Toronto Estate Law Blog : Toronto Estate Lawyer : Hull & Hull Law Firm : Trust Mediation and Succession Planning : Serving Ontario, Ottawa, Mississauga, Hamilton

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Mr. Justice Brown recently considered whether to apply the doctrine of cy-pres in the matter of The Bank of Nova Scotia Trust Company v. Common Ground Women’s Centre, CanLII 2010 ONSC 63.

(The doctrine of cy-pres is discussed in Megan Connolly’s blog, here.)

In Common Ground, the deceased died in 2007, leaving a will dated 1997. The deceased’s will provided that the residue of her estate was to be divided “in equal shares among the following organizations which shall be in existence at my death…”, and went on to list 18 charities, one of which was “Common Ground Women’s Centre, 736 Bathurst Street, Toronto”. 

As it turned out, Common Ground Women’s Centre was in fact a charity, and had not been dissolved as at the date of death. However, it had ceased operations in or about 1997, and it had lost its charitable status.

An application to the court for directions was brought by the Estate Trustee. The following issues were raised in the application:

1. Was Common Ground in existence at the time of death?
2. If not, did the gift lapse, resulting in a partial intestacy, or did the doctrine of cy-pres apply?
3. If the doctrine of cy-pres applied, to whom should the Common Ground share be paid to?

As to the first issue, the court held that although Common Ground continued to have “legal” existence, the deceased’s wording of the Will was such that she intended that the charity be able to apply the gift to charitable purposes. Thus, the intention was that the charity be active and operating at the time of death: Common Ground was not.

As to the second point, the court found that the issue of determining whether there was a lapsed gift or whether the cy-pres doctrine applied did not arise. Rather, the specific language of the will, requiring that the charity “shall be in existence” avoided the problem.   As Common Ground was not in existence, the residue passed to the remaining 17 charities, in equal shares.

Thank you for reading. Have a great weekend.

Paul Trudelle

Paul E. Trudelle - Click here for more information on Paul Trudelle. 

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As I noted yesterday, Ontario’s Good Government Act 2009 has received royal assent. Over 300 pieces of legislation have been amended or repealed, including various statutes dealing with the regulation of charities in Ontario.  

Of particular note are the following two changes:

1.    The Charitable Gifts Act (the “CGA”) has been repealed. This Act has long been criticized for unnecessarily restricting the ability of charities from directly or indirectly owning more than a 10% interest in a business, particularly as the Income Tax Act already imposes various restrictions on registered charities conducting business activities. The repeal of the CGA may be a welcome change to Ontario charities wishing to acquire an interest in a business for investment purposes. 

2.    An amendment to the Charities Accounting Act (“CAA”) relates to the section dealing with interests in real or personal property held for a charitable purpose. Historically, the CAA restricted the ownership of real estate by an Ontario charity by requiring that land could only be held to the extent that it was used for the charitable purpose. A charity could not own excess land and lease it out. Any excess property was subject to vesting in the Public Guardian and Trustee. The amended section now simply provides that a charity that holds an interest in real or personal property for a charitable purpose shall use the property for the charitable purpose. This amendment will presumably allow charities to hold excess property, both real or personal, and invest such property in order to earn income. 

For a more fulsome discussion of the effect of the Good Government Act, 2009 on charities, see Miller Thomson’s informative newsletter.

Bianca La Neve

Bianca V. La Neve - Click here for more information on Bianca La Neve.

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Hull & Hull LLP hosted its quarterly breakfast series on September 24, 2009.   Megan Connolly started off the day with a very informative talk on charitable gifts, with a focus on when a charitable beneficiary can not be identified or cannot be found. 

Megan reviewed ways in which the charitable gift may survive in these circumstances, which are touched upon below.

·                    When the charity is inaccurately described, but the description is sufficient to make it clear to which charity the gift was intended and the beneficiary is discoverable, the gift will not fail;  

·                    When the institution can still be identified, although its form might have changed (i.e. unification of churches), then the court will often be willing to give effect to the gift – a key consideration is whether the charity has maintained a “continuing identity”;

·                    When it is impossible or impracticable to carry out the gift (i.e. the named institution ceased to exist during the testator’s lifetime) an application for the advice direction of the court can be brought on the basis of the cy-près doctrine; and

·                    Section 13 of the Charities Accounting Act provides a mechanism for obtaining a cy-près order without having to commence a formal court proceeding when the consent is obtained of the Public Guardian and Trustee and everyone else required to be served with such an application.

An interesting panel discussion followed between Ian Hull and Suzana Popovic-Montag on undue influence, which is seen to be the most difficult ground upon which to successfully challenge a Will.

If you would like to receive a copy of the papers on these topics please contact us.

Have a great day,              

Natalia Angelini

Natalia Angelini - Click here for more information on Natalia Angelini.
 

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Cy pres is the equitable doctrine under which a court interprets a document containing a gift to charity by substituting another charity to reflect as closely as possible the donor’s intention. Courts use cy pres when a donor’s original charitable purpose cannot be exactly fulfilled. When literal compliance is impossible, the general intention of the donor should still be carried out as nearly as possible (cy pres) so that the charitable bequest does not fail.  

In our area of expertise, estate and trust litigation, cy pres applications are quite common to determine the proper beneficiary(s) of a subject testamentary bequest.  Megan Connolly has blogged on the application of the cy pres doctrine to charitable bequests in Wills. Cy pres has been applied in other areas of the law.

In the context of class action proceedings, settlements increasingly include cy pres orders (as they are often called) where part of the settlement funds are paid to charitable and non-profit organizations, to be applied to activities that may reasonably be expected to benefit class members. In a recent decision approving the settlement of a class action against a financial institution involving alleged unauthorized charges for foreign currency transactions, Justice Cullity reviewed cy pres orders in class action settlements and ultimately made an order for the Law Foundation of Ontario to receive $14.2 million to create a trust fund “for the purpose of advancing public access to justice in Canada”. Justice Cullity noted that access to justice had been used as a ground for certifying the proceeding. Class members and other members of the public would benefit from enhanced access to justice in the future. 

Thanks for reading,

Bianca La Neve

Bianca La Neve - Click here for more information on Bianca La Neve.

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The holiday season is generally the time when people give most generously to charity. However, with the souring economy, many charities are seeing their donations dry-up.   

Individual giving has been on the decline, as many people appear either unable to donate as in the past or unwilling to until the economy seems stable again.     

Gift giving by foundations is also on the decline. The Bill & Melinda Gates Foundation recently announced that less will be disbursed in grants over the next year than originally anticipated (in recent years, the annual amount disbursed has been about USD$3 billion of its USD$35.1 billion endowment). 

Corporate donations are also decreasing. Large charities are particularly dependant on corporate philanthropy; however, many large corporations no longer have the financial wherewithal to donate as they have in better times and some of the most generous givers (such as Bear Stearns and Lehman Brothers) do not appear to be in a position to give at all. 

The decrease in charitable giving has had an immediate effect on some charities. The Variety Children's Charity, recently laid-off 21 of 65 employees and has temporarily stopped a phys-ed program for disabled children. There are many shelters and food banks that are seeing donations decline as need for services increases. 

To encourage giving, some charities are making it easier to donate. The Salvation Army has gone electronic and has introduced wireless machines at the donation point at Yonge-Dundas Square in Toronto to allow people to donate by debit or credit card if they do not have change to drop into the kettle. 

Have a great day!

Megan F. Connolly