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Docket: 2001-4456(IT)G |
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BETWEEN: |
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LORRAINE MULLIN, 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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Appeal heard on February 19, 2004 at Toronto, Ontario
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Before: The Honourable Justice T. O'Connor |
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Appearances: |
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For the Appellant: |
The Appellant herself |
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Counsel for the Respondent: |
Brent Cuddy |
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JUDGMENT
The appeal from the assessment made under the Income Tax Act for the 1999 taxation year is dismissed in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 10th day of May, 2004.
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"T. O'Connor" |
O'Connor, J.
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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. |
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,
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[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. ...
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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.
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... "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.)
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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.
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...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. ...
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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.
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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.
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[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.
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"T. O'Connor" |
O'Connor, J.
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CITATION: |
2004TCC333 |
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COURT FILE NO.: |
2001-4456(IT)G |
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STYLE OF CAUSE: |
Lorraine Mullin, Executrix of the Estate of Audrey MacDonald and H.M.Q. |
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PLACE OF HEARING: |
Toronto, Ontario |
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DATE OF HEARING: |
February 19, 2004 |
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REASONS FOR JUDGMENT BY: |
The Honourable Justice T. O'Connor |
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DATE OF JUDGMENT: |
May 10th, 2004 |
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APPEARANCES: |
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For the Appellant: |
The Appellant herself |
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Counsel for the Respondent: |
Brent Cuddy |
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COUNSEL OF RECORD: |
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For the Appellant: |
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Name: |
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Firm: |
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For the Respondent: |
Morris Rosenberg Deputy Attorney General of Canada Ottawa, Canada |