Re Sick and Funeral Society of St John's Sunday School, Golc...

Facts

• The Sick and Funeral Society of St John’s Sunday School, Golcar was established as a friendly society to provide its members with financial assistance for sickness and funeral expenses.
• Members contributed regular payments, which the society accumulated over time.
• Upon dissolution of the society, surplus funds remained after settling all debts.
• The society’s rules did not specify how leftover funds should be distributed following dissolution.
• The central issue arose regarding whether the surplus should be distributed among current members or returned to all contributors under a resulting trust.

Issues

1. Whether leftover funds from a dissolved friendly society, in the absence of clear rules, should be distributed to the current members or held on a resulting trust for contributors.
2. Whether the nature of members’ contributions constituted gifts to the society or were made for specific purposes under a trust.
3. How the absence of express rules regarding surplus funds affects legal entitlements on dissolution.

Decision

• The court determined that the leftover funds could not be treated as ownerless property and must be held on a resulting trust for the contributors.
• It was found that contributions by members were not gifts but payments made for defined purposes (sickness and funeral benefits), which had been fulfilled.
• The court rejected distribution solely to members at dissolution, concluding that such an approach would unfairly benefit current members at the expense of original contributors.
• The absence of specific rules about surplus funds meant equity required protection of the contributors’ rights through a resulting trust.

Legal Principles

• Where a trust fails or lacks express provision for surplus funds, property is subject to a resulting trust, reverting to the original contributors.
• Resulting trusts ensure property is not ownerless and uphold fairness among all contributors, not just those present at dissolution.
• A distinction exists between automatic resulting trusts (arising upon failure of an express trust) and presumed resulting trusts (arising absent consideration and absent evidence of gift).
• The society’s governing rules are essential; in their absence, equitable principles determine entitlement to surplus funds.
• Clear documentation regarding the fate of surplus funds can prevent disputes upon dissolution of associations.

Conclusion

The court in Re Sick and Funeral Society of St John’s Sunday School, Golcar [1973] Ch 51 held that in the absence of explicit rules, surplus funds remaining after a society’s dissolution are held on resulting trust for contributors, not solely distributable among current members, affirming the importance of tracking contributions and providing certainty in the dissolution of unincorporated associations.