Link: Case Summary Document
Citation:  EWHC 618 (Ch) (England and Wales High Court (Chancery Division), HHJ Cooke)
Acknowledgement:The Pemsel Case Foundation thanks The Australian Centre for Philanthropy and Nonprofit Studies for its contribution in the drafting of this Case Note.
In this English case, Phillips was the executor of the will of the testatrix, Mrs Spear. Mrs Spear left only one specific bequest in her will, to her pet parrot. The remainder of the estate was left equally between four charities, the Royal Society for the Protection of Birds (RSPB), the Peoples Dispensary for Sick Animals (PDSA), The New Forest Owl Sanctuary (NFOS), and Monkey World Ltd. Each charity’s share was to be £65,000.
In this application, the executor sought the court’s directions on the gift to the NFOS, which had ceased to exist. Another body, the North Wales Bird Trust (NWBT) sought the gift as the successor body to the NFOS. If the gift failed, the amount would be divided between 16 relatives under the rules of intestacy.
The NFOS had ceased to exist amidst scandal. The circumstances included an undercover BBC report which alleged cruelty and unacceptable practices in relation to the birds kept at the sanctuary. This report led the Charity Commission (under section 8 of the Charities Act 1993) to appoint an investigating officer on 9 July 2003, to enquire into possible mismanagement by the trustees and lack of financial control. All the trustees then resigned, though there were some alleged misdeeds which continued. NFOS was deregistered as a charity on 17 August 2006. It was officially dissolved as a company on 6 February 2007, a few days after Mrs Spear’s death. Fewer than half the birds under the control of NFOS were transferred to an estate controlled by NWBT. The fate of the other birds was unclear.
Clause 7 of the will provided that ‘if before my death (or after my death but before my Trustees have given effect to the gift) any charitable or other body to which a gift is made by this Will… has changed its name or amalgamated with any other body or transferred all its assets then my Trustees shall give effect to the gift as if it were a gift to the body in its changed name or to the body which results from the amalgamation or the body to which the assets have been transferred’.
It was argued that the NWBT was such a body. However, His Honour said that this was not so. Clause 7 referred to circumstances where a body merely changed its name, or to which all the predecessor’s assets had been transferred in an amalgamation. NWBT was not such a body, as it had received fewer than half the birds that NFOS had held and none of its other assets (worth apparently £160,000), which were prevented from being disposed of in doubtful circumstances only by the intervention of the Charity Commission.
The counsel for the Attorney-General (intervening in the case) then suggested various resolutions to preserve the gift for charity. These were:
i) Could the gift be construed as a gift for the charitable purposes of NFOS, rather than a gift to NFOS itself absolutely? If so, the property would be impressed with a charitable purpose trust which the court could give effect to by way of a scheme.
ii) If the gift was to NFOS absolutely, it failed, but:
a) If it was considered to be a case of ‘initial failure’, a gift that was impossible at the time it was made, the court may apply it cy-près if satisfied that it was made as part of an overall paramount charitable intent.
b) If it were a case of subsequent failure, the gift may be applied cy-près in any event.
The Attorney General submitted that it would be appropriate to direct the gift to the NWBT if the gift was to be saved at all.
His Honour found that there was no overall charitable intent – the gifts were very specifically made to NFOS. Nor was there a failure of the gift at the date of death, i.e. there was no initial failure, and therefore no need to consider overall charitable intent in that context. His Honour said (at ):
This case is therefore one of supervening failure, that is to say one where the gift was effective at the date of death to impress the funds with the charitable purpose intended to be given effect to through NFOS, but which cannot now be carried through in that manner by reason of NFOS having subsequently ceased to exist. In those circumstances there is no doubt that unless the court finds that the particular method specified is the only possible way of giving effect to the donor’s charitable intentions, it may direct that the funds be applied cy-près, that is to say by the court directing a scheme which will see the funds used in a manner as close as possible to that which the deceased intended.
His Honour agreed with the Attorney-General that the NWBT was an appropriate recipient of the gift in all the circumstances.
The case may be viewed at: http://www.bailii.org/ew/cases/EWHC/Ch/2012/618.html
Implications of this case
This was not a case of the will-maker not keeping her will up to date. The body referred to in the will had officially ceased to exist a few days after her death. Therefore, the executor needed to obtain guidance on where to direct the gift. The court applied the gift cy-près to another recipient with similar aims, because it was able to find that the gift had an underlying charitable intention, not a specific intention which could only be carried out by giving it to the now defunct charity.