Is it this? http://www.commonlii.org/uk/cases/EngR/1754/99.pdf

Neil Guthrie

On 2 Aug 2014, at 18:50, Phillip Lister <phil77lister@gmail.com> wrote:

> The earliest example of the courts invalidating a bequest due to "public policy " is an ancient case DeCosta v DaSilva from 1745 where the cy pres doctrine was then used to "save" the bequest by finding a more appropriate way of effecting the testatator's general charitable intention. Its from about 1745 and reported in, an old volume of the E.R,'s maybe 27 or 45, its years since I looked but it was a case that was seminal in my law school education of what one can do with words and logic; and it seems an apt analogy here too. The result is ironic but pefectly logical...if u want to go there to start with. So there is a precedent !..Phil Lister QC in Edmonton,Alberta
>
> -----Original Message----- From: Harrington Matthew P.
> Sent: Saturday, August 02, 2014 3:13 PM
> To: Lionel Smith, Prof. ; obligations@uwo.ca
> Subject: Re: ODG: Unconditional Bequest Struck on the Basis of Public Policy
>
> Lionel:
>
> Thanks very much for your thoughts on this.
>
> I agree with that part of Fox that holds that courts might invalidate an improper exercise of discretion notwithstanding Gisborne. The interesting aspect of this part of Fox is whether the trustee’s good motives might immunise against the bad. I`m not sure that the court resolves that. Moreover, while it’s clear Galligan J. is prepared to say that the case is one of the improper exercise of discretion, the other justices (while agreeing in result) question whether that is really what is going on. Thus, McKinlay J. seems to hang his reasons on the fact that Mrs. Fox seemed utterly unaware of the fact that she was a trustee. His complaint appears to be that the problem was that she treated the property as her own. (Hence his statement that “In her viva voce evidence, Mrs. Fox made it quite clear that she had no understanding whatever of her duty as executrix of her husband's estate. She, in effect, said that she was of the view that all of the assets were hers to dispose of as she pleased because she had worked with her husband to acquire them.”)
>
> My complaint about Fox is the public policy section. That is what I`m referring to in the context of McCorkill. I think a very important question is the extent to which courts invalidate testamentary provisions on the basis of public policy. I think that so far Canadian courts have done a poor job of that.
>
> Thus we have the majority in Leonard:
>
> I think it inappropriate and indeed unwise to decide in the context of the present case and in the absence of any proper factual basis whether these other scholarships are contrary to public policy or what approach is to be adopted in determining their validity should the issue arise. The court's intervention on public policy grounds in this case is mandated by the, hopefully, unique provisions in the trust document.
>
> And the concurrence in Leonard:
>
> A finding that a charitable trust is void as against public policy would not have the far-reaching effects on testamentary freedom which some have anticipated. This decision does not affect private, family trusts. By that I mean that it does not affect testamentary dispositions or outright gifts that are not also charitable trusts.
>
> And then Galligan J. in Fox:
>
> If a settlor cannot dispose of property in a fashion which discriminates upon racial or religious grounds, it seems to me to follow that public policy also prohibits a trustee from exercising her discretion for racial or religious reasons.
>
> Nowhere does Galligan explain how we got from “it would be unwise” to extend Leonard beyond its facts or “this decision does not affect private, family trusts” to all discrimination in trusts --- public or private --- is invalid.
>
> That’s my problem. Judges make pronouncements about public policy but don’t bother to explain and we’re left to wonder where it comes from.
>
> I agree that McCorkill might be the right result, but I think it leaves too many questions open, and Stephen Pitel has raised some really good ones in this thread. I think that when judges go down the public policy road they ought to be more clear in exactly how they reach their decisions. That’s why I think Fox is shoddy. Taken at face value, Galligan J.’s opinion likely destroys the vast majority of religious trusts as well as almost any other race- or sex-based trust for ameliorative purposes. That’s not probably what was intended, but without more, that’s what we’re left with. So, the result of that particularly public policy adventure is that other courts don’t seem to have taken it up.
