Supreme Court of Canada
In re Cox, 1953 1 S.C.R. 94
Date: 1952-12-22
In re Herbert Coplin Cox
and
In re Louise Bogart Cox
Edwin G. Baker (Plaintiff)
Appellant;
and
National Trust
Company Limited and Others (Defendants) Respondents.
1952: May 12, 13, 14; 1952: December 22.
ON APPEAL FROM THE COURT OF APPEAL FOR
ONTARIO.
Charity—Charitable Trust—Income of trust
fund payable to such employees and their dependents of an assurance company as
determined by its Board of Directors—Validity.
By his will the testator directed his
trustees to hold the residue of his estate upon trust as follows: “To pay the
income thereof in perpetuity for charitable purposes only: the persons to
benefit directly in pursuance of such charitable purposes are to be only such
as shall be or shall have been employees of The Canada Life Assurance Company;
subject to the foregoing restrictions, the application of such income,
including the amounts to be expended and the persons to benefit therefrom,
shall be determined by the Board of Directors of the said The Canada Life
Assurance Company, as they, the said Board of Directors, in their absolute
discretion shall from time to time decide.”
[Page 95]
Held: (Rand
and Cartwright JJ. dissenting)—That on its true construction the clause did not
evidence a general charitable intent and the specific bequest to the employees
did not satisfy the test of public benefit requisite to establish it as a
charitable trust. Oppenheim v. Tobacco Securities Trust Co. Ld. [1951]
A.C. 297; In re Compton [1945] Ch. 123; In re Hobourn Aero Components
Ld.’s Air Raid Distress Fund [1946] Ch. 194 and In re Drummond [1942]
2 Ch. 90.
Per: Rand and
Cartwright JJ. (dissenting)—The residuary clause declares a general charitable
intent and impresses upon the residue a trust for that purpose. The word
“directly” restricts direct benefits to those mentioned and implies that all
other benefits are to be indirect, but since the benefit to the specified class
violates the rules laid down requiring that public quality in the recipients
defined by the cases mentioned, it follows that only by indirect benefits to
individuals as by grants to charitable agencies or objects are the funds to be
dealt with by the trustees.
Rand J. was of opinion that failure of the
benefits to the employees of the Assurance Company did not cause the
appointment of the Board of Directors as the body to determine the distribution
of the funds to also fail but rather that the absolute discretionary
appropriation to charity of the property generally was conferred upon the
Board.
Cartwright J. was of opinion that since the
mode of carrying the testator’s general charitable intention into effect could
not be carried out, the matter should be referred back so that proper
proceedings could be taken for the propounding and settlement of a scheme for
the application cy-près of the residuary estate.
APPEALS by the representative of the
employees of The Canada Life Assurance Co. from the judgment of the Court of
Appeal for Ontario
construing the residuary clause in the wills of the late Herbert Coplin Cox and
his widow the late Louise Bogart Cox. The clauses were substantially identical
and by consent of the parties the two appeals were heard together. Wells J.,
the trial judge, construed the disposition as a valid charitable bequest for
the relief of poverty confined to the class described. The Court of Appeal reversed his judgment,
declared the clause did not constitute a valid charitable bequest and ordered a
reference to determine the next-of-kin.
[Page 96]
J.J. Robinette, Q.C. and G.F. Hayden for
Edwin G. Baker, by order representative of the employees of The Canada Life
Assurance Co., appellant.
L.H. Snider, Q.C. for the Public Trustee.
Beverley Mathews, Q.C. and W.C. Terry,
Q.C. for the National Trust Co., Administrator of the estate of H.C. Cox,
respondent.
Hon. S.A. Hayden, Q.C. for the National
Trust Co., executor of the will of Louise Bogart Cox.
J.D. Arnup, Q.C. and R.B. Robinson for
Margaret Jane Ardagh and all next-of-kin in the same interest, respondent.
H.C. Walker Q.C. for Lida Louise Shepard,
respondent.
H.J. McLaughlin, Q.C. for W.B. Shepard,
one of the next-of-kin of Louise Bogart Cox, respondent.
P.D. Wilson, Q.C. for the Official
Guardian, respondent.
The judgment of Kerwin and Taschereau, JJ. was
delivered by:—
KERWIN J.:—The will of the late Herbert Coplin
Cox directe his trustees to hold the residue of his estate upon trust as
follows:—
To pay the income thereof in perpetuity for
charitable purposes only; the persons to benefit directly in pursuance of such
charitable purposes are to be only such as shall be or shall have been
employees of The Canada Life Assurance Company and/or the dependents of such
employees of said The Canada Life Assurance Company; subject to the foregoing
restrictions, the application of such income, including the amounts to be
expended and the persons to benefit therefrom, shall be determined by the Board
of Directors of the said The Canada Life Assurance Company, as they, the said
Board of Directors, in their absolute discretion shall from time to time
decide. The Trust Fund is to be known as “The Cox Foundation” in memory of the
family whose name has been so long associated with the said Company.
The first point to be determined is the proper
construction of this clause. If it consisted merely of the opening words “To
pay the income thereof in perpetuity for charitable purposes only” that would
be a good charitable trust,
[Page 97]
and it is therefore argued that while in the
latter part of the clause the only persons to benefit “directly” from the
application of the income are the present and former employees (and their
dependants) of The Canada Life Assurance Company, there is an area of indirect
benefit untouched by such latter part but which falls within the opening words.
As against this it might be suggested that, if that were so and assuming the
latter direction would not fall within the scope of legal charity, the funds
could be applied for either purpose. It might be also suggested that, in that
event, the present case could not be distinguished from those where the fund
could be diverted in the trustees’ discretion to an object totally uncharitable
in the legal sense with the result that the whole bequest would be void: Hunter
v. A.G.; Chichester
Diocesan Fund and Board of Finance v. Simpson.
The point need not be determined on this appeal
because the word “directly” does not operate in the manner suggested as I
construe the clause to mean that the charitable purposes for which the income
is to be paid in perpetuity are the employees and dependants. Members of that
class must of necessity benefit directly as a trust for indirect benefits would
be too vague for the Court to enforce. The word “directly” therefore adds
nothing. On that construction it is not a case of there being a charitable
intention with merely the particular mode of application failing for illegality
or some other reason, and the cases cited on that branch of the matter have no
application.
Upon a consideration of the numerous decisions,
it is clear that, if the objects of a trust are not charitable in themselves,
it is not a charitable trust, and the fact that the donor thought his gift
charitable is not relevant to the issue: Tudor on Charities, 5th edition, page
8. The circumstance, therefore, that the testator directed his trustees to pay
the income for charitable purposes only does not determine the matter when, as
I believe, the only purposes to which the moneys may be applied are not
charitable.
[Page 98]
It has now been settled that the element of public
benefit is essential for all charities no matter in which of Lord Macnaghten’s
classifications in Income Tax Commissioners v. Pemsell, they fall. The only exception is the
anomalous case of trusts for the relief of poverty and, here, that condition does
not exist. Mr. Robinette contended that, granted the words “to pay the
income thereof in perpetuity for charitable purposes only” would, by
themselves, establish a valid charitable trust, it should be held that the
succeeding part of the clause applied only to indigent or necessitous persons.
However, this succeeding part permits the Board of Directors to choose
employees and dependants who are not poor and the argument fails.
As pointed out by Lord Simonds in Oppenheim v.
