Re Recher [1972] Ch 526

Key point

  • A gift to members is prima facie an accretion to funds which are the subject matter of contract between members

Facts

  • A gift to the London Anti-Vivisection Society was void since the society had merged with the national society
  • Brightman J’s obiter dicta offered support to the contract holding theory

Brightman J

Nature of an unincorporated assocation

  • Rules of association or constitution of an association are a contract between members
  • The multipartite contract can be terminated by members through unanimous agreement and the funds could be divided among themselves beneficially
  • The association funds can be derived from both member subscriptions and donations

Contract-holding theory

  • In the absence of words that impose a trust, the legacy is a gift to members beneficially not as joint tenants or tenants in common so as to entitle each member to an immediate distributive share, but as an accretion to funds which are the subject matter of the contract between members (same with the subscription fees of members)
  • However, in the current case there was no valid gift since the gift was for the old society not the new one, the old society was dissolved before the gift and hence the gift was void
  • It was argued that a gift must either be to existing members or on trust for present and future members, which would be void since no individual member acting by himself can ever obtain his share – if this argument were correct it would be impossible to make a straightforward donation

Inward and outward looking associations

  • It was argued that gifts to inward-looking associations, which exist to promote the interests of its members, are intended as gifts to existing members; and gifts to outward-looking associations, which seeks to promote some outside purpose must be intended as a gift for the purpose of the UA or its present and future members
  • This distinction is ill-defined, some associations look both ways
  • Any outward-looking association unhampered by trusts can by agreement convert itself into an inward looking association

Commentary

  • Members of the society have agreed not to put the money into their own pockets upon dissolution
  • Brightman must have thought that the members can always renegotiate their contract, otherwise the contract holding theory cannot apply to outward looking associations