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#3559 - Unincorporated Associations Framework - Trusts and Equity

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  1. Is it UA?

  1. Stipulated expressly in the problem conclusive

  2. Not stipulated ask

  1. Owned by individual/company = legal personality (company law)

  2. 2 or more persons bound together for one or more common purposes w/mutual rights & obligations in an organisation which has rules governing the use of property, and which can be joined/left at will (Lawton LJ in Burrell) = UA

  1. Has it dissolved + when?

  • Assets can only be distributed if dissolved!

  • Do facts put together carry sufficient conviction that association is at an end & not merely dormant?

  1. not dissolved just b/c impractical to operate (ReWilliams Delby Sick Fund)

  2. need positive acts + inactivity (mere inactivity will suffice where it’s prolonged) (ReGNKSportsClub)

  • 4 ways in which can dissolve (Brightman J)

  1. In acc. w/rules

  2. By agreement of all interested persons

  3. Court order

  4. Substratum upon which it was founded has gone (i.e. purpose no longer effective)

  • watch out for ambiguity in purpose – e.g. to reduce noise in the airport: depends on whether a particular airport (which has closed, hence purpose no longer effective) or any airport

  • Only one person left = dissolved b/c can’t associate w/himself assets are divided as follows:

  1. Originally, bona vacantia (ReBucks)

  2. Currently – to remaining members b/c contract governing the use of property no longer operative, hence can severe their share (Hanchett Stamford v AG)

  • Date of dissolution – if unclear, court must pick a reasonable date

  • If result in the end is unfair, try tweaking it

  • If few possibilities, analyse all

  1. Has each donation been made validly?

  • Important b/c determines whether goes back on RT or can be divided amongst members in acc. w/rules

  • UA can’t own payments made b/c not a legal person must construe as one of the following (Leahy v AG of New South Wales)

  1. A gift to existing members beneficially

  • Problematic b/c each can severe their share immediately, contravening donor’s intent

  1. A gift to existing & future members beneficially

  • Likely to fail b/c of perpetuity

  1. Absolute gift to members (usually, for one (Treasurer) to hold on trust for others b/c easier + rules limiting no of people who can hold certain types of interests; e.g. s? LPA 1925) which takes effect as accretion to existing funds under contract

  • Requirements

  1. Beneficial transfer

  2. Existence of contract governing the holding/use of property

  • If transfer is made w/some qualification as to use (e.g. to LawSoc for purposes of mooting ReLipinski

  • Theoretical problems

  1. ensuring Treasurer holds on self-imposed trust depends on contract governing the use & holding of property

  • Downside – donor doesn’t have much impact

  1. formalities – disposition of equitable interest when old members leave & new join

  • Penner – implied contractual right for Treasurer to vary membership – add & take away

  1. shifting membership

  2. contract “binds” property – not theoretically possible

  • argue members are bound by contract in their use of property instead?

  1. members can waive/vary the contract by agreement

  1. Purpose trust w/ascertainable beneficiaries (ReBowes type trust as used in ReLipinski)

  • Oliver J (ReLipinski)

  1. Donor’s intent in identifying the purpose was to benefit members (e.g. for Maccabi association for construction/maintenance of new buildings) = valid

  2. Donor’s intent was clearly not to confer any particular benefit on anyone/to benefit ascertainable group of people (e.g. general purposes of association) = fails (can’t make a gift to object or purpose – Neville Estates v Madden)

  • Key question: end enforcement/interest in enforcement

  • How to determine?

  1. Default position – contract holding theory (ReBucks)

  2. Donor can choose

  • usually, won’t say so explicitly

  1. Donation is genuinely intended for benefit of the members – apply contract holding theory

  2. Purpose trust may not be allowed - apply alternative

  3. Contractual analysis doesn’t work

  1. Political parties – mandate/agency theory (ReGrant Will’s Trusts; Conservative Union Office v Burrell – b/c no contract)

  • Webb’s critique: key is a set of rules governing use of property, shouldn’t matter if technically a contract

  1. Gift excludes possibility of members taking beneficially (e.g. solely for purposes of association)

  1. Neither applicable RT to donor

  2. 2 plausible situations exist

  1. Where court is compelled to use particular form of analysis for one (e.g. subscription money) may choose to use it for the others

  • Rationale: simplicity for courts/accountants

  • Lazy law?!

  1. Pragmatic advantages/lure of possible results might sway the court

  • E.g. donation of 3 mln., 2 remaining members – ridiculous for them to take beneficially b/c will acquire windfall

  1. Practical examples

  1. Subscription money

  • Logically, payment for subscription = contract (ReRecher)

  • If members received all they had bargained for = bona vacantia to the Crown (ReSussex)

  • Problematic b/c

  1. Conceptually suspect – previously not ownerless, why ownerless now?

  2. The only trust which would be affected by dissolution is purpose trust which isn’t normally valid

  1. Raffle, tickets, competitions, events

  • Logically, a contract = absolute gift (accretion to funds)

  • Analysed as purpose trust going bona vacantia to Crown in ReSussex b/c of absence of intent to receive it back on RT (unlike donors of sums)

  1. Larger donations by will

  • Logically, either way

  • Practically, purpose trust is fairer b/c would go back on RT facilitative principle

  1. Pension funds

  1. Purpose trust (goes back on RT to employers b/c of intent but not to employees - their shares go bona vacantia instead) (Davis Richards Wallington)

  2. Contract holding theory – to existing members (Air Jamaica v Charlton)

  1. How is the surviving money to be...

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