Court File and Parties

COURT FILE NO.: CV-21-00665150-00ES DATE: 20230306

ONTARIO SUPERIOR COURT OF JUSTICE ESTATES LIST

IN THE MATTER OF THE ESTATE OF ANNA SALNIKOVA

BETWEEN: Gustav Dors and John Subbotin, Estate Trustees of the Estate of Anna Salnikova, Applicants AND: The Public Guardian and Trustee, Respondent

COUNSEL: James C. Davies, for the Applicants Heather Hogan, for the Respondent

HEARD: February 22, 2023

Judgment on Application

C. GILMORE, J.

Introduction

[1] This is an Application for Directions from the Court with respect to the Will of Anna Salnikova (“the deceased”) dated March 14, 2006 (“the Will”).

[2] The deceased left 20 percent of the residue of her Estate to a charity which no longer exists. The Applicants seek to distribute the lapsed gift to the other 19 charities listed in the Will on a pro-rata basis. The Public Guardian and Trustee (“the PGT”) objects and requests that the residue be paid to a charity with similar charitable objects in accordance with the doctrine of cy-pres.

[3] For the reasons set out below, I find that the Will meets the accepted criteria to demonstrate a general charitable intent. The deceased intended that portion of the residue to be used for orphans in South America and not to be distributed to the other 19 charities on an intestacy. As such, the doctrine of cy-pres should be applied and charities with similar charitable objects are to be identified by the PGT.

Background

[4] The deceased died in 2018. She had no spouse or children. Her sibling was killed in World War II. Her only living relatives were a first and second cousin who were left cash legacies under the Will. Those legacies have been distributed. The total value of the deceased’s Estate was approximately $660,000.

[5] 95 percent of the deceased’s Estate was left to 20 enumerated charities in various percentages. Examples of the charities included the Salvation Army, the Arthritis Society, Canadian Red Cross, Canadian Bible Society, United Way and the Slavic Evangelical Baptist Church. The charity which was left the largest portion of the residue (20 percent) was the Pan American Mission (“the Mission”) in Canada located at 3308 Barr Road, Calgary, Alberta with a head office in Turlock, California. The Estate Trustees estimate that the value of this portion of the Estate is approximately $120,000.

[6] The relevant provision at paragraph 9(a) in the Will is as follows:

a) TWENTY (20%) PER CENT of the remainder of my estate to the PAN AMERICAN MISSION IN CANADA (Childrens' Homes), 3308 Barr Road N.W., Calgary, Alberta, T2L 1M8, having its main office in Turlock, California, U.S.A.

[7] The deceased and her friend, Ms. Elizabeth Dors, were part of a group of women who raised funds for various charities including the Mission. The deceased often made charitable donations to the Mission which helped to fund orphanages in South America.

[8] Elizabeth Dors was the deceased’s Attorney for Property and in 2012 on the deceased’s instructions she sent a cheque for $200 to the Mission’s office in Calgary, Alberta. The cheque was returned with a note that the charity was no longer in existence. The status of Canadian charity is conceded to be “Revoked-Voluntary” by the Canada Revenue Agency (“CRA”) as of December 8, 2012. Ms. Dors requested and received a CRA document entitled “Notice of Intention to Revoke a Charity’s Registration” from the Mission’s Calgary Office.

[9] Further searches were conducted by a lawyer engaged by the Estate Trustees with respect to the Mission’s California office. Similarly, documents were obtained indicating that the Mission in California was subject to an “Involuntary Dissolution – Non-Profit Corporation (Domestic)” on February 27, 2013.

[10] Documents related to the California Office of the Mission indicated that its Chief Executive Officer was Mr. Caleb Matthew Jappe. Three separate letters were sent to Mr. Jappe at the California office of the Mission in March and April 2022 concerning the status of the Mission in California. No response was ever received.

[11] The position of the Applicants is that the Mission no longer exists. The PGT does not dispute the Applicants’ evidence in this regard.

[12] The Will does not contain any clause that directs how to distribute the residue if one of the charities was no longer in existence.

The Legal Issues

Jurisdiction

[13] This Court has both special and inherent jurisdiction in matters relating to charities. As per Toronto Aged Men’s and Women’s Homes v. Loyal True Blue and Orange Home (2003), 68 O.R. (3d) 777 (S.C.), at para. 5, this Court in addition to its inherent equitable jurisdiction, has the power to “superintend the establishment and administration of charities.”

