A Comparative Analysis of a Testator’s Power to Delegate Dispositions of Property; Cohen c. Succession de Cohen, 2018 QCCS 3212

February 2019 | Stephen Sweeney, Arshia Asif

Much has been written recently about the extent of a testator’s powers to delegate certain powers under his or her Will. This article examines a recent decision of the Quebec Superior Court in Cohen c. Succession de Cohen[1] and will consider how the facts in that case may have led to a different result in common law jurisdictions, including Ontario.

Joseph Cohen, a resident of Quebec, died in 2015. In his Will, signed in 2014, Mr. Cohen directed his executors as follows:

I designate, give and bequeath to charities in Israel all my property, moveable and immoveable, real and personal of any nature whatsoever. The choice of the charity (ies) is left to the discretion of my testamentary executor.

One of Mr. Cohen’s surviving brothers took issue with the provisions of the Will and commenced action to have the Will declared null and void.

The Quebec Decision

Among the issues before the Court was this: Was the bequest to non-specified Israeli charities, and the delegation to the testator’s executors the power to choose the recipient charities, valid under Quebec law?

In the result, the Court held the bequest to be invalid because it was “impossible to identify the legatees.” Further, the legacy was “too vague and uncertain to be understood and applied.”

But here is where the decision becomes interesting and, in our view, peculiar to Le Code Civil du Québec (CCQ). Article 1282 of the CCQ states:

The settlor may reserve for himself the power to appoint the beneficiaries or determine their shares, or confer it on the trustees or a third person.

In the case of a social trust, the trustee’s power to appoint the beneficiaries and determine their shares is presumed. In the case of a personal or private trust, the power to appoint may be exercised by the trustee or the third person only if the class of persons from which he is to appoint the beneficiary is clearly determined in the constituting act.

In other words, the CCQ specifically contemplates the delegation by a settlor of a trust of the power to appoint beneficiaries. But the CCQ only provides for this discretion in respect of trusts and no such discretionary power is given to liquidators of estates. The implication is that had the testator established a testamentary trust and conferred upon the trustees of that testamentary trust the power to appoint beneficiaries, the result would have been different. The Court was of the view, however, that in the case of Mr. Cohen’s Will, no such trust was created.

Because there is no equivalent provision in the CCQ in respect of the direct legal transfer of a testator’s assets to his liquidator (executors) under a Will, Article 1282 could not save the power of appointment.

Would the result be the same under Ontario law?

There is no analogous statutory provision in Ontario to Article 1282 of the CCQ. Thus, a consideration of the facts of this case under Ontario law would require a common law analysis.

Clearly, powers of appointment, including the power to appoint beneficiaries, is valid under Ontario law. In Re Nicholls,[2] the Ontario Court of Appeal confirmed that the use of powers of appointment in Wills is valid and that it is permissible to delegate one’s testamentary power. A power of appointment is the authority conferred by one person upon another to appoint the person or persons who are to receive assets.[3] Such powers are distinct from trusts and agency, and it is important to distinguish whether a power or a trust has been created. There are different kinds of powers of appointment. The provision in Mr. Cohen’s Will can be categorized as a special power because the choice of appointees is restricted by the donor (the testator in this instance) to a particular class of objects, in this case, “charities in Israel.” Furthermore, the donee, or recipient, of a power of appointment may take the power in his or her personal capacity or as a fiduciary. When powers are given to trustees, they normally take them subject to their fiduciary obligations as trustees, although this is not always the case. The consequence is that the donee, as fiduciary, must exercise the power subject to those fiduciary obligations, i.e., honestly and in accordance with its terms and must not exercise the power improperly or for improper objects.[4]

In Milne Estate (Re)[5], the Divisional Court, on appeal from the lower court decision, held that a Will is not a form of trust. Thus, the formalities for the creation of a valid trust, including the “three certainties” need not be satisfied for a Will to be valid. On this basis, the certainty of objects applicable to trusts is not required to be satisfied. With this being the case for Wills, what would otherwise be a requirement of certainty of objects must instead be an inquiry into the intent of the testator.[6]

There is also a long line of case law concerning the use of powers of appointment for charitable objects. In Brewer v McCauley[7] the Supreme Court of Canada stated that, “a testator may delegate his duty to dispose of his property if he or she provides a direction that such property is to form a gift for charitable purposes.” Furthermore, gifts “unto my country England, for its own use and benefit absolutely,”[8] “unto the State of Israel for charitable purposes only,”[9] and “to the German people through the German consul in Toronto”[10] have all been held to be valid bequests.

