UNINCORPORATED ASSOCIATIONS

(SUBTITLE: HOUSTON, WE HAVE A PROBLEM)

An outline of the nature of unincorporated associations. How do they hold property?
How are gifts to such bodies to be construed and take effect? What happens to the
property held by the association on dissolution?
1. Features of the UA
An unincorporated association has no legal personality of its own; it comprises
merely an association of individuals and/or legal persons who have come together
for a set of common objectives which they can usually achieve better together.
Courts have identified typical characteristics of such bodies.
CUCO v Burrell [1982] 2 All ER 1 (per Brightman LJ)
(a) Composed of two or more persons bound together for a common purpose
(b) Having mutual rights and duties arising from a contract between them
(c) The association has rules governing who controls the association and its
funds and the terms on which that control is exercisable
(d) The association can be joined or left at will.
Eastbourne Town Radio Cars Association v Customs and Excise
Commissioners [2001] UKHL 19; [2001] 1 W.L.R. 794 (per Lord Hoffman)
26. The issue in this case is whether the Eastbourne Town Radio Cars Association (the
Association) is for the purposes of VAT a taxable person making taxable supplies of services to its
members, who are independent car hire drivers. The Association is unincorporated. It has a
constitution which contains a statement of its objects (the employment by the members of a manager,
telephonist and other staff to provide a communications network for putting customers in contact with
drivers and ancillary purposes), provisions for admission to membership, governance (by an elected
committee) and subscriptions by periodic payments, subject to adjustment so as to divide the
expenses among the members. The committee have power to make bye-laws for the internal
management of the Association, including the terms and conditions on which members may avail
themselves of the services provided by the Association.
32. My Lords, an unincorporated association is not a legal entity. It is a number of legal persons
having mutual rights and duties in accordance with rules which constitute the contract under which
they have agreed to be associated. The property of the Association is owned by or on trust for
the individual members and subject to the rules. The liability of the individual members for the debts
incurred for the purposes of the association is governed by the ordinary law of contract and agency.
The rights of the members, as against each other, to avail themselves of the common property and
facilities are governed by their contract.

2. How does an Unincorporated Association hold property?

Since the UA is not a legal person capable of owning property or being the subject of
legal rights and duties, in practice, association property will likely be vested in
some of the members as trustees for all the members of the association. There
will usually with a treasurer operating a clubs bank account. This will be a
straightforward trust for members in most cases a bare trust. In most small clubs,

even this arrangement is unlikely to be adopted formally they will operate on the
basis that the assets belong to the club.
In this context, the trust concept will allow for common ownership, especially if the
property includes assets such as land where for practical or legal reasons the title
cannot be put into the names of all the members of the association.
The trustees or others under the constitution of the club (chairman or committee)
may enter into contracts binding the UAs property.
Although the mechanism of the trust has to be used because of communal or coownership, the UAs property belongs to the members subject to their contract with
each other under the constitution (whether purposes of the UA are inward or outward
looking (Re Rechers WT [1972] Ch 526 at 538, endorsed in Re Grants WT [1980] 1
WLR 360 at 367)) and subject to creditors claims resulting from contract made with
the trustees or officers.
See Walton J in Re Bucks Constabulary Widows and Orphans Fund (No 2)
[1979] 1 All ER 623 (626-7):
If a number of persons associate together, for whatever purpose, if that purpose is one which
involves the acquisition of cash or property of any magnitude, then, for practical purposes, some one
or more persons have to act in the capacity of treasurers or holders of the property. In any
sophisticated association there will accordingly be one or more trustees in whom the property that is
acquired by the association will be vested. Usually there will be a committee of some description
which will run the affairs of the association; though of course in a small association the committee
may well comprise all the members; and the normal course of events will be that the trustee, if there
is a formal trustee, will declare that he holds the property of the association in his hands to deal with it
as directed by the committee. If the trust deed is a shade more sophisticated it may add that the
trustee holds the assets on trust for the members in accordance with the rules of the association. Now
in all such cases [unless under the rules the funds are wholly devoted to charity or held under some
other trusts] the persons, the only persons, interested therein are the members.

All the assets of the association are held in trust for its members save and to the extent to which
valid trusts have otherwise been declared of its property .

This may leave open a number of questions:

if the property is held on trust for the members, does that cover all categories
of members?
what are the rights in respect of club assets of those who join after the trust
has been created new members?
What happens when a member dies or leaves the association? Does s.53(1)
(c) LPA apply?
Above all, when property/money is donated to the association, how is that to be
held? Will that be determined by the terms of the donation or by the rules of the
association or both? What happens to the assets of the association when it ceases
to exist, either through being wound up or becoming moribund?
3. The problem of gifts to UAs

In practice such gifts or donations do not appear to encounter difficulties in general.

The issue of the success or otherwise of a purported donation will likely arise in the
context of testamentary gifts because those who might otherwise be entitled to the
property concerned on failure of the gift may want to challenge its validity. In the
case of an inter vivos gift it may be that the donor has changed his mind and
questions the validity of the gift.
In terms of the law, older case law seemed to assume that a gift was:
(1) to the members of the association at the time of the gift so that they were entitled
to their share of that gift
(2) to the committee or trustees of the association to spend as they saw fit in the
interests of the association or
(3) as an endowment, which prevented the trustees and/or members from spending
the capital of the gift other than for prescribed purposes.
The main issue therefore was whether the gift created an endowment as that might
create an issue of perpetuity (inalienability). There was no further analysis of how to
deal with any property interests created the issue was one of control of the capital
of the gift. There was no need to identify the beneficiaries of the property held by the
association a gift would be good as long as the trustees/committee had the power
to spend the capital. If they could spend only income, the trust would be perpetual
and void (under the common law rules of the time).
See: Re Drummond [1914] 2 Ch 90
FACTS: Gift to the Old Bradfordians Club, London, to be utilised as the Committee
should think best as being in the interests of the club or school
HELD: Gift was valid not as a gift to the members but to the committee to spend the
money as it thought fit on specific objects. No perpetuity issue.
Analysis of such gifts became more sophisticated in later case law. Viscount
Simonds in Leahy v AG for NSW [1959] AC 457 Privy Council, stressed that the
effect of the gift will depend on the construction placed on what are meant to be
the settlors or testators intentions taking into account:
the terms of the gift
the rules and nature of the association to which he/she is giving
the nature of the property.
Leahy
FACTS: Gift of sheep station and homestead on trust for such order of nuns of the
Catholic Church or the Christian Brothers as my executors and trustees shall select.
HELD: in principle, the gift was construed as an endowment for a non-charitable
purpose (although saved by NSW statute which allowed it to be applied for charitable
purposes).
Terms of the gift: the PC operated on the basis that a gift would prime facie be to
the individual members of an association unless the language of the gift was
inconsistent with such an interpretation. In this case it could be for each and every
member of the order, but the form of the gift was not to the members, it was to the
Order.

