Incorporation of an unincorporated association: who owned the association’s property?

In Chap Yick Clansman’s Association Ltd v Mok Fai ([1997] HKLRD 580, HC) the property of an unincorporated association was held by four trustees on trust for the members for the time being of the association. A company was incorporated to take over as the vehicle for the running of the association and all members of the unincorporated association at the time of incorporation were automatically members of the company. There was never any formal assignment by the members of their beneficial interests in the property to the company (as required by section 5(1) of the Conveyancing and Property Ordinance). Twenty years after incorporation, the company became one of the trustees of the property. The question was whether the beneficial ownership of the property had passed to the company or remained with the members immediately prior to incorporation.

The court held that ownership had passed to the company. There had been a novation of the terms of the contract between the members of the unincorporated association when they approved the company’s constitution. This conclusion was reinforced by the fact that the company had been treated as owner of the property for a twenty year period from the date of incorporation to its appointment as trustee. In any event, any member of the unincorporated association would now be estopped from asserting a beneficial claim to the property.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: