THE ATTACHMENT OF CHARITABLE PROPERTY AT LAW AND IN EQUITY: OR, WHY THE ONTARIO COURT OF APPEAL IN RE CHRISTIAN BROTHERS OF IRELAND IN CANADA IS RIGHTS AND ITS CRITICS ARE WRONG

Abstract

In Re Christian Brothers of Ireland in Canada, the Court of Appeal for Ontario explained why all of a charity’s property—even property the charity holds in trust for charitable purposes—can be used to pay the charity’s debts. The charity and trust bar think that the Court of Appeal’s decision is in error. They think that without good reason the Court of Appeal gave creditors access to property held on a charitable trust in violation of the trustee indemnity principle. In fact, it is the critics who are wrong. All property that is held by a charity, whether in trust or otherwise, is dedicated to a socially desirable purpose or purposes, not for the private benefit of any person or persons. For this reason, principles of law or equity that are based on private property rights—such as the trustee indemnity principle—cannot automatically be applied to property held for charitable purposes. When applied to property held for charitable purposes, the trustee indemnity principle, for example, prevents that property from being used to pay any liabilities. This is a form of charitable immunity, which has long been rejected in the law. This paper explains why, as a matter of well established principle, logic and policy, charitable property—even property held in trust for charitable purposes—may be attached to pay for the charity’s liabilities and must be so used once the charity becomes insolvent.