Isle of Man: The Cy-pres Doctrine

The doctrine of cy-pres is a general rule that when literal compliance with the terms of a will or trust is impossible, the intention of a donor or testator should be carried out as nearly as possible. When a gift is made by will or trust (usually for charitable or educational purposes), and the named recipient of the gift does not exist, has dissolved, or no longer conducts the activity for which the gift is made, then the estate or trustee must make the gift to an organisation which comes closest to fulfilling the purpose of the gift.

In the recent case of Philip Bradshaw Games (as administrator (trustee) of the Estate of the late Donald Collister) v Manx National Heritage (Manx Museum & National Trust) CHP 2001/61 the Isle of Man High Court of Justice considered using this doctrine in the construction of a will. Reference was made by the High Court to the Privy Council's decision in Mayor of Lyons v AG of Bengal (1875-76) LR 1 App Cas 91.

The Claimant in this case was the administrator of an estate. The assistance of the Court was sought on a gift in the testator's will for the development of a heritage centre and museum on a field left by the testator for this purpose. The relevant clauses of the will read as follows:

8. "I GIVE and DEVISE my field at the bottom of the Estate at Ballastrooan and numbered 1358 on the Ordnance Survey Plan of the Isle of Man...unto my Trustees UPON TRUST to erect a Heritage Hall and museum on the said field and that all my personal property of historical significance with particular regard to Manx Heritage should be displayed in the Heritage Hall and Museum for the benefit of the people of the Isle of Man and Visitors to the Isle of Man."

9. As to the rest ... of my Estate both real and personal I GIVE DEVISE and BEQUEATH the same to my Trustees UPON TRUST to call in administer and ... to sell the same and to transfer pay or apply my remaining property and the proceeds of sale of any such property as shall have been sold:-

(a) as to so much thereof as shall be necessary to meet all the costs of planning and building a Heritage Centre and Museum to be called "The Collister Heritage Centre and Museum" and
(b) as to the balance thereof TO HOLD the funds remaining UPON TRUST to apply the capital and income thereof for and towards

(i) the cost of maintenance and upkeep of Colby Croft aforesaid and

(ii) the cost of maintenance and upkeep of the Heritage Centre and Museum and its surrounding land aforesaid...

15. Should there be insufficient funds to construct and maintain the Collister Heritage Centre and Museum aforesaid after the rest residue and remainder of my Estate both real and personal wheresoever situate and of whatsoever kind of or to which I shall be seized possessed or entitled at the date of my death or over which I shall have any power or testamentary disposition whatsoever after payment thereout my just debts funeral and testamentary expenses have been called in sold or transferred then and in such case I LEAVE DEVISE and APPOINT my residuary estate unto my Trustees UPON TRUST to pay the capital and income thereof to the Trustees of the Manx Museum and National Trust absolutely subject to them paying thereout the cost of maintenance and upkeep of Colby Croft aforesaid absolutely."

The Court considered the following issues: -

(a) whether to give directions as to the extent, if any, of the steps the Claimant should pursue to obtain planning permission to build the heritage centre and museum on Field 1358;

(b) if no further steps were needed to pursue planning permission, whether the gift in clause 8 failed;

(c) if the gift in clause 8 failed, whether the gift of residue set out in clause 9 also failed;

(d) if the gift in clause 9 did not fail, whether the residue could be used by the Claimant as trustee in pursuing the erection and maintenance of the heritage centre and museum in partnership with the Commissioners;

(e) if the gift of residue in clause 9 failed, whether the alternative contingent gift of residue in clause 15 failed due to the non-satisfaction of any condition precedent contained in that clause; and

(f) if either clause 9 or clause 15 failed such that there was potentially a partial intestacy, whether the doctrine of cy-pres could be applied through the operation of section 3(1) of the Charities Act 1962 to save either gift so as to apply the funds to another charitable purpose.

The Court considered a number of authorities on the construction of wills. Each case turns on its particular facts and construction of the terms of the will in the circumstances existing. The question is not what the testator meant to do when he made the will, but what the written words he used mean in the particular case. The Court highlighted that where there is uncertainty, which may lead to intestacy, a presumption exists against intestacy.

Applying these tenets of construction, the Court held that the gifts relating to the museum and heritage centre as a whole were impractical and impossible for the following reasons: -

(a) planning permission for the heritage centre and museum would not have been provided as Field 1358 was situated in an area of residential housing and the grant would result in the loss of usable housing contrary to planning policy;

(b) in light of this, the object of the gift in clause 8 was impossible as the property could not be used for the intended purpose;

(c) as clause 9 related to the heritage centre to be created by clause 8, clause 9 could not be read separately; and

(d) clause 15 failed for one of the following reasons:

a. clause 15 included a restrictive precondition which meant the validity of the gift in clause 15 was dependent on the earlier gift not failing; or
b. if there was no restrictive precondition, the gift nevertheless failed as there were insufficient funds to maintain the heritage centre in the long term.

Having decided that the gifts in the will failed, the Court considered whether the purpose of the gifts could be amended cy-pres in order to save the gifts. The doctrine of cy-pres is set out in section 3 of the Charities Act 1962:

"(1) Subject to subsection (2) below, the circumstance in which the original purposes of a charitable gift can be altered to allow the property given or part of it to be applied cy-près shall be as follows:-

(a) where the original purposes, in whole or in part,-... (ii) cannot be carried out, or not according to the directions given and to the spirit of the gift;

(2) Subsection (1) above shall not affect the conditions which must be satisfied in order that property given for charitable purposes may be applied cy-près , except in so far as those conditions require a failure of the original purposes.

(3) References in the foregoing subsections to the original purposes of a gift shall be construed, where the application of the property given has been altered or regulated by a scheme or otherwise, as referring to the purposes for which the property is for the time being applicable."

The Court highlighted the distinction between a general charitable intention and a specific charitable intention. A general charitable intention exists where the testator wishes 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 testator which is not an essential part of his true intention. In contrast, a specific charitable intention exists where the testator means his charitable disposition to take effect if, but only if, it can be carried into effect in a particular and specified way. The doctrine of cy-pres cannot apply in the latter case.

Considering the particular facts of the case, the Court applied the Privy Council decision in Mayor of Lyons v AG of Bengal which held that the doctrine of cy-pres must be applied to a gift without regard to the other charitable gifts in the same instrument. A gift may therefore be saved regardless of the fact that the residue is nevertheless directed to charity. The question is whether it is possible to impute to the testator a mere general charitable intention behind the gift which enables the gift to be given effect in an alternative way.

Refusing to apply the property cy-pres, the Court held that there was a clear direction in this case that if the gifts failed, the property should pass as residue; there was a specific charitable intention. The testator had determined to give to charity in his own way such that there was no general charitable purpose behind the gifts that could be amended cy-pres.

This case highlights the need for wills to be drafted carefully and precisely and for individuals to seek appropriate legal advice to ensure their wishes will be carried out.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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