COURT FILE NO.: 12-115 (Owen Sound)
DATE: 20121204
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Friends of Camp Aneesh v. Girl Guides of Canada-Guides du Canada
BEFORE: K. van Rensburg J.
COUNSEL: John A. Tamming, for the Plaintiff
Valerie A. E. Dyer, for the Defendant
Nick Hedley, for the Public Guardian and Trustee
E N D O R S E M E N T
[1] This is a motion by the defendant to strike the Statement of Claim, and to dismiss the action, or in the alternative to strike certain paragraphs of the Statement of Claim. The motion is pursuant to rules 21 and 25 of the Rules of Civil Procedure.
The Claim
[2] According to the Statement of Claim, the plaintiff is a corporation which was incorporated in 2011, the objects of which include the provision of camping experiences for girls and young women resident primarily in Bruce and Grey Counties (the “Local Guides”) by the maintenance and operation of Camp Aneesh, and to provide a site for the training of personnel in respect of same.
[3] The defendant is the Girl Guides of Canada-Guides du Canada, which is currently the legal registered owner of Camp Aneesh, which camp comprises approximately 50 acres.
[4] The plaintiff takes issue with the defendant’s decision, announced in 2010, to sell Camp Aneesh and to retain the sale proceeds.
[5] It is alleged that Camp Aneesh was originally transferred by John and Marjorie Kerr to the Owen Sound Division Girl Guides of Canada in 1969 for the sum of $4,800, and that, on April 10, 1984, the camp was deeded by the Owen Sound Division Girl Guides of Canada to Girl Guide Land Corporation (“GGLC”) for nominal consideration. On April 16, 2004, GGLC deeded Camp Aneesh to the defendant. It is alleged that in 1982 the defendant had requested the then board of directors of the camp, that the camp be transferred to the defendant “to be held in trust” for the Local Guides, and that the 1984 transfer reflected a change of legal ownership. It is alleged that the 1984 transfer was without consideration, and in good faith and in reliance on express representations that the transfer was for housekeeping purposes only, to allow for insurance to be placed against the property and that the transfer would not alter the availability of the camp for future generations of students.
[6] The Statement of Claim alleges that the camp had been purchased and developed exclusively through the generosity of area residents who had a passion and commitment for guiding, and alleges that the local girls, their families and guide leaders had raised substantial funds to improve the camp over the years, and had contributed “sweat equity” through their voluntary labour.
[7] The relief sought in the statement of claim is the following: an order for mandamus compelling the defendant to transfer the camp property to the plaintiff, or in the alternative a declaration that the defendant holds the camp on a resulting, constructive or bare trust for the plaintiff; damages for misrepresentation in the amount of $500,000; an order that, if the camp is sold, all net sale proceeds be paid to the plaintiff; an order prohibiting the defendant from encumbering or transferring the camp without a court order; and an accounting of all monies expended by the defendant on the camp since the defendant acquired ownership of same.
Positions of the Parties
[8] At the commencement of the hearing of the motion the court was advised that the plaintiff consents to an order striking the pleading of negligent misrepresentation (that would comprise the claim for damages in para. 1(e) and para. 19 of the Statement of Claim).
[9] The thrust of the defendant’s argument is that the Statement of Claim, supplemented by a response to demand for particulars, does not disclose a cause of action, in that the remaining causes of action asserted as a result of the historical events that are pleaded (resulting and constructive trust), cannot be maintained by the plaintiff, a corporation that was only incorporated in 2011.
[10] The plaintiff relied on the factum and arguments of the Public Guardian and Trustee (“PGT”), whose involvement in the proceedings was not opposed by the defendant.
[11] The PGT has a role in the supervision of charities. The PGT’s factum proposes an alternative interpretation of the claims of the plaintiff, asserting that the 1984 transfer of the camp property without consideration, was a transfer by the local guiding group in Grey and Bruce counties, the Owen Sound Division, to the GGLC “in trust for the purposes of the Owen Sound Division”, and that it was the mutual intention of the parties for the GGLC to hold the camp in trust for the guiding community of Grey and Bruce Counties.
