Sexism, Homophobia & Racism: Reasonable Limitations on Testamentary Freedom
Testamentary freedom is a foundational principle of estate planning. Individuals are allowed to decide how to devise their assets with minimal state interference. However, testamentary freedom has several key limitations. One notable way to curb this otherwise unhindered freedom is striking down clauses in a will that violate public policy. Last week in Royal Trust Corporation of Canada v The University of Western Ontario et al, 2016 ONSC 1143 (“Royal Trust”), Justice Mitchell of the Ontario Superior Court (“ONSC”) struck down the provisions of a will setting up a trust that was racist, homophobic, and sexist.
Dr. Victor Hugo Priebe executed his will on July 20, 1994. In his will, he created a trust for the purpose of providing monetary awards for students enrolled in science programs at either the University of Western Ontario or the University of Windsor. Aiding future students to obtain a higher education through the creation of a legacy is an admirable goal. However, Dr. Priebe’s instructions on the eligibility requirements, outlined at length in 3(d)(ii)(E) of his will, were blatantly discriminatory.
The scholarship included typical requirements: recipients had to have strong academic records in specified study areas. But the requirements also included several bizarre stipulations. Applicants were ineligible if they participated in intercollegiate sports, and male applicants had to demonstrate “that they are not afraid of hard manual work” (Royal Trust, at 8). Then there were the discriminatory clauses. Male candidates had to be Caucasian, single, and heterosexual. Female candidates qualified only if they were “hard-working, single, Caucasian […], not a feminist or lesbian” (Royal Trust, at 8) [Emphasis in original]. Clause 3(d)(ii)(E) of the will also held that male candidates could study medicine, but female medical students did not qualify.
The trustee of the bursary fund set out in Dr. Priebe’s will wisely sought the opinion, advice and direction of the Superior Court of Ontario whether the bursary was void, and if it was, how to proceed. The trustee was neutral and took no position on whether the trust terms were contrary to public policy or whether the will left open the option to vary the trust using the cy-près doctrine. The Respondents, the University of Western Ontario, University of Windsor, Windsor Public Library, Hotel-Dieu Grace Healthcare, and Windsor Regional Hospital, also took no position. The Office of the Public Guardian and Trustee (“OPGT”) took the position that the terms were contrary to pubic policy and should be struck. As a result of these positions, no party defended the purpose trust Dr. Priebe intended to create.
Encouragingly, the trustee acted with integrity when they served the Human Rights Commission (“Commission”) with the application of record (Royal Trust, at 3). The Commission chose not to get involved. Their non-involvement was sensible. First, there was no reasonable prospect that the inflammatory and discriminatory language of the trust would not be struck down. Second, the Commission had already used their limited resources in Canada Trust Co v Ontario Human Rights Commission, 74 OR (2d) 481 (“Ontario Human Rights Commission”), the leading case in Ontario on when it is appropriate to strike down the discriminatory terms of a trust. Third, had the judge misapplied or ignored Ontario Human Rights Commission, the Commission could seek to be added as a party at the appellate stage. The OPGT would likely have appealed if the trust had been upheld in its entirety.
Cy-près denied: The trust cannot be corrected
Justice Mitchell correctly applied Ontario Human Rights Commission and struck down the discriminatory requirements of the bursary. In Ontario Human Rights Commission, like other cases, such as Re Ramsden Estate (1996) 145 Nfld & PEIR, the courts will try to carve out a trust that does not violate public opinion. This is referred to as the cy-près doctrine. In applying the cy-près doctrine, courts acknowledge the testator’s intention of creating a charitable purpose trust, and reconstruct the trust terms to achieve the intended goal, such as providing scholarships for persons studying in a specialized field, in a manner that does not violate public policy. In essence, courts will salvage the testator’s charitable intention when possible to prevent the trust from failing in its entirety. This allows the courts to balance the testator’s will, the public good achieved by the charitable act, and public policy. For example, in Royal Trust the ONSC would likely have read out “Caucasian,” “heterosexual”, “lesbian”, “single”, and “feminist” (Royal Trust, at 8).
Dr. Priebe precluded the court from relying on the cy-près doctrine. In 3(d)(ii)(G) of his will, he ordered that, “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)” (Royal Trusts, at 8) [Emphasis in original]. Dr. Priebe only wished to be charitable on his terms; this amounted to a ‘take it or leave it’ proposition to the courts. The court, bound by his testamentary intention on this point, could not salvage the trust. No bursary could be created.
Lessons from Royal Trust
The ONSC did not develop or clarify the law in Royal Trust. No new test emerged as to what constitutes public policy, nor the extent of infringement of public policy required to meet the threshold for holding impugned trust terms void. Nonetheless, there are lessons to be learned. Undeniably, the terms of the trust are shocking. It is unnerving that someone could hold such glaring discriminatory beliefs, and then try to use their estate to perpetuate sexism, homophobia, and racism.
Equally unnerving is that anyone would execute a will with these types of provisions after the holding in Ontario Human Rights Commission, which was decided in 1990—Dr. Priebe executed his will four years later. He, or possibly his solicitor, had turned their mind to possibility of the trust being held void: Dr. Priebe explicitly precluded the possibility of amending the trust through use of the cy-près doctrine.
Royal Trust does not specify if Dr. Priebe had a solicitor draft his will. Royal Trust does raise the tension faced by a solicitor in taking instructions and drafting a will that necessitates rather than avoids estate litigation. Estate lawyers have an ethical duty to impress upon their clients that there are reasonable limitations on testamentary freedom. Further, it is imperative lawyers inform their clients that their estate will diminish as a result of litigation costs for including legally contentious provisions. In Royal Trust, the cost awarded to the OPGT and the cost the Trustee incurred to bring this motion totaled $22,059.74 (Royal Trust, at 19-20). This point of law has been decided. Solicitors who draft wills with discriminatory trusts where it is reasonably foreseeable at the time of the will’s execution that the trust is likely to be found void should be forced to bear the costs of seeking direction from the court.