The cy-pres doctrine in English law is an element of trusts law that deals with charitable trusts. The doctrine states that when such a trust has failed because its purposes are either impossible or cannot be fulfilled, the High Court of Justice or the Charity Commission can issue an order redirecting the trust's funds to the nearest possible purpose. For charities worth under £5,000 and without land, the trustees (by a two-thirds majority) may decide to redirect the trust's funds. The doctrine was initially part of ecclesiastical law, originating from the Norman French phrase cy près comme possible (as close as possible), but similar and possibly ancestral provisions have been found in Roman law, both in the Corpus Juris Civilis and later Byzantine law.
Trusts to which the doctrine is applicable are divided into two groups: those with subsequent failure, where the trust's purpose has failed after coming into operation, and initial failure, where the trust's purposes are immediately invalid. Subsequent failure cases simply require redirecting the funds to the nearest possible purpose, as there's no question of allowing the settlor's next of kin to inherit the money. However, initial failure cases require a decision not only on whether the purpose has failed, but also on whether the funds should be subject to cy-près or returned to the estate in a resulting trust. This decision is based on the charitable intention of the settlor, which is determined based on the facts of each individual case.
Definition and origin
The cy-près doctrine is the idea that, where a charitable trust's purposes are impossible or cannot be fulfilled for whatever reason, the funds should be reapplied to purposes as close as possible to the trust's original goals. This is done through a formal application by the trustees, either to the High Court of Justice or the Charity Commission. This doctrine originated in ecclesiastical law, the name coming as a contraction of the Norman French cy près comme possible (as close as possible), It was originally justified in an ecclesiastical way; charitable gifts were provided to secure entry into heaven, and if the charitable gift failed, this would not be guaranteed. If it was re-purposed, however, entry would be granted. The local bishop, therefore, would usually simply apply the gift to the nearest possible purpose to the testator's original goals.
Some evidence suggests that the doctrine descends from Roman law. The Corpus Juris Civilis mentions a process that redirected money collected to celebrate a person's life in some way that violated law to a purpose within the law. It also gives a similar justification: "[I]t would be unjust that the amount which [the testator] has destined to that end should revert to the heirs. Therefore, let an investigation be made to ascertain how the trust may be employed so that the memory of the deceased may be preserved in some other and lawful manner." The Byzantine Empire used a system similar to cy-près when dealing with piae causae, charitable corporations, whereby if the corporation fell its possessions were to be transferred to the Papal treasury and spent on a purpose as close as possible to that of the original corporation.
Requirements
Prior to the Charities Act 1960, situations where the cy-près doctrine applied were limited to cases where the trust's purpose was either impossible or impracticable. The 1960 Act, however, provides in Section 13(1) (now part of the Charities Act 1993) that cy-près can apply where the original purposes have: This definition was amended by the Charities Act 2006 to replace "the spirit of the gift" with "the appropriate considerations," which are defined as "(on the one hand) the spirit of the gift concerned, and (on the other) the social and economic circumstances prevailing at the time of the proposed alteration of the original purposes". In the case of extremely small charitable trusts (where the charity has an income of less than £5,000 and holds no land) the trustees may agree by a two-thirds majority to transfer the property to another charity, without involving the High Court or Commission. This is contained in Sections 74-5 of the 1993 Act. Once the decision is reached, public notice must be given, and the Commission informed. Cy-près powers are now enacted in the Charities Act 2011.