Re Grant [1980] 1 WLR 360

Facts

  • The case concerned the management and distribution of property held by members of an unincorporated association.
  • The Court of Appeal considered the legal rules applying to the assets of an unincorporated association after its dissolution.
  • The dispute focused on determining the rights of members regarding the association’s property, particularly upon termination of the association.
  • The association in question did not have a separate legal identity; its property was held not by the entity itself but by trustees or members, due to its unincorporated status.

Issues

  1. Whether, upon dissolution, the assets of an unincorporated association should be distributed according to the association’s rules or according to general principles of fairness.
  2. What contractual rights the members of an unincorporated association have to its property, especially when the association ends.
  3. How the absence of a separate legal identity for unincorporated associations affects property ownership and contractual arrangements among members.

Decision

  • The court held that distribution of assets on dissolution must follow the terms of the association’s rules as set out in its constitution or governing documents.
  • If the rules expressly provide for the method of distributing property upon dissolution, those terms are determinative.
  • In the absence of specific rules, property is to revert to the members as joint owners or owners in common, depending on the nature of their contributions.
  • The court rejected reliance solely on broad principles of fairness, emphasizing that contractual rights based on the association’s rules are decisive for property distribution.

Legal Principles

  • The constitution and rules of an unincorporated association constitute a contract between the members, determining their rights to property and distribution on dissolution.
  • Property cannot be distributed on the basis of general fairness where explicit contractual provisions exist.
  • The lack of legal identity for unincorporated associations means property is usually held by trustees or in the name of members on behalf of the association.
  • Members’ rights and responsibilities, including property management and dispute resolution, must be clearly addressed in the association’s governing documents to avoid uncertainty.

Conclusion

The court in Re Grant [1980] 1 WLR 360 affirmed that the distribution of an unincorporated association's assets on dissolution is governed strictly by the association’s rules and the contractual rights of its members, rather than by general notions of fairness, highlighting the importance of clear and detailed constitutional documents.

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