Unincorporated Associations

Question 1

What is an UA?

Answer 1

• UA is a collective body of individuals (e.g. the UCL Law Society) which does NOT have its own legal personality as a company does (i.e. un-incorporated)
• If A wishes to devote his money to the carrying out of a purpose, then he can give money to an UA the purposes of which are those of the settlor

Question 2

DEFINITION

Conservative and Unionist Central Office v Burrell [1982] Lawton J

Answer 2

an UA exists where there are:
o Two or more persons bound together for common purpose(s) other than business purposes;
o By mutual undertakings, each having mutual duties and obligations (usually under a contract inter se);
o In an organisation which has rules which identify in whom control of it and its funds rests on and on what terms; AND
o The organisation can be joined or left at will (i.e. any individuals enters the contract inter se voluntarily)
♣ Key thing is the contract. They must be bound together by identifiable rules.
♣ 2 dubious elements:
• (1) Whether members can join and leave at will is dubious as this should depend on the consent of the other parties to the contract.
• (2) that the organisation should not exist for business purposes: why not? (Arguably to prevent circumventing tax?)

Question 3

DEFINITION

Kibby v Registrar of Titles [1998] Mandie J the ‘essence’ of an UA is:

Answer 3

o ‘some form of combination of persons (with a common interest or purpose) with a degree of organisation and continuity at least sufficient to distinguish the combination from an amorphous or fluctuating group of individuals and with some clear criteria or method for the identification of its members.’
o He does not think that ‘a name or title, or the existence of a written constitution or rules governing the combination, or the existence of some form of contract between the members, is an essential characteristic, but clearly the existence of one or more of these would go a long way towards satisfying the need for some degree of organisation and continuity and for the satisfactory identification of members. Likewise, the existence of office-bearers, a committee and a bank account are relevant to a degree of organisation. The absence of all of these features makes it unlikely, but not impossible, that an association has been formed or is being carried on.’

Question 4

a) HOW DOES UA HOLD PROPERTY?

Leahy v AG for NSW [1959]

Answer 4

The beneficiary principle applies to gifts to UAs as well. UAs were once considered to be an exception to the general principle that non-charitable purpose trusts are void, but this exception was rejected by the PC in Leahy.

ϖ the testamentary gift was an estate called Elmslea: ‘upon trust for such order of nuns of the Catholic Church or the Christian Brothers as my executors and trustees shall select…’. It is accepted that orders of nuns are not exclusively charitable (as they may not have a public benefit - the religion has to interact with the public to have public benefit) since some of them are cloistered and are not interactive with the public.

ϖ PC Held:
o Prima facie, a gift to an UA is an absolute gift to its members at the date (i.e. present and future) of the gifts as JT or TC.
o In the present case, however, he intended to create a trust.
♣ It was described as a trust, and although this was not determinative in itself, it was not in the form of a gift to the members.
♣ Further, Members of the Order were spread out over the world. It would not be easy to see the testator having intended an immediate beneficial gift to each and every one of these.
♣ Nb the subject matter of the gift – a grazing property with a furnished homestead which made it unlikely that the testator intended this as a gift individually to every member of the Order.
♣ Although we don’t know the rules worldwide of the order, there was reason to doubt that the members had the capacity to dissolve the association and distribute the assets.
♣ His stated intention was that ‘the gift is to be an endowment of the society to be held as an endowment’ and that ‘as the society is according to its form perpetual’, it must fail.
o A charitable purpose trust must be EXCLUSIVELY charitable. Hence this is not a trust for charity. Viscount Simonds: in law a gift to such society simpliciter is nothing else than a gift to its members at the date (i.e. present and future) of the gift as JT or TC. It also violated the rule against perpetuities of vesting.

Question 5

HOW DOES UA HOLD PROPERTY?

Neville Estates v Madden [1962]

Answer 5

The claimants sought a declaration that they were entitled to the proceeds of a contract for sale of land owned by the Catford synagogue. The synagogue claimed that consent of the Charity Commission was required

ϖ Cross J: there are 3 possible constructions of a gift to a UA according to Leahy:

1) An absolute gift to the individual members as co-owners (JT or TC), whereby each may take their own share (shares can be severed) and claim it whether or not he continues to be a member. In other words, there is no purpose trust, but the trust is for ascertained objects, i.e. the members of the UA. In this way the donation is valid. The downside of this is that the members may use their own shares of the donation for their own purposes and take the shares with them on leaving the association, thereby ignoring the donor’s motives in making the gift. This problem is dealt with in 2)
2) An absolute gift to the individual members (again, valid objects) as an accretion to the UA funds, but this time the gift is subject to their respective contractual rights and liabilities towards one another as members of the UA. The shares cannot be severed and will accrue to others on death or resignation. Hence the money is to be dealt with not as the members wish (as is the case in 1), but in accordance with the contract (rules of association) which binds the members of the UA together. (see Recher’s WT; Re Lipinski’s WT for illustration)
3) A gift held on trust or applied for the purposes of the UA (see Re Lipinski’s WT), instead of to be at the disposal of the members. In this case the trust will fail unless the UA is a charitable body.

Commentary: Hayton: there are actually 5 ways in which a gift can be made to a UA:

1. Absolute gift of legal title to current members
2. Absolute gift of legal title to the current members as an accretion to the funds of the UA to be dealt with under a bare trust according to the rules of association
3. Trust for present and future members
4. Trust for the charitable purposes of the UA
5. Trust for the non-charitable purposes of the UA

Question 6

HOW DOES UA HOLD PROPERTY?

1) Absolute gift of legal title to current members

Answer 6

• If the gift is a valid absolute gift of legal title to the members of the UA for the time being, then the members can claim their proportionate shares. Each of the members can deal with his share freely.

Question 7

HOW DOES UA HOLD PROPERTY?

2) Absolute gift of legal title to current members as an accretion to the UA’s funds

Re Recher’s WT (1972)

Answer 7

ϖ testamentary gift to an anti-vivisection society which had ceased to exist. The assets were held by trustees on trust for members of the UA subject to contract (construction 2 above). Members can therefore divide the assets freely.

ϖ Brightman J: this is not a gift to the members as JT/TC, not a gift to present and future members, not a gift for the purpose of the society. In the absence of words which purport to impose a trust, the legacy is a gift to the members beneficially, not as JTs or TCs, but as an accretion to the funds which are the subject-matter of the contract which the members have made inter se. The donor’s absence of knowledge of the true legal analysis of the gift is irrelevant!

o if you do have an association where the funds go not to members’ advantage but to some other goal, this association “is bound… to have some sort of constitution; that is to say, the rights and liabilities of the members of the association would inevitably depend upon some form of contract inter se, usually evidenced by a set of rules.”
o Here, there clearly seemed to be a contract between members and “any… member was entitled to the rights and subject to the liabilities defined by the rules. If the committee acted 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 had suffered as a result of the breach of contract.”
o And just like in any contract, it must follow that the members of the society could, by unanimous agreement (or majority vote, if that’s what the rules say), vary or terminate the contract.
o There’s no trust for charitable purposes, or private trust, or any other trust, which can hinder this – no one would have any standing to stop them from dissolving the society and dividing the money between them
o “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 tenants in common so as to entitle each member to an immediate distributive shares, but as an accretion to the funds which are the subject matter of the contract which the members have made inter se.”

Question 8

Commentary on Re Recher

Answer 8

Commentary: this analysis of the way in which the UA holds property is the contract-holding theory: NO primary trust is involved. Donations to UA are absolute gifts to the members of the UA subject to their contractual obligations inter se, as created by the rules of association: Re Bucks. Therefore, when the UA comes to an end, the assets are distributed according to the contract, not under a RT as was decided in Re West Sussex.

Contrast this with the bare trust with mandate theory: the treasurer trustees of the UA hold the UA’s funds on primary bare trust for the members of the UA to deal with the fund according to the mandate or the standing orders which arise under the rules of association created by the members inter se (e.g. procedural rules which require the President to co-sign cheques for large payments). A gift that is an accretion to the funds is a gift to the treasurer trustee of the UA to hold the property on the same trust as he does the other funds of the UA.

Unlike in Lipinski, the property could not be construed as intended to be held on trust.

Upon dissolution: unincorporated associations are of very different sizes. When they’re small, there’s likely to be only one class of member, so when you dissolve it and divide up the money, all members will be treated alike. But larger ones are likely to have different classes of member, so if property is sold, it will be necessary to determine whether all members should share in the proceeds of sale.

Question 9

Penner commentary on re Recher

Answer 9

1) while it is true that A cannot give a gift to B and declare that B holds it under contractual obligations to C, this construction states that by making the gift, A indicates that it is to go to the treasurer trustee of the UA to hold the property under the same trusts as the treasurer trustee holds other properties of the UA. A thus defines the trust he imposes by reference to a pre-existing trust. The trust is certain as it is clear what the trustee is entitled to do.
2) there is no perpetuities problem here. The trust of a UA’s property is for members for the time being (present members), members (beneficiaries) can leave and join. AT all times they are fully entitled to collapse the trust under Saunders v Vautier, and so the trust is NOT perpetual because the rights are always fully currently vested. There are no obligations to unascertained future members, as they are not beneficiaries under the trust at any time.
3) it is a mistake to think that whenever a member leaves or joins the UA , the old class of beneficiaries have to assign their interests in writing according to s.53(1)(c) because s.53(1)(c) does not apply to powers to add or delete beneficiaries.
4) this contract-holding theory explains how UAs may receive gifts that they can devote to their purposes without the gifts being purpose trusts.

Question 10

HOW DOES UA HOLD PROPERTY?

