Purpose Trust - Unincorporated Associations

Unincorporated Associations

Special problems arise in connection with the holding of property by unincorporated associations of persons. Whereas a company has separate legal personality and can hold property, with certain statutory exceptions, unincorporated associations of persons cannot. Accordingly, where an unincorporated association is formed for a non-charitable purpose (which is most often the case), a gift to an unincorporated association can fail as an invalid purpose trust. However, the courts have usually tried to avoid such a result by construing the gift as a gift to the members of the unincorporated association. The difficulty is that such a gift would then have to be construed as a distributive gift to the individual members, rather than a purposive gift for the objects of the unincorporated association. In Re Recher's Will Trust Ch 526 a more purposive approach was taken, and Brightman J held that a gift to The London and Provincial Anti-Vivisection Society was to be construed as a beneficial gift in favour of the members, not so as to entitle them to an immediate distributive share, but as an accretion to the funds of the society subject to the contract of the members as set out in the rules. Further, it was held that such a construction would be possible whether the society was inward looking (i.e. existed to promote the interests of its members) or outward looking (i.e. existed to promote some external cause or purpose).