The association: looking at the Order, its membership may have been numerous and
spread all over the world. If the gift was to individuals then it would be to those living
at the death of the testator but only to them. The question was whether the testator
intended an immediate beneficial legacy to such a body of beneficiaries.
Subject matter of the gift: Looking at the subject matter of the gift, it was not possible
to regard all the members of the Order becoming beneficial owners of such a
property. It was unlikely that the members would regard themselves as being able to
put an end to their association and distribute the assets.
It seems likely that the testator intended a trust not merely for the benefit of the
existing members of the selected order but for its benefit as a continuing body and
for furtherance of its work.
Hence, even if the gift to a selected Order of nuns was prima facie a gift to the
individual members of the Order, other considerations arose from the terms of the
will, the nature of the society, its organisation and rules or the subject matter of the
gift which led the court to conclude that despite the absolute nature of the gift, yet it
was invalid because it was in the nature of an endowment.
If a gift is made to individuals, whether under their own names or under the name of
their society, and the conclusion is reached that they are not intended to take
beneficially, then they take as trustees. If so, it must be ascertained who are the
beneficiaries. If at the death of the testator the class of beneficiaries is fixed and
ascertained or ascertainable within the limit of the rule against perpetuities, all is
well. If it is not so fixed and not so ascertainable, the trust must fail. [Once it is
ascertained that the Order is not confined to living and ascertained persons it
opens another possibility that the trust is not for persons but for a non-charitable
purpose]
The same approach followed by the High court of Australia in Bacon v Pianta (1966)
114 CLR 634
FACTS: residuary bequest to Communist Party of Australia for its sole use and
benefit. The CPA was a UA.
HELD: the bequest was to the members, both present and future, in trust for the
purposes of the party, which were non-charitable purposes. The court noted: the
form of the bequest; the size of the party (5,000 members); the geographical spread
of members; the fluctuation in membership; the apparent lack of capacity (legal or
practical) of members to terminate the association and its assets.
Hence, if a testator knew that it would be difficult or impossible for members of an
association to dissolve it or wind it up, so that the association is intended to carry on
indefinitely, a bequest could be construed as setting up an endowment.
Later cases have focused on other considerations that may allow a court to find a gift
to be valid as a trust for members of an unincorporated association:

In Neville Estates Ltd v Madden 1962] Ch 832 at 849 Cross J identified three ways
in which a gift to an unincorporated association could take effect:
(1) a gift to the members of the association at the relevant date as joint tenants, so that any
member can sever his share and claim it whether or not he continues to be a member of the
association.
(2) a gift to the existing members not as joint tenants, but subject to their respective contractual
rights and liabilities towards one another as members of the association. In such a case a
member cannot sever his share. It will accrue to the other members on his death or
resignation, even though such members include persons who became members after the gift
took effect. If this is the effect of the gift, it will not be open to objection on the score of
perpetuity or uncertainty unless there is something in its terms or circumstances or in the
rules of the association which precludes the members at any given time from dividing the
subject of the gift between them on the footing that they are solely entitled to it in equity.
(3) the terms or circumstances of the gift or the rules of the association may show that the
property in question is not to be at the disposal of the members for the time being, but is to be
held in trust for or applied for the purposes of the association as a quasi-corporate entity. In
this case the gift will fail unless the association is a charitable body."

This passage has been approved consistently in subsequent case law. It suggests
the question: did the donor intend to create
(a) a gift to the individual members of the association at the date of the gift as joint
tenants or tenants in common
(b) a gift by way of endowment for the association, necessarily to be held on trust or
(c) a gift to the members but subject to their mutual contractual rights and
obligations.
Construction (c) will operate by way of a trust mechanism as the means by which the
members can share their property, but the focus is on their contractual rights rather
than their property rights. It appears to work in practice but does not necessarily
provide a coherent legal mechanism for giving effect to what the testator probably
intended.
Also, applying Re Denley's Trust Deed [1969] 1 Ch 373, a gift as a trust could be
upheld even where it appears to be applicable for specific non-charitable purposes.
On this basis, the options appear to be:

Gift or assignment to present members (i.e. members at the time of the gift)
A trust for present members (i.e. members at the time of the gift)
A trust for present and future members (an endowment) including those who
benefit from carrying out the purposes of the body to which they belong
A transfer to the members of the association for the time being as an
accretion to their funds to be used in accordance with the associations
constitution/rules (property held on a contractual basis the so-called
contract holding theory).
A trust for abstract non-charitable purposes (an endowment) (outward
looking purposes that provide no immediate benefit to the members) (e.g. for
a political campaign).
A trust for charitable purposes (where the association exists for the pursuit of
charitable purposes)

In other words, is it a straightforward trust of the property in the hands of the

treasurer so that it can be spent freely on everyday expenses (without having to
distinguish between capital and income and spend only income) or an endowment
trust requiring the capital to be set aside from general assets of the UA and only the
income to be used in a specified manner. The issue for an endowment trust would be
whether it was for present and future beneficiaries (following Re Denleys Trust
Deed)) in which case the rule against remoteness of future vesting might be an
issue, or for an abstract non-charitable purpose, in which case it would contravene
the beneficiary principle and the rule against inalienability. In the last case, the
association could not claim that it was the beneficiary as it has no existence.
If there is no clear intention to establish an endowment trust (requiring the gift/legacy
to be segregated from general funds and the income to be used for specific purpose
or present and future members), the modern trend is for courts to validate gifts by
construing them as a gift to the present members of the association beneficially as
an accretion to the societys funds as a form of joint tenancy subject to the rules of
the body by which the members are contractually bound.
Even if a gift is construed as being for the benefit of the members, there might still be
an issue as to whether that reflects the testators true intentions. For example, what if
the association has been formed to pursue some outward looking purpose in which
the members have no material interest?
4. Possible constructions of gifts to UAs
Example: testator leaves 100,000 to the Gastronomes Club for the sole purpose
of purchasing the proper cooking equipment and high quality food needed to hold an
annual banquet in my honour for the next 25 years.
No trust but a straight gift to the present aggregate of persons described by the
group name under which they associate.
Hence any member would be able to claim their proportionate share under a joint
tenancy or tenancy in common.
See:
Cocks v Manners (1871) LR 12 Eq 574
FACTS: residuary gift to the Dominican Convent at Carisbrooke payable to the
superior for the time being
HELD: found payable to the superior of the order for the time being for the benefit of
the members of the order
Re Smith [1914] 1 Ch 937:
FACTS: bequest to the society or institution known as the Franciscan Friars of
Clevedon in the County of Somerset
HELD: construed as a gift to the individual members of the order at the date of the
testators death

