Re St Andrew's Allotment Association [1969] 1 WLR 299

Facts

• St Andrew’s Allotment Association was an unincorporated association formed to manage allotments for its members.
• The association ceased to operate and was subsequently dissolved, leaving surplus funds.
• The association’s rules or constitution did not specify a process for distributing surplus assets after dissolution.
• The dispute concerned whether the leftover funds should be distributed to members or treated as ownerless property (bona vacantia).

Issues

1. Whether the surplus funds of the dissolved unincorporated association should be distributed to its members or treated as ownerless property.
2. Whether the contractual-holding theory or the trust-based approach should apply to determine the distribution of assets upon dissolution.
3. How to resolve surplus distribution in the absence of explicit rules within an unincorporated association’s constitution.

Decision

• The Court of Appeal held that the surplus funds must be distributed to the members according to their rights under the association’s contract at the time of dissolution.
• The court applied the contractual-holding theory, finding that the assets were owned collectively by members subject to the association’s rules, rather than as trust property.
• It was determined that, in the absence of specific rules regarding surplus upon dissolution, the existing contract between members governed distribution.
• The court rejected the trust-based approach and the argument that surplus assets should be treated as bona vacantia.

Legal Principles

• Surplus assets of an unincorporated association on dissolution are to be distributed to members in accordance with their contractual rights.
• The contractual-holding theory governs asset ownership and distribution, as opposed to the trust-based approach, unless a trust is expressly created.
• Where the constitution or rules do not specify surplus distribution, reference must be made to the implied contract among members.
• The court emphasized the importance of clear constitutional provisions for surplus distribution in unincorporated associations.

Conclusion

The decision in Re St Andrew’s Allotment Association [1969] 1 WLR 299 confirmed that surplus funds of a dissolved unincorporated association are to be distributed among members in accordance with their contractual rights at dissolution, establishing the contractual-holding theory as the preferred approach and rejecting the trust-based or bona vacantia outcomes. This judgment remains a foundational authority on surplus distribution for unincorporated associations.