Claim no B30BM419

IN THE HIGH COURT OF JUSTICE

Chancery Division 

Birmingham district registry

Before His Honour Judge Simon Barker QC sitting as a Judge of the High Court

22 December 2016

between
 (1) tARSEM SINGH 
(2) Manjit Singh boPARAI 
Claimants
and 

(1)	THE CHARITY COMMISSION	
(2)	Sukhbinder  Singh  Sandhu, 
(3)	Surjit singh Mattu 
(4)	Ajit Singh Brainch
(5)	HER MAJESTY’S Attorney General 
Defendants

Mr Robert Pearce QC, instructed by Brabners LLP, appeared for the Claimants
Mr Avtar Khangure QC, instructed by Aspect Law Limited, appeared for the Second, Third and Fourth Defendants
The First Defendant and the Fifth Defendant were not represented and did not appear

Hearing dates 14 April and 7 – 8 September 2016

JUDGMENT

 I direct that pursuant to CPR 39APD6 paragraph 6.1 no tape recording shall be made of this judgment and that copies of this version shall stand as authentic and be treated as the official transcript

HHJ BARKER QC :

Introduction
1	These proceedings concern the Guru Nanak Gurdwara (“the GNG”), a Sikh temple in Wolverhampton, which is an unincorporated association governed by a written constitution (“the Constitution”) and registered as a charity.

2	The Constitution provides for the management of the GNG by specified officers and other members of a management committee (“the Committee”), comprising 25 Sikhs in total, which is elected, or – more accurately – selected, for a two year term in May of alternate years. The most recent election was that of May 2015. The Constitution provides for a two stage process of election and that the outcome of the election is subject to a ratification procedure whereby the names of the persons elected to the Committee are announced to the congregation of the GNG. The congregation may cause the election of any member of the Committee to be invalid by taking “legitimate” objection. What constitutes legitimate objection is not defined in the Constitution but does not require consideration in this judgment. The Constitution also provides for a body of trustees (“the Trustees”) who are appointed by the Committee and hold office until death, resignation or removal. The Trustees hold the GNG’s property and may be required to fulfil administrative roles as specified by the Constitution in a reserve or back-up capacity. 

3	The claimants (“Cs” and respectively “C1” and “C2”) and the second, third and fourth defendants (“Ds”) are members of the GNG’s congregation. C1 is the president and C2 is the general secretary of the Committee. In general terms, at least, the conduct of Cs is supported by and represents the views of the Committee as a whole and vice versa.  Ds are three of the Trustees. Their conduct is supported by and represents the views of a section of the congregation.

4	The first and fifth defendants (respectively “the CC” and “the A-G”) have taken no part in the proceedings.

Background to the litigation
5	It is common ground that the May 2015 announcement of the new Committee at the GNG caused some turmoil within the congregation. It also seems that before the May 2015 election there was a degree of disharmony within the GNG’s congregation over an alleged requirement that disabled and elderly members of the congregation needing to sit be segregated and their view obstructed.

6	Following the May 2015 election, Ds complained to the CC that the election was invalid and submitted a video recording of the announcement of the Committee’s election to the congregation in May 2015. On 30.9.15, the CC issued a letter to C2 as general secretary of the GNG representing the Committee and Ds which expressed the view that the election was “invalid as set out in the Constitution”. The writer of the CC’s letter also proposed that the Trustees organise a further election and administer the GNG in the meantime. The letter concluded on the basis that the CC’s file would be closed because the Constitution provided a machinery for addressing an invalid election. 

7	These events, and difficulties in operating the GNG’s bank account caused or triggered by Ds, brought matters to a head. On 16.10.15, after taking legal advice, Cs’ solicitor wrote to the CC inviting the CC to withdraw its “decision” of 30.9.15 failing which Cs wished to litigate the issue of whether the election process of May 2015 was effective to install a new Committee at the GNG. Cs recognised that such proceedings would be charity proceedings and would engage s.115 of the Charities Act 2011 (“s.115”) which defines charity proceedings at s.115(8) as :

“ … proceedings in any court in England or Wales brought under-
(a)	the court’s jurisdiction with respect to charities, or
(b)	the court’s jurisdiction with respect to trusts in relation to the administration of a trust for charitable purposes”.

Cs recognised that s.115(2) prohibited them from pursuing charity proceedings without the sanction of the CC. In this respect, s.115(2) provides :

“Subject to the following provisions of this section, no charity proceedings relating to a charity are to be entertained or proceeded with in any court unless the taking of the proceedings is authorised by order of the [CC]”.

The “following provisions” of s.115 were not applicable; accordingly, by their letter dated 16.10.15 Cs sought authorisation from the CC as a matter of urgency.   

8	On 23.10.15 in the absence of a response from the CC, Cs issued proceedings in the name of the GNG against the CC. The substantive basis of the proceedings was to challenge the views expressed in the CC’s 30.9.15 letter and to seek a declaration that the May 2015 election of the Committee was valid. On the same day, and on very short notice, His Honour Judge Purle QC heard an application by Cs, suing in the name of the GNG, for interim injunctive relief including restraint of the CC from giving effect to its 30.9.15 decision that the May 2015 election was invalid and restraint of Ds from interfering in the administration of the GNG. 

