THE DISSOLUTION OF UNINCORPORATED NON‐PROFIT ASSOCIATIONS
| DOI | http://doi.org/10.1111/j.1468-2230.1980.tb01612.x |
| Date | 01 November 1980 |
| Author | Brian Green |
| Published date | 01 November 1980 |
THE DISSOLUTION
OF
UNINCORPORATED
NON-PROFIT ASSOCIATIONS
UNINCORPORATED
associations are groups of persons who have come
together for a common purpose, and who have not incorporated their
combination under any of the special or general statutes conferring
legal personality under English law.2 There are many thousands
of
these associations in the United Kingdom, with widely dilbring
functions, from small members' clubs of little or no social significance.
through
to
friendly societies and powerful trade unions which may
have
a
profound effect on society.3 Between them they control assets
running into hundreds of millions of pounds. Many of them terminate
their activities each year and still more are in a becalmed or moribund
condition, either ripe
for
termination or,
if
certain authorities are to
be
f~llowed,~ already automatically dissolved by conclusion of law.
Despite these facts, the law relating
to
the dissolution
of
such associa-
tions
is
in
a
most unsatisfactory condition. The cases are contradictory
and, even when they have managed to reach common conclusions,
their reasoning has often been sparse and confusing. Thc area is a
difficult one. Unincorporated associations reside on
the
shifting inter-
face of the law of contract and the law of trusts, and one's answers
to the proprietary questions posed by their dissolution must necessarily
reflect one's assumptions about the proper relationship between these
two
conceptual receptacles
of
English law.
The purpose of this article is to offer
a
systematic treatment of
this vexed question of dissolution of unincorporated non-profit associa-
tions. The first section briefly sketches a contractual foundation for the
unincorporated association. In the second section, the modes
of
dissolving such bodies arc catalogued. And in the third part the
consequences of their dissolution are investigated.
1.
UNINCORPORATED ASSOCIATIONS
Although in everyday language any combination of two or more
persons
is
an
"
association," when lawyers speak
of
"
unincorporated
1
See generally
:
Ford,
Unincorporated Non-Profit Associations
(1959)
Oxford;
Ciower,
PrincipZes
of
Modern Company
IAW
(4th
cd.,
1979),
Chap.
12;
Stoljar,
Groups
and Entifies: An Znqufry
into
Corporate Theory
(1973)
Canberra; and also Halsbury's
Laws
of
England
(4th
ed.,
1974)
on Clubs, Unregistercd Companies and Friendly
Societies.
2
Apart
from the
Companies Act
1948,
other important incorporating statutes are
the Building Societies Acts
1874
to
1962,
and
the
Industrial and Provident Societies Act
1965.
3
The greater thc potential social impact
of
thc association, the stronger the argu-
ment
for
statutory regulation. For Friendly Societies, see
the
Friendly Societies Acts
1896
to
1974,
registration under which is voluntary.
The
vast majority
of
Trade Unions
are cxprcssly denied corporate status, but are treated as though incorporated entities
in important respects:
s.
2
(1)
of
the Trade Union and Labour Relations Acts
1974.
626
4
Sect.
2
(c)
below.
Nov.
19801
DISSOLUTION
OP
UNINCORPORATED
ASSOCIATIONS
627
associations
”
they usually have a narrower concept in mind. Groups of
persons congregating together are not of legal significance unless they
havc chosen to regulate their mutual rights and obligations by
contract-a matter to be decided on the facts of each case.5 Thus,
four persons meeting to play bridge on a particular night every week
do not constitute
an
“
unincorporated association,” and
if
one of their
number is excluded from future sessions, that person will not have
access to the courts for redress of the social slight he has suffered.
Toleration of another’s company
is
a consensual, not a contractual,
act; and the frustrated bridge player’s dissatisfaction would be best
taken up with his former partners, for he cannot be said to have
suffered the breach of a private legal right.
Where the reciprocal rights of associating persons are founded in
contract, its terms will usually be evidenced by their association’s
rules
6;
although the extent to which a society is governed by a formal
constitution will vary according to the level of sophistication which that
body aEects. The rules will generally specify the purposes for which
the association has becn formed, and make provision for procedural
matters such as the admission of members, the termination of member-
ship, the variation of rules, and the everyday management of the
association’s affairs. Interestingly, however, it has never been usual
for a society’s rules to contain any provision relating to its dissolution,
and in this event, the question
of
dissolution
has
been generally left
to be settled by judge-made law.
Ownership
of
the
Association’s
Property
Since an association is,
in
essence, no more than a simple contractual
aggregation
of
individuals without a separate legal identity beyond the
personality derived
of
those individuals, it follows that any property
beneficially
“
owned
”
by the association must actually belong to its
member^.^
As
a matter
of
convenience, such property will normally be
placed in the hands of one or more trustees-whether formally
so
designated or not-upon trust to be dealt with in accordance with the
association’s rules. The beneficiaries of
this
trust of the association’s
property will, collectively, be its members.&
The nature of each individual member’s interest in
his
society’s
communal property is more difficult to discern. One view is that
associations are characterised by a special form of co-ownership whose
6
For another
view,
see Stoljar,
Groups and Entities,
p.
43;
although the vast
majority
of
modern authority expressly contradicts him-see, particularly, cases at
note
6,
below.
6
Re Recher’s Will Trusts
C19721
Ch.
526, 538;
Re
Sick
and Funeral Society, Golcar
119733
Ch.
51,
59;
Re
Bucks
Constabulary
(No.
2) C19791 1
W.L.R.
936, 943;
and
Re Grant’s Will Trusts
C19791
3
All
E.R.
359, 364.
See
e.g.
O’Connor
M.R.
in
Tierney
v.
Tough
C19141
1
I.R.
142, 155;
and
Brightman
J.
in
Re Recher’s Will Trusts
C19723
Ch.
526, 538-539.
This is to say nothing of any further, quite separate, trust which may restrict the
mcmbcrs’ entitlement to take
the
nssocialion’s property
for
thcmselves absolutely
:
see
Walton
I.
in
Re
Bucks
Conrrubulury
(No.
2)
C19791 1
W.L.R.
936, 946;
and Sect.
3
(b)
(ii)
bclow.
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