Keene (Trustees of the Graphic Reproduction Federation) v Wellcom London Ltd & Ors

An unincorporated association is not dissolved merely because it has become inactive, if it retains assets and its trustees continue to administer them. Membership is personal. A company member ceases to be a member when it is dissolved, and its membership rights cannot vest in the Crown under Companies Act 2006, section 1012, because those rights have already terminated. Where the association remains in existence but is moribund, the court may exercise its inherent jurisdiction to dissolve it. The assets should then be distributed so far as possible in accordance with the association’s rules, including their provisions governing members’ entitlements on dissolution.

The trustees of the Graphic Reproduction Federation, an unincorporated association formed to represent employers in the graphic reproduction trade, sought a declaration that the Federation had spontaneously dissolved between 1987 and 2013. Alternatively, they sought dissolution under the court’s inherent jurisdiction and directions for distribution of its assets.

The Federation had held no general meetings since 1985, its management committee had not met since 1987, and subscriptions had not been collected since 1986. It nevertheless retained substantial assets, which the trustees continued to administer. The principal issues were whether inactivity had dissolved the Federation, whether dissolved corporate members retained rights capable of vesting in the Crown, and how the assets should be distributed.

1. The claim for a declaration of spontaneous dissolution was refused. Inactivity alone does not dissolve an unincorporated association. The Federation remained in existence because it retained assets and the trustees continued to manage them. The court applied the reasoning in Re William Denby & Sons Ltd Sick and Benevolent Fund [1971] 2 All ER 1196 and Re GKN Bolts and Nuts Sports and Social Club [1982] 2 All ER 855.
2. Membership of an unincorporated association is personal. A member who resigns or is expelled loses the right to participate in the association and in assets distributed on dissolution. A corporate member remains a member while in liquidation unless expelled under the Rules, but ceases to be a member when dissolved. The court followed the principles summarised in Hanchett-Stamford v Attorney General & Anr [2008] EWHC 330 Ch.
3. Section 1012 of the Companies Act 2006 applies to property or rights vested in or held on trust for a company immediately before its dissolution. It cannot vest a membership right in the Crown where the right was personal to the company and terminated when the company ceased to exist. If the Federation had already been dissolved, however, rights which had crystallised before that dissolution could constitute assets capable of transmission as bona vacantia.
4. The court exercised its inherent jurisdiction to dissolve the Federation as at the date of judgment. The net assets, after payment of liabilities and expenses, were to be distributed among the members existing at the date of the order, including Tomlinson Ltd as successor to Tomlinson Engraving Ltd, pro rata according to their contributions as if clause 51 of the Rules applied. An inquiry was required to determine relevant contribution arrears.
5. The court noted the residual power to require trustees to argue issues on behalf of an unrepresented interested class, referring to State Street Bank and Trust Company v Sompo Japan Insurance [2010] EWHC 1461 (Ch). It did not require such assistance because the position appeared clear.