9	On the material then available, HHJ Purle QC formed the view that it was strongly arguable that the election under challenge was not the subject of legitimate objection. Cs also raised a complaint that Ds had interfered in the administration of the GNG by writing to the GNG’s bank with a view to securing the freezing of that account. At that time, the GNG’s current account bank balance exceeded £1.8million and weekly donations for the year to 31.5.15 had exceeded £650,000 (an average of £12,500 per week). HHJ Purle QC acknowledged that interim relief might be required in connection with the operation of the GNG’s bank account so as to restore the orderly payment of liabilities; expenditure on fund raising, charitable activities and governance was running at approximately £300,000 per annum (an average of almost £6,000 per week). HHJ Purle QC directed amendment of the claim to identify Cs as the claimants in place of the GNG and joinder of the A-G as a defendant. Subject to those procedural corrections to the proceedings, HHJ Purle QC stood Cs’ application over to 6.11.15. 

10	On 28.10.15 Cs issued a further application extending the relief sought to include declarations that (1) the CC’s letter of 30.9.15 was not a valid order of the CC and (2) Cs and the others of the Committee were validly elected in May 2015 as well as orders restraining Ds from interfering in the administration of the GNG, and, without detracting from the declarations and the restraint of Ds, an order staying the proceedings pending authorisation of any party by the CC, pursuant to s.115, to continue the proceedings. 

11	On 6.11.15 Cs’ applications came before Mr Justice Newey. The focus of that hearing was the operation of the GNG’s current account with Barclays Bank PLC. Neither Ds nor the court were informed by Cs that during the interval between the hearings the Committee, which included Cs, had resolved to open a bank account with a different bank, Santander PLC.  Newey J intended to maintain the status quo pending a decision by the CC on whether or not to grant Cs permission to continue the proceedings. By consent, Newey J made an order addressing the banking of all GNG receipts, the payment of GNG’s liabilities, the provision of copy bank statements to D and approval by Ds of expenditure out of the ordinary course of £1,000 or more, and the staying of the proceedings pending the CC’s decision or further order of the court. Newey J also ordered Cs to pay 75% of Ds’ costs with the 25% of each side’s costs being costs in the case. Mr Khangure QC had taken over representation of Ds by this hearing and Cs counsel at that time was Mr Quirke. 

12	There is no transcript of that hearing before Newey J but there are two passages in his judgment as to costs which are relevant. They are :

“5. In the event the focus of today’s hearing has been on the operation of the Barclays account. Ultimately a way forward has been agreed in relation to that such that it will be common ground, reflected in a court order, that a variety of payments can legitimately be made from the account with provision for [Ds’] agreement to be sought in respect of other payments”

and

“10. … I also think it right to award [Ds], at least at this stage, less than the totality of the costs not least because some of the costs would have been needed to be incurred to achieve a resolution along the lines of that in fact achieved today in respect of Barclays Bank”. 

Before me, Cs relied on the first passage as indicating that at the hearing on 6.11.15 no formal order was agreed or made, but rather the agreement was that the parties would reach an agreement as to the Barclays account, alternatively as supporting Cs’ contention that they reasonably believed that no order had actually been made on 6.11.15. The second passage sheds light on the first and indicates to me that formal agreement as to the operation of the Barclays account was reached at court on 6.11.15 and that Newey J was so informed. That is consistent with a description of what occurred given to me by Mr Khangure QC during the course of the hearing. 

13	Following the 6.11.15 hearing and upon reflection, Cs and the other members of the Committee concluded that the terms relating to the operation of the GNG’s bank account imposed an unacceptable interference with their management of the GNG and were unworkable. This was notwithstanding that, apart from the requirement to report to Ds and seek Ds’ approval of certain expenditure, the terms agreed reflected banking and accounting obligations specified in the Constitution.  Unknown, at the time, to Ds or the court, the Committee began operating the Santander account on 1.12.15. C1 had proposed the opening of this account to the Committee in October 2015 on the basis that the GNG’s current account at Barclays was frozen. However, an agreement had been made on 6.11.15 which permitted the immediate operation of the Barclays account with the result that there was no good reason to operate the Santander account. 

14	The parties were unable to agree a draft order giving effect to the agreement made at court on 6.11.15. On about 8.12.15, the matter was referred back to Newey J. A further hearing was then fixed before Newey J for 18.1.16. 

15	On 13.1.16 Cs served notice of discontinuance of their claim. This prompted Ds to issue a cross-application on 15.1.16 for orders including that Cs’ notice of discontinuance be set aside and that the order made on 6.11.15 be finalised. At the hearing on 18.1.16, Newey J confirmed the order made on 6.11.15 in the form contended for by Ds. At this hearing Mr Khangure QC appeared for Ds and Mr Saini, Cs’ solicitor, attended throughout as an officer of the court rather than as Cs’ advocate. Towards the end of the hearing Mr Khangure QC expressly raised the question of the operative date of the 6.11.15 order :

“MR. KHANGURE: There is one other point. I think I would like to say it openly so that Mr. Saini hears me. The order that my lord had just perfected which was made on 6th November requires compliance which to date ought to have been complied with and would have to be complied with.
MR. JUSTICE NEWEY: Absolutely”.    

16	During the course of argument on 18.1.16, Newey J raised the question of what could be done about the proceedings which could not be continued without the CC’s authority and which Cs no longer wanted to pursue. Mr Khangure QC’s submissions for Ds were that (1) discontinuance was in effect an abuse of the process as its purpose was to avoid the making of the 6.11.15 order and, if its effectiveness was confirmed, to bring about that order’s demise, and (2) discontinuance would not resolve or dispel the issue as to the validity or otherwise of the May 2015 election. Mr Khangure QC explained that Ds wanted an opportunity to communicate with the CC and invite the CC to either take over the proceedings itself or give Ds permission to commence proceedings; Ds envisaged that consideration by the CC might take a month or two. In the event, Newey J adjourned the discontinuance issue to a date to be fixed, not before 1.2.16, and  ordered Cs to pay Ds’ costs of that day.                 

