Wednesday, September 10, 2008

Re Johnston Estate: Court Upholds Gift to "Workers"

When Margaret Mary Johnston died in 2003, by her last will, she left most of her $550,000 estate “to be used for medical purposes for the workers in the ministry or for any other of their needs.”

What did she mean? How could her intentions be carried out?

These were a couple of the questions Mr. Justice Barrow had to decide in a recent Supreme Court of British Columbia case, Re Johnston Estate, 2008 BCSC 1185.

Mrs. Johnston was active in the Christian Fellowship a non-denominational group devoted to spreading the teachings of Christ. Members are called “workers,” and are supported with the assistance of donations. The Fellowship is not as structured as a church, but there is some organization. Each Canadian province has a list of workers in the province and a list of workers from the province working overseas. Each province has an overseer who coordinates the workers, and may accept and distribute donations.

In this context, it is clear that Mrs. Johnston wanted her funds to be used for workers in the Christian Fellowship, but this still leaves a lot of questions unanswered. Did Mrs. Johnston intend for the funds to be distributed to members who were workers at a specific time? Were funds to be used for only British Columbia workers, or for workers anywhere in the world? How would workers be selected? What purposes are medical purposes, and what other needs could qualify?

The law requires that the terms of gifts be reasonably clear. In this case with all these questions, could the court carry out Mrs. Johnston’s intentions, or was this provision too vague? If too vague, the gift would fail, and most of her estate would have to be distributed to her closest relatives according to the rules of intestacy in British Columbia.

But if Mrs. Johnston’s gifts were charitable, the requirement for certainty is relaxed. Under British Columbia law, for a gift to be charitable it must fall within, or be closely analogous to, gifts for purposes that have traditionally been recognized by the courts as charitable. Most charitable gifts will fall into one of four categories, set out in the House of Lords case of Income Tax v. Pemsel, [1891] A.C. 531:

(1) the relief of poverty; (2) the advancement of education; (3) the advancement of religion and (4) certain other purposes beneficial to the community, not falling under any of the preceding heads.
Mr. Justice Barrow found that Mrs. Johnson’s gift was charitable, falling into the category of advancement of religion. Accordingly, he upheld the gift despite the uncertainties. He found also found that she intended to benefit workers from British Columbia, irrespective of where they carried out their work.

In the case of a charitable gift, the court may set up machinery for carrying out the gift.

Mr. Justice Barrow appointed two friends of Mrs. Johnston to act as trustees to administer the gift to the workers. He ordered that notices be sent to from time-to-time to workers to inform them of the fund (the frequency of notices to be determined after the court received further information concerning how frequently the list of workers is updated). Workers or the British Columbia overseer could request funds from the trustees, who would decide what payments to make. The trustee could make payments out of the income or capital of the funds.

Although it would have been preferable if Mrs. Johnston had a professionally drawn will, setting out her intentions more clearly, and the mechanics for carrying out her gift, because her intentions were charitable, Mr. Justice Barrow was able to give effect to Mrs. Johnston’s general intentions.

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