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Citation: 2004TCC333
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Date:
20040510
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Docket: 2001-4456(IT)G
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BETWEEN:
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LORRAINE MULLIN,
THE
EXECUTRIX OF THE ESTATE OF AUDREY MACDONALD,
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Appellant,
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and
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HER
MAJESTY THE QUEEN,
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Respondent.
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REASONS FOR
JUDGMENT
O'Connor,
J.
[1] The issue in this appeal is best
described by quoting paragraphs 9, 10, 11 and 12 of the Reply to
the Notice of Appeal. Note that Poverello Charities Ontario
("Poverello") is a registered charity.
In so
assessing the appellant, the Minister made, inter alia,
the following assumptions:
(a) Under the
terms of her will, Audrey MacDonald directed her Estate Trustees
to divide the residue of her estate into equal shares, one of
which was to be paid or transferred to her brother, Father Joseph
MacDonald, if he survived her;
(b) Under the
terms of the will, there was no alternative recipient named with
respect to the portion of the estate bequeathed to Father Joseph
MacDonald, so that if Father Joseph Macdonald predeceased the
testator, the residue of the estate was to be divided equally
among the remaining three beneficiaries of the residue of the
estate;
(c) The Appellant
asserted that the Poverello donation was made in accordance with
the provision of the will bequeathing the residue of the estate,
$46,332.87 being one-quarter of the residue of the estate,
and
(d) There was no
provision in the will for the transfer or payment of any amount
to Poverello and therefore any amount given to Poverello was not
given in accordance with the terms of the will.
(e) The Estate of
Audrey Macdonald did not donate any amount to
Poverello.
(f) No
amount in respect of a donation to Poverello is properly included
in the total charitable gifts of Audrey MacDonald for the 1999
taxation year.
B.
ISSUES TO BE DECIDED
10. The
issue is whether Audrey MacDonald made a donation in the amount
of $46,332.87 to Poverello which should be included in the total
charitable gifts of Audrey MacDonald for the 1999 taxation
year.
C.
STATUTORY PROVISIONS, GROUNDS RELIED ON, AND RELIEF
SOUGHT
11.
He [the Respondent]
relies, inter alia, on
section 118.1 and subsection 248(1) of the Income Tax Act,
R.S.C. 1985, c. 1 (5th Supp.), as amended (the
"Act"), and sections 3500 and 3501 of the
Income Tax Regulations.
He
respectfully submits that the Poverello donation was not a gift
made by Audrey MacDonald by will or otherwise, and is therefore
not properly included in the "total charitable gifts"
or "total gifts" of Audrey MacDonald for the 1999
taxation year, as those terms are defined in subsection 118.1(1)
of the Act.
[2] The Appellant, as executrix of the
estate of Audrey MacDonald argues essentially that Father
MacDonald and Poverello are one and the same and that any monies
going to Father MacDonald are used by him in carrying out his
duties at Poverello. The monies in question were deposited in the
bank account of Poverello and are being used to construct a
sunroom for the persons Poverello cares for, such as the
homeless, street people and people with psychiatric or mental
problems.
[3] She refers to a document which
outlines the duties performed by Poverello. The following is an
extract from that document:
POVERELLO
CHARITIES
Poverello
Charities began as shopper's drop-in in 1969. its original
purpose was to bring the healing presence of Christ into the
market place. It served as a Christian coffee house at Yonge and
Teraulay Sts. until 1973, and at Yonge and Bloor Sts. until
1978.
The Coffee
House/Drop-In responded to the changing needs of the clients.
Community homes began in 1975. Another Drop-In began in 1976 to
serve the needs of the post-psychiatric community. In 1976,
thrift stores were added to the roster of services. Besides
recycling materials at low cost, the "Brother Stores"
generated sufficient funds to help in the purchase of more
community homes and a vacation/retreat centre on Georgian
Bay.
During the
1980's, Poverello Charities was involved in the founding of
the Daily Bread Food Bank, the co-founding of St. Jude's
Homes ( a 37 apartments complex for people with chronic mental
illness), and the formulating of a new concept of food delivery
to the poor. This latter concept - a restaurant where a meal
would be served in a gracious setting at a modest cost - was
incorporated into St. Francis Table.
During the
1990s, a street ministry was initiated. Food, drink, and clothes
are provided to people who live and sleep on the streets in
downtown Toronto. This program
which is now in its second decade, operates from November 15th
until April 15th.
Hopefully,
in the near future, we will see work places created where people
with mental illness can contribute their skills and expertise,
and receive adequate remuneration for their labours.
The name
Poverello Charities was adopted to acknowledge a link to
St. Francis of Assissi, the "poverello"
or poor little one who lived simply and worked with the
poor.
Poverello
Charities is registered as a charitable institution with the
Federal Government. It is incorporated in the Province of Ontario
and has a Board of
Directors.
The Appellant also
points out that Joseph M. McBride, Q.C., the lawyer who settled
the estate, made the $46,332.87 cheque payable to Poverello
Charities Ontario.
