Re Horley Town Football Club; Hunt and another v McLaren and others

Football club — Unincorporated association — Football ground held on trust — Validity of trust — Entitlement to beneficial interest The claimants, as trustees of a football club, sought directions from the court as to the basis upon which they held the club assets, including the club ground. The original ground had been on land settled on trust in 1948 by the then president “for the primary purpose of securing a permanent ground” for the club. Despite the reference to permanence, the trust deed specified a perpetuity period. It also provided for the trustees to hold the property upon a trust for sale, with a power to postpone sale and a requirement not to sell without the consent of the club during the perpetuity period. In the event of a sale, the proceeds were to be held on trust “for all or any of the general purposes of the Club”, and could be “treated and expended as income accruing to the Club to be used as and for the said general purposes”. By the date of the action, the original ground had been sold, and the proceeds had been used to buy another site and to construct a clubhouse and ancillary facilities. The club operated as an unincorporated association and the rules provided for three types of membership: full, temporary and associate. The latter were members were members of independently constituted clubs that were invited to use the football club’s facilities. Associate and temporary members could not vote, but, following an amendment to the rules, the clubs to which the associate members belonged were each given a vote at the annual general meeting. The defendants included representatives of various categories of members, past and present, together with a former trustee and the executor of the settlor. The parties put forward various interpretations of the trust in an attempt to resolve the difficulties arising in respect of non-charitable trusts for purposes and trusts in favour of unincorporated associations. Held: (1) The trust deed should be construed as a gift to the club and its members for the time being on a “contract holding” basis, so that the members held in accordance with the club rules, and their interests devolved with the other club property under those rules: Neville Estates Ltd v Madden [1962] Ch 832 applied. It was a necessary characteristic of a gift of that class that the members of the association could, in accordance with the rules, direct that the funds should be applied to some new purpose or distributed among the members for their own benefit. In that regard, it did not matter that, in the instant case, the rules had been changed to confer a right to vote upon a body that was not itself a member, namely the club to which associate members belonged. The influence of such a body upon the rules and the destination of club property was not fatal: Re Grant’s Will Trusts [1980] 1 WLR 360 applied. (2) The beneficial interest under the trust was held by the current full members of the club, for whom the trustees held the assets on a bare trust. The non-voting temporary and associate club members were not entitled to any interest in the club’s assets: Re GKN Bolts & Nuts Ltd (Automative Division) Birmingham Works Sports and Social Club [1982] 1 WLR 774 applied. The full members held subject to the current rules and could, unanimously or by AGM, call for the assets to be transferred. The members might agree to dissolve the club and to distribute the assets among themselves, or the association might be wound up by the court. In the absence of anything contrary in the club rules, a rule would be implied, whereby on a dissolution, the surplus funds of the club would be divided among the adult and senior members on a per capita basis. Gilead Cooper (instructed by Hepburns, of Oxted) appeared for the claimants; Henry Legge, Joseph Goldsmith and Sarah Haren (instructed by Adams & Remers, of Brighton) appeared for the first defendant, second defendant, and third and sixth defendants, respectively; the fourth defendant did not appear and was not represented. Sally Dobson, barrister