>
> As you say, if another racist trust like McCorkill comes up, I, too, hope it will be struck down. So on that basis McCorkill should have a long life. But, as to the other questions, I`m not sure. I think it’s early days. That’s all I’m saying.
>
> With all of that, I really do appreciate your thoughts. They were really, really helpful to me.
>
>
>
> ---------------------------------------
> Matthew P. Harrington
> Professeur titulaire
>
> Faculté de droit
> Université de Montréal
> 3101 chemin de la Tour
> Montréal, Québec H3T 1J7
> 514.343.6105
> www.droit.umontreal.ca
> ---------------------------------------
>
>
> From: Lionel Smith, Prof.<mailto:lionel.smith@mcgill.ca>
> Sent: ‎Saturday‎, ‎August‎ ‎02‎, ‎2014 ‎12‎:‎15‎ ‎PM
> To: obligations@uwo.ca<mailto:obligations@uwo.ca>
>
> In my view Fox v Fox Estate (1996) <http://canlii.ca/t/6j90> was correctly
> decided, and the Court in that case had no reason to refer to Leonard
> (1990) <http://canlii.ca/t/g186s> or to public policy in the strict sense.
> In Fox, a fiduciary power holder used the fiduciary power to indulge her
> personal prejudices. That is not allowed in any jurisdiction, not because
> of public policy, but because of the nature of fiduciary powers and their
> correct interpretation. Fox inscribes itself in a long line of cases that
> have held that a dispositive discretion held in a fiduciary capacity must
> be exercised, or not, in what the fiduciary subjectively believes to be
> the best fulfilment of the purpose for which the power was granted:
> Vatcher v Paull [1915] AC 372, 378 (PC); Klug v Klug [1918] 2 Ch 67;
> McPhail v Doulton [1971] AC 424 at 449, 457; Re Hay¹s Settlement Trusts
> [1982] 1 WLR 202, 209 (Ch D); Turner v Turner [1984] Ch 100, 109-110 (Ch
> D); Re Beatty [1990] 1 WLR 1503, 1506 (Ch D); Hayim v Citibank NA [1987]
> AC 730, 746 (PC).
> When the fiduciary power holder uses the power for extraneous and
> therefore improper reasons, such as the disapproval of a marriage as in
> Fox and also Klug, he or she acts unlawfully and the exercise of the power
> is voidable (or, as in Klug, the refusal to exercise the power leads to
> the disqualification of the fiduciary, allowing the other, properly
> acting, fiduciary to act alone).
> McCorkill did not involve a fiduciary power and is quite a different case.
> The intended donee and the intended purpose of the gift were indeed ugly
> and in this sense, I wish the decision long life and wide influence in
> similar situations that may arise in the future.
> Lionel
>
>
> On 02-08-14, 10:01 , "Harrington Matthew P."
> <matthew.p.harrington@umontreal.ca> wrote:
>
>> How¹s this:
>>
>> I read Leonard as a rather narrow case, applicable to its facts. The
>> majority clearly says it is not making any decision as to discrimination
>> in charitable trusts in general. Other courts that have considered
>> Leonard have clearly noted this, with the BC courts saying Leonard is
>> ³limited to its facts.²
>>
>> As for Fox¹s Estate, I contend that it is simply wrong. It cites Leonard
>> as outlawing all discrimination in trusts, both public and private. It
>> completely ignores Leonard¹s refusal to go beyond the facts of the
>> Leonard trust and then misconstrues Leonard¹s holding with respect to
>> private trusts. I am quite hostile to Fox, and I think more people ought
>> to be. Read it carefully as an analysis of Leonard, one might give it an
>> ³F² if handed in by a student. Beyond mis-citing Leonard, the judges in
>> Fox give no reasons for their decision --- no explanation as to how the
>> expansion from Leonard¹s plain language that it applies to charitable
>> trusts winds up affecting family trusts. In short, Fox is a sloppy piece
>> of work, even if one thinks it is the right result.
>>
>> If you look at the cases outside Ontario, almost no court follows Leonard
>> or Fox. (If you have one, please do let me know since I`m working on
>> this problem.) Courts in NS, BC and Mann have ignored Fox completely and
>> limited Leonard to its facts. (NFLD has an outlier case but it's thin.)
