Equity and Trusts- Charities

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Introduction The first issue that needs to be considered is whether Holmfirth Wheeltappers’ and Shunter’s Benefit Society is charitable. On the facts of the scenario it is evident that the association has not been established for charitable purposes as defined by section 3(1) of the Charities Act 2011. The next issue arising is that the association is obviously not a company and so it is an unincorporated association.

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Lawton LJ set out the definition of an unincorporated association in Conservative & Unionist Central Office v Burrell [1982] 2 All ER 1 CA as: two or more members bound together for one or more common purposes, mutual rights and duties between the members, and rules governing who controls the association and how its funds are used; the members must be able to join and leave the association at will. These groups are not covered by the Companies Act 1996. Hence, they have no legal personality, existing in their own right and cannot own property. Therefore, as the nature of the current association is of an unincorporated one, any distributions of the associations’ funds will be governed by trust law. In order to discuss the issues arising, I will examine in turn each of the facts considering the case law on the distribution of the surplus funds of unincorporated non-charitable associations. In Neville Estates Ltd v Madden [1962] Ch 832 HC it was decided that the funds of an association are held by the members and not by the association as a whole. Alternatively, they are held on trust only if the trust is charitable, which is unlikely to apply on the present scenario. Instead, the scenario is concerned with a claim to the surplus assets of the association when it is dissolved. [1] A legacy of 20,000 from Cyril The issue arising here is that an unincorporated association as it is not a legal person it cannot own property or be the beneficiary of a trust. A gift can therefore be treated as an attempted trust for the purposes of the association as in Leahy v AG for NSW (1959). The general rule is that trusts for non-charitable purposes are void, as well as transfers for abstract purposes[2] something which is not permitted under the beneficiary principle stating that for a trust to be valid it requires that there be some individual or corporate entity in whose favour the court would be able to exercise the trust.[3] A problem arises in respect of the legacy left from Cyril as Nora, the widow and executrix of Cyril’s will seems to challenge the validity of the legacy on the winding up of the association. The courts have been prevented by precedent and English legal tradition from saying that an unincorporated association is capable of owning property yet various alternative ways have been constructed by the courts in an attempt to save the transfers made to unincorporated associations.

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