Royal Trust Corporation of Canada v. The University of Western Ontario et al.[^*]

[Indexed as: Royal Trust Corp. of Canada v. University of Western Ontario]

Ontario Reports

Ontario Superior Court of Justice,

A.K. Mitchell J.

February 16, 2016

129 O.R. (3d) 772 | 2016 ONSC 1143

Case Summary

Trusts and trustees — Charitable trusts — Public policy — Will directing trustee to provide funds for awards or bursaries for "Caucasian (white) male, single, heterosexual students" and "single, Caucasian white girl who is not a feminist or lesbian" — Qualifications void as contrary to public policy — Doctrine of cy pres not applying as will contained express provision that award was to be deleted if qualifications were found to be void for public policy.

The testator's will directed his trustee to provide funds for awards or bursaries for "Caucasian (white) male, single, heterosexual students" and "single, Caucasian white girl who is not a feminist or lesbian". The trustee brought an application for the opinion, advice and direction of the court, asking the court whether the qualifications were void and, if so, whether there was a general charitable intention expressed in the will sufficient to permit the court to exercise its inherent jurisdiction and direct that the trust be administered cy pres.

Held, the application should be allowed.

The qualifications were contrary to public policy as they were discriminatory on the basis of race, gender and sexual orientation. The doctrine of cy pres could not be applied as the will expressly stated that the provision for the award was to be deleted if the court found the qualifications to be void as contrary to public policy.

Cases referred to

Canada Trust Co. v. Ontario Human Rights Commission (1990), 1990 6849 (ON CA), 74 O.R. (2d) 481, [1990] O.J. No. 615, 69 D.L.R. (4th) 321, 37 O.A.C. 191, 38 E.T.R. 1, 20 A.C.W.S. (3d) 736, 12 C.H.R.R. D/184, 1990 6849 (C.A.); Goodman Estate v. Geffen, 1991 69 (SCC), [1991] 2 S.C.R. 353, [1991] S.C.J. No. 53, 81 D.L.R. (4th) 211, 127 N.R. 241, [1991] 5 W.W.R. 389, J.E. 91-1059, 80 Alta. L.R. (2d) 293, 125 A.R. 81, 42 E.T.R. 97, 27 A.C.W.S. (3d) 930

Statutes referred to

Charities Accounting Act, R.S.O. 1990, c. C.10, s. 10 [as am.]

Trustee Act, R.S.O. 1990, c. T.23, s. 60 [as am.]

Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 14.05(3) (a), (b), (d)

APPLICATION by the trustee for the opinion, advice and direction. [page773]

B. Duewel, for applicant.

D. Desante, for respondent Office of the Public Guardian and Trustee.

Endorsement of A.K. MITCHELL J.: —

Nature of the Application

[1] Pursuant to s. 60 of the Trustee Act[^1], s. 10 of the Charities Accounting Act[^2] and rule 14.05(3)(a), (b) and (d) of the Rules of Civil Procedure[^3], the applicant, Royal Trust Corporation of Canada, trustee of the estate of Victor Hugh Priebe (the "trustee"), seeks the opinion, advice and direction of the court upon the following questions arising out of the last will and testament of Dr. Priebe dated July 20, 1994:

(a) Does the will provide the trustee with a discretion to choose whether or not to disperse funds for the purposes of para. 3(d)(ii)(E) of the will?

(b) Are any of the provisions in para. 3(d)(ii)(E) of the will void or illegal or not capable of being lawfully administered by the trustee because they are contrary to public policy, discriminatory on the basis of race, creed, citizenship, ancestry, place of origin, colour, ethnic origin, sexual orientation, or otherwise and/or uncertain?

(c) If so, who is entitled to the trust funds under the will?

(d) Is there a general charitable intention expressed in the will sufficient to permit the court to exercise its inherent jurisdiction in the matter of charitable trusts and direct that the trust be administered cy-pres?

(e) If the court exercises its inherent jurisdiction to direct that the trust be administered cy-pres, how should the trustee administer the trusts?

[2] The respondents the University of Western Ontario, University of Windsor, Windsor Public Library, Hotel-Dieu Grace Healthcare and Windsor Regional Hospital take no position on the application. [page774]

[3] Applicant's counsel advises that, as a courtesy, the Human Rights Commission was served with a copy of the application record. The commission did not appear on the return of the application and takes no position on the application.

[4] The Office of the Public Guardian and Trustee asks the court that when giving its advice and direction to the trustee, the court declare para. 3(d)(ii)(E) of the will void as being contrary to public policy.

[5] It is important to note that the position taken by the Office of the Public Guardian and Trustee is not opposed by the trustee. The trustee's position on the application is neutral in all respects. The trustee seeks only such advice and direction of the court as will permit the trustee to fulfil its duties and obligations in administering the estate of Dr. Priebe in accordance with the provisions of the will.

[6] Immediately following receipt of submissions on the application, I declared para. 3(d)(ii)(E) void as being contrary to public policy by virtue of it being discriminatory on the basis of race, gender and sexual orientation and held that this provision of the will cannot be saved by applying the doctrine of cy-pres. I made these findings with written reasons to follow. These are those reasons.

