Applying Cy-Près When Named Charity Has Ceased to Exist
Cases arise fairly regularly in which a testator has named a specific charity in her will but the charity has ceased to exist by the time she dies. If the named charity continues under a different name because it has changed its name or was amalgamated with another charity and adopted its name, the charity has not really changed to exist and the court merely identifies the charity to which the money should be paid. In this case the cy-près doctrine is not involved. If the charity has ceased to exist entirely before the gift takes effect, it can be applied cy-près, but only if the will displays a general charitable intention. Such a general charitable intention is necessary for the doctrine to operate in the case of an initial gift to charity. It is not necessary when the gift has already vested in charity and the named charity later ceases to exist.[1]
Both the issues of change of name and discontinuance arose in Galloway Estate v. British Columbia Society for the Prevention of Cruelty to Animals,[2] so the case is instructive in how the court addresses the two issues. The indexed name of the case unfortunate, since it actually involved two estates, namely the estates of twin sisters, Sheila Holland and Lea Galloway. Both died testate. Their wills had been drafted by the same lawyer, appointed the same executor, and contained similar charitable bequests. Ms. Holland died in 2010. She was predeceased by her husband and had no children. She left a life interest to her sister. Ms. Galloway died in 2020, so the residue of the Holland estate had to be distributed at that point
The Holland will directed that on the death of Ms. Galloway the residue of the Holland estate should be divided into ten equal shares. One share was to be paid to St. Paul’s Hospital Foundation of Vancouver for research. One share was to paid in equal shares to Open Learning Agency (Knowledge Network) (‘OLA’) and Pacific Coast Public Television Association (‘PCPTA’). The other shares were to be paid to family members.
The Galloway will directed that the residue was to be paid ‘to such of the following charitable organizations that are in existence at the date of my death’. Then the will named the same three charities (among others) as in the Holland will.
The St. Paul’s Hospital Foundation no longer existed under that name. It was amalgamated in 2017 into the St. Paul’s Foundation of Vancouver.
The following facts are relevant to the other two charities. KCTS Television (‘KCTS’) was a US television broadcasting company. It owned and operated a commercial-free educational channel, KCTS 9, or PBS Channel 9. In 2015 KCTS changed its name to Cascade Public Media (“CPM’). It continued to operate KCTS 9, which could be viewed in the US and Canada. In 1987 KCTS incorporated PCPTA as a Canadian charity that could issue tax receipts to Canadian donors. However, PCPTA was dissolved in 2018 after the CRA expressed concerns that it was not an independent arms-length Canadian Charity. Thereafter, Canadian donors were encouraged to continue their support of KCTS 9, by making donations directly to it.
The OLA was a public institution that provided lifelong learning opportunities to people in British Columbia and around the world. The Knowledge Network was one service provided by OLA. In 2008 OLA was continued under the name Knowledge Network Corporation (‘KNC’). It continued the Knowledge Network and remained committed to OLA’s mandate.
Because of these various events, the executor of both wills made separate applications to the court for directions about the distribution of the estates. The applications were heard together.
The court held in para. 31 that there was no dispute that St. Paul’s Foundation of Vancouver was the successor to the St. Paul’s Hospital Foundation of Vancouver. Thus it was entitled to the share of the estates left to the latter in both wills. Further, the Attorney General, who was notified of the applications because of its parens patriae jurisdiction over charities, and the other respondents to the applications (that is the other residuary beneficiaries under the wills) agreed that KNC was the legal successor to OLN and was thus entitled to the shares given to OLN in both wills (para. 36). As I noted above, in respect of both of these gifts the court was simply identifying the correct beneficiary and did need to exercise its cy-près jurisdiction.
The Attorney General initially raised concerns about whether CPM was entitled to succeed to the gift to PCPTA under the Holland will by the application of the cy-près doctrine. However, the Attorney General acknowledged that the gift to PCPTA disclosed a general charitable intent and, after receiving further evidence, also agreed that CPM appeared to be the appropriate recipient of the gift.
However, with respect to the CPCTA gift in the Galloway will the Attorney General took a different view about the application of the cy-près doctrine. This was because the Galloway will made gifts to charitable organizations that are in existence at Ms. Galloway’s death and, of course, CPCTA was not. Consequently, in the Attorney General’s view the doctrine could not be applied. The other respondents did not challenge CPM’s claim.
The court held that the share left to PCPTA in the Galloway will should be distributed to CPM under the cy-près doctrine. Justice McNaughton J. agreed that CPM was not a successor to PCPTA in the strict sense. However, her Honour held, rightly in my view, that under the cy-près doctrine the court does not have to look for a strict corporate successor. (Although that is what it does when a charity has changed its name, as I pointed out above.) Having regard to the fact that Ms. Galloway wanted to benefit the charity that supports the work of KCTS 9 and that CPM was the only charity that did so, her intention could be fulfilled if the gift was paid to CPM.
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[1] See generally Oosterhoff on Trusts, 9th ed. by Albert H. Oosterhoff, Robert Chambers, and Mitchell McInnes (Thomson Reuters/Carswell 2019), §§7.7.2, 7.7.3. Note that the doctrine of cy-près can also be employed if the charitable gifts in question are impracticable or impossible of performance. This is also discussed in the above text at the location indicated, but those concepts were not relevant in the case I am about to discuss.
[2] 2021 BCSC 413, 65 E.T.R. (4th) 211.