[12] The PGT asserts that the Statement of Claim raises a number of questions regarding the defendant’s proposed disposition of the camp property as follows: whether the defendant holds the property in trust or alternatively on a resulting, constructive or bare trust for the purposes of providing camp property for the guiding community of Grey and Bruce counties, and if so, whether the proposed sale and disposition of the proceeds require court approval, and if the facts warrant the removal of the defendant as trustee of the property. According to the PGT, the plaintiff is putting itself forward as an alternate trustee of the camp property. The PGT contends that the plaintiff’s claim to impose or find a trust raises issues which engage the court’s inherent jurisdiction over charitable matters, and that the request that the trust be in favour of the plaintiff is not fatal.
Analysis and Decision
[13] Rule 21.01(1)(b) provides for a judge to strike a “pleading” on the ground that it discloses no reasonable cause of action or defence. It must be “plain and obvious” that the claim has no reasonable prospect of success. The facts pleaded in the Statement of Claim are assumed to be true and the pleading is read generously, making allowances for drafting deficiencies and erring on the side of permitting a novel but arguable claim to proceed to trial: Nash v. Ontario (1995), 27 O.R. (3d) 1 at 6 (C.A.) and R. v. Imperial Tobacco Canada Limited, 2011 SCC 42, [2011] 3 S.C.R. 45, at paras. 17 and 21.
[14] The rule has been interpreted to permit the court to strike a part of a pleading, and is frequently employed to excise from a Statement of Claim causes of action that have no chance of success, if appropriate, with leave to amend. As McLachlin C.J.C. recently noted in Imperial Tobacco at paras. 19 and 20:
The power to strike out claims that have no reasonable prospect of success is a valuable housekeeping measure essential to effective and fair litigation. It unclutters the proceedings, weeding out the hopeless claims and ensuring that those that have some chance of success go on to trial.
…The efficiency gained by weeding out unmeritorious claims in turn contributes to better justice. The more the evidence and arguments are trained on the real issues, the more likely it is that the trial process will successfully come to grips with the parties’ respective positions on those issues and the merits of the case.
[15] In KNP Headwear Inc. v. Levinson, [2005] O.J. No. 5438 (Div. Ct.), at para. 11, Then J. noted that there was no definition of “cause of action” under the Rules of Civil Procedure. He referred to two alternative definitions in Black’s Law Dictionary. The first is “a group of operative facts giving rise to one or more basis for suing”; the second is “the legal theory of a lawsuit”.
[16] In a motion under Rule 21.01(1)(b), both definitions of a “cause of action” may be engaged. An entire pleading may be struck because there are no operative facts that give rise to a basis for suing. Parts of a pleading may be struck to ‘weed out’ the claims where the legal theory is defective, whether because an essential element of the cause of action is not pleaded or for some other reason.
[17] In the present case, the facts that have been pleaded may give rise to a cause of action; the problem is that the cause of action as pleaded is not that of the plaintiff who has commenced the proceeding.
[18] Once the misrepresentation claims are excised from the Statement of Claim, what remains are trust claims, in particular, claims that the defendant holds the camp property on a resulting trust or by constructive trust for the plaintiff. The prayer for relief seeks to have the camp property transferred to the plaintiff or alternatively seeks a declaration that the defendant holds the property in trust for the plaintiff, or if the property is sold, that the plaintiff receive the net proceeds.
[19] A resulting trust arises “whenever legal or equitable title to property is in one party’s name, but that party, because he is a fiduciary or gave no value for the property, is under an obligation to return it to the original title owner, or to the person who did give value for it”: D.W.M. Waters, M. Gillen and L. Smith, Waters’ Law of Trusts in Canada, 3rd ed. (Toronto: Thomson Carswell, 2005), at p. 362. A claim for resulting trust may involve, as here, an alleged transfer for nominal or no consideration.
[20] The Statement of Claim pleads and relies on the mutual intention of the parties to the 1984 transfer that the lands would be held on a resulting trust “in favour of the guiding community of Grey and Bruce Counties”. All of the activities alleged to have given rise to a trust in favour of the plaintiff took place before the plaintiff was incorporated. There is no prospect of success for the claim that the defendant holds the camp property by resulting trust for the plaintiff.
[21] Similarly, a constructive trust is a remedy for unjust enrichment, with three elements: an enrichment of or benefit to the defendant, a corresponding deprivation of the plaintiff, and the absence of a juristic reason for the enrichment. The plaintiff must show that he or she gave something to the defendant which the defendant received and retained, and that the enrichment corresponds to a deprivation that the plaintiff has suffered: Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, at paras. 32, 38 and 39.
