Dissolution of unregistered friendly society - distribution of assets - provision in society's rules giving extra votes to long-standing members not displacing presumption of equal distribution

Elvidge and others v Coulson: ChD (Mr Justice Peter Smith): 15 July 2003

In proceedings brought by the members of a benefit scheme run by an unregistered friendly society, the first claimant was appointed to represent members with long service and the defendant was nominated to represent members with short service.

The scheme was dissolved and the question arose as to the correct method of distribution of the scheme's assets.

The society's rules provided that it could be dissolved by the consent of a majority 'of five-sixths in value' of its members.

The expression 'in value' was a reference to section 70(6) of the Friendly Societies Act 1896, in which the word 'value' imposed a weighted voting mechanism giving extra votes to long standing members.

The claimants contended that the expression 'in value' in the rules conferred an increased benefit to such members.

Henry Legge (instructed by Rowley Dickinson, Manchester) for the claimants; Leon Sartin (instructed by Rowley Dickinson, Manchester) for the defendant.

Held, sanctioning the distribution of the scheme's assets on dissolution, that the expression 'in value' in the rules did not displace the presumption of equal distribution on a 'per capita' basis between members alive at the time of the dissolution; that although longer standing members should have a greater say in whether or not the society should continue, they did not necessarily have additional benefits on dissolution; and that the rules merely imported the voting mechanism of the 1896 Act, which was silent as to the destination of funds on dissolution.