Cy-près

Chapter 16

Definition of Cy-près

Exceptions to Cy-près

Cy-près and General Charitable Intention

Charities Act 2011, s 62

Charities Act 2011, s 63

Points to Review

Useful Things to Read

This chapter builds upon the discussion of charities in Chapter 15 and specifically looks at the doctrine of cy-près. This is a doctrine which can apply when a charitable gift fails. The doctrine broadly operates to enable the property in the gift to be transferred to another charity with similar objects.

As You Read

Look out for the following issues:

how the doctrine of cy-près may be defined;

how, if it applies, cy-près ensures that the charitable gift will not revert to resulting trust; and

how the provisions of the Charities Act 2011 give the doctrine of cy-près application than that under the common law.

Definition of Cy-près

Cy-près means ‘as near as possible’. The general principle is that if a charitable gift has failed because it cannot be carried out by the trustees of the testator’s will exactly according to his wishes, the trustees may make an application to the Charity Commission¹ to apply the gift to another charity whose objects are, as near as possible, to that charity whom the donor intended to benefit. In this way, it may be said that as much charitable good as possible in the circumstances will still come from the donor’s gift as the donor intended.

The application of cy-près to the gift means that a resulting trust² of that property to the donor’s estate is disapplied.

Cy-près will not apply in every situation where a charity fails. It will only apply if the donor of the gift showed a general charitable intention in giving his gift or establishing his charitable trust.

If the charitable gift has not failed, cy-près has no application. There are three occasions when it has been held that the gift has not failed. These are where:

[a] the charity continues in another form;

[b] there is a gift for the purposes of an unincorporated assocation;³ or

[c] the charitable institution has been described incorrectly.

These exceptions to when cy-près may be used will be considered first.

Glossary — testator/testatrix

These terms are used throughout this chapter. A testator is a male who has written his will; a testatrix a female who has done the same.

Exceptions to Cy-près

If the charity continues in another form, the charitable gift will not have failed. This occurred in Re Faraker.⁴

Mrs Faraker left £200 in her will to ‘Mrs Bailey’s Charity Rotherhithe’. There was no charity by that name in Rotherhithe, but there was a similarly named ‘Hannah Bayly’s Charity’. The latter charity had been established originally to benefit poor widows in Rotherhithe. Some six years before Mrs Faraker’s death, Hannah Bayly’s Charity had been merged with 13 other charities in the Rotherhithe area and the combined charity’s object was to aid the poor in that area. It was admitted that Mrs Faraker had meant to leave the money to Hannah Bayly’s Charity, but the issue for the court was whether the gift had lapsed when that charity had merged with the others.

The Court of Appeal held that the gift had not lapsed. Hannah Bayly’s Charity was not, said Cozens-Hardy MR, extinct. All that had happened was that its objects had changed. These objects had changed lawfully as a scheme to merge the charity with the 13 others had been approved by the Charity Commissioners. Mrs Faraker did not give her money to a particular charity; she gave it to a charity which was simply identified by a particular name. The gift to the charity had not failed at all. It was only if the charity had failed by, for example, there ceasing to be any poor widows in Rotherhithe, that the doctrine of cy-près could apply.

There is a gift for the purposes of an unincorporated association

A gift left for the purposes of an unincorporated association will not be subject to the cy-près doctrine as long as those purposes continue. This occurred in Re Finger’s Will Trusts.⁵

Georgia Finger divided her residuary estate in her will into 11 equal parts and left them to charitable insitutions. Amongst the recipients were the National Radium Commission and the National Council for Maternity and Child Welfare. Both of these organisations no longer existed by the time of her death. Her executors sought directions as to whom the sums left to those two bodies should be paid.

The National Radium Commission was an unincorporated association which was charitable. Appoving the obiter comments of Buckley J in Re Vernon’s Will Trusts,⁶ Goff J held that a gift to an unincorporated charity could be seen to be a purpose trust whose purpose would not fail but could be carried on by another charitable insitution because the original gift was to further particular purposes. This was subject to two provisos. First, if the testatrix’s intention was to benefit a particular institution which had ceased to exist at the date of her death, the gift could not take effect as a purpose trust. It had to be established that the testatrix wanted to benefit the purpose in general, as opposed to the particular institution. Second, the charitable purpose still had to exist now even though the particular institution to whom the gift was left had disappeared.

