Hunt v McLaren
| Jurisdiction | England & Wales |
| Judge | Mr Justice Lawrence Collins |
| Judgment Date | 04 October 2006 |
| Neutral Citation | [2006] EWHC 2386 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No HC 05 C 02942 |
| Date | 04 October 2006 |
[2006] EWHC 2386 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand
London WC2A 2LL
Mr Justice Lawrence Collins
Case No HC 05 C 02942
In The Matter Of The Horley Town Football Club
Mr Gilead Cooper (instructed by Hepburns) for the Claimants
Mr Henry Legge (instructed by Adam & Remers) for the First Defendant
Mr Joseph Goldsmith (instructed by Adam & Remers) for the Second Defendant
Miss Sarah Haren (instructed by Adam & Remers) for the Third and Sixth Defendant
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this judgment and that copies of this version as handed down may be treated as authentic
()
I Introduction
In 1948 Major Jennings, the president of the Horley Football Club ("the Club"), settled some land known as "The Defence" on trust to secure a permanent ground for the Club.
In May 2002 The Defence was sold to a developer for almost £4 million. The sale took place with the appropriate approvals, and no issue arises as to its propriety. The trustees used the proceeds to buy another site for £850,000, and to construct a Club house and ancillary facilities. The costs of construction and furnishing amounted to approximately £2.2 million.
In the course of this purchase and development, the newly acquired land was subjected to certain restrictive covenants, which limit the use of the site to sports and leisure. As consequence it is likely to be difficult to sell the assets now held by the trust; and if they were sold, they would probably fetch significantly less than was paid for them.
The Claimants ("the Trustees") are the present trustees of the Club, and seek the directions of the court with regard to certain questions concerning the basis on which they hold the assets vested in them as trustees. These questions relate primarily to the validity of the underlying trust and, on the assumption that the trust is valid, the proper construction of the Rules of the Club.
The Club is an unincorporated association. An unincorporated association is not a legal person and is not an entity capable of holding property. It has been defined as "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 on what terms and which can be joined or left at will": Conservative and Unionist Central Office v Burrell [1982] 1 WLR 522, 525, per Lawton LJ. But, as Underhill and Hayton, Law Relating to Trusts and Trustees, 16 th ed., pages 123–124, say:
"Gifts to or in trust for unincorporated associations raise technical problems that will amaze or confound laymen wishing to benefit an association. The technical problems flow from the fact that an unincorporated association is not a legal person capable of owning property and of being the subject of legal rights and duties."
The First Defendant represents the interests of the Committee and the present members of the Club other than "temporary members" and "Associate Members." The Second Defendant represents the interests of all persons falling with the definition of "members other those represented by the First Defendant." The Third Defendant represents the interests of the members of the Club (and their estates) who were members of the Club on September 1, 1948. The Fourth Defendant is the executor of the estate of Major Jennings, and represents the interests of those who would benefit if the original gift was void. He has not taken any part in the proceedings. The Fifth Defendant is a former trustee, who was a trustee at the date of the sale of The Defence and the purchase of the new grounds. He is interested in obtaining relief under section 61 of the Trustee Act 1925 if such relief is found to be necessary. The Sixth Defendant represents the interests of former members other than (a) those represented by the Third Defendant, and (b) "temporary members", "temporary club members" and "Associate Members". The purpose of this class of representation is to address the possibility that the gift as originally constituted was valid, but that a change in the Rules has resulted in a trust which cannot be recognised as a matter of law.
II The Declaration of Trust
By a Declaration of Trust dated September 1, 1948 ("the Deed") and by a Conveyance of the same date Major Jennings settled certain freehold land known as "The Defence" on trust "for the primary purpose of securing a permanent ground for The Horley Football Club of which Club he is president …" on the terms set out in the Deed (Recital 3). Notwithstanding the use of the word "permanent" in the recitals, clause 11 defines the "perpetuity period" for the purposes of the Deed as 21 years from the death of the last surviving descendant of King George VI living at the date of the Deed.
The Deed is supplemental to a conveyance of land to the original trustees on trust for sale. The trustees' power of sale (the trustees' power to postpone the application of the statutory trust for sale) is therefore the statutory power and is prima facie not limited by perpetuity, notwithstanding the royal lives clause at clause 11: Law of Property Act 1925, section 23.
By clause 1 of the Trust, Major Jennings directed the trustees to hold The Defence on trust for sale with power to postpone sale (provided that no sale shall be made during the perpetuity period as defined by clause 11 without the consent of the Club):
"AND UPON FURTHER TRUST to permit the Club to use the same free of rent for the purposes of the Club and for such other purposes of a recreational nature as the Committee shall from time to time determine unless and until the Committee shall otherwise resolve and communicate such resolution to the Trustees."
The "Committee" is defined in the Deed to mean the persons mentioned in the First Schedule of the Deed "or other the persons for the time being purporting to act as the Committee of the Club."
Clause 3 provides:
"If and when the said property is sold as aforesaid the proceeds of sale and the investments and interest thereon for the time being representing the same shall be held upon trust for all or any of the general purposes of the Club and so that the whole or any part of such proceeds of sale or investments representing the same may be treated and expended as income accruing to the Club to be used as and for the said general purposes of the Club in accordance with the Rules of the Club and the receipt of the Treasurer of the Club for any sum or sums paid to him for the purposes aforesaid shall be a sufficient discharge to the Trustees without inquiry concerning the purposes for which the same sum or sums shall be used or expended."
Clause 4 provides:
"Until sale the Trustees shall hold the said property upon trust to allow the same or any part thereof and the rents and profits arising out of letting the same or any part thereof to be used for such purposes as the Rules of the Club for the time being in force shall authorise and the Committee direct or in default of such direction as the Trustees shall in their discretion think fit."
Before sale, the trustees are to permit The Defence to be used for the purposes of the Club or other purposes of a recreational nature; after sale, the proceeds may be treated as an accretion to the funds of the Club, as income for its general purposes.
Clause 6 deals with eligibility to be or remain a trustee, and concludes with the following proviso
"… PROVIDED ALWAYS that in the event of the Club being in abeyance from any cause or becoming defunct this Clause shall not operate to preclude the Trustees or the Committee as constituted at the date on which the Club becomes in abeyance or defunct as the case may be from exercising their full powers hereunder anything to the contrary notwithstanding."
This is the only provision dealing explicitly with the possibility of the failure or termination of the Club. But it gives no guidance as to how the assets of the trust are to be dealt with in such an event, or who the beneficiaries would be.
III The Rules of the Club
The current Rules of the Club ("the Rules") are dated June 25, 2004. The material provisions are as follows:
(1) Rule 1 provides that the objectives of the Club "shall be the furtherment of sporting, social and recreational activities."
(2) Rule 3 provides that the Defence will be held in trust for the Club by three trustees (of whom there are at present only two).
(3) Rule 4 provides:
"The club shall be a members club and shall consist of members and temporary members. Temporary members shall consist of
a. Members and Supporters of visiting teams
b. Persons attending functions where the club premises have been hired for the purpose of that function. This is provided that a list of all persons attending is submitted to the club secretary at least 7 days in advance.
c. Members of other Associations and Clubs who are attending functions hosted by Horley Town Football Club. This is provided that a list of all persons attending is submitted to the club secretary at least 48 hours in advance…"
(4) Rule 5 sets out the rates of subscription for six categories of members, namely Adult Playing Members, Youth Members, Junior Members, Senior Citizens, Adult Social Members, and Family Social Members. Rule 5 also introduces a further category of membership, namely "Associate Members", "who will enjoy the same rights as full...
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