Re Ogden [1933] Ch 678

FACTS: a testator bequeathed a proportion of his residuary estate to Herbert Samuel
"to be by him distributed amongst such political federations or bodies in the United
Kingdom having as their objects or one of their objects the promotion of Liberal
principles in politics as he shall in his absolute discretion select and in such shares
and proportions as he shall in the like discretion think fit." It was clear that all the
bodies in the UK that matched that description could be identified.
HELD: there was a class of beneficiaries capable of ascertainment in a specified
area; that the bequest was not void for uncertainty; that there was no trust for the
promotion of Liberal principles; and that the bequest was valid.
Per Lord Tomlin:
I do not think that it is in dispute that a gift to a voluntary association of persons, for the general
purposes of such association is an absolute gift, and prima facie is a good gift, and, as no question
of perpetuity can be involved in such a case, it becomes unnecessary to consider whether the gift is
charitable or not. The validity of the gift does not depend upon its being charitable, but upon its being
an absolute gift.

Here, if there be a trust, it must be found in the language of the will. I am unable in the express
language which the testator has employed to find any trust, and there is nothing to justify the
implication of one.
Consequently I hold that, when the bodies have been selected from the prescribed field, the gift to
each body will be an absolute gift for the purposes of such body, and accordingly valid .

Note that any discerned intention that the gift should be enjoyed by present and
future members and must be held so that the property is there in the future when
those future members emerge, there would have to be a trust. However, older cases
took the generous view that because the gift was for present members, that avoided
any perpetuity problem of gifts to future members (i.e. endowments) that would be
void at common law. The only issue was one of control of the fund created.
See comments of Lord Hanworth MR in re Macaulays Estate (reported as a note to
Re Price [1943] Ch 422 at 435:
The problem may be stated in this way. If the gift is in truth to the present members of the society
described by their society name so that they have beneficial use of the property and can, if they
please, alienate and put the proceeds in their own pocket, then there is a gift to present individuals
which is good: but if the gift is intended for the good not only of the present but of future members so
that the present members are in the position of trustees and have not right to appropriate the property
or its proceeds for their personal benefit then the gift is invalid .

In Leahy v Attorney-General of New South Wales [1959] AC 457, at p.477,

Viscount Simonds said that in law a gift to an unincorporated association where
neither the circumstances of the gift nor the directions given nor the object
expressed impose on the donee the character of a trustee, is nothing else than a gift
to its members at the date of the gift as joint tenants or tenants in common.
However, this presumption can be displaced on the basis that the subject-matter of
the gift is to be dealt with in accordance with the rules of the association.

Construing gifts as falling within this first method of construction may still be possible
even if the gift is to the association with the motive that of being used for its general
purposes (see Re Lipinskis WT [1976] Ch 235). However, it is more likely to be
construed as being a gift to the members subject to the contract between them on
the basis that it is unlikely that a testator would intend individuals immediately to be
able to divide up the gift amongst themselves (see Re Rechers WT [1972] Ch 526).
A trust for present members at the date of the gift jointly or equally.
A straightforward trust for present members with Saunders v Vautier rights is
equivalent to an absolute out-and-out gift. This construction is likely only if present
members are intended to be benefited rather than future members as well (see
above)
See:
Re Drummond [1914] 2 Ch 90 (doubted in Leahy as an intention to benefit future
members seemed present)
Likely today to be construed as falling within contract holding construction (see
below).
A trust for present and future members of the association, including where the trust
is for purposes primarily for the personal benefit of present and future members
(meeting the requirements of the beneficiary principle).
The gift is in the nature of an endowment, requiring the capital to be segregated from
the ordinary funds of the UA so that the income may be used for the benefit of the
members from time to time. In principle, such a gift will be subject to the rules
against remoteness of future vesting but it is unlikely to affect the validity of the gift
since under the 1964 and 2009 Perpetuities and Accumulations Acts, trustees will be
allowed to wait and see if the trust is fulfilled within the perpetuity period. The class
of beneficiaries will close at end of period so as to allow division between the then
existing members.
In the light of Re Denley, it should not matter whether members have joined together
for a social or recreational purpose or to secure a personal advantage. In either
event, the beneficiary principle would be satisfied. If they have combined for some
altruistic (outward looking) non-charitable purpose, then beneficiary principle can
nevertheless be satisfied if the members can wind up the association and divide the
property between themselves and the actual terms of the gift do not overriding the
members rights under the constitution, so creating an enduring non-charitable
purpose trust (see below).
There is no endowment as the gift is an out-and-out gift to the present members of
the association beneficially as an accretion to the UAs property to be dealt with
according to the rules by which the members are contractually bound.

