Unincorporated Associations

It is worth noting that throughout history there have been various incidents where the courts have interpreted transfers as being executed to the people affiliated with the association and the officers there as well in a fiduciary capacity, not solely for the direct benefit of the members, but rather to advance 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 legitimize the transfer. However, it should be noted that 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 underscored during cases such as the "Re Recher's WT [1972] Ch 526 and Re Lipinski's WT [1976] Ch 235".

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 underscored 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 contigent 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 a well known fact that it is highly crucial to consider that in cases involving an unincorporated association with charitable objectives, where rights were entrusted to its officers or members as trustees for charitable purposes, such rights would be redirected to a similar charitable cause under the "cy-près doctrine," as outlined in Section 9.5, referencing precedents such as "Re Vernon's WT" and "Re Finger's WT." Conversely, when you find yourself dealing with the most rare cases such as where rights were held in trust for legitimate non-charitable purposes, such rights would be redirected to a similar charitable cause under the "cy-près doctrine," as outlined in Section 10.4, the trust should persist without dissolution, as the dissolution of the association alone does not terminate the purpose. However, it is an undeniable fact that many court decisions have erroneously treated the purpose as that of the association, which has resulted in the purpose failing upon the association's dissolution.

purpose trusts. As a result this presumption would result in making the gifts null and void from their inception, given the inherent invalidity of private purpose trusts. Furthermore, the legal distinction which is found within the cases addressing “the validity of gifts to unincorporated associations” and those concerning association dissolution is such that the two categories of cases are fundamentally distinct. 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.