changes in membership. The trial judge preferred the diocese's interpretation.

[6] The St. Aidan's group appeals. The diocese seeks leave to cross-appeal the lower court's order that each party bear its own costs. [page4 ]

[7] For the reasons that follow, I would dismiss the appeal. I would allow the motion for leave to appeal costs and allow the cross-appeal in part.

Background

The structure of the Anglican Church

[8] The parties' positions and the trial judge's reasons in this case cannot be understood without a basic appreciation of the structure of the Anglican Church.

[9] The Anglican Church is comprised of 38 "provinces" that span the globe. Each province has an archbishop (or primate) at its head. Provinces are subdivided into dioceses, each headed by a bishop. The governing body of a diocese is called a synod, which is an elected body composed of the bishop, clergy and laity.

[10] The 38 provinces of the Anglican Church are known collectively as the "Anglican Communion". There are four "instruments of unity" or "instruments of communion" that link the communion together: the Archbishop of Canterbury; the Lambeth Conference, a conference of bishops that meets every ten years; the Anglican Consultative Council; and the biennial meeting of the primates. None of these bodies has legislative authority over the provinces.

The Anglican Church of Canada

[11] The Anglican Church of Canada is one of the 38 provinces of the Anglican Church. It was founded in 1893 as an amalgam of various dioceses that had previously formed part of the Church of England. The basic constitution of the Anglican Church of Canada is the Solemn Declaration of 1893, wherein the founding members committed themselves to remain in "full communion with the Church of England throughout the world".

[12] The Anglican Church of Canada has three constitutional levels: the national church, four ecclesiastical provinces and 30 dioceses. Each of the dioceses has detailed and specific jurisdiction and each is headed by a bishop. Each has a synod, or council, that functions as its ecclesiastical legislature.

The Diocese of Huron

[13] The Diocese of Huron was one of the founding members of the Anglican Church of Canada. It was incorporated in 1875 by an Act of the Legislative Assembly of the Province of Ontario: 38 Vict. Cap LXXIV Ont. Stat (the "Act").

[14] Section 5 of the Act states that any property held or acquired "for any church purpose in connection with the Church [page5 ]of England in Canada" may be conveyed to the synod, which "shall perform the trusts relating thereto". Section 6 states that the synod "shall hold all property vested in trust", and may "sell and absolutely dispose of all or any property" and hold the proceeds in trust.

[15] By virtue of s. 8 of the Act, the Synod of the Diocese of Huron was given "full power and authority to make such canons, rules, regulations and by-laws" as the synod considered necessary.

[16] Pursuant to this section, the Diocese of Huron approved both a constitution and a list of canons, which are essentially the diocese's by-laws. They provide, amongst other things, that no one may officiate in any congregation of the diocese without the bishop's consent (Canon 7), that the bishop is the chief pastor in each parish of the diocese (Canon 9), and that rearrangement of the parishes in the diocese requires the bishop's approval (Canon 12).

Canon 14

[17] Canon 14, "Title to Real Property and Acquisition, Maintenance and Repair of Church Buildings", is central to the disposition of this appeal. It states, in part:

1. Legal title to all real property held by any Parish or congregation in the Diocese is registered in the name of The Incorporated Synod of the Diocese of Huron, which holds it in trust for the benefit of the Parish or congregation.

2. Before any church is consecrated, the legal title thereto shall be registered in the name of The Incorporated Synod of the Diocese of Huron, which holds it in trust for the benefit of the Parish or congregation.

3. The sale, leasing, mortgaging or other disposition of any church, parish hall, rectory or other real property owned by the Parish or congregation, however the title is registered, shall require the prior consent of the Vestry, the Diocesan Council and the Bishop of the Diocese.

[18] In other words, Canon 14 confirms that the synod holds all real property "in trust for the benefit of the Parish or congregation". It further confirms that the disposition of any real property owned by the parish or congregation requires, amongst others, the bishop's consent.

[19] Although the words "parish" and "congregation" are not defined in the canons, the canons clearly contemplate that two or more congregations may form one parish. For example, Canon 13(6) provides that "[i]f there is more than one congregation in a Parish, each shall bear its proper share of the expenses" of running the parish, including utilities, municipal taxes and insurance. Canon 19(9) provides that "[i]n the event there are [page6 ]two or more congregations forming one Parish, there shall be a separate Parish Council for each congregation".

