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December 2018

"Bucking" the Legal Lacuna

The Humboldt Bronco's Record Setting GoFundMe Campaign and Saskatchewan's Informal Public Appeals Act

David Elmaleh
David Elmaleh
Partner

Lee Chitty
Lee Chitty,
Law Student

By David Elmaleh and Lee Chitty

In the wake of a tragedy, people come together. The terrible event of the April 2018 Humboldt Broncos bus crash is no exception. Across the country, the crash prompted condolences from public figures and celebrities. Communities held vigils, and many participated in symbolic tributes such as the #PutYourSticksOut tribute in which people left hockey sticks outside their doors.1 Donations were made as well. A GoFundMe crowdfunding campaign set a national record by raising over $15-million.2

Appeals to the public for donations are a feature of everyday life. Appeals that occur on a regular basis are usually conducted by registered charities and other organizations having the benefit of experienced fundraisers and professional advice. However, after a disaster, spontaneous appeals frequently occur as well. Although the organizer of a spontaneous appeal may not be aware of it, their public appeal is at the centre of a complex web of trust and charity law, much of which is obscure and inaccessible. For example, what happens when an informal fundraising campaign raises more money than needed for its stated purpose? What happens to the remainder? Who does it belong to? Does it have to be returned? In the era of social media and crowdfunding platforms like GoFundMe, Kickstarter, and Indigogo, these complicated issues are likely to become exacerbated.

The Law of Public Appeals

Due to the complexity of trust and charity law, unforeseen questions can arise. Emergencies or tragedies that give rise to appeals may have substantial emotional impacts on the community and the generosity of the public's response can be astonishing. The amounts donated may go beyond what is required to meet the original need. Sometimes the appeal turns out to have been unnecessary, because the need is met through governmental or other sources, like insurance. Occasionally the opposite situation arises, and too little may be raised to be of any use at all.

If the purpose of a public appeal fund falls within the legal definition of "charity",3 returning the contributions to those who gave them would probably amount to a breach of trust. It would also be legally incorrect for the fundraisers to turn over the unused funds to an equally worthy cause without the permission of the court.be legally incorrect for the fundraisers to turn over the unused funds to an equally worthy cause without the permission of the court.4 People who issue spontaneous appeals for donations out of public-spiritedness or humanitarianism rarely appreciate the complexities of the law of charity, and in an emergency, there is little or no time to get legal advice on the subject.

Gillingham Bus Disaster Fund provides an illustration of the problems a spontaneous public appeal can face.

A Cautionary Tale

Bowman v Official Solicitor, commonly referred to as Re Gillingham Bus Disaster Fund5 provides an illustration of the problems a spontaneous public appeal can face. In 1951, a number of marine cadets were killed or injured when a bus drove into their marching column. A fund was collected through the public appeals by the mayors of three towns to cover funeral expenses, help the injured, and "for such worthy cause or causes in memory of the boys who lost their lives as the mayors may determine". Insurance covered most of the expenses associated with the first two purposes, resulting in a large surplus remaining. Because the court held that the third purpose was "non-charitable", that part of the trust failed.

Only a fraction of the funds raised could be used for their intended charitable purpose, so the question arose, what should be done with the surplus monies?

In a circumstance like this, the doctrine of resulting trusts applied and the court concluded that the money was held on resulting trust for the donors.6 Unfortunately, this did not resolve the issue. Many of the donors gave anonymously and most of the money could not be returned to them. As a result, the surplus funds were paid into court, where it sat for 35 years. Eventually, it was distributed among 17 survivors of the accident, years later.7 Re Gillingham Bus Disaster Fund is a cautionary story which reveals a troubling gap in the law of trust and charity. Unfortunately, nothing was done to address that gap until 2011. Even now, Saskatchewan is the only province to have taken action.8