2) Absolute gift of legal title to current members as an accretion to the UA’s funds

Re Lipinski’s WT [1976]

Answer 10

ϖ a testator had left part of his estate on trust for the Hull Judeans (Maccabi) Association, to build and improve new buildings for the benefit of the land. An unincorporated association, existed to promote the participation of Anglo-Jewish youth in sport, cultural and communal activities, and to inculcate good citizenship and self- discipline, and to cultivate an interest in Hebrew, Jewish history and traditions.

ϖ Oliver J: there was a valid trust for the members of the Association — on the contractual analysis

o At first sight, there seems to be difficulty in arguing that the gift is to members of the association subject to their contractual rights inter se, given that there’s a specific direction as to how the money is to be spent, i.e. as to the subject of the gift. So, it was argued that this created a non-charitable purpose trust, which was therefore invalid.
o Oliver J, however, doesn’t think it’s enough just to demonstrate that this was a ‘purpose trust’: “If a valid gift may be made to an unincorporated body as a simple accretion to the funds which are the subject matter of the contract which the members have made inter se…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”
o In such circumstances, why can’t beneficiaries enforce the trust, or, in the exercise of their contractual rights, terminate it 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 within the second category [under Neville estates] — 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.”

Question 11

Davies & Virgo commentary on contractual analysis

Answer 11

It follows that the terms of the association’s constitution will be incorporated into the trust to enable members to enforce or terminate it by terminating the association, so that the members can then take trust property for themselves.

This contractual analysis, though, can’t work where the members aren’t the only parties to the association’s constitutive contract, and so can’t agree to waive the rules and divide the property amongst themselves. If the members of the association aren’t able to alter their rules to apply the association’s funds for a new purpose, it casts doubt on the idea that it’s a gift for them (i.e. with the purpose in mind, but giving the members discretion), rather than for the charitable purpose.

Question 12

HOW DOES UA HOLD PROPERTY?

2) Absolute gift of legal title to current members as an accretion to the UA’s funds

Re Grant [1979]

Answer 12

ϖ – a testator left his estate for the benefit of the Chertsey and Walton Constituency Labour Party.

ϖ Vinelot J: this was a valid gift: the contract-holding theory couldn’t apply because members couldn’t change the rules. For the contractual analysis to work, members must be able, under the rules, to alter the rules to provide that the funds should be applied to a new purpose, or even distributed to their benefit. It’s impossible to construe this gift as being made to the members of the CLP as a collection of individuals in the expectation that it would be used for broad purposes of the CLP. This is because:

o Members of the CLP don’t control the property. The rules governing the CLP can be altered by an outside body, which could direct an alteration under which the general committee of the CLP would be bound to transfer any property to the National Labour Party. The members can’t change the rules so as to make the bequeathed property applicable for some purpose other than that provided by the rules; and they also couldn’t direct that property to be divided amongst themselves beneficially.
o Also, this wasn’t a gift to the CLP, but to the Labour Party property committee, who are to hold the property for the benefit of – i.e. on trust for – the Chertsey headquarters. So, it’s a gift to trustees, not in terms of an unincorporated association, which “militates against construing it as a gift to the members of the association at the date when the gift takes effect, and against construing the words indicating the purposes for which the property is to be used as expressing the testator’s intention or motive in making the gift and not as imposing any trust”

Question 13

Baughen analysis on the contract holding theory not sitting comfortably with fundamental principles of express trusts

Answer 13

• You have members bound by an association’s rules. There is an implied term that a member’s interest will cease when they die, and their share will accrue to remaining members. New members will also join, which will diminish the interest of existing members.
• Both of these instances involve dispositions of an ‘equitable interest’ — but s.53(1)(c) requires that this be in writing (which is unlikely to happen in our scenarios here)
• Presumably, then, the situation lies in s.53(2) LPA; it is likely that the courts would treat the alteration of the beneficial interests of existing members as arising due to operation of Walsh v Lonsdale, with constructive trusts arising out of the network of contracts between the members [i.e. that ‘equity regards as done that which ought to be done’]
• Penner and Davies & Virgo: the preferable view to this is that the departing member’s interest isn’t transferred to the other members, but is destroyed, and the destruction of such interests doesn’t require writing to be effective.

Question 14

HOW DOES UA HOLD PROPERTY?

3) Trust for present and future members

Answer 14

• The gift is intended to ensure that present and future members are either directly or indirectly benefitted by carrying out the purposes of the UA to which the members belong. Thus, the gift of endowment capital is to be held on trust so that it will always be available for the members from time to time or for purposes benefiting them.
• E.g. ‘£100,000 left on trust to the UA treasurer to apply the income for the benefit qua members of those from time to time members of the UA’ or ‘£100,000 to the UA treasurer to apply the income for the general purposes of the UA’ or ‘for the benefit of members from time to time of the UA’ or ‘for the lasting benefit of the UA’

Question 15

HOW DOES UA HOLD PROPERTY?

4) Trust for the charitable purpose of the UA

Answer 15

• Since this will be a charitable purpose trust, the beneficiary principle is not applicable. The funds will need to be kept separate from the non-charitable funds of the body and remain subject to the charitable purpose even after dissolution

Question 16

HOW DOES UA HOLD PROPERTY?

5) Trust for the non-charitable purpose of the UA

Answer 16

• Clearly if the gift is intended to be of endowment capital to be held on trust for the income to be applied to the UA’s abstract non-charitable purposes this trust will be void for infringing the beneficiary principle.

Question 17

5) Trust for the non-charitable purpose of the UA

Re Macaulay [1943]

Answer 17

ϖ the gift was for the ‘maintenance and improvement of’ an estate. HL Held: it failed for perpetuity, the donee being a non-charitable body. There is intention of continuity according to word ‘maintenance’.

• However, to avoid this outcome, it can be argued that the fulfilment of the UA’s purposes ensures to the benefit of a sufficiently certain class of individuals for them to have locus standi to apply for enforcement: Re Denley. Where the donee association is itself the beneficiary of the prescribed purpose, the gift should be an absolute one as an accretion to the UA funds.

Question 18

5) Trust for the non-charitable purpose of the UA

Re Turkington (1937)

Answer 18

ϖ there was a gift to a masonic lodge ‘as a fund to build a suitable temple in Stratford’. The members of the lodge being both the trustees and the beneficiaries, Luxmoore J construted the gift as an absolute one to the members of the lodge for the time being.

Question 19

5) Trust for the non-charitable purpose of the UA

Re Lipinski’s WT [1976]

1. facts
2. Oliver J re expression ‘in memory’
3. distinction between case where purpose described intended to benefit ascertained beneficiaries and those where no beneficiary intended
4. ‘the strongest argument in common sense….’
5. Re Bowes

Answer 19

ϖ there was a gift of an estate to the trustees of a UA left by a testator on trusts ‘in memory of his late wife to be used solely in the work of constructing new buildings for the UA and/or improvements to the said buildings’. Was this a valid bequest?

ϖ Held: Oliver J: the expression ‘in the memory’ says very little: the fact that it was a tribute the testator wished to pay to the wife or that the money was to be used for a purpose did not by itself indicate a desire to create a perpetual endowment/purpose, because such money can be spent right away.

o There is a distinction between the case where a purpose is described which is clearly intended for the benefit of ascertained/ascertainable beneficiaries and the case where no beneficiary at all is intended (i.e. Re Denley).
o If a valid gift may be made to an unincorporated body as a simple accretion to the funds which are the subject matter of the contract which the members have made inter se … 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… 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 within the second category (i.e. accretion to the funds).
o Re Bowes also made it clear that where the amount of the gift was to go to the beneficiary, the purpose could be overridden as a mere motive or superadded direction. Thus, the gift is valid as one to the members, although expressed plainly as a purpose. In any case, there are clearly ascertained beneficiaries here, they are the members for the time being who could enforce the purpose. The gift is thus valid!
o Rule: if a purpose trust directly or indirectly confers a benefit on a group of individuals, it may be valid if it is limited to the period of perpetuity.

Question 20

Commentary by Penner on Re Lipinski

and possible rebuttal by Oliver J

Answer 20

Commentary: Penner: Oliver J stressed that the ‘donee body is itself the beneficiary of the prescribed purpose’, so the purpose was inward-looking as a benefit to the members themselves rather than outward looking (Re Denley’s WT).

This is doubtful because the objects of the UA’s constitution were to benefit Anglo-Jewish youth generally, and this should make the trust fail as it would be arguable whether there was an ascertained beneficiary. Oliver J (rebuttal): however, this is not how I construe the testator’s intention.

Question 21

What is the rule for whether transfer intended to be trust for benefit of club or members?

Answer 21

1. If the beneficiaries themselves are not members of UA, then it may well be necessary that the gift be framed as a purpose trust to be ‘inward-looking’. Otherwise it means that outward-looking purposes could be valid so long as the settlor named a class of beneficiaries, thus overthrowing Re Astor
2. If the beneficiaries are already members of the UA, then it is not necessary that the gift be framed as a purpose trust to be ‘inward-looking’ (Re Lipinski)

Question 22

Does Re Denley apply?

Re Grant?

• quote
• explanation

Davies & Virgo opinion

Answer 22

ϖ Re Grant did doubt the application of the Denley principle to unincorporateded associations:

o	Denley “falls altogether outside the categories of gifts to unincorporated association and purpose trusts”
o	Vinelot J sees the principle as applying to discretionary trusts, i.e. where the benefit to be taken by any member of the class is up to discretion of trustees, but any member of that class can apply to court to compel trustees to administer the trust in accordance with its terms.

Davies & Virgo:

• There is no need to confine Denley in this way — in the case itself, the discretion of the trustees wasn’t considered to be significant.
• Further, Denley was applied, amongst other mechanisms, in Lipinski to explain how property could be used for the purposes of an unincorporated association.
• Despite this, however, the Denley principle hasn’t been influential in explaining property holding for the benefit of unincorporated associations; other explanations have been more significant in explaining both the property-holding, and the effect of dissolution on who should benefit.

Question 23

5) Trust for the non-charitable purpose of the UA

Re Bucks Constabulary Widow’ and Orphans’ Fund Friendly Society (No 2) [1979]

Answer 23

Walton J: I can see no reason for thinking that this analysis is any different whether the purpose for which the members of the association associate are a social club, sporting club, to establish a widows’ and orphans’ fund, to obtain a separate parliament for Cornwall, or to further the advance of alchemy… it matters not. All the assets of the UA are held in trust for its members subject to the contractual claim of anybody having a valid contract with the UA…

Commentary: so as long as the purpose framing the gift is one which the members themselves pursue by spending their own money, then the gift is to their ‘inward-looking’ benefit, and is therefore an accretion to the UA’s funds.

Question 24

HOW DOES UA HOLD PROPERTY?

6) Agent for the transferor

Answer 24

• Here there is no gift, but property is transferred to some officer of the association as the transferor’s agent, with authority to apply the property for the intended purposes. This solution has proved significant where an association doesn’t satisfy the definition of an unincorporated association, so the contract-holding mechanism isn’t available.

Question 25

6) Agent for the transferor

Conservative Central Office v Burrell [1980]

Answer 25

ϖ the Conservative party was held not to be an unincorporated association because of the absence of a contractual link between the different components of the party. This prevented the use of the contract theory. It was held that funds paid to the party were received by the Treasurer of the party, who was an agent of the donors, only authorised to use the money for the purposes of the Party.

ϖ Brightman LJ

o The issue is whether the party was an unincorporated association (important for tax reasons). It was also important to consider what the legal relationship would be between a contributor to CCO funds and the recipient of those contributions.
o There is no legal problem if the contributor hands a recipient money to be applied for political purposes indicated by distributor, or to be chosen at discretion of the recipient. This would be a simple case of mandate / agency:
♣ The recipient would have authority to make use of the money in the indicated way
♣ A contributor can at any time demand return of his money so far as not spent, unless the mandate is irrevocable
♣ But once the money’s spent, he can’t demand any of it back
♣ No trust arises, but there is a fiduciary relationship inherent in the relationship of principal and agent.
♣ If, however, the recipient was to apply the money for a purpose other than scope of the mandate, he wouldn’t be discharged. He could be restrained, like any other agent, and required to replace the money.
o What if the recipient is treasurer of an organisation that receives and applies funds from multifarious sources for certain political purposes?
♣ If the treasurer has clear authority to add the contribution to the mixed fund that he holds, the mandate at that stage becomes irrevocable (i.e. contributor can’t ask for it back, or require the mixed fund “to be unscrambled for his benefit”)
♣ But this doesn’t mean that contributors lose all rights at this point —they will probably have a remedy against the recipient to make good any misapplication of the mixed fund.
o The status of the treasurer in this case appears to be the above.
o The discussion of mandates, and complaining contributors, is very “remote and theoretical”, as no contributor to CCO will view his contribution like this — he just believes he’s making a gift to conservative party. And in practical terms, he is. But the justification for looking at the precise legal relationship is the challenge to suggest a legal framework that fits “the undoubted fact that funds are held by the Central Office and are administered for the use and benefit of the Conservative Party”
o Further, he doesn’t see any legal difficulty with this mandate theory. There is no need to invent an unincorporated association to explain the situation.
o The only problem would be if this was in a will, since you can’t set up an agency in this way between a testator and his chosen agent, at the moment of death. But doesn’t need to decide that here.

Question 26

WHICH CONSTRUCTION TO FIND?

Answer 26

• If a transferor actually chooses between the analyses, that choice should govern how the transfer is treated.

• But if the transferor has just purported to make a transfer to the club, and the construction is being chosen by the judge as a proxy:
o the choice ought in principle to be made by reference to the question ‘which analysis provides the closest proxy?’;
o though there are other considerations too.

Question 27

Which analysis provides the closest proxy?

Answer 27

• The gift analysis involves absolute transfer to the members – and nothing more, so as to take the property from being simply the members’ ‘own’ and make it ‘club property’.
o it is therefore not a good proxy for a purported transfer to the club.
o it will make sense where the transfer is e.g. a bequest by a long-time member of the club, out of affection for those who were members alongside him.

• The contractual and purpose trust analyses both require the money to be spent on the club’s purposes, so can be regarded as decent proxies for a transfer ‘to’ the club.
o the contractual analysis: via the members’ contract, i.e. club rules.
o the purpose trust analysis: via the terms of the trust.

• How the contractual and purpose trust analyses differ:
o under the contractual analysis, the members can vary or terminate their contract (club rules) and so apply the transferred money in a new way or take it for themselves.
o under the purpose trust analysis, the money remains tied to the transferor’s (settlor’s) purpose.

• This might be thought to mean that the purpose trust analysis is preferable, as closer to the transferor’s wishes. However, remember that the idea is to find the better proxy for a transfer ‘to’ the club itself.
o under the contractual analysis, if ‘the club’, in the guise of its contracting members, alters its own make-up, the property stays with it in its new make-up – which may leave it the better proxy for a transfer ‘to’ the club itself.
o on the other hand, also under the contractual analysis, the members can decide (with or without dissolving the club) to take the money for themselves, or otherwise detach it from the club – which may leave it a weaker proxy for a transfer ‘to’ the club, and perhaps weaker than the purpose trust analysis.

Question 28

Other considerations influencing the judge’s choice

Answer 28

• Money held under the contractual analysis is generally easier to deal with in the event of the association’s dissolution than money held on purpose trust.
o money held under the contractual analysis is generally divided equally between those who were members at the time of dissolution. This will usually have been quite recent, so there should be few difficulties finding those entitled, and paying them.
o money held under the purpose trust analysis is generally to be returned to its transferor. The transfer may have occurred a long time before, so there may be considerable difficulties finding those entitled, and paying them.

• Normally, some of the association’s income will necessarily, or very probably, arrive via the contractual analysis, while the rest could be seen as arriving under either the contractual analysis or the purpose trust analysis – so it makes for easiest accounting to take it all under the contractual analysis.
o if the transfer is by way of performance of a contractual obligation, it must comply with that obligation. Where the association (strictly, its treasurer etc) sells something to the transferor – eg a raffle ticket, or entry to a concert, or membership – the transferor will usually be required, in return, to transfer the price absolutely: not to settle it on trust for the association’s purposes. This much of the association’s income will therefore have to be taken under the contractual analysis.
o if the transfer is voluntary, the transferor could in principle decide to give either way.
o but if a voluntary transfer is via a street collection – where the sum involved is very small, and the transferor remains anonymous – the transferor will probably want to make the transfer ‘out and out’. This was recognized in Re West Sussex Constabulary Trusts [1971] Ch 1, 13, but taken to mean that the transfer was on purpose trust but the resulting trust after dissolution disclaimed. More plausibly, it means that the transfer was absolute, under the contractual analysis.

Question 29

WHEN HAS THE UA DISSOLVED?

Answer 29

• Dissolution can occur (Re William Denby Sick Fund [1971] 1 WLR 973):]
o in accordance with the association’s rules (i.e. in some event designated by the rules – which might be eg a majority vote);
o by agreement of all the members (this terminates the key contract);
o ‘by order of the court in the exercise of its inherent jurisdiction’ (quaere what underpins this);
o spontaneously, when the association’s ‘substratum’ has gone – more exactly, when the association has ceased to function, either through external events (e.g. an allotment association, when the allotments are compulsorily purchased) or through inactivity, though only where this shows that ‘all concerned regard the society as having ceased to have any purpose or function, and as no longer existing’ (Re GKN Sports Club [1982] Megarry V-C) (quaere what underpins this too).
♣ Mere inactivity isn’t enough; “but inactivity may be so prolonged or so circumstanced that the only reasonable inference is that the club has become dissolved.”
♣ In such cases the court must do the best it can to pick a reasonable date where existence is said to come to an end.
♣ On the facts, had it come to an end by the relevant date here?
• On that date, “the club had ceased to operate as a club for several months,”
• More than “mere inactivity” – there had been “positive acts towards the winding up of the club”. Eg sale of their stock of drinks, ending of registration for VAT, dismissal of the steward. As well as all the stuff like abandoning the preparing of accounts, issuing of membership, use of the sports ground, which might seem like mere inactivity, but which he thinks included some ‘deliberation’— “there was a systematic dismantling of the club and its activities.”
o UA will also be brought to an end if the number of members falls below two (Hanchett-Stamford; and this point was recognised in Re Bucks)

Question 30

TREATMENT OF THE GIFT UPON DISSOLUTION OF THE ASSOCIATION

Answer 30

• When dissolved, an unincorporated association may have surplus assets that derive from members through the payment of subscriptions, or gifts. There are three possible consequences:

1. Assets may be returned to the people who provided them in the first place (asset held on resulting trust for transferor).
2. Assets may be transferred to the Crown because nobody owns them (they become bona vacantia).
3. Assets may be transferred to members at time of dissolution (typically according to the rules of the association; i.e. contractual entitlement)

Which one of these occurs depends on how the assets were held in the first place.

