Trusts 13: Rights 'Held' by Unincorporated Associations Cases

Terms in this set (11)

Elmslea upon trust for such order of nuns of the Catholic Church or the Christian Brothers as my executors & trustees shall select. This wide power of selection allowed the trustees to select orders of nuns that were not charitable under the law. This trust was saved by the application of a New South Wales statute, which restricted the power of selection to charitable objects. HC of Australia also accepted that the gift would also be valid as a gift to a UA, given to the members for the benefit of the community.

A testator, who died in 1955, by his will, made in 1954, provided by clauses 3 and 5: "3. As to my property known as 'Elmslea' ... upon trust for such order of nuns of the Catholic Church or the Christian Brothers as my executors and trustees shall select" 5. As to all the rest and residue of my estate both real and personal upon trust to use the income as well as the capital to arise from any sale thereof in the provision of amenities in such convents as my said executors and trustees shall select either by way of building a new convent or the alteration of or addition to existing buildings occupied as a convent or in the provision of furnishings in any such convent or convents the receipt of the Reverend Mother of that particular order of nuns or convent shall be a sufficient discharge for any payment under this clause."

It was not disputed that the phrase "orders of nuns" was not used in its strict canonical sense, but included also Congregations of Sisters, and among the orders were contemplative orders, which were not regarded as charitable in the legal sense of that word. By section 37D of the Conveyancing Act, 1919-1954, of New South Wales: "(1) No trust shall be held invalid by reason that some non-charitable and invalid purpose as well as some charitable purpose is or could be deemed to be included in any of the purposes to or for which an application of the trust funds or any part thereof is by such trust directed or allowed."

On an originating summons issued by the trustees of the will to have determined the validity of the dispositions in clauses 3 and 5:-

Held, first, that the gift in clause 5 was saved from invalidity by section 37D of the Conveyancing Act. That section applied not only where a testator had expressly indicated alternative purposes, the one charitable and the other non-charitable or not necessarily charitable, but applied also where, as here, the gift was for a purpose described in a composite expression embracing both charitable and non-charitable purposes, for both orders of nuns, the charitable and non-charitable - active and contemplative, the valid and the invalid - were embraced in the single phrase "orders of nuns." Held, (1) the gifts in both clauses were saved in so far as they related to active (but not contemplative) orders of nuns by s.37d (1); (2) the gift in cl.3 did not take effect as an absolute gift to the members of the selected order for the time being; therefore, the trustees could not select a contemplative order under that clause.
A legacy to a non-charitable unincorporated association which has ceased to exist at the date of the testator's death will fail. Per curiam: the normal construction of a legacy to a non-charitable unincorporated association is that it is an accretion to the funds held by the officers of the association subject to the contract between the members formed by the constitution and rules. The testatrix left a legacy to a non-charitable association which was dissolved and merged with another before her death.

Held, that the gift could not be an accretion to the funds of an organisation different from that which the testatrix had had in mind, to be held on the terms of a contract different from that contemplated by her, so the gift failed.

By a will dated May 23, 1957, the testatrix gave a one-sixth share of her residuary estate, subject to a life interest in her husband's favour, to "The Anti-Vivisection Society, 76 Victoria Street, London S.W.1," absolutely. She died on May 6, 1962, and her husband on April 26, 1968. Until the end of 1956, a non-charitable unincorporated society, known as "The London and Provincial Anti-Vivisection Society" (the London & Provincial society), had carried on its activities at 76 Victoria Street, but on January 1, 1957, it was amalgamated with a larger non-charitable unincorporated society, known as "The National Anti-Vivisection Society" of 27 Palace Street, London S.W.1, and its premises at 76 Victoria Street were closed down. On amalgamation, the larger society changed its name to "The National Anti-Vivisection Society (incorporating the London and Provincial Anti-Vivisection Society)." In 1963 "The National Anti-Vivisection Society Ltd." was incorporated and the assets were vested in it. That company was similarly not a charity.

On the question whether the gift was valid:-
Held: (1) that the gift must be construed as a gift to "The London and Provincial Anti-Vivisection Society, 76 Victoria Street," and could not be treated as a gift to the larger combined society