17	It is relevant to note from the transcript of that hearing that, in discussion with Mr Khangure QC, Newey J observed that the order of 6.11.15 did not or might not amount to an injunction and that Mr Khangure QC agreed with that observation :

“MR. JUSTICE NEWEY: So in terms of the rules the question would be you need permission if an interim injunction has been granted, but I suppose this order does not, obviously, amount to an interim injunction.

MR. KHANGURE: No”.
 
I note that during the hearing there was no consideration of what would or might constitute an interim injunction.

18	After the hearing Cs changed their legal representation and retained Brabners LLP who, at some point prior to 14.4.16, instructed Mr Pearce QC. On 24.2.16 Brabners wrote to the CC and stated that Cs did not require the CC to complete its consideration of Cs’ application for s.115(2) authorisation of the proceedings. By a reply dated 26.3.16, and after noting that Cs were no longer seeking an order under s.115 and that Cs had not presented a complete case for an order,  the CC informed Cs that it had decided to refuse consent in relation to Cs’ application for an order.

19	The return date was fixed for 14.4.16. On 31.3.16, and lest Cs were not entitled to discontinue the proceedings as a matter of right, they issued an application for permission to discontinue the proceedings. The hearing was listed before me. I made an order setting aside Cs’ notice of discontinuance; my reasons included that by reference to CPR 25.1(1)(a) and the definition of an injunction in the Glossary as :

“A court order prohibiting a person from doing something or requiring a person to do something”

paragraph 5 of the 6.11.15 order was not, even when read in context with paragraph 4, a conditional permission but was an injunction. Having regard to the time of day, I reserved the costs of Ds’ application; I also gave directions for completion of the evidence on Cs’ application for permission to discontinue and fixed a hearing date for 8.7.16. This date was re-fixed for 7-8.9.16 following service of the evidence and a revised time estimate for the hearing.    

20	On 17.5.16 the CC wrote to the parties. The CC (1) stated that it is for the court rather than the CC to determine whether or not Newey J’s order should remain in place; (2) resiled from the statement that the May 2015 election was invalid; (3) strongly urged the parties to mediate the ongoing dispute, even while court proceedings were pending; (4) advised that uncertainty about the meaning of legitimate objection in the Constitution should be resolved by the Committee, and suggested that professional advice be obtained; and, (5) confirmed that the CC had requested information from Cs about the use of GNG funds to cover their litigation costs.

Cs’ application for permission to discontinue
21	CPR 38.2(2)(a) provides, in so far as relevant, that :

“a claimant must obtain the permission of the court if he wishes to discontinue all or part of a claim in relation to which-
(i)	the court has granted an injunction”.

22	Mr Pearce QC‘s primary submission was that the court is bound to permit discontinuance of these proceedings because they are not, and will not be, authorised by order of the CC as required by s.115(2). Mr Pearce QC further submitted that the proceedings cannot be saved by leave given by the court pursuant to s.115(5), which provides that :

“ … proceedings may nevertheless be entertained or proceeded with if, after the order had been applied for and refused, leave to take the proceedings was obtained from one of the judges of the High Court attached to the Chancery Division” 

because it is implicit in s.115(5) that the application to the court must be made by the party the subject of the CC’s refusal, i.e. by  Cs. As to that, Cs had no intention of making any such application to the court, save in so far as necessary for the court to dispose of the outstanding matters, essentially discharging the injunction and ruling upon costs. 

23	As to the status of the proceedings and the appropriate course for the court to take, Mr Pearce QC referred to Rendall v Blair (1890) 45 Ch D 139 for Court of Appeal dicta, considering a materially identical provision at s.17 of the Charitable Trusts Act 1853, that it would be wrong to dismiss an action simply on the grounds that permission had not been sought from the Charity Commissioners before the action was commenced but that, if permission cannot be obtained, the action will be dismissed, see Cotton LJ at p.150. Bowen LJ expressed his agreement Cotton LJ on this point, at p.157, and added that pending a decision as to consent the proceedings need not be dismissed but might be stayed, p.158. Fry LJ agreed with Bowen LJ, p.160. Bowen LJ expressly addressed the scope of the equivalent section, p.158 : 

“ … [s.17] directs what ought to be done. Unless the duty is complied with by the litigant the Court must hold its hand. But it does not oblige the Court to close the gates of mercy upon the applicant, but enables it to stay proceedings until that consent, which as a matter of duty ought to be obtained in the first instance, is obtained at last. That, to my mind, is the scope of the section”. 

The power to order a stay was an indulgence to the party seeking authorisation and its duration was confined to the period until consent was obtained thereby regularising the proceedings.

24	Mr Pearce QC further submitted that Ds’ approach (that non-compliance, historically and/or prospectively, by Cs with the banking requirements of the 6.11.15 order is somehow relevant to the question of permission to discontinue) is misconceived because it overlooks the jurisdictional lacuna as a result of which the court has no legitimate alternative but to bring the proceedings to an end. Mr Pearce QC submitted that Ds were not inhibited from commencing proceedings, and seeking an authorisation from the CC, but Cs could not be compelled to keep alive proceedings which they wish to terminate; indeed, Ds acknowledged as much during the course of the hearing before Newey J on 18.1.16 and had had ample time, eight months, in which to take that course.

25	In a nutshell, Mr Pearce QC’s primary submission was that in this case the court can only exercise its discretion or make its decision judicially by permitting discontinuance and dismissing the claim. 

26	Also implicit in Mr Pearce QC’s submissions was the proposition that it would be wrong in principle for the court to countenance continuation of an interim injunction  as an end in itself.   

