Re William Denby Sick Fund [1971] 1 WLR 973

Key point

• Specifies four ways in which unincorporated associations can be dissolved, mere inactivity alone not being one of them

Facts

• A sickness fund was made for the employees of W
• The rules of the fund were regularly ignored
• When 176 of then 300 members of the fund left W’s employment, no further contributions were collected, but those in receipt of benefit continued to receive benefits, with the last benefit being issued in 1964

Issue

• Had the fund been dissolved by inactivity and its surplus become distributable?

Held (High Court)

• The fund was not dissolved

Brightman J

There are four ways in which an unincorporated association can be dissolved:

1. Occurrence of an event of which the rules prescribe dissolution
2. Unanimous agreement of parties
3. Court orders dissolution in exercise of its inherent jurisdiction
4. Where the substratum upon which the society or fund was founded was gone (the fund has no effective purpose)

Inactivity

• Mere inactivity does not necessarily lead to the conclusion that members acquiesced in dissolution at the date of commencement of such inactivity
• In the case of a fully viable fund, the court should slow to attribute to the members more than acquiescence in temporary suspension

Current case

• In the current case there was still effective purpose (substratum) to the fund despite the period of inactivity
• Membership was still substantial and was likely to increase as the company rebuilt its labour force

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