In all of those cases, the Court considered whether the Will demonstrated a general charitable intention within the parameters of the Statute of Elizabeth.[11] In Keren Kaymeth Le Jisroel, Ltd. v Inland Revenue Commissioners,[12] the Court held that a bequest to a company, the purpose of which was to restore Jews to and their settlement in the Holy Land, was not a charity as it was impossible to identify the community which was to benefit (i.e, the gift could not fall under the fourth head of charitable purposes being, “other purposes beneficial to the community”). Keren appears to suggest that a gift to a group of people such as “Jews” or “Germans,” without further clarification, would be void for uncertainty.

More recently, the Ontario Superior Court[13] reaffirmed the guiding principles on charitable bequests in a will as follows:

First, courts do not favour an intestacy, particularly in the case of a charitable bequest: Gray Estate v. Yule (1990), 75 O.R. (2d) 55 (Ont. Gen. Div.), paras. 18 and 19. Second, where it is clearly the intention of the testatrix to dispose of the whole of her property, the court will follow the construction which gives effect to such intention in preference to a construction which will result in a partial intestacy, especially where the gift in question is that of residue: Campbell, Re, [1963] 2 O.R. 633 (Ont. H.C.), p. 637.

Conclusion

In the Province of Quebec, the CCQ (Article 1282) only provides for powers of appointment to trustees of properly constituted trusts, and no such power or discretion is available in the case of direct bequests to liquidators that do not meet the formal requirements for the establishment of a trust. In Ontario, by contrast, the use of powers of appointment are valid and it is permissible to delegate one’s testamentary power to appoint beneficiaries. Coupled with case law concerning charitable bequests and the Court’s overriding preference to avoid an intestacy (even a partial intestacy), it seems clear that had Mr. Cohen been a resident of Ontario and had his executors applied to the Ontario Courts for a Certificate of Appointment of Estate Trustee (probate certificate), the gift in his Will to Israeli charities would have been a valid gift and the power given to his testamentary executor to choose the recipient charitable beneficiaries would have been a valid appointment.

____________________________________________________________________________________________________________________________________

[1] Cohen c. Succession de Cohen, 2018 QCCS 3212.

[2] Re Nicholls (1987), 57 OR (2d) 763

[3] A.H. Oosterhoff, Oosterhoff on Trusts, 7th ed. (Toronto Ont.: Thomson Canada Limited, 2007) at 146.

[4] Ibid, at 146-147.

[5] Milne Estate (Re), 2019 ONSC 579, Ontario Divisional Court

[6] A. H. Oosterhoff and Katy Basi, Implications of Re Milne Estate: Are Multiple Wills the Tip of the Iceberg, STEP Insider, January 2019, Vol. 18, No. 1, STEP Canada, at 3.

[7] Brewer v McCauley [1954], SCR 645.

[8] Re Smith; Public Trustee v Smith [1932] 1 Ch. 1531.

[9] Re Levy Estate 33 O.A.C. 99 (C.A.),

[10] Gray Estate v. Yule (H.C.J.), 1990 75 O.R. (2d) 55 (Ont. Gen. Div.).

[11] The Charitable Uses Act of 1601, (43 Eliz I, c.4) (known as the Statute of Elizabeth), repealed by section 13(1) of the Mortmain and Charitable Uses Act 1888 (c.42).

[12] Keren Kaymeth Le Jisroel, Ltd. v Inland Revenue Commissioners [1932] AC 650.

[13] Bank of Nova Scotia Trust Co. v. Common Ground Women’s Centre 2010 ONSC 63, hereinafter Women’s Centre.

Disclaimer

This publication is provided as an information service and may include items reported from other sources. We do not warrant its accuracy. This information is not meant as legal opinion or advice.

Miller Thomson LLP uses your contact information to send you information electronically on legal topics, seminars, and firm events that may be of interest to you. If you have any questions about our information practices or obligations under Canada's anti-spam laws, please contact us at privacy@millerthomson.com.

© 2019 Miller Thomson LLP. This publication may be reproduced and distributed in its entirety provided no alterations are made to the form or content. Any other form of reproduction or distribution requires the prior written consent of Miller Thomson LLP which may be requested by contacting newsletters@millerthomson.com.