27	Mr Pearce QC made these submissions to persuade me to make a summary determination of Cs’ application on a preliminary point of principle. After hearing Mr Khangure QC, I formed the view that such a course would not be appropriate. My reasons included the importance of the dispute to each side and to the GNG as a whole; the obvious significance of the 6.11.15 order to each side and to the GNG; and, importantly, Ds’ stated desire to seek authorisation for resolution of the issue as to the May 2015 election. 

28	Mr Pearce QC continued by submitting that the authorities relied upon by Mr Khangure QC, or all but one of them, were distinguishable from the circumstances of this case.

29	In Ernst & Young v Butte Mining Plc [1996] 1 WLR 1605 Mr Justice Robert Walker set aside a notice of discontinuance filed after the parties had agreed terms of a consent order by which judgment in default of defence would be set aside and the defendant would have unconditional leave to serve a defence and counterclaim, which substantially exceeded the value of the claim, within seven days. The significance of this agreed order to the defendant was that a fresh claim, but not a cross-claim, would have been limitation barred. The claimant’s solicitor secured carriage of the consent order and served notice of discontinuance upon the sealing of the order and before the defendant’s defence and counterclaim could be served. On the evidence, which unusually for an interim application included cross-examination and therefore enabled fact finding, Robert Walker J took the view that the claimant’s solicitor had misled the defendant’s solicitor such that service of the notice of discontinuance contradicted the essence of the consent order and constituted an abuse of the process. Robert Walker J noted, by reference to the decision of the House of Lords in Castanho v Brown & Root (UK) Ltd [1981] AC 557, that discontinuance, even where the court’s permission is not required, will not be permitted if it is an abuse of the process and further that where permission to discontinue is granted it may be subject to terms. Referring to the judgment of Mr Justice Hobhouse in Fakih Brothers v A P Moller (Copenhagen) Ltd [1994] 1 LL Rep 10, Robert Walker J noted that in considering whether service of the notice was an abuse of the process it was necessary to have regard to the overall position of the parties and what the claimant was trying to achieve. It was relevant that Butte Mining Plc’s lawyer had been misled in consequence of which the Ernst & Young had secured an opportunity to serve a notice of discontinuance which it might not otherwise have been able to serve. The distinguishing features relied upon by Mr Pearce QC were the absence of any deception by Cs as an aspect of the overall position of the parties and the additional criteria attaching to charity proceedings which can only continue if ordered by the CC or, if refused by the CC, permitted by the court. 

30	Muman and others v Nagasena [2000] 1 WLR 299 concerned the right to possession of premises in east London used as a Budhist temple by a charity. The claimants contended that they were the governing body and trustees of the charity; the defendant, who was in occupation, claimed to be the patron or resident monk of the charity. Title to the premises was vested in the Official Custodian for Charities who should have been, but was not, joined as a party. At first instance the trial judge had dismissed the action on the ground that the claimants had no right to seek possession. However, the trial judge had overlooked a statutory provision to the contrary. The Court of Appeal reinstated the proceedings and remitted the case for trial by a different judge. The Court of Appeal also stayed the proceedings on the grounds that both the claim and counterclaim raised issues which were charity proceedings (who were the trustees and who was the patron, and, possibly, who were the members) which could not be continued unless authorised by the Charity Commissioners or the court. The Court of Appeal also directed that the stay should not be lifted, even if the authorisation requirement was met, until after the parties had attempted to resolve the dispute by mediation. Mr Pearce QC drew attention to the fact that in that case there was no interim relief and the stay was ordered not to preserve and sustain an interim injunction but for authorisation and mediation of issues which both sides wished to contest. Mr Pearce QC contrasted the present case as one where authority had been refused by the CC and mediation, while not opposed in principle, would require careful consideration as to formulation of the issues and other fundamental matters.

31	Todaysure Matthews Ltd and another v Marketing Ways Services Ltd [2015] EWHC 64 (Comm) concerned an application by the defendant to set aside a consent order so that the defendant would be released from an undertaking given in the consent order. Mr Justice Teare considered the principles governing discharge from the obligations of an interim consent order and held that good cause had to be shown; good cause depended upon all the circumstances of the case but, typically, included a change of circumstances or the discovery of some new fact. It was relevant that a consent order was the product of a negotiation and agreement between the parties and it was relevant, as a factor for continuing the consent order, that there is a public interest in parties resolving their differences themselves. The consent order provided benefits to both sides and there was no injustice in holding the defendant to its agreement. Mr Pearce QC submitted that the context was entirely different, the jurisdiction was different, and in the present case the release from the consent order is to be the consequence of the substantive proceedings coming to an end by discontinuance. Crucially, there have been material changes of circumstances since the 6.11.15 order was made in that Cs no longer wish to pursue the proceedings and the CC has refused consent.

32	In Choudhury and another v Stepney Shahjalal Mosque & Cultural Centre Ltd and others [2015] EWHC 743 (Ch) the dispute concerned the control of a mosque following the division of the trustees into two camps. Mr Justice Birss had granted a without notice injunction to restrain the holding of a meeting. At the return hearing the defendants sought a stay of the proceedings for the CC to consider an application for authorisation. In fact the claimants had already sought authorisation which was under consideration. Birss J held that staying the proceedings was a factor to take into account when considering whether to grant or continue an interim injunction, but no more than that, and that the circumstances warranted the modification of the form of injunction to restrain both sides. Mr Pearce QC distinguished the case by reference to the fact that the CC has refused to authorise the present proceedings.

33	In The High Commissioner for Pakistan in the United Kingdom v National Westminster Bank plc [2015] EWHC 55 (Ch) the court was concerned with an application to set aside a notice of discontinuance under CPR 38.4(1) which provides : 

“Where the claimant discontinues under rule 38.2(1) the defendant may apply to have the notice of discontinuance set aside“.

