Briarpatch Inc. v. The Queen, 96 DTC 6294, [1996] 2 CTC 94 (FCA)

Robertson J.A.: — This appeal is brought pursuant to subsection 172(3) of the Income Tax Act (the “Act”) from a notice of intention, issued by the Minister of National Revenue, to revoke the appellant’s registration as a charity as provided for under subsection 168(1). While several issues were raised in argument, it is common ground that this appeal can succeed only if publication of the appellant’s magazine Briarpatch is deemed a charitable activity. For the reasons which follow, I am of the opinion that that publication does not come within the ambit of the well-established categories of charitable activities as originally laid down by Lord Macnaghten in Pemsel v. Special Commissioners of Income Tax (sub nom. Commission for Special Purposes of Income Tax v. Pemsel), [1891] A.C. 531, nor within the common law jurisprudence which has developed. In particular, the reasoning of this Court and the facts in Native Communications Society of B.C. v. Minister of National Revenue, [1986] 3 F.C. 471 (F.C.A.) cannot further the appellant’s case.

The essential facts leading up to this appeal are as follows. The appellant commenced operation in 1973 with a view to publishing a monthly newsletter (“Notes from the Briarpatch”) for the Unemployed Citizens Welfare Improvement Council of Saskatoon. In 1974 the appellant was incorporated, as a non-profit organization, under the provisions of the Societies Act of Saskatchewan. In 1975 it applied for and obtained registered status as a charitable organization. The aims and objectives, as communicated to Revenue Canada, are identical to those submitted to the provincial authorities with respect to the incorporation. They read as follows:

- communications link between low income organisations individuals;

- provide individuals and organisations with access to the media;

- evaluate the views and problems of welfare recipients, unemployed and low income people known to the public;

- evaluate, analyse and provide constructive criticism of government programs dealing with low income people;

- provide factual and relevant information to the people;

- content of the newsletter should be such that it is valuable to low income people;

- Briarpatch Society shall carry on educational workshops and partake in other media workshops;

- identify common problems between and among various groups around these issues;

- Briarpatch Society educate regular media to present the problems of the poor fairly;

- break down hostilities and barriers between people.

In 1987 the Department of National Revenue conducted an audit of the appellant’s activities. For purposes of this appeal it is sufficient to state that by that date the principal activity carried on by the appellant was the publication and distribution of the magazine Briarpatch which is published ten times per year. In its written submissions, the appellant adopts the position that it publishes articles of specific interest and application to Canada’s poor, with the specific goals of education and the alleviation of poverty through education. The articles are written by educators from all fields and have been used as teaching tools in university courses. The appellant also maintains that the dissemination of information to and about the poor constitutes the conferral of a benefit. While conceding for purposes of this appeal that the appellant was “properly charitable at the time of registration”, the respondent takes the position that since that date the focus of the magazine has shifted from dealing with issues directly affecting low income people - the poor - to issues of general interest.

A brief review of the relevant legal principles will help place the appellant’s argument in perspective. As the Act does not define charitable activities the issue falls to be determined by common law provisions. The common law classifies a charity in four ways: (1) the relief of poverty; (2) the advancement of education; (3) the advancement of religion; and (4) purposes beneficial to the community, not falling within the preceding categories. In oral argument the appellant chose not to advance the thesis that the publication of Briarpatch was directed at the relief of poverty. Rather it pursued the issue in terms of the magazine’s principal focus being poverty and in terms of its primary activity coming within both the second and fourth categories; that is to say the advancement of education and a purpose which is otherwise beneficial to the community in a charitable sense.

Turning to the second category, the law presently requires that someone claiming to advance education, such as the appellant, must establish that its publication is directed toward the “formal training of the mind” or “the improvement of a useful branch of human knowledge”: see Positive Action Against Pornography v. Minister of National Revenue, [1988] 1 C.T.C. 232, 88 D.T.C. 7186 (C.A.) per Stone J.A. As stated by MacGuigan J.A. in Maclean Hunter Limited v. Deputy Minister of National Revenue for Customs and Excise, [1988] 1 C.T.C. 174, 88 D.T.C. 6096 at page 177 (D.T.C. 6098) (F.C.A.):

When the word “education” or “educational” is used without qualification, it has reference to a fundamental process of learning which is aimed at preparing either for life in general or for a large purpose such as a particular profession or trade, and is in any event without an immediately utilitarian focus.

Although broadly worded as a residual “catch-all”, the fourth category has been interpreted cautiously, if not narrowly, by the courts. What constitutes a charitable benefit to the community must be determined in light of the Preamble to the Charitable Uses Act, 1601 (43 Eliz. I, c. 4):

The relief of aged, impotent, and poor people; the maintenance of sick and maimed soldiers and mariners, schools of learning, free schools, and scholars in universities; the repair of bridges, ports, havens, causeways, churches, seabanks, and highways; the education and preferment of orphans; the relief of stock, or maintenance of houses of correction; marriage of poor maids; suppor- tation, aid, and help of young tradesmen, handicraftsmen, and persons decayed; the relief or redemption of prisoners or captives; and the aid or ease of any poor inhabitants concerning payment of fifteens, setting out of soldiers, and other taxes.

