By NEIL HARTNELL
TRIBUNE Business Editor
nhartnell@tribunemedia.net
A NEW Providence church’s demand that it be paid a $300,000 gift from the estate of a medical equipment supplier’s late founder has been “deferred” by the Supreme Court for a full accounting to be performed.
Justice Hope Strachan yesterday declared that New Providence Community Church, located on Blake Road, was a “valid” beneficiary of the will of Mary Carolyn Papai, founder and former president of Ports International, amid its battle with her estate’s two executors.
However, she held off granting the church’s demand “for an immediate unconditional Order” that the entire $300,000 be paid to it to give the executors, Charles Mackay, attorney and principal of the Mackay & Moxey law firm, and Ronald Harcourt Knowles, 45 days to reconcile and complete a full accounting of the estate’s assets and inventory.
New Providence Community Church launched its Supreme Court claim almost four years ago on October 26, 2022, asserting that it was due the $300,000 gift as a named beneficiary in the last will and testament of Ms Papai, who passed away on October 21, 2014.
It alleged that, despite making “several requests” for payment of the gift, the executors had rejected its demands via two letters issued on August 10, 2020, and December 3, 2021. Subsequently, in addition to the payment demand, the church also called on the Supreme Court as an “alternative”, and “if necessary”, to place Ms Papai’s estate in administration and remove the executors.
However, Mr Knowles and Mr Mackay, while admitting that Ms Papai’s will “provided for a legacy” to New Providence Community Church, countered that the deceased had left no personal bank accounts or assets from which to make the $300,000 payment. They added that Ports International could not make the payment because it was a separate legal entity over which they had no control.’
The executor duo also argued that they were not permitted to use other estate assets to “meet the unpaid legacy”. However, Justice Strachan identified that, while the estate’s probate declaration recorded bank deposits as being ‘zero’, it then referenced cash held at Scotiabank and Royal Bank of Canada (RBC), plus other assets, worth a collective $96,007.
The judge, finding that these entries need to be reconciled before making any further decisions, ordered Mr Mackay and Mr Knowles to conduct a full accounting within 45 days - a deadline that expires on December 4, 2026. And she ruled that the executors were incorrect to determine that the absence of assets from which to make payment “automatically extinguished” the church’s gift.
“The principal dispute is whether a $300,000 gift to New Providence Community Church failed because a nominated source was said not to exist and the other belonged to Ports [International],” Justice Strachan wrote.
“New Providence Community Church claimed that the gift is demonstrative and survives failure or insufficiency of the nominated source, while the defendants contend that it failed for want of subject matter. In order to make a proper determination, the court must also classify the other gifts in the will and determine their proper place in the administration of the estate.”
Other gifts left Ms Papai in her last will and testament included $50,000 to the Cancer Society of The Bahamas, plus a $150,000 “fund upon trust” for three organisations - Smile Train, World Vision and Youth Empowerment through Soccer. Together with the church’s $300,000, these gifts totalled $500,000.
Ms Papai also gave all the shares she beneficially owned in Ports International and HMH Enterprises to trustees, who had “powers of sale, conversion and investment, together with powers concerning advancement from capital”, until her son, Happy Hall, turned 35 years-old.
Her Sandyport and other real properties were also left to Mr Hall, while a further $30,000 was bequeathed to Alana Wharton for the purchase of a motor vehicle. “New Providence Community Church repeatedly sought payment but received no part of its legacy,” Justice Strachan wrote.
“The defendants say their inquiries revealed no personal banking funds sufficient to satisfy the gift and no corporate authority permitting payment from Ports. They further contend that Ports’ money was not estate property, and that the legacy therefore failed for want of subject matter.
“The defendants also relied upon New Providence Community Church’s failure to provide information concerning the cost of the proposed columbarium (structures built to hold human assets), other donors and their intended contributions,” she added.
“New Providence Community Church says the will contains no such conditions and that the executors could not lawfully add them. New Providence Community Church also seeks an account and alleges that the administration may have favoured the son over other beneficiaries.”
Turning to the submissions of both sides, Justice Strachan said: “New Providence Community Church submits that the words ‘the sum of $300,000’ create an independent monetary gift. Its claim is that the subsequent reference to personal and Ports accounts merely identifies the contemplated source of payment.
“Its case is therefore that the gift is demonstrative rather than specific, and does not fail merely because the nominated fund is insufficient or unavailable…. The defendants accept that the will contains the words relied upon but dispute their legal effect.