Tobacco Securities Trust Co. Ld., when
the trust is for the benefit of a class of persons, the question is whether
that class can be regarded as such a “section of the community” as to
satisfy the test of public benefit. He points out that these words,
“section of the community”, have no special sanctity, “but they
conveniently indicate first, that the possible (I emphasize the word
“possible”) beneficiaries must not be numerically negligible, and secondly,
that the quality which distinguishes them from other members of the community,
so that they form by themselves a section of it, must be a quality which
does not depend on their relationship to a particular individual. It is for
this reason that a trust for the education of members of a family or, as In
re Compton, of a
number of families cannot be regarded as charitable. A group of persons may be
numerous but, if the nexus between them is their personal relationship to a
single propositus or to several propositi, they are neither the community nor a
section of the community for charitable purposes.”
The House of Lords approved the judgments of
Lord Greene as Master of the Rolls in In re Compton7, and of
Lord Greene and of Lord Justice Morton (as he then
[Page 99]
was) in In re Hobourn Aero Components Ltd.’s
Air-raid Distress Fund. The
decision in In re Drummond was
also approved. That decided that trusts for the benefit of employees past,
present or future of an employer are not public charities. In re Rayner, was regarded as of doubtful authority. As
pointed out by Lord Morton of Henryton, the Court of Appeal in Gibson v. South
American Stores (Gath and Chaves) Ld.,
felt obliged because of the rule of stare decisis to follow an
unreported decision of its own in 1935, In re Sir Robert Laidlaw, and to
hold that a trust was valid which was for all persons who in the opinion of a
Board of Directors are, or should be necessitous and deserving, and who had
been in the employ of the Company or a subsidiary thereof, and dependants
thereof. The element of poverty was present and it was held to be a valid
charitable trust notwithstanding the limited nature of the class of
beneficiaries. I have already pointed out that the element of poverty does not
enter into the present matter and, in my opinion, the decision in Oppenheim is
decisive.
It is decisive notwithstanding that at the date
of the application to Wells J. the persons who would answer the description of
employees, past or present, of the Company, and dependants of such employees,
were estimated to be in excess of thirty thousand, and that some of these were
in such circumstances as to require financial aid. Even if those facts
satisfied the first test of a “section of the community”, the second
requirement is a quality which does not depend on the relationship of the
members thereof to a particular individual. When the Hobourn case came
before the Court of Appeal, it was contended that the observations of that
Court in Compton that a trust for the benefit of employees of a business
was a purely private and personal trust were dicta only. At page 200, Lord
Greene stated his belief in the correctness of those observations, and at page
208, Lord Justice Morton said quite
[Page 100]
plainly that he entirely approved of the Drummond
decision. In the Hobourn case the Court was not dealing with a fund
put up by outside persons but, at page 200, Lord Greene stated that “even if we
were, I should on the authority of In re Compton feel constrained to
hold that such a fund would not be a good charity.” Lord Justice Morton was of
the same opinion and Lord Justice Somervell agreed. In view of the approval by
the House of Lords of the decisions in Compton and Hobourn, the matter
would appear to be concluded.
It was argued that the law should not be the
same for Ontario but even if the decision in Oppenheim had never been
given, I would hold that its basis, as found in the judgments of Lord Greene in
Compton and of Lord Greene and of Lord Justice Morton in Hobourn, is
a complete and satisfactory method of disposing of the present issue. I adopt,
if I may, the words of Lord Simonds in Oppenheim: “It must not I think
be forgotten that charitable institutions enjoy rare and increasing privileges
and that the claim to come within that privileged class should be clearly
established.” Those privileges, it might be added, are, of course, not confined
to the receipt of benefits in perpetuity under a will.
The appeal should be dismissed subject to a
variation to which Mr. Snider drew our attention. The testator’s widow
survived her husband, and paragraph 5 of the judgment of Wells J., as inserted
in the Court of Appeal order, should be stricken out and the following
substituted therefor:—
5. And there therefore being an intestacy
as to such balance of the testator’s residuary estate, THIS COURT DOTH FURTHER
ORDER that it be referred to the Master of this Court at Toronto to determine
and report who were entitled thereto at the date of the death of the testator.
The costs of all parties should be paid out of
the estate, those of the surviving administrator with the will annexed and
trustee of the testator’s will and codicil as between solicitor and client.
The residuary clause in the will of the
testator’s widow is the same as in her husband’s and the same order should,
therefore, go in the appeal in connection with her estate except that there is
no necessity of any alteration in the order of the Court of Appeal.
[Page 101]
RAND J. (dissenting):—I agree with the
construction placed on the residuary clause by my brother Cartwright, that it
declares a general charitable intent and impresses upon the residue a trust for
that purpose; I agree, also, that the word “directly” is significant, that it
restricts direct benefits to those mentioned and implies that all other
benefits are to be indirect; I agree, finally, that the benefit to the
specified class violates the rules laid down requiring that public quality in
the recipients defined by the cases mentioned. It follows that only by indirect
benefits to individuals, as by grants to charitable agencies or objects such as
libraries, hospitals, schools, churches, works or institutions, are the funds
to be dealt with by the Trustees.But I am unable to concur in the view that by
reason of the failure of the benefits to the employees of the Assurance
Company, the appointment of the Board of Directors as the body to determine the
distribution of the funds, must be taken also to fail. The absolute
discretionary appropriation to charity of the property generally was conferred
upon the Board; benefits might or might not be awarded to the employee group:
they might from time to time be bestowed exclusively on other objects. The
reasons leading the testator to select the Board would, from the evidence, seem
to be obvious. He, himself, as well as others of the Cox family, had long been
associated with the Company, and he had come to know and, undoubtedly,
appreciate the competency and character of those who constituted its Board. It
may be also that that long family connection had, directly or indirectly, in
some degree, enabled the accumulation of the wealth of which he was disposing,
and it was an easy step to associating the Company with its distribution as a
public benefaction.
In these circumstances I cannot take the
designation of the Board to have been bound up with the intended benefits, to
the employees. The discretion extended over the whole charitable field; and I
find nothing to indicate that had there not been the special provision for the
employees, that discretion would have been placed elsewhere. I should think, on
the contrary, that, in his opinion, the perpetuation of the family name in the
maintenance of a charitable Foundation would be uniquely served by such an
intimate office on the part of the Board.
[Page 102]
I would therefore declare the bequest in both
testaments to be a valid gift to charity, the income to be applied by the
trustees to such charitable purposes with indirect personal benefits only as
the Board in their discretion think proper.
The costs of all parties should be paid out of
the estates as proposed.
The judgment of Taschereau, Kellock and Fauteux,
JJ. was delivered by:—
KELLOCK J.:—As the question arising in these
appeals is common to both, it will be convenient to deal with the will of the
male deceased. The relevant paragraph reads as follows: (As to which see page
96).
Wells J., the judge of first instance, construed
this disposition as a good charitable bequest confined to the relief of poverty
among the class described. The Court of Appeal appears to have entertained the
same view with respect to the question of construction, but reversed the
judgment of Wells J. on the ground that a trust for the relief of poverty
confined to such a class was not a valid trust. In the view of Roach J., who
delivered the judgment of the court, such a trust lacked the necessary public
character.
The appellant, while adopting the construction
of the will accepted in the courts below, contends that the Court of Appeal
erred in its view of the law. Appellant contends further that, while the class
denned by the testator comprises the only persons who are to benefit “directly”
from the trust, the testator has expressed a general charitable intention and
has left his gift to operate in the field of “indirect” benefit.
In its popular sense, “charity” does not
coincide with its legal meaning but, as stated by Lord Macnaghten in Pemsel’s
case,
adopting the argument of Sir Samuel Romilly in Morice v. Bishop of Durham,
“Charity” in its legal sense comprises four
principal divisions: trusts for the relief of poverty; trusts for the advancement
of education; trusts for the advancement of religion; and trusts for other
purposes, beneficial to the community, not falling under any of the preceding
heads.
[Page 103]
In Verge v. Somerville, Lord Wrenbury said at p. 499:
To ascertain whether a gift constitutes a
valid charitable trust so as to escape being void on the ground of perpetuity,
a first inquiry must be whether it is public—whether it is for the benefit of
the community or of an appreciably important class of the community. The inhabitants
of a parish or town, or any particular class of such inhabitants, may, for
instance, be the objects of such a gift, but private individuals, or a
fluctuating body of private individuals, cannot.
Lord Greene M.R. in Compton’s case, said with reference to the above
proposition that it is true with respect to all charitable gifts and is “not
confined to the fourth class in Lord Macnaghten’s well known statement in Pemsel’s
case.”
In the submission of the appellant, any trust
for the relief of poverty creates, per se, a public benefit. Accordingly, while
admitting that the trust here in question cannot, on the law as stated by Lord
Wrenbury, be upheld as applied to the last three heads of Lord Macnaghten’s
classification, the appellant submits that if the language here in question may
be construed as the appellant seeks to construe it, the trust is valid with
respect to the first head, namely, for the relief of poverty within the group
defined by the testator.
The initial question, therefore, is as to the
true construction of the language which the testator used. Appellant says that
the words “for charitable purposes only” are to be construed as though the
testator had said, “for such legal charitable purposes as the law recognizes”
within the class of beneficiaries defined.
As I have said, this construction of the
testator’s language found acceptance in the courts below, but I am regretfully
unable to come to that conclusion. The word “charitable,” construed in its
legal sense, comprises all of the four heads already mentioned, and I find
nothing in the language used which permits me to eliminate therefrom any of
them. To put the matter more plainly, I see no escape from reading the words
used as though the testator had set out seriatim the said four heads. This
being so, the testator has empowered his trustees, even on the appellant’s
thesis, to apply the subject matter of the trust for charitable and
[Page 104]
non-charitable purposes, thereby empowering them
to devote the whole, if they please, to the non-charitable. The “application of
such income” is left entirely to the discretion of the directors of the company
and the bequest is therefore void; Morice v. Bishop of Durham. In my view, therefore, the basis of the
argument of the appellant fails on this branch of the case.
In 1938 when the will here in question was
executed, a testator might not unreasonably have thought, in the state of the
authorities at that time, that a valid trust for purposes embracing all of the
four heads of charity could be created for the benefit of a class such as the
employees of a particular company and their dependents. In 1881 the case of Spiller
v. Maude, had
come before Jessel M.R. That case dealt with a fund derived from subscriptions
made by members of a company of actors and actresses for the benefit of the
members and their dependents. The learned Master of the Rolls came to the
conclusion that poverty was clearly an ingredient in the qualification of
members who should receive benefits and that the fund was, accordingly,
charitable. Again in 1896, in In Re Buck, Kekewich J. decided similarly with
respect to the funds of a Friendly Society. In 1900, also, in In Re Gosling, Byrne J. upheld as a good charitable
trust, a fund for the purpose of pensioning off old and worn-out clerks of a
particular firm.
In 1914, the case of In Re Drummond, came before Eve J., who held that a trust
for the purpose of providing holiday expenses for the employees of one
department of a company was invalid as not being a trust for public purposes
but for private individuals. But, in 1920 the same learned judge, in Re
Rayner, had
to consider the validity of a trust for the education of children of the
employees of a particular company. Eve J. distinguished his decision in Drummond’s
case and held the trust then before him valid, being of opinion that the
class of beneficiaries was sufficiently defined as a section of the public
to support
[Page 105]
the gift. Although Lord Wrenbury’s judgment in Verge
v. Somerville was
delivered in 1924, it was not until 1945 that the decsion in Rayner’s case
was over-ruled by the Court of Appeal in In Re Compton, supra. In the
meantime, the will of the testator here in question was executed.
By 1948 when the will of the testatrix was
executed, In Re Hobourn, had
been decided, although Gibson v. South American Stores, and Oppenheim v. Tobacco Securities
Trust, had
not. However, whatever may have been the view of the professional advisers of
either the testator or the testatrix when the respective wills now in question
were executed, the appellant does not argue now that the trusts here in
question can be supported in law except as trusts for the relief of poverty.
For the reason already given, the necessary foundation for such an argument
does not exist upon the construction of the language used by the testators
which, in my view, is the proper construction.
With respect to the argument that there is a
whole field of “indirect” benefit left open within which the trust may validly
operate, we have not the benefit of the view of either of the courts below, as
this contention was for the first time put forward in this court. This argument
is, of course, founded upon the use of the word “directly”.
It is contended that while the testator has
prohibited the application of any part of the income for the direct benefit
of an individual who does not fall within the specified class, the will permits
the income to be applied to such objects as, for example, a hospital, as it is
said, such a gift involves only indirect benefit, presumably, to the patients.
Had the testator stopped with the words “The
Canada Life Assurance Company” where those words are used for the second time
in the first limb of the paragraph, there might be considerable force in this
contention. The testator, however, did not stop there, but went on to prescribe
[Page 106]
in the second limb that, “subject to the
foregoing restrictions”, the application of the income, including
(a) “the amounts to be expended” and
(b) “the persons to benefit
therefrom” (and here the word “directly” does not occur)
should be determined by the Board of Directors.
It is to be observed that while it is the
trustees who are to disburse the income, it is the directors who are to control
the application of the payments. The word “persons” in (b) above
certainly does not exclude individuals. It includes them. If, therefore,
according to the appellant’s contention, no individual may take a direct
benefit, the directors could never, as the testator directs, determine the
“persons” to benefit but only at best, the “classes of persons” who might be
served by any particular institution or organization to which they might direct
payments to be made. The Canada Life employees and their dependents are
themselves a class but the testator has declared that even among that class,
the selection of the actual beneficiaries is a matter for the directors.
Having imperatively prescribed that the
“persons” to benefit shall be determined by the directors, the testator
has made it clear, in my opinion, that it is individuals and not institutions
or organizations that he had in mind. Accordingly, as a gift to or for the
benefit of an individual must benefit that individual directly, I think that in
prescribing in the second limb of the paragraph that “the persons to benefit
therefrom” are to be determined by the directors, he has removed any ambiguity
there might otherwise have arisen upon the phrase “the persons to benefit
directly” in the earlier language. The testator had in mind I think, in the employment
of the earlier language that while a gift to or for the benefit of a member of
the specified class would involve direct benefit to him, it might, in many
cases, also involve indirect benefit to others, e.g., relatives of the
beneficiary. In making their selections from that class, however, the directors
will be concerned only with persons to be directly benefited.
I therefore think that the testator has devoted
the income for “charitable purposes” among the persons of the class which he
has himself described, to the exclusion of all
[Page 107]
others. Accordingly, while the opening language
of the paragraph “to pay the income thereof in perpetuity for charitable
purposes only”, taken alone, could not well be broader for the purpose of
expressing a general charitable intention, the language which follows makes it
clear, in my opinion, that the testator had no general charitable intention but
an intention that the income should be used for charitable purposes for the
benefit only of the persons he specifies and for no one else. If this be the
true view, the court is not in a position to apply the gift in any other way
upon the failure of the testator’s gift.
I think the case at bar is within the principle
of In Re Wilson,
rather than within In Re Monk. In National
Anti-vivisection Society v. Inland Revenue Commissioners, Lord Simonds, in dealing with the
doctrine of general charitable intention, said at p. 64:
It would be very relevant, if the society,
conceding that the campaign against vivisection was not a charitable
purpose, argued that there was yet a general charitable intention and that its
funds were applicable to some other charitable purpose. That is not the
argument. If it were, I should not entertain it, though it might in an earlier
age have succeeded.