(2) That the gift ought not to be construed as a gift in trust for the purposes of the London & Provincial society and that, assuming that the London & Provincial society had continued its separate existence until the testatrix's death, the gift could have taken effect as a legacy to the members of the society beneficially, not as joint tenants or as tenants in common so as to entitle each such member to a distributive share, but as an accretion to the funds which constituted the subject-matter of the contract by which the members had bound themselves inter se, but that since the London & Provincial society had been dissolved before the date of the will and the contract between its members terminated, the gift could not be construed as a gift to the members of a different association as an accretion to the funds subject to a different contract, and that accordingly the gifts had failed.
A gift to a non-charitable association, which does not create a trust, cannot be valid, except where it may be construed as a gift to the existing members of the association, either as joint tenants or beneficially, subject to their contractual rights and obligations as members. In 1959, on the purchase of a property, for use as the C constituency party headquarters, a trust was created so that the property could be dealt with by the general management committee, with gift over to the Labour Party absolutely. After a reorganisation of constituency boundaries in 1970, the new constituency party's general management committee found its powers subject to the ultimate control of the National Executive Committee. In 1975 T demised all his real and personal estate "to the Labour Party property committee" (accepted as meaning the new committee to C constituency headquarters) provided those headquarters remained in CUDC area, with gift over in default to the Labour Party absolutely.

On the executors' application to determine the validity of the gift and to ascertain the beneficiaries:
Held, (1) that unless the terms of the gift to the Labour Party property committee could be construed as a gift to the existing members of an unincorporated body either as joint tenants or for their benefit subject to their contractual rights and obligations as members of the association, there must be a trust created in order for the gift to be valid; that, since the testator had indicated that the gift was to the property committee and not to the trustees of the 1959 trust and had also envisaged, by the proviso and the gift over to the National Labour Party, a situation where the constituency party would no longer need headquarters, the terms of the will could not be construed as granting a gift to be held under the terms of the 1959 trust deed and, accordingly, no valid trust had been created.

(2) That, if the gift was to the existing members of the constituency association with a direction, not amounting to a trust, to use the property for "headquarters purposes", it was invalid (i) because on the construction of the clause, the gift could not be to existing members of the association as joint tenants and, therefore, to be valid the gift had to be for the benefit of the existing members subject to the contractual rights and obligations as members, and for that purpose it was essential that the members who received such a gift should be free to dispose of the fund in any way they thought fit in furtherance of the testator's intentions or to divide it beneficially among themselves, and that the rules of the constituency association made it plain that its members were controlled by an outside body and did not have such powers; and (ii) because the gift was expressed to be to the Labour Party property committee and not the members of the association.
The Conservative and Unionist Central Office was assessed to corporation tax in respect of the income arising from its funds for the five years from March 1972 to 1976 inclusive. The party appealed contending that it was not an unincorporated association and, therefore, not a "company" within the meaning of section 526 (5) of the Income and Corporation Taxes Act 1970. 1 The commissioners found that no one could join the party directly; that membership could be obtained either through a local constituency association or through the parliamentary party; that members of local constituency associations, and the associations themselves, had no constitutional links with the parliamentary party; that the local associations chose their own parliamentary candidates and if a candidate was elected a member of the House of Commons he became a member of the parliamentary party as the representative of the constituency and was not a delegate of the local constituency association. In the party organisation the leader of the party was at the apex of the entire structure. He was elected by the Conservative members of Parliament in the House of Commons and was then presented for election to a special meeting representing the party as a whole. The commissioners decided that the party was an "unincorporated association" and that its profits were accordingly chargeable to corporation tax under section 238 (1) of the Act. The party appealed. Vinelott J. allowed the appeal holding that the party was a political movement with many parts working together towards a common end but was not an "unincorporated association" within section 526 (5).

On appeal by the Crown:—

Held, dismissing the appeal, that on the true construction of section 526 (5) of the Income and Corporation Taxes Act 1970 an unincorporated association was an association between two or more persons bound together for one or more common purpose, not being business purposes, by mutual undertakings, each having mutual duties and obligations, and was an organisation which had rules identifying where its control rested and the terms on which it could be joined or left; that the bond of union between the members of such an association had to be contractual and the agreement which brought the contract about should have been made on some identifiable occasion or in some identifiable circumstances; and that, on the facts, there was nothing linking contractually and directly members of local constituency associations to members of Parliament and, accordingly, the party lacked the characteristics of an unincorporated association for the purposes of the taxing statutes.
During the war years from 1940 to the end of 1944 collections were made weekly from the employees of a company operating three factories, at first informally and later by agreed deductions from wages, towards a war emergency fund. The money was for some time expended on comforts or money payments for ex-employees serving abroad or at home. After September, 1940, it was decided to use the collected funds also to relieve, and after January, 1944, solely to relieve cases of employees who had suffered damage and distress from air raids. Claims were only entertained from persons who had contributed to the fund, but no means test was imposed on any application. The fund having been closed a summons was taken out for determination of how the surplus moneys were to be dealt with. Held that there was no public charitable purpose in regard to the fund and that the contributors were entitled to a return of a due proportion of their contributions but must bring into hotchpot any benefit they had already received: On appeal by the Crown:-

