Re Recher's Will Trusts [1972] Ch 526

Facts

• The proceedings arose out of a testamentary gift made to an unincorporated association.
• Because an unincorporated association has no separate legal personality, its assets must be held by individuals (usually officers or trustees) for the benefit of the members.
• Doubt existed as to the precise legal mechanism by which those assets were held, managed, and ultimately distributed, especially when donors use broad language such as “to the association absolutely.”
• Earlier authorities had taken differing views: some treated such gifts as outright gifts to existing members, others as attempted purpose trusts liable to fail for want of human beneficiaries, and yet others as resulting trusts in favour of the donor’s estate.
• The court was therefore required to decide which analysis applied and, in consequence, how property should be dealt with both during the life of the association and on its dissolution.

Issues

1. Whether a gift to an unincorporated association operates:
   a. as an immediate gift to the current members beneficially;
   b. as a purpose trust for the association’s aims; or
   c. as property held on trust pursuant to the mutual contractual obligations of the members.
2. If the contractual model is correct, what are the practical consequences for control, management, and alienation of the property while the association continues.
3. Upon dissolution, whether the property should revert to the donor’s estate, be applied cy-près, or be divided among the members who exist at the date of dissolution.

Decision

• Brightman J confirmed that the “contract-holding” analysis is the correct one in most voluntary association cases.
• Accordingly, property given “to the association” is interpreted as a gift to the members, not beneficially as individuals, but as joint beneficial owners subject to their mutual contracts (namely, the rules or constitution).
• The property is therefore held by the association’s officers or other nominated holders on trust for the members, but the scope of that trust is defined and limited by the association’s rules.
• So long as the association continues, individual members cannot claim any fixed share; their rights are collective and regulated by the contract.
• On dissolution, the contractual rules again govern distribution. If those rules expressly provide for a charitable or other external destination, that direction is followed. Where the rules are silent, equity treats the beneficial interest as falling in equal shares to the members existing at the date of dissolution.
• The gift does not fail, nor does it result back to the donor’s estate, because there is a valid trust for persons—the current members—albeit one qualified by their contract.

Legal Principles

• Contract-holding theory: A voluntary association is viewed as a nexus of contracts between its members. Property given to the association is held for the members collectively in accordance with those contracts.
• Valid trust for persons: Because every member is an ascertainable human beneficiary, the beneficiary principle is satisfied and the need for the charitable or purpose-trust exceptions does not arise.
• Limitations on member rights: A member cannot sever or demand a personal share while the association subsists; the beneficial interest is inseparable from membership and is exercisable only through association mechanisms (meetings, voting, committee action).
• Trustee duties: Those controlling the property must apply it for the association’s legitimate objects and must do so consistently with the rules. Misapplication gives rise to ordinary fiduciary remedies.
• Dissolution and surplus: Equity follows the contract. Silence leads to equal division among current members, reflecting their collective, not personal, beneficial ownership during the association’s life.
• Consistency with prior authority: The decision reconciles earlier cases by acknowledging that outright gifts to individual members can occur where wording or context clearly shows that intention, but absent clear words the contractual analysis is preferred.

Conclusion

Re Recher [1972] Ch 526 decisively adopted the contract-holding theory for unincorporated associations. By recognising that gifts “to an association” vest in the members subject to their agreed rules, the judgment provides a coherent framework for the holding, management, and ultimate distribution of association assets and removes the uncertainty that previously surrounded testamentary and inter vivos gifts to such bodies.