Question 31

1. Resulting Trust (happens on the trust analysis)

Answer 31

• An RT can arise when property is held on express trust that fails.
• Under the purpose trust analysis, the money is held on trust for the purposes. If it becomes impossible to carry out that trust, it fails.
• Strictly speaking, the dissolution of the association need not mean that it is impossible to carry out the trust:
o The purpose could remain viable
o Even then, the trust might be read as for the association’s purposes so long as carried on by the association (i.e. the trust has ‘essential mechanism’). In that case, the dissolution of the association would once again make it impossible to carry out the trust, so that it fails.
• After the trust’s failure:
o any express gift over will come into operation.
o if there is no express gift over (as perhaps more usually, in the case of a purported transfer ‘to’ an association), there will be an automatic resulting trust, (necessarily) for the transferor.

Question 32

1. Resulting Trust (happens on the trust analysis)

Re Gillingham Bus Disaster Fund (1958)

Answer 32

ϖ funds were raised to defray the cost of funerals of V and to care for the disabled. Any surplus funds were to be devoted to ‘other worthy causes’. Harman LJ Held: the general principle is that where money is held on trust and the trust declared does not exhaust the fund it will revert to the donor or settlor under a resulting trust. This is because the donor did not part with his money absolutely, but only sub modo to the intent that his wishes should be carried into effect. It arises when the expectation is for some unforeseen reason cheated of fruition. Under the resulting trust, subscribers have the beneficial interest of the proportions they had contributed. Just because a number of donors are unascertainable does not make the money change its destination and become bona vacantia. Commentary: when we take the Re Recher contract-holding theory, there is NO need for resulting trust anymore because the money is held under a bare trust for the members of the UA with mandate. It is therefore theirs to be distributed amongst themselves upon dissolution.

Where the effect of the dissolution of the association is to terminate the express trust, the property won’t be held on RT for the transferors if they can be considered to have divested themselves of all rights to the property.
• E.g. if money has been paid to the association by a member in return for contractual benefits.

Question 33

1. Resulting Trust (happens on the trust analysis)

Re West Sussex Constabulary’s Benevolent Fund [1971]

Answer 33

ϖ The Constabulary was amalgamated with other police forces, and its benevolent fund which paid allowances to (objects) widows and children of deceased constables (who were members), was to be wound up. It was decided in a meeting that the remaining funds should be used to purchase annuities for those widows. Money had come from (1) the members themselves (2) from raffles, sweepstakes (3) anonymous donations from collecting boxes (4) donations and legacies. Held: the contract ended due to the amalgamation, but this only affected the member’s contractual rights and duties, not their ownership. The members put up money on a contractual basis, not one of trust.

ϖ Goff J Held:

o 1) the amalgamation of the forces meant that there were no longer any members of the fund by the time of the amalgamation as the only persons who could be members were constables who died. Thus the decision was invalid and the funds remained undisposed of. There was NO resulting trust in favour of the former and surviving constable members. The surviving constable members put up their money on a contractual basis and not one of trust; the constables who remained members until their deaths are excluded because they have had all they contracted for under the rules of association, either because their widows and dependants have received the funds or because they did not have any widows or dependants. Any surviving members would have a claim in contract based on frustration or failure of consideration. These members could claim back reimbursement for the subscriptions.

o 2) nobody who contributes to the fund incidentally as a function of buying a raffle ticket has given money upon trust: he receives his full benefit from the contract. No trust intention can be imputed because the purchaser may not be interested in aiding the cause. His purchase is also indirect. (Penner: but a purchaser who buys raffle tickets fully realising there is a large gift element surely has the intention)

o 3)***, these contributors of small anonymous donations must be as assumed to have parted with their money out and out absolutely in all circumstances as they are for the benefit of third partiesbona vacantia(Penner: the blurry distinction between small and large donations is fatal. The better explanation is that an automatic resulting trust is so patently pointless, even though theoretically correct, because nobody will ever try to prove a valid claim to the money. Hence, the result is bona vacantia) (Walton J in Re Bucks: the mere fact that the members have contracted between themselves to provide benefits for third parties does not mean (in the absence of a valid trust in favour of the third parties) that they have relinquished their property in the fund)

o 4), an automatic resulting trust arises for the identifiable donations.

Question 34

Davies & Virgo on Cunnack and Air Jamaica

Answer 34

• The essential feature of Cunnack and West Sussex: where the payer receives, or expects to receive, some contractual benefit in return for payment, the payer will be considered to have given up any rights to the return of the money
• But the reasoning employed in Cunnack has been doubted on the ground that property can be held on RT even though the contributor had received all of the expected contractual benefits: Davis v Richards and Wallington Industries (Scott J) and Air Jamaica v Charlton (Lord Millett).
• In fact, the Cunnack result can be justified for the exceptional reason that a relevant statute at the time required the rules of the association to state all the possible uses of the society’s assets and no use was identified in favour of the members — i.e. RT excluded by statutory provision

Question 35

1. Resulting Trust (happens on the trust analysis)

Davis v Richards & Wallington [1990]

Answer 35

ϖ A group of companies established by way of trust a pension scheme to replace a previous scheme. Contributions from: (i) employers’ contributions; (ii) employees’ contributions; (iii) transferred funds. The companies terminated the scheme due to financial difficulties. Were the surplus funds held on resulting trust for contributors, or taken by Crown as bona vacantia?

ϖ Scott J

o Employers’ contributions were held on resulting trust. Employees’ contributions and the portion of surplus from transfer were bona vacantia.
o Whilst on the facts there was not an RT, it was held that the fact that an employee has got all that he bargained is not necessarily a decisive argument against an RT.
o There was just no RT here because
♣ It was impossible to arrive at a workable scheme for apportioning the employees’ surplus among the different classes of employees, and he didn’t want to “impute” an intention to them “that would lead to an unworkable result”; and
♣ Scott thought he was precluded by statute from imputing to the employees an intention that they should receive more than the max they’d be entitled to under the relevant statute.

Question 36

1. Resulting Trust (happens on the trust analysis)

Air Jamaica Ltd v Charlton [1999]

Answer 36

ϖ Privy Council: held that surplus funds arising from the discontinuance of a pension scheme should be held on RT for the employer and employees who’d contributed to the fund, in proportion to their contributions and regardless of any benefit they’d received from the fund

ϖ Lord Millett (giving the PC’s judgment):

o Quotes Scott above, but thinks that this approach to intention is “erroneous.” He doesn’t see why, even in the case of ordinary actuarial surplus [i.e. about overfunding], it should obviously be the case that where employees are promised certain benefits under a scheme, to which they have contributed more than was necessary to fund those benefits, they shouldn’t expect to receive a return of their excess contributions.
o Here, however, the issue isn’t simply overfunding, but that some of the trusts have failed. In these circumstances it’s impossible that the members got all they bargained for. One of the benefits they bargained for was that trustees should be obliged to pay them additional benefits in the event of the scheme’s discontinuance. It was the invalidity of this trust that gave rise to the surplus.
o “Their Lordships consider that it would be more accurate to say that the members claim such part of the surplus as is attributable to their contributions because they have not received all that they bargained for”
o The fact that this might involve the employees recovering more than they’d have been entitled to under the relevant tax legislation doesn’t matter, because here we are talking about the operation of a resulting trust: don’t distort principle just because of some tax legislation: RT arises “by operation of law”, outside of the pension scheme and of the tax legislation.

Question 37

Davies & Virgo on the fact that there was a resulting trust notwithstanding a contractual relationship

Answer 37

D+V: the view shared in both these cases, that the fact that a member had received contractual benefits from the association shouldn’t prevent an RT from arising, is good [i.e. better than the Cunnack idea]. But note that this might be inconsistent with the following case:

ϖ Westdeutsche Landesbank Girozentrale v Islington LBC

ϖ Lord Browne-Wilkinson says that he doesn’t think Megarry is right to say that the 2nd type of RT [i.e. what we tend to call ‘automatic’] arises automatically, but that it’s down to intention. “If the settlor has expressly, or by necessary implication, abandoned any beneficial interest in the trust property, there is in my view no resulting trust: the undisposed-of equitable interest vests in the Crown as bona vacantia.” He references West Sussex Constabulary in this context.

Question 38

2. Bona Vacantia

Answer 38

• If there is no owner, e.g. where it’s not possible to identify who transferred the property to the association, the property is bona vacantia and will be transferred to the crown.

Question 39

3. Contractual entitlement

Answer 39

• Later cases have departed from the resulting trust analysis and focused on the contract-holding theory (the contractual approach).
• This Re Recher contractual approach is simpler and treats UAs as a contract between members. Hence, the contract, found on the rules of association, will determine what happens to the funds.
o The dissolution terminates the primary obligation to spend it on the association’s purposes, its place being taken by another primary obligation which determines the money’s fate.
o If no such term is made, a term will be implied into the rules to the effect that the surplus should be distributed equally between the members at the time of the dissolution.

Question 40

3. Contractual entitlement

Re Bucks Constabulary Widwos’ and Orphans’ Fund Friendly Society (No 2) [1979]

Answer 40

ϖ similar facts as West Essex) The fund, which was registered under the Friendly Societies Act 1896, was made up of voluntary contributions from its members, for the relief of widows and orphans of deceased members of the Bucks Constabulary. Under s.49(1) of the 1896 Act, property belonging to a registered friendly society was vested in trustees for the benefit of the members and those claiming through them. There was no provision for distribution of the assets of the fund in the event of the society being wound up. In April 1968 the Bucks Constabulary was amalgamated with other constabularies to form the Thames Valley Constabulary, and in October 1968 the society was wound up. The trustee applied to court to determine how the funds were to be distributed. Held: The surplus assets were held on trust for the members of the society at the time of its dissolution, to be distributed among them in equal shares due to an implied term. The constables were entitled to the surplus fund in equal shares.

