Mostafa Ragab Mohamed v Gamal Abdelmamoud
| Jurisdiction | England & Wales |
| Judge | Lord Justice Newey,Lord Justice McCombe,Lord Justice Longmore |
| Judgment Date | 23 April 2018 |
| Neutral Citation | [2018] EWCA Civ 879 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2015/1564 |
| Date | 23 April 2018 |
[2018] EWCA Civ 879
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
(CHANCERY DIVISION)
(Mr Edward Murray, sitting as a Deputy High Court Judge)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Longmore
Lord Justice McCombe
and
Lord Justice Newey
Case No: A3/2015/1564
and
Mr Adam Johnson QC and Mr Donny Surtani of Herbert Smith Freehills LLP (Acting Pro Bono) for the Appellants
Mr Andrew Clutterbuck QC (instructed by Vincent Solicitors) for Mr Gamal Abdelmamoud
Hearing date: 15 March 2018
Judgment Approved
This appeal concerns a default judgment that the claimant, Mr Gamal Abdelmamoud, obtained against the defendant, the Egyptian Association of Great Britain Limited (“EAGB”). The appellants, Mr Mostafa Ragab Mohamed (“Mr Ragab”), Dr Shenouda Shalaby, Mr Shady Issa and Mr Azima Madkour, who are all members of EAGB, applied for the judgment to be set aside, and their application succeeded before Deputy Master Smith. An appeal having, however, been allowed by Mr Edward Murray, sitting as a Deputy High Court Judge, the appellants now challenge his decision in this Court. The case raises issues as to when a non-party can be said to be “directly affected” by a judgment or order for the purposes of CPR 40.9, which provides:
“A person who is not a party but who is directly affected by a judgment or order may apply to have the judgment or order set aside or varied.”
Narrative
EAGB, a company limited by guarantee and a registered charity, was incorporated in 1997. Its memorandum of association provided for members to pay up to £10 each in the event of the charity being wound up and also barred the payment or transfer of income or property to members. The articles of association stated that, subject to certain exceptions, the business of the charity was to be “managed by the trustees who may exercise all the powers of the Charity”. “The trustees” was defined to refer to EAGB's directors. As “persons having the general control and management of the administration of a charity”, the directors of a charitable company are also “charity trustees” within the meaning of section 177 of the Charities Act 2011.
EAGB appears to have adopted a “Constitution” in 2009. This provided for a management committee with 11 members, who were to be elected at the annual general meeting. The committee was, among other things, to “[p]rovide governance to the Egyptian Association, represent it to the community and accept ultimate legal authority for it”.
It is, as I understand it, common ground that Mr Ragab was a director/trustee of EAGB before he resigned as such in 2011. At that stage, Mr Omar Ismail became a director/trustee.
On 12 July 2012, an extraordinary general meeting was held (or purportedly held) at which, according to the appellants, 12 individuals were elected as “new trustees” for EAGB. They included three of the appellants: Mr Ragab, Dr Shalaby and Mr Issa. The validity of the appointments is, however, disputed by Mr Ismail, among others.
On 2 December 2012, an emergency meeting of EAGB's board was held (or purportedly held). It was chaired by Mr Ismail. The minutes recorded that the board agreed that EAGB should enter into a loan agreement with Mr Abdelmamoud, the proceeds of which were to be used to fund litigation against Mr Ragab. The minutes also stated that Mr Ismail was “delegated and authorised by the Board of Directors to take all legal actions against [Mr Ragab] in respect of any and all actions needed to be taken to ensure the return of any monies and or properties belonging to [EAGB]”. There was reference in the minutes to Mr Ragab having sold “the 50 visas Hajj licence” and “allegedly pocketing this money which belongs to the Company/charity” and to his refusing to pay back £80,000 which “he took from the Egyptian Association”. It was also stated that Mr Abdelmamoud agreed to provide funding:
“providing that all legal matters are in place and that contract must be signed, proof that we are the Directors/Trustees acting on behalf of the Egyptian Association and that the Board of Directors are agreeable”.
On 14 December 2012, Mr Abdelmamoud entered into a contract the parties to which were identified as himself and EAGB. The contract, which was signed on behalf of EAGB by Mr Ismail, provided for Mr Abdelmamoud to lend EAGB £30,000 to be used only for the purpose of meeting legal expenses and to be “repayable in full immediately upon formal demand at any time”. Interest was to be paid at 10% per annum, but:
“In the event of default of payment of interest or delayed repayment of the Principal Sum beyond the due date interest shall accrue from the event of default at the rate of 25% … per annum on the defaulted balance together with any accrued but unpaid interest.”