[20] The issue in this appeal, as in the court below, is the meaning of "in trust for the benefit of the Parish or congregation".

St. Aidan's Parish

[21] St. Aidan's Anglican Parish was established in 1922 or 1923 in what was then Ford City -- now Windsor -- Ontario. It became one of what would eventually be 146 parishes in the Diocese of Huron.

[22] In 1952, real property was purchased and a church was constructed for St. Aidan's. The real property was registered in the name of the Diocese of Huron in trust for the benefit of St. Aidan's Parish or congregation.

[23] Although the trial judge made no findings about these matters, in an affidavit filed at trial, the appellant Ms. Hyttenrauch deposed that the church property has been expanded twice. In 1978, the members of St. Aidan's purchased a piece of land adjacent to the existing property for $18,000. In the late 1990s, they built a new fellowship hall attached to the existing building at a cost of $610,000. Ms. Hyttenrauch stated that funds for the addition were raised "entirely" by the church members.

[24] St. Aidan's Anglican Church is known to be a theologically conservative, evangelical congregation. Its troubled relationship with the Diocese of Huron is illustrative of the conflict among individual churches, dioceses and the wider Anglican Church of Canada that has developed and deepened over the past number of years.

The conflict within the Anglican Church

[25] At its most basic, the conflict reflected in this litigation is between Anglicans who maintain traditional, conservative theological interpretations of the Scriptures and those who have adopted more liberal interpretations. These profound theological differences have come into sharp focus over the blessing of same-sex unions.

[26] The movement towards the blessing of same-sex unions started in the 1990s in some dioceses, particularly the Diocese of New Westminster in British Columbia. This development was controversial, and at the global decennial Lambeth Conference in 1998, a majority of bishops passed a resolution rejecting the blessing of same-sex unions.

[27] In spite of the Lambeth resolution, in 2002 the Synod of the Diocese of New Westminster resolved, and its bishop accepted, [page7 ]that priests should be permitted to bless same-sex unions in certain circumstances.

[28] Believing that its own diocese was no longer "in communion" with the wider Anglican Church, four parishes in the Diocese of New Westminster purported to break away. They formed the Anglican Network in Canada ("ANiC") under the episcopal oversight of a sympathetic bishop located in southeast Asia. They then sued the Diocese of New Westminster for the right to retain the church properties, claiming that the properties were held in trust for "historical, orthodox, Anglican doctrine and practice". I will discuss the outcome of the B.C. litigation later in these reasons.

[29] These developments, as well as the election of an openly gay bishop in New Hampshire, were regarded as grave challenges for the Anglican Church. In 2003, the Archbishop of Canterbury commissioned a report to explore the "canonical understandings of communion, impaired and broken communion, and the ways in which provinces of the Anglican Communion may relate to one another in situations where the ecclesiastical authorities of one province feel unable to maintain the fullness of communion with another part of the Anglican Communion".

[30] The resulting Windsor Report, released in 2004, observed that "the instruments of unity and communion have been threatened by the current divisions" within the Church. It also questioned the theological basis for blessing same-sex unions and noted that the "clear and repeated statements of the Instruments of Unity" have advised against the development of such rites. The Windsor Report recommended a moratorium on the blessing of same-sex unions.

[31] In 2007, the General Synod of the Anglican Church of Canada passed a resolution stating that the blessing of same-sex unions "is not in conflict with the core doctrine (in the sense of being creedal) of the Anglican Church of Canada". In other words, the General Synod took the position that the blessing of same-sex unions was not a matter of creed, and therefore not an action that would imperil communion with the wider Church.

[32] Not surprisingly, this resolution was controversial and served to deepen the divisions between the Anglican Church of Canada and detractors in the ANiC, as well as with more conservative provinces within the Anglican Communion globally.

The conflict between St. Aidan's and the Diocese of Huron

[33] Against this backdrop, in May 2008 the Synod of the Diocese of Huron voted to request that the bishop "grant permission [page8 ]to clergy, whose conscience permits, to bless the duly solemnized and registered civil marriages between same-sex couples". The bishop accepted the resolution as valid and said he would seek further guidance before making a final decision.

[34] Although a final decision was still pending, many members of St. Aidan's nonetheless felt that in order to remain a Biblically faithful parish in full communion with the global Church of England and in compliance with the Solemn Declaration of 1893, they could no longer remain in the Diocese of Huron.