I would use the same language in the present
case, and would dispose of the appeal as proposed by my brother Kerwin.
ESTEY J.:—The late Herbert Coplin Cox provided
in his will that the residue of his estate should be held by his trustees upon
trust (As to which see p. 96).
His widow, the late Louise Bogart Cox, included
an identical provision in her will and both have been considered in this
litigation. As a matter of convenience only the will of Herbert Coplin Cox will
be referred to hereafter.
The Court of Appeal for Ontario reversed the
judgment of Mr. Justice Wells and held that the foregoing provision did
not constitute a valid charitable trust or, as stated by Mr. Justice
Roach, writing the judgment of the Court:
... These trusts are not trusts for general
public purposes; they are trusts for private individuals, a fluctuating body of
private individuals but still private individuals. Because they are not for
public purposes they are not charitable and are therefore void as offending the
rule against perpetuities.
[Page 108]
Counsel for the appellant contends that the
judgment of Mr. Justice Wells should be restored, declaring that the
foregoing provision of the will constitutes a valid charitable bequest for the
relief of poverty and, with respect to public benefit, he submits:
The rule is either that the element of
public benefit must be present in every category of legal charity except in the
case of trusts for relief of poverty; or that a trust for the relief of poverty
of a class of persons per se creates a public benefit.
It is convenient first to consider how far
public benefit is essential in the creation of a valid charitable trust.
Charitable purposes and objects have been classified by Lord Macnaghten in Pemsel’s
case, under
four headings. These are trusts for (a) the relief of poverty; (b)
the advancement of education; (c) the advancement of religion and (d)
other purposes beneficial to the community not falling under any of the
preceding heads.
In Oppenheim v. Tobacco Securities Trust Co.
Ld.,,
securities were left upon trust to apply the income
in providing for or assisting in providing
for the education of children of employees or former employees of
British-American Tobacco Co. Ld. … or any of its subsidiary or allied companies
in such manner and according to such schemes or rules or regulations as the
acting trustees shall in their absolute discretion from time to time think fit…
In the House of Lords it was held that this
trust for educational purposes was invalid because the beneficiaries were
limited to the children of employees of specified companies and, therefore, did
not constitute a section of the community. Lord Simonds, at p. 306,
stated:
A group of persons may be numerous but, if
the nexus between them is their personal relationship to a single propositus or
to several propositi, they are neither the community nor a section of the
community for charitable purposes.
I come, then, to the present case where the
class of beneficiaries is numerous but the difficulty arises in regard to their
common and distinguishing quality. That quality is being children of employees
of one or other of a group of companies. I can make no distinction between
children of employees and the employees themselves. In both cases the common
quality is found in employment by particular employers.
In the foregoing quotation Lord Simonds, with
whom Lord Oaksey and Lord Morton of Henryton agree, makes it plain that it is
not the number of beneficiaries that constitutes the test, but that however
large the number, if
[Page 109]
the nexus between them is their personal
relationship to a single propositus such as The Canada Life Assurance Company,
they do not constitute a section of the community and, therefore, the
trust is invalid, not being for a public benefit.
In Gilmour v. Coats, the House of Lords emphasized the same
requirement of public benefit in order that a valid charitable trust for
religious purposes may exist. The Privy Council emphasized the same requirement
in relation to a trust falling under classification (d) (for
other purposes beneficial to the community) in Verge v. Somerville, where Lord Wrenbury stated at p. 499:
To ascertain whether a gift constitutes a
valid charitable trust so as to escape being void on the ground of perpetuity, a
first inquiry must be whether it is public—whether it is for the benefit of the
community or of an appreciably important class of the community. The
inhabitants of a parish or town, or any particular class of such inhabitants,
may, for instance, be the objects of such a gift, but private individuals, or a
fluctuating body of private individuals, cannot.
The Oppenheim, Gilmour and Verge cases
make it clear that public benefit must at least be found in charities
classified under (b), (c) and (d) of Lord Macnaghten’s
classification; further that the Oppenheim case makes it equally plain
that in specifying the employees of The Canada Life Assurance Company and their
dependents the testator had not created a trust for public benefit.
Counsel for the appellant, however, contends
that public benefit is not essential to the creation of a trust under Lord
Macnaghten’s classification (a) (for the relief of poverty).
Trusts for the relief of poor and needy
relatives, usually described as the “poor relations” cases, have at least since
1754 (Isaac v. de Friez), been
held to be valid in courts of first instance and the Court of Appeal in
England. These have been treated, in the Court of Appeal and in so far as they
have been referred to in the House of Lords, as exceptions to the general rule
that public benefit must be found in order that a charitable trust may be
valid. (See Lord Simonds in the Oppenheim case, supra, at 308).
[Page 110]
There is also, in the Court of Appeal in
England, a second exception to this general rule, of which Gibson v. South
American Stores Ld., is an
illustration. In that case the trust was for the benefit of those
who are or shall be necessitous and
deserving and who, for the time being, are or have been in the company’s employ
... and the wives, widows, husbands, widowers, children, parents, and other
dependants of any person who, for the time being, is, or would if living have
been, himself or herself a member of the class of beneficiaries.
The foregoing provision was held to be for the
relief of poverty and the requirement of public benefit was raised by the
Master of the Rolls at p. 191:
Under the law as it has now been
established, and in the light of its several recent decisions both in this
court and in the House of Lords, is a trust for a class of poor persons defined
by reference to the fact that they are employed by some person, firm or
company, a good charitable trust, or does it fail of that qualification through
the absence of the necessary public element?
The Master of the Rolls, after recognizing the
“poor relations” cases as an exception or an anomaly, appeared to regard the
decisions in Spiller v. Maude, In
re Buck,, and In
re Gosling, as
constituting another exception to the rule requiring that in a valid trust
public benefit must be found. In each of these cases the fund was held to have
been created expressly for the benefit of poverty and the fact that the
beneficiaries must be selected from an association or company did not prevent
its being a valid charity. The learned Master of the Rolls, in appreciation of
the fact that the issue in the foregoing oases had never been before the House
of Lords, recognized the possibility that it might be otherwise decided in that
House. He, however, without in any way discussing the principles involved, felt
bound by the unreported judgment of the Court of Appeal in 1935, Re Sir
Robert Laidlaw, of
which no reasons were available. In his own words:
I think that, so far as I am concerned,
this question has been determined by In re Sir Robert Laidlaw, on
grounds which are not apparent, and I loyally follow them without affirming or
disaffirming any of the grounds relied on by Harman J.
He, therefore, held the trust valid and the same
position was taken by that court in Re Coulthurst.
[Page 111]
The case at bar, however, does not come within
either of the foregoing exceptions. It could not, nor has it been suggested
that it falls within the “poor relations” group. Then, with respect to the
second exception or group, illustrated by the Gibson case, supra, it
must be observed that all of the cases that have been included thereunder were
specifically created for the relief of poverty and no other charitable purpose.
This is not such a case. The language here, without enumerating them, includes
all the classifications as made by Lord Macnaghten, which, of course, would
include poverty. Even if this exception should ultimately become established in
the law, it ought not to be so far extended as to include a trust for all
charitable purposes such as that here under consideration.
