Paul Russell was named the executor and trustee by Euphemia (Mia) Polykarpou in her will of March 2004. Mia died on in March 2015, and probate of her will was granted to Paul in October 2015.
In previous posts about Mia’s estate; after appointing Paul as her executor and trustee, and making a number of minor bequests, Mia made the following gift:
- MY EXECUTORS shall hold the rest and residue of my Estate to divide as follows: –
4.1 As to a 50% part or share thereof to be used for research into the causes of and cures for MULTIPLE SCLEROSIS, the distribution and use of such funds, whether to any hospital, medical practitioner, scientist or research facility to be at the discretion of the Executor;
4.2 As to the remaining share thereof to ‘OPRAH ANGEL NETWORK’ 110N Carpenter Street, Chicago, Illinois 60607 United States of America.
The gift to Oprah Angel Network (OAN) failed as the OAN ceased to exist before Mia’s death.
In December 2015, Paul made an application to the Court for advice under s 63 of the Trustee Act 1925 (NSW) on the question of whether he would be justified in making an application for a cy-près scheme in relation to the gift in clause 4.2 of the will.
Where a specific gift within a Will fails, and there is no provision in the Will for dealing with the residue of the estate, that portion of the Will is treated as if it did not exist and would be distributed as if the deceased died “intestate”.
In most jurisdictions where this occurs, the court can step in and establish a scheme known as a cy près scheme by which a failed gift is constituted a valid charitable trust, and is distributed to an alternate charitable beneficiary that is as closely aligned to the deceased’s intentions as possible.
- Cy-pres is a doctrine which is applied when the strict terms of a will cannot be carried out and is subject to certain conditions; the testator must exhibit in their will a general charitable intention.
- there must be impracticability in the fulfilment of the charitable intention of the testator.
- the condition of the gift that causes the impracticability must not be an essential term of the bequest.
There were two applications to the Attorney General with proposals for the use of the trust funds of $609,127.66.
- Oprah Winfrey Leadership Academy Foundation (“OWLAF”) is a not for profit organisation incorporated in Illinois United States. The Oprah Winfrey Leadership Academy was founded by Oprah Winfrey in South Africa to provide an independent residential boarding secondary school for disadvantaged girls.
- The Young Women’s Christian Association of NSW (“YWCA”) proposes to apply the trust funds to benefit women and children requiring post-crisis domestic violence services in South Western Sydney
The Attorney General felt that the OWLAF scheme would primarily benefit young women in South Africa predominantly students attending the Academy and its graduates as such OWLAF’s focus is narrower than the primary charitable purpose stated in the Will.
In considering the merits of OWLAF versus the YWCA the Attorney General ruled the YWCA better met the primary charitable purpose of the gift and ordered that the money will now be spent establishing and funding a post-crisis domestic violence centre in Campbelltown which provides services to women and children
“…the betterment, support and enrichment of women and children in need or for educational purposes…”
under that order, the Young Women’s Christian Association of NSW (YWCA)
“…is to hold the gift in clause 4.2 of the Will of the deceased on trust, to apply the capital and income for the purpose of establishing and funding a post-crisis domestic violence centre in Campbelltown which provides services to women and children as described in the YWCA’s application to the Crown Solicitor”.
Paul was of the opinion that the cy-près scheme did not reflect Mia’s wishes as she was a devotee of Oprah Winfrey for many years and that, if the gift failed, she would have wanted her estate to be applied for the purposes of an alternative charity associated with Ms Winfrey that had objects that were as close as possible to the OAN.
Case law has established that charitable trust proceedings may be settled by compromise. The Court has inherent jurisdiction to approve the terms of such a compromise; the consent of the Attorney General who represents the Crown as the protector of charities is a necessary condition to the Court’s approval. The Attorney General and Paul asked that the Court quash the orders made in October 2007 and $566,077.66, be applied cy-près as follows:
(a) 60% of the Charitable Trust to the Polykarpou Trust to be applied for such purposes of the Oprah Winfrey Leadership Academy Foundation (OWLAF) as are charitable purposes for the betterment of women and children who are in need or disadvantaged.
(b) 40% of the Charitable Trust to YWCA Australia to be applied for:
(i) the purpose of establishing and funding a post-crisis domestic violence centre in Campbelltown which provides direct services to women and children affected by domestic violence, within 12 months of the date of the establishment of the cy-près scheme;
and in the event that YWCA Australia is not able to apply towards that end within 12 months of the date of the establishment of the cy-près scheme,
(ii) the benefit of women who participate in the Ngalingah Mijung Dubais (Our Happy Women) programme in the Northern Rivers Region of New South Wales, led by a YWCA Australia Cultural Engagement Officer, which provides education, employment and pre-vocational courses to Aboriginal and Torres Strait Islander women in the Lismore area, many of whom have young children to develop skills necessary to enter the workforce opportunities.