“They contend that the Testatrix [Ms Papai] owned shares in Ports but did not own its bank accounts, and there was no lawful corporate resolution authorising the contemplated payment. They also rely upon their responsibility to preserve the Ports shares specifically place in trust for the son,” she added.
“The court accepts that the defendants’ corporate law point is substantial. The question, however, is whether it determines ownership of Ports’ money only, or also determines whether the testamentary gift itself survives. Those are not necessarily the same question. The distinction lies at the centre of this judgment.”
Justice Strachan found that New Providence Community Church’s gift was a “demonstrative pecuniary legacy”, meaning it was to receive the $300,000 stated by Ms Papai from an intended source of funding - her personal accounts, and those of Ports International.
The executors, though, took the position that they could only make the will’s payments from Ms Papai’s personal funds and assets, which were insufficient, and not those of Ports International. They argued that the company is “a separate legal entity whose assets” they had no permission to distribute.
However, Justice Strachan ruled: “The defendants’ contention that the absence of a nominated personal account necessarily caused the legacy to fail is rejected. There is no uncertainty concerning the beneficiary or the amount.
“New Providence Community Church is named and $300,000 is fixed. The alleged difficulty concerns the source of payment, which is legally different from uncertainty as to subject matter of the gift….
“The absence, identification difficulty or insufficiency of the designated personal source did not of itself extinguish New Providence Community Church’s demonstrative legacy. The factual status of the banking entries remains to be determined through the account.”
And the judge added: “The defendants are correct with respect to the Testatrix being unable to dispose of company funds as her personal property. Neither did ownership of the shares make the company’s bank accounts the Testatrix’s personal property.
“Section 79 of the Companies Act places management and exercise of corporate powers in the directors, subject to its statutory qualification. The executors are therefore correct not to withdraw Ports’ corporate money merely because the will referred to it.
“A demonstrative legacy does not authorise an executor to appropriate property owned by a separate legal person. The will itself reinforces this conclusion by subordinating trustee powers concerning Ports to decisions of the Board,” Justice Strachan continued.
“The defendants’ argument fails, however, when it treats that corporate conclusion as disposing of the probate question. The legal unavailability of a designated fund does not necessarily destroy the demonstrated gift for which it was nominated. The undischarged benefit remains subject to the statutory regime applicable to pecuniary legacies.”
Justice Strachan declined to find that the executors had “improperly preferred” Mr Hall, adding: “The will itself gives the son significant specific and residuary benefits, which the executors were required to respect. The benefits could not lawfully be administered as though valid pecuniary dispositions to others did not exist.”
And she also emphasised that there was no evidence of “alleged fraud, dishonesty, mala fides, willful default, devastavit or causative loss”, while ruling that New Providence Community Church was entitled to an inventory and accounting of Ms Papai’s estate under the Probate and Administration Act’s section 52.
Justice Strachan said this was especially needed because of the probate declaration’s reference to zero bank deposits, only to then identify $49,153 as being held at Scotiabank; $820,31 with RBC; household goods worth $40,000; and shares in Ports International and HMH Enterprises each valued at $1,000.
She added that this was especially important in determining the order in which Ms Papai’s different bequests were to be paid, and from what source. “The will expressly directed that identified charitable legacies should abate first if there were a shortfall,” Justice Strachan wrote.
“No equivalent priority language appears in these three provisions, but the ultimate consequences must still be worked out under the order as dictated in the Probate Act.” As a result, the judge said the sum payable to New Providence Community Church and other beneficiaries must “await the account” and subsequent Supreme Court Order.
“New Providence Community Church therefore succeeds on construction and validity,” Justice Strachan wrote. “The defendants succeed on the narrower proposition that Ports’ corporate property could not be appropriated directly under the will. Final quantum, abatement, resort to specific property and any personal liability of the executors must await the estate account….
“The defendants shall identify the value and disposition of the Sandyport properties, Ports shares and HMH Enterprises shares, and disclose all lawful dividends, distributions or other receipts arising from those shares following the Testatrix’s death. They shall also identify material transfers or advancements made to or for the son.”
Once the accounting exercise is completed, the estate’s disposition - and how the bequests and gifts left by Ms Papai are to be settled - will be determined. Justice Strachan said this will decide whether the Sandyport real estate, and Ports International and HMH Enterprises shares, need to be sold or realised.