Boris Ignachkov Legal Principles and Key Points
- In the case of Re Sick and Funeral Society of St John’s Sunday School, Golcar [1973] Ch. 51, it was held that members of an unincorporated association are entitled to share in the assets equally unless the association’s rules clearly show an entitlement in other proportions.
- Money and assets held by an unincorporated association using a contract are not held on resulting trust for members who leave prior to its dissolution; resignation terminates any contractual right to the assets.
Facts of the Case
- In 1866 the society was formed to provide sickness and death benefits for its members. Members aged between 5 and 14 paid half the weekly subscription and received sickness benefits at half the rate of members aged 14 and above.
- Students leaving the school could continue membership but would be suspended by omitting to pay their subscription within a specified period.
- In 1966, a members’ meeting unanimously decided that the society would be wound up from 31st December. 4 members (C) who had ceased paying subscriptions in 1963 sought to pay their arrears in 1967, claiming that they retained membership.
- A further meeting in 1968 unanimously resolved that the surplus assets should be distributed among their members and personal representatives of any member who had died since 12th December 1966.
Issues
- What rights did each member have at the time of dissolution?
- How would the assets be distributed among members?
- Did C have any right, contractual or otherwise, to a distribution of the assets?
Held by the Chancery Division
- The rights of each member crystalised on 31st December 1966 when the decision to wind up was made; as such, personal representatives of members who died after this time were entitled to the share those members would have received.
- Membership of the association was a matter of contract based on the written rules and conduct of the association.
- Distribution of the assets was to be made according to the rules of the association; members over 14 would receive one full share and members under 14 would receive one half-share.
- Even though the association had no provision for resignation, members could resign by conduct. Accordingly, C had resigned their membership prior to 1966 by failing to pay subscriptions. C had no right to the distribution of assets.
Megarry J.
- “Membership of a club or association is primarily a matter of contract. The members make their payments, and in return they become entitled to the benefits of membership… The sums they pay cease to be their individual property, and so cease to be subject to any concept of resulting trust. Instead, they become the property of all the members for the time being, including themselves…If then, dissolution ensues, there must be a division of the property of the association among those alone who are owners of that property, to the exclusion of former members. In that division, I cannot see what relevance there can be in the respective amounts of the contributions. The newest member, who made a single payment when he joined a year ago, is as much a part owner of the property of the association as a member who has been making payments for 50 years.” [59F].
- Finch v Oake [1896] 1 Ch. 409 established that a member of a society has the unilateral right to resign his membership at any time. The only requirement is that they sufficiently manifest their decision to be a member no more. Conduct of inertia, particularly in cases of club memberships, is sufficient for both the society and the individual to recognise this decision.
