Discriminatory Will Provision Ruled Invalid

by | Feb 25, 2016 | Expertise, Wills & Estate Administration

Ontario’s Superior Court of Justice (the “Court”) has reaffirmed the common law prohibition against enforcing testamentary trusts that are contrary to public policy by striking down a fund that was discriminatory on the basis of race, gender and sexual orientation. In its February 16, 2016 decision in Royal Trust Corporation of Canada v The University of Western, the estate trustee for the testator, Dr. Victor Hugh Priebe (“Dr. Priebe”), applied for direction from the Court concerning certain provisions contained in the will concerning the establishment of a fund for “awards and bursaries” which were to be restricted to certain male and female candidates on the basis of race, gender and sexual orientation. The estate trustee applied for direction from the court concerning these provisions pursuant to section 60 of the Trustee Act, section 10 of the Charities Accounting Act and Rules 14.05(3)(a), (b) and (d) of the Rules of Civil Procedure.

Paragraph 3(d)(ii)(E) of Dr. Priebe’s will provided for a fund for “awards or bursaries” to be awarded to “Caucasian (white) male, single, heterosexual students in scientific studies…”. Further requirements stated that candidates must “not be afraid of manual labour” or “anyone who plays intercollegiate sports”. A separate award, to be named the Ellen O’Donnel Priebe Memorial Award, was to be awarded to “a hard-working, single, Caucasian white girl who is not a feminist or a lesbian, with special consideration, if she is an immigrant, but not necessarily a recent one.” Justice Mitchell concluded at paragraph 14 of the decision that she had “no hesitation in declaring the qualifications relating to race, marital status and, in the case of female candidates, philosophical ideology, in paragraph 3(d)(ii)(E) of the Will void as being contrary to public policy.”

Paragraph 3(d)(ii)(G) of the will also provided that if any of the provisions of Dr. Priebe’s will were found to be of a non-charitable nature or were declared void for public policy by the courts, that the gift “shall be deleted without prejudice to the remaining provisions of this paragraph 3(d)(ii)”. The Court found that this provision precluded it from applying the doctrine of cy-pres, which meant that the Court was unable to exercise its inherent jurisdiction to alter the offending paragraph in a manner that was not discriminatory. As a result, the Court was bound to delete the discriminatory provision of paragraph 3(d)(ii)(E) from the will.

The Court cited Canada Trust Co. v Ontario Human Rights Commission as the leading authority on this matter, as well as authority for  the principle that each trust must be evaluated on a case-by-case basis and that not all restrictions amount to discrimination that are contrary to public policy. However, testamentary provisions that are blatantly contrary to applicable human rights legislation will almost certainly be found to be void as being contrary to public policy. Whether such provisions can be saved based upon the Court’s inherent cy-pres jurisdiction will depend upon the specific wording of each will, as was evident in this case. For a discussion of another recent testamentary freedom and public policy decision, reference can be made to the July/August 2015 Charity & NFP Law Update concerning the McCorkill v Streed decision.

FATF Plenary Meeting Held this Month

by | Feb 25, 2016 | Counter Terrorism Law, Expertise

From February 17 to 19, 2016, a Plenary Meeting (the “Plenary”) of the Financial Action Task Force (“FATF”) was held in Paris, France. The FATF is an inter-governmental policy-making institution responsible for setting and monitoring international standards for combating money laundering and the financing of terrorism, which is promulgated, among other ways, via a series of Recommendations for its member countries. This most recent Plenary was largely focused on advancing the FATF’s work to combat terrorist financing in a variety of sectors.

At the Plenary, the FATF adopted a Consolidated FATF Strategy on Combatting Terrorist Financing (“Consolidated Strategy”), which lays out an updated consolidation of the FATF’s stated “key objectives” to meet terrorist threats from perceived facilitating organizations that fund and support the terrorist groups or individuals. The Consolidated Strategy seeks to achieve the following: achieving a full understanding of the scope of terrorist financing, ensuring that FATF Recommendations provide appropriate counter measures and that member countries are maintaining compliance.

The published outcomes of the Plenary make special note that since 2015, the FATF has been “call[ing]” on its member states to provide more information on terrorist financing and identify barriers to “effective information sharing – at international and domestic levels.” The FATF has been reviewing this information and sharing practices and tools for overcoming these “barriers” with member states. The FATF has restated its commitment to ensuring the free flow of information in order to combat terrorist financing. The FATF reaffirmed their commitment to continue this work at all levels domestically and internationally, with government agencies and in the private sector.

This campaign to strengthen and remove perceived barriers to information sharing was reflected recently in Canada in the Anti-terrorism Act, 2015 (otherwise known as Bill C-51). This legislation garnered some significant concern about safeguards that might be necessary in an evolving world where information is shared between government agencies, the private sector and internationally. Charities and not-for-profits, particularly those that have programs internationally or that operate in “conflict zones” need to be aware of this increasingly free-flow of information globally, as it is being institutionalized and significantly increased. The impact of this globally shared information should not be underestimated as the information (which may include simple allegations) could lead to or be a part of potential revocation of charitable status and/or charges under the broad definition of “facilitation” of the Criminal Code, among other serious liabilities. For more information please see Anti-Terrorism & Charity Law Bulletin No. 39, which discusses the impact of Bill C-51 on charities and not-for-profits.