Members have come together as an association or society and have validly devoted
their funds to the pursuit of a lawful non-charitable purpose. Assets are held by the
treasurer/committee/officers/ trustees on the terms of the club constitution or rules,
which are a contract between the members. The mechanism of trust is interposed
because assets could not practically be vested in all the members indeed that
might be legally impossible in the case of land of there are more than four members
of the association. The assets are held on a bare trust that does not detract from the
contractual analysis.
Members rights are based on contract. They will not normally be able to claim their
proportionate share of the associations assets at any time (for example if they leave
the association). Their rights are as members to control the activities of the
committee/officers in accordance with the rules. In particular they can ensure that the
assets of the association are used in accordance with those rules and can if
necessary if the constitution so provides take the decision to wind up the
association and divided the proceeds. Other than that, their rights terminate on
resignation or death; new members (i.e. members for the time being) will obtain
rights in relation to the assets of the association during their membership.
The conclusion must be that the members are joint tenants of some kind, with the
result the last surviving member of the association will in principle be entitled to
whatever association assets are left at that time (see Hanchett- Stamford v A-G
[2008] EWHC 330; [2009] Ch 173). Indeed, it is likely that questions as to the
members contractual rights will occur when the association is wound up.
When it comes to gifts from third parties to the association, courts will tend towards
finding the gifts valid by concluding that they are no more than additions to the funds
that are subject to the rules of the association. This means that money will be paid
over to a UAs treasurer to go into its account or other property will be vested in
trustees or the club committee or officers under a straightforward trust for members
in accordance with the societys rules. Hence, a legacy intended to swell the general
coffers of the body that are available for discharging any of its liabilities should be
valid as directly or indirectly benefitting the members who have standing to ensure
that the funds are property spent.
Gifts construed in this way avoid invalidity as purpose trusts but still do not take
effect as immediate distributions of shares in the property in favour of the members.
On this basis, it does not matter whether the purposes of the association are
inward or outward looking (i.e. in the interests of the members or promoting some
outside purpose).
However, if the members are unable to divide the subject-matter of the gift between
themselves because they are prevented from doing so by the clear terms of the gift
or because on dissolution the assets must pass to another body to carry on the
purposes of the dissolved body (see e.g. Re Grant), then the trust cannot be a bare
trust for members. It would likely be a purpose trust with the gifted assets being
regarded as an endowment.

See: Re Rechers WT [1972] Ch 526

FACTS: a share of Rs residuary estate for (what Brightman J construed as) The
London and Provincial Anti-Vivisection Society, 76 Victoria Street, London S.W.1.
Until the end of 1956 a non-charitable unincorporated society, known as the London
and Provincial Anti-Vivisection Society had carried on its activities at 76 Victoria
Street, but in 1957 it was amalgamated with a larger non-charitable unincorporated
society, known as The National Anti-Vivisection Society and the Victoria Street
premises were closed down. It changed its name to The National Anti-Vivisection
Society (incorporating the London and Provincial Antivivisection Society). In 1963
the National Anti-Vivisection Society Ltd was incorporated and the assets were
vested in it. It was not a charity. The question arose as to whether it would have been
a valid gift if the association had still existed at her death.
HELD: (Brightman J) the gift had to be construed as a gift to the London and
Provincial Anti-Vivisection Society, 76 Victoria Street, and not to the larger combined
society. It was not to be construed as a gift in trust for the purposes of the Society. It
could have taken effect as a legacy to the members of the society beneficially, as an
accretion to the funds which constituted the subject matter of the contract by which
the members had bound themselves. But since the Society had been dissolved, the
gift could not be construed as a gift to the members of a different association and
they therefore failed.
The testatrixs knowledge or lack of knowledge of the true legal analysis of the gift
was irrelevant.
It was not a gift to the members of the association at the time of Rs death as Joint
Tenants or Tenants in Common so as to entitle them to a distributive share. Nor was
it a gift to present and future members beneficially and not a gift in trust for the
purposes of the society.
The rules of the society did not purport to create any trusts other than the honorary
trustees were not beneficial owners of the assets of the society, but trustees upon
trust to deal with the assets according to the directions of the committee.
A trust for non-charitable purposes, as distinct from a trust for individuals, is clearly
void because there is no beneficiary. It does not, however, follow that persons cannot
band themselves together as an association or society, pay subscriptions and validly
devote their funds in pursuit of some lawful non-charitable purpose. An obvious
example is a members social club. But it is not essential that the members should
only intend to secure direct personal advantages to themselves. The association
may be one in which personal advantages to the members are combined with the
pursuit of some outside purpose. Or the association may be one which offers no
personal benefit to all the members, the funds of the association being applied
exclusively to the pursuit of some outside purpose.
Such an association of persons [will] have some sort of constitution; that is to say,
the rights and liabilities of the members of the association will depend on some form
of contract inter se, usually evidenced by some set of rules. If the committee [in
this case were to act] contrary to the rules, an individual member would be entitled to
take proceedings in the courts to compel observance of the rules or to recover
damages for any loss he has suffered as a result of the breach of contract.


The funds of an association may ... be derived from non-contracting parties and
legacies from persons who have died. In the case of a donation that is not
accompanied by words which purport to impose a trust, it seems to me that the gift
takes effect in favour of the existing members of the association as an accretion to
the funds which are the subject-matter of the contract which such members have
made inter se, and fall to be dealt with in exactly the same way as the funds which
the members themselves have subscribed. So, in the case of a legacy. In the
absence of words which purport to impose a trust, the legacy is a gift to the members
beneficially, not as joint tenants or as tenants in common so as to entitle each
member to a distributive share, but as an accretion to the funds which are the
subject-matter of the contract which the members have made inter se.
See also: Re Bucks Constabulary Widows and Orphans Fund Friendly Society (No
2) [1979] 1 All ER 623
Conclusions: does this all mean that there is a form of joint tenancy amongst all of
the members for the time being, which determines on death, but under which each
member has contracted not to sever their joint interest and not to exercise their right
to claim an aliquot share on resignation or even whilst a member. They may only be
able to do so if under the appropriate rules they decide between themselves to divide
up the assets. It seems that as a matter of contract when a member resigns they
cannot claim their proportionate share or claim that their equitable interest could not
have passed on their resignation to the other members without signed writing as
required s.53(1)(c) LPA 1925 (see e.g. Hanchett-Stamford v A-G at [36]-[37] and
[47]-[49]).
Graham Moffat (Trusts Law): can the associations rules based as they are on
contract bind the property being given? Law seems to be compelled to adopt notions
of contract as a means of enforcing a form of communitarian property ownership. A
system of rules governing use and control which removes any transmissible
property right or power in an individual member of the group or association
(see Harris, What is non-private property? (Harris (ed) Property problems: from
Genes to Pension Funds (1997), 175 at 178-180).
The contract holding theory does not resolve questions about beneficial ownership of
UAs assets. on dissolution of an association, there can still be issues over the scope
and interpretation of the mutual contract.

An endowment trust for abstract or impersonal non-charitable trusts.