ϖ Walton J: (wholly unable to square Goff J’s decision in West Essex which caused him ‘great concern’; and applying the modern contract-holding analysis) although the benefit was for third parties, and held that the fund should be divided equally among existing members.

o Merely because the benefit of the fund was intended for third parties, it did not follow (in the absence of valid trusts of the assets being declared in favour of the third parties) that the members themselves did not continue to control the assets, and could indeed collectively have divided them up among themselves had they so wished, before the dissolution. Re West Essex is distinguished based on the statute.
o The mere fact that the members have contracted between themselves to provide benefits for third parties does NOT mean (in the absence of a valid trust in favour of the third parties) that they have relinquished their property in the fund.)
o They can, after all, collectively agree to distribute the fund among themselves, or to vary the benefits under the scheme. The resulting trust had no place in cases where there were contractual rights and the member had had all that he contracted for. But if [the society] has been dissolved or terminated the members entitled to participate would prima facie be those persons who were members at the date of dissolution or termination.

Question 41

Swadling on Re Bucks

Answer 41

the case decides that property belongs to the members, but it does NOT finally dispose of the question whether in some cases they may not come under an obligation to make restitution of is value to donors.

Question 42

Hayton on Re Bucks

Answer 42

the decision represents the marked shift from the old approach, where the surplus assets in the fund are held in resulting trust, to the new approach, where interests and rights of members of UA are governed exclusively by contract. SO if the rule of association provides for a particular method of distribution of surplus assets upon dissolution of the UA, this method will be used. It should be preferred to West Sussex.

Question 43

ZCT on Re Bucks

Answer 43

the whole idea that the members hold trust property on the basis of their contractual obligations is evidently a risky one, since the members will always be free to alter the terms of the contract at a general meeting. Worst still, if this occurred, neither the donor nor his estate could do anything since s/he will not be privy to that contract if s/he is not a member of the association. In addition, following the decision in Re Bucks, the contract-holding approach implies that only existing members of the association can have entitlement to its assets on its dissolution. The resulting effect is that a newly acquired member of the association will acquire entitlement to the assets, even though no formal transfer has ever taken place with the previous member. This seems inappropriate; since it may well be that the settlor never intended this to be the case.

Question 44

General objections to contract-holding theory

Answer 44

the contract-holding analysis can only ever be used where the members have sufficient control so that they could choose to use the funds for different purposes, or even to wind up the association and divide the funds between themselves. Only this will prevent infringement of the rule against perpetuities, which requires that the gift must not tied up indefinitely does not give full effect to the settlor’s intentions

Question 45

3. Contractual entitlement

Hanchett-Stamford v AG [2009]

Answer 45

ϖ Performing and Captive Animals Defence League was a UA formed in 1914 to procure a ban on the use of performing animals. Eventually, membership dwindled to a husband and a wife. When H died, there were substantial assets, including a property worth £675k and stocks and shares worth over £1.7m. The association was held to have dissolved on the death of the penultimate member (H)

ϖ Lewison J Held:

o The contract-holding theory was applied and it was concluded that the present members of the association were beneficially entitled to the assets subject to the contractual arrangements between them.
o Further, it was recognized that an unincorporated association which is not a charity is automatically dissolved when its membership falls below one and the last surviving member is entitled the assets of the association and they do not vest in the Crown as bona vacantia (i.e. the sole surviving member (Mrs H) was entitled to claim the assets of the association, which did not vest in the Crown as bona vacantia).
♣ Agreed with Walton J’s conclusion in Re Bucks that if there’s only one member of a UA, it must cease to exist; both for the reasons that Walton gave (the members’ rights are contractual and not equitable so upon death they cease to have any interest in the UA), and also because if members’ rights are based in contract, the contract must cease to bind once there’s no other party that can enforce it.
♣ He disagrees with Walton’s obiter dictum that a sole surviving member of UA can’t claim the assets of the association, and that they vest in the crown as bona vacantia
• Because that would mean that if there are 2 members of an association with assets of £2m, they can agree to divide those assets between them, but if one of them dies before they’ve divided them, it all goes to the crown as bona vacantia.
• Members of a dissolved association have a beneficial interest in its assets. 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 below two.”
• This also seems to go against Art 1 of ECHR, which says no-one’s to be deprived of his possessions other than where public interest demands. What public interest is there here in depriving one of two members of a UA of his share of the assets?
o The contractual approach will not be available if the association has ceased to exist, or if the association lacks identifiable rules.

Lewison J’s conclusion is logical and defensible; the death of the penultimate member should not divest the final member of their entitlement to the property that had been used for the purposes of the association.

Question 46

3. Contractual entitlement

Re Horley Town FC [2006]

Answer 46

Settlor gave the President of a football UA a piece of land to practise on as a permanent ground. The UA used land to play football matches on it and hold social events in the clubhouse. The only people who were entitled to use the land were the members of the UA, and over time the definition of who was a member of the club expanded to include ‘temporary members’ – who were members of visiting football teams and people who had paid to use the clubhouse for a specific event – and ‘associate members’ – who were members of a society that paid an annual subscription to the club in return for being given limited rights to use the clubhouse. The land was sold for £4m and the officers in charge of the club used some of the money to buy a new football ground. The question arose as to who was entitled to the proceeds of the sale of the land. Held:the contractual approach was applied despite the fact that outsiders had some limited control over the club’s resolutions. Some external control is not fatal to the contract holding theory.

Question 47

3. Contractual entitlement

Re St Andrew’s Lawn Tennis Club Trust [2012]

Answer 47

A dispute arose over a piece of land that had been occupied by the lawn tennis club since 1938. The trust deed’s declared purpose was that the land should be held on trust to provide a sports ground for games for any persons associated with St Andrew’s Cheam Church. The trustees of the club argued that the declaration was invalid (violating the beneficiary principle) and therefore that it was held on a resulting trust for the members of the club. The church’s charitable trust wanted to sell the land and apply the proceeds for the purposes of the church. Held: this is NOT a charitable trust – but a perpetual trust for a non-charitable purpose, namely to enable the members of the club to play. A gift which includes non-charitable purposes fails under English Law and it was held that the correct conclusion was that the land was held upon a resulting trust for the executors of the estate of a church secretary, but NOT a resulting trust in favour of the members of the club.

Question 48

3. Contractual entitlement

When should there not be an equal distribution?

Answer 48

• [i.e. cf resulting trust, on the equity solution, which would be done by contributions].
• Where the distribution of the assets occurs by reference to the contract-holding theory, the assets will usually be distributed equally between the members at time of dissolution, regardless of how long they’ve been members, or the amount of subscriptions they’ve paid.
• Walton J in Re Bucks:
o Remaining question is whether the assets are split equally or in proportion to contributions made by each. The contract governs this.
o But, prima facie, “distribution is on the basis of equality, because, as between a number of people contractually interested in a fund, there is no other method of distribution if no other method is provided by the terms of the contract” (which, in this case, there isn’t)
o The members aren’t entitled to the fund [under this contract solution by equity, but by law. This is “a matter of pure contract”, so distribution is “completely divorced from all questions of equitable doctrines”; it’s “a matter of simple entitlement”, which must be in equal shares.

• This principle of equal distribution was applied by Lawrence Collins J in Re Horley Town Football Club
• But sometimes the terms of the contract between members will result in a different form of distribution: St John’s.

Question 49

3. Contractual entitlement

Re Sick and Funeral Society of St John’s Sunday School [1973]

Answer 49

ϖ a society had been formed at a Sunday school to provide for sickness and death benefits for its members, who could be teachers and children. Junior members under 13 paid half the weekly subscription and received sickness benefits at half the rate. Following dissolution of the society, it was held that the effect of the rule of the association was that junior members were entitled to only a half-share of the surplus assets as compared to the ordinary members

ϖ Megarry J

o Should the basis of distribution be proportionate to the amounts contributed? Should there be equal shares? Should there be half shares and full shares?
o The difficulty here comes from confusing property and contract
o RT is a property concept – “any property a man does not effectually dispose of remains his own”
♣ If it operates here, e.g. if you die, trust will be for your estate, since you don’t lose that interest when you die
♣ But in these cases, even where there’s been held to be an RT, the people who got share of assets on dissolution were only the living members
♣ So in these cases there can’t be an “ordinary resulting trust” – a “modified” one
o Membership of a club or association, though, “is primarily a matter of contract” – you make your payment and thereby become entitled to benefits of membership, in accordance with the rules
♣ The sums you pay cease to be your individual property – so they aren’t subject to any resulting trust.
♣ They become property of the members (including you).
♣ If you cease to be a member (by death or otherwise), you cease to be part-owner of any of the club’s property.
♣ So if there’s dissolution, it’s only split between owners of the property, i.e. current members.
o Here, then, under this contractual analysis, there’s no relevance to the respective amounts of the contributions that people have made – the newest member, who’s only given one year’s fee, is as much a part-owner as the oldest member: “Each has had what he has paid for” – whether that is benefits of membership for 1 yr or 50 yrs. So the latter shouldn’t get 50 times the benefit if the club is wound up
o So, rejects the proportionate division – prefers equality
o but does equality prevail when there’s more than one class of member? [i.e. some people are contributing more etc.]
o No- you look at the rules of the society to see if they “indicate any basis other than that of equality”, which, here, they do
♣ “A distinction between classes of members is quite different from a distinction between individual members of the same class based on the amounts contributed by each member” — “At any given moment one can say that the rights and liabilities of all the members of one class differ in the same way from the rights and liabilities of all the members of the other class, irrespective of the length of membership or anything else.”
o In addition, he confirmed that members who’d been excluded from the association by virtue of failing to pay their subscriptions weren’t entitled to share in the distribution of assets, even if they’d paid the arrears of their subscriptions after the association had been dissolved (although they would if they’d paid their arrears before dissolution, because then they’d have been members at time of dissolution)