>>
>> Leonard, Fox and McCorkill raise the public policy question. Fox gives
>> the public policy argument a bad name since its lack of reasoning leaves
>> it open to the challenge that it is just a case of judges substituting
>> their preferences for precedent.
>>
>> I wonder that McCorkill may not be considered similar to Leonard, i.e.,
>> limited to its facts: It¹s an egregious example of discrimination, but
>> is there really enough there in the reasoning to suggest anything about
>> how gifts to foreign corporations or individuals ought to be decided?
>> After all, despite the way people talk about Leonard, trusts for
>> religious groups that discriminate against non-members are still valid,
>> as are trusts that discriminate on the basis of race (even in Ontario).
>> This is true no matter how many casebooks repeat the assertion that
>> ³discriminatory trusts are invalid.²
>>
>> Can¹t McCorkill be seen as simply a rather ugly one-off?
>>
>>
>>
>> ---------------------------------------
>> Matthew P. Harrington
>> Professeur titulaire
>>
>> Faculté de droit
>> Université de Montréal
>> 3101 chemin de la Tour
>> Montréal, Québec H3T 1J7
>> 514.343.6105
>> www.droit.umontreal.ca
>> ---------------------------------------
>>
>>
>> From: Lionel Smith, Prof.<mailto:lionel.smith@mcgill.ca>
>> Sent: Friday, August 01, 2014 5:44 PM
>> To: Adam Parachin<mailto:aparachi@uwo.ca>
>> Cc: Stephen Pitel<mailto:spitel@uwo.ca>,
>> obligations@uwo.ca<mailto:obligations@uwo.ca>
>>
>> Hi Adam and Stephen,
>> The debt question is a good test. I suppose a hard-working judge who
>> liked my analysis might allow a claim in unjust enrichment by individuals
>> (members, shareholders) who would be deprived by the non-recognition of
>> the corporation. After all, if you say it does not exist for the purposes
>> of NB law, you have to analyse the case as if it did not exist, i.e. only
>> looking at the natural people involved, so the borrower, having secured
>> the non-recognition of the corporation, could not turn around and say "I
>> did not borrow from the individuals, I borrowed from the corporation".
>> On the other hand, if the loan was linked to the criminally unlawful
>> (under Canadian law) activities of the NA, I would not expect the the
>> debt claim to succeed, any more than I would expect a debt claim by a
>> foreign organized-crime loan shark to succeed in a New Brunswick court.
>> Alternatively, it may be correct to say that the case is more about
>> limits on testamentary freedom, leaving the debt case untouched. I agree
>> with Adam that this is how it is reasoned.
>> But either way I think this case goes beyond 'unpalatable' in relation to
>> the beneficiary's activities/objects. I would use the word 'unlawful'.
>> Criminally unlawful, in Canada, with clear private law effects inasmuch
>> as also in violation of the human rights acts. Surely no one is surprised
>> by the intervention of public policy reasoning in the face of criminal
>> activity? That is the easiest case for when the normal rules have to
>> yield.
>> I tend to agree that both the reasoning in the case, and my spin, lead to
>> a situation where a gift to a racist individual would be valid. So far as
>> I understand, the recognition of a non-forum natural person as a person
>> in forum law does not pass through private international law.
>> Right now, that does not bother me, that is, I find McCorkill appealing
>> even though I accept that a gift to a racist individual could not be
>> stopped by its reasoning. I'm not sure I see a problem with this. If Mr.
>> McCorkill leaves his money outright to Mr. Racist, the head of the
>> organization, then of course Mr. Racist can do whatever he wants with the
>> money. McCorkill, I suspect, did not want that. He wanted the money to be
>> assigned to particular activities. That is the whole problem, because
>> those activities are criminally unlawful in the forum. As in many fields,
>> you can't have it both ways. If he gave it to Mr. Racist subject to an
>> express or secret trust to employ it in certain ways, no one would
>> disagree that that those trusts or conditions would be subject to a
>> public policy analysis. So, I don't see the problem with applying the
>> same filter just because a corporation is involved in order to ensure the
>> affectation of the property to a particular purpose.
