Native Communications Society of B.C. v. M.N.R., 86 DTC 6353, [1986] 2 CTC 170 (FCA)

Stone, J.:—The appellant has sought registration as a “charitable organization” under the provisions of the Income Tax Act, R.S.C. 1952, c. 148 as amended by S.C. 1970-71-72, c. 63 and as further amended. Its application for registration was refused by the Minister of National Revenue and it now brings this appeal from that decision pursuant to subsection 172(3) of the Act.

The appellant is a non-profit corporation incorporated pursuant to the laws of British Columbia in 1983. Its purposes as amended appear in clause 2 of its Certificate of Incorporation reading as follows:

2. The purposes of the Society are:

(a) to organize and develop comprehensive non-profit communications programs, namely radio and television productions that are of relevance to the native people of British Columbia.

(b) To train native people as communication workers; and to publish a nonprofit newspaper on subjects relevant to the native people of British Columbia;

(c) to procure and deliver information on subjects facing native people of British Columbia;

(d) as subsidiary to the above dominant purposes and as a means to carry out the said purposes

(i) to promote by communications, the image of native people in the national scene and to create incentives for development of mutual understanding.

(ii) to provide suitable quarters for the purposes of the society.

(iii) to procure and deliver information on subjects relating to the social, educational, political and economic issues facing native people of British Columbia.

(iv) to co-operate with other persons,

(v) to communicate with and to broaden social interactions among other native groups from various parts of the world.

(e) to do all of the above on an objective basis;

(f) to do all such other things which are conducive to the attainment of the purposes stated above.

They are followed immediately by clauses 3 and 4 which read:

3. In the event of winding up or dissolution of the Society funds and assets of the Society remaining after the satisfaction of its debts and liabilities, shall be given or transferred to such organization or organizations concerned with the social problems or organizations promoting the same purposes of this Society, as may be determined by the members of the Society at the time of winding up or dissolution, and if effect cannot be given to the aforesaid provisions, then such funds shall be given or transferred to some other organizations, provided however that such organization referred in this paragraph shall be a charitable organization, a charitable corporation, or a charitable trust recognized by the Department of National Revenue of Canada as being qualified as such under the provisions of the Income Tax Act of Canada from time to time in effect.

4. The above purposes of the Society shall be carried out without purpose of gain for its members and any profits or other accretions to the Society shall be used for promoting its purposes and all of the above purposes shall be carried on on an exclusively charitable basis.

Correspondence ensued between the appellant and the Charitable and Non-Profit Organizations Section of the Department of National Revenue, Taxation. In November 1983 registration was refused on the basis that the objects of the appellant went beyond being exclusively charitable. The appellant was invited to submit a further application to be accompanied by evidence “that the objects of the corporation have been amended in an appropriate manner”. A fresh application was in fact submitted in December 1984 together with an amended Certificate of Incorporation from which I have already quoted. This fresh application was accompanied by a statement concerning the activities and proposed activities of the appellant. It will assist if I set out here the contents of that document in their entirety:

WHAT WE DO . . .

A. Training

THE NCS IS COMMITTED to training native people in communications technology. Training programs have been developed in the Print Journalism field and 1984 will see the implementation of a Training Program in broadcast communications, including radio and television.

SPECIALIZED MEDIA WORKSHOPS are also an important part of developing skills in the broadcast industry. Native people throughout British Columbia will continue to have the opportunity to be introduced to new and existing technologies useful in urban and remote communities.

B. Newspaper

IN SEPTEMBER 1983, the Society began publishing a monthly newspaper called “Kahtou”. Kahtou is knowledge. In Chinook, this means ‘‘why, what, and how”. To this, the editor adds “who, where and when”. In addition, to our own journalistic staff, we welcome stories, news articles and information from contributors around the province. Circulation has now reached 7,500 and the paper is now published bi-weekly. Distributed to native organizations, Band Councils, individuals and many non-native organizations, it is an effort to keep everyone up to date about events and issues of interest to native people in British Columbia.

C. Northern Native Broadcasting Access Program (NNBAP)

THE NCS IS ADDRESSING the special concerns of native people in northern British Columbia. Preliminary research and planning is underway for the purpose of establishing a radio and television production centre controlled by native people in the north.