If the activity in question is not within the “spirit and intendment” of those enunciated in the preamble, in addition to being of benefit to the community, then it cannot be viewed as charitable in the legal sense: See generally Guaranty Trust Company of Canada v. Minister of National Revenue, [1967] S.C.R. 133 at page 141 and V. Krishna, The Fundamentals of Canadian Income Tax, 5th ed., (Toronto: Carswell, 1995) at pages 579-80.

One must also consider the trend of those decisions which have recognized certain objects and purposes as charitable under the fourth heading and ask whether by extension or analogy the case under consideration is in line with the earlier precedents: see D’Aguiar v. Guyana Commissioner of Inland Revenue, [1970] T.R. 31 at page 33 per Lord Wilberforce. This approach merely reflects the understanding that “the law of charity is a moving subject which may well have evolved since 1891”: per Lord Wilberforce in Scottish Burial Reform & Cremation Society v. Glasgow (City), [1967] 3 All E.R. 215, [1968] A.C. 138 at page 154 (H.L.); cited with approval in Native Communications Society, per Stone J.A. at pages 175-76 (D.T.C. 6357-58).

That the law of charity can be a moving subject is aptly illustrated in Native Communications Society. In that case the taxpayer was a non-profit native corporation whose objects were to produce media and television programs of relevance to the native people of British Columbia and to publish a newspaper on subjects of relevance to the native community. The appeal from the Minister’s refusal to register the corporation as a charitable organization was allowed by this Court. In reaching its conclusion the Court had regard to the special legal position occupied by the Native peoples in Canadian society. I will say more of this case shortly.

Having regard to the foregoing legal framework it remains to be decided whether the publication of Briarpatch constitutes a charitable activity. At this stage the answer is essentially one of fact or personal judgment involving an evaluation of the magazine’s contents. In my opinion, the publication does not fall within the category of the advancement of education as that phrase is applied in the law of charities. It is evident that the magazine is not directed toward the training of the mind through structured analysis or presentation of knowledge. I agree with counsel for the Minister that the publication lacks the continuity, structure and analysis needed to meet those tests. I also agree that the fact that the magazine is used for classroom purposes in universities does not render it educational in the charitable sense.

In support of the above conclusions, I need only list a sampling of the topics canvassed in the May, 1986 edition of Briarpatch: “Wheat Pool closures”, “Farmer’s stage occupation”, “Potash worker’s strike”, “Central American teach-in”, “Liberation theology”. Under the heading culture, that publication contains a review of two television sitcoms: The Cosby Show and Kate and Allie. The most telling evidence as to the nature of the publication is found in the appellant’s marketing literature. In an effort to attract subscribers, Briarpatch has described itself as an “independent voice for social change” and as offering “views and analysis without the emerald-tinted glasses” (Appeal Record at page 537). Another brochure concludes that “Our broad coverage of politics, women’s issues, and culture guarantees good, informative reading ten times a year” (Appeal Record at page 393). It cannot be denied that Briarpatch is informative and educational in the broad sense. But these accolades are equally applicable to other commercial publications. Moreover, they cannot propel one to the conclusion that the publication is intended to advance education in the charitable sense. I turn now to the appellant’s reliance on the fourth category - a purpose beneficial to the community in general.

The thrust of the appellant’s argument is that, as with the newspaper contemplated in Native Communications Society, Briarpatch speaks to a specific, identifiable group which deserves or needs special recognition or protection, - the poor. By addressing the needs and concerns of that disadvantaged group, Briarpatch is providing a service that is of benefit to the community and, therefore, charitable. The immediate problem with this argument is that the topics canvassed in Briarpatch are not restricted to matters that are of direct relevance to Canada’s poor. In short, the appellant’s publication lacks specificity of purpose. This fact alone is a sufficient basis on which to distinguish the present case from Native Communications Society. Admittedly, in that case a publication was involved, but that is the only common ground shared with the case under consideration. In closing, it is instructive to reproduce the observations of Stone J.A. in Native Communications Society with respect to the native publication that was anticipated in that case:

It is apparent that the newspaper is used more than as a mere vehicle for conveying news. An examination of its pages shows that through them its Indian readers are made aware of activities of a cultural nature going on elsewhere in the wider Indian community and of attempts being made to foster language and culture as, for example, through greater use of native languages and the revival of ancient crafts, music and story telling. All of this may well instill a degree of pride of ancestry in the readers of Kahtou, deepen an appreciation of Indian culture and language and thereby promote a measure of cohesion among the Indian people of British Columbia that might otherwise be missing. The record indicates that the radio and television programs are being designed along the same general lines.

Having regard to the above passage, and the special constitutional status possessed by Canada’s Native peoples, it is clear that this is not a proper case in which to draw an analogy or to approve of an extension to the reasoning advanced in Native Communications Society. In closing, I note that similar observations were made recently by this Court in Vancouver Society of Immigrant and Visible Minority Women v. Minister of National Revenue, [1996] 2 C.T.C. 88 (F.C.A.).

For all these reasons, the appeal should be dismissed.

Appeal dismissed.