Analysis and
Decision
[4] Subsection 118.1(1) of the
Income Tax Act (the "Act") defines
"total charitable gifts" as follows:
118.1(1)
Definitions - In this section
"total charitable gifts" of an individual
for a taxation year means the total of all amounts each of which
is the fair market value of a gift (other than a gift the fair
market value of which is included in the total Crown gifts, the
total cultural gifts or the total ecological gifts of the
individual for the year) made by the individual in the year or in
any of the 5 immediately preceding taxation years (other than in
a year for which a deduction under subsection 110(2) was claimed
in computing the individual's taxable income) to
(a) a
registered charity,
...
[5] Although the Court is sympathetic
to the position of Father MacDonald and Poverello, the case of
George W. Lucey and Lyman J. Lucey and The Catholic Orphanage
of Prince Albert, commonly known as St. Patrick's Orphanage
and Francis Charles Neate, Administrator of Estates of the
Mentally Incompetent, as Administrator of the Estate of Nellie A.
Lucey decided by the Supreme Court of Canada (1951 S.C.R.
690) is remarkably similar to the facts in this
appeal.
[6] In that case the bequest read as follows:
I devise and bequeath all the real and personal estate to which I
will be entitled at the time of my decease, unto Reverend William
Bruck o.m.i. St. Patricks Orphanage of the City of Prince
Albert in the Province of Saskatchewan, absolutely, and I appoint
the said Reverend William Bruck sole Executor of this my Will;
hereby revoking all former Testamentary writing. ...
...
The Supreme Court held as
follows:
Held: that
the words of the will must be interpreted in their grammatical
and ordinary sense and so interpreted the words "unto
Reverend William Bruck o.m.i. St. Patricks Orphanage of the City
of Prince Albert
***" meant that the donee of
the estate was the Reverend William Bruck and not the
Orphanage.
The Court also stated as
follows:
Our first task is to interpret the words, in which the testatrix
has expressed herself, in their grammatical and ordinary sense. I
cannot bring myself to doubt that, so interpreted, the words
"unto Reverend William Bruck o.m.i. St. Patrick's
Orphanage of the City of Prince Albert in the Province of
Saskatchewan" mean that the gift of the testatrix'
estate is to the individual whose name is Reverend William Bruck
and who is further described by the initials and words which
follow his name, the letters "o.m.i." denoting the
Order to which he belonged and the words
"St. Patrick's Orphanage" the place where he
lived, ... It would, I think, involve a violent and unnatural
construction to regard the words "Reverend William
Bruck" or "Reverend William Bruck o.m.i." as an
adjectival phrase descriptive of St. Patrick's Orphanage, and
I do not think the testatrix so employed them. ...
It is next necessary to consider the argument of the respondent
that if it should be held that the gift is to the Reverend
William Bruck it is made to him not beneficially but virtute
officii impressed with a trust for the benefit of the
Orphanage.
In none of the cases to which counsel referred was a gift to a
named individual held to be other than a beneficial gift merely
because such individual was described as the holder of an
office.
...
...
"The mere description of the legatee as the holder of an
office is not, of course, sufficient to raise any such
inference." (i.e. an inference that it was not a personal
bequest.)
...
I have found no case which decides, and I do not think that it
should be held, that the fact that a beneficiary is described in
a will as a member of an order, vowed to poverty, is of itself
sufficient to prevent his taking beneficially.
...
...I can
find nothing in the judgments delivered in the Court of Appeal at
variance with the statement of Tomlin J. that a person cannot be
fixed with a trust, because by vow or otherwise, he is under some
obligation of conscience carrying no legal sanction to deal with
what he receives in a particular way. ...
...
It is, I think, sufficient to refer to the statement of Lord
Cairns in Charter v. Charter (2).
***My
Lords, upon one part of the case I have never entertained any
doubt. I hold it to be clear, as I think all your Lordships do,
that this is not a case in which any parol evidence of statements
of the testator, as to whom he intended to benefit, or supposed
he had benefited, by his will, can be received *** I am of
opinion that it ought to have been excluded. The only case in
which evidence of this kind can be received is where the
description of the legatee, or of the thing bequeathed, is
equally applicable in all its parts to two persons, or to two
things. That clearly cannot be said of the present
case.
...
There is, I think, no doubt that if the
Reverend Father Bruck had survived the testatrix he
would have used all of her estate either for the Orphanage or for
other equally worthy objects and would have retained nothing
whatever for himself; but, in my opinion, no obligation to so
deal with the state was imposed upon him by the words which the
testatrix has used in her will.
...
[7] I find that the said decision of
the Supreme Court is clearly applicable to the present case and I
must conclude that the bequest was to Father MacDonald and not to
Poverello.
[8] Consequently, the appeal is
dismissed.
Signed at Ottawa, Canada, this 10th
day of May, 2004.
O'Connor,
J.
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