Question 50

Fox categorisation of distribution for these contractual cases:

Answer 50

Contractual analysis on dissolution
• Money is owned by the members but caught by the contract (club rules)
o Possibility 1: original contract is discharged, and the fate of the remaining money is determined without reference to it
o Possibility 2: original contract remains in force - the dissolution terminates primary obligation to spend it on association’s purposes, its place being taken by another primary obligation which determines the money’s fate
• Usually there is no difference between the two outcomes, but there is a difference if the association is dissolved spontaneously due to the membership falling to 1 or 0
o Possibility 1, in this scenario: remaining money belongs to those who are members when contract thus discharged
o Possibility 2, in this scenario: implied term requires payment of the money to those who were members at time of dissolution, and as there are no such people, the property is bona vacantia 


Contractual possibility 1
• If original contract is discharged by agreement, and there is agreement as to what should happen with the money, then the money goes in accordance with new agreement
• If original contract discharged by frustration, money goes in accordance with law of frustration
• Otherwise money rests where the underlying principle leaves it i.e. with the member at time of dissolution equally without obligation to use it in a particular way
o Hanchett-Stamford

Contractual possibility 2
• The second primary obligation could be express, implied, or non-existent
• Express: effectuated according to its term
• Implied:
o conventionally this will require equal division between the members at the time of dissolution: Re Bucks
o but it may involve division according to subscriptions/ class of member: St John’s
• Non-existent: no express term and impossible to find implied term, whereupon the money becomes bona vacantia

Question 51

A group of students at Camford uni. are concerned to encourage a broader range of students to apply to places at that university and also to win increased student representation within the university administration. In October 2010, the students form a club, known as ‘Camford Needs Democracy; (CND). CND is not incorporated; a ‘club constitution’ sets out the aims and rules of the organisation, binding all the members who join, and makes provisions for an executive, including a treasurer, to operate its bank account.

CND forms links with other similar groups across the country and co-ordinates its policy with those groups. CND’s first appeal in December 2010 is a great success, and attracts hundreds of members and £5,000 in donations. To cap it all, the wealthy widow of a Camford lecturer dies in January 2011 leaving CND £20,000 in her will.

1. The residuary beneficiaries under the widow’s will challenge the bequest to CND. Will a acourt enforce the bequest? Should it?

Intro

Answer 51

Whether the court will enforce the widow’s bequest to CND will depend on whether the bequest can be validly construed as either a charitable trust, or as the holding of property, in some manner, by an incorporated association. For each, we shall examine whether the court should uphold the benefit.

Question 52

A group of students at Camford uni. are concerned to encourage a broader range of students to apply to places at that university and also to win increased student representation within the university administration. In October 2010, the students form a club, known as ‘Camford Needs Democracy; (CND). CND is not incorporated; a ‘club constitution’ sets out the aims and rules of the organisation, binding all the members who join, and makes provisions for an executive, including a treasurer, to operate its bank account.

CND forms links with other similar groups across the country and co-ordinates its policy with those groups. CND’s first appeal in December 2010 is a great success, and attracts hundreds of members and £5,000 in donations. To cap it all, the wealthy widow of a Camford lecturer dies in January 2011 leaving CND £20,000 in her will.

1. The residuary beneficiaries under the widow’s will challenge the bequest to CND. Will a acourt enforce the bequest? Should it?

The charitable trust analysis

(i) recognised charitable purpose

Answer 52

To be a charitable trust, three stages must be satisfied: it must be for a purpose of a kind listed in s.3(1) Charities act 2011 (‘CA 2011’), there must be a benefit, (s. 2(1)(b); ISC v Charity Commission) and the benefit must be to the public (s. 2(1)(b)).

CND’s twin goals of broadening access to Camford University and increasing student representation within the university appears to satisfy category (b) ‘the advancement of education’ since increasing access to the university will lead to dissemination of knowledge to a far greater proportion of the population. The desire to increase access also falls within (j) ‘the relied of those in need by reason of youth, age, ill-health, disability, financial hardship or other disadvantage.’ Finally, the goal of increasing student representation within the university may fall within (e) ‘the advancement of citizenship or community development’, since allowing students to participate in decision-making processes about them will lead to a greater sense of responsibility, pride and trust in the university. One possible counterargument is that the purpose is political! (give case law).

The present case is less clear cut than the purpose of increasing access to the university, but s3(1)(m)(i) permits purposes which are analogous to, or in the spirit of, enumerated purposes. For the reasons above, the purpose of increasing student representation is arguably within the spirit of citizenship/community development purpose.

Question 53

A group of students at Camford uni. are concerned to encourage a broader range of students to apply to places at that university and also to win increased student representation within the university administration. In October 2010, the students form a club, known as ‘Camford Needs Democracy; (CND). CND is not incorporated; a ‘club constitution’ sets out the aims and rules of the organisation, binding all the members who join, and makes provisions for an executive, including a treasurer, to operate its bank account.

CND forms links with other similar groups across the country and co-ordinates its policy with those groups. CND’s first appeal in December 2010 is a great success, and attracts hundreds of members and £5,000 in donations. To cap it all, the wealthy widow of a Camford lecturer dies in January 2011 leaving CND £20,000 in her will.

1. The residuary beneficiaries under the widow’s will challenge the bequest to CND. Will a acourt enforce the bequest? Should it?

The charitable trust analysis

(ii) purpose must be beneficial

Answer 53

To count as charitable, the purpose must be beneficial (CA s.2(1)(b); ISC v Charity Commission). Thus understanding of purpose of a particular description is for the public benefit (s.4(2)). This process takes effect downstream/consequential effects from the pursuing purpose (ICLR v A-G). Thus, in Neville Estates v Madden, the purposes of providing a synagogue was deemed to have consequential benefits accruing to the public ‘from attendance at places of worship of persons who live in this world and mix with the fellow citizens’ (Cross J). In this case, increasing access to the university has the positive consequence of widening access to education to those previously unable to access it, improving the pool of talent within Camford uni, and increasing public confidence in educational institutions such as Camford that they are not seen to be drawing students from a narrow class of society. Further, increasing student representation within the university also has the positive impact of making students feel more valued, and fostering a greater sense of corporate citizenship and engagement with policy. These benefits must be weighed against the countervailing disbenefits (ISC v Charity Commission; national Anti-Vivisection Society v IRC), unless the purpose is a mainstream example of the type in question (ISC v Charity Commission). Thus, the goal of broadening access may not require a balancing exercise, but the goal of increased student representation may do so.

Question 54

A group of students at Camford uni. are concerned to encourage a broader range of students to apply to places at that university and also to win increased student representation within the university administration. In October 2010, the students form a club, known as ‘Camford Needs Democracy; (CND). CND is not incorporated; a ‘club constitution’ sets out the aims and rules of the organisation, binding all the members who join, and makes provisions for an executive, including a treasurer, to operate its bank account.

CND forms links with other similar groups across the country and co-ordinates its policy with those groups. CND’s first appeal in December 2010 is a great success, and attracts hundreds of members and £5,000 in donations. To cap it all, the wealthy widow of a Camford lecturer dies in January 2011 leaving CND £20,000 in her will.

1. The residuary beneficiaries under the widow’s will challenge the bequest to CND. Will a court enforce the bequest? Should it?

The charitable trust analysis

(iii) benefit to the public

Answer 54

there must be a benefit to the public (s.2(1)(b)). The usual rule is that the benefit must be available to everyone capable, given its nature, of taking advantage of the purpose; the availability must not be limited artificially, by reference to some considerations extrinsic in nature. There is no such artificial limiting in this case, with respect to either the purpose of increasing access to Camford or to increasing student representation, that purpose being intrinsically limited to students of Camford. In education cases, there seems to be the additional caveat that the beneficiaries must not be ‘numerically negligible’ (Lord Simonds in Oppenheim). It has not been applied beyond the case of Re Duffy (trust for residents of an old people’s home). The advancement of student representation within Camford may be questioned as to whether it is ‘numerically negligible’ class to constitute a section of the public. However, given the student population of most universities numbers in tens of thousands, it is unlikely to that this constitutes a ‘numerically negligible’ class.

Thus, there is a valid charitable trust

Question 55

A group of students at Camford uni. are concerned to encourage a broader range of students to apply to places at that university and also to win increased student representation within the university administration. In October 2010, the students form a club, known as ‘Camford Needs Democracy; (CND). CND is not incorporated; a ‘club constitution’ sets out the aims and rules of the organisation, binding all the members who join, and makes provisions for an executive, including a treasurer, to operate its bank account.

CND forms links with other similar groups across the country and co-ordinates its policy with those groups. CND’s first appeal in December 2010 is a great success, and attracts hundreds of members and £5,000 in donations. To cap it all, the wealthy widow of a Camford lecturer dies in January 2011 leaving CND £20,000 in her will.

1. The residuary beneficiaries under the widow’s will challenge the bequest to CND. Will a court enforce the bequest? Should it?

Should the court enforce the bequest as such?

Answer 55

The court’s main priority should be to uphold the wishes of the testator/testatrix. The question for the court, then, must be whether this is best effectuated by upholding the widow’s wishes in the form of charitable trust, or by an unincorporated association analysis.

Question 56

A group of students at Camford uni. are concerned to encourage a broader range of students to apply to places at that university and also to win increased student representation within the university administration. In October 2010, the students form a club, known as ‘Camford Needs Democracy; (CND). CND is not incorporated; a ‘club constitution’ sets out the aims and rules of the organisation, binding all the members who join, and makes provisions for an executive, including a treasurer, to operate its bank account.

