Company constitutions - Mosques - Trusts - Election of management committee

(1) Ghalib Hussain (2) Abdul Sattar v (1) Wycombe Islamic Mission & Mosque Trust Ltd (2) Tasawar Iqbal: ChD (Judge David Cooke): 20 April 2011

The court was required to give directions in a dispute between the claimants (S) and defendants (T).

A company, with five subscribers had been incorporated in 1983 with a view to construct mosques.

An election was held to appoint a mosque committee and anyone who attended the mosques was entitled to vote.

In 2001, a new constitution was agreed and a new management committee elected.

Disputes arose between S and T, two rival factional groups, as to how the affairs of the mosques should be achieved. Proceedings in the Companies Court were stayed on Tomlin terms after S and T agreed to the involvement of a spiritual leader (X).

Under the terms of the settlement agreement, the management committee was to resign and be replaced by a new committee consisting of 11 from each of S and T, and that the new committee was to oversee the production of a new constitution.

A new constitution was drafted which was accepted by S but rejected by T.

Following lengthy disputes, a legal adviser recommended that a trust deed would be a more suitable working structure.

S rejected that idea.

Held: (1) On the evidence, no person other than the five original subscribers ever became a member of the company prior to the purported adoption of the 2001 constitution (see paragraph 20 of the judgment).

(2) The 2001 constitution was validly adopted and became binding on the company under the Duomatic Ltd, Re [1969] 2 Ch 365 ChD principles, Duomatic applied (paragraph 37).

(3) The committee elected under the constitution was the equivalent to the board of directors with authority to manage the affairs of the company.

As provided for by the constitution, those who were registered as voting in the election automatically became registered members of the company (paragraph 41).

(4) On the evidence, X did not have an arbitrator’s authority to dictate a solution which would be legally binding.

The committee put in place by X was not properly appointed and had no standing to enter into commitments on behalf of the company.

There could be no binding effect on the company flowing from any of the decisions purportedly taken by the committee.

Changes to the constitution had to be decided by the members of the company and not by the management committee (paragraphs 56-58).

(5) The present position was that the company had no validly appointed management committee.

The power to appoint a new committee was in the hands of the members.

When such a committee was appointed that committee would have the responsibility to decide whether any arrangements should be put in place to transfer the mosques to a trust.

Given there was no properly acting management committee, steps should be taken to elect such a committee under the provisions of the 2001 constitution.

It was not practicable to leave that to be dealt with by the requisition of the members in circumstances where there was no properly constituted management committee, and it was appropriate for the court to give directions with a view to the holding of necessary elections and to give consequential directions as to who could vote (paragraphs 59, 62-65).

Directions given.

Tina Kyriakides (instructed by Reynolds Parry Jones) for the claimants; Arshad Ghaffar (instructed by Gordons) for the defendants.