Such gifts will be void for infringing the beneficiary principle unless comes within one
of the anomalous exceptions, is not uncertain and complies with rule against
inalienability.

See
Leahy (supra): endowment for contemplative order of nuns
Bacon v Pianta: Communist Party
Grant: political party
Trust exists for charitable purposes
The funds of the association are held on trust for charitable purposes. The members
may subscribe, but their subscriptions or gifts will be used for the charitable
purposes of the association. There are no problems associated with trusts: no
application of the beneficiary principle and no issue of perpetuity.
The issues most likely to arise relate to gifts to named charitable associations that
have ceased to exist at the time of the gift (or perhaps never existed at all) or where
charitable associations have become moribund, can no longer fulfil their charitable
function (perhaps for lack of funds) or the charitable purpose has been overtaken by
events.
See e.g. Re Fingers WT [1972] Ch 286
Academic comment:
Hackney Understanding Trusts (1987) at p.81: we are not looking at what the
donor intends, but trying to fit his intentions into a legal framework that works,
whether or not it approximates to the category he has in mind. [C]ourts are
allowing purposes to be effectuated under the cloak of contractual apparatus, which
they would strike down if they came honestly out into the open as purpose trusts.
Graham Moffat (Trusts Law): the combination of the beneficiary principle and the
refusal to give effect to trust purposes as mere powers has forced the courts to
search for contrived explanations of property holding in non-charitable associations.
5. Case studies
Re Lipinskis WT: Court of First instance case used to consider the interpretation
of the words
FACTS: a residuary bequest upon trust as to one half thereof for the Hull Judeans
(Maccabi) Association in memory of my late wife to be used solely in the work of
constructing the new buildings for the Association and/or improvements to the said
buildings.
HELD: (1) The reference to the wifes memory was a motive throwing no light on the
question whether a permanent endowment was intended.
(2) Used solely was a superadded direction of no legal force, rather, it was a strong
moral intimation of which of the Associations purposes the testator would most like
to see carried out.

(3) The money could be spent on capital or income expenses or could even be
divided between the members if they took the necessary measures under the UAs
constitution. There was nothing in the rules of the association that prevented them
from changing the rules to allow the members to divided the property amongst
themselves.
(4) The money accrued to the general funds of the association to be held for the
benefit of the members.
So: construed as an absolute gift to current members as an accretion to the funds
which were the subject-matter of the contract between the members.
Per Oliver J:
I do not really see why such a gift, which specifies a purpose which is within the powers of the
association and of which the members of the association are the beneficiaries, should fail. Why are
not the beneficiaries able to enforce the trust, or, indeed, in the exercise of their contractual rights, to
terminate the trust for their own benefit? Where the donee association is itself the beneficiary of the
prescribed purpose, there seems to me to be the strongest argument in common sense for saying
that the gift should be construed as an absolute one [i.e. accretion to the funds that are the subjectmatter of the contract between the members] the more so where, if the purpose is carried out, the
members can by appropriate action vest the resulting property in themselves, for here the trustees
and the beneficiaries are the same persons.

The gift could be upheld by applying Denley: i.e. the gift could be interpreted as
specifying a particular purpose for the benefit of ascertained beneficiaries (the
members for the time being (so avoiding any perpetuity problem). Even under such a
trust, the members of the association would be able to terminate the trust.
Whether one treats the gift as a purpose trust or as an absolute gift with a
superadded direction all roads lead to the same conclusion.
CONTRAST RE LIPINSKIS WITH RE GRANTS
Re Grants WT
FACTS: Gift of estate to the Labour Party Property Committee for the benefit of the
Chersey HQ of the Chertsey and Walton Constituency Labour Party providing that if
the HQ should cease to be in the Chertsey UDC area (1972), the estate should pass
to the national party.
Counsel submitted that there was no endowment trust, the property being held
without distinction between capital and income, so apparently conceding that
otherwise the gift would be void (following Neville Estates v Madden [1962] Ch 832).
HELD: (1) For the benefit of construed as in trust for.
(2) The gift was intended to be kept intact to provide a permanent endowment to
pass to the NLP if the prescribed event occurred. The gift was therefore void for
infringing the beneficiary principle because it was an abstract purpose trust and so
also void for breaching inalienability rule.
(3) The bequest could not be construed as an outright gift to the members
individually or as a gift to augment the trust property held by the property committee
on non-endowment trusts or as a gift to CLP members at testators death with a

superadded direction of no legal force that would use if for HQ purposes, though
accruing to the general funds of the CLP.
Vinelott LJ; The fact that it is a gift to trustees and not in terms to an unincorporated
association militates against construing it as a gift to members at the date the gift
takes effect and against construing the words indicating the purposes for which the
property is to be used as expressing the testators motive and not as imposing any
trust.
The CLP members were not entitled under CLP rules to divide CLP funds amongst
themselves. They could not alter the rules so as to make the property bequeathed
applicable for some other purposes outside those provided by the rules. They were
subordinated to the NLP which could demand the funds be transferred to them for
the purposes of the NLP. The CLP rules were unalterable without NLP consent.
The reason for the judge emphasising that the CLP members could not divide the
trust fund between themselves could well be that if an outward looking purpose of a
non-charitable character could be made effective for a perpetuity period by such a
gift for such purpose being made to an UA, this would undermine the orthodox
principle that a trust must be for persons of a charitable purpose to be valid.
Moffat: Does Vinelotts comment re the terms of the gift being to trustees militating
against construing it as a gift to members suggest that a non-charitable association
that designates trustees to hold its property heightens the risk that a bequest will be
construed as a purpose trust and be void?
Note: if Denley does circumvent the beneficiary principle (despite the narrow view
taken of it by Vinelott J), it may not have helped here since the purposes of the CLP
were too intangible or indirect to benefit the members as ascertained individuals.
(Vinelott construed the case as a discretionary trust only, so that would exclude
validating a legacy to a UA as a trust for purposes directly or indirectly benefiting
members. This would place the decision at odds with Lipinski.)
This raises the question whether Denley can help with gifts to outward-looking
associations.
Re Horley Town Football Club [2006] EWHC 2386
FACTS: Horley Town FC was an unincorporated association. When its president
settled land on trust to secure a permanent ground for the club, the trust deed
defined a perpetuity period. It was supplemental to a conveyance of land to the
original trustees. The membership of the club was a clearly defined and narrow class
under the club rules but was later expanded to include temporary and associate
members. The land was sold and the proceeds used by the trustees to acquire
another site and construct a club house and ancillary facilities. The validity of the
underlying trust was questioned as were the club rules. Was this gift a non-charitable
purpose trust or valid as a gift to the members of the club for the time being subject
to the rules of the club?
HELD: the deed should be construed as a gift to the club as a contract-holding gift
to the club members for the time being. This would mean that there was no