Background

[7] Dr. Priebe died on January 1, 2015. Royal Trust was appointed estate trustee pursuant to a certificate of appointment of estate trustee with a will issued August 4, 2015.

[8] The will contains, inter alia, the following provisions in respect of which the trustee seeks the court's opinion, advice and direction:

Paragraph 3(d)(ii): My Trustee shall expend the balance of the income of my estate, and all income of my estate following the death of my sister, in the sole discretion of my Trustee, but after consultation with its Windsor Advisory Board, for so long as it exists, and thereafter, with a committee comprised of senior trust administrators of my Trustee and no more than two persons not ordinarily employed by my Trustee, such persons to be chosen from those with a science, industry or medical background, other than academics, administrators and government officials, for such one or more of the following purposes, it being my intention that my Trustee in its sole discretion may in any one year allocate a portion or all of the income to one or more of the following purposes so long as it is following a plan, to be updated from time to time to carry out all such purposes at such time and times as it determines:

(E) To provide funds, from time to time and in the discretion of my Trustee for awards or bursaries to Caucasian (white) male, single, heterosexual [page775] students in scientific studies, including medicine, genetics, biology, chemistry, physics and those going into medical pharmacology research. The selection of these students shall be made by my Trustee's Windsor Advisory Board, or with the committee it constitutes pursuant to this paragraph 3(d)(ii). It is my wish hereby expressed that the committee in determining the terms of such awards or bursaries that they take into consideration academic achievement, but not necessarily the highest marks, but a minimum cumulative average of at least 10.0 (B+) and an honest desire to work and achieve in his or her chosen profession and be of good character. Extracurricular activities (i.e. non-academic) of the applicant shall not be taken into consideration in qualifying a student for purpose of these awards or bursaries. In addition, students with the necessary academic qualifications who through work histories have demonstrated that they are not afraid of hard manual work in their selection of summer employment shall be given special consideration in the selection process. If no paid employment is available, then a full-time voluntary manual labour job may be considered as a substitute. These awards shall be directed to students who are going to attend the University of Western Ontario or those for whom it may be a hardship to go to the University of Western Ontario then they can be awarded to these particular students who wish to attend the University of Windsor. No awards to be given to anyone who plays intercollegiate sports. Further, to similarly provide funds for an award to be known as the Ellen O'Donnel Priebe Memorial Award in the discretion of my trustee, under the same terms as the awards above, except this award is to go to a hard-working, single, Caucasian white girl who is not a feminist or lesbian, with special consideration, if she is an immigrant, but not necessarily a recent one. This award is for someone going into a field the scientific study (not medicine) on the terms outlined above for the male applicants. The awards, at the discretion of the Trustee may be for some or all of the tuition payable by such applicants in the year of the award applicants must reapply if these are desired in subsequent years and the Trustee will reassess each candidate at that time to evaluate their academic progress and adherence to remaining single. The number of the awards or bursaries available shall be determined at the discretion of the Trustee depending on the amount of award available for this purpose. The awards or bursaries may be paid directly to the University to be attended by an award recipient on account of tuition.

(G) In the event that one or more of the foregoing provisions shall be declared to be of a non-charitable nature, or, if the qualifications set forth for receipt of an award referred to above are adjudged by a court of competent jurisdiction to be void for public policy, then the provision for such gift shall be deleted without prejudice to the remaining provisions of this paragraph 3(d)(ii).

(Emphasis added)

Analysis

[9] The trustee and the Office of the Public Guardian and trustee both agree that pursuant to para. 3(d)(ii), set forth above, the trustee only retains discretion as to which of the charitable purposes described in paras. 3(d)(ii)(A) through (F) it will [page776] direct income in any given year. This paragraph does not grant the trustee discretion to disregard any one or more of the charitable purposes/trusts described in para. 3(d)(ii). For greater clarification, the trustee cannot simply disregard the charitable trust established by para. 3(d)(ii)(E).

[10] As a precondition to the trustee having recourse to para. 3(d)(ii)(G) of the will, the court must find that para. 3(d)(ii)(E) is contrary to public policy and, therefore, void. This is the central issue on this application.

[11] The leading authority is Canada Trust Co. v. Ontario Human Rights Commission.[^4] In that case, the indenture, under which the inter vivos trust was created, contained four recitals relating to race, religion, citizenship, ancestry, ethnic origin and colour with respect to the persons eligible to receive scholarships under the will. One recital stated: "[T]he Settlor believes that the white race is, as a whole, best qualified by nature to be entrusted with the development of civilization and the general progress of the world along the best lines."

[12] The Ontario Court of Appeal in Canada Trust Co. found the charitable trust to be void on the ground of public policy to the extent that it discriminated on the ground of race (colour, nationality, ethnic origin), religion and sex.[^5]

[13] As a guiding principle, the court in Canada Trust Co. stated that each trust must be evaluated on a case-by-case basis should its validity be challenged and cautioned that not all restrictions amount to discrimination and are therefore contrary to public policy.

