The Wivenhoe Benevolent Society, a non-charitable unincorporated association, ran a social club and held dinners for worthy causes. Its funds were raised from members(TM) subscriptions and donations from well-wishers. Six weeks ago it held a di

A Gift to the persons currently members of the association, but taking effect as an accretion to the association's funds, to be dealt with according to the rules of the association, by which the members are contractually bound;  On this analysis, the gift is still an absolute gift to the members of the association, but the members are bound by the contractual relationship between them to use the property to the association’s purposes. If one member made an attempt to misuse the property outside the association's purposes, the other members could seek to restrain him by injunction, or proceed against him for breach of contract. 

An absolute gift to its present and future members, with or without contractual obligations, on this construction, the gift will fail if it is not limited to the rule against perpetuities.

The law on the dissolution of unincorporated associations has been thought reasonably well settled by the authorities, in particular Re Bucks Constabulary Widows' and Orphans' Fund Friendly Society (No. 2). But the judgment of Scott J. in Davis v. Richards & Wallington Industries Ltd., a recent decision in the area of pension funds, raised two analyses, one applied to the income from donations in Re West Sussex Constabulary's Widows, Children and Benevolent (1930) Fund Trusts.   The rules governing money donated during the life of the association and then on dissolution are governed by the law of trusts and the gift by donation will be held on resulting trust for the donor, however if the donor disclaimed it, the interest would go as bona vacantia to the Crown, the West Sussex Constabulary’s Widows, children and Benevolent (1930) Fund Trust  took this view for donations made in collection boxes. 

The other analysis is that the money paid absolutely is held on trust for the members of the association by for example by the treasurer. The disposal of such money is governed by the law of contract; the treasurer receives the money absolutely but holds it on trust for the members of the association, who are then bound by this same contract, Re Recher’s Will Trusts

A common problem concerning unincorporated associations is the distribution of their assets when they are dissolved. Where the assets are contributed by the individual members the association the problem is not particularly acute, but there are particular difficulties where the assets are funds that have been raised by public subscription, Re West Sussex Constabulary Widows Fund. The prevailing view is that there is no obligation to return these funds to their contributors, but in Air Jamaica v. Charlton.

In Cunnack v. Edwards, a society governed by the Friendly Societies Act 1829 was established in 1810 to raise funds by subscriptions of its members to provide annuities for the widows of the deceased members.  In Cunnack v. Edwards, it was held there was no resulting trust in favour of the personal representatives of the last surviving members and the assets went to the Crown bona vacantia.  If the entitlement is based on a resulting trust, the distribution will be made among all the members, past and present including personal representatives of the deceased members in shares proportionate to their contribution.  It has been argued that the members’ subscriptions were not given on trust on the outset and therefore considered as absolute gifts to the individual members and in accordance with the rules of the association because if treated as a trust it will be void for its purpose under the beneficiary principle.  A binding contract is formed between the members

Gifts from identifiable individuals will have a possibility of the money to be treated as been expressly given for the purposes of the association.  The surplus of such funds will result back to the donors unless there is evidence of a clear intention to be parted with the money forever, Westdeutsche Landesbank Girocentrale v. Islington LBC; these trusts for purposes are void unless they fall within the Re Denley exceptions.

Where the surplus funds are from anonymous donors, the courts hold the assets until they are claimed by the donor on production of satisfactory evidence as in Re Gillingham Bus disaster fund. However if the donor wished for anonymity either he or she had intended to disclaim any future interest of the gift and that it should be taken as an absolute gift. 

There is little judicial authority on the duties and responsibilities of either ordinary members of unincorporated associations or those members elected to the committee of management. There are two reasons for this, first, the legal form of an unincorporated association tends to be adopted by local community groups who simply cannot afford court proceedings and secondly, the courts have shown a consistent reluctance to become involved in the affairs of unincorporated associations

A member of a non-charitable unincorporated association is does not have a fiduciary duty,  although it is arguable that a term may be implied into the constitution that a member is under a duty not to act dishonestly, capriciously or arbitrarily, such an implied term is unlikely unless the purpose of the association can only be achieved with the full co-operation of all the members.

