Gamal Abdelmamoud (Appellant/ Claimant) v The Egyptian Association in Great Britain Ltd (Respondent/Defendant) Mostafa Ragab and Others (Respondents/Applicants)
| Jurisdiction | England & Wales |
| Judge | Edward Murray |
| Judgment Date | 17 April 2015 |
| Neutral Citation | [2015] EWHC 1013 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: CH/2014/0471 |
| Date | 17 April 2015 |
[2015] EWHC 1013 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand. London. WC2A 2LL
Edward Murray
(sitting as a Deputy Judge of the Chancery Division)
Case No: CH/2014/0471
Mr Philip Flower (instructed by Vincent Solicitors) for the Appellant/Claimants
Dr Shenouda Shalaby and Mr Mostafa Ragab in person and for the Respondents/Applicants
The Respondent/Defendant did not appear and was not represented
Hearing date: 20 January 2015
Edward Murray (sitting as a Deputy Judge of the Chancery Division):
On 20 January 2015 I heard the appeal of Mr Gamal Abdelmamoud against the order made by Deputy Master Smith on 30 July 2014 setting aside (a) the judgment entered in favour of Mr Abdelmamoud as claimant against The Egyptian Association in Great Britain Limited as defendant (the "EAGB") on 26 June 2013 and (b) the final third party debt order obtained by Mr Abdelmamoud on 4 September 2013 in relation to sums standing to the credit of EAGB's bank account at the National Bank of Egypt. Deputy Master Smith's order was made on the application of Mr Mostafa Ragab, Mr Shenouda Shalaby, Mr Shady Issa and Mr Azima Madkour ("the Applicants"). At the conclusion of the hearing, I granted the appeal (i) setting aside the Deputy Master's order setting aside the default judgment obtained by Mr Abdelmamoud and (ii) restoring the final third party debt order obtained by Mr Abdelmamoud on 4 September 2013. I briefly gave my reasons and indicated that I would provide a written judgment in due course. This is that judgment.
In brief, Mr Abdelmamoud's claim against the EAGB was for repayment of a loan of just over £30,000 made under the terms of a loan agreement dated 14 December 2012. The EAGB is a charity organised as a company limited by guarantee. The Applicants are members of the charity. The loan was repayable on demand, and Mr Abdelmamoud demanded repayment on 29 April 2013. He issued proceedings on 16 May 2013. No acknowledgement of service or defence was filed by EAGB, and Mr Abdelmamoud was granted judgment in default in the sum of £38,025 on 26 June 2013, an interim third party debt order was made in his favour and a final third party debt order was made on 4 September 2013. The Applicants subsequently successfully applied to stay the third party debt order and to have the judgment in default and the third party debt order set aside.
At the beginning of the hearing, I was asked to rule on an application by the Applicants for permission to cross-appeal out of time certain aspects of Deputy Master Smith's order of 30 July 2014. The Deputy Master had in his order extended the time for the service of any Appellant's Notice in relation to his order to 28 August 2014, however the Applicants did not serve an Appellant's Notice by that date. Their application to appeal out of time came before Mr Justice Norris on 6 January 2015, who made no order on the application, but directed the applicants to prepare a statement as to why their application for permission was out of time and why it would be fair to hear their application at the hearing of Mr Abdelmamoud's appeal, which was listed for 20 January 2015. I considered their statement at the beginning of the hearing and heard the submissions of Dr Shalaby on behalf of the Applicants, who were not represented by counsel. Neither in the statement nor in the submissions of Dr Shalaby were any substantive reasons put forward for their delay in applying for permission to appeal, much less any reason that would justify a delay of over four months following the extended date specified by the Deputy Master in his order. Accordingly, I refused their application and proceeded to hear Mr Abdelmamoud's appeal.
The issues
There are two principal issues on this appeal:
i) whether the Deputy Master was correct as a matter of law in his conclusion that the Applicants had legal standing to bring their application to set aside the default judgment obtained by Mr Abdelmamoud on 26 June 2013 against the EAGB; and
ii) if so, whether the Deputy Master was correct as a matter of law in his conclusion that the Applicants, acting in effect on behalf of the EAGB, demonstrated a real, as opposed to fanciful, prospect of successfully defending Mr Abdelmamoud's original claim against the EAGB.
