<\/p>\n
I recently spent several hours poring through the \u201cReasons for Judgment\u201d issued by Justice Shelley Fitzpatrick of the BC Supreme Court in considering whether or not The Land Conservancy would be permitted to sell one of its protected properties \u2013 B.C. Binning House in West Vancouver \u2013 in order to pay off some of its debts.\u00a0 While this was not the most captivating read (I wouldn\u2019t recommend it if you are having trouble staying awake), it did address a number of very important issues relating to the future of TLC and its properties, and it has implications for the entire land trust movement in BC and across Canada, as well as for much of the charitable sector.\u00a0 For the many people who care about TLC and about conservation, it\u2019s important to understand what is really going on and what the Judge had to say.<\/p>\n
<\/p>\n
1.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/b>\u00a0Background<\/span><\/b><\/p>\n First, a bit of background, to provide some context.\u00a0 For the past few years, TLC has been experiencing serious financial challenges.\u00a0 It was stretched to the limit, and not bringing in enough revenue to meet its ongoing needs and commitments.\u00a0 It became clear to all of us at TLC that we needed to make some bold shifts in operations and refocus our fundraising activities.<\/p>\n In response, TLC\u2019s Management began a methodical and strategic reorganization.\u00a0 We began making severe cutbacks in staffing and operations in order to reduce expenditures as far as practicable, and were implementing new plans to significantly increase revenues. \u00a0These plans, to be successful at the level required, needed to be broad in scope and far-reaching, and were designed to put TLC on a more stable financial foundation.\u00a0 But they were not a \u201cquick fix\u201d.\u00a0 As is usually the case in such circumstances, they would have required some up-front investment to implement them (about $1.4 million over 3 years), and would have taken a few years to come to full realization.\u00a0 While there could never, of course, be absolute guarantees, we (as management) believed that this was the only realistic path forward that would both fully protect all the sites we were responsible for and would give us the best chance to revitalize and stabilize the organization.<\/p>\n It was certainly a juggling act to keep the organization going throughout this time, made even more difficult by the persistent and continuous attacks \u2013 both in the media and otherwise \u2013 by those who did not appreciate or fully understand what we trying to accomplish, and there is no doubt that it was stressful for all concerned.<\/p>\n However, during the late winter and spring of 2012, TLC\u2019s Board of Directors decided that they no longer wanted to continue with the approach being taken by the organization\u2019s management.\u00a0 They wanted a quicker and more dramatic change, and appeared to be prepared to sacrifice some of the organization\u2019s property responsibilities and change the organization\u2019s mandate to achieve it.\u00a0 Over the next few months they engineered a series of moves that would result in the removal of virtually all of TLC\u2019s management and staff, with just a handful of administrative staff retained (none with the experience or expertise to continue effective operations or, more importantly, with the ability to raise significant additional revenues).<\/p>\n While I understood that they were well-intentioned, and I acknowledge the Board\u2019s right to determine the direction for the organization, I believed then (and I continue to believe) that the Board\u2019s actions were ill-advised and that their new approach would have very little chance of achieving their objectives.\u00a0 I believed that their approach was an abandonment of what so many people had been working so hard and for so many years to bring about; it was a betrayal of what TLC was all about.\u00a0 And, most sadly of all, I believed then \u2013 and I still do \u2013 that the actions they took were not necessary; there were better approaches available.<\/p>\n <\/p>\n 2.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/b>Restructuring\/Legal Process<\/span><\/b><\/p>\n At its AGM in the fall of 2012, the Board told TLC members that it was going through a \u201crestructuring\u201d process and would have a new operational plan in place as soon as possible.\u00a0 They turned to financial institutions, lawyers and outside consultants for advice, but no restructuring plan emerged.\u00a0 A year later, in October 2013, the Board petitioned the Supreme Court of British Columbia for protection from its creditors under the Companies\u2019 Creditors Arrangement Act (CCAA), arguing that \u201conly a court supervised restructuring process will provide the outcomes it has been working towards.\u201d\u00a0 Creditor protection was granted by the court until November, to give TLC time to get a restructuring plan in place.\u00a0 A court Monitor \u2013 the accounting firm Wolrige Mahon LLP \u2013 was appointed to oversee and assist the process.