Re William Denby Sick Fund [1971] 1 WLR 973

Facts

  • The case involved the dissolution of the William Denby Sick Fund, an unincorporated association.
  • Upon dissolution, the distribution of the association’s remaining funds was contested.
  • The key issue was whether the surplus should be distributed among current members or returned to contributors under a resulting trust.
  • The association did not have clear rules in its constitution regarding the distribution of assets upon dissolution.
  • The Court of Appeal analyzed the contractual basis of membership and considered the absence of explicit distribution provisions.

Issues

  1. Whether, upon dissolution of an unincorporated association without express distribution rules, surplus assets should be distributed to current members or held on resulting trust for contributors.
  2. Whether the contractual rights and rules of the association take precedence over resulting trust principles for fund distribution.

Decision

  • The Court of Appeal decided that, where an unincorporated association lacks express provision for the distribution of assets on dissolution, the surplus funds are to be given to current members based on their contractual rights.
  • The court rejected the application of resulting trust principles, finding that contributions were intended for the association’s purpose, not for individual claims by contributors.
  • The members’ rights and entitlements were determined by the contract embodied in the association’s rules, not by external trust law doctrines.

Legal Principles

  • The distribution of assets in a dissolved unincorporated association is governed by the contractual relationship between members as set out in the association's rules.
  • Resulting trust principles have only limited application regarding leftover assets of such associations, especially where members’ contributions were made for the group's purposes.
  • Where association rules are silent, courts defer to the default that current members share the surplus, not original contributors.

Conclusion

The case establishes that, unless otherwise specified in the association's constitution, surplus assets on dissolution of an unincorporated association are distributed among current members according to their contractual rights, reaffirming the priority of contractual over trust law principles in such contexts.

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