Mr Pearce QC and Mr Khangure QC were agreed that the judgment of Mr Justice Henderson at [46] – [47] provides helpful guidance by analogy on the principles governing the approach to deciding whether or not to permit discontinuance. Explaining his reasons for rejecting the claimant’s submission that the court’s power to set aside a notice of discontinuance was confined to instances of abuse of process,  Henderson J said :

“ 46  ….. Thus I consider that the court should approach an application to set aside a notice of discontinuance under rule 38.4(1) on the basis that the court has a discretion which it should exercise with the aim of giving effect to the overriding objective of dealing with the case justly and at proportionate cost. If the facts disclose an abuse of the court’s process that will no doubt continue to be a powerful factor in favour of granting the application; but it would in my view be wrong to treat abuse of process as either a necessary or an exclusive criterion which has to be satisfied if the application is to succeed”.

Henderson J  continued at [47] by agreeing with and citing a passage from the judgment of Mr Justice Aikens in Sheltam Rail Co Ltd v Mirambo Holdings Ltd [2008] EWHC 829 (Comm) at [34] – [35] :

“34  .  …   The wording of [CPR 38.4(1)] does not impose any particular test that has to be satisfied before the court will set aside a notice of discontinuance that has been issued under rule 38.2(1) without the court’s permission. However, I agree with note 38.4.1 of Civil Procedure 2007 (vol 1) that a court may set aside a notice of discontinuance if it concludes that it is an abuse of the process of the court. I accept that this may not be the only circumstance in which the court exercises its powers under CPR r 38.4(1). Further, even if it concludes that it is an abuse of process, a court must still have a discretion whether to set aside a notice of discontinuance. (Compare the comment of Robert Walker J in Ernst & Young v Butte Mining Plc [1996] 1 WLR 1605, 1622F).

35.  When considering whether or not a notice of discontinuance is an abuse of the process of the court, I regard a useful question to ask (as under the old RSC): If the permission of the court had been required to issue a notice of discontinuance, would that permission have been granted unconditionally? However, that is not the only matter to consider before a court exercises its discretion to set aside a notice under CPR r 38.4. A court must also be entitled to consider both the circumstances in which the notice of discontinuance was issued and what the claimant is attempting to achieve by issuing and serving the notice”.    

34	As to what Cs were attempting to achieve, Mr Pearce QC submitted that Cs sought to achieve (1) compliance with s.115 following the CC’s refusal to authorise proceedings, (2) benefit to the GNG by avoiding further legal costs, (3) benefit to the GNG by terminating disruption to the management of its affairs, and (4) benefit to the GNG by extracting itself from a question of diminishing significance because May 2017 will herald a fresh election. He also stressed that the circumstances in which the notice was issued included that Cs had not sought and were not seeking (1) to prevent Ds from making their own application to bring charity proceedings to challenge the May 2015 election as having been subject to legitimate objection, (2) to secure access to the GNG’s funds for improper purposes, (3) to defeat or obstruct the congregation’s right to obtain information about the GNG’s finances, or (4) to avoid ADR if properly thought through, as to which the issues for any mediation were far from straightforward. 

35	By way of overview, Mr Pearce QC submitted that the GNG is a large and complex institution playing an important role in the local community which is managed by volunteers whose contribution to the GNG is impeded by this litigation.

36	Turning to Ds, Mr Pearce QC submitted that Ds were seeking to achieve continuation of their hold over Cs via the 6.11.15 order without having, or for that matter being able, to formulate or pursue charity proceedings themselves. Mr Pearce QC submitted that Ds’ focus on alleged breaches of the 6.11.15 order is a distraction from the substantive issues. Mr Pearce QC accepted on behalf of Cs that there had been breaches of the agreed banking terms, but submitted that almost all had occurred before service of the sealed order on 26.1.16. By way of examples, Cs accepted that (1) they had retained cash which should have been banked and had opened and operated the Santander account; but this was during a period of difficulty and, at least, uncertainty as to Cs’ obligations; (2) Ds had been misinformed about the source of monies used to pay Cs’ current solicitors but Cs had arranged for restoration from other sources and they had an argument that they would be entitled to reimbursement under s.31 of the Trustee Act 2000; and, (3) the provision of information terms of the 6.11.15 order had not been complied with timeously but that had been or was being remedied.     

37	Mr Pearce QC referred to the evidence of Cs’ current solicitor, Mr Simon Morris, and that of C2 for Cs’ additional reasons for seeking permission to discontinue. In summary they were (1) the CC has refused permission; (2) Cs no longer think it is in the best interests of the GNG for the proceedings to continue; (3) continuation of the proceedings will disrupt the affairs of the GNG; (4) continuation of the proceedings will give rise to further great expense; and, (5) Ds could have brought and could bring their own proceedings. In addition, an assurance was given that the Committee is fully aware of its responsibilities to deal with the GNG’s funds in accordance with the Constitution. 

38	As to the merits of Ds’ challenge to the May 2015 election, Mr Pearce QC submitted that the court is not concerned to evaluate the evidence and that the court would only determine that issue in charity proceedings. 

39	Nevertheless, Mr Pearce QC did address the evidence concerning the 6.11.15 order in some detail to support his own submissions and when answering Mr Khangure QC’s submissions. Mr Pearce QC acknowledged that some of the 36 particularised complaints about failures by Cs or the Committee to comply with the 6.11.15 order revealed Cs’ conduct as injudicious, but noted that they did not result in the misapplication of funds. He pointed to flaws in 15 of the allegations, but was otherwise generally driven to rely on Cs’ contention that they did not understand the 6.11.15 banking order to have been agreed to or operative until it was served on 26.1.16.