[14] Pursuant to s. 5(4) of the Charities Accounting Act, R.S.O. 1990, c. C.10, notice must be served on the PGT in any proceeding relating to construction of a Will and the PGT has the right to object, consent or be heard with respect to any argument in the proceeding.

General Charitable Intent and the Application of the Cy-Pres Doctrine

[15] In Re Jacobsen (1977), 80 D.L.R. (3d) 122 (B.C. S.C.), the Court dealt with a charitable gift to the Catholic Children’s Aid Society. The entity had been dissolved in 1974 and replaced with the Catholic Children’s Aid Society of the Catholic Archdiocese of Vancouver. The Court dealt with the argument that the lapsed gift should be treated as an intestacy and distributed to the heirs-at-law. The Counsel for Catholic Community Services argued that the testatrix had a general charitable intent, and the gift was therefore subject to the doctrine of cy-pres.

[16] At p. 127 of Jacobsen, the Court set out certain principles relating to the determination of charitable intent as follows:

1. The bequest is a bequest without limitation to an institution which was admittedly a charitable institution.
2. The bequest is a residuary bequest.
3. Provision has already been made for the next of kin in para. 6(c) of the will of the testatrix.
4. 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).

[17] The Court held that the case was suitable for the application of the cy-pres doctrine based on the abovementioned criteria.

[18] These criteria have been applied in subsequent cases in order to determine whether a general charitable intent existed with respect to failed charitable gifts. In Romanic et al. v. La Fabrique de la Paroisse Sainte-Sophie et al., 2020 ONSC 3534, 61 E.T.R. (4th) 149, the deceased left the residue of his estate to a church parish (“Sainte-Therese”) which no longer existed on the date of his death. The Sainte-Therese parish had been dissolved and replaced by two new parishes namely the Respondent parishes, Sainte-Antoine and Sainte-Sophie.

[19] The Estate sought directions as to whether the residue should be paid to Sainte-Antoine, Sainte-Sophie, apportioned between the two parishes, or whether the gift had lapsed and should be paid to the next-of-kin on an intestacy. The Court found that the residue was payable to Sainte-Sophie as it best honoured the wishes of the testator and the charitable purpose of the Will.

[20] At paras. 21-22, the Court cited Conforti v. Conforti (1990), 39 E.T.R. (Ont. Gen. Div.) at para 14 for the proposition that cy-pres may be used by the courts to direct the bequest to a charitable purpose similar to the purpose specified in the Will. The Court goes on to set out the following principles with respect to the use of the cy-pres doctrine:

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.

[21] The Court applied the cy-pres doctrine and found that the Will manifested a general charitable intention. The testator was a devout Catholic who had ties to the Sainte-Sophie parish from a young age and chose to be buried there. The Court noted that there was no gift over or alternate beneficiary for the residue. Directing the gift to the Sainte-Sophie parish would best resemble the initial purpose of the gift under the Will. The effect of not directing the residue to the Sainte-Sophie parish would defeat the testator’s clear intentions.

[22] Applying the law to these facts I find that the cy-pres doctrine applies because it is not possible to pay 20 percent of the residue to the Mission as it no longer exists. I also find that the testator manifested a general charitable intention in her Will, as 95 percent of her Estate was gifted to charities.

[23] In determining general charitable intent, I rely on the criteria set out in Jacobsen in that this was a gift without limitation to a charitable institution, the gift is made from the residue of the estate, the other beneficiaries received cash legacies, there is no gift over in the event of a lapsed gift, and the remaining residual beneficiaries are all charities.

[24] As in the Sainte-Sophie case, the testator was a religious person who belonged to a women’s group at her church which raised money for charitable causes. The deceased continued to make donations to the Mission even when those gifts had to be carried out on instructions to her Power of Attorney. As well, the percentage allocated to the Mission (20 percent) was the largest portion of the residue. I infer, therefore, that this charity and its objects was of particular importance to the deceased.

[25] I find that distributing the residue gifted to the Mission to the other charities would defeat the testator’s intention to benefit orphans in South America. None of the other 19 charities (at least on their face) appear to have a similar purpose. Given the testator’s general charitable intention, the failure of the gift and the lack of any gift over, the gift should be made to a charity with similar charitable objects.

The Applicants’ Analysis Cannot Stand

[26] The Applicants’ position is that, given that the Mission no longer exists, the gift to the Mission must lapse and an intestacy created with respect to the residue of the Estate such that the 20 percent of the residue otherwise payable to the Mission would be distributed pro-rata amongst the remaining 19 charities.