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This paper is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This paper is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
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Written by: Albert Oosterhoff
Posted on: August 3, 2021
Categories: Commentary
Cases arise fairly regularly in which a testator has named a specific charity in her will but the charity has ceased to exist by the time she dies. If the named charity continues under a different name because it has changed its name or was amalgamated with another charity and adopted its name, the charity has not really changed to exist and the court merely identifies the charity to which the money should be paid. In this case the cy-près doctrine is not involved. If the charity has ceased to exist entirely before the gift takes effect, it can be applied cy-près, but only if the will displays a general charitable intention. Such a general charitable intention is necessary for the doctrine to operate in the case of an initial gift to charity. It is not necessary when the gift has already vested in charity and the named charity later ceases to exist.[1]
Both the issues of change of name and discontinuance arose in Galloway Estate v. British Columbia Society for the Prevention of Cruelty to Animals,[2] so the case is instructive in how the court addresses the two issues. The indexed name of the case unfortunate, since it actually involved two estates, namely the estates of twin sisters, Sheila Holland and Lea Galloway. Both died testate. Their wills had been drafted by the same lawyer, appointed the same executor, and contained similar charitable bequests. Ms. Holland died in 2010. She was predeceased by her husband and had no children. She left a life interest to her sister. Ms. Galloway died in 2020, so the residue of the Holland estate had to be distributed at that point
The Holland will directed that on the death of Ms. Galloway the residue of the Holland estate should be divided into ten equal shares. One share was to be paid to St. Paul’s Hospital Foundation of Vancouver for research. One share was to paid in equal shares to Open Learning Agency (Knowledge Network) (‘OLA’) and Pacific Coast Public Television Association (‘PCPTA’). The other shares were to be paid to family members.
The Galloway will directed that the residue was to be paid ‘to such of the following charitable organizations that are in existence at the date of my death’. Then the will named the same three charities (among others) as in the Holland will.
The St. Paul’s Hospital Foundation no longer existed under that name. It was amalgamated in 2017 into the St. Paul’s Foundation of Vancouver.
The following facts are relevant to the other two charities. KCTS Television (‘KCTS’) was a US television broadcasting company. It owned and operated a commercial-free educational channel, KCTS 9, or PBS Channel 9. In 2015 KCTS changed its name to Cascade Public Media (“CPM’). It continued to operate KCTS 9, which could be viewed in the US and Canada. In 1987 KCTS incorporated PCPTA as a Canadian charity that could issue tax receipts to Canadian donors. However, PCPTA was dissolved in 2018 after the CRA expressed concerns that it was not an independent arms-length Canadian Charity. Thereafter, Canadian donors were encouraged to continue their support of KCTS 9, by making donations directly to it.
The OLA was a public institution that provided lifelong learning opportunities to people in British Columbia and around the world. The Knowledge Network was one service provided by OLA. In 2008 OLA was continued under the name Knowledge Network Corporation (‘KNC’). It continued the Knowledge Network and remained committed to OLA’s mandate.
Because of these various events, the executor of both wills made separate applications to the court for directions about the distribution of the estates. The applications were heard together.
The court held in para. 31 that there was no dispute that St. Paul’s Foundation of Vancouver was the successor to the St. Paul’s Hospital Foundation of Vancouver. Thus it was entitled to the share of the estates left to the latter in both wills. Further, the Attorney General, who was notified of the applications because of its parens patriae jurisdiction over charities, and the other respondents to the applications (that is the other residuary beneficiaries under the wills) agreed that KNC was the legal successor to OLN and was thus entitled to the shares given to OLN in both wills (para. 36). As I noted above, in respect of both of these gifts the court was simply identifying the correct beneficiary and did need to exercise its cy-près jurisdiction.
The Attorney General initially raised concerns about whether CPM was entitled to succeed to the gift to PCPTA under the Holland will by the application of the cy-près doctrine. However, the Attorney General acknowledged that the gift to PCPTA disclosed a general charitable intent and, after receiving further evidence, also agreed that CPM appeared to be the appropriate recipient of the gift.
However, with respect to the CPCTA gift in the Galloway will the Attorney General took a different view about the application of the cy-près doctrine. This was because the Galloway will made gifts to charitable organizations that are in existence at Ms. Galloway’s death and, of course, CPCTA was not. Consequently, in the Attorney General’s view the doctrine could not be applied. The other respondents did not challenge CPM’s claim.
The court held that the share left to PCPTA in the Galloway will should be distributed to CPM under the cy-près doctrine. Justice McNaughton J. agreed that CPM was not a successor to PCPTA in the strict sense. However, her Honour held, rightly in my view, that under the cy-près doctrine the court does not have to look for a strict corporate successor. (Although that is what it does when a charity has changed its name, as I pointed out above.) Having regard to the fact that Ms. Galloway wanted to benefit the charity that supports the work of KCTS 9 and that CPM was the only charity that did so, her intention could be fulfilled if the gift was paid to CPM.
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[1] See generally Oosterhoff on Trusts, 9th ed. by Albert H. Oosterhoff, Robert Chambers, and Mitchell McInnes (Thomson Reuters/Carswell 2019), §§7.7.2, 7.7.3. Note that the doctrine of cy-près can also be employed if the charitable gifts in question are impracticable or impossible of performance. This is also discussed in the above text at the location indicated, but those concepts were not relevant in the case I am about to discuss.
[2] 2021 BCSC 413, 65 E.T.R. (4th) 211.
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This paper is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This paper is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
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