[35] In accordance with the canonical rules on special meetings, on September 28, 2008, 110 out of 140 members of the St. Aidan's vestry (i.e., the members eligible to vote on church matters) attended a meeting to discuss the synod's resolution. By a vote of 109 to 0, with one abstention, they passed a resolution purporting to leave the diocese and requesting "on an emergency and pastoral basis" the episcopal oversight of a bishop in the Province of the Southern Cone, in South America.

The litigation

[36] In January 2009, the churchwardens of St. Aidan's, the appellants Ms. Delicata and Ms. Hyttenrauch, commenced court proceedings against the Incorporated Synod of the Diocese of Huron and Robert Bennett in his capacity as bishop. As I explained earlier, the trial judge made an order appointing Ms. Delicata and Ms. Hyttenrauch as representative plaintiffs for the people who voted to leave the diocese on September 28, 2008. These more than 100 individuals are identified in Schedule "A" to the judgment under appeal.

[37] The principal claim advanced by Ms. Delicata and Ms. Hyttenrauch in their representative capacity was that the diocese holds the church property in an express trust for the purpose of continuing "traditional, orthodox" Anglican worship, ministry and practice "considered within the doctrines and practices traditionally held and practiced by orthodox Anglicans, and in particular to the religious doctrines and practices referred to in the Solemn Declaration of 1893". "Church property" was defined to consist of all real estate presently held in trust by the Diocese of Huron for St. Aidan's Parish or congregation.

[38] In the alternative, they claimed that the diocese holds the property in a charitable purpose trust. They also sought a declaration of beneficial ownership of the proceeds of the St. Aidan's Bequeathment and Financial Fund (the "foundation"), which was established in 2000 to "preach, promote and advance the spiritual teachings of the Parish". [page9 ]

[39] Ms. Delicata and Ms. Hyttenrauch in their representative capacity also sought declarations that

the diocese's actions are "inconsistent with the trust on which the property of the Parish is held";

the congregation's use of the property is consistent with the terms of the trust "in continuing to uphold traditional, historic and current doctrine and practices of the Anglican Communion"; and

the congregation's seeking of episcopal oversight from the Anglican Province of the Southern Cone is consistent with the terms of the trust over the property.

[40] Shortly after the representative plaintiffs commenced their action, as mentioned, the diocese launched its own proceedings against Ms. Delicata, Ms. Hyttenrauch and others. It sought a declaration of ownership of the church property and related injunctive relief. On the eve of trial, the diocese was granted leave to add the foundation as a party defendant with a view to obtaining an accounting of foundation funds since 2008, an order directing repayment of certain funds to the foundation and an order directing transfer of the foundation to the parish.

[41] Ultimately, the two actions were directed to be tried together. The case management judge directed that the trial would start after the litigation involving the four parishes in New Westminster, British Columbia had concluded. The trial in that action took place in the spring of 2009, and the trial judge released his reasons dismissing the church members' claim in November of that year. The British Columbia Court of Appeal dismissed their appeal in November 2010: Bentley v. Anglican Synod of the Diocese of New Westminster, [2009] B.C.J. No. 2336, 2009 BCSC 1608, 52 E.T.R. (3d) 246, affd [2010] B.C.J. No. 2201, 2010 BCCA 506, 62 E.T.R. (3d) 1, leave to appeal to S.C.C. refused [2011] S.C.C.A. No. 26.

[42] The trial in this case commenced in April 2011.

The Decision Below

[43] The trial judge framed the issues before him as follows:

(1) what is meant by "Parish or congregation";

(2) who is the beneficial owner of St. Aidan's church property; and

(3) who is the beneficial owner of the St. Aidan's Bequeathment and Financial Fund? [page10 ]

[44] The trial judge answered all of these questions in favour of the diocese.

[45] At the outset of his analysis, the trial judge considered the conflicting affidavit evidence before him on the interpretation of the word "parish", found in Canon 14. Reverend Percy O'Driscoll, one of the diocese's witnesses, described a parish as an entity whose members may choose to leave, while the parish itself continues in perpetuity to be the responsibility of the bishop of the diocese in which it is geographically located. By contrast, Prof. John Stackhouse, a witness for the St. Aidan's group, stated that the definition of "parish" is flexible and varies with the context. In this case, Prof. Stackhouse deposed that "parish" means the people who at any one time consist of, or make up, the congregation.

