GoFundMe is arguably the most recognized crowd funding platform used by many who seek to raise funds from the public domain to support a defined goal. Legal issues have been raised surrounding the funds donated through platforms such as GoFundMe, particularly when the funds are used for something other than its intended purpose. This issue is at the heart of Maghdoori v. Sanjari, 2022 ONSC 4624 (CanLII) (“Maghdoori”), an application brought by the parents of the deceased, Sara, against Sara’s husband.
In Maghdoori, the applicants allege that the respondent misappropriated funds donated to their daughter to help pay for her expensive cancer treatment. Money was raised through GoFundMe and some family and friends donated to Sara directly. Sara opened a bank account into which both sets of funds were deposited and co-mingled. A significant portion of the donated funds were used for the cancer treatment but the applicants allege that not all donated money was used for this purpose. Moreover, they allege that Sara expressed an intention that money not used for the cancer treatment would be returned or otherwise donated. The husband allegedly controlled the use of the funds, before and after Sara’s death, which the applicants say were impressed with a constructive trust. Sara’s parents seek the return of the donated funds not used for the cancer treatment to the donors or, alternatively, to charitable causes. Sara’s parents plead that they are motivated out of moral, ethical and social obligations to ensure that the donated funds are used for its intended purpose and not for the respondent’s personal benefit.
While many issues in the application remain outstanding, the court was asked to consider a motion brought by the respondent to strike the application pursuant to r. 21.01(1)(b) of the Rules of Civil Procedure. The rule permits a motion to strike out a pleading on the ground that it discloses no reasonable cause of action or defence. The respondent argued that Sara’s parents lacked standing to bring the estate related claims and the trust related claims. The estate related claims included seeking the respondent’s removal as executor to be replaced by Sara’s parents. However, prior to her death Sara executed a will which appointed her husband as sole executor of her estate and sole beneficiary. Sara also executed powers of attorney appointing her husband as sole attorney. Neither the validity of the will nor the powers of attorney are challenged.
The court noted that to succeed on the r. 21 motion the respondent had to convince the court that “it is plain and obvious” that the applicants do not have standing and that their estate related claims and trust related claims are “doomed to fail.” Evidence is not admissible on a r. 21 motion and the pleadings are “taken as true.” The court reviewed the test for determining private interest standing on a r. 21 motion, recently articulated by the Court of Appeal for Ontario in Carroll v. Toronto-Dominion Bank, 2021 ONCA 38 (CanLII), and summarized in Maghdoori as:
- The party must have either a public interest or a private interest standing.
- In cases where private interest standing is asserted (such as this one in Maghdoori), the party must have a personal and direct interest in the issues to be litigated. It is not enough that they have a sense of grievance or will gain the satisfaction of righting a wrong or are upholding a principle. To have private interest standing, a person must have a personal legal interest in the outcome.
The court determined that Sara’s parents lacked standing to bring the estate related claims, as they were neither direct nor residuary beneficiaries and therefore had no financial interest in the estate. The court did not agree with the applicants that they had a “contingent interest on an intestacy” when there was no will challenge and therefore no possibility of an intestacy.
However, on the trust related claims the court came to a different conclusion. The respondent argued that the applicants had no standing to advance claims with respect to the GoFundMe donations because the applicants only donated to Sara directly. But the court read the applicants’ pleadings broadly and found that the claims included all donated funds managed through Sara’s bank account. At paragraph 48 of Maghdoori, the court stated:
In the broadest sense, the applicants contributed to the donated funds, even if not through the GoFundMe campaign. Even if they are not seeking the return of their funds (but, rather, a cy-pres donation of their proportion of any remaining donated funds not used for the intended purpose to the charities they have established in Sara’s name), as donors to the alleged trust the applicants may be found to have an interest in ensuring that the purposes of the trust itself, which they donated to and facilitated the creation of, are adhered to. This claim seeks to establish the full extent of amounts donated that form part of the trust, the purposes of the trust, the extent of any donated funds that were not used for the established purposes, and to eventually uphold those purposes once established.
The court was not prepared to strike the trust related claims in the application as having no reasonable cause of action. Sara’s parents did not need to seek the return of the funds they donated to persuade the court that “there is at least some chance that they will be found to have a sufficient direct interest in the donated funds…and they would therefore have standing to advance these claims.” The trust related claims will continue, at least for now. The husband may be the successor trustee of the donated funds. A trust may have been created that prevents Sara’s husband and her estate from benefitting from the donated funds. Perhaps we shall see.
Malcolm BurrowsAugust 24, 2022 - 1:22 pm
Hi Karen – Thanks for this terrific update. I think it’s important to distinguish between “charitable giving” (which the blog is tagged) and “benevolence”. This is crowd-funding and benevolence – helping an individual in need, not public benefit, Charity at law. There are similarities, but important legal distinctions that need to be emphasized – even as our culture blurs them. Malcolm