D. Rural Communications Services

IMPROVING COMMUNICATIONS CANNOT be limited to a broadcast or print information system. Many B.C. communities still have limited or inadequate telephone and telecommunications systems. The NCS is working to ensure that even the most isolated communities have access to communications systems that most British Columbians take for granted. Trial communications for hunters, trappers, and fishermen is another area that the NCS is working to improve.

As a subsidiary activity to the above and in order to carry out the above:

(e) Liaison

LIAISON WITH various levels of government, the private sector, and crown corporations, all involved in communications, is an aspect of our work in promoting adequate services for native people.

(f) Media

MEDIA REPRESENTATION of native people is often negative. Another activity of NCS is to encourage realistic portrayals of native people in both urban and rural settings.

A copy of the April 24, 1984, number of the “Kahtou” newspaper referred to in the last mentioned document accompanied the fresh application. At page 2 it asserts that it is “politically non-aligned” and at page 9 that it “is distributed free of charge to aboriginal people throughout B.C.” I will have something more to say about this publication presently. Notwithstanding the amended objects and the additional material submitted, the fresh application was denied by letter dated April 4, 1985. At the request of the appellant the decision was reconsidered but was confirmed by a further letter dated June 10, 1985. These letters deal at some length with some of the language contained in the appellant’s “purposes” and with a number of judicial decisions as showing that those purposes, in the opinion of the Minister, did not qualify as “charitable”. I wish here to set forth only two passages from these fairly detailed letters. In the first of them the following reasons were given for refusing the application:

It is a basic tenet of charity law that, in order for a purpose to be regarded as charitable, it must not be so vaguely or broadly stated as to permit the pursuit of non-charitable objects or activities. What is more, it must be clear from the organization’s objectives that all of its resources must be and will be devoted to charitable activities as is required by the provisions of the Income Tax Act. The objects must not provide for activities which are not charitable nor should they be so broad that, although not specifically non-charitable, they would empower the corporation to engage in non-charitable activities.

And in the letter of June 10 the following is stated:

We would, however, like to provide a more detailed explanation of this decision. As you are aware, an applicant in order to qualify for registration as a charitable organization must devote all its resources to charitable activities carried on by the organization itself. The Act does not define the term “charitable” and it is therefore necessary to refer to the principles of common law governing charity.

Charitable purposes and activities have been categorized by the courts as the relief of poverty, the advancement of religion, the advancement of education and other purposes and activities beneficial to the community as a whole in a way the law regards as charitable. These, then, are the basic concepts to which an organization’s purposes and activities must relate in order to be considered charitable.

You have stated that the dominant purpose of the organization is charitable and that you have submitted evidence from other jurisdictions to support this view. In brief, the primary purpose of the Society is to organize and develop non-profit communications programs of relevance to the native people of British Columbia through the mediums of radio, television and newspaper production. A copy of one of the newspapers published was enclosed with the applicant’s submission. We have reviewed the articles published in the newspaper and note that it is indeed a vehicle to report community news of relevance to native people. In this respect, we would advise that the advancement of education, in common law, has been interpreted to mean the advancement of education for its own sake in that the mind may be trained as opposed to the mere provision of information which informs rather than teaches.

The “provisions of the Income Tax Act” referred to in the letter of April 10, 1985, would appear to be those found in paragraph 149.1 (1)(b) of that statute which defines the term "charitable organization’" as follows:

149.1(1) In this section

(a)

(b) “charitable organization” means an organization, whether or not incorporated, all the resources of which are devoted to charitable activities carried on by the organization itself and no part of the income of which is payable to, or is otherwise available for, the personal benefit of any proprietor, member, shareholder, trustee or settlor thereof;

The starting point for a discussion of what may or may not constitute a good charitable purpose is the decision of the House of Lords in the case of The Commissioners for Special Purposes of the Income Tax v. Pemsel, [1891] A.C. 531; [1891-4] All E.R. 28, and, in particular, the legal meaning of the word "charity” given by Lord Macnaghten at 583 (All E.R. 55) of the report:

How far then, it may be asked, does the popular meaning of the word “charity” correspond with the legal meaning? “Charity” in its legal sense comprises four principal divisions: trusts for the relief of poverty; trusts for the advancement of education; trusts for the advancement of religion; and trusts for other purposes beneficial to the community, not falling under any of the preceding heads.