The fact that the “poor relations” cases and the
group illustrated by the Gibson case, supra, have been treated as
exceptions to the general rule that a charitable trust must be not only
charitable in character but for a public benefit indicates that the general
rule requiring public benefit is applicable to trusts for the relief of
poverty. Moreover, that such is the correct view is strengthened by the
statements to be found in the authorities and text books, of which the following
may be noted:
Lord Simonds:
… the principle has been consistently
maintained, that a trust in order to be charitable must be of a public
character. It must not be merely for the benefit of particular private
individuals: if it is, it will not be in law a charity though the benefit taken
by those individuals is of the very character stated in the preamble. Williams’
Trustees v. Inland Revenue Commissioners.
Lord Porter in National
Anti-Vivisection Society v. Inland Revenue Commissioners, stated:
One must take it therefore that in
whichever of the four classes the matter may fall, it cannot be a charity
unless it is beneficial to the community or to some sufficiently defined
portion of it.
See also Lord Wright at p. 42.
Then (again the learned authors of Tudor on
Charities, 5th Ed., p. 11, state:
In the first place it may be laid down as a
universal rule that the law recognizes no purpose as charitable unless it is of
a public character. That is to say, a purpose must, in order to be charitable,
be directed to the benefit of the community or a section of the community.
[Page 112]
Whether public benefit exists in a given case is
a question of fact. In National Anti‑Vivisection Society v. Inland
Revenue Commissioners, supra, the House of Lords adopted the view expressed
by Russell J. (as he then was) in Re Hummeltenberg. Lord Wright, at p. 44, adopts the
language of Russell J.:
In my opinion, the question whether a gift
is or may be operative for the public benefit is a question to be answered by
the court by forming an opinion upon the evidence before it.
and expressly approves of it. At p. 42 Lord
Wright states:
The test of benefit to the community goes
through the whole of Lord Macnaghten’s classification, though as regards the
first three heads, it may be prima facie assumed unless the contrary appears.
Lord Simonds stated at p. 65:
I will readily concede that, if the purpose
is within one of the heads of charity forming the first three classes in the
classification which Lord Macnaghten borrowed from Sir Samuel Romilly’s
argument in Morice v. Bishop of Durham,
the court will easily conclude that it is a charitable purpose. But even here
to give the purpose the name of “religious” or “education” is not to conclude
the matter. It may yet not be charitable, if the religious purpose is illegal
or the educational purpose is contrary to public policy. Still there remains
the overriding question: ‘Is it pro bono publico? It would be another strange
misreading of Lord Macnaghten’s speech in Pemsel’s case, (one was pointed out in In re Macduff), to suggest that he intended anything to
the contrary. I would rather say that, when a purpose appears broadly to fall
within one of the familiar categories of charity, the court will assume it to
be for the benefit of the community and, therefore, charitable, unless the
contrary is shown, and further that the court will not be astute in such a case
to defeat on doubtful evidence the avowed benevolent intention of a donor.
If, therefore, upon the face of the document,
the purpose or object of the trust is charitable in character, public benefit
may be assumed or prima facie established, but where, as here, upon the face of
the document it is clear that the cestuis que trust are limited to those who
are employees of a particular company and their dependents, public benefit is
negatived and, therefore, that element essential to a valid charitable trust is
absent.
The appellant further contends that the
provision of the will above quoted should be construed to mean that the employees
and their dependents were to benefit to the extent that the trust might be
declared valid, or, as otherwise stated, the testator discloses an intention
that the
[Page 113]
fund should be used for such charitable purpose
or purposes as are legal within the named group. If, therefore, the absence of
public benefit made the trust invalid under headings (b), (c) and
(d) of Lord Macnaghten’s classification, it would still remain a
valid charitable trust under (a) for the relief of poverty. This
contention, if maintained, would involve a consideration of the Gibson case,
supra. However, in my view, the provision does not admit of such a
construction. It would appear that the testator, in providing that the
directors might expend the income for charitable purposes, included the relief
of poverty, in the same sense that all other purposes and objects are included,
and made it abundantly clear that the employees and their dependents should
benefit, not only in case of financial need, but in any manner that might be
included within the phrase “charitable purposes.” Moreover, it cannot be
concluded that the testator would not have been mindful of the fact that the
directors would probably find it difficult to expend the fund for the relief of
poverty only among the employees and their dependents.
There remains the further contention that,
though the trust for the employees and their dependents may be invalid, the
testator has, in the foregoing provision, disclosed a general charitable
intention which should be administered cy-près. This involves a difficult
question of construction. As stated by Lord Davey in Hunter v. Attorney-General:
You must construe the words of the will
fairly, and if you can find a charitable purpose sufficiently clearly expressed
the Court will give effect to it. If you do not find any such definite
expression, you are not at liberty to supply it from more or less well-founded
speculation of what the testator would probably have wished or intended if his
attention had been drawn to the omission.
As Kay J. stated in Re Taylor; Martin v. Freeman,:
I take the line to be a very clear one;
perhaps sometimes it is difficult to say on which side of the line a particular
case comes; but the line, which we all very well understand, is one of this nature:
if upon the whole scope and intent of the will you discern the paramount object
of the testator was to benefit not a particular institution, but to effect a
particular form of charity independently of any special institution or mode,
then, although he may have indicated the mode in which he desires that to be
carried out, you are to regard the primary paramount intention chiefly, and if
the particular mode for any reason fails, the court, if it sees a sufficient
expression of a general intention of charity,
[Page 114]
will, to use the phrase familiar to us,
execute that cy-près, that is, carry-out the general paramount intention
in some way as nearly as possible the same as that which the testator has
particularly indicated without which his intention itself cannot be
effectuated.
The testator, under his will, provided for
relatives and friends by way of legacies and annuities and then set up the
foregoing trust for the employees of the company over which he presided as
president and their dependents. When read as a whole, the will rather supports
the view that the testator intended to benefit only these groups.
It is, however, contended that in the paragraph
creating this trust he discloses a general charitable intention. The opening
words “To pay the income thereof in perpetuity for charitable purposes only,”
if they stood alone, would disclose a charitable intention. However, these
words are but a part of the sentence creating the trust which must be read and
construed as a whole. The phrase “subject to the foregoing restrictions” refers
to both the limitation “for charitable purposes only” and the restriction of
the benefit to the employees and their dependents. The testator appears here to
place these two first portions of the provision upon an equal basis. Moreover,
there is but one income and when, in that provision, he provides “the
application of such income … shall be determined by the Board of Directors ...
in their absolute discretion” he uses the phrase “such income” to refer back to
the word “income” as it is first used in this sentence. It would appear,
therefore, that the testator contemplated the directors would expend the entire
income upon charitable purposes, but for the benefit of the employees and their
dependents.
The testator, throughout this paragraph,
provides for the employees and their dependents in such a manner that they may
benefit in any way that may be within the limits of charitable purposes. In a
sentence so constructed it seems impossible to give to any part thereof a separate
and distinct significance such as that here suggested.
The word “only” is twice used in this sentence
and in both instances it adds nothing to the meaning except in so far as it may
emphasize the intention of the testator. It is, however, stressed that the
insertion of the word “directly” in the phrase “the persons to benefit directly
in pursuance of such charitable purposes ...” imports that
[Page 115]
the testator had in mind that the employees and
their dependents would benefit directly but that some others or other groups
might benefit indirectly, which could only be accomplished by interpreting the
provision as disclosing a general charitable intention. Even if a general
charitable intention be found, it does not follow that the beneficiaries would benefit
indirectly. The word “directly” is not a word of art and, while in another
context it might well support such a contention, as here used it merely
emphasizes the testator’s intention to directly benefit the employees and their
dependents.
