Redeemer negotiates end to class action law suit
Settlement marks end of Foundation's Forgivable Loan dispute
3 min. read
January 31, 2013

The Ontario Superior Court of Justice has approved a negotiated settlement in the class action lawsuit filed against the now defunct Redeemer Foundation regarding its Forgivable Loan Program (FLP). The lawsuit was filed in April, 2011 and the plaintiffs and Redeemer agreed upon the terms of the settlement later that year. Last December, those terms were approved, or certified by the court, and they were officially announced this week. This marks the end of legal proceedings surrounding events that began more than a decade ago. Redeemer’s Board of Governors had previously approved the terms of the negotiated settlement, which will not have an adverse effect on Redeemer’s budget. The terms involve amounts that are much less than originally claimed in the suit, and Redeemer’s insurance partners will also be contributing to the cost of the settlement. By the definitions used by the court, more than 450 donors were considered to be “members of the class,” and thus part of the settlement action. However, the vast majority of donors did not sign up to be part of the class action lawsuit. In fact, many continued to support Redeemer throughout the years this was making its way through the courts, and have indicated that they will “Opt Out” of the settlement and not pursue the claim. “I am pleased—especially for the affected donors—that this matter is finally closed,” says Dr. Hubert Krygsman, President of Redeemer University College. “I am also grateful to those donors, many of whom continued to faithfully support of Redeemer throughout the many years it has taken to resolve this matter.” This struggle was never primarily about the money. We stood by and fought for our donors all along because we believed it was the right thing to do for them. We know that it has been challenging for many of them and we are grateful that the matter is now resolved.” Background: The former Redeemer Foundation’s Forgivable Loan Program (FLP) was established in 1987 in order to help students meet the high cost of university education. The Foundation believed that the FLP was set up in compliance with Canada Revenue Agency (CRA) guidelines, as they then existed. The FLP operated to the benefit of participating students and their families for many years. In the early years, donations were accepted from anyone, including former employers, friends, churches and frequently relatives of students. As a result of revised CRA guidelines issued in December 2002, the Foundation in its ongoing efforts to be fully compliant with the law, responded by ceasing to accept donations from persons defined by the CRA as “related persons” (parents, grandparents and siblings). A CRA audit conducted in 2006 confirmed that gifts to the program for the audited years 2003 and 2004 were legitimate donations. However, an earlier audit conducted by the CRA with respect to the 2001 and 2002 tax years determined that, with respect to those particular tax years, the FLP was not compliant with CRA’s requirements. Accordingly, CRA reassessed the roughly 450 donors who supported the FLP during those years. During the next few years, the Foundation made considerable effort to defend and represent its donors’ interests, eventually arguing the case in the Supreme Court of Canada. Redeemer, the Foundation, and the donors were understandably disappointed when the case was concluded in CRA’s favour, with a 4-3 decision by the Supreme Court of Canada in 2008. Because the Redeemer Foundation ceased operations in 2009, Redeemer University College was named the defendant in the civil case when it was launched in April, 2011.

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