The gift to the National Council for Maternity and Child Welfare failed because this body was incorporated. Goff J held that this meant the testatrix’s intention was to benefit that particular institution and not charitable purposes in general. When that institution ceased to exist, the gift had to fail.

As the gift had failed, Goff J considered whether he could find a general charitable intention by the testatrix. He held that she did have a general charitable intention by leaving the whole of her residuary estate to charitable institutions. Consequently, the doctrine of cy-près could apply to the gift for the National Council for Maternity and Child Welfare. A scheme was proposed to pay that gift to the National Association for Maternal and Child Welfare, which Goff J approved.

If the donor incorrectly describes the recipient institution but it is clear that the donor intended to benefit only that particular organisation, the gift can still take effect to that organisation under a scheme. This can be shown by the decision of Megarry V-C in Re Spence.⁷

Beatrice Spence left half of her residuary estate in her will for the benefit of the patients at ‘The Blind Home, Scott Street, Keighley’. No such exact institution existed. There was, however, a Keighley and District Association for the Blind which had existed for decades. It had a blind home at 31 Scott Street, Keighley. Megarry V-C quickly held that the actual home was the same as that described by Miss Spence in her will and it should benefit.

More difficult was the subsequent issue of whether the money could only be used for the home at Scott Street, Keighley or whether it had to be put towards the charity’s general funds, as the charity also ran another home in Bingley. Megarry V-C held that Miss Spence’s intention was that only the patients at the particular home in Keighley should benefit from her gift. As this was not quite how she had described her intention in her will, he ordered that a scheme should be made under which the gift could be paid for the benefit of the patients at the home owned by Keighley and District Association for the Blind at Scott Street, Keighley.

Cy-près was not relevant to this part ofher residuary estate as the gift had not failed as such.

If none of these exceptions are valid and the gift has failed because the recipient no longer exists, prima facie, the gift will return to the donor’s estate on a resulting trust. If, however, it can be said that the donor displayed a general charitable intention in their gift, a cy-près scheme will be ordered by the court so that the gift may instead be transferred to another recipient and not returned to the donor’s estate.

Cy-près and General Charitable Intention

General charitable intention must be shown before a gift can be transferred to another recip-ient. A proposed transfer of the gift to another recipient is called a ‘scheme’. In Re Lysaght,⁸ Buckley J defined general charitable intention as:

a paramount intention on the part of the donor to effect some charitable purpose which the court can find a method of putting into operation, notwithstanding that it is impracticable to give effect to some direction by the donor which is not an essential part of his true intention — not, that is to say, part of his paramount intention.⁹

If a general charitable intention can be found, another charitable recipient can receive the gift provided their charitable objects are broadly the same as the original recipient intended by the testator.

EXPLAINING THE LAW

Buckley J’s words show that the court draws a distinction between where the testator includes an essential provision in his gift that the entire gift depends upon for it to be administered. In such a case, no general charitable intention can be shown and the gift cannot be applied cy-prts if it fails. Such would be the case in the example above if the court concluded that the only way of effecting the gift would be the now-impossible task of paying the money to Derbyshire School because Scott had intended that only that school should benefit from his generosity. In contrast, if the testator merely indicates how he would like the gift to be administered, he does display a general charitable intention because the precise means of how the gift should be applied are not essential to the gift being administered. In such a case, the gift can be applied cy-près.

Buckley J also emphasised that general charitable intention did not mean that the testator could only leave an original gift which benefited either ‘charity’ in the most general terms or one particular head of charity again in general terms. ‘General’ is used in contrast to a particular set of instructions being given so that the gift can only be administered in a certain way. Provided no set of instructions was given by the testator, it can usually be said that he had a general charitable intention.

