The Stanley Cup Finals started this past weekend, with the Edmonton Oilers playing the Florida Panthers to see who will take home the Stanley Cup. Although many Canadian viewers no doubt tuned in to see if the Edmonton Oilers can finally break the Canadian curse and bring the Stanley Cup back to Canada for the first time since 1993, this time of year may have the nerdier trust lawyers amongst us have their minds turn to something else. The Stanley Cup, as many may know, is alleged to be held in a trust.
Official details regarding the terms of the trust in which the Stanley Cup is alleged to be held are somewhat sparse, however the Hockey Hall of Fame’s website notes the current “Trustees” of the Stanley Cup include former player Lanny McDonald. The Wikipedia page for the Stanley Cup provides some history, noting the trust was originally established by Lord Stanley of Preston in 1892, then Governor General of Canada, when he transferred the original trophy to two Trustees with the instructions that it was to be given to the champion hockey club in the Dominion of Canada. There were certain conditions that were to be placed on the presentation of the trophy to the hockey club, including that the trophy was to be returned at the request of the Trustees so it could be presented to the winners the next year, and that the winning team could pay to have their team name and year they won engraved onto the trophy (traditions which continue to this day). The Trustees are alleged to have entered into an agreement with the NHL in or about 1947, where the Trustees agreed to present the trophy to the winner of the NHL each season (an arrangement that exists to this day).
The Stanley Cup potentially being held in a trust since 1892 may have questions bouncing around the heads of the nerdier trust lawyers amongst us. The presentation of a trophy like the Stanley Cup would likely be a “purpose trust”, insofar as it is not likely being held for the benefit of specific beneficiaries, but rather for a broader purpose (being the presentation of a trophy to the champion hockey club). Generally speaking for a “purpose trust” to be valid it must be for a “charitable purpose”, as absent certain limited exceptions a non-charitable purpose trust cannot exist (exceptions which likely could not apply here due to the rule against perpetuities and the trust apparently having been settled in 1892). If indeed the Stanley Cup is held on a purpose trust, would the presentation of a trophy like the Stanley Cup be found to be “charitable”? If not, what happens?
Pemsel v. Special Commissioners of Income Tax, [1891] A.C. 531, confirmed that for a purpose to be “charitable” it must fall under one of four categories: (1) the relief of poverty; (2) the advancement of religion; (3) the advancement of education; or (4) other purposes beneficial to the community. As the presentation of the Stanley Cup is unlikely to it under categories (1) to (3), if it were to be found to be charitable it would likely need to fall under category (4), being the broad catch-all “other purposes beneficial to the community”.
The Supreme Court of Canada in A.Y.S.A. Amateur Youth Soccer Association v. Canada (Revenue Agency), 2007 SCC 42, confirmed the promotion of “sport” could not be considered a charitable purpose which could fit under the “other purposes beneficial to the community” category. This is echoed in Re Nottage, [1895] 2 Ch. 649, where in considering whether a trust which was established to hold a yachting trophy could be charitable, the court concluded it could not, stating:
“I am of opinion that a gift, the object of which is the encouragement of a mere sport or game primarily calculated to amuse individuals apart from the community at large, cannot upon the authorities be held to be charitable, though such sport or game is to some extent beneficial to the public. If we were to hold the gift before us to be charitable we should open a very wide door, for it would then be difficult to say that gifts for promoting bicycling, cricket, football, lawn-tennis, or any outdoor game, were not charitable, for they promote the health and bodily well-being of the community.” [emphasis added]
I am not going to argue the legal underpinnings of the Stanley Cup are potentially problematic (who am I to potentially ruin a Canadian tradition). What I am saying is that in the event the Stanley Cup is indeed held in a trust, and such a trust is found to be an invalid non-charitable purpose trust, it is possible the trust itself could fail and with it the Stanley Cup could revert to the Settlor. The original Settlor of the Stanley Cup, Lord Stanley of Preston, is long since dead. Through the magic of Wikipedia however I was able to identify Lord Stanley’s great-great grandson, the current Earl of Derby. And so I present to you, the potential undisputed hockey champion of the world, potential true owner of the Stanley Cup, Edward Stanley, 19th Earl of Derby. Maybe he and Connor McDavid can have a one-on-one hockey competition, winner gets the Stanley Cup.
Thank you for reading (and go Oilers).