Someone recently bought our

students are currently browsing our notes.

X

Unincorporated Associations Notes

GDL Law Notes > GDL Equity and Trusts Notes

Updates Available  

A more recent version of these Unincorporated Associations notes – written by Cambridge/Bpp/College Of Law students – is available here.

The following is a more accessble plain text extract of the PDF sample above, taken from our GDL Equity and Trusts Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:

Lecture 9 - Unincorporated Associations
[ 1 of 5 exceptions of beneficiary principles described in Re Endacott]Unincorporated associations = non-charitable (quasi-charitable), non-profit associations such as sports clubs and societies and member social clubs (extremely common). o Defined per Lawton LJ in Conservative and Unionist Central Office v Burrell:
? 2 or more people
? bound by 1+ common purpose [not business]
? bound by mutual undertakings (rights/duties and obligations) arising from contract between them (i.e. membership agreement or constitution document)
? Organisation must have rules, identifying who controls/has funds and terms on which control can be exercised/distributed (i.e. usually voting with majority or executive power).
? Organisation can be joined/left at will (i.e. by joining you voluntarily accept membership and by leaving you give up rights in association =
voluntary nature of agreement) o

o

Definition of UA:
? NOT a legal entity - just an aggregate of its members
? No personality distinct from its members - UA just individuals (unlike corporation)
? Can't sue/be sued in its own name (so cannot hold property, or be benefifiary of trust, or be trustee).
? UA can exist in perpetuity - Is not bound by perpetuity rules (i.e. last forever, doesn't have to come to an end -bit like a charity).
? Membership of UA is fluid - unless UA stops taking members; the membership group will change/dynamic as people join/leave
? Will continue until its dissolved (by member vote or if fall below 2 members), OR association will become Moribund [i.e. no members as all individuals have died, UA will cease to exist]. Re Koeppler's Will Trust = Unincorporated Association definition = "an association of persons bound together by identifiable rules and having an identifiable membership"

Difficulties presented by UAs
? Key problem = They do not have a legal personality - they are not recognised as a separate legal person and so the law only 'sees' the individual members. o Viscount Simonds in Leahy v AG for New South Wales = UAs nothing more than 'artificial and anomalous conception' as a continuing entity with no separate legal personality o Creates problems of asset holding and management, particularly in the context of dispositions in favour of the association. o Example - With no legal personality, an unincorporated association cannot be the subject of a gift or the beneficiary of a trust (little more than a group of individuals who share a common interest).

A disposition in favour of an unincorporated association will therefore inevitably look like a purpose trust (trust to carry out the purposes of the association) - and consequently encounter all problems discussed in last topic, since no beneficiary and uncertainty. Courts changed rules = to circumvent that association itself cannot own property as doesn't have legal personality (gifts made by will to unincorporated associations). o 1. Property cannot be vested in UA, so property usually vested in the names of specified persons (the members) o 2. Create a Bare Trust for the current members o = 'sub-species of joint tenancy' (Hanchett-Stamford v AG)
? when property vested in specific names of individual persons - individual members cannot sever their interests.
? Bare trust - bound by a purpose, so essentially type of non-charitable purpose trust. oHow Unincorporated Association can hold property (disposition of your property):Different interpretations of gift = Enable gifts to UAs to be upheld. Courts will decide which interpretation best reflects testator's presumed intention (Brightman J in Re Reacher's Will Trusts). o If gift to UA challenged = court will look at facts and consider different constructions in turn (Re Grant; and Philippe v Cameron).

= if doesn't fall into disposition method - disposition will fail, and property will stay with Settlor/Donor's estate.Important to know which interpretation (different constructions) is likely to be used - to get around issue UA doesn't have legal personality for UAs to hold property): o NB - law in this area is constantly evolving (older authorities looked at in light of more recent decisions and liberalization of Perpetuity Rule by Statute since 1964)?1. Gift for present members beneficially: UA still composed of individual members who do have their own legal personality!
Members each 'pocket a share' o Construction sees gift to named association treated as gift to individual member of association (satisfies beneficiary principle and avoids perpetuity rules as gift vest immediately in ascertainable individuals). o Individual members each 'pocket their share' of gift with free choice over how money spent (no obligation to use gift for UAs purposes, unlikely to be testator's intention). Case = Leahy v AG for NSW o Summary = Australian testator left farm on trust for nuns/brothers of various non-charitable religious orders. UA didn't have legal personality, so court looked whether it could be treated as immediate gift to members.Viscount Simmonds identified 3 reasons why testator was unlikely to have intended gift to individual members
? 1. Wording of gift legacy - Must look like gift freely given and look like gift supposed to vest in individual members. [unlikely as meant to be for UA]
? Expressed to be held 'on trust' for selected orders, capital kept intact so use of property always available for benefit of those members.
? 2. Nature of beneficiaries - How recipients of property can be classified. More members you have the less likely this interpretation will work.
? members numerous and spread all over world, suggested legacy to each was not intended.
? 3. Subject matter of gift (property)- Property should be something amenable to division like personal property. Land much more difficult.
? 730acre farm, presumably each member was not intended to have their own small plot of land on farm.
? Note - personal property (i.e. like Cocks v Manners) more easily divisable among number of beneficiaries.
? Note - property land (i.e. like Leahy) not amenable to distribution. Hard to parcel up land into shares which is extremely unlikely, so testator probably didn't intend that. Other option, is to sell it and divide the proceeds which if someone is disposing of land via UA they want it to be used and not sold.
= i.e. property given over as if each individual member had been named on the face of the will. UK Case = Cocks v Manners o Gift to associations with no direction/qualification about how to be used can work.
[UNCOMMON almost unheard of - disposition method] - can be used to save gift in favour of UA, only if reflects testator's intention. Need to consider (3 points of in Leahy). Difficult to establish as traditional way around UA, but very very uncommon!
o??

(on point 2 about Nature of Beneficiaries) - Using club name as convenient label o Obiter in Re Grant's WT = construction only suitable where name of association used as convenient label to describe class/group of persons (i.e. dining or social club i.e. 10-12 members) - club name effectively used as form of shorthand for individual beneficiaries, instead of spelling out member's names in full (old and unsophisticated way of using Contractual Analysis below).

? ? ? ? 2. Gift/Trust for present and future members
? [SO uncommon it has never been tried] - theoretically possible.
?? ? ?Ascertained or ascertainable beneficiaries

Buy the full version of these notes or essay plans and more in our GDL Equity and Trusts Notes.

More GDL Equity And Trusts Samples