Syed Aminul Haque v Altaf Hussain & Ors.

Trustees defending proceedings must distinguish their fiduciary role from their personal interests as members or beneficiaries. They must avoid conflicts and should seek the court’s directions where the proposed defence is driven by personal interests.

A constitutional dispute within an unincorporated association is generally a matter for its members. It is not a defence for trustees facing allegations of breach of trust, misappropriation or failure to account, unless it is relevant to their conduct as trustees. The court may determine the identity and governing constitution of the association for the purposes of the trust claim, while leaving wider membership disputes to appropriate proceedings.

The claimant, acting as representative of the members of Muttahida Quami Movement Pakistan, claimed that six properties and traceable sale proceeds were held on trust for the association’s members. He sought removal or substitution of the trustees, relief concerning alleged misappropriation, accounts and recovery of trust assets.

The trial was divided into two stages. The first concerned whether MQM and MQMP were the same unincorporated association, which constitution governed, and whether constitutional changes in 2016 were valid. The second stage, if required, concerned breach of trust and the relief sought.

The central issue was whether the defendants could rely, in their capacity as trustees, on disputes concerning the association’s internal constitution and leadership.

1. Stage-one decisions. MQMP was MQM, with MQMP representing a change of name. The 2015 Constitution had not been proved to have been adopted. The April 2016 Constitution was adopted. Mr Altaf Hussain stood down from involvement on 23 August 2016. The September 2016 Constitution was subsequently adopted and amended into the 2017 Constitution, which governed MQMP subject to later amendment.
2. Trustees’ position. Trustees sued as trustees must promote and uphold the trust and comply with their fiduciary duties, including the duty to avoid conflicts of interest. They cannot use their trustee capacity to advance personal interests as members or former members. Where a conflict arises, they may need to step down or secure neutral representation, and should seek directions from the court.
3. Constitutional dispute. The MQM Constitutional Issue concerned the contractual rights of members and former members, not the defendants’ conduct in administering trust property. It therefore could not provide a defence to claims concerning removal of trustees, misappropriation, accounts or recovery of trust assets. Even if the 2016 amendments were procedurally defective, subsequent elections and adoption of the 2017 Constitution superseded those events for the purposes of this claim.
4. Authorities. The approach in Schumacher v Clarke [2019] EWHC 1031 was explained as recognising that trustee-removal applications focus on the interests of the trust and beneficiaries and may be determined without findings on every underlying fact. Fielden v Christie-Millar [2015] EWHC 2940 (Ch) was distinguished: trustee neutrality does not prevent trustees defending allegations concerning their own conduct, but that principle did not extend to the separate constitutional dispute here.
5. The court held that no further hearing was required on the constitutional issue. Mr Haque was entitled to bring the claim under the 2017 Constitution. The second stage of the trial was to proceed to determine whether the relief claimed should be granted.

This was a first-instance decision. The judgment records that the claim had been directed to proceed in two stages, with the constitutional issues determined first and the trust-relief issues reserved for the second stage.