web analytics

Timeshare Resort Clubs & Unincorporated Associations

The consumer will appreciate an unincorporated association is a legal nobody.

A person has a responsibility and as such, you can hold him/her to account.

Persons are natural (human being) and unnatural persons like limited companies.

UA’S are not people, therefore, any liability passes directly to committee members/ club group.

The entire committee is personally liable.

An interesting case and authority was established in the following and is well worth repeating in short.

You (the committee member) are liable for the debts of the club. It is irrelevant whether you attended the meeting, the mere fact that you are a member of the force which renders deeds on others in the club; make you joint and severally liable.

You might take consolation from the peddlers that you’re insured or the club is insured. Well, take note. The insurance company will be facing a substantial claim, the distribution could be tremendous. Do you honestly think they want to get involved when the damages will be in their millions and they can avoid the debt by holding you out to dry?

Do you think they will stand by and support this behaviour, are you told they will?

Consumers who dangle from this problem need advice and fast, because a new day in timeshare is coming and committee personal liability is just around the corner.

The decision in the unreported case of Davies v Barnes Webster & Sons Ltd serves as an important reminder of the liability of committee members of unincorporated associations.

Barnes Webster & Sons Ltd, a company of builders, had been contracted to carry out works for a club. Mr Davies was a member of the club committee.

A contract was signed by the club’s treasurer and witnessed by Mr Davies, provided for payment by the club of an agreed sum plus other sums which might become payable under the contract.

The building work was completed and the agreed sum paid by the club.

However, an additional £147,000 (for agreed variations to the contract) was not paid by the club. This created a claim by the builder and an alleged indebtedness on behalf of the club.

Therefore, liability established, remedy follows as normal. Timeshare consumers at this stage ought to know that in disputes you can use leverage vehicles. A claimant has options when actioning a recovery.

Assuming that you, the claimant have a debt above a certain level and that debt is incontestable (in the eyes of a court) you can issue a statutory demand against the creditor saying I am owed in excess of £xxxxx that being the case the defendant is either unable or unwilling to discharge his debts if and when due.

That being the case, the claimant seeks the sanction of insolvency/bankruptcy.

In this unreported case, the builder did just that.

Barnes Webster & Sons Ltd served a statutory demand on Mr Davies in respect of the additional sum. Mr Davies applied to have the statutory demand set aside on the basis that he was not personally liable for the debt. (The claim was not an issue, the court was being asked to settle a distinct issue which others had danced around. That issue is, was the committee personally responsible for club debts?)

The court held that, on the face of it, a club member of an unincorporated association is not personally liable for the acts of those who entered into contracts on behalf of the association.

Instead, liability is to be determined on who had authority under the rules of the club.

In this particular instance, it was the management committee who had been entrusted with the affairs of the rugby club and, without evidence to the contrary, the court inferred that the club’s treasurer was acting on the authority of the committee when entering into the building contract.

As a result, the members of the club’s committee were personally liable under the contract and the builder had the right to seek payment from Mr Davies as a member of the committee.

The court did have some sympathy for Mr Davies however and granted him extra time to arrange for payment of the debt before the builder was entitled to commence bankruptcy proceedings against him.

It may come as a surprise to many committee members of unincorporated clubs that they could be held personally liable for their club’s debts.

Whilst they will be only too aware that by accepting office they are expected to invest time and effort into helping to run their club, it is unlikely that they will appreciate the extent to which they are also accepting personal responsibility for meeting any debts which the club is unable to pay.

Last modified: 28th August 2020