At the beginning of January 2013, EAGB applied for injunctive relief against Mr Ragab. When the proceedings (“the Ragab Proceedings”) came before Briggs J on 9 January, the application was adjourned with Mr Ragab giving an undertaking to the Court to tell a meeting/Christmas dinner taking place the next day that there was a dispute as to who the proper chairman and head of EAGB was and to send emails to similar effect to all members of EAGB.
The application was disposed of by consent at a hearing before Proudman J on 10 April 2013. Mr Ragab and Mr Ismail each gave undertakings to the Court. Mr Ragab undertook, among other things, not to hold himself out as the chair or officer of EAGB “unless so elected at the meeting requisitioned by [EAGB] pursuant to the Memorandum and Articles 1997”. For his part, Mr Ismail undertook, among other things, to requisition a general meeting of EAGB “pursuant to the Memorandum and Articles 1997” to be held on or before 15 June at which “the existing directors and charity trustees shall resign for the purposes of enabling the members to vote on and elect not less than three new directors (who shall also be appointed trustees)”.
On 29 April 2013, Mr Abdelmamoud appears to have made a formal demand for his “loan of £30,000” to be repaid. This was followed up by a “Pre-legal action Notice” dated 6 May. On 16 May, Mr Abdelmamoud issued the present proceedings in the Queen's Bench Division. He claimed £30,000 plus interest of £7,500 on the basis that EAGB was to pay “interest of 25% per annum on the defaulted balance” in the event of default.
On 15 June 2013, there was held (or purportedly held) a general meeting of EAGB that is said to have been “supervised by an independent panel”. According to the panel, Mr Ismail, Mr Moustaf El-Sayed and Mr Ossama Abdel Hamid were elected as directors/trustees of EAGB. The appellants, however, dispute the validity of this election.
On 26 June 2013, Mr Abdelmamoud obtained judgment in default against EAGB for the £37,500 he had claimed plus costs of £525. On the following day, he applied for a third party debt order to be made in his favour in respect of EAGB's accounts with National Bank of Egypt. An interim third party debt order was made on 3 July, and a final order followed on 4 September.
On 14 October 2013, by which time Mr Abdelmamoud's proceedings had been transferred to the Chancery Division, the appellants issued an application for the default judgment against EAGB to be set aside. The application came before Deputy Master Smith, who gave judgment on 30 July 2014. He concluded that there was a real prospect of EAGB successfully defending Mr Abdelmamoud's claim and, further, that the appellants had standing to apply to set aside the default judgment. With regard to the latter point, the Deputy Master said this (at paragraph 49 of his judgment) after referring to CPR 40.9 and Latif v Imaam Inc [2007] EWHC 379 (Ch):
“ Latif did not purport to set out the limits to CPR 40.9. If anything, the case demonstrates that the situations in which CPR 40.9 can be relied on are rather wider than the reported authorities and that cases should be decided on their own facts. CPR 40.9 is in wide terms. It requires only that a person be directly affected by a judgment or order. In my view the Applicants, as members of the charity who claim to dispute the election of the present management committee, are directly affected by the default judgment even if they have no proprietary interest in the Charity's funds. They have an interest in protecting the funds of the Charity of which they are members. Of course, it would be inappropriate to set judgment aside if the Applicants were unable to defend the claim on behalf of the Charity but, in line with the notes at paragraph 40.9.5 of The White Book, it seems to me that the Applicants as members of the Charity should be entitled to apply to defend the proceedings in the name of the Charity on suitable indemnities being given in circumstances where the registered directors of the Charity are not proposing to defend the claim.”
The order made by the Deputy Master provided, by paragraph 2, for the default judgment and the third party debt order to be set aside and for the appellants to “have permission to defend the action in the name of the Defendant [i.e. EAGB]”. By virtue of paragraph 1 of the order, paragraph 2 was to take effect only if the appellants filed and served a written undertaking to indemnify EAGB against any costs subsequent to 4 September 2013 for which it might be held liable to Mr Abdelmamoud.
Mr Abdelmamoud appealed against Deputy Master Smith's decision. The appeal came before Mr Edward Murray, sitting as a Deputy High Court Judge, who, on 20 January 2015, held that...
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