[27] The Applicants rely on Eberwein Estate v. Saleem, 2012 BCSC 250, 76 E.T.R. (3d) 218. In that case, the Court was asked for directions on the interpretation of the Will of Gertrud Eberwein. The Will provided for bequests of $15,000 each to nine different charities. One of those charities was not in existence on the date of death namely “Aid to Animals in Distress” in Vancouver, British Columbia.

[28] The Court found that Ms. Eberwein was a cat and animal lover. As the charity in question no longer existed, the Court held that the deceased did not have a general charitable intent with respect to that gift as she had been very careful to name specific charities. The Court was not satisfied that the Testator would have wanted the money to go to another charity if that gift failed. As such, the Court ordered that the gift had lapsed and would form part of the residue of the Estate.

[29] The PGT does not rely on Eberwein and submits that it is not the law with respect to failed charitable gifts. I agree. It is clear that courts will not favour an intestacy where it can be inferred that the Testator intended to devote the failed gift to the charitable purpose or objects of the former institution. In such cases the Court will apply the cy-pres doctrine in order to apply the bequest to a charitable object as close as possible to the original purpose.

[30] The Applicant also relies on The Bank of Nova Scotia Trust Co. v. Common Ground Women’s Centre, 2010 ONSC 63, 54 E.T.R. (3d) 262. In that case, the Applicant applied for directions from the Court because the Respondent Women’s Centre could not be located. The Court determined that the Women’s Centre was not in existence on the date of death and that the residue was to be divided between the 17 named charitable organizations in existence on the date of death.

[31] This case can be distinguished from the case at bar as the deceased’s Will in Common Ground, contemplated a gift over because it specified that the residue was to be divided amongst the listed charities in existence at the date of death. As such, a gift over was contemplated and the cy-pres doctrine did not apply.

[32] The Applicants suggest that this Court adopt the approach taken in Mladen v. McGuire. In that case, the Court grappled with whether a lapsed residuary gift passed on an intestacy to the next of kin or to the surviving residuary beneficiaries. An intestacy would have meant that a portion of the residue was divided between five cousins including three cousins that the deceased did not know and had not had contact with during her lifetime.

[33] The Court resorted to a judicially developed rule of construction known as the “armchair rule.” Using this rule of construction, the Court places itself in the “testator’s armchair” with the knowledge of the deceased’s assets, family and other relevant evidence to give effect to the testator’s intention (see para. 22). The Court determined that it was not limited to the language of the Will but could consider the surrounding circumstances. In that case, the Court held that sitting in the armchair of the testator there was a contrary intention in the Will in that the testator would not have wanted an intestacy which would result in part of the residue being paid to three strangers to the deceased. The lapsed residuary gift went to the two surviving beneficiaries.

[34] The Applicants relied on Mladen for the proposition that the Court could use the “armchair rule” to determine that the lapsed gift should be distributed amongst the remaining 19 charities.

[35] I do not rely on Mladen as the facts are different. The residual beneficiaries in Mladen were not charities. As such, the cy-pres doctrine did not apply.

[36] Given all of the above, I reject the Applicants’ position that the remaining 19 charities should benefit from the lapsed gift. Without a specific gift over provision as in Common Ground and given that the criteria in Jacobsen have been met, the cy-pres doctrine must be applied. A charity with similar charitable objects must be located in order to ensure that the testator’s general charitable intent is carried out.

Orders and Costs

[37] The 20 percent residue payable to the Pan American Mission in Canada set out in subparagraph 9(a) of the Will shall be payable to a charity with similar charitable objects in accordance with the cy-pres doctrine.

[38] The PGT is to provide to the Applicants a list of nominee charities including current contact information for the nominees. The Applicants may choose one of the nominees either on their own or in consultation with the PGT. The payment otherwise owing to the Pan American Mission shall be paid to the chosen charity. The chosen charity is to be provided with a copy of this Judgment. The PGT is to be copied on the correspondence to the chosen charity enclosing the relevant funds.

Costs

[39] The Estate Trustee’s original costs were $25,000 for this Application. Given delays due to COVID, lack of judges and other delays the Applicants now seek $35,000.

[40] The PGT submitted that this amount seems high given that little has happened since the matter was originally scheduled in August 2022.

[41] The costs in this matter will come out of the residue and reduce the amounts available to the subject charities.

[42] While this Application was somewhat unique, it was not overly complex. In my view, all inclusive costs of $30,000 are appropriate and are payable to the Applicants from the residue of the Estate.

[43] The PGT did not seek costs.

C. Gilmore, J. Released: March 6, 2023