Unincorporated Associations Notes

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).

  • 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)

  • 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.

  • 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

  • Creates problems of asset holding and management, particularly in the context of dispositions in favour of the association.

  • 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).

  • 1. Property cannot be vested in UA, so property usually vested in the names of specified persons (the members)

  • 2. Create a Bare Trust for the current members

  • = ‘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.

How 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).

  • 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):

  • 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’

  • 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).

  • 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

  • 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...

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