Ds’ submissions in response
40	Mr Khangure QC had succeeded in his submission that Cs’ application was not appropriate for to determination on a preliminary basis. Ds still wished to litigate the issue as to the validity of the May 2015 election even if Cs did not, not least because the next election process, in May 2017, would take as its starting point the incumbent electors. Further, Ds had been prevented from serving and filing a defence or defence and counterclaim by reason of the stay imposed by the court’s order of 18.1.16. Cs’ change of position and their procurement of the CC’s refusal to authorise the continuance of the proceedings was a tactical response to the necessary safeguards imposed, by consent, under the 6.11.15 order.

41	Referring to Castanho v Brown & Root (UK) Ltd and to Ernst & Young v Butte Mining Plc, Mr Khangure QC submitted that the court will be astute not to permit abuse of its process for a collateral or tactical purpose which would strike at an existing order; and, that this was all the more so where, as here, the order was made by consent. Mr Khangure QC submitted that the fact that the circumstances of those cases could be categorised as commercial litigation whereas the present proceedings concerned the internal affairs of a charity and required compliance with s.115 before being proceeded with further was not material to the applicability of the general principle. By analogy with the point drawn from Fakih Brothers v A P Moller (Copenhagen) Ltd by Robert Walker J, the overall position of the parties was that they were unable to continue the proceedings by reason of a stay and, further, Cs’ motivation underlying discontinuance was improper in that Cs sought their release from legitimate, and agreed, oversight in their management of the GNG’s financial affairs and from the obligation to justify their election in May 2015. The chronology was important, Cs did not inform the CC that they did not require a decision on s.115 until 24.2.16, ie after the stay was imposed and after they had lost the argument as to the form of the 6.11.15 order.
	
42	Noting that Cs had obtained the CC’s decision not to authorise continuance of the proceedings by withdrawing their request for authorisation, and drawing on the Court of Appeal’s decision in Rendall v Blair, Mr Khangure QC submitted that this was not a case in which the CC’s authorisation cannot be obtained; accordingly, it  would not be right to dismiss the proceedings, a consequence of permitting discontinuance, without giving Ds the opportunity to obtain such authorisation. Indeed, that either side should have an opportunity to approach the CC for permission to proceed was expressly envisaged in the draft order proposed by Cs under their 28.10.15 application :

“(7)	These proceedings be stayed pending the obtaining of permission to any party from the [CC] to proceed, pursuant to [s.115]”.

Although, not in precisely that language, the order in fact made by consent on 6.11.15 was not prescriptive as to who might seek the CC’s authorisation :

“3.	The claim be stayed until formal permission of the [CC] is obtained or further order of the Court”.

43	As to Todaysure Matthews Ltd and another v Marketing Ways Services Ltd, Mr Khangure QC submitted that the principles relating to consent orders were of general application and there was no good reason to distinguish a consent order in a case concerning the management or internal affairs of a charity from a consent order in commercial litigation. In any case, release from obligations under or variation of the terms of such an order must be based upon good cause. The consent order in this case was the product of careful negotiation and agreement at court on 6.11.15; a change of view as to the desirability of the terms agreed was quite different from a change of circumstances; the change of circumstances relied on by Cs was self-induced and reliance was self-serving; the underlying dispute has not been resolved or gone away, and it was therefore in the interests of the administration of justice that the agreement be upheld pending resolution of the issue; and, Cs had not pointed to any injustice, as distinct from inconvenience, that would result from being held to their agreement.  

44	In Choudhury and another v Stepney Shahjalal Mosque & Cultural Centre Ltd and others, Birss J was concerned that inactivity on the part of the court would very probably serve to escalate the dispute and concluded that holding the ring for a limited period, by granting an injunction imposing the same prohibition on both sides for a short period, three months with liberty to apply, would afford the CC a reasonable period within which to reach a decision under s.115 after which the injunction would expire. Mr Khangure QC acknowledged Mr Pearce QC’s point that in the present case the CC had made a decision, but submitted that that was not based on its own evaluation and the CC might well make a different decision if the proceedings were kept alive for a short period.

45	Mr Khangure QC placed considerable reliance on the decision in Muman and others v Nagasena.  Continuation of a stay and of the interim injunction would serve to further the purpose of the authorisation requirements under s.115, which was to prevent charities from frittering away money subject to charitable trusts in pursuing litigation relating to internal disputes. As a quite separate point, the Court of Appeal insisted and ordered that the parties attempt to resolve the dispute by mediation and imposed a stay and prohibited further expenditure in the meantime. Mr Khangure QC urged the court to direct a mediation and continue the stay meanwhile in this case. 

46	Mr Khangure QC compressed the principles to be drawn from Henderson J’s judgment in The High Commissioner for Pakistan in the United Kingdom v National Westminster Bank plc to the following propositions : (1) the court’s approach to setting aside a notice of discontinuance or granting an application for permission to discontinue must be to give effect to the overriding objective of dealing with cases justly and at proportionate cost; (2) to that end, the court must consider the circumstances and what the claimant was attempting to do; (3) facts disclosing abuse of process would be a powerful but not either a necessary or the only factor to consider; (4) an attempt to frustrate the future conduct of a process or obtain a collateral tactical advantage was an abuse of process; and, (5) the court’s decision involves the exercise of a discretion, and may include the imposition of terms. As to collateral advantage, Mr Khangure QC referred back to Castanho v Brown & Root (UK) Ltd, and in particular a passage in Lord Scarman’s speech, with which Lords Wilberforce, Diplock, Keith, and Bridge agreed, at p.571G :

“The court has an inherent power to prevent a party from obtaining by the use of its process a collateral advantage which it would be unjust for him to retain: and termination of process can, like any other step in the process, be so used”.