While the word “general” is not essential to
disclose a general charitable intention, its absence in a provision by a
testator given to using words of emphasis is significant where, as here, in the
same sentence he sets forth his purpose, object and the names of the cestuis
que trust. Further, the disposition of this residue, having regard to the
variety of benefits and the number of beneficiaries, does not suggest any
surplus and it cannot be assumed that the testator had any doubt as to the
validity of the trust he was creating. The provision read as a whole does not
disclose that the testator’s paramount object was to benefit charity generally,
but rather to benefit the employees and their dependents. In other words, in
the language here used one cannot, to use the language of Lord Davey, “find a
charitable purpose sufficiently clearly expressed.”
The variation in para. 5 of the judgment of
Wells J., relative to the will of Herbert Coplin Cox, as inserted in the Court
of Appeal order, should be altered as set out by my brother Kerwin. The appeals
should be dismissed. The costs of all parties should be paid out of the estate,
those of the surviving administrator with the will annexed and trustee of the
testator’s will and codicil as between solicitor and client.
CARTWRIGHT J. (dissenting):—These two appeals
were argued together.
The late Herbert Coplin Cox died on September
17, 1947, leaving a will dated June 25, 1938. His widow, Louise Bogart Cox,
died on November 18, 1948, leaving a will dated November 2, 1948. The questions
to be determined arise out of the residuary clauses contained in these wills.
[Page 116]
These are substantially identical in wording and
it was common ground that the result should be the same in both appeals. It
will therefore be necessary to consider only the residuary clause contained in
the will of Mr. Cox. It reads as follows:—
SUBJECT as hereinbefore provided, and with
respect to the balance of my residuary estate which may remain in my Trustees’
possession, my said Trustees shall hold same upon trust as follows: (The trust
is set out at p. 96).
The trustees moved on originating notice for the
determination of a number of questions, but it was agreed when the motion came
on for hearing before Wells J. that he should deal only with the question
whether the disposition made in the residuary clause quoted above is a valid
charitable bequest, and that upon the final determination of that question the
matter should be referred back to the Weekly Court for further consideration.
Evidence was received of the following
matters:—(i) that the number of persons in existence at the date of the hearing
before Wells J. who would answer the description of employees, past or present,
of the Canada Life Assurance Company and dependents of such employees was estimated
to be somewhat in excess of thirty thousand, (ii) that a number of these were
in such straitened circumstances as to need financial aid, (iii) that the known
next-of-kin of Mr. Cox were of the fourth degree, and (iv) that the known
next-of-kin of Mrs. Cox were of the fifth degree. It is stated in the
reasons for judgment of the Court of Appeal that the residuary estate of
Mr. Cox amounts to about $500,000 and that of Mrs. Cox to about
$200,000.
Counsel appeared for the trustees of the wills,
for the directors of the Canada Life Assurance Company, for the known
next-of-kin, for the present appellant who was appointed in each case to
represent the employees of the Canada Life Assurance Company, for the Public
Trustee who was appointed to represent such other persons as might benefit
under the residuary clause in question and for the Official Guardian who was
appointed to represent any unascertained persons who might be interested in the
residue in the event of an intestacy.
Wells J. decided that the clause in question “is
a valid charitable bequest for the relief of poverty”. The Court of
[Page 117]
Appeal reversed the judgment of Wells J.,
declared that the clause does not constitute a valid charitable bequest and
that it is therefore void as offending the rule against perpetuities and
ordered a reference to the Master at Toronto to determine and report as to who
are the next‑of‑kin of Mr. Cox and Mrs. Cox respectively.
On appeal to this Court, counsel for the
appellant asked that the judgment of Wells J. should be restored and
alternatively supported the argument of counsel for the Public Trustee. Counsel
for the Board of Directors of The Canada Life Assurance Company adopted the
argument of counsel for the appellant. Counsel for the trustees of the wills
submitted the rights of the trustees to the Court but “suggested” that the
judgment of Wells J. should be restored. For the Public Trustee it was
contended that the clause is a valid charitable bequest as it stands and is not
restricted to the relief of poverty but that if this is not accepted there is a
valid bequest for charitable purposes generally and if the particular mode
prescribed for carrying such purposes into effect fails, in whole or in part,
the general charitable intention should be executed cy-près. Counsel for the
next-of-kin and for the Official Guardian supported the judgment of the Court
of Appeal.
It will be convenient first to summarize the
reasons which brought Wells J. and the Court of Appeal to their respective
conclusions.
Early in his reasons Wells J. says:—
In the case at bar, however, the payment of
income is limited “for charitable purposes only” and I think there can be no
question that this gift must be deemed to be for any of the four purposes which
the authorities have laid down as compendiously describing charitable trusts.
Later, after quoting from the judgment in The
Commissioners for Special Purposes of the Income Tax v. Pemsel, where Lord Macnaghten speaks of the four
principal divisions which “Charity” in its legal sense comprises, the learned
judge continues:—
As I have said, I must assume that all
these four heads were intended to be included by these two testators in the
phrase used by them to denote the purpose for which the residue of their assets
was to be left, that is “for charitable purposes only”.
[Page 118]
He then proceeds to the inquiry whether the
trust is public—whether it is for the benefit of the community or of an
appreciably important class of the community. After an examination of numerous
authorities, including Gilmour v. Coats,
In re Gosling, In
re Drummond, In
re Rayner, In
re Compton, In
re Hobourn Aero Components Limited’s Air Raid Distress Fund, and Gibson v. South American Stores, the learned judge concludes that it has
been decided by the Court of Appeal in England that a trust for the relief of
poverty amongst the employees and ex-employees of a company and their families
is a valid charitable trust. He proceeds:—
... The charitable objects which are
roughly gathered together under the words “relief of poverty” and which include
the various items originally set out in the statute of Elizabeth and those of a
similar nature are included in my view in the general words used by the
testators when they provided that the income from the residue of their estates
was to be paid over for charitable purposes only. Despite the very cogent
argument addressed to me on behalf of some of the next-of-kin I must find that
these testators had a general charitable intent which they have expressed
without any ambiguity and that included in this intent was the division of
charitable trusts which has been described as trusts for the relief of poverty.
Under the exception which I have noted in the decisions the fact that the group
intended to be benefited is defined by and depends upon a personal relationship
either at first or second hand to the Corporation in which both the testators
have been interested in their lifetime, does not preclude me from holding as I
think I should under the authorities that in each of the wills before me there
is a valid charitable bequest for the relief of poverty. But I must hold that
the bequest is limited to this head of charitable relief. I do so realizing
that the result is not a satisfactory one in the particular circumstances of
this case but I am bound by the decision of the Court of Appeal of England in a
matter of this sort unless there are contrary decisions of our own Court of
Appeal and none have been cited to me nor have I found any.
The unanimous decision of the Court of Appeal
was delivered by Roach J.A. who,
after reviewing the authorities dealt with by Wells J. and the decision of the
House of Lords in Oppenheim v. Tobacco Securities Trust Co. Ltd., decided after Wells J. had given
judgment, says in part:—
The trusts with which we are here concerned
are “for charitable purposes only”. That phrase necessarily includes all legal
charities. The law is now definitely settled by as high authority as the House
of
[Page 119]
Lords—the Oppenheim case—that to the
extent that those purposes include the charities coming within the second,
third and fourth divisions of charities as classified by Lord Macnaghten these
trusts are not valid charitable trusts because the beneficiaries are limited to
a group of individuals who are defined by reference to propositi named
by the donor in each case. Wells J. reached that conclusion but he held that
they were valid charitable trusts limited to the relief of poverty among the
beneficiaries. In my opinion they are not legal charitable trusts even for that
purpose.
Clearly they do not come within the “poor
relations cases”. Those cases constitute a class of anomalous decisions which
are now regarded as good law only because of their respectable antiquity.
