Unincorporated Associations
It has happened various times that the Courts have viewed transfers as being made to the members or officers of the association in a fiduciary capacity, not for the direct benefit of the members, but rather for the objectives of the association. This interpretation given by the court serves as a prohibition for individuals from asserting ownership over and withdrawing the shares that they own personally, due to the fact that as per purpose trust they won’t be considered as beneficiaries. However, it should be noted that aforementioned perspective presents noteworthy challenges for the transferor, often resulting in the transfer being deemed void as a private purpose trust unless the purposes are exclusively in accordance with the charitable objectives, as delineated in the case of "Leahy v AG for New South Wales" [1959].
Regardless of the fact that there had been a prominent insufficiency within the legal personality, unincorporated associations often find individuals attempting to transfer rights to them, either through gifts or contracts perceived to be made with the association. It is left to the court to decide what, legally speaking, is an illogical act. Even though the courts could simply consider all the transfers of such nature as void, akin to transfers to inanimate objects like trees or pets, they endeavour to legitimate the transfer. However, it should be noted that it has been entailed by the court's perspective that interpreting the transfer as having been made to the people or officials belonging to the association, with each of them having "legal personality". It should be noted that after it the crucial examination pertains to the capacity in which these people or officials hold the rights conveyed.
A comparatively contemporary perspective entails relying on the contractual principles rather than resorting to the mechanism of trust. This approach capitalizes upon the inherent nature of unincorporated associations, whose working in turn is dependent upon explicit or implicit agreements among their members, giving rise to reciprocal duties. It should be noted that the reciprocal understandings and obligations we got from the above discussion, are mutually agreed upon, and are usually interpreted as contractual relations in accordance with legal principles, regardless of their informal character. Even during cases where associations operate informally, they are required to work in accordance with the contractual obligations, albeit informally, if they are recognized as associations at all. However, acknowledging the presence of these contractual obligations, mostly explained within the rules made by the association, gifts and other conveyances to such associations are constructed as transfers to the individual members. Still, these transfers are required to be in accordance with the contractual obligations among themselves to utilize the rights for furthering the association's objectives. Later on, this rule got understood during cases such as the "Re Recher's WT [1972] Ch 526 and Re Lipinski's WT [1976] Ch 235".
When we are concerned with trying to interpret gifts or other transfers made to an unincorporated association, it leads us towards the rise of problems. However, it should be
noted that It isn’t allowed to donate rights "subject to contract". Furthermore, a person cannot confer the rights to a friend contingent upon terms that have been mentioned in a contract with another party, as contracts entail personal obligations between individuals, and the donor is not a party to such contracts. In the article "A problem in the construction of gifts to unincorporated associations" [1995] Conv 302, a way to deal with the issue mentioned earlier has been suggested by Matthews whereby association members can make sure to add a clause within the rules that they have made suggesting that “any item received whether a present or a contractual payments” (e.g., funds collected from ticket sales for an association-sponsored dance) are accepted individually by the members but remain subject to their collective agreement. While theoretically feasible, as it would bind members through contract to handle transfers in a prescribed manner, it is unlikely that many associations have started following such rules.
It is worth going through that when we are dealing with cases in which an unincorporated association has pursued charitable objectives and the rights were vested in its officers or members as trustees for charitable endeavors, such rights would be directed to a comparable charitable purpose through the “cy-prés doctrine”, as elucidated in “section 9.5”, drawing upon precedents like “Re Vernon’s WT” and “Re Finger’s WT”. Conversely, when we are concerned with a rare case such as where the rights were held in trust for legitimate non-charitable purposes, as detailed in section “10.4”, the trust should endure without dissolution. This is because of the fact that the dissolution of the association alone does not constitute a winding up of the purpose. However, it is worth mentioning that a significant number of decisions made by the court have incorrectly viewed the purpose as that of the association, leading to the failure of the purpose upon dissolution of the association. It is worth going through that in scenarios of such nature, a resulting trust should be established that will be favoring the initial contributors of the rights. Should the rights have been obtained pursuant to either iteration of the contract-holding theory previously delineated, they would be apportioned among the current membership upon dissolution, due to the fact that the members of the association have absolute entitlement to the rights under these contract-holding theories.
The to the point determination of the way rights were acquired and held by an unincorporated association also dictates the disposition of any remaining funds upon the association's dissolution. Even though we are aware of the fact that this principle is apparent, in the rulings of the courts concerning the allocation of rights upon dissolution have implicitly relied on it at different junctures, assuming that the association itself retained those rights in ways that would have been untenable had the legitimacy of gifts or other transfers to the association been subject to scrutiny.
As an example it is worth noting that upon dissolution, the court may inadvertently operate under the assumption as per which the funds were bestowed and retained under private purpose trusts. The result of this presumption would be the nullification of those gifts from their inception, as private purpose trusts are inherently invalid. Indeed, the legal differentiation among the cases which were dealing with the lawfulness of gifts to unincorporated associations and those pertaining to association dissolution is such that the two categories of cases are
fundamentally incongruous. Furthermore, additional complications have been added in these scenarios due to the historical separation of these two topics in legal texts and treatises. It was only with the emergence of the bare trust/contractual mandate theory, stemming from cases like Re Recher’s WT, that a coherent reconciliation started. It can be concluded that the previous rulings upon the matter of dissolution of unincorporated associations should be approached with circumspection.