JCT contract – Unincorporated association – Contractual liability – Appellant club president witnessing signing of building contract on behalf of club – Club failing to pay all sums due under contract – Respondent builder serving statutory demand on appellant – District judge refusing to set aside demand – Whether appellant liable under contract as member of management committee — Appeal dismissed
The respondent building company had been contracted to carry out works for a rugby club, an unincorporated association of which the appellant was a trustee, a member of the management committee and the president. The contract was on the JCT standard form contract 2007 and provided for the payment of an agreed sum and included a standard condition for payment of such other sums as might become payable under the contract. The contract was signed by the club’s treasurer and witnessed by the appellant. On completion of the works, the agreed sum was paid. However, a dispute arose concerning an additional sum of £147,000 for agreed variations. When the club failed to pay that amount, the respondent served a statutory demand on the appellant prior to applying to the court to issue a bankruptcy order against him.
The appellant applied to set aside the statutory demand on the basis that he was not personally liable for the debt. The district judge dismissed the application, holding that the appellant was liable since he had been kept informed about the progress of the contract and had not objected, had voted at a club meeting in favour of entering into the contract, had witnessed the contract and was a trustee of the club.
The appellant appealed against the refusal of his application to set aside the statutory demand, contending that the treasurer was the person liable under the contract.
Held: The appeal was dismissed.
In the absence of evidence to the contrary, the management committee of an unincorporated association was liable under a building contract entered into on behalf of the club by the treasurer. Thus, the statutory demand served on the appellant was enforceable against him as a member of the committee.
Prima facie, a member of an unincorporated association was not personally liable for the acts of those who entered into contracts on behalf of the association. The question as to who was the proper person liable depended on who had authority under the rules of the club. Where work had been done for an unincorporated association and there was no statutory provision to the contrary, questions of liability were governed by the rules that applied to contracts made through an agent. Prima facie, it was the committee entrusted with the affairs of the club that would be liable: Bradley Egg Farm Ltd v Clifford [1943] 2 All ER 378 applied.
In the instant case, under the club rules the management committee was responsible for the management of the club. Thus, the correct analysis of who was liable depended on applying the principles of agency. The appellant had been deliberately vague in his witness statement as to who authorised the contract and had failed to exhibit any minutes of meetings. Accordingly, the proper inference, in the absence of evidence to the contrary, was that the treasurer was acting on the authority of the committee, so that the committee was liable under the contract. Therefore, the appellant, as a member of the management committee of the club, together with the other members, was liable under the contract.
The fact that the appellant had participated in the vote to proceed with the contract and witnessed its signing, was irrelevant but there was no basis on which to set aside the statutory demand against him.
However, the appellant would not be expected to satisfy the statutory demand out of his own funds and it would take time to realise sufficient club assets for that purpose. In those circumstances, it would be oppressive for the appellant to find himself the bankrupt within the usual 28-day payment period. Accordingly, an order would be made under r 6.5 of the Insolvency Rules 1986 (SI 1986/1925) that the respondent could commence bankruptcy proceedings after the expiry of three months.
Stephen Goodfellow (instructed by Scannells Hunt, of Shenfield, Essex) appeared for the appellant; Ivor Collett (instructed by Wortley Byers, of Brentwood, Essex) appeared for the respondent.
Eileen O’Grady, barrister