That definition has been applied time after time in this country and has been approved by the Supreme Court of Canada (see Guaranty Trust Company of Canada v. Minister of National Revenue, [1967] S.C.R. 133 at 141; [1966] C.T.C. 755 at 759). A purpose, to be a good "charitable” one, must possess a charitable nature within "the spirit and intendment” of the preamble to the Statute of Elizabeth entitled "An Act to redress the misemployment of lands, goods, and stocks of money heretofore given to charitable uses”. That statute was enacted in England in 1601 during the reign of Elizabeth I as 43 Eliz. I, c. 4. Nowadays, it is generally known to this branch of the law simply as the “Statute of Elizabeth’’. It is unnecessary to recite the whole of that preamble and perhaps also undesirable to attempt its reproduction in the original form and style. I prefer instead to do as Slade, J. did in McGovern and Others v. Attorney General and Another, [1982] Ch. 321 at 332; [1981] 3 All E.R. 493 at 502-3 where he put the statute's list of charitable objects in modern English as follows:

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, stock, or maintenance of houses of correction; marriage of poor maids; supportation, 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.

The appellant seeks to bring its case within three of the four heads found in Lord Macnaghten’s classification, namely, “relief of poverty", “advancement of education” and “trusts for other purposes beneficial to the community, not falling under any of the preceding heads". I would find some difficulty in concluding that the appellant’s purposes fall under the first of these heads. The record before us is not such as to support such a claim even though it is notorious that the Indian people, generally speaking, are not as advantaged as many of their fellow citizens. The same general problem presents itself with regard to the second head. I say this notwithstanding that one of the appellant’s express purposes is “to train native people as communication workers" and that an incidental purpose for publishing the newspaper and for the production of radio and television programs is or will be to train Indian people in the use of those means of communication. In view of the conclusion I am about to reach on the applicability of the fourth head it will not be necessary to express a final view on the point. It is this fourth head that was presented first in order of argument and with the greatest detail and emphasis.

A review of decided cases suggests that at least the following propositions may be stated as necessary preliminaries to a determination whether a particular purpose can be regarded as a charitable one falling under the fourth head found in Lord Macnaghten’s classification:

(a) the purpose must be beneficial to the community in a way which the law regards as charitable by coming within the “spirit and intendment" of the preamble to the Statute of Elizabeth if not within its letter. (National Anti-Vivisection Society v. Inland Revenue Commissioners, [1948] A.C. 31 at 63-64; [1947[ 2 All E.R. 217 at 232-33; In re Strakosch, [1949] 1 Ch. 529 (C.A.) at 537-38; [1949] 2 All E.R. 6 at 8), and

(b) whether a purpose would or may operate for the public benefit is to be answered by the Court on the basis of the record before it and in exercise of its equitable jurisdiction in matters of charity (National AntiVivisection Society v. Inland Revenue Commissioners, (supra) at pages 44-45 (All E.R. 221-22), 63 (All E.R. 232)).

Can it be said that the purposes of the appellant fall within “the spirit and intendment" of the preamble to the Statute of Elizabeth and, therefore, within the fourth head of Lord Macnaghten’s definition of the word “charity"? In answering this question we must bear in mind what Lord Greene, M.R. had to say in In re Strakosch (supra) at 537 (All E.R. 8):

In Williams' Trustees v. Inland Revenue Commissioners ([1947] A.C. 447) the House of Lords has laid down very clearly that in order to come within Lord Mac- naghten's fourth class, the gift must be not only for the benefit of the community but beneficial in a way which the law regards as charitable. In order to satisfy the latter it must be within the “spirit and intendment” of the preamble to the Statute of Elizabeth. That preamble set out what were then regarded as purposes which should be treated as charitable in law. It is obvious that as time passed and conditions changed common opinion as to what was properly covered by the word charitable also changed. This has been recognized by the courts as the most cursory examination of the cases shows. [Emphasis added.]