[46] The trial judge preferred Reverend O'Driscoll's interpretation. He explained, at para. 34: "Professor Stackhouse's contextual definition is porous. Members of the parish are transient. They come and go. Relying upon [his] definition, members could acquire an uncrystallized interest in the assets of the parish during their tenure, which interest could be crystallized at any time."

[47] The trial judge determined that while members in a parish can come and go at any time, the parish itself remains, irrespective of the limited number of individual members left behind following the September 2008 vote. The parish could not sever itself from the diocese.

[48] The trial judge determined that there was an express trust that provided for three certainties: the trustee was the Diocese of Huron; the trust property was the church property; and the beneficiary was the parish or congregation. Since the parish could consist of more than one congregation but did not in this case, the object or beneficiary of the express trust was St. Aidan's Parish of the Diocese of Huron.

[49] In light of this finding, there was no need for the trial judge to consider the charitable purpose trust argument advanced by the St. Aidan's group. In any event, he agreed with the B.C. Court of Appeal's analysis in Bentley, supra, in which Newbury J.A. rejected the plaintiffs' cy près argument as both legally and practically flawed.

[50] The trial judge stated that he "completely" agreed with Newbury J.A.'s comments from Bentley, at para. 76 (C.A.), which he excerpted at para. 52 of his own reasons:

I prefer to rest my conclusion that the appeal must be dismissed, however, on the basis that the purpose of the trusts . . . is to further Anglican ministry in accordance with Anglican doctrine, and that in Canada, the General [page11 ]Synod [of the Anglican Church of Canada] has the final word on doctrinal matters. This is not to say that the plaintiffs are not in communion with the wider Anglican Church -- that is a question on which I would not presume to opine. I do say, however, that members of the Anglican Church in Canada belong to an organization that has subscribed to "government by bishops". The plaintiffs cannot in my respectful opinion remove themselves from their bishop's oversight and the Diocesan structure and retain the right to use properties that are held for purposes of Anglican ministry in Canada.

(Emphasis in original)

[51] In light of this analysis, the trial judge held, at para. 53, that the effect of the September 2008 vote to leave the Diocese of Huron and seek alternative episcopal support "merely means that [the St. Aidan's group] leaves behind the property of St. Aidan's Parish of the Diocese of Huron".

[52] The trial judge further held, at para. 54, that the vote of the vestry to leave the diocese was ultra vires: "Those members of the Vestry severed their personal relationship with the Diocese of Huron. St. Aidan's Parish of the Diocese of Huron remains intact."

[53] Similarly, the trial judge held that the beneficial owner of the foundation is St. Aidan's Diocesan Parish. He explained that the foundation was established by letters patent dated December 27, 2000. The foundation was incorporated to hold the funds contributed to St. Aidan's Anglican Church. The letters patent defined the objects of the corporation as "to receive and maintain funds" and to use those funds exclusively "to preach, promote and advance the spiritual teachings of the parish of St. Aidan Anglican Church of Windsor, Ontario, by practicing the religious observances, tenets and doctrines associated with the Anglican faith".

[54] The major sources of the foundation's funds were twofold. In 2001, the foundation received $418,605 from a bequest made by the Duckworths, who were long-standing members of the congregation. In 2002, the foundation received $157,375 from the sale of the parish rectory.

[55] The trial judge found that since 2001, the foundation had been used to maintain parish property and to support St. Aidan's Anglican Church and its Anglican faith. The one exception was the payment of $30,000, made in 2008, to the ANiC to assist the ANiC with its legal fees. The trial judge found, at para. 64, that this payment amounted to a breach of trust.

[56] Unlike in the case of the church building, the trial judge held that the diocese is not the trustee of the foundation. Instead he declared, at para. 72, that the existing officers of the foundation corporation hold all assets of the foundation for the benefit of St. Aidan's Parish of the Diocese of Huron. [page12 ]

[57] The trial judge acknowledged that this effectively meant that the foundation's trustees and its beneficiary had conflicting interests. Other than the aforementioned $30,000, the trial judge did not provide particulars of other transfers. However, he did direct that all foundation funds presently held in various bank or financial institution accounts to which they were transferred by members of the St. Aidan's group be consolidated and returned to the churchwardens of St. Aidan's Parish of the Diocese of Huron to be held in trust for the purposes of the foundation.