In the Oppenheim case Lord Morton of
Henryton suggested that such a case as the Gibson case—the case at bar
resembles it to the extent that the purposes of the trusts here in question
include the relief of poverty—might be described as a descendant of the “poor
relations cases”. In this Province, at least, and I should think also in
England the “poor relations cases” as a class constitute a closed class and no
other case not entirely identical with the poor relation cases should be
legally adopted into that class.
Since that class is closed then the trusts
here in question can be valid charitable trusts only if there is a second
exception to the general rule, namely, trusts for the relief of poverty among a
group of private individuals who are chosen by the donor by reason of another
type of personal relationship, namely, their relationship as employees or
dependents of employees of a named employer.
In my opinion this Court should hold that
in this Province there is not such an exception to the general rule. The test
as laid down in In re Compton and approved and applied in the Oppenheim
case to an educational trust should also be the test to be applied in a
trust for the relief of poverty. I can see no reason why it should be applied
in the one but not in the other.
While the learned Justice of Appeal points out
the distinction between the case at bar and Gibson v. South American Stores (supra),
that in the former the relief of poverty is included in the purposes of the
trust while in the latter poverty was a necessary element to qualify a person
for benefit (vide Gibson v. South American Stores (supra) at
187), it would appear from the quotation from his reasons above, and
particularly the last paragraph thereof, that even had the facts of the two
cases been identical he would have refused to follow the Gibson case.
Roach J.A. does not in his reasons examine the
argument of the Public Trustee as to the application of the cy-près doctrine.
Early in his reasons, after stating the facts, he says:—
If the trust in question in each estate is
not a valid charitable trust, it is void as offending the rule against
perpetuities and a partial intestacy will result.
[Page 120]
In my view, the first step to be taken in an
endeavour to solve the problem presented to us is to construe the words of the
clause in question, bearing in mind the rule that for the purpose of
ascertaining the intention of the testator the will is read, in the first
place, without reference to or regard to the consequences of any rule of law,
the rules of law being applied to the intention thus collected in order to see
whether the court is at liberty to carry the intention into effect (vide Halsbury
2nd Edition, Volume 34, page 189 and cases there cited). The clause first
directs that the trustees shall hold the residue upon trust:—“To pay the income
thereof in perpetuity for charitable purposes only;”. Pausing here, I can not
think of any words more apt to indicate a general charitable intention. The
clause proceeds, not to prescribe in any detail the mode in which this
charitable intention is to be carried into effect but to confer on the Board of
Directors of the Canada Life Assurance Company, subject only to two
restrictions, an absolute discretion as to the application of the income,
“including the amounts to be expended and the persons to benefit therefrom”.
The absolute discretion so given is stated to be “subject to the foregoing
restrictions”. What then are these restrictions? They are, first, that the
income is to be paid “for charitable purposes only” and, second, that “the persons
to benefit directly in pursuance of such charitable purposes are to be only
such as shall be or shall have been employees of The Canada Life Assurance
Company and/or the dependents of such employees”. The usual and ordinary
meaning of the words of the clause does not appear to me to differ from their
literal meaning and I can find no ambiguity in the clause. It provides (i) that
the income is to be used forever for charitable purposes only (ii) subject to
this and to one further restriction an unfettered discretion is given to the
Board of Directors of the Canada Life Assurance Company to direct the manner of
its application (iii) the further restriction referred to is that the
charitable purposes selected by the Board shall be such that direct benefits shall
be conferred only upon members of a class made up of the present and past
employees of the Canada Life Assurance Company and the dependents of such
employees. I can find nothing in the words used to suggest that poverty is a
necessary element
[Page 121]
to qualify any member of the class mentioned for
benefit. While the clause forbids the conferring of direct benefits upon
persons outside the class it does not require that direct benefits shall be
conferred upon any of its members. The Board is left free, if it sees fit, to
devote all the income to charitable purposes which confer only indirect
benefits. The discretion given to the Board is no doubt a fiduciary discretion
which must be exercised bona fide (vide the observations of the Master
of the Rolls in Gibson v. South American Stores (supra) at
page 185) but apart from this it is subject only to the two restrictions above
referred to.
The next, and, as it appears to me, more
difficult question is whether the restriction referred to, i.e., “the persons
to benefit directly in pursuance of such charitable purposes are to be only
such as shall be or shall have been employees of The Canada Life Assurance
Company and/or the dependents of such employees”, is valid.
A considerable portion of the full and able
arguments addressed to us on this branch of the matter proceeded as if the
question were whether a perpetual trust to use the income of the fund for
charitable purposes only and for the benefit only of members of the class
mentioned would be a valid charitable trust. That is not the precise point
before us, as, if my view as to the construction of the clause is correct, it
is only in the case of direct benefits that the application of the income is
confined to members of the class, but a consideration of it may be of
assistance. I do not propose to attempt a review of the numerous authorities so
fully discussed in the judgments below and in the recent decisions in England,
above referred to. With respect, it appears to me that the present state of the
law in England on this point is accurately summarized by Jenkins L.J. in In
re Scarisbrick, at
page 648 et seq, as follows:
... (i) It is a general rule that a trust
or gift in order to be charitable in the legal sense must be for the benefit of
the public or some section of the public; See In re Compton, In re Hobourn Aero Components Ld.’s.
Air Raid Distress Fund, and Gilmour
v. Coats.
(ii) An aggregate of individuals
ascertained by reference to some personal tie (e.g. of blood or contract), such
as the relations of a particular individual, the members of a particular
family, the employees of a particular firm, the members of a particular
association, does not amount
[Page 122]
to the public or a section thereof for
the purposes of the general rule: see In re Drummond, In re Compton, In re Hobourn Aero Components Ld.’s
Air Raid Distress Fund, and Oppenheim
v. Tobacco Securities Trust Co. Ld.
(iii) It follows that according to the
general rule above stated a trust or gift under which the beneficiaries or potential
beneficiaries are confined to some aggregate of individuals ascertained as
above is not legally charitable even though its purposes are such that it would
have been legally charitable if the range of potential beneficiaries had
extended to the public at large or a section thereof (e.g., an educational
trust confined as In re Compton, to the lawful descendants of three
named persons, or, as in Oppenheim v. Tobacco Securities Trust Co. Ld. to
the children of employees or former employees of a particular company).
(iv) There is, however, an exception to the
general rule, in that trusts or gifts for the relief of poverty have been held
to be charitable even though they are limited in their application to some
aggregate of individuals ascertained as above, and are therefore not trusts or
gifts for the benefit of the public or a section thereof. This exception
operates whether the personal tie is one of blood (as in the numerous so-called
“poor relations” cases, to some of which I will presently refer) or of contract
(e.g., the relief of poverty amongst the members of a particular society, as in
Spiller v. Maude, or
amongst employees of a particular company or their dependants, as in Gibson v.
South American Stores (Gath and Chaves) Ld.
(v) This exception cannot be accounted for
by reference to any principle, but is established by a series of authorities of
long standing, and must at the present date be accepted as valid, at all events
as far as this court is concerned (see In re Compton63)
though doubtless open to review in the House of Lords (as appears from the
observations of Lords Simonds and Morton of Henryton) in Oppenheim v. Tobacco
Securities Trust Co. Ld.65
If, in the case at bar, the clause in question
required the income to be used for the relief of poverty among the class
described it would fall within the fourth proposition stated by
Jenkins L.J. and it would be necessary for us to decide whether we should
accept this proposition, as Wells J. did, or reject it, as the Court of Appeal
did; but, as I have already indicated, I am unable to so construe the clause.
I should here mention one of
Mr. Robinette’s arguments in support of the view that the clause should be
construed as limiting the application of the income to the relief of poverty.