More recently, in Scottish Burial Reform and Cremation Society Ltd. v. Glasgow Corporation, [1968] A.C. 138; [1967] 3 All E.R. 215, Lord Wilberforce reminds us that “the law of charity is a moving subject”. I refer more fully to his opinion on the point as expressed at page 154 (All E.R. 223) of the report:

On this subject, the law of England, though no doubt not very satisfactory and in need of rationalisation, is tolerably clear. The purposes in question, to be charitable, must be shown to be for the benefit of the public, or the community, in a sense or manner within the intendment of the preamble to the statute 43 Eliz. 1, c.

4. The latter requirement does not mean quite what it says; for it is now accepted that what must be regarded is not the wording of the preamble itself, but the effect of decisions given by the courts as to its scope, decisions which have endeavoured to keep the law as to charities moving according as new social needs arise or old ones become obsolete or satisfied. Lord Macnaghten's grouping of the heads of recognised charity in Pemsel's case ([1891] A.C. 531, 583) is one that has proved to be of value and there are many problems which it solves. But three things may be said about it, which its author would surely not have denied: first that, since it is a classification of convenience, there may well be purposes which do not fit neatly into one or other of the headings; secondly, that the words used must not be given the force of a statute to be construed; and thirdly, that the law of charity is a moving subject which may well have evolved even since 1891. [Emphasis added.]

Nor should we ignore the advice of Lord Upjohn as expressed in the same case. In deciding whether the charity there in question fell within the spirit and intendment of the preamble to the Statute of Elizabeth, he said (at 150 (All E.R. 220)):

This so-called fourth class is incapable of further definition and can to-day hardly be regarded as more than a portmanteau to receive those objects which enlightened opinion would regard as qualifying for consideration under the second heading.

I do not think the case can be decided without taking account of the special legal position in Canadian society occupied by the Indian people. A measure of protection for “existing aboriginal and treaty rights of the aboriginal people of Canada” is recognized in section 35 of the Constitution Act, 1982. And, as we shall see, the state plays a large role in the lives of the Indian people under domestic legislation.

The people toward whom the purposes of the appellant are directed are composed of members of Indian bands widely scattered throughout the province of British Columbia. I have already noted that the use of the newspaper, radio and television has or will provide an element of “education” in that a number of the Indian people have or will obtain some degree of training in their use. In addition radio, television and the newspaper is or will be used for communicating in matters which touch their lives as Indians. Counsel for the respondent contends that the newspaper contains only “news” which cannot be seen as “educational”. I have difficulty in following this argument for it seems to me that in the minds of its readers the newspaper could well be regarded as educational as well as informative. I need not decide the point. 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 radio and television programs are being designed along the same general lines.

In my judgment it would be a mistake to dispose of this appeal on the basis of how this purpose or that may or may not have been seen by the courts in the decided cases as being charitable or not. This is especially so of the English decisions relied upon, none of which are concerned with activities directed toward aboriginal people. If, as Lord Wilberforce says (and I agree), "the law of charity is a moving subject", then our duty must be to see whether in the circumstances disclosed by the record before us the appellant’s purposes at this point in time fall within Lord Macnaghten's fourth head of charities in Pemsel's case. We do not have the guidance of a prior decision of a court of this country dealing with a case quite like that of the present one. On the other hand I am much assisted by an Australian decision, In re Mathew, [1951] V.L.R. 26. It was there contended that a testamentary direction that the residuary estate be used by a named person “in his discretion for the benefit of the Australian aborigines” was invalid. The argument on the other side was that it fell within the fourth head mentioned by Lord Macnaghten and the Supreme Court of Victoria agreed. I think the following passage from the judgment of O’Bryan, J. (at 232) is particularly helpful:

Australian aborigines are notoriously in this community a class which, generally speaking, is in need of protection and assistance. This has been recognised in various ways by the Legislature. It is necessary only to refer to our Victorian Aborigines Act of 1928. By that statute, a Board is set up for the protection of Australian aborigines, and extensive powers are given to the Governor in Council to make regulations for their protection and assistance, including regulations for the distribution and expenditure of moneys granted by Parliament for their benefit (sec. 6(IV) ) and for the care and education of their children. Such a class, in my opinion, is analogous to those mentioned in the statute as 'The aged, impotent and poor people; support aid and help of people decayed; education and preferment of orphans”. I must apply the words of this statute to present-day Australian conditions. The words are to be applied, not ejusdem generis, but by way of analogy. In my opinion, so applying them, Australian aborigines comprise a class of persons analogous to those which the statutory preamble enumerates. That being so, the gift is not vitiated by its general provision that the fund is "To be used by him at his discretion for the benefit of .. ..”

