J M Sanderson & Ors v Hi Peak Property Ltd

Cancellation of registration under the Industrial and Provident Societies Act 1965 removes a society’s corporate status and limited liability, but does not necessarily destroy the society’s existence. An informal dissolution cannot occur while the association remains a registered corporate body. If the association continues after cancellation, its assets are held for the members subject to the contract of association. If it has dissolved, the former members may have beneficial interests in its assets. Uncertainty about which members hold or may enforce contractual rights does not justify striking out the claim or granting summary judgment where the contractual rights themselves continue to exist.

The claimants, five individuals suing on behalf of members of Hunloke Allotment Association Limited, brought contractual claims concerning rights under three agreements with Hi Peak Property Ltd. The association had been registered under the Industrial and Provident Societies Act 1965, but its registration was cancelled on 28 March 2011. The defendants applied to strike out the claim or obtain summary judgment, arguing that the claimants had no contractual rights and no locus standi.

A District Judge dismissed the application on 6 January 2014 and granted permission to appeal. The central issue was whether cancellation of registration, dissolution, or uncertainty about the identity of the members entitled to enforce the rights meant that the contractual claims could not proceed.

1. Appeal dismissed. The claim was properly constituted, and neither strike-out nor summary judgment was appropriate.
2. Under section 3 of the Industrial and Provident Societies Act 1965, registration gives a society corporate status, perpetual succession, limited liability and the capacity to sue and be sued. Section 4 continued the registration under the 1965 Act of societies previously registered under the 1893 Act.
3. Cancellation of registration removes the privileges and obligations arising from registration, including corporate status and limited liability, but does not necessarily destroy the society. The court relied on Lord Tomlin’s statement in Hole v Garnsey [1930] AC 472 at 499, which had not been doubted and had been applied in Boyle v Collins [2004] EWHC 271 (Ch).
4. Informal or spontaneous dissolution may apply to an unincorporated association, but not to a registered society while it remains a corporate body. Corporate status continues until ended in a manner recognised by the statute. The reasoning and result in Boyle v Collins supported that conclusion.
5. After cancellation, either the association continued as an unincorporated association, in which case its present members held the contractual rights subject to their association contract, or it did not continue, in which case the members at cancellation held the former corporate assets beneficially. The court relied on the explanation in Hanchett-Stamford v The Attorney General [2008] 4 All E R 323 at paragraph 47.
6. The remaining uncertainty concerned which members could enforce the rights, not whether the rights had disappeared or vested in the Financial Services Authority. That issue was not a proper basis for dismissing the claim.

1. District Judge: On 6 January 2014, District Judge Musgrave dismissed the defendants’ application to strike out the claim or obtain summary judgment, and ordered them to pay the claimants’ costs. Permission to appeal was granted.
2. High Court (Chancery Division): The appeal was dismissed. The District Judge had reached essentially the right conclusion for the right reasons.