1. Introduction
Testators often make gifts in their wills to charities. But if a named charity never existed or has ceased to exist before the testator’s death, or if the testator’s purpose cannot otherwise be carried out, the question arises what should be done with the subject matter of the gift. There are two possible situations. The first is the case of an initial failure. The second is the case of a supervening failure.
In the case of an initial failure, the court has to determine whether: (a) the purpose specified by the testator is impossible or impracticable to carry out; and (2) whether the testator had a general charitable intention. Most cases involve an initial failure.
In the case of a supervening failure the property has already vested in the charity and cannot (save for a couple of minor exceptions) revert to the testator’s estate, but the purpose can later become impossible or impracticable. In this case it is not necessary to show that the testator had a general charitable intent.
‘Impossibility’ means that the purpose cannot be carried out at all. ‘Impracticability’ means that there is no longer a real need for the purpose the testator intended.
In the case of an initial failure, if the testator has named a specific institution that still exists but it is impossible or impracticable to give effect to the intended purpose, the gift will typically fail, and the property will result to the estate. However, if the court finds that the testator had a general charitable intention, even though she named a specific charity, the property can be applied cy-près to purposes similar to the named charity. If the testator gives her entire estate or all the residue to named charities one of which has never existed, the court can also find a general charitable intent by the concept of ‘charity by association’ or ‘kindred objects’. And then it can direct that the share of the non-existent charity be applied cy-pres.[1]
The question whether a gift of residue given to a charity that had ceased to exist before the testator’s death, a case of initial failure, arose in Dors v The Public Guardian and Trustee.[2]
2. Facts
The testator, Anna Salnikova, died in 2018. She had no spouse or children and her only sibling died in World War II. Her only living relatives were a first and second cousin. The testator appointed her friend, Elizabeth Dors and another person her executors. The testator’s Will, made in 2006, left legacies to the two cousins, and directed that the residue be distributed and paid to 20 named charities in varying percentages. The charity to which the testator gave the largest part of the residue (20 percent) was the Pan American Mission in Canada (‘the Mission’). She provided the Calgary address of the Mission, as well as the address of its head office in California in her Will. The Mission helped fund orphanages in South America. The testator and Ms. Dors were part of a group of women who raised funds for various charities, including the Mission. Ms. Dors was also the testator’s attorney for property and sent a cheque for $200 to the Mission’s Calgary office on the testator’s instructions. However, the cheque was returned with a note stating the charity was no longer in existence. Further research indicated that the Canadian charity had been voluntarily wound up in 2012, and that the US charity had been dissolved involuntarily in 2013.
The will did not contain a provision directing the executors how to distribute the residue if one of the charities was no longer in existence. The executors brought an application for directions about the disposition of the money left to the Mission. They took the position that the gift had lapsed, and that the money should be distributed pro rata to the other 19 charities. However, The Public Guardian and Trustee (the ‘PGT’) took the view that it should be paid to a charity with objects similar to the Mission under the cy-prés doctrine.
3. Analysis and Judgment
Justice Gilmore applied the principles described in Re Jacobsen[3] to determine charitable intent:
- The bequest is a bequest without limitation to an institution which was admittedly a charitable institution.
- The bequest is a residuary bequest.
- Provision has already been made for the next of kin in para. 6(c) of the will of the testatrix.
- All of the beneficiaries mentioned in para. 6(d) of the will are admittedly charitable institutions (as compared to para. 6(b) of the will where only some of the legatees are charitable institutions).
In Jacobsen the court determined that the money left to one of the charities should be applied cy-prés.
Her Honour also referred to and applied another similar case, La Fabrique de la Paroisse Sainte-Sophie,[4] which also applied a gift cy-près. In that case,[5] the court quoted the following applicable principles in determining whether to apply cy-près from Conforti v Conforti:[6]
The cy-près doctrine may be used by the court to direct a gift in a Will to an institution or organization other than the one named in the Will if:
- a) the gift in the Will is impractical or impossible;
- b) the testator manifested a general charitable intention in making the gift in the Will; and
- c) the gift to the alternative institution or organization would be a gift resembling the initial purpose of the gift in the Will.