The second issue (if reached) gives rise to three subsidiary issues:
i) Did the EAGB have legal capacity to enter into the loan agreement as borrower with Mr Abdelmamoud as lender and, if not, what is the consequence of its lack of capacity?
ii) Was Mr Omar Ismail (also known as Asharf Ismail), who purported to act on behalf of the EAGB in entering into the loan agreement with Mr Abdelmamoud, acting as a director of the EAGB when doing so?
iii) If the loan agreement is void for lack of capacity or want of authority of Mr Ismail to enter into it on behalf of the EAGB, does the EAGB have a real, as opposed to fanciful, prospect of resisting a claim for restitution for unjust enrichment in relation to the monies advanced by Mr Abdelmamoud to the EAGB?
There is a further issue raised in para 51 of the judgment of the Deputy Master, The purported purpose of the loan by Mr Abdelmamoud to the EAGB was to fund the bringing of proceedings by the EAGB against the first Applicant, Mr Ragab. The EAGB did not obtain consent from the Charity Commission to bring those proceedings, as required by section 115 of the Charities Act 2011. The issue raised in the Deputy Master's judgment is whether that failure of the EAGB to obtain the section 115 consent could somehow give rise to a defence by the EAGB to repayment of the loan with a real prospect of success, in light of other relevant circumstances of the case as found by the Deputy Master.
The factual background
The factual background is briefly summarised in para 3 above and in detail in paras 6 to 28 of Deputy Master Smith's judgment The salient facts relevant to this appeal are set out below, including both facts undisputed between the parties and relevant findings of fact by the Deputy Master, Some disputed facts are also mentioned, where the fact of the dispute is relevant to the appeal.
In his judgment, the Deputy Master uses the terms "committee", "board", "governing body" and "management committee" in various places in relation to the EAGB, referring in each case, it seems, to the set of its directors (rather thanto a sub set). If there is meant to be a distinction between any of these terms, nothing appears to turn on it in his judgment The EAGB does not appear to be an organisation with a large board of directors entrusting the exercise of certain powers and delegating certain tasks to a smaller management committee of the board.
As the Deputy Master most often uses the term "committee" in his judgment, I will use that term below to mean the directors of the EAGB, bearing in mind that it remains in dispute whether at the relevant times Mr Ismail and the other members of the committee which he purported to chair were the properly appointed directors of the EAGB or whether, instead, Mr Ragab and the other members of the committee which he purported to the chair were the properly appointed directors,
Mr Abdelmamoud is a businessman. He is a member of the EAGB (under the name Gamal Abdelmaboud).
The EAGB is a charity organised as a company limited by guarantee. It was founded in 1997. Its objects include the advancement of education and religion, the relief of poverty, sickness and distress, and the provision of facilities for recreation and leisure in the interests of social welfare and, in particular, for members of the Egyptian community.
Mr Ragab (also known as Mostafa Ragab Mohamed) was a founding member of the EAGB. In 2011 he decided not to continue as an officer and director. A new committee was elected, which included Mr Ismail and Dr Shalaby. During the course of 2012 there was a dispute of some sort between members of the EAGB, and the committee voted to expel Dr Shalaby from the committee. Dr Shalaby denies that his expulsion was valid,
It is the Applicants' case that at an extraordinary general meeting ("EGM") of the EAGB on 14 July 2012 the members passed a motion of no confidence in the committee then chaired by Mr Ismail and elected a new committee that included three of the four Applicants (not Mr Madkour). Mr Ismail disputes that the vote at the EGM was effective to remove the incumbent members of the committee, which included Mr Ossama Abdel-Hamid and Mr Moustafa Elsayed.
Mr Ragab, Dr Shalaby and Mr Issa sent returns to Companies House stating that they had been elected directors, but, according to the Applicants, Mr Ismail continued to control the e filing passwords and so was able to prevent the newly elected directors from appearing as directors of the EAGB on the companies register at Companies House.
Notwithstanding this, Mr Ragab began to hold himself out as the new chair of the committee of directors of the EAGB and to communicate with members of the EAGB on this basis. Mr Ismail, with the agreement of the incumbent committee (as he viewed it), decided to bring proceedings against Mr Ragab on behalf of the EAGB to restrain Mr Ragab from holding himself out as the chair of the EAGB.
Mr Ismail was not, however, able to access the funds of the EAGB for this purpose, as the EAGB's bankers, the National Bank of Egypt, refused to allow drawings from the EAGB's bank account while there was a dispute as to the identity of the lawful directors of the EAGB, Mr Ismail turned to Mr Abdelmamoud for a loan to fund the proposed proceedings against Mr...
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