Held, (affirming Cohen J.'s decision), that the fund was not held on any charitable trust. It was a fund collected by employees of a company to provide benefits for themselves and in view of this personal relationship the fund was not applicable for the benefit of the public or any section of the public so as to make it subject to a charitable trust within the fourth class of charitable trusts laid down by Lord Macnaghten in Income Tax Commissioners v. Pemsel. Nor was there any element of poverty in the present case so as to bring it within those cases where trusts which appeared otherwise to be of a private nature were held to be charitable because they were for the relief of poverty.
On closure of a fund for the benefit of third parties there is no resulting trust in favour of subscribers or outright donors. Members of the West Sussex Constabulary subscribed to a fund for granting allowances to widows and dependants of deceased members. Revenue was also derived from the proceeds of (a) entertainments, raffles and sweepstakes; (b) collecting-boxes; (c) donations, including legacies. On January 1, 1968, the constabulary was amalgamated with other police forces. On June 7, 1968, a meeting of members resolved to amend the fund's rules so as to enable them to wind it up and distribute its assets under a scheme. On a summons by the trustees for the court's approval, the court having ruled that there were no members after December 31, 1967, capable of amending the rules or winding up the fund.

Held, (1) that the fund could not belong to the members themselves since only third parties could benefit; that there could not be a resulting trust since their money had been put up on a contractual, not a trust, basis; and so their contributions, apart from any claim members might have in contract arising from frustration or total failure of consideration, were bona vacantia; (2) that no resulting trust arose from outside contributions under class (a) since these had been made on a contractual basis, nor under class (b) since these donors had intended to part outright with their money; so both were bona vacantia; and (3) in the case of class (c) the purpose of the donations was unequivocal, so there was a resulting trust of these for the donors or their estates.
The last surviving member of an unincorporated association was entitled to its assets, free from any restrictions imposed by the rules of the association.

The claimant (S) sought a declaration that the work and objects of an unincorporated association (L) were charitable, and an order appointing herself and her solicitor as trustees of the funds of L with discretion to select a charity (B) with similar objects to L to receive those funds. L had been founded in 1914. The only extant evidence of the objects of L showed that it sought "To make illegal performances by animals by cruelty in the "training" etc." and to "make unprofitable the infliction of cruelty in the production of animal films shown on the British screen". S and her husband (X) were the only two living members of L before X's death in 2006. They had decided that it would be best if L's assets were transferred to B, following advice from an accountant that L should move towards winding-up. The court was required to determine whether L was a charity, and, if not, to whom its assets belonged.

Judgment for claimant in part. (1) L was not and never became a charity. It was not a charitable organisation at its inception. One of its significant purposes was to change the law and, where that was a purpose of a trust, the courts had refused to recognise the trust as charitable. Further, the objects of L did not become charitable as a result of changes in the law. The Charities Act 2006 did not change the principle that a trust could not be charitable if one of its objects or purposes was to change the law and, whilst the Animal Welfare Act 2006 contained provisions which created offences of causing distress to animals, it did not go so far as to prohibit performing animals, which was one of L's purposes. The decision by S and X that L's assets ought to be given to B was insufficient to change the objects of L with the result that they became exclusively charitable. There was no written evidence of that decision to satisfy the Law of Property Act 1925 s.53(1)(b) and there was no evidence on which a finding of fact that there was an express declaration of trust or words to that effect could be based. There was insufficient evidence that S and X had entered into a contract with each other for the assets to be distributed for charitable purposes, so that the objects of L became exclusively charitable. (2) S, as the last surviving member of L, was entitled to its assets. Whilst it was not a joint tenancy according to the classical model, since any collective ownership of property had to be a species of joint tenancy or tenancy in common, the kind of collective ownership provided by an unincorporated association had to be a sub-species of joint tenancy, albeit taking effect subject to any contractual restrictions applicable as between members. Members' rights were contractual and a member ceased to have any interest in the assets of an unincorporated association on death. Accretion on death was inherent in the beneficial interest in any asset being held by joint tenants in equity, and was no doubt reinforced by contractual restrictions such as the rules of an association. The property of an unincorporated association was the property of its members, but they were contractually precluded from severing their share except in accordance with the rules of the association. On the dissolution of an unincorporated association, those who were members at the time were entitled to the assets free from any such contractual restrictions. The obiter observations of Walton J. in Bucks Constabulary to the effect that a sole surviving member of an unincorporated association, while still alive, could not claim its assets, could not be accepted. L ceased to exist when X died. S was entitled to L's assets free from any restrictions imposed by the rules of L, which ceased to bind on X's death, and so she was free to choose to give the assets to B.