Today’s post is written by guest blogger Adam Parachin, Associate Professor of Law at the University of Western Ontario.
In a recent decision – McCorkill v. Streed 2014 NBQB 148 – the New Brunswick Court of Queen’s Bench took the highly unusual step of striking an unconditionalresiduary bequest on the basis of public policy. Justice Grant reasoned that the bequest violated public policy due to the white supremacist agenda of the beneficiary, a Virginia corporation called the National Alliance.
I readily agree with Justice Grant’s finding in paragraph 48 that the publications of the National Alliance reproduced in the judgment are “disgusting, repugnant and revolting.” We should not, however, permit our indignation at the subversive values espoused by the National Alliance to stand in the way of us candidly acknowledging that the McCorkill judgment raises some very genuine concerns pertaining to estates law and policy.
The unique legal issue raised in McCorkill is when, if ever, courts should strike unconditional bequests on grounds of public policy. Aware that the doctrine of public policy is not normally applied to unconditional bequests, Justice Grant reasoned in paragraph 77 that the bequest under review was “comparable…to a gift to a trustee for a purpose that is contrary to public policy.”
In other words, since the racist purposes to which the National Alliance would presumably apply the bequest could be inferred, and were seemingly within the contemplation of the testator, the validity of the bequest could (and should) be assessed from the vantage that the unconditional bequest was in reality an express trust for those racist purposes.
The obvious problem with this reasoning is that it is based upon a legal fiction as to the true nature of the legal relationships created under the will. No purpose trust was created, neither could one be inferred.
The formal validity of a bequest should be evaluated based on its actual legal form rather than a strained analogy to a hypothetical purpose trust that the testator never intended to establish. Otherwise judges will enjoy too broad a latitude to strike facially valid testamentary provisions simply by re-characterizing them into problematic legal forms never intended by the testator.
McCorkill implies (if not overtly establishes) that, not only is it against public policy to establish a trust for, say, the promotion of racism, and/or to subject a bequest to a condition precedent of committing a racist act, it is also against public policy to leave property unconditionally to a beneficiary who is likely to use that property in a racist way. This reasoning equates an overtly racist trust with an unrestricted bequest to a known racist. It invites future courts to evaluate not only the express conditions attaching to bequests but also the ways in which beneficiaries are anticipated by testators to use unconditional bequests, or more generally, the deservedness of beneficiaries.
Anticipating this objection, Justice Grant reasoned that the facts of McCorkill were distinguishable. “[I]n most cases”, he reasoned in paragraph 74, “a beneficiary of an estate does not ‘stand for’ something identifiable.” “Unlike most beneficiaries”, he noted in paragraph 73, presumably in reference to the fact that the National Alliance is a corporate person, “the National Alliance has foundational documents which state its purposes.”
With respect, a bequest to a racist corporate person is not so distinct from a bequest to a natural person equally committed to the same racist agenda. Even if future courts accept the distinction, which seems doubtful, what, if anything, does this do to vindicate the public policy against discrimination? Rather than combat discrimination it merely incentivizes racists not to incorporate. Alternatively, it incentivizes future sympathizers of the National Alliance to leave their estates not to the National Alliance but rather to the controlling minds of the corporation.
In the not too distant past, the Ontario Court of Appeal in Canada Trust Co. v. Ontario Human Rights Commission  O.J. No. 615 struck the shockingly bigoted provisions of a charitable trust on the basis of public policy, expressly noting in paragraph 100 that that case “does not affect private, family trusts.” A few years later, the very same court in Fox v. Fox Estate  O.J. No. 375 applied Canada Trust Co. (paragraph 16) in the context of – of all things – a private family trust.
What future cases will McCorkill spawn? Is this an early step towards a “clean hands” requirement for beneficiaries?