The Costs Order

[58] The trial judge concluded by dismissing the action instituted by Ms. Delicata and Ms. Hyttenrauch in their representative capacity "with costs" and reserving on the issue of costs in the action instituted by the Diocese of Huron for declaratory relief. He noted that an orderly transfer of the foundation's assets without the need for any further litigation, and the co-operation of the St. Aidan's group in this regard, would be "looked upon favourably" when the cost determination was made.

[59] Unfortunately, the trial judge died. Accordingly, Rady J. presided over the costs hearing. She ordered that, in the interests of promoting harmony within the church, the parties each bear their own costs.

[60] The costs judge acknowledged that in Bentley, the trial judge awarded the successful diocese its costs. That decision was upheld by a majority of the B.C. Court of Appeal on the ground that, regardless of its theological origins, the dispute was over property and should be treated as such. Newbury J.A. dissented on the costs issue, holding that the trial judge erred in failing to consider that the plaintiffs were driven by their conscience to pursue the litigation, and that a no-costs order should be made "in the interests of harmony".

[61] The costs judge in this case preferred Newbury J.A.'s analysis. She explained, at para. 27, that while it was true that that "in essence, the case was a property dispute, it also involved parishioners acting in accordance [with] their spiritual conscience calling upon them to dissent". The costs judge approved of Newbury J.A.'s observation that from time to time, a court will make a no-costs order in proceedings involving church property "to promote harmony".

The Appeal

[62] The appellants submit that the trial judge erred in his analysis of the trust arguments, and in particular erred by [page13 ]

(1) failing to give meaning to both words in the disjunctive phrase "Parish or congregation";

(2) in the alternative, failing to grant an equitable remedy on the basis of unjust enrichment over the church building and the foundation; and

(3) misinterpreting the nature and purpose of the foundation and concluding that the $30,000 provided by the foundation to the ANiC breached the objects of the charitable corporation.

[63] The diocese seeks leave to appeal the costs order, arguing that it was an error to depart from the presumption that successful parties are entitled to their costs.

Analysis

The meaning of "Parish or congregation"

[64] The appellants' primary submission is that the trial judge erred in his interpretation of Canon 14, which provides that church property is to be held by the diocese in trust "for the Parish or congregation". The appellants submit that the trial judge erred by treating the words "Parish or congregation" as interchangeable and interpreting them to refer to the political unit or "parish" under the diocesan structure, rather than the individuals who comprise St. Aidan's church congregation at any one time.

[65] The appellants submit that the trial judge made three errors in his interpretation and determination of the trust's beneficiaries.

[66] First, the trial judge failed to consider the plain meaning of the words "parish" and "congregation" and failed to give meaning to both words. The plain meaning of those words in this context must be interpreted to refer to the class of individuals who worshipped at St. Aidan's church and who comprised its congregation.

[67] Second, the appellants submit that the trial judge failed to look at the contextual evidence which, they say, reflects the settlers' intention that the trust property would be held for "the class of theologically conservative Anglicans who worshipped at St. Aidan's Church in accordance with traditional Anglican teachings and theology".

[68] Third, the appellants submit that the trial judge erred in failing to consider or apply the proper test for certainty of objects in a discretionary trust. He improperly required an ascertained entity to serve as the trust object. In particular, he failed to [page14 ]apply the appropriate principle for determining the ascertainable objects of the beneficial class of the trust as articulated in Gulbenkian's Settlement Trust (Re), [1970] A.C. 508, [1968] 3 All E.R. 785 (H.L.), at pp. 518-19 A.C.

[69] I do not accept the appellants' submissions. I agree with the trial judge's analysis and conclusion that the words "Parish or congregation" must denote a static entity that may not be severed from the diocese and that is not defined by any particular group of members at any particular time. I reject the "snapshot" theory advanced by the appellants for three reasons.

[70] First, the appellants' proposed interpretation is inconsistent with the language and purpose of Canon 14. Canon 14 states that church property cannot be sold, mortgaged or otherwise disposed of without the bishop's prior consent. This reinforces the conclusion that the bishop, and by extension the diocese, retains control over all church property in perpetuity for the benefit of the members of the diocese. That objective would be wholly undermined by the appellants' proposed interpretation of the words "Parish or congregation", which would permit the diocese to be splintered and its property distributed at the will of a single group of estranged congregants.