\u00a0 In November, TLC returned to the court without a plan in place and asked for more time, which was granted, until January 2014.\u00a0 In January, TLC returned again (still without a plan) and was granted more time, until April of this year.<\/p>\n As part of this CCAA process, TLC was given permission to borrow up to $1.85 million to fund its restructuring work, and to keep itself going in the interim.\u00a0 In a rather shocking move, the Court allowed TLC to put up a number of its (supposedly protected) conservation properties as collateral for this loan.\u00a0 It\u2019s hard to understand how this was permissible.\u00a0 Allowing protected properties to be used as collateral for a loan (for other purposes, as this is) appears, in itself, to be in contradiction of the Charitable Purposes Preservation Act.\u00a0 It\u2019s certainly in contravention of TLC\u2019s own By-Laws.<\/p>\n By December the first $0.5 million was already spent on the legal and financial work, and the process had barely started.\u00a0 Since then, the amount spent has, at least, doubled.\u00a0 Days and days of court time, even more research time, thousands of pages of affidavits \u2013 all prepared by lawyers and their staff, and charged at hundreds of dollars per hour \u2013 adds up quickly.<\/p>\n During this time, TLC has also moved to put a number of its protected properties up for sale.\u00a0 It is highly questionable whether this is either ethical or legal.\u00a0 The Charitable Purposes Preservation Act requires that properties donated to a charity, or acquired (even in part) with donated funds, must retain the purposes for which they were donated (in TLC\u2019s case, the purposes are: \u00a0conservation in perpetuity and appropriate public access).\u00a0 They cannot be sold off to raise revenue, or to settle other debts, but can only be disposed of by transferring them to other organizations or entities with similar purposes, which will retain the charitable purpose of the donation.<\/p>\n So, when TLC received an offer of $1.6 million from a private individual for B.C. Binning House, it caused quite a fuss.\u00a0 With the Monitor\u2019s approval (which was required), TLC asked the court for permission to sell the property.\u00a0 This caused the Attorney General of BC, the Municipality of West Vancouver (where the house is located), the University of British Columbia (see below) and several heritage groups and individuals to object.\u00a0 Binning House had been donated to TLC (by the estate of Jessie Binning, widow of renowned Canadian artist B.C. Binning, who designed and built the house) specifically for the purposes of conservation and provision of public access to the property.\u00a0 (For more details on Binning House and its significance, please see here<\/span>).<\/p>\n This specific item overtook the court\u2019s attention to the broader issue of TLC\u2019s restructuring and its creditor protection.\u00a0 However, it did enable the court to focus on one of the most significant elements that will, no doubt, be at the core of TLC\u2019s upcoming restructuring plan \u2013 the desire to sell its protected properties to pay off its debt.<\/p>\n <\/p>\n \u00a03.<\/strong> \u00a0 \u00a0 Judgment Decisions and Potential Outcomes<\/span><\/b><\/p>\n The first skirmish arose as a result of UBC\u2019s intervention that the Binning House property was inappropriately transferred to TLC, and that the executors of Binning\u2019s will should have sold the house and given the funds to UBC.\u00a0 This emanated from the specific way that Binning\u2019s will was worded.\u00a0 However, it was a matter that was really resolved years ago, at the time of the donation \u2013 UBC was informed of the donation but opted not to challenge it.\u00a0 To raise it now seemed (to me at least) to be simply opportunistic and an attempt by UBC to get its hands on some cash \u2013 it had nothing to do with protecting this important heritage resource.\u00a0 We should expect better from UBC.<\/p>\n After many hours of hearings, Justice Fitzpatrick determined that the donation of Binning House to TLC was appropriate, done properly and was in keeping with the wishes of the donor as expressed in the will.\u00a0 She assessed costs for this portion of the process against UBC.<\/p>\n The Judge then turned her attention to the issue of the proposed sale of the property to a private individual.\u00a0 In assessing whether or not this would be permissible, she first had to determine whether or not the provisions of the CPPA were applicable to this property.\u00a0 TLC claimed, with a range of arguments, that they were not \u2013 that they did not have a \u201ctrust\u201d responsibility \u2013 and they should be allowed to sell the property.\u00a0 Justice Fitzpatrick, however, disagreed with all of TLC\u2019s arguments, and concluded that the CPPA constraints on the sale or disposition of the property were, indeed, valid and must be considered.<\/p>\n This was (or should be) a tremendous relief for everyone who cares about conservation and the protection of our heritage (cultural or natural), and particularly for land trusts.