Game, set and match… to an unexpected beneficiary

Sonia Lonsdale

Sonia Lonsdale

With Wimbledon now under way, many people will be looking to start playing tennis again at their local club. In many cases this may be a small club around the corner with a church related name, but does anyone know who actually owns it and in fact it could be sold at anytime!

Most sporting clubs operate as unincorporated associations, which arise when two or more people come together for a particular purpose, but decide not to use a formal structure like a company.

Unincorporated associations have no legal identity of their own; so they have no legal rights, are not separate from their members and are not able to, for example, hold property in their own name. Although unincorporated associations can get around this by having their members hold such property on trust for the association, it is clear that non-charitable purpose trusts and/or those that do not comply with the rule against perpetuities are bound to be void.

The case below of Re St Andrew’s (Cheam) Law Tennis Club Trust [2012] EWHC 1040 (Ch), illustrates potential issues facing sporting clubs, societies and other unincorporated associations.

Facts

A dispute arose over a piece of land that had been occupied by the lawn tennis club since 1938. The trust deed’s declared purpose was that the land should be held on trust to provide a sports ground for games for any persons associated with St Andrew’s Cheam Church.

The trustees of the club argued that the declaration was invalid and therefore that it was held on a resulting trust for the members of the club. The church’s charitable trust wanted to sell the land and apply the proceeds for the purposes of the church.

Judgment

The Court held that the trust deed was an attempt to create a perpetual trust for a non-charitable purpose, which is unlawful, under English Law and that its primary purpose was simply to enable members of the club to play tennis. That was not a charitable purpose.

A gift which includes non-charitable purposes fails under English Law and it was held that the correct conclusion was that the land was held upon a resulting trust for the executors of the estate of a church secretary.

The essence of this case is that, again, one needs to be very careful when setting out trusts to ensure that if they are going to be charitable, their purposes are exclusively charitable and that any non-charitable purposes are kept strictly segregated.

Sonia Lonsdale
Paralegal
Commercial Property Department
SLonsdale@LawBlacks.com
0113 227 9229

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