Variances in the formation of societal funds are capable of determining the receipt of unaccounted monies, when those organisations are dissolved through death of its members, or as part of a change in structure and administration.
In such instances, the Crown treasury will be quick to adopt the residual capital under the principle of bona vacantia, therefore the courts are required to discriminate between the powers of legislation and those of the surviving trustees/members when deciding the destination of such sums.
On this occasion, a widows and orphans trust fund had been formed for the benefit of serving county police officers, which operated under the terms of the Friendly Societies Act 1896 and was used both for loss of life and sickness of those subscribed.
In 1968, the society members agreed to wind up the fund as part of an amalgamation with a larger benevolent fund, whereupon it was decided that the £87,000 held would be used to fund ongoing annuities for those claiming under right for the sum of £35,000, and provide £40,000 to gain entry into the new fund; whereupon, the remaining £12,000 would be distributed between the surviving members, as provided for by section 49(1) of the 1896 Act, which reads:
“All property belonging to a registered society, whether acquired before or after the society is registered, shall vest in the trustees for the time being of the society, for the use and benefit of the society and the members thereof, and of all persons claiming through the members according to the rules of the society.”Friendly Societies Act 1896
While in the event that no such preparation has been made, there was also adequate authority to suggest that:
“[I]f on the termination of a society no provision has been made by the rules for the distribution of its funds, such funds are divisible among the existing members at the time of the termination or dissolution in proportion to the amount contributed by each member for entrance fees and subscriptions, but irrespective of fines or payments made to members in accordance with the rules.”
Which prima facie, prevented the recovery of money by the Treasury, as might be expected in such instances.
In an originating summons submitted by the sole trustee to the fund, the court was asked to determine whether the £40,000 planned for payment should be held upon trust for the widows and orphans fund before being equally distributed amongst the surviving members; or as was suggested, the monies were due to the Crown under a loss of ownership through the dissolution of the fund.
Having considered the weight behind such prominent cases as re Recher’s Will Trusts and Cunnack v Edwards, Walton J concluded that unless the society had been reduced to just a single remaining member, there was little to indicate that anything less than an equal distribution between the existing members and those surviving members that had previously died, would be a suitable application of law.
Hence, the court awarded judgment accordingly, while reminding the parties that:
“[U]nless under the rules governing the association the property thereof has been wholly devoted to charity, or unless and to the extent to which the other trusts have validly been declared of such property, the persons, and the only persons, interested therein are the members.”