A recent decision of the Ontario Superior Court of Justice was unequivocal in its refusal to recognize a trust in certain recreational lands owned by the YMCA. The court did not mince its words. It said to find otherwise would be an “absurd result.” Let’s examine why.
Geneva Park Property
The case involved property on Lake Couchiching, located on the traditional territory of the Anishinaabe people, the Chippewas of Rama First Nation, which is known as Geneva Park. The applicants were members of a group of individuals and families who have built, donated, laboured and contributed to Geneva Park for generations. They eventually incorporated and became known as the Friends of Geneva Park (FOGP).
Geneva Park was owned by YMCA Simcoe/Muskoka. In early 2021, the YMCA decided that the property must be sold as a result of financial pressures caused by the COVID-19 pandemic. The YMCA did not simply put the property on the market for sale to the highest bidder; it engaged a specialized realtor and sought to find a buyer that would essentially refurbish and steward the property for the use of generations to come. Potential buyers were encouraged to submit an “Expression of Interest.” Of note, FOGP itself submitted an Expression of Interest.
The property was used throughout the twentieth century for family camping, leadership development, and not-for-profit retreats and conferences. The property was developed and maintained over the decades through donations, of both labour and funds, and where funds were donated, charitable receipts were issued to donors. Cottages located on the property were built by the family camping community.
YMCA entered into an agreement to sell the property to The Commercial Realty Group, whose previous projects included restoration and conservation of various properties, and who made a commitment to rejuvenate and restore of the park. On the eve of the closing of the sale of the property, the Applicants sought, among other things, a declaration from the court that the property was held in trust by the YMCA for the members and community of Geneva Park, including FOGP, an interim injunction to stop the closing of the sale of the property, or in the alternative, if a sale proceeded, an order that the proceeds of sale be paid into court and an amount representing donations made by the Applicants and other members of the community be paid to FOGP for use in its charitable purposes.
Was Geneva Park held in trust?
This case touches on a number of possible trust arguments, including whether there was an implied trust, a resulting trust, a constructive trust or a charitable purpose trust, all of which were rejected by the Court.
The creation of a trust requires what are called “three certainties”: (1) certainty of intention – quite literally that someone intended to establish a trust, (2) certainty of objects – which is another way of saying there must be a person or charitable purpose intended to benefit from the trust, and (3) certainty of subject matter – which means the property or other assets held by the trust must be identifiable.
It is apparent from the facts that satisfying the first and second of three certainties would be difficult if not impossible. The Court said that there was “absolutely no evidence” that the YMCA held the property in trust for anyone. Although the YMCA treated the applicants as stakeholders, they were but one of many stakeholder groups.
A resulting trust can arise where one person transfers property to another person who pays nothing for it. In certain circumstances, the person receiving the property is found to hold it for the benefit of the transferor. With respect to the resulting trust argument in this case, FOGP argued that the donations and contributions of its members over the years to the YMCA had been made on the basis that the YMCA was holding the property in trust for the community. The court found no evidence of this assertion.
Constructive trust is a remedy used by the courts to address an unfair result with respect to property ownership. With respect to the constructive trust argument in this case, the Applicants argued that the YMCA’s behaviour, the manner in which it raised funds and represented itself to the Geneva Park community as well as the public, indicated that it held the property in trust for the Applicants. Once again the Court stated that this could not be the case. It emphasized that charities solicit donations and assistance as a matter of course, which is exactly what YMCA did in this case and that the Applicants willingly and voluntarily provided such assistance and funds.
It is not necessary for a trust to be in writing to be valid. Where there is no trust document, a court will look to other evidence of a trust’s existence. The Applicants claimed that YMCA’s conduct demonstrated that the intended and exclusive beneficiary of Geneva Park, including related activities, programs, fundraising and cottage use, was for the Geneva park family community. In rejecting this argument, the Court held that there was no evidence that the Geneva park family community was the exclusive beneficiary of Geneva Park. The fact that the FOGP submitted an Expression of Interest was found by the Court to be evidence that they knew there was no trust. That Expression of Interest made no reference to the property being held in any kind of trust.
The Court did not consider whether the alleged trust was charitable and the decision thus provides no useful direction on this issue.
Essentially the Applicants argued that their donations of time, money and labour over the years to maintain and improve the property gave them rights to the property. The Court rejected these arguments and held that these were nothing more than donations to a charity (which, it is worth noting, the applicants got to enjoy through their use of Geneva Park).
The Court went on to refuse all other requests for relief made by the Applicants.
Although trusts need not be in writing, without a written deed or agreement, proving a trust’s existence is difficult. Resulting trusts are common in the context of estate planning, and constructive trusts are common in the context of family law, to name two common examples, and are born out of the court’s attempt to remediate what are otherwise unfair results. In this case, while the Applicants most certainly felt that their labour and contributions earned them rights in Geneva Park over the years, care must be taken to ensure such rights are structured and documented properly. This is particularly true where one of the parties is the type of organization to which gifts and donations of one’s time and energy without anything expected in return are the norm.