>> I teach corporate law and I think that in most situations, corporate
>> personality should be taken very seriously. The reason so much economic
>> analysis of corporate law goes off the rails is that, being economic
>> analysis, it tends to ignore the corporation and look only at the natural
>> people, which may be fine for economic analysis but is not right for
>> legal analysis. But when we are in the realm of criminal illegality, we
>> are not constrained by the same principles that otherwise apply.
>> L.
>>
>> From: Adam Parachin <aparachi@uwo.ca<mailto:aparachi@uwo.ca>>
>> Date: Friday, 1 August 2014 at 14:09
>> To: ODG <obligations@uwo.ca<mailto:obligations@uwo.ca>>
>> Subject: Re: ODG: Unconditional Bequest Struck on the Basis of Public
>> Policy
>>
>> I share Stephen's suspicion that an NB court would indeed be likely to
>> recognize the National Alliance as a foreign entity possessing the
>> capacity to enforce a debt obligation, or other like proceeding, in an NB
>> court. This complicates the suggestion that McCorkill is ultimately
>> concerned not with the public policy limits of testamentary freedom but
>> rather with the application of public policy in private international law.
>>
>> One might say in reply that a bequest is readily distinguishable from a
>> debt proceeding. As a donative transfer, the bequest does more than any
>> other kind of transaction or proceeding to economically enable the
>> nefarious pursuits of the National Alliance. But the difference here is
>> merely one of degree. It is not a difference in kind. It is therefore
>> not obvious why the repugnant activities of the National Alliance would
>> be a controlling consideration in one context but not the other, unless,
>> of course, what is ultimately driving the analysis in McCorkill is a
>> concern over policing the limits of testamentary freedom (which is how
>> McCorkill was expressly reasoned). This takes us back to the issues I
>> previously raised about McCorkill having potentially expanded the
>> doctrine of public policy to now include a judicial discretion to strike
>> unconditional bequests to unpalatable beneficiaries.
>>
>> What if the beneficiary in McCorkill was not a foreign corporation but
>> rather a foreign individual? Would principles of private international
>> law still allow the court to disregard the individual as a legal person
>> with capacity to receive an NB bequest due to his or her racist
>> tendencies? If so, then the court's insistence in McCorkill that
>> bequests to individuals are categorically distinct from bequests to
>> corporations comes under attack. If not, then we are left with a
>> doctrine allowing bequests to racist individuals but not to racist
>> corporations. If this is the law, then foreign racists are well-advised
>> to not incorporate and/or testators with racist sympathies are
>> well-advised to leave their estates to the directing minds of the
>> National Alliance rather than to the National Alliance itself. There is
>> something not particularly satisfying about either outcome.
>>
>> How will future courts deal with McCorkill? The cases in this area of
>> law reveal a certain willingness of late on the part of courts to give
>> large and liberal interpretations to precedents limiting testamentary
>> freedom on the basis of public policy. In the not too distant past, the
>> Ontario Court of Appeal in Canada Trust Co. v. Ontario Human Rights
>> Commission [1990] O.J. No. 615 struck the shockingly bigoted provisions
>> of a charitable trust on the basis of public policy, expressly noting in
>> paragraph 100 that that case "does not affect private, family trusts." A
>> few years later, the very same court in Fox v. Fox Estate [1996] O.J. No.
>> 375 cited Canada Trust Co. (paragraph 16) in the context of - of all
>> things - a discriminatory exercise of a power of appointment under a
>> private family trust.
>>
>>
>> On 08/01/14, Stephen Pitel <spitel@uwo.ca<mailto:spitel@uwo.ca>> wrote:
>>
>> Three questions:
>>
>> Question #1: if the NA loaned someone in NB some money and then was not
>> repaid, and the NA started proceedings in NB to recover the money, would
>> the NB court hold that the plaintiff is not an entity with the capacity
>> to sue?
>>
>> Normally the capacity to sue for fictional legal entities is governed by
>> the law of their "home" jurisdiction. So entities that would not be seen
>> to have the capacity to sue in the forum nonetheless can so sue if they
>> have that capacity under that law. I assume the NA does have such
>> capacity under the law of its "home" jurisdiction.