Here in Canada, as well, the state is authorized to play and does play a somewhat similar role in protecting and assisting the Indian people. In fact it has been held by the Supreme Court of Canada that the Crown is under a fiduciary duty in dealing with lands held for the benefit of Indians (Guerin et al. v. The Queen, [1984] 2 S.C.R. 335; 13 D.L.R. (4th) 321). A cursory examination of the Indian Act, R.S.C. 1970, c. 1-6, as amended, reveals the extent of state involvement. I would note, for example, that it may have a say in: establishing of bands and the occupancy of reserve lands; the registration of Indian people; the holding, management and expenditure of Indian moneys; the compulsory taking or using, or the surrender of lands of a reserve; descent of property, wills and the distribution of property on intes tacy; mental incompetency and guardianship; trading with the Indians; enfranchisement; schools. The statute is under the administration of the Minister of Indian Affairs and Northern Development who is also the superintendent general of Indian Affairs. It provides for a “superintendent” which is defined to include a commissioner, regional supervisor, Indian superintendent, assistant Indian superintendent, etc. as well as the superintendent for a particular band or reserve. From this elaborate set of provisions it may be seen that the state has assumed a special responsibility for the welfare of the Indian people. Unlike the vast majority of their fellow citizens they are rather a people set apart for particular assistance and protection in many aspects of their lives. That circumstance, in my view, cannot be safely disregarded in deciding whether the purposes of the appellant fall inside or outside the fourth category of charities as classified by Lord Mac- naghten in Pemsel's case.

I have concluded that the appellant’s purposes are beneficial to the Indian community of British Columbia within the spirit and intendment of the preamble to the Statute of Elizabeth and, therefore, they are good charitable purposes. It is true that they are not drawn with exceptional precision but it is of the nature of corporate objects clauses to be rather broadly phrased. Nevertheless, they are restricted to matters that are “of relevance” or are “relevant” or that are “facing native people of B.C.” Though there is some broadness of language in clause 3(d) it is expressly made “subsidiary to the above dominant purposes and as a means to carry out the said purposes”. The incorporating document also requires that “all of the above purposes shall be carried on on an exclusively charitable basis”. Not without some significance too (though not in itself decisive) is that in the event of the winding up or dissolution of the appellant its remaining assets are to be given or transferred over to “a charitable organization, a charitable corporation, or a charitable trust” concerned with the social problems with which it is concerned or that is promoting the same purposes and is recognized by the Department of National Revenue as being qualified as a charitable organization, charitable corporation or charitable trust under the Act.

Before leaving the matter I should comment on one of the reservations of the respondent to treating the appellant's purposes as charitable. It concerns the presence of the word “political” in clause 2(d)(iii) of the statement of purposes. I do not share the respondent's concern. The record before us does not contain even the slightest hint that the appellant engages or intends to engage in political activities. Clause 2(d)(iii) merely authorizes the procurement and delivery of information on a number of issues including political issues facing the native people of British Columbia. It does not authorize the appellant to engage in political activities as such. The appellant's newspaper is expressly stated to be “politically non- aligned” and there is no evidence on the record showing that the contrary is so. If the appellant were to engage in political activities such as would disqualify it from continued registration as a “charitable organization”, the respondent could revoke its registration in the manner provided by the Act.

I would allow this appeal, set aside the decision of the Minister of National Revenue herein and refer the matter back to the Minister for reconsideration on the basis that the appellant is a ‘‘charitable organization” within the meaning of paragraph 149.1(1)(b) of the Income Tax Act. No special reasons having been shown pursuant to Rule 1312, I would not allow costs.

Appeal allowed.