In a recent decision that will be of interest to churches and denominations across the country, Ontario’s highest court has weighed in on a number of important legal questions, including: Who owns a charity’s assets in a parting of ways? Who decides what a “congregation” is? And who should bear the legal costs once these questions are answered? The case and its implications for charities are discussed in this article.

Background

On September 4, 2013, the Ontario Court of Appeal released its decision in Delicata v. Incorporated Synod of the Diocese of Huron.[i] That case involved a dispute between the Anglican Diocese of Huron (the “Diocese”) and the membership of St. Aidan’s Anglican Church in Windsor, Ontario (the “St. Aidan’s Group”). The case involved what the court described as “profound and long-standing theological differences relating to Biblical interpretation and the authority for Anglican doctrine found in the Scriptures.” Ultimately, a decision was made by the St. Aidan’s Group, catalyzed by the Diocese’s decision to bless same-sex unions, to leave the Diocese.

As a result of this parting of ways, the question arose as to who owned the church property in Windsor, as well as a charitable foundation established and maintained by St Aidan’s members. The matter made its way to court, where the trial judge focussed on the interpretation of the Diocese’s canons, particularly Canon 14, which stated that the Diocese holds all real property “in trust for the benefit of the Parish or congregation.”[ii]

The issue turned on the interpretation of the phrase “Parish or congregation”. The St. Aidan’s Group argued that a parish is a fluid concept that describes the people who comprise the congregation at any one time. The Diocese argued that a parish is a static concept that continues in perpetuity regardless of changes in membership, and submitted that while members of the parish may choose to leave, “the parish continues in perpetuity to be the responsibility of the Bishop of the Diocese in which it is geographically located.”[iii] The trial judge agreed with the Diocese, concluding: “Members can come and go in a parish at any time, but the parish itself remains.”[iv]

The trial judge determined that the church property would remain with the Diocese, and the St Aidan’s Group appealed to the Ontario Court of Appeal.

Decision

On appeal, the Ontario Court of Appeal agreed with the Diocese and the lower court, and rejected what it described as the “snapshot theory” of a parish:

“[T]he words ‘Parish or congregation’ must denote a static entity that may not be severed from the Diocese and that is not defined by any particular group of members at any particular time.”[v]

The Court was influenced by the Anglican Church’s Canons and incorporating legislation, which both stated that church property could not be sold, mortgaged, or otherwise disposed of without the Bishop’s consent. The Court interpreted this to mean that the Bishop (and by extension the Diocese) retained control over all church property in perpetuity for the benefit of the Diocese. Permitting the property to be distributed “at the will of a single group of estranged congregants” would, in the view of the Court, wholly undermine this objective.[vi] The court also noted that to allow “any group of worshippers who [meet the minimum membership requirements] and…by majority vote, leave the Diocese and take the church property with them” would clearly be contrary to “what the canons intended.”[vii]

The St. Aidan’s Group also argued that, if they could not keep the church building, the Diocese would be unjustly enriched because funds for the church’s land and building, including an addition in the 1990’s that cost $610,000, were raised “entirely by the church members”. However, the Court rejected this argument as well, concluding:

“The congregants who contributed money or labour to maintaining the church property knew they were doing so for the benefit of St. Aidan’s Parish of the Diocese of Huron. It must be inferred that they also knew what the canons and statute stated.”[viii]

For all of these reasons, the Court dismissed the St. Aidan’s Group’s appeal, affirming that the St. Aidan’s Group’s vote to leave the Diocese meant that it had to leave the property of the parish behind.

This left the issue of costs: who was responsible for paying the legal fees for the lengthy court battle? Normally, the general rule is that the unsuccessful party pays at least a portion of the successful party’s costs. In the lower court, however, the costs judge had decided to depart from this usual rule in the interest of promoting “harmony”. The Diocese appealed this decision, and once again, found favour with the Court of Appeal. The Court of Appeal noted that there was “no basis in the evidence” to suggest that the “pursuit of harmony” was a legitimate reason to depart from the usual rules governing cost award. The Court stated:

“As a matter of principle, in our justice system litigation over spiritual or religious convictions should not presumptively have a safe harbour from costs.”[ix]

The Court ordered the St. Aidan’s Group to pay $100,000 toward the Diocese’s legal costs (which amounted to almost $450,000), in addition to their own costs of almost $270,000. The Court made it clear that this money could not be paid from the St Aidan’s Foundations funds, as this would constitute a breach of trust. Presumably, this means that the individuals that formed the St. Aidan’s group will be personally responsible to pay this money.

Commentary

The outcome of this decision is not particularly surprising – it is consistent with the lower court’s findings as well as the conclusions reached by British Columbia courts in a similar case.[x] However, it does affirm a number of important legal concepts, and the following general principles may be drawn from the case (see also our recent article “When a Charity Divides, Who Keeps What?” for a discussion of a similar case from Alberta):

1)    Courts will look to a church’s governing documents and hierarchical structure to determine ownership of property in the event of a dispute between a diocese/denomination and local congregation.

2)    The Ontario Court of Appeal’s comments continue a judicial trend: judges seem to be resistant to allowing dissident groups to unilaterally break away from a larger church body and take property with them, even if those individuals are the ones who actually donated the resources to acquire the property. Of course, each case will be decided on its own facts, and in this case the Anglican Church’s unique hierarchical structure, canons, and legislation all played a role in the final outcome. It is quite possible that a different conclusion might be reached in a different denominational/local church relationship, depending on the specific church laws in place.

3)    It seems that church members and donors will be “presumed” by the court to have read and understood the documents governing the legal relationship between the diocese or denomination and local church. Practically speaking, this does not seem to reflect the reality that many church members have never read their denominational documents or church canons, or at least might interpret them differently than a civil court would. As such, their actual intent in making a donation may or may not reflect what the law presumes it to be. Nevertheless, denominations and churches alike should ensure that everyone has a clear understanding of who has ownership of “church property” and who has the authority to decide what to do with it in the event of a dispute.

4)    Individual litigants should no longer presume that they will be shielded from a costs award should they be unsuccessful, even if they are going to court with the best of intentions. Although previous cases (including a dissenting opinion of the British Columbia Court of Appeal) suggested that there might be some latitude shown to litigants motivated by sincere religious convictions, that view was not adopted by the Ontario Court of Appeal.

Ultimately, the case reflects just some of the difficulties that arise in the unfortunate scenario when a church and denomination disagree on doctrinal matters. Sometimes, recourse to the civil court system is inevitable, but denominations and churches may wish to think creatively and proactively about whether other options could be explored in the event of a dispute. It is best to have that conversation early on, before a dispute arises, so everyone can think objectively about how such matters ought to be dealt with. Hopefully, in the spirit of Christian harmony, some disputes might be resolved without having to commence litigation.

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