>>
>> Would the NB court say that as a matter of NB's public policy, the NA is
>> so awful that its very existence and capacity to sue should not be
>> recognized, so that it cannot bring a claim to recover the money it
>> loaned? It would surprise me if it did. And so I am equally surprised
>> that it would say it is not a valid entity for purposes of receiving a
>> gift.
>>
>> Question #2: if the gift was not to the NA but instead to an individual,
>> resident in Virginia, who believed and did all the same things the NA
>> did, would the NB court say that the individual was a non-entity and so
>> not able to receive the gift?
>>
>> Question #3: why is this interesting and controversial decision not in
>> CanLII or QuickLaw? Is it on a public website at all? I found it, with
>> some effort, through the Canadian Lawyer magazine.
>>
>> My first two questions point in the direction that this decision might
>> not be adequately explained in capacity or entity terms. Beyond that, I
>> worry that this decision is counter to comity. Conduct that clearly does
>> not fly in NB does fly, legally, in other parts of the world, and so
>> there seems the possibility of over-reaching in the court's decision to
>> invalidate this gift based on conduct that will happen elsewhere. The
>> decision seems quite a broad deployment of public policy.
>>
>> Stephen
>>
>>
>>
>> On 31/07/2014 6:16 PM, Lionel Smith, Prof. wrote:
>> Thanks Adam.
>> It is not quite a question of capacity in the strict sense‹in most
>> jurisdictions today, just as in some contexts since long ago, the stated
>> objects of a corporation do not limit its capacity, but acting outside
>> the objects is still unlawful and can be sanctioned in various ways.
>> A charitable corporation does not hold its property in trust, but it is
>> required to operate according to its constitution which, in the case of
>> charitable corporations, will include stated objects (because without
>> them it would be impossible to say that the entity existed for solely
>> charitable purposes).
>> Of course, many modern corporate regimes (outside of charity) permit
>> corporations that lack stated objects. So a more difficult question is
>> whether the result in McCorkill could follow if the National Alliance was
>> unrestricted by its constitution, but still carried on its hateful
>> activities.
>> I think it is germane that the recognition of any legal construct
>> originating in another jurisdiction‹a corporation, a trust, a marriage or
>> other contract‹is always pursuant to principles of private international
>> law. Most constructs are recognized as a matter of routine comity, but
>> even though we might not notice this, recognition is always subject to
>> the limits of public order.
>> If an entity is devoted to the carrying on of repulsive activities, that
>> are contrary to the fundamental values of the forum, then the forum court
>> should simply not recognize it as a matter of local law. This would be
>> possible even if that entity was free to carry on other activities, and
>> indeed even if, according to the law of the place of origin of the
>> entity, its activities are permissible.
>> Perhaps this is the best reading of the judgment: the gift failed because
>> it was made to an entity that, according to the public policy (in the
>> private international law sense) of New Brunswick law, was a non-entity.
>> Lionel
>>
>>
>> From: Adam Parachin <aparachi@uwo.ca>
>> Date: Thursday, July 31, 2014 at 17:12
>> To: Lionel Smith <lionel.smith@mcgill.ca>, ODG <obligations@uwo.ca>
>> Cc: "Angela Campbell, Prof." <angela.campbell@mcgill.ca>
>> Subject: Re: ODG: Unconditional Bequest Struck on the Basis of Public
>> Policy
>>
>> Thank you Lionel. There is an indeed an appeal to that reasoning, though
>> it rests on an assumption that corporations hold property for the stated
>> purposes of the corporation. That needs to be reconciled with the
>> principle - common to many jurisdictions - that corporations have the
>> capacity of natural persons. I confess that I have not looked at the
>> state of Virginia corporate law on point. Assuming that principle
>> applies in Virginia, which was not considered in McCorkill, the idea
>> developed by the Court that a bequest to a corporation is readily
>> distinguishable from a bequest to an individual becomes more difficult to
>> sustain.