\u00a0 It was equally as important for any charity that takes on a trust responsibility when it accepts donations.\u00a0 This decision reinforced the integrity of the system.\u00a0 It means that when a donor makes a gift in order to achieve a specific purpose, they can be assured that the purpose of their gift will be retained over time.\u00a0 This is the foundation of the term \u201ctrust\u201d in land trusts (and in many other charities).<\/p>\n However \u2013 and this is a very big \u201chowever\u201d \u2013 Justice Fitzpatrick also focused on another provision of the CPPA which does not bode as well.\u00a0 The Act allows that if the charity is no longer \u201cwilling or able\u201d to continue to uphold the trust responsibilities, the court can make whatever orders it deems appropriate to continue to meet the specific trust responsibilities or \u201cadvance another charitable purpose that the court considers is consistent\u201d.\u00a0 That is, the court may change the purposes for which the gift was given and, in so doing, change the trust responsibility that the charity holds \u2013 meaning they could, potentially, do other things with the property, including selling it for other purposes.\u00a0 Although common law would require that the \u201cother charitable purpose\u201d be as close as possible to the original purpose, in this particular case it is a loophole big enough to drive a moving truck through.<\/p>\n The Judge has concluded that TLC did not try hard enough to find another entity that will continue to uphold the trust responsibilities for Binning House \u2013 that is, one that will work toward conservation in perpetuity and provision of appropriate public access.\u00a0 She has ordered that TLC try harder to find such an entity before she would entertain any requests for a market sale.\u00a0 It is unclear what conditions (or costs) would be acceptable to her in approving such a transfer (remember, because TLC is currently working under CCAA creditor protection, the court must approve its actions, including sales\/transfers of property).\u00a0 She has, however, left open the possibility that TLC could return and try again if they are unsuccessful in finding an appropriate alternative.<\/p>\n <\/p>\n 4.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/b>\u00a0What\u2019s Next<\/span><\/b><\/p>\n So, after all this legal deliberation, after the expenditure of well over $1 million on lawyers, accountants and court costs, where are we now?\u00a0 Essentially, back at the beginning.\u00a0 The law stands as it was written \u2013 no surprise there.\u00a0 The Charity (TLC) has to live up to its trust responsibilities \u2013 again, no surprise.\u00a0 But TLC\u2019s debt is considerably higher and its ability to continue as a viable land trust is seriously jeopardized and, accordingly, all of TLC\u2019s properties are now at greater risk than they were before.<\/p>\n If we are to see B.C. Binning House protected as it should be, those of us who care about the site will need to step forward and find a solution \u2013 and it will most likely need to be a creative solution.\u00a0 The same can be said for Abkhazi Garden, Ross Bay Villa, Kogawa House and many other properties that TLC is no longer willing or able to look after.\u00a0 Unfortunately, I fear that TLC no longer has the in-house expertise to accomplish this.<\/p>\n It is heartening to see the District of West Vancouver step forward to be a part of the solution for Binning House.\u00a0 The local volunteer group that has championed the house in recent weeks can also play a big part.\u00a0 There are also organizations such as the newly-formed National Trust for Land and Culture who are intimately familiar with the house, and have the expertise and framework to put such a solution together, and who are willing to help.\u00a0 Even Mr. Wall, the prospective purchaser of the site, could continue to play a significant role in the protection of this important Canadian heritage, should he wish to \u2013 there will still be a significant need for financial resources, which will have to be found.\u00a0 I continue to believe that if everyone involved can put aside their baggage, we can find a solution \u2013 to Binning as well as the other properties.<\/p>\n <\/p>\n Addendum<\/span><\/b> (March 25, 2014) Since this article was written, TLC has returned to the court with proposals to sell additional properties.\u00a0 First was a proposal to sell Keating Farm Estate (in Duncan).\u00a0 This sale was approved by the Court.\u00a0 And now there is a pending hearing regarding the proposed sale of a portion of Abkhazi Garden in Victoria and the Eagle Bluff property near Oliver.\u00a0 I will provide more information and commentary on these proposals soon.<\/p>\n","protected":false},"excerpt":{"rendered":" I recently spent several hours poring through the \u201cReasons for Judgment\u201d issued by Justice Shelley Fitzpatrick of the BC Supreme Court in considering whether or not The Land Conservancy would be permitted to sell one of its protected properties \u2013 B.C. Binning House in West Vancouver \u2013 in order \u2026<\/p>\n
\n<\/span><\/b><\/p>\n