Sabha & Ors v Rai & Ors

The constitution of an unincorporated religious association may be construed according to objective standards. Where the meaning of a notice is disputed, the court may adopt a contextual interpretation, considering its readership and relevant factual findings, without adjudicating on the truth or content of religious belief. A court cannot use surrounding history to imply extensive powers into a badly drafted constitution or write a bargain the parties did not formulate. Appellate interference with a costs discretion is limited. A mediation-based challenge requires an unreasonable decision to delay or refuse mediation. An indemnity-costs challenge may remain arguable where relevant joinder, participation and proportionality matters were not addressed.

The claimants sought permission to appeal from orders made by Miss Penelope Reed QC, sitting as a Deputy High Court Judge in the Chancery Division. The orders followed a trial of preliminary issues concerning the constitution and election notice of an unincorporated religious association. The judge answered the preliminary questions against the claimants, refused declarations on the construction of the constitution, ordered costs against the claimants, and awarded interim payments, including costs to the trustees on the indemnity basis.

The Court of Appeal considered whether the proposed appeals disclosed an arguable error in the construction of the constitution and notice, the scope of the trustees’ powers, the treatment of mediation delay in the costs order, and the indemnity-costs order.

Permission to appeal

1. The renewed application was dismissed on the substantive construction points, the proposed implication of powers into clause 8(d), and the challenge based on delay in mediation. Permission was granted in relation to the indemnity-costs order made in favour of the trustees.

2. The constitution could be construed objectively. The court was entitled to determine the association’s aims by reference to objective standards without deciding questions of religious truth or belief. The judge correctly distinguished the absence of an express constitutional requirement of belief from the separate task of construing the disputed addendum in its context. She was entitled to consider the notice’s readership, the evidence about worship, and the practical meaning conveyed to members. The addendum should not be read as imposing a narrow alteration of the association’s doctrine.

3. Clause 8(d) could not be read as conferring extensive appellate or coercive powers on the chairman or trustees. The clause was badly drafted, but the court could not use the history of disputes to create a bargain which the parties had not formulated with sufficient precision.

4. Costs are a matter of judicial discretion. The Court of Appeal will interfere only on limited grounds, such as misdirection, failure to take an important consideration into account, or a clearly perverse result. A successful party should not lose or be deprived of costs because of mediation delay unless the relevant party made an unreasonable decision to delay or refuse mediation. The judge had found genuine attempts to resolve the dispute through trustees or community mediators, and there was no sufficient basis for permission on that issue.

5. The judge had directed herself according to the usual test for indemnity costs, namely whether the conduct was out of the norm, relying in part on the absence of a cause of action against the trustees. However, it was properly arguable that she had not adequately considered the earlier order permitting joinder, the trustees’ active participation and possible justification for their presence, and the proportionality of making the claimants bear the whole hearing costs on the indemnity basis. Permission was therefore granted on that ground.

6. Execution of the £75,000 interim payment relating to the standard-basis costs was postponed for eight weeks, with liberty to apply in writing. The trustees’ costs payment was stayed pending appeal, subject to an application below if the standard- and indemnity-basis amounts could be identified.

1. Court of Appeal (Civil Division) — [2015] EWCA Civ 1594: dismissed the renewed permission application except on the indemnity-costs issue, granted permission on that issue, and made consequential stay and time-extension orders.
2. High Court, Chancery Division: decided the preliminary constitutional issues against the claimants, refused declarations, and made the challenged costs and interim-payment orders. No citation for the decision is stated in the judgment.