CND forms links with other similar groups across the country and co-ordinates its policy with those groups. CND’s first appeal in December 2010 is a great success, and attracts hundreds of members and £5,000 in donations. To cap it all, the wealthy widow of a Camford lecturer dies in January 2011 leaving CND £20,000 in her will.

1. The residuary beneficiaries under the widow’s will challenge the bequest to CND. Will a court enforce the bequest? Should it?

The UA analysis

(i) definition of UA

Answer 56

The definition of an UA, per Lawton LJ in Conservative Central Office v Burrell, is: ‘two or more persons bound together for one or more common purposes, not being business purposes, by mutual undertakings, each having mutual duties and obligations, in an organisation which has rules which identify in whom control of it and its funds rests and upon what terms and which can be joined and left at will’ - qualify this slightly and note variation in other case - we know that a single set of rules is significant (Labour Party + in Conservative, no UA because grew organically) - applies to the present case

Question 57

A group of students at Camford uni. are concerned to encourage a broader range of students to apply to places at that university and also to win increased student representation within the university administration. In October 2010, the students form a club, known as ‘Camford Needs Democracy; (CND). CND is not incorporated; a ‘club constitution’ sets out the aims and rules of the organisation, binding all the members who join, and makes provisions for an executive, including a treasurer, to operate its bank account.

CND forms links with other similar groups across the country and co-ordinates its policy with those groups. CND’s first appeal in December 2010 is a great success, and attracts hundreds of members and £5,000 in donations. To cap it all, the wealthy widow of a Camford lecturer dies in January 2011 leaving CND £20,000 in her will.

1. The residuary beneficiaries under the widow’s will challenge the bequest to CND. Will a court enforce the bequest? Should it?

The UA analysis

(ii) how will it hold the property?

Answer 57

Since UAs are not legal persons and thus cannot own property in their own right, a transfer to one will fail (per Leahy v AG for New South Wales) unless some suitable proxy can be found to make the transfer ‘work’. There are 3 potential proxies: an absolute transfer to members in their personal capacity; an absolute transfer to members, not in their personal capacity, but as members of the association subject to their contractual rights/liabilities to each other; and as a trust for the association’s purpose, valid under Re Denley. Each is examined in term, assessing the suitability of each as a proxy for the widow’s bequest.

Question 58

A group of students at Camford uni. are concerned to encourage a broader range of students to apply to places at that university and also to win increased student representation within the university administration. In October 2010, the students form a club, known as ‘Camford Needs Democracy; (CND). CND is not incorporated; a ‘club constitution’ sets out the aims and rules of the organisation, binding all the members who join, and makes provisions for an executive, including a treasurer, to operate its bank account.

CND forms links with other similar groups across the country and co-ordinates its policy with those groups. CND’s first appeal in December 2010 is a great success, and attracts hundreds of members and £5,000 in donations. To cap it all, the wealthy widow of a Camford lecturer dies in January 2011 leaving CND £20,000 in her will.

1. The residuary beneficiaries under the widow’s will challenge the bequest to CND. Will a court enforce the bequest? Should it?

The UA analysis

(ii) Absolute transfer to members in a personal capacity

Answer 58

By this method, property is vested in all the members and any claim their share at any time. But all members have to agree before there can be any dealing with the property (NB add case law). There is also no guarantee that the members will continue to use the property to carry out the purposes of the association - they can always sell the property and pocket the proceeds. Thus, this proxy is better suited to small associations without long-term objectives or where we can infer that the donor intended to grant a gift i.e. where they knew the members of the UA in their personal capacity (i.e. members of a tightly-knit David Bowie fan club). Thus, the court would not opt for this proxy since the CND is fairly sizable organisation (or was at its height), with long-term objectives forming part of a larger web of sister groups at other campuses, and the widow presumably intended the money to be for the objectives rather than individuals.

Question 59

A group of students at Camford uni. are concerned to encourage a broader range of students to apply to places at that university and also to win increased student representation within the university administration. In October 2010, the students form a club, known as ‘Camford Needs Democracy; (CND). CND is not incorporated; a ‘club constitution’ sets out the aims and rules of the organisation, binding all the members who join, and makes provisions for an executive, including a treasurer, to operate its bank account.

CND forms links with other similar groups across the country and co-ordinates its policy with those groups. CND’s first appeal in December 2010 is a great success, and attracts hundreds of members and £5,000 in donations. To cap it all, the wealthy widow of a Camford lecturer dies in January 2011 leaving CND £20,000 in her will.

1. The residuary beneficiaries under the widow’s will challenge the bequest to CND. Will a court enforce the bequest? Should it?

The UA analysis

(iii) Absolute transfer to members, not in their personal capacity, but as members of the association subject to their contractual rights/liabilities to each other

Answer 59

This construction was described in Neville Estates v Madden: the funds of the association are held in accordance with the rules of the association which contractually bind all the members. It was applied in Re Recher, a case with similar facts to the ones presently concerned: there, it was held that a legacy is a gift to the members beneficially, not as joint tenants or tenants in common so as to entitle each member to an immediate distributive share, but as an accretion to the funds which are the subject matter-matter of the contract which the members have made inter-se. This proxy has several key benefits: the property is held subject to the terms of the contract, rather than on trust, so there is no difficulty with the rule as to certainty and of beneficiaries and thus, future members can be easily accommodate. Furthermore, property can be held by one of two persons on behalf of the members, thus avoiding the need for all the members to act together - with its attendant problems. In this case, the treasurer (and executive committee) can hold funds on trust for all the members.

However, this proxy raises a few key issues: namely the continued holding of property for CND and its purposes is dependent upon a moral and not legal obligation because it is a necessary condition of this method that the members can come together and change the rules. Thus, they have the collective power to direct the funds towards a new purpose or to distribute it amongst themselves. One way to overcome this difficulty is for the members to collectively come together and direct the money towards the purpose, thus forcing the treasurer to apply the property for that purpose rather than for the benefit of the members (admittedly this is always vulnerable to change, but is nonetheless provides some safeguard!)

The biggest difficulty with this approach is how best to analyse the relationship of the treasurer with the rest of the members. In Re Recher, Brightman J invoked the idea of a mandate. This means only personal actions against the treasurer, since there is no legal/equitable interest in the property which can be enforced against an outsider to the association who has received the association’s property.

(However, on the facts, the greater problems is that the fact this analysis does not explain a putative bequest to a party - an agency cannot be created in a will. This matter was left unresolved in Conservative Central Office v Burrell - NB this analysis is needed if a valid UA exists!!)

Question 60

A group of students at Camford uni. are concerned to encourage a broader range of students to apply to places at that university and also to win increased student representation within the university administration. In October 2010, the students form a club, known as ‘Camford Needs Democracy; (CND). CND is not incorporated; a ‘club constitution’ sets out the aims and rules of the organisation, binding all the members who join, and makes provisions for an executive, including a treasurer, to operate its bank account.

CND forms links with other similar groups across the country and co-ordinates its policy with those groups. CND’s first appeal in December 2010 is a great success, and attracts hundreds of members and £5,000 in donations. To cap it all, the wealthy widow of a Camford lecturer dies in January 2011 leaving CND £20,000 in her will.

1. The residuary beneficiaries under the widow’s will challenge the bequest to CND. Will a court enforce the bequest? Should it?

The UA analysis

(iii) Re Denley?

Answer 60

This final construction was not always acknowledged but was found in Re West Sussex. It involves saying that the transferor constitutes a trust, with the club treasurer, or himself, or a free-standing person (e.g. will’s executor) as trustee, for the association’s purposes, validly under the reasoning of Re Denley (say a little).

There are numerous setbacks with this apporach:

1. a gift worded purely for the purposes of an outward looking (i.e. concerned with matters other than members’ interests) association is unlikely to fall within Re Denley (explain why). This poses problems for CND since while their purposes of increasing student representation is an inward looking purpose, its purpose of broadening access to Camford is an outward looking one which does not benefit its members. Furthermore, some judges (i.e. Millet) referring to the beneficiary principle, do not accept that trusts can be valid on this basis. They may reinterpret hem as an absolute transfer, treating the purpose element as mere motive (as in Re Bowes and Re Grant, where is was said that Re Denley has not application to gifts to UA, that case involving a discretionary trust).

Question 61

A group of students at Camford uni. are concerned to encourage a broader range of students to apply to places at that university and also to win increased student representation within the university administration. In October 2010, the students form a club, known as ‘Camford Needs Democracy; (CND). CND is not incorporated; a ‘club constitution’ sets out the aims and rules of the organisation, binding all the members who join, and makes provisions for an executive, including a treasurer, to operate its bank account.

CND forms links with other similar groups across the country and co-ordinates its policy with those groups. CND’s first appeal in December 2010 is a great success, and attracts hundreds of members and £5,000 in donations. To cap it all, the wealthy widow of a Camford lecturer dies in January 2011 leaving CND £20,000 in her will.

1. The residuary beneficiaries under the widow’s will challenge the bequest to CND. Will a court enforce the bequest? Should it?

The UA analysis

Should the court enforce the bequest as such?

Answer 61

Again, the court’s main purpose should be to uphold the settlor’s wishes. Thus, the question for the courts is which construction best upholds the widows’ wishes? As mentioned above, we can rule out the third purpose trust analysis due to problems caused by the outward looking nature of some of the CND’s purposes and the fact that the construction has an unclear footing in the cases. (moreover, unless expressly stated, the courts’ general suspicion of such trusts has rendered it relatively unused).