47	Turning to the facts, Mr Khangure QC submitted that Cs’ conduct could not withstand scrutiny. There was and is a genuine dispute as to whether the congregation’s objection to the Committee was legitimate. The 6.11.15 order required no more than that the GNG’s money was accounted for, and the additional task of disclosing that accounting to Ds, who are three of the Trustees, ensured transparency but did not impose a burden; further, it was disturbing that Cs were unwilling to be bound by the consent order. Cs’ conduct in relation to the 6.11.15 order was relevant to the court’s decision and discretion; the evidence of Cs’ refusal and failure to comply was very strong and their attempts to assert that there was no agreement and that they were not bound by an order were unconvincing. Cs’ conduct in relation to the Santander account, both as to its establishment and its use, added considerable force to these criticisms. Cs had lied to the CC about their funding of this litigation and had given instructions to their solicitors to be communicated to Ds about the funding of this litigation which were also false. Cs gave no warning of their intention to discontinue. Cs viewed discontinuance as a way of avoiding a decision on the election issue and escaping from the legitimate, reasonable and agreed constraints of the 6.11.15 order. Cs’ conduct in relation to the funding of their own costs provided cogent evidence that their word was not to be trusted. Mr Khangure QC put flesh on the bones of these submissions by reference to the available evidence and undertook, as did Mr Pearce QC, a detailed review of available financial material. 

48	Mr Khangure QC accepted that Cs could not be forced to continue a claim against their will and that the claim will have to be discontinued and/or dismissed at some point. Drawing from all the authorities, Mr Khangure QC submitted that the appropriate course for the court to take in the just exercise of its discretion was to impose conditions on Ds, that they apply to the CC for authority under s.115 and serve a counterclaim, but continue the injunction and stay in the meantime for a limited period. This course was justified by reference to all the circumstances, including the purpose underlying Cs’ conduct, and would further the overriding objective. The alternative would leave the GNG unprotected by court order, pending a fresh application, and would inevitably escalate costs considerably and disproportionately. Separately, Mr Khangure QC invited the court, of its own motion, to order the parties to participate in mediation. 

Analysis and decision
49	As to the general principles relating to permission to discontinue proceedings  to be derived from the authorities cited by the parties’ counsel in so far as relevant to the circumstances of this case, I bear in mind that (1) the rules do not prescribe any particular test for permitting discontinuance or, for that matter, for setting aside a notice of discontinuance;  (2) a claimant’s desire to bring proceedings to an end where there is no counterclaim should be respected, not least because a claimant cannot be compelled to prosecute a claim; (3) the court has an inherent discretion, including as to the timing of any discontinuance; (4) as with any judicial discretion, it may only be exercised in accordance with principle but is otherwise unfettered; (5) the court’s objective, both substantively and procedurally, is to achieve a just result according to law and to limit costs to those proportionate to the case; (6) the consideration required of the court is of all the circumstances and not merely those concerning only one party or only some of the parties; (7) when considering all the circumstances, conduct, particularly that aimed at abusing or frustrating the court’s process or securing an unjust tactical advantage, is relevant and may well be important, but it is by no means conclusive; and, (8) when considering all the circumstances, the court should also have in mind its realistic options, which may include imposing conditions while the proceedings remain extant. 

50	In addition, and of relevance to this application, I bear in mind that (1) a claimant in proceedings concerning the internal affairs of a charity is free to accept the CC’s refusal to authorise continuance of proceedings and that, absent an application to a judge of the High Court sitting in the Chancery Division, such refusal will prevent further progress of the proceedings by the claimant. In this context, the court will aim to further the purpose underlying s.115 which was succinctly expressed in Muman and others v Nagasena as being to prevent charities from frittering away money subject to charitable trusts in the pursuit of litigation relating to internal disputes; (2) an applicant seeking release from a consent order must show good cause, which may include change of circumstances or some new fact; and, (3) civil proceedings may only be maintained in respect of a cause of action and that interim relief, such as an interim injunction, is not free standing but is granted in aid of a cause of action, see Lord Diplock’s speech in Siskina (Owners of cargo lately laden on board) and others v Distos Compania Naviera SA [1979] AC 210, p.256C-E.

51	As to distinguishing the authorities, the principal underlying theme put forward by Mr Pearce QC was that Cs are simply not able to proceed with the litigation by reason of the CC’s refusal to authorise their continuation. Had that been an informed decision taken by the CC after consideration of the merits it would have weighed very heavily, if not decisively, in Cs’ favour. However, the CC’s refusal falls to be taken into account in its full context which is that Cs both withdrew their request for authorisation under s.115 and failed to provide full information to the CC for it to consider authorisation on the merits. It therefore did no more than serve to acknowledge Cs’ desire to extract themselves from an ongoing dispute about the GNG’s internal affairs and avoid resolution of the dispute through legal process, or, for that matter, mediation. Put another way, it is far from clear that the issue as to the May 2015 election is one in respect of which neither Cs nor Ds could obtain the CC’s authorisation under s.115.

52	As to the factual issues and detailed evidence, I agree with Mr Pearce QC that evaluation and fact finding are not for this application, and I bear in mind that there has been no oral evidence and I am dealing with an application and not giving a judgment after a trial. That does not mean that I must disregard the impression created by the evidence as a whole or that I am bound to accept assertions as true because they are verified by a statement of truth. Moreover, I may, and should, take into account fully Ds’ evidence in so far as Mr Pearce QC made concessions or was unable to point to a realistic answer in Cs’ evidence. 

