unincorporated associations

8/13/2019 unincorporated associations

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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

unincorporated associations

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