[14] I have no hesitation in declaring the qualifications relating to race, marital status and sexual orientation, and, in the case of female candidates,[^6] philosophical ideology, in para. 3(d)(ii)(E) of the will void as being contrary to public policy. Although it is not expressly stated by Dr. Priebe that he subscribed to white supremacist, homophobic and misogynistic views as was the case in the indenture under consideration in Canada Trust Co., the stated qualifications in para. 3(d)(ii)(E) leave no doubt as to Dr. Priebe's views and his intention to discriminate on these grounds. [page777]

[15] With respect to the application of the doctrine of cy-pres, it was envisioned (quite rightly) by Dr. Priebe that the qualifications for receipt of an award or bursary under para. 3(d)(ii)(E) might offend public policy. He included in the will a paragraph permitting the trustee to seek the court's declaration in this regard which the trustee has now done. The doctrine of cy-pres can have no application in the present case because the will contains an express provision as to the consequences of a declaration by the court that the qualifications for entitlement of an award or bursary are void as against public policy. In the face of such a declaration, the will requires that the "provision for such gift shall be deleted without prejudice to the remaining provisions of this paragraph 3(d)(ii)" (emphasis added).

[16] Having found that the qualifications for receipt of an award or bursary under para. 3(d)(ii)(E) are discriminatory on the basis of marital status, gender, race and sexual orientation, and therefore void on the ground of public policy, I am bound to give effect to the intentions of the testator under para. 3(d)(ii)(G) and delete the charitable trust established under para. 3(d)(ii)(E).

[17] In summary, the court's advice and directions on the questions under the will posed by the trustee are as follows:

(a) Does the will provide the trustee with a discretion to choose whether or not to disperse funds for the purposes of para. 3(d)(ii)(E) of the will?

No.

(b) Are any of the provisions in para. 3(d)(ii)(E) of the will void or illegal or not capable of being lawfully administered by the trustee because they are contrary to public policy, discriminatory on the basis of race, creed, citizenship, ancestry, place of origin, colour, ethnic origin, sexual orientation, or otherwise and/or uncertain?

Yes. The qualifications relating to race, gender, marital status and sexual orientation in para. 3(d)(ii)(E) are void as being contrary to public policy.

(c) If so, who is entitled to the trust funds under the will?

The beneficiaries of the other charitable trusts established in paras. 3(d)(ii)(A), (B), (C), (D) and (F) of the will.

(d) Is there a general charitable intention expressed in the will sufficient to permit the court to exercise its inherent jurisdiction in the matter of charitable trusts and direct that the trust be administered cy-pres? [page778]

No. The will requires that upon the court's declaration that the qualifications are void as being contrary to public policy the charitable trust established in para. 3(d)(ii)(E) fails in its entirety and is to be deleted.

(e) If the court exercises its inherent jurisdiction to direct that the trust be administered cy-pres, how should the trustee administer the trusts?

Not relevant given the court's decision in (d).

Costs

[18] Both parties acknowledge the other's entitlement to its respective costs of the application.

[19] The Office of Public Guardian and Trustee submitted a costs outline to support its claim for partial indemnity costs of responding to the application in the amount of $5,904.25, inclusive of disbursements and HST. The trustee does not object to the quantum claimed and, accordingly, the Office of the Public Guardian and Trustee shall be paid its costs of the application in the all-inclusive amount of $5,904.25 from the estate of Victor Hugo Priebe, deceased.

[20] The trustee submitted a costs outline to support its claim for full indemnity costs of the application[^7] in the amount of $16,155.49, inclusive of disbursements and HST. The Office of the Public Guardian and Trustee does not object to the quantum claimed or the reasonableness of those costs. I am satisfied that the application was necessary and the time spent by the various timekeepers and rates charged by those timekeepers were reasonable given the importance of the issues to a proper administration of this estate. Accordingly, Royal Trust, as trustee of the estate of Dr. Priebe, shall be paid its costs of the application in the all-inclusive amount of $16,155.49 from the estate of Victor Hugo Priebe, deceased.

Application allowed.

[page779]

[^*]: Vous trouverez la traduction française à la p. 779, post.

[^1]: R.S.O. 1990, c. T.23.

[^2]: R.S.O. 1990, c. C.10.

[^3]: R.R.O. 1990, Reg. 194.

[^4]: (1990), 74 O.R. (2d) 481, [1990] O.J. No. 615, 1990 6849 (C.A.), at p. 487 O.R., p. 22 (QL).

[^5]: However, the court applied the cy-pres doctrine and brought the educational trust into accord with public policy by removing the offending restrictions. In doing so, the charitable trust was maintained.

[^6]: In a derogatory manner, female candidates are referred to as "girls".

[^7]: Trustees are entitled to be fully indemnified for all legal costs reasonably incurred on behalf of the estate. See Goodman Estate v. Geffen, [1991] 2 S.C.R. 353, [1991] S.C.J. No. 53, at para. 75.

End of Document