[71] Second, the appellants' proposed interpretation is inconsistent with the Anglican Church of Canada Act, S.O. 1979, c. 46. Section 2(1) provides that land "shall not be sold or leased, mortgaged or otherwise encumbered . . . except with the consent of the vestry of the church or congregation interested therein and of the bishop of the diocese and the executive committee of the synod of the diocese" (emphasis added). The appellants' proposed interpretation would allow the church property to be conveyed to them without the consent of the bishop or the synod, contrary to the statute.

[72] Third, the appellants' argument must be considered in light of Canon 18, which describes the composition of the vestry in a given congregation. It provides that a vestry is composed of all baptized members of the congregation who have reached 16 years of age and who, for at least three months during the preceding 12 months of the date of the relevant vestry meeting, have been "identifiably involved with such congregation with regular worship, fellowship and financial support". If the appellants' "snapshot" theory is correct, then any group of worshippers who meets the minimum requirements of Canon 18 could constitute a parish and could, by majority vote, leave the diocese and take the church property with them. This is clearly not what the canons intended. [page15 ]

[73] Finally on this point, Gulbenkian's Settlement (Re) does not assist the appellants. The trial judge did not dismiss their trust argument because the class of beneficiaries was uncertain.

[74] Accordingly, the appellants' first argument fails.

Unjust enrichment

[75] It follows that the appellants' unjust enrichment argument (which the respondents say was not argued in the court below) must fail as well. The congregants who contributed money or labour to maintaining the church property knew they were doing so for the benefit of St. Aidan's Parish of the Diocese of Huron. It must be inferred that they also knew what the canons and statute stated. I would not give effect to this ground of appeal.

The foundation

[76] Similarly, I agree with the trial judge's conclusions with respect to the foundation. They were also consistent with the evidence of the president of the foundation.

[77] As I explained earlier, the letters patent state that the object of the foundation is to "preach, promote and advance the spiritual teachings of the parish of St. Aidan's Anglican Church of Windsor" (emphasis added). The appellants submit that for purposes of the foundation, "parish" is synonymous with the then current membership of St. Aidan's church. For the reasons I have already given, that interpretation is incorrect.

[78] It follows that the trial judge correctly held that it was a breach of trust for the officers to use foundation funds to help pay the ANiC's legal bills. As the respondents put it in their factum: "The appellants sought to use property of the Foundation, held in trust for the Diocesan Parish congregation, to finance litigation . . . so as to defeat the claims that the church property was held in trust for the Diocesan Parish Congregation."

Cross-appeal on costs

[79] Turning to the cross-appeal, in my view, the costs judge erred in treating the pursuit of "harmony" as a reason to depart from the usual rule that a successful party is entitled to costs. There was no basis in the evidence for any such determination. As a matter of principle, in our justice system litigation over spiritual or religious convictions should not presumptively have a safe harbour from costs. Moreover, the parties clearly expected exposure to costs; at the September 2008 meeting, a resolution was passed to indemnify Ms. Delicata and Ms. Hyttenrauch should they be ordered to pay costs personally. [page16 ]

[80] The appellants were unsuccessful and therefore the respondents are presumptively entitled to costs. In my view, there was nothing in the facts which would displace this presumption.

[81] The respondents sought $445,486.37, inclusive of fees, disbursements and taxes, for both actions in the court below. The appellants' bill of costs amounted to $267,616.60. Taking all the relevant factors into account, I would fix costs in the court below at $100,000 in favour of the respondents in the Delicata action and order no costs in the diocese's action. In my view, and particularly in light of the amounts and nature of the issues involved, this is a fair and reasonable award.

[82] Given the foregoing analysis, it would be inappropriate for the appellants to use foundation funds to satisfy the costs order as they had proposed in the court below. I would order that the Delicata and Hyttenrauch appellants pay these costs, bearing in mind that they represent and have an indemnity given by those people who voted to leave the diocese on September 28, 2008.

Conclusion

[83] The appeal is dismissed, leave to cross-appeal the costs order is granted and the cross-appeal is allowed in part. If the parties cannot agree on costs of this appeal, they may make brief submissions in writing.

Plaintiffs' appeal dismissed; defendant's appeal allowed in

part.

End of Document