As an estate planning professional, philanthropy is a great tool in your toolkit. However, if your client intends to incorporate philanthropy into their estate plan, the importance of including a cy‑près clause in their Will cannot be understated. If there is no cy‑près clause in the Will and the charity has ceased to exist, an application to the Court must be made for direction as to whether the gift has lapsed or whether it can be saved by the cy‑près doctrine. This is exactly what happened in a recent decision out of the Saskatchewan Court of King’s Bench, Concentra Trust v Calvary United Church, 2024 SKKB 139 (CanLII).

Patricia Kisil passed away on May 1, 2020. According to the terms of her Will, 70 percent of the residue of her estate was to be divided amongst several charitable institutions in Saskatchewan. At the time of Patricia’s death, Wesley United Church, which was to receive 10 percent of the residue of the estate, had ceased to exist. The only other United Church in Prince Albert was Calvary United Church.

Concentra Trust was named the executor of Patricia’s estate. It brought an originating application requesting direction from the Court of King’s Bench as to whether the gift to Wesley United Church had lapsed or whether it could be saved by the cy‑près doctrine, and if so, who the proper recipient of the gift should be.

Justice Labach began his analysis by noting that before the court can apply the cy‑près doctrine, two conditions must be established:

1. That it is impossible, impractical, or contrary to public policy to carry out the gift; and
2. That the testator, in making the gift, had a general or overriding charitable intent.

If these two conditions are satisfied, then the court has the discretion to order a cy‑près scheme that keeps as closely as possible to the testator’s original object.

Justice Labach found that the first prong of the test was easily met: because Wesley United Church ceased to exist two years before Patricia’s death, it was impossible for Concentra Trust to carry out Patricia’s gift to the church. In turning to the second prong of the test, Justice Labach also found that Patricia had a general charitable intention behind the gift to Wesley United Church for several reasons. Firstly, if Patricia had wished to benefit any of her other relatives, she could have named them as alternate beneficiaries in her Will but did not do so. Secondly, Patricia’s gift to Wesley United Church was not for a specific use or purpose but was for the Church’s unrestricted use. Thirdly, there was nothing in the gift-over provisions contemplating what was to happen if a gift to any of the specific charities lapsed. In these circumstances, Justice Labach inferred that Patricia did not make preparations in the event of a lapse because she expected the gift would go toward the Church’s general charitable purpose. Considering the foregoing, Justice Labach found that Patricia clearly had a broad and general charitable intention in leaving the bequest to Wesley United Church.

After concluding that the cy‑près doctrine applied, Justice Labach next turned to whether the proper recipient of the gift was the Calvary United Church or the Living Skies Regional Council, which was the administrative body of the United Church of Canada responsible for, among other things, dealing with congregational property, ensuring compliance with the Church’s policies, and dealing with financial issues. Justice Labach was not convinced that Patricia would have wanted her bequest to be used to fund the administration of the United Church in Saskatchewan. He instead noted that Calvary United Church was committed to the same doctrines and principles that Wesley United Church and United Churches across the country were committed to, and that, like Wesley United Church, Calvary United Church brought the United Church to bear on numerous projects for the benefit of the community.

Justice Labach noted that a charity cannot use the cy‑près doctrine to vary the terms of a will to effect a different charitable purpose than that intended by the testator. As “cy‑près” means “as nearly as possible to that which has failed”, the court’s discretion is limited to ordering a scheme as close as possible to the testator’s original object. As Calvary United Church was the organization that most closely parallelled Patricia’s original intention in her gift to Wesley United Church, Justice Labach ordered that the 10 percent residue payable to Wesley United Church was payable to the Calvary United Church for its unrestricted use. The Estate was ordered to pay costs of $2,500 to Calvary United Church, and $1,000 to Living Skies Regional Council for the application.

This case is a good reminder to always ensure a cy‑près clause is included in a Will if any of the estate is left to charity. While Justice Labach’s commentary was insightful, this entire court application, and the resulting costs to the Estate, may have been avoided if Patricia’s Will had included a cy‑près clause.

Written by Kristie Anne Kirwan, Scotiatrust