>>
>> Even in the charitable context, the most apt analogy is not to a
>> contribution to a charitable trust, which very clearly becomes subject to
>> the purposes of the trust, but rather a contribution to a charitable
>> corporation. I am not aware of any authority having definitively
>> established that a charitable corporation necessarily holds all donations
>> in trust for its purposes as they existed at the time of the donation.
>>
>> On 07/31/14, "Lionel Smith, Prof." <lionel.smith@mcgill.ca> wrote:
>>
>> Thanks for this Adam. Very interesting indeed.
>> Surely one could argue that it is not like an unrestricted bequest to an
>> individual, since presumably the foreign corporation has a constitution
>> that requires it to pursue certain goals and/or activities. This point is
>> made by the judge at [73]ff. In the same way, an 'unrestricted' bequest
>> to a charity that was organized in the form of a trust would not be an
>> unrestricted bequest, but effectively an accretion to the existing trust
>> and thus an adoption by the testator of the terms of that charitable
>> trust. (Of course, a corporation can change its constitution, but then
>> again any trust can in principle be varied (in most jurisdictions)).
>> So this testator wanted to make a gift to a corporation but the
>> corporation would not, I presume, be recognized as a legal person under
>> Canadian law, because its constitution (or activities, or both) were
>> unlawful under our laws. In that perspective the decision is not so
>> surprising.
>> Lionel
>>
>>
>>
>> From: Adam Parachin <aparachi@uwo.ca>
>> Date: Thursday, 31 July 2014 at 16:10
>> To: ODG <obligations@uwo.ca>
>> Subject: ODG: Unconditional Bequest Struck on the Basis of Public Policy
>>
>> Dear All:
>>
>> A recent decision of the New Brunswick Court of Queen's Bench (McCorkill
>> v Streed 2014 NBQB 148) is attracting some attention here in Canada
>> amongst estates lawyers. The Court took the unusual step of striking an
>> unconditional residual bequest on the basis of public policy.
>>
>> The beneficiary of the bequest was the National Alliance, a Virginia
>> corporation with a white supremacist agenda. Justice Grant assessed the
>> formal validity of the bequest by looking to the purposes to which the
>> National Alliance would apply the bequest. Finding that the National
>> Alliance engages, albeit in the U.S., in what qualifies as unlawful hate
>> speech under Canadian criminal law, Justice Grant concluded that the
>> bequest was against public policy and thus void.
>>
>> Justice Grant essentially reasoned that, since the racist purposes to
>> which the National Alliance would presumably apply the bequest could be
>> inferred, and were presumably in the contemplation of the testator, the
>> validity of the bequest could (and should) be assessed from the vantage
>> that the unconditional bequest was in reality an express trust for those
>> racist purposes.
>>
>> I confess to this being my first experience with this reasoning. The
>> case equates an unrestricted bequest to a known racist with an overtly
>> racist purpose trust. It contemplates a judicial discretion to
>> re-characterize facially valid testamentary dispositions into problematic
>> legal forms never intended by testators. It invites future courts to
>> evaluate not only the express conditions attaching to bequests but also
>> the ways in which beneficiaries are anticipated by testators to use
>> unconditional bequests, or more generally, the deservedness of
>> beneficiaries.
>>
>> I would be much obliged if anyone can point me in the direction of
>> similar cases or relevant scholarly commentary.
>>
>> Regards,
>>
>> Adam
>>
>> --
>>
>> Adam Parachin
>> Associate Professor
>> Faculty of Law
>> University of Western Ontario
>> (519) 661-2111 Ext. 81445
>>
>>
>> --
>>
>> Adam Parachin
>> Associate Professor
>> Faculty of Law
>> University of Western Ontario
>> (519) 661-2111 Ext. 81445
>>
>>
>> --
>>
>>
>> Professor Stephen G.A. Pitel
>> Faculty of Law, Western University
>> (519) 661-2111 ext 88433
>>
>>
>> --
>> [http://communications.uwo.ca/brandnew/images/esig/esig-law.gif]
>> Adam Parachin
>> Associate Professor
>> Faculty of Law
>> University of Western Ontario
>> (519) 661-2111 Ext. 81445
>>
>