53	I feel bound to record that I consider the submission, and Cs’ position, that it was reasonable for Cs to regard the 6.11.15 banking order as under negotiation or inoperative until it was served on 26.1.16 as unrealistic. It is also troubling that Cs plainly thought it appropriate to conceal from Ds and the court on 6.11.15, and again on 18.1.16, that they had already decided to open and operate a new bank account at a different bank. It is disturbing that Cs’ made unreliable statements to the CC and misled Ds about the funding of their representation in this litigation. That is conduct which reflects badly on and weighs against Cs. It encourages a very cautious attitude to written evidence that would otherwise be taken at face value at this stage. 

54	I also regard more than a few of the detailed explanations given to justify breaches or non-observance of the 6.11.15 order as stretching credulity to and beyond normal tolerances. One example was the evidence about problems caused to Cs in respect of renewing insurance, which was foreseeable and easily avoidable on their part; another example was C2’s attempt in his written evidence to pass off bankings into the Santander account in February 2016, i.e. even after service of the 6.11.15 order, as somehow the fault of the security company which transports the GNG’s cash from the temple to its bank.

55	Standing back from and looking in the round at the circumstances, I am left with an overwhelming impression that Cs have had no compunction about disregarding agreements and not keeping their word. Their volte-face, following a realisation or conclusion that the 6.11.15 order did not serve the interests of the GNG, should and would (or could) have been fully addressed by a prompt referral back to court and a reasoned explanation of the problems envisaged or apparent were it genuine rather than motivated by self-interest. Delay and undisclosed inconsistent conduct was not the answer and it provided a revealing insight into Cs’ true motivation. 

56	These circumstances inevitably coloured the otherwise very powerful submissions made by Mr Pearce QC as to Cs’ view of what is in the GNG’s best interests and the likelihood and potential consequences of disruption of the GNG’s affairs. As to escalating litigation costs, or the frittering away of the GNG’s cash balances on litigation, it is not clear that termination of the proceedings now will result in savings to the GNG. 

57	On the other hand, and as Mr Pearce QC submitted, it may be said that Ds have had much longer than a reasonable period within which to formulate a counterclaim and prepare a draft request for authority to the CC, and to apply for the stay to be lifted for such purposes to be put into effect. Their inactivity may be viewed as a reflection of the fact that they consider that their interests, and those of the members of the GNG’s congregation who would side with them, are well enough served by maintenance of the 6.11.15 order while the days pass. Delay on the part of Ds may also be viewed as tactical. It weighs against Ds, but markedly less heavily than the factors weighing against Cs.

58	Cs’ loss of interest in the proceedings and the absence of a counterclaim means that there is no cause of action to be proceeded with; this, in turn means, as Mr Khangure QC recognised, that the proceedings must be brought to a close in their current form. Absent a counterclaim disclosing a cause of action there is no juridical basis for the continuation of the 6.11.15 order. However, sanctioning immediate discontinuance would, in my judgment, offend rather than further the overriding objective. There are sound and serious reasons for the Trustees, including Ds, to be concerned about the current management of the GNG and there are significant internal disputes concerning the GNG as a charity. There are very significant assets held in a bank current account (notwithstanding that the Constitution provides for all but £5,000 to be placed on deposit) and there are divisions within the GNG’s officer and management structure as to the appropriate use to be made of those assets in accordance with the GNG’s objectives and purposes. Calls from the CC for a mediation have gone unheeded for months. Litigation has been frustrated by tactical manoeuvres. In my judgment it would be a denial of justice, and contrary to the overriding objective, for the court to simply wash its hands of the proceedings, bring about the discharge of the 6.11.15 order, and leave Ds to either start again or await and take their chances at the May 2017 election.

59	Continuation of the stay and injunction without setting time limited conditions would be unjust even if, which it is not, it would be a permissible exercise of the discretion.

60	The appropriate course, consistent with furtherance of the overriding objective and in line with Birss J’s decision in Choudhury and another v Stepney Shahjalal Mosque & Cultural Centre Ltd and others, is to afford Ds a time limited opportunity effectively to take over the proceedings. To this end Ds must take two steps, namely serve and file a pleading incorporating or comprising a counterclaim and apply to the CC under s.115, within a very short period of time, namely four weeks (20.1.17). The stay should be lifted for those purposes. As the claim is no longer pursued there may be no point in drafting a defence save for the purpose of avoiding the requirement of the court’s permission under CPR 20.4(2); if an application for permission to make a counterclaim and a hearing are needed the hearing should be expedited and will be accommodated by 10.2.17 and the counterclaim should be served and filed in draft with an application by 20.1.17.  Subject to those steps, the stay should remain in place until 31.3.17; that would allow a period in excess of three months for the CC to consider Ds’ request for authorisation. In the event that Ds fail to take any of those steps the consequence will be the immediate discharge of the 6.11.15 order and the dismissal of the proceedings. The same will apply if the CC refuses to authorise Ds’ counterclaim absent leave sought without delay pursuant to s.115(5).

61	For these reasons, I refuse Cs’ application for permission to discontinue the claim with immediate effect.

62	There remains the question of costs, including reserved costs. In addition, I have not taken up Mr Khangure QC’s invitation to direct mediation. That is because Ds have not put forward a suggestion as to the terms of reference or proposed arrangements for mediation and Mr Pearce QC has submitted that there are complexities which need to be considered very carefully. Costs and any further consideration of mediation may be raised at a further hearing to be fixed as soon as convenient to the parties in the next term.