[22] Again, the material facts alleged in the Statement of Claim in support of the claim for a constructive trust are historical events that took place before the plaintiff was incorporated. While the Statement of Claim pleads facts that would be relevant to a constructive trust claim, the plaintiff, that was incorporated in 2011, is not the proper party to assert such a claim.
[23] The PGT’s factum and argument suggest an alternative framework for a claim that has as its focus the need to ensure the proper execution of an alleged charitable trust. The PGT refers to the relief available under the inherent jurisdiction of the court with respect to charities, and the Charities Accounting Act, R.S.O. 1990, c. C.10 (the “CAA”).
[24] The Superior Court has inherent jurisdiction to supervise the activities of a charitable corporation to ensure that they accord with its charitable purpose and to intervene if the charity is not administered in accordance with its purpose or its charitable funds are misapplied: Re Public Trustee and Toronto Humane Society et al., [1987] O.J. No. 534 (H.C.J.) and Asian Outreach Canada v. Hutchinson, [1999] O.J. No. 2060 (S.C.J.).
[25] The CAA provides for a mechanism for any person to complain to the Superior Court of Justice if charitable property is not being used for the intended purposes. The complaint is brought under s. 6(1), and permits the court to require the PGT to investigate the allegations. Subsection 10(1) provides that an application may be brought to the Superior Court of Justice by “any two or more persons” who allege a breach of a trust created for a charitable purpose or who seek the direction of the court for the administration of a trust for charitable purposes. As Cullity J. noted in Asian Outreach Canada, the CAA creates machinery and provides procedures and does not significantly extend the jurisdiction of the Court over the matters to which it refers (at para. 26).
[26] The plaintiff’s counsel agrees that the Statement of Claim should be amended to add claims under the CAA and invoking the court’s inherent jurisdiction, however he would like to retain all of the facts that have been pleaded, some of which the defendant argues would not be relevant to a claim on the bases proposed by the PGT. Alternatively, the plaintiff’s counsel suggested that the Claim be struck with leave to deliver a Fresh as Amended Statement of Claim.
[27] The defendant’s counsel contends that the court should strike the Claim with leave for the plaintiff and others to commence new proceedings. While the plaintiff has standing to pursue the claims and relief under the CAA or the court’s inherent jurisdiction, the defendant observes that at least two applicants are required in order to claim relief under s. 10 of the CAA, so the Claim could not be amended to add relief under the CAA unless another party joins the proceeding.
[28] No one expects that the striking of the Statement of Claim in this action will bring an end to the dispute between the plaintiff and the defendant. The defendant’s counsel acknowledged that any order striking the pleading would be without prejudice to the commencement of an application under the CAA or some other appropriate proceeding.
[29] Whether to strike a pleading without leave to amend, or to permit the plaintiff to deliver a fresh as amended pleading in the same action may appear to be a distinction without a difference. In a case such as this, where no cause of action is evidenced by the Statement of Claim in favour of the plaintiff who commenced the action, where a different legal framework is warranted, and where no proposed amendments have been placed before the court (although the plaintiff was requested by the defendant to do so several months ago), it is preferable to strike the Claim without leave to amend and to dismiss the action. There is no limitation period or other reason to keep the existing action alive. The better approach is to terminate the action, while permitting the plaintiff or some other party or parties to commence suitable proceedings.
[30] The defendant’s motion is therefore granted, on terms that the Statement of Claim is struck and the action is dismissed, without prejudice to the plaintiff or some other party or parties commencing a fresh proceeding. For greater certainty, this order does not preclude the applicant(s) or plaintiff(s) in the new proceeding from pleading facts that are the same or similar to the facts pleaded in the Statement of Claim that has been struck out.
[31] If the parties are unable to agree on costs, I will receive brief written submissions, limited to three pages each as follows: from the defendant moving party within 20 days, responding submissions within 15 days of receipt of the defendant’s submissions, and reply submissions, if any, within ten days of receipt of the responding submissions.
K. van Rensburg J.
DATE: December 4, 2012
COURT FILE NO.: 12-115 (Owen Sound)
DATE: 20121204
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Friends of Camp Aneesh v. Girl Guides of Canada-Guides du Canada
BEFORE: K. van Rensburg J.
COUNSEL: John A. Tamming, for the Plaintiff
Valerie A. E. Dyer, for the Defendant
Nick Hedley, for the Public Guardian and Trustee
ENDORSEMENT
K. van Rensburg J.
DATE: December 4, 2012