perpetuity problem because the gift to the members was not contingent. Their
interests vested immediately and devolved with the other club property under the
club rules. Also the gift could not be characterised as uncertain.
6. Other forms of Association and inter vivos donations
Inter vivos gifts to an association of people that does not match Burrell definition of
UA can be construed as being subject to a mandate to use the property in
accordance with the associations constitution/rules (using the property/money as an
agent of the donor/member).
Donor regarded as giving treasurer a mandate to deal with gifted property of which
treasurer becomes full beneficial owner. Treasurer is permitted to add the
contribution to the general funds; once that happens, the mandate become
irrevocable. Latter liable to be sued to apply property for designated purpose and
can be restrained from misapplying, at least until the contribution has been spent.
No such agency can be set up on death between testator and chosen agent .
Legacy to e.g. campaign group could be regarded as conditional gift, with property
falling back into testators estate for residuary legatee to the extent that not applied in
the manner required by the condition.
7. Disposal of funds on dissolution of an unincorporated association
What happens to the funds and assets of an unincorporated association on its
dissolution? Who owns them?
The members of the association if so, on what basis?
Third party contributors to the association?
The Crown as bona vacantia?
(1) Explanation of current understanding: assets held subject to the
contract between the members
Hanchett-Stamford v Attorney General [2009] Ch. 173 per Lewison J:
47 The thread that runs through all these cases is that the property of an unincorporated association
is the property of its members, but that they are contractually precluded from severing their share
except in accordance with the rules of the association; and that, on its dissolution, those who are
members at the time are entitled to the assets free from any such contractual restrictions. It is true
that this is not a joint tenancy according to the classical model; but since any collective ownership of
property must be a species of joint tenancy or tenancy in common, this kind of collective ownership
must, in my judgment, be a subspecies of joint tenancy, albeit taking effect subject to any contractual
restrictions applicable as between members. In some cases (such as Cunnack v Edwards [1895] 1
Ch 489; [1896] 2 Ch 679) those contractual restrictions may be such as to exclude any possibility of a
future claim. In others they may not. The cases are united in saying that on a dissolution the
members of a dissolved association have a beneficial interest in its assets...I cannot see why
the legal principle should be any different if the reason for the dissolution is the permanent
cessation of the association's activities or the fall in its membership to below two. The same

principle ought also to hold if the contractual restrictions are abrogated or varied by
agreement of the members.

(2) Assets subject to express trust declared by third party donor

Traditional analysis that where there is a surplus of funds after a trust has been
performed or is no longer capable of performance, there is a resulting trust in favour
of the donor or donors estate.
For example,
Re Trusts of the Abbott Fund [1900] 2 Ch 326 (resulting trust of the surplus of a
trust fund to be applied for the benefit of two sisters that was provided by
subscribers) Two old ladies were defrauded and local friends and neighbours come
together and put together a fund to help the sisters. Following the death of the
sisters there was money left over. There was nothing in the terms of the trust which
suggested that they were entitled to a share in the money. Thus, as the purpose was
complete, it must be a resulting trust to the donors.
Re Gillingham Bus Disaster Fund [1959] Ch 62 (resulting trust of the surplus of a
trust fund to pay for funeral expenses of victims of a bus crash and to provide
support to injured victims of the crash. Money donated by general public in response
to an appeal) Involved a tragic accident where a group of marine cadets were
marching on the road and were hit by a large vehicle. Several of them died and other
were injured. The mayors of the town put together a fund to cover funeral expenses
for those that were killed and to offer support to survivors. However it turned out that
the money was not needed because the members of the families had an action to
claim for damages. Therefore, there was a surplus. The money was either held on
resulting trust for donors or it goes to the crown. The difficulty was that it was a
mass appeal and there were anonymous donors. Despite this the court found that it
was a resulting trust. The court said that the law will presume a resulting trust with
the advantage of hindsight. The money was paid into court and held for the purpose
of repaying the donors. Love suggests that this is a totally impractical solution.
In the context of unincorporated associations, the resulting trust may still arise in the
case of e.g. a donation of funds to be held on express trust for the benefit of present
and future members of a society for so long as the law allows.
(3) Contributions to the associations assets from third parties
Can the same be said for general third party donations to an association that on the
basis of the Re Recher [1972] Ch 526 analysis (contract holding theory) are
construed as belonging to the members on the terms of the contract between them?
Per Brightman J in Re Recher: A gift to an unincorporated association will be an
accretion to the funds which are the subject matter of the contract which [the]
members have made inter se, and falls to be dealt with in precisely the same way as
the funds which the members themselves have subscribed.

(4) Contributions to the associations assets from the members of the

association from time to time
The position of assets of the society at the time of its dissolution that had been
contributed by members (such as subscriptions).
Earlier case law was based on a resulting trust analysis:

resulting trust in favour of subscribers to a society to be divided among those

who were members at the time of dissolution in proportion to their
contributions but irrespective of the benefits received (e.g. Re Printers and
Transferrers Amalgamated Trades Protection Society [1899] 2 Ch 184)
(society existed for protection of members to protect their earnings or provide
income in case of lock out. Members would subscribe to the association.
Payments out to members would vary, depending on how long they were
members. What happens when the association dissolves and there is no set
rules. The Court held that the money is in favour of the members based on
resulting trust. They are entitled to a proportionate share based on their
contributions.)
resulting trust in favour of subscribers (members) past and present in
proportion to their contributions but adjusted for any benefits received (Re
Hobourn Aero Components Ltds Air Raid Distress Fund [1946] Ch 194)
(This was a mutual society set up during WW2. Society was set up to help
victims of air raids. There was a surplus of funds after dissolution. The
surplus was held on resulting trust to be distributed to members based on
contribution, subject to deductions for benefits they have already received.
The judge was not happen with earlier cases such as Printers and
Transferrers Amalgamated Trades Protection Society. Thus anybody who has
contributed is entitled to a share based on what they have contributed subject
to deduction for payments they have received. This includes previous
members who have already died, their estates would be entitled to receive
some of the surplus.)