In conclusion where an unincorporated association comes to an end, the surplus assets must be disposed of. Equity will go the extra mile to avoid a beneficial vacuum; one view is that the surplus assets should revert to the donors under a resulting trust, West Sussex Constabulary’s Widows, children and Benevolent (1930) Fund Trust, this solution is adopted in special circumstances e.g. Air Jamaica Ltd v. Charlton.  The other view is to distribute the assets of the unincorporated association among the surviving members of the association meaning the one club member who survived the fire would be the sole beneficiary of the assets in question, Re Recher’s Trust. 

Bibliography:

Cases:

1. Air Jamaica v. Charlton (1999) 1 W.L.R. 1399
2. Conservative and Unionist Central Office v. Burrell [1982] 1 W.L.R. 522
3. Cunnack v. Edwards [1896] 2 Ch 679
4. Davis v. Richards & Wallington Industries Ltd [1990] 1 W.L.R. 1511,
5. Dawkins v Antrobus (1881) 17 Ch.D. 615
6. Goring v British Actors Equity Association [1987] I.R.L.R. 122
7. Leahy v. Attorney General for New South Wales [1959] A.C. 457
8. Morice v. Bishop of Durham (1804)10 Ves. Jr. 522
9. Re Denley's Trust Deed [1969] 1 Ch. 373
10. R. v. District Auditor, ex parte West Yorkshire MCC [1986] R.V.R. 24
11. Re Recher’s Trust (1972)
12. Re Bucks Constabulary Fund friendly Society (No 2) (1972)
13. Re Denley [1969] 1 Ch. 373
14. Re Gillingham Bus disaster fund [1959] Ch. 62
15. Re Bucks Constabulary Widows' and Orphans' Fund Friendly Society (No. 2) [1979] 1 W.L.R. 936
16. Re Astor’s Settlement Trusts [1952] Ch. 452
17. Re West Sussex Constabulary's Widows, Children and Benevolent (1930) Fund Trusts [1971] Ch. 1
18. Shuttleworth v Cox Bros & Co (Maidenhead) Ltd [1927] 2 K.B. 9
19. Westdeutsche Landesbank Girocentrale v. Islington LBC [1996] A.C. 669

Journal Articles:

1. A Problem in the Construction of Gifts to Unincorporated Associations”, [1995] Conv. 302.
2. Charles Harpum, Perpetuities, pensions and resulting trusts, Conv. 2000, Mar/Apr, 170-178
3. J. E. Martin, [1991] Conv. 366
4. Jean Warburton, Charity members: duties and responsibilities, Conv.2006, Jul/Aug, 330-352
5. Peter Luxton, Gifts to clubs: contract holding is trumps, Conv. 2007, May/Jun, 274-281
6. Paul Matthews, A problem in the construction of gifts to unincorporated associations, Conv. 1995, Jul/Aug, 302-308
7. Simon Gardner, New angles on unincorporated associations, Conv. 1992, Jan/Feb, 41-52.
8. Warburton, Unincorporated Associations: Law & Practice (2nd ed.) pp.5-6

Websites:

Textbooks:

1. Hanbury and Martin, Modern Equity, (14th ed. 1993), p. 369-70
2. Hayton and Marshall, Cases and Commentary on the Law of Trusts, (9th ed. 1991), p. 194-197;
3. Underhill and Hayton, Law of Trusts and Trustees, (14th ed. 1987), p. 81-86;
4. Hanbury and Martin, Modern Equity, (14th ed. 1993), p. 369-70;
5. Pettit, Equity and the Law of Trusts, (7th ed. 1993), p. 54-57;
6. Parker and Mellows, the Modern Law of Trusts, (6th ed. 1994), p. 123-28.

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