Her Honour, relying on the above authorities held that the gift to the Mission should be applied cy-prés because the testator evinced a general charitable intention since she gave 95 percent of her Estate to charities, and it was clear that the Mission and its objects were particularly important to her. Distributing the 20 percent to the other charities would defeat her intention to benefit orphans in South America. Consequently, her Honour rejected the position of the executors. But she noted that the result would have been different if the Will contemplated a gift over to the other charities.
In the order, her Honour directed that the 20 percent should be paid to a charity with objects similar to those of the Mission. She directed that the PGT should provide the executors with a list of nominee charities and the executors were then entitled to choose one of the nominees on their own or in consultation with the PGT.
As is apparent from the reasons, it is possible for a testator to insert a provision in a will that avoids the necessity and cost of having to make an application to the court for a cy-près order. Lawyers who draft wills for clients who make testamentary gifts to charities should suggest such a provision. Precedents provide several examples. Others are mentioned in a paper prepared by Dana De Sante, then of the Office of the Public Guardian and Trustee, for the Six-Minute Estates Lawyer presented by the Law Society of Upper Canada on 27 April 2011.[7]
The provision could direct the executors to distribute the money left to a charity that no longer exists or never existed equally to the other charities. But a more appropriate provision would be to direct the executors in their absolute discretion to select an appropriate charity with similar objects to those of the charity that no longer exists. The provision can and should also address the possibility of a charity having changed its name or having been amalgamated with another charity.
—
[1] For a detailed discussion of the cy-près doctrine, see Oosterhoff on Trusts, 9th ed by Albert H Oosterhoff, Robert Chambers, and Mitchell McInnes (Toronto: Thomson Reuters, 2019) §7.7, and for Initial Impossibility or Impracticability, and Supervening Impossibility or Impracticability see §§7.7.2 and 7.7.3.
[2] 2023 ONSC 1503. See also the fine blog by my colleague, Evan Pernica, on this case at https://welpartners.com/blog/2023/05/what-happens-when-a-gift-in-a-will-is-made-to-a-charity-that-no-longer-exists/.
[3] (1977), 80 DLR 3d 122 (BCSC) at 127.
[4] 2020 ONSC 3534. See my blog, ‘Application of Cy-Près Doctrine to Charitable Gift’, https://welpartners.com/blog/2020/10/application-of-cy-pres-doctrine-to-charitable-gift/, posted 6 October 2020.
[5] At paras 21-22.
[6] (1990), 39 ETR 32 (Ont Gen Div), para 14.
[7] I am indebted to my colleague, Heather Hogan, for drawing my attention to this paper.
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Written by: Albert Oosterhoff
Posted on: June 19, 2023
Categories: Commentary, WEL Newsletter
1. Introduction
Testators often make gifts in their wills to charities. But if a named charity never existed or has ceased to exist before the testator’s death, or if the testator’s purpose cannot otherwise be carried out, the question arises what should be done with the subject matter of the gift. There are two possible situations. The first is the case of an initial failure. The second is the case of a supervening failure.
In the case of an initial failure, the court has to determine whether: (a) the purpose specified by the testator is impossible or impracticable to carry out; and (2) whether the testator had a general charitable intention. Most cases involve an initial failure.
In the case of a supervening failure the property has already vested in the charity and cannot (save for a couple of minor exceptions) revert to the testator’s estate, but the purpose can later become impossible or impracticable. In this case it is not necessary to show that the testator had a general charitable intent.
‘Impossibility’ means that the purpose cannot be carried out at all. ‘Impracticability’ means that there is no longer a real need for the purpose the testator intended.
In the case of an initial failure, if the testator has named a specific institution that still exists but it is impossible or impracticable to give effect to the intended purpose, the gift will typically fail, and the property will result to the estate. However, if the court finds that the testator had a general charitable intention, even though she named a specific charity, the property can be applied cy-près to purposes similar to the named charity. If the testator gives her entire estate or all the residue to named charities one of which has never existed, the court can also find a general charitable intent by the concept of ‘charity by association’ or ‘kindred objects’. And then it can direct that the share of the non-existent charity be applied cy-pres.[1]
The question whether a gift of residue given to a charity that had ceased to exist before the testator’s death, a case of initial failure, arose in Dors v The Public Guardian and Trustee.[2]
2. Facts
The testator, Anna Salnikova, died in 2018. She had no spouse or children and her only sibling died in World War II. Her only living relatives were a first and second cousin. The testator appointed her friend, Elizabeth Dors and another person her executors. The testator’s Will, made in 2006, left legacies to the two cousins, and directed that the residue be distributed and paid to 20 named charities in varying percentages. The charity to which the testator gave the largest part of the residue (20 percent) was the Pan American Mission in Canada (‘the Mission’). She provided the Calgary address of the Mission, as well as the address of its head office in California in her Will. The Mission helped fund orphanages in South America. The testator and Ms. Dors were part of a group of women who raised funds for various charities, including the Mission. Ms. Dors was also the testator’s attorney for property and sent a cheque for $200 to the Mission’s Calgary office on the testator’s instructions. However, the cheque was returned with a note stating the charity was no longer in existence. Further research indicated that the Canadian charity had been voluntarily wound up in 2012, and that the US charity had been dissolved involuntarily in 2013.
The will did not contain a provision directing the executors how to distribute the residue if one of the charities was no longer in existence. The executors brought an application for directions about the disposition of the money left to the Mission. They took the position that the gift had lapsed, and that the money should be distributed pro rata to the other 19 charities. However, The Public Guardian and Trustee (the ‘PGT’) took the view that it should be paid to a charity with objects similar to the Mission under the cy-prés doctrine.
3. Analysis and Judgment
Justice Gilmore applied the principles described in Re Jacobsen[3] to determine charitable intent:
In Jacobsen the court determined that the money left to one of the charities should be applied cy-prés.
Her Honour also referred to and applied another similar case, La Fabrique de la Paroisse Sainte-Sophie,[4] which also applied a gift cy-près. In that case,[5] the court quoted the following applicable principles in determining whether to apply cy-près from Conforti v Conforti:[6]
The cy-près doctrine may be used by the court to direct a gift in a Will to an institution or organization other than the one named in the Will if:
Her Honour, relying on the above authorities held that the gift to the Mission should be applied cy-prés because the testator evinced a general charitable intention since she gave 95 percent of her Estate to charities, and it was clear that the Mission and its objects were particularly important to her. Distributing the 20 percent to the other charities would defeat her intention to benefit orphans in South America. Consequently, her Honour rejected the position of the executors. But she noted that the result would have been different if the Will contemplated a gift over to the other charities.
In the order, her Honour directed that the 20 percent should be paid to a charity with objects similar to those of the Mission. She directed that the PGT should provide the executors with a list of nominee charities and the executors were then entitled to choose one of the nominees on their own or in consultation with the PGT.
As is apparent from the reasons, it is possible for a testator to insert a provision in a will that avoids the necessity and cost of having to make an application to the court for a cy-près order. Lawyers who draft wills for clients who make testamentary gifts to charities should suggest such a provision. Precedents provide several examples. Others are mentioned in a paper prepared by Dana De Sante, then of the Office of the Public Guardian and Trustee, for the Six-Minute Estates Lawyer presented by the Law Society of Upper Canada on 27 April 2011.[7]
The provision could direct the executors to distribute the money left to a charity that no longer exists or never existed equally to the other charities. But a more appropriate provision would be to direct the executors in their absolute discretion to select an appropriate charity with similar objects to those of the charity that no longer exists. The provision can and should also address the possibility of a charity having changed its name or having been amalgamated with another charity.
—
[1] For a detailed discussion of the cy-près doctrine, see Oosterhoff on Trusts, 9th ed by Albert H Oosterhoff, Robert Chambers, and Mitchell McInnes (Toronto: Thomson Reuters, 2019) §7.7, and for Initial Impossibility or Impracticability, and Supervening Impossibility or Impracticability see §§7.7.2 and 7.7.3.
[2] 2023 ONSC 1503. See also the fine blog by my colleague, Evan Pernica, on this case at https://welpartners.com/blog/2023/05/what-happens-when-a-gift-in-a-will-is-made-to-a-charity-that-no-longer-exists/.
[3] (1977), 80 DLR 3d 122 (BCSC) at 127.
[4] 2020 ONSC 3534. See my blog, ‘Application of Cy-Près Doctrine to Charitable Gift’, https://welpartners.com/blog/2020/10/application-of-cy-pres-doctrine-to-charitable-gift/, posted 6 October 2020.
[5] At paras 21-22.
[6] (1990), 39 ETR 32 (Ont Gen Div), para 14.
[7] I am indebted to my colleague, Heather Hogan, for drawing my attention to this paper.
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