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Unincorporated associations
1) In Burrell case the four criteria for the existence of u.a were
stated.
A. Two or more persons bound together
B. mutual undertakings
C. need of rules
D. freedom to join or leave
Mutual undertakings signify that the members of the club are in
contractual relationship where each member is party to a
contract that creates the legally binding rules of the association
Beneficiary principle concerning u.a Leahey case
Gift is made for a purpose but the beneficiaries are the
members. Otherwise if it was to impose a trust who would be
the beneficiaries other than the members? Most probably the
gift would fail for uncertainty of objects. (Leahy)
A gift cannot be made to a purpose or an object
Possible constructions of a gift to u.a
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Neville Estates case interpreted Leahy with three possible
constructions.
1. Individual members as co-owners
2. Contractual relationship
3. Quasi corporate entity
Re Recher case expanded the second category: in the absence
of words imposing a trust the legacy is a gift to the members
beneficially not as joined tenants but as an accretion to thefunds which are the subject matter of the contract
Contract holding theory nothing more than a bare mandate
trust (Quist close) .The treasurer holds the funds on bare trust
for the members and deal with according with the mandates or
rules of the association. So a gift to the accretion of the funds is
a gift to the treasurer to hold on trust
Problems:
A person cannot give a gift subject to another contractrights
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No perpetuity problem different from the perpetuity rules
concerning the other association property
The trust is for the members for the time being
Rights are always fully vested and members can exercise their
Saunders right and collapse the trust
Possible 53 (1) (c) problem. Not likely. Section do not apply to
powers.
The contract holding theory explains how a gift can be devoted
to their purposes without it being a purpose trust. This does not
mean that there cant be an invalid purpose trust. In Lipinski
case there was a gift that could have been a purpose trust.
Testator left a gift to Maccabee association to be used SOLELY
for the improvements of a building. Nevertheless Oliver j
explained that improvements are different from maintenance
which shows a perpetual intention while improvements does
not as the gift can be spent at once. He also held that the class
of beneficiaries were ascertained enough and could not see the
reason why the gift should fail from the moment that the
purpose was within the ascertained beneficiaries contractual
relationship.
Oliver j contrasted this case with Leahy on the basis that in the
latter there was no ascertainable class and also that there was
already authority in Re Turkington.
Furthermore Oliver j relied on the dubious Re Denley case
where a purpose trust was upheld from the moment the
beneficiary principle was satisfied
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Re Bowes also stands as authority for the proposition that
where the entire amount of the gift is to go to the beneficiaries
then it is submitted that the purpose can be overridden as a
mere motive
Inwardoutward looking purposes
Re Bucks case: assets of the association are held on trust for the
members subject to any contractual obligations.
If the members are spending their own money for a purpose
under the rules of the association then the court can construe
the gift as accretion to the funds.
Gifts expressed as trusts for outward looking purposes may be
valid just for the reason that the membership as the class of
ascertained beneficiaries can get together and decide whether
to carry the purpose or not. This prevents the possibility that Re
Astor gets manipulated.
Re Lipinski raises the issue of the status of the settlorspurpose.
It is submitted by Oliver j that the members of the u.a. can
ignore it.
Possible solution for Mr. Lipinski to frame the the purpose as a
Sanderson type trust.i.e conditional gift.
Dissolution of unincorporated associations
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The contract holding theory of the way under ehich a u.a holds
property is generally accepted.
In Re Gilingham Bus Disaster Fund funds were raised for the
funerals of those who were killed by bus. Any surplus funds
were to be devoted to other worthy causes. Thegift was a
Sanderson type trust in respect of the cadets but the gift over to
worthy causes was void for being non- charitable purpose
trust. The treasury solicitor claimed the surplus to go bona
vacantia i.e. goods without owner. Harman j stated that as a
general principle it is submitted that money held upon trust
which trust does not exhaust the funds then it will jump back to
the donor under a resulting trust. The reasoning behind this
view is that the settlor did not part with the money absolutely
but only sub modo.Therefore any surplus still belongs to him.
This doctrine do not rest on evidence of the settlorsstate of
mind but is an inference of law of after knowledge.
Resulting trust pointless for small donors. Even so as Harman jstates from the moment that even the small giver can be
ascertained he does not the reason why the surplus should go
on bona vacantia.
Under contract holding theory it is clear that the members hold
the property under the terms of the association and therefore
upon dissolution there is clearly no need for bona vacantia or
resulting trust. The money are held under a bare mandate trust,
meaning that the members have owned it all along, and
therefore it is theirs to be distributed amongst themselves.
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Before this principle there were cases which were wrongly
decided and it was the only way that upon a dissolution there
would be either a bona vacantia case or an ART case. Re
Printers case. By contrast in Cunnack the money went on bonavacantia.
Re West Sussex case: West Sussex Constabulary amalgamated
with other police forces. The benevolent fund was to wound up.
Any mandate as to the use of the funds would be extinguished
but not the bare trust on funds. The death of the contract would
not change the ownership rights of the members, only their
contractual rights and duties as to the use of the funds.
Members argued that there was a resulting trust on their
behalf.
Goff j explained it from a contractual aspect. Persons who
remained members until their death were excluded because
they had what they had contracted for.
Surviving members are also excluded because their relationship
Is contractual and not upon a trust.
Only those surviving members who had dependents who had
not received any benefits yet. Probably wrongly decided.
In Re Bucks the modern contract theory was applied. Property
belongs to the members
In Hanchett Stamford the contract holding theory was
applied.
It is submitted that small donors must be assumed to have
intended to part with the money. It is submitted that it is the
very inconvenience of an ART arising in every case that makes
the bona vacant solution preferable
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Political parties and unincorporated associations
Re Grants case: Failed. A gift to the Labour party was held to
create perpetual trust.It was held that the Labour Party was not
a u.a since its rules were able to be altered by an outside
body.In contrast there is the case of Neville estates were it was
held that the Synagauge was an u.a despite the fact that it had
affiliations with the United Synagogue.A case very similar to the
Re Grants case.
If the political parties are not u.a , then how do they hold their
property?Most likely on a mandate basis.
Brian Green thoughts upon dissolution
In Re William Denby case Brightman J. set down four methods
upon which an association may be dissolved.
A . Voluntary dissolution by the members
B . occorence of an event triggering the automatic dissolution
C. winding up upon court equitable jurisdiction
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Where an association is dissolved THE PRESENT LAW presumes
that the surplus assets should be divided amongst its members
at the date of the dissolution upon equal shares. According to
Green this is contrary both in principle and authority. Inprinciple it confuses entitlements to share the benefits which
the association provides with the property interests that reflect
contributions. An older authority had recognized this and
concluded that assets should be distributed equally when
contributions could not be ascertained.
Brian Green suggests that an alternative property solution
should be adopted where the existing members would receive
proportionate interests in the funds. This is supported as the
members are tenants in common or on the basis of a resulting
trust. The former is preferred on several grounds.
Why prefer common ownership over resulting trust?
It is submitted that common ownership solution will be
applicable to all cases instead of a resulting trust arising where
a primary trust can be implied.
Secondly the tenancy in common provide for a total division of
the surplus while resulting trust is limited in returning the
contributions to the individual member
No priority of members over the societys general coreditors
Fourthly the need for someone in whose favour the court can
decree a performance ( Morice V Bishop ) .
Fifthly a resulting trust is subject to perpetuity restrictions