General charitable intention can be demonstrated by the donor or under the provisions of s 62 of the Charities Act 2011.

General charitable intention by the donor

‘Subsequent failure’ is so called because the gift fails subsequent to the testator’s death, but before his estate is distributed by his personal representatives. If this occurs, the gift can readily be applied for an alternative charitable institution. The phrase ‘subsequent failure’ was used by Kay LJ in describing how the gift had failed after the testator’s death in Re Slevin.¹⁰

In the case, a gift was left in a will of £200 ‘to the Orphanage of St Dominic’s, Newcastle-on-Tyne’. The orphanage closed after the testator’s death, but before his estate was distributed. The issue for the Court of Appeal was whether the gift could be applied cy-près to another charity, or whether it would fall back to the estate as a resulting trust as the object had ceased to exist.

In giving the judgment of the Court of Appeal, Kay LJ compared the position to that of an individual who had been left a legacy under a will and who had died after the testator but before the money was given to him. The money would belong to the individual from the point of the testator’s death. Such money would not fall back into the estate under a resulting trust.

The same principle could be applied to an institution. The institution became the equitable owner of the £200 at the date Mr Slevin died. When the orphanage ceased to exist, its property had to be administered by the Crown whose task was to apply it for a similar charitable purpose as that undertaken by the orphanage.

Re Slevin was followed by Romer J in Re King,¹¹ which considered the issue of a surplus of money remaining after the charitable purpose of the gift had been fulfilled.

Here the testatrix left her entire estate on trust to provide a stained glass window in the church in Irchester for certain members of her family and herself. There was approximately £300 remaining of her residuary estate after the cost of providing the window had been deducted from it. The executors sought directions as to whether the entire gift was charitable or not and if it was, whether the surplus could be applied cy-près in providing a further stained glass window in the church. The next-of-kin (who, if successful, would have received the surplus) argued that a general charitable intention on the testatrix’s behalf had to be found if the surplus was to be applied cy-près and that simply leaving a gift to make and install a stained glass window showed no general charitable intention.

Romer J had no doubt that the gift was charitable. He also held that the surplus could be applied cy-près for a second window in the church. He referred to Re Slevin and held that the decision in that case was authority for a more general principle that if a gift was left for a charitable purpose which was otherwise well provided for without the gift, the gift would be applied cy-près. He thought that was the case here.

It must be questioned whether the principle in Re Slevin is necessarily as wide as propounded by Romer J in Re King. The institution had ceased to exist after the testator’s death in Re Slevin but this was largely irrelevant as it had already had the gift given to it at the point of the testator’s death. Clearly, the church in Re King had not ceased to exist after the date of the testatrix’s death but the gift had still been given to it at the date of her death. A perhaps narrower interpretation needs to be applied to Re Slevin than that propounded in Re King. It is suggested that all the principle in Re Slevin consists of is that once property is given to an institution, the institution may keep it (because equitable ownership has passed) and if the institution then ceases to exist, it may be applied as a cy-près scheme for the purposes of a similar charitable organisation.

The decision of the Court of Appeal in Biscoe v Jackson¹² is one of the earliest which shows this distinction between a general purpose and a particular recipient.

Joseph Jackson left £10,000 in his will to his trustees to establish a soup kitchen and cottage hospital in Shoreditch, London. Unfortunately, no land could be found in Shoreditch to establish either the hospital or soup kitchen. The issue was whether a cy-près scheme could be ordered to vary the gift.

The Court of Appeal held that the testator had shown a general charitable intention by his gift. Cotton LJ explained that the testator had shown a general intention to benefit the poor and sick of Shoreditch. The testator had simply pointed out how he wished the gift to be effected: by the creation of a soup kitchen and hospital.

If, therefore, the testator has shown a charitable intention with simply a desire as to how that should be carried out and it is impossible to accede to the testator’s desire, a cy-près scheme can alter the mechanism suggested by the testator to implement his gift for a similar charitable purpose.

Such general charitable intention was shown again in Re Roberts.¹³