How do we decide whether the gift is caught by a contract? Per Gardner, by reference to the basis on which the donor made the gift. If one is a longstanding member of an association and regards the others as dear friends, it makes more sense that they receive the legacies not ‘on account of the club’ but rather in their personal capacity: the intention is to provide each of the friends to have a memento of the donor. If the donor was trying to leave it to the club itself, then the members will receive the legacies in that way ‘on account of the club’ - thus, these legacies should be caught by contractual rules, and the members will have to pool them and devote them to the club’s continuing activities.

The mere fact that the testatrix is a wealthy widow of a Camford lecturer suggests that she, or her late husband, may have had some personal involvement with CND and thus wished to leave a memento to each of the members. This makes the construction plausible. However, it is equally plausible that she wishes to lave the money to the members rather than its members in order to enable the association to carry on its work - in which case the contractual construction is more appropriate. In the absence of information, it is not possible to say which construction the courts should favour, but the courts should nonetheless uphold the bequest in order to honour the testatrix’s wishes, regardless of which construction it uses.

Question 62

A group of students at Camford uni. are concerned to encourage a broader range of students to apply to places at that university and also to win increased student representation within the university administration. In October 2010, the students form a club, known as ‘Camford Needs Democracy; (CND). CND is not incorporated; a ‘club constitution’ sets out the aims and rules of the organisation, binding all the members who join, and makes provisions for an executive, including a treasurer, to operate its bank account.

CND forms links with other similar groups across the country and co-ordinates its policy with those groups. CND’s first appeal in December 2010 is a great success, and attracts hundreds of members and £5,000 in donations. To cap it all, the wealthy widow of a Camford lecturer dies in January 2011 leaving CND £20,000 in her will.

2. sometime later, by May 2015, CND has achieved most of its goals; membership then declines to some 25 members, and the organisation disbands that month. £2,500 is left in its bank account. What should be done with this money?

Answer 62

Orthodoxy states that the way the funds are dissipated upon the dissolution of an unincorporated association is dictated by the way in which they were held. However, this premise is overlooked in a few decisions, notably in Davis v Richards & Wallington, where the money was returned on resulting trust to transferors whose transfers (because in performance of a contractual obligation) should have been seen as absolute. This makes it necessary to examine both the contractual and purpose trust anlyses on dissolution

Question 63

A group of students at Camford uni. are concerned to encourage a broader range of students to apply to places at that university and also to win increased student representation within the university administration. In October 2010, the students form a club, known as ‘Camford Needs Democracy; (CND). CND is not incorporated; a ‘club constitution’ sets out the aims and rules of the organisation, binding all the members who join, and makes provisions for an executive, including a treasurer, to operate its bank account.

CND forms links with other similar groups across the country and co-ordinates its policy with those groups. CND’s first appeal in December 2010 is a great success, and attracts hundreds of members and £5,000 in donations. To cap it all, the wealthy widow of a Camford lecturer dies in January 2011 leaving CND £20,000 in her will.

2. sometime later, by May 2015, CND has achieved most of its goals; membership then declines to some 25 members, and the organisation disbands that month. £2,500 is left in its bank account. What should be done with this money?
   (i) The contractual analysis on dissolution

Answer 63

The fate of the money is determined largely by whether the original contract is discharged, in which case the fate of the money is determined without reference to it, or whether the original contract remains in force - i.e. the dissolution terminates only the obligation to spend the money on association’s purposes, its place being taken up by another obligation under the same contract, which determines the fate of the remaining money.

Given CND disbands (discuss GKN), this is indicative of the original contract being discharged- the constitution (the contract) does not remain in force. In the absence of any intention as to where the £2,500 should go, the money will simply rest at the time of the dissolution in their pre-existing shares, without any obligation to use it in a particular way (Hanchett-Stamford v A-G).

NB: Not all the property may be held on this analysis (e.g. membership fees may, but not the £5,000 in donations!!)

Question 64

A group of students at Camford uni. are concerned to encourage a broader range of students to apply to places at that university and also to win increased student representation within the university administration. In October 2010, the students form a club, known as ‘Camford Needs Democracy; (CND). CND is not incorporated; a ‘club constitution’ sets out the aims and rules of the organisation, binding all the members who join, and makes provisions for an executive, including a treasurer, to operate its bank account.

CND forms links with other similar groups across the country and co-ordinates its policy with those groups. CND’s first appeal in December 2010 is a great success, and attracts hundreds of members and £5,000 in donations. To cap it all, the wealthy widow of a Camford lecturer dies in January 2011 leaving CND £20,000 in her will.

2. sometime later, by May 2015, CND has achieved most of its goals; membership then declines to some 25 members, and the organisation disbands that month. £2,500 is left in its bank account. What should be done with this money?
   (ii) the purpose trust analysis

Answer 64

Following dissolution, any express gift will come into operation, and if there is no express gift over (which is the most likely scenario in the case of a purported transfer ‘to’ an association), there will be an automatic trust in favour of the transferor (Megarry Vandervell No 2) i.e. the widow’s estate.

As to whether the resulting trust arises in favour of the donors who donated the money during the appeal, in principle, the beneficial interest under the resulting trust can be disclaimed, leaving it bona vacantia (Westdeutsche) but this possibility was denied in Air Jamaica on the basis that RTs do not depend on the settlor’s intention but ‘respond to the absence of any intention on his part to pass the beneficial interest to the recipient’ (per Lord Millet, a view which echoes Birks and chambers’ thesis of resulting trusts and can also be found in his judgment in Twinsectra). However, it is argued that this approach is wrong in principle and should be ignored. Firstly, it is a Privy Council case, so not binding. Secondly, resulting trusts should, per Grevling, rater be seen as responding to ‘the absence of any intention to pass a beneficial interest to the recipient of anyone else’, so as to allow for express trusts themselves - and so too for bona vacantia. Further, the interest under a resulting trust can be gievn away, certainly after is has vested (Re Vandervell No. 2) and presumably also before. Approaching the matter either way, the conclusion seems to be that disclaimer should be possible, Indeed, disclaimer seems to be the conclusion where the transfer was small and anonymous, indicating that the transferor probably wanted nothing back (was giving it ‘out and out’) - as in the case of donation via street collection on in the present case, via a CND fundraising appeal. This is how an association’s income from street collections was dealt with in Re West Sussex… However, a better reading of the transferor’s intention to give ‘out and out’ is probably to see the transfer as having been given under the contractual analysis in the first place. In which case, the Hanchett-Stamford v AG approach discussed above will apply.

(nb maybe say something about how it should be shared?)

Question 65

Cunnack v Edward

Answer 65

Society had been established to raise a fund by members’’ subscriptions to provide annuities for the widows of deceased members. Last member died and surplus of £1,250.

Held: widows, and not the members, were the society’s beneficiaries, accordingly there would be no resulting trust of the surplus in favour of the estates of the members of the society. The surplus went to the Crown instead as bona vacantia.

As Smith LJ said, ‘as the members paid his money into the society, so he divested himself of all interest in this money for ever, with this one reservation, that if the member left a widow she was to be provided for during her widowhood’.

Question 66

When might bona vacantia be appropriate?

Answer 66

where the rules of the association do not permit a distribution according to the members’ contract inter se, and where in the case of a donation made on trust, a RT is inappropriate because the donor clearly intended to par with the donation outright and for all time.

• this latter point was established in Re West Sussex and confirmed obiter by LBW in Westdeutsche!

Question 67

How to distinguish between Re Gillingham and Cunnack?

Answer 67

In Cunnack, the funds were held subject to a contractual arrangement. Harman J was not impressed with the crown’s argument that the RT solution should be avoided due to the impracticalities of identifying the anonymous donors. His lordship was convinced that the RT was appropriate to named donors and saw no reason to suppose that the anonymous donor had any larger intention than the named donor as to the ultimate destination of their donation. In the event that the anonymous donors might not be found, the surplus should be held on the courts’ account, but should not pass to the crown.

The preferred approach today is to regard the anonymous donations as out and out donations. The intention to make an outright disposition is said to rebut the presumption of a resulting trust.

Question 68

How was Re West Sussex distinguished from Re Bucks?

Answer 68

Rather artificially, on the basis that Re West S case involved a simple UA, whereas the latter involved a friendly society.

The facts were that the society had been established to make provision for widows and orphans of deceased members of Bucks constabulary. It was then amalgamated with Thames valley constabulary. The rules of the society did not make provision for the distribution of surplus assets on dissolution.

(1) Walton J held that as there had been members in existence at the time of dissolution, the surplus would be held for them according to a term that could be implied into the contract between the members. This could operate to the to total exclusion of the claim on behalf of the Crown.
(2) as here, the contract between the members provided no other method of distribution, such funds were prima facie to be distributed amongst the surviving members in equal shares.
- walton j preferred the analysis of Brightman J in Re Recher to that of Goff J in Re West Sussex: whereas goff sought to draw a distinction between an association established for the benefit of its members and an association for third parties or purposes, Walton held that ‘whether the purposes for which the members of the association associate are a social club, a sporting club, to establish a widows’ and orphan’s’ fund, to obtain a separate Parliament for Cornwall, or to further the advance of alchemy. It matters not.’

Question 69

Re Astor

Answer 69

Re Astor’s Settlement Trusts [1952] Ch 534 is an English trusts law case, concerning the principle that non-charitable trusts must be for beneficiaries and not abstract purposes.

Relevant when showing that a gift may be construed as a gift to members of UA subject to contract, even though appears to be directed to some purpose, where it is inward-looking i.e. members are beneficiaries (Re Lipinski); but… if outward-looking, then would fail as would breach Re Astor