A Branch, or a Separate Unincorporated Club?

In Kelowna Trap and Skeet Club v. Kelowna & District Fish & Game Club (released April 2013), a British Columbia trial judge dealt with ownership of property claimed by members of an unincorporated organization, ruling that the club had always been a branch of the incorporated society and therefore could not claim a separate interest in the society's property.

1. Facts

The Kelowna & District Fish & Game Club (the "Society") was incorporated as a not-for-profit club circa 1939 and acquired lands on which various activities of its members were enjoyed called the "Sportsmens Field".

The trap club operated for more than 60 years as an unincorporated association.  However, in 2012, a separate society of the same name was incorporated under the British Columbia Society Act.  A meeting of members was then called to approve the transfer of assets from the unincorporated association to the newly-formed society.

Although later abandoned at trial, the transferors initially claimed ownership of Sportsmans Field and a bank account at a local credit union.

2. Ruling

Justice Betton of the Supreme Court of British Columbia nevertheless carefully weighed the evidence to consider the juridicial nature of the unincorporated association before the successor society was created in 2012.

The evidence included early financial statements of the Society, showing ownership of the lands by the Society, and the lack of any explanation of why the Society would permit use of a substantial portion of its lands without any rent being charged or any agreement being put in place.  The balance sheet supported the inference that the Society paid for acquisition of Sportsmens Field.

Annual reports of the Society to its members were also consistent with its position that the Society had separate components or branches. While there was some separate accounting between the separate branches, this did not establish separate ownership.  The annual report referred to six clubs within the larger Society.

There was an overlap in the membership of the Society and the unincorporated club.  All members of the club were members of the larger Society but not all members of larger Society were members of the trap club.

No evidence was presented to rebut the evidence pointing to the unincorporated club as a branch of the larger Society. Therefore, the unincorporated association was found to be a branch of the larger Society and not a separate entity.

3. Key Observations

Given the finding of fact in this case to the effect that the unincorporated association was at all times a branch with the larger Society and not a separate entity, this was not an occasion for the court to ponder the juridicial nature of an unincorporated club.

While there are occasions when the court must recognize that the members of an unincorporated association have paid for an asset and therefore retain beneficial ownership of that asset, the evidentiary burden is high.  The key is to trace who paid for the acquisition, construction and maintenance of the property.  If the acquisition and construction took place many years ago, the documentary evidence may be difficult to reassemble.  In that case, historical documents such as annual financial statements and annual reports to members will often carry the day as they did in Kelowna Trap.  If the members of an unincorporated association indeed paid for the asset, the asset belongs to those members or their successors.  The unincorporated association has no separate legal status on its own and, therefore, no ability to hold title to property.

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