(Compare Air Jamaica Ltd v Charlton [1999] 1 WLR 1399 (PC) (surplus funds on the
dissolution of a pension scheme))
Other authority took the view that the relationship between the members and the
association was based on contract rather than property; the members made an outand-out payment to the association in return for benefits. If they obtained what they
had paid for, they had no interest in any surplus assets.
See Cunnack v Edwards [1896] 2 Ch 679 (Typical Victorian society. Men would
contribute to society which in case of their death would provide benefits to their
widows. Following death of all contributors and all widows there was a surplus in the
fund. The personal representatives of contributors claimed that the money should go
to them based on resulting trust. Court rejected this argument because the whole
setup was based on contract. Money was put into fund for distinct purpose and once
you have gotten what you paid for that is it. You cannot claim back money.
Therefore any surplus will go to the crown.): contributions by members to pay for

annuities for their widows; all contributors and all annuitants died leaving a surplus in
the fund. Court held that contributors were not entitled to surplus; surplus passed to
the Crown as bona vacantia.
Similar approach to members contributions taken in Re West Sussex
Constabularys Widows, Children and Benevolent (1930) Fund Trusts [1971] Ch
1 (Goff J). Was taken to fund which was supposed to support police officers who
died in course of duty.
See now, however, Buckinghamshire Constabulary Widows and Orphans Fund
Friendly Society (No 2) [1979] 1 WLR 936 (Walton J): rules governing members
clubs should govern the distribution of assets. The members control the assets
which belong to them as such, in which case the members at the time of dissolution
would be those entitled to participate. Claims would not be based on a resulting trust
and property passing to the Crown as bona vacantia was not an appropriate solution
where there were such members.
See also: Hanchett-Stamford v Attorney General (supra)
(5) Two case studies
Re West Sussex Constabularys Widows, Children and Benevolent (1930) Fund
Trusts [1971] Ch 1
FACTS: an unincorporated association (?) (the Fund) created to benefit the widows
and dependents of members of the police force who died. The fund was based on:
(a) members subscriptions
(b) the proceeds of entertainments, raffles etc (fund raisers)
(c) collecting boxes for anonymous public donations
(d) individual donations and legacies
On the merger of the police force with other forces, the fund was to be dissolved, but
the rules of the association failed to indicate how the funds were to be distributed.
HELD: (a) the surviving members had no claim to the part of the fund reflecting
members contributions. Members who left prematurely and the surviving members
were unable to claim under a resulting trust because they had put up their money on
a contractual basis and not one of trust. They had received all they had contracted
for either because their widows and dependants had received or are in receipt of the
prescribed benefits, or because they did not have a widow or dependants. The funds
were therefore not owned and passed to the Crown as bona vacantia.
(b) the proceeds of entertainments etc: these were based on contract with third
parties and were out-and-out payments to the fund. In any event what went to the
fund were the profits from these events rather than straight donations from the
public. There could be no resulting trust for members of the public so property
passed to the Crown.
(c) collecting boxes: out and out payments so no resulting trusts for the members of
the public who contributed (Gillingham case doubted in part). Property passed to the
Crown.
(d) individual donations and legacies: as the object of the trust had failed, this part of
the fund would be held on resulting trust for the donors.

In principle, how can category (c) be distinguished from category (d)? Should not all
contributions be treated in the same way?
Goff J refused to accept that the principles relating to members clubs were
applicable:
this was a pensions or dependent relatives' fund not at all akin to a club;
in the cases where the surviving members have taken, the club society or
organisation existed for the benefit of the members for the time being
exclusively, whereas in the present case (as per Cunnack v. Edwards) , only
third parties could benefit;
as regards the further argument that the surviving members of the fund had
power to amend the rules and could therefore have reduced the fund into
possession, and so ought to be treated as the owners of it or the persons for
whose benefit it existed at the crucial moment they had the power but they
did not exercise it, and it was now too late.
Buckinghamshire Constabulary Widows and Orphans Fund Friendly Society
(No 2) [1979] 1 WLR 936
Distribution of assets of an unincorporated association should be among the
members on dissolution based on the contract between them. The resulting trust has
no relevance to this analysis.
FACTS: unincorporated association registered as a Friendly Society established (no
different in principle in this regard than any unincorporated association) to benefit
widows and orphans of police officers by paying them sums on the latters death or
during illness. Police officers paid contributions. Fund wound up on merger of police
authorities. In the absence of rules of the association indicating how the funds were
to be distributed, the issue was whether they belonged to the members of passed to
the Crown as bona vacantia.
HELD: the assets should be distributed among the members of the society at the
time of its dissolution. Funds that were held under the terms of an express trust
could be distinguished from the funds governed by the contract between the
members. West Sussex case distinguished (as this case was a friendly society
governed by statute) but Walton J declared that he found it difficult to square it with
the relevant principles of law applicable: that case should have been decided on the
basis of the rules applicable to members clubs. The members controlled the assets,
which had been their property.
Per Walton J: Why are the members not in control, complete control, save as to any existing
contractual rights, of the assets belonging to their organisation? ... Goff J. recognised that the
members could have altered the rules prior to dissolution and put the assets into their own pockets. If
there was no obstacle to their doing this, it shows in my judgment quite clearly that the money was
theirs all the time.

It would make no difference if the association was for the benefit of the members
themselves the issue was that of control.

In principle therefore, the assets of an unincorporated association are to be divided

amongst those who are members at the time of dissolution. If a member ceases to
be a member for example, through death, resignation or expulsion, they lose their
right to participate in any of the assets upon dissolution (see Hanchett-Stamford v
Attorney General). In the case of a corporate member, membership would in addition
be lost if the company was dissolved before the association was wound up.
This begs two questions:
(1) if assets are to be distributed amongst members at the time of dissolution, when
and how does that occur?
(2) how are the assets to be distributed?
(6) Dissolution and moribund societies
Unincorporated associations may be formally wound up in accordance with their
constitutions (e.g. through a resolution of a members meeting), taking effect from the
agreed date.
An unincorporated association may still exist even if ceases to be active (i.e. is
moribund). It will not be regarded as dissolved unless perhaps the inactivity is so
prolonged or the circumstances are such that that the only reasonable inference is
that it was spontaneously dissolved and has ceased to exist as a body. In such a
case, it would be for the court to select a date.
See, for example:
Re GKN Bolts and Nuts Ltd (Automotive Division) Birmingham Works Sports and
Social Club [1982] 1 WLR 774
1946: trustees of a social club purchase a sports ground
1975: membership cards no longer issued and the final AGM takes place; no further
accounts taken; bar stocks sold; steward dismissed
18 December 1975: special meeting to consider offer to buy the land. Resolution
passed that the land be sold (although that was invalid as the clubs activities had
ceased and it had become incapable of carrying out its objects)
1978: the trustees sold the land for 253,000
In this case, the club was taken to have ceased to exist on 18 December 1975 as a
result of inactivity combined with the positive acts taken to wind it up.
Contrast: Keene v Wellcom London Ltd [2014] EWHC 134 (Ch);
It was held that an unincorporated association that had been inactive for 27 years
had not been spontaneously dissolved, as inactivity in itself was not enough to bring
about dissolution. (In fact, on application, the court dissolved the association as at
the date of the judgment and directed that its assets be distributed to the members in

existence at that time pro rata according to their contributions as if the relevant
clause in the constitution applied.)
An association will cease to exist if its membership is reduced to one. Hence, while a
society has two or more members, the members could agree to divide the societys
assets between them, could the sole remaining member claim all of the societys
assets?
In Re Bucks Constabulary Widows' and Orphans' Fund Friendly Society (No 2),
Walton J noted in all unincorporated societies, in default of any rule to the contrary,
when a member ceases to be a member of the association he thereupon ceases to
have any interest in its funds. Membership always ceases on death so that past
members or the estates of deceased members have no interest in the assets. He
concluded that given that (unless expressly so provided by the rules) unincorporated
societies are not tontine societies intended to provide benefits for the longest liver of
the members, although it is difficult to say in any given case precisely when a
society becomes moribund, it is quite clear that if a society is reduced to a single
member neither he, nor still less his personal representatives on his behalf, can say
he is or was the society and therefore entitled solely to its fund. It may be that it will
be sufficient for the society's continued existence if there are two members, but if
there is only one the society as such must cease to exist. There is no association,
since one can hardly associate with oneself or enjoy one's own society. And so
indeed the assets have become ownerless.
In Hanchett-Stamford v Attorney General [2009] Ch. 173, Lewison J accepted that
that if there is only one member of an unincorporated association, it must cease to
exist disagreed. However, he took the view that a sole surviving member would be
entitled to the assets of the association on the basis that the members were joint
tenants in equity, subject to any contrary provisions in the rules of the association. In
Cunnack v Edwards, all the members were long dead and their claims had been
satisfied there was nothing in that case that was inconsistent with the proposition
that if there had been a surviving member that surviving member could have claimed
the assets.
[44] ... If the property of the association is the property of its individual members,
there does not appear to be any explanation of why that should cease to be the case
if the membership falls below two.
Lewison Js justifications for this view:

Walton Js comments were obiter;

Cunnack v Edwards did not exclude the possibility that if there had been a
surviving member that surviving member could have claimed the assets;
while a society is not a tontine society in so far as it is not intended to provide
benefits for the ultimate survivor, any case in which property is held on a joint
tenancy in equity produces a tontine effect , even if that is not its purpose,
on a dissolution the members of a dissolved association have a beneficial
interest in its assets and there is no reason why the legal principle should be

any different if the reason for the dissolution is the permanent cessation of the
association's activities or the fall in its membership to below two;
Article 1 of the First Protocol of the European Convention for the Protection of
Human Rights and Fundamental Freedoms guarantees the peaceful
enjoyment of possessions, stating that No one shall be deprived of his
possessions except in the public interest and subject to the conditions
provided for by law For one of two members of an unincorporated
association to be deprived of his share in the assets of the association by
reason of the death of the other of them, and without any compensation,
appears to be a breach of this article;
what public interest is served by the appropriation by the state of that
members share in the associations assets?

(7) How are the assets to be distributed?

In the light of such case law as Re Buckinghamshire Constabulary and HanchettStamford v Attorney General,

outside contributors to the funds of an association are highly unlikely to have

any claims on the funds in the absence of an express trust declared by them
in respect of their contributions;
the Crown is less likely to be able to establish a claim of bona vacantia; and
if the contract holding analysis applies, only those members at the time of
dissolution will be entitled to share the (former) associations funds.

In the first place, the rules of the association will decide how the assets are to be
distributed (Re Buckinghamshire Constabulary).
In the absence of any specific provision, division will be on the basis of equal per
capita distribution, irrespective of length of membership of the association or actual
contributions of the members to those funds (Re Buckinghamshire Constabulary).
Circumstances may point to a different basis of distribution based on the level of
contributions and/or category of membership.
Re Sick and Funeral Society of St Johns Sunday School, Golcar [1973] Ch 51:
surplus finds were distributable among existing members on a per capita basis but
with full shares for adults and half shares for children.
Re GKN Bolts and Nuts Ltd (Automotive Division) Birmingham Works Sports
and Social Club [1982] 1 WLR 774 (those entitled to share the assets of the club
were the full members and ordinary members. Honorary, temporary and associate
members who had paid no subs and had no voting rights were excluded. Megarry VC based this form of distribution on applying common sense!)
Re Horley Town Football Club [2006] EWHC 2386 (Ch): the club had temporary
members (for one-off events) with no voting rights, associate members (paying an
annual subscription allowing them to use the club facilities) with limited rights to vote
at association meetings during their membership, and full members with full voting

rights. Lawrence Collins J concluded that in the event of winding up, temporary
members would receive no property as they were not entitled to vote for the winding
up of the association, neither would the associate members as they had no effective
rights. Only the full members were the appropriate recipients of club property on
winding up. In the absence of specific club rules on the distribution of its assets on
winding up, a term should be implied into those rules that the surplus on winding up
should be divided equally amongst members per capita but possibly reflecting the
different classes of membership. (Not finally decided in the case.)
The category of membership will not necessarily affect the extent of the share of a
member to the associations assets on winding up in relation to other categories of
membership but such circumstances as being entitled to vote in association
meetings, including voting on the winding up of the association and distribution of
assets, may lead to the conclusion that there should be differential distribution
among existing members.