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

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 the funds 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 contract rights

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

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

Inward outward 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 settlors purpose. 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

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. The gift 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 settlors state of mind but is an inference of law of after knowledge. Resulting trust pointless for small donors. Even so as Harman j states 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.

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 bona vacantia. 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

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

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. In principle 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