The Informal Public Appeals Act

In 2014, the Legislative Assembly of Saskatchewan enacted The Informal Public Appeals Act.9 It did so in response to and modelled on, the recommendations of the Uniform Law Conference of Canada.10 The purpose of the model law is to confirm that money raised through public appeal is held in trust for the objects of the appeal, to confirm power in the court to direct the application of surplus funds raised for non-charitable objects, and to provide a mechanism for the handling of small surpluses or refunds to donors. Under the law, a court hearing to enforce a public appeal trust can be requested by a trustee, a donor, a person who benefits from a fund, the Attorney General or anyone the court considers has a sufficient interest in a fund.11

After donations poured in from over 140,000 people in over 80 countries around the world, the total money raised through GoFundMe exceeded $15-million. The Humboldt Broncos Memorial Fund Inc. (the "Memorial Fund") was created to responsibly manage and distribute the money to the individuals and families for which the funds were intended.12 The Memorial Fund applied to the courts for a hearing on the fund becoming the first application under the Saskatchewan law.13

At a recent court hearing for the administration of the fund Jeff Lee, counsel for the Memorial Fund told Justice N. Gabrielson that the expenses of the players and families would amount to less than $15.2 million raised.14 Without the Informal Public Appeals Act, the surplus was at risk of protracted litigation over the proper charitable use, or worse, being stuck in the courts like in Re Gillingham Bus Disaster Fund.

Conclusion

The bus crash affecting the Humboldt Broncos was a grave tragedy for the community, but also had a profound effect on the national Canadian psyche. The astonishing amount of money raised to support the victims and families of the Humboldt Broncos, not just from Canada but from abroad, is a prime example of the potential of people to help one another.

Saskatchewan's Informal Public Appeals Act is an important legislative tool to protect individuals who create charitable campaigns, promote donor confidence that money donated will be used for the cause it was intended, and, most importantly, assist the beneficiaries of these campaigns by ensuring they receive the funds provided. With the widespread popularity of GoFundMe, Kickstarter, and Indiegogo, informal public appeals will continue to be common, and will more frequently reach levels of success the Humboldt Bronco campaign saw. Without similar legislation to Saskatchewan, informal public appeals taking place in other provinces risk falling into the legal lacunae left by charity and trust law.

Let's hope that the rest of the Nation follows in Saskatchewan's footsteps.


1 'Put your sticks out' campaign catching on as tribute to Humboldt Broncos, (9 April 2018).
2 Jonathan Hayward/The Canadian Press, Humboldt Broncos GoFundMe campaign ends with over $15-million raised, The Globe and Mail (19 April 2018).
3 In its popular sense, "charity" means virtually the same thing as "benevolence." In law, however, "charity" has a narrower meaning. Essentially, the legal idea of charity is that of a private gift for a public purpose. A "public purpose," in this context, means a benefit to the community as a whole, or to a significant segment of it. In addition, the purpose of the fund must fit within a limited category of purposes.

4 Uniform Law Conference of Canada, Report of the Working Group on a Uniform Informal Public Appeals Act, (Winnipeg, 2011) at para 8.
5 (1958) Ch 300, [1958] 1 All ER 37, affirmed (1959) Ch 62, [1958] 2 All ER 749 (CA).
6 A resulting trust (from the Latin 'resalire' meaning 'to jump back') is the creation of an implied trust by operation of law, where property is transferred to someone who pays nothing for it; and then is implied to have held the property for benefit of another person.
7 Albert Oosterhoff, Public Appeals (6 June 2018), WEL Blog.
8 Terry Davidson, Oversight of Humboldt crowdfunding money could mean similar legislation elsewhere, says lawyers, The Lawyer's Daily (23 August, 2018).
9 The Informal Public Appeals Act, SS 2014, c I-9.0001.
10 Uniform Law Conference of Canada, Report of the Working Group on a Uniform Informal Public Appeals Act, (Winnipeg, 2011).
11 The Informal Public Appeals Act, SS 2014, c I-9.0001 at s 9.
12 Humboldt Broncos Memorial Fund Inc.
13 Court hearing on Humboldt Broncos fundraising a first under Saskatchewan law, Canadian Press (14 August 2018).
14 Andrea Hill, Money raised by Humboldt Broncos GoFundMe need not be limited to family expenses: judge, Saskatoon Star Phoenix (17 October 2018).


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