It is said that the clause imperatively requires the income to be devoted in
perpetuity to charitable purposes, that this must mean charitable purposes in
the legal sense, that the testator has not specified any particular
[Page 123]
charitable purposes but, insofar as direct
benefits are concerned, has defined with precision the class for whose benefit
the income is to be applied, and that it must therefore be taken that he
intended the income to be used for such purposes only as the law recognizes as
charitable in regard to the defined class. This argument is necessarily based
on the assumption that we should accept and follow the decision in Gibson v.
South American Stores (supra) and for the purpose of the
argument I will assume, without deciding, that we should do so. The learned
judge of first instance appears to have accepted this argument which provides a
reconciliation of the passages first above quoted from his reasons, to the
effect that all of the four principal divisions of charity were intended to be
included by the testator in the purposes for which the income from the residue
was to be applied, with the final conclusion, also quoted above, that the
bequest is limited to the relief of poverty. Not without hesitation I have
reached the conclusion that this argument should not prevail. In my opinion the
exception to the general rule set out in the fourth proposition stated by
Jenkins L.J. is restricted to trusts in which the quality of poverty is
made an essential condition of eligibility for benefit and should not be
extended to cases where the trust permits income to be applied to any of the
four principal divisions of charity; nor should such an extension be effected
by construing words in a trust instrument which in their ordinary and natural
meaning in no way restrict the application of the income to the relief of
poverty as if they imposed such a restriction merely by reason of the fact that
there is a clear direction that the income is to be used for charitable
purposes only.
In my opinion the restriction is invalid because
the class to which direct benefits are restricted (in the words of Jenkins
L.J., quoted above) “does not amount to the public or a section thereof”.
The restriction is therefore ineffective to either require or permit the trustees
to confine the direct benefits of the trust to the class defined, that is, such
persons “as shall be or shall have been employees of The Canada Life Assurance
Company and/or the dependents of such employees”.
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It is next necessary to consider the effect of
holding the restriction ineffective. In his reasons already quoted the learned
judge of first instance says: “I must find that these testators had a general
charitable intent which they have expressed without any ambiguity.” I have
already indicated that I share this view. As is pointed out by Sargant L.J. in In
re Monk, Giffen v. Wedd, it is
now well settled that the question whether there is a general charitable intent
is one depending on the construction of the particular will or other instrument.
In the same case at page 204 Lord Hanworth M.R. says:—
The authority of the judgment of Parker J.
in In re Wilson is
invoked, where he defines broadly two categories into which the cases decided
may be divided. The first where “it is possible, taking the will as a whole, to
say that, notwithstanding the form of the gift, the paramount intention,
according to the true construction of the will, is to give the property in the
first instance for a general charitable purpose rather than a particular charitable
purpose, and to graft on to the general gift a direction as to the desires or
intentions of the testator as to the manner in which the general gift is to be
carried into effect.” In such cases, even though the precise directions cannot
be carried out, the gift for the general charitable purposes will remain, and
be perfectly good, and the doctrine of cy-près applied. The other category is,
“where, on the true construction of the will, no such paramount general
intention can be inferred, and where the gift, being in the form a particular
gift—a gift for a particular purpose—and it being impossible to carry out that
particular purpose, the whole gift is held to fail.” Parker J. concludes with
the statement of his opinion that the question whether a particular case falls
within the one or the other of the above categories is simply a question of the
construction of the particular instrument.
In the case of In re Wilson, referred to
by Lord Hanworth, Parker J. says that in this class of cases “different minds
may very well take different views”. To my mind it seems plain that in the case
at bar the testator has indicated the paramount intention of giving the whole
income from the residue of his estate to charity. This is expressed in the
opening words of the clause:—“To pay the income thereof in perpetuity for
charitable purposes only.” All that follows in the clause is, in my view, a
direction as to the manner in which the testator intends “such charitable
purposes” to be carried into effect. The question being one of the construction
of this particular will, only limited assistance can be derived from an
examination of what Sargant L.J. refers to as “the long bead-roll of cases on
the subject” but I have not found a case in which a will contained an express
direction that income should be used
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for charitable purposes only in which it was
held that there was not a general charitable intention. If the matter were
doubtful it would be necessary to remember, as is pointed out by Lord Hanworth
in In re Monk at
page 207, “that the Court leans in favour of a charitable purpose.” I wish to
make it clear that my view that the will indicates a general charitable
intention is not dependent on the effect which I think must be given to the
word “directly” in construing the clause in question. If, contrary to my view,
the words of the clause following the words “To pay the income thereof in
perpetuity for charitable purposes only” should be construed as confining all
benefits from the trust to members of the defined class it would still be my
opinion that the will read as a whole indicates a paramount intention to devote
all the residue to charity. The impression which I gather from reading the
whole of Mr. Cox’s will (and the same is true as to the will of Mrs. Cox)
is that the testator has, with care and in considerable detail, provided for
all those persons whom he regarded as having a claim upon his bounty, that he
has then addressed himself to the question of how he shall dispose of the
considerable residue remaining, that he has decided to devote it in perpetuity
to charitable purposes, that he has said so in the clearest terms, and then has
gone on to direct the method of its application. That method failing, the
general intention to devote the residue to charity remains.
Once it has been decided as a matter of
construction that there is a general charitable intention it is clear that such
intention will not be allowed to fail. The question arises, however, whether it
should be left to the Trustees of the will to apply the income under the
direction of the Board of Directors of The Canada Life Assurance Company in
accordance with the clause with the invalid restriction deleted or whether the
Court should direct the income to be applied cy-près. While I think that
the intention of the testator to confer direct benefits on members of the class
mentioned, to be selected by the Board, to the exclusion, so far as direct
benefits are concerned, of all who are not members of the class cannot be given
effect, there would remain numerous ways in which the trust could be fully
executed by applying the income to charitable purposes which, while highly
beneficial to the public, produce
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indirect benefits only, such as, for example,
reduction of the National Debt, the support of schools, or contribution to what
are commonly termed “Community Chests”; but, reading the will as a whole, I
find no reason to suppose that the testator would have forbidden the conferring
of direct benefits except in furtherance of his intention to afford them to
members of the defined class, which last-mentioned intention cannot be given
effect. I do not think it can safely be assumed that the testator would have
provided as the manner of carrying out his general charitable intention what would
remain of the clause after the deletion of the restriction held to be invalid;
and I am therefore of opinion that the proper course is to direct a scheme.
I would allow the appeals, declare that each
will discloses a general charitable intention as to the residuary estate but
that the mode of carrying such intention into effect provided by the testator
and testatrix respectively cannot be carried out, and direct that the matter be
referred back to the Weekly Court so that the proper proceedings may be taken
for the propounding and settlement of a scheme for the application cy-près of
such residuary estate.
In the particular circumstances of this case I
would direct that the costs of all parties appearing on each appeal be paid out
of the fund in question in each estate, those of the trustees as between
solicitor and client, and that the orders as to costs made in the courts below
should stand.
Appeals dismissed.
Solicitor for the appellant: J.J. Robinette.
Solicitor for the Public Trustee: Armand
Racine.
Solicitor for the respondent, National
Trust Co. Ltd.: Frank McCarthy.
Solicitors for the respondent, The Board
of Directors of The Canada Life Assurance Co.: McCarthy & McCarthy.
Solicitors for the respondent, W.B.
Shepard: McLaughlin, MacAulay, May & Soward.
Solicitors for the respondent, Margaret
Jane Ardagh:Graham, Graham & Bowyer.
Solicitor for the Official Guardian,
respondent: P.D. Wilson.
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