[2024] UKUT 349 (LC)

The appeal turns on the construction of rules 30, 48 and 69, and primarily on the meaning of rule 30. Does “discuss” mean “discuss”, as the appellant says, or something else? Does “to discuss all management decisions of the Co-operative that have arisen since the last general meeting” mean that the general meeting discusses what the committee has decided since the last meeting, or does it mean to take all management decisions that have become necessary since the last meeting?

I take no account of Mr Manning’s suggestion that if this respondent does not meet the requirements of paragraph 2B(2)(b) of Schedule 14 no fully mutual co-operative society can do so. There is no evidence to that effect, and if there were it would be irrelevant to the construction of the statute. As Mr Lane observed, it would not be difficult to draft rules that satisfied the statutory requirement. Nor am I concerned with previous decisions of the FTT.

The system described by Mr Manning, on his reading of the rules, is that all management decisions are made by the respondent in general meeting, with the committee simply carrying out their instructions, as well as making trivial non-management decisions (Mr Manning gave the example of buying a pint of milk). Such a system could be workable, but in my judgment that is not the system described by the rules. The appellant’s construction of rule 30 is obviously correct. I say that for three reasons.

The first is that that is the plain meaning of rule 30. As a matter of ordinary language to discuss is not the same as to decide. Where the rules wish to talk about deciding they do so explicitly; hence the words of rule 12, which confer an “absolute discretion”, and hence the use of the words “determine”, “appoint”, etc in rule 69. If the rules wanted the general meeting to take management decisions it would have said so. This is not, as Mr Manning suggested, a “purely semantic” point; it is about the plain meaning of words. As for the subject matter of those discussions, decisions “that have arisen since the last general meeting” is not the clearest way of putting things, but it seems to me mean that the general meeting is to discuss management decisions that have been made (by the committee) since the last general meeting, not to make decisions on issues or problems or the like that have arisen since the last general meeting and now have to be decided upon. It may also mean discussion of management issues that have arisen and have not yet been decided since the last meeting; but rule 30 provides for the general meeting to discuss them, not to decide.

Second, that reading of rule 30 is consistent with rule 48 which – in distinct contrast to rule 30 - makes provision for the committee to “control and direct the management of the day-to-day business of the Cooperative.” Rule 48 does not say that the committee shall implement the decisions of the general meeting. It is to control and direct, and that is not consistent with an inability to decide anything. And what it controls and directs is the day-to-day “management”; I do not understand how that does not mean that the committee takes management decisions. That is why it is called a management committee.

Third, Mr Manning’s construction of rule 30 makes it very difficult to understand rule 69. In his skeleton argument he said that “the matters referred to by Rule 69 do not relate to management decisions at all, but, by Rule 48, to the control and management of the day-to-day business of the Co-operative”. That is puzzling. Why is a decision about the management of day-to-day business not a management decision? Mr Manning is perhaps reading “management decisions” in rule 30 as being policy decisions, or higher level decisions in some sense, as distinct from the day-to-day management decisions referred to in rule 69; I do not think that is a workable distinction, and even if it were, who could then say which level of management decisions is referred to in paragraph 2B(2)(b) of Schedule 14? That paragraph simply says “all management decisions”, and I take that to mean all of them, high-level or day-to-day.

At the hearing, Mr Manning accepted that some of the matters listed in rule 69 could require management decisions – for example, the appointment of a managing agent. He explained that the management decision has to be made by the general meeting, and the committee simply puts it into effect. The same goes for other matters described in the rules as functions of the committee. But that means that the committee in considering, for example, the appointment of a managing agent under rule 69, the creation of a new office under rule 76, or the expulsion of a committee member under rule 57a, has to be clear whether it is a management decision or not. If it is, the decision has to be made by the general meeting and the committee must then follow instructions. But there is no criterion for ascertaining the nature of a particular decision. It is not at all obvious to me that the appointment of an additional officer, for example, is not a management decision, nor the admission of an individual as a member. If the committee gets it wrong, their decisions could be challenged as being taken without authority. Mr Manning’s construction sets the committee an impossible task.

I therefore agree with the appellant’s construction. The management committee, as its name implies, is empowered to make management decisions. They might be described as day-to-day management decisions, but they are management nonetheless. The function of the general meeting is to discuss those decisions so that the members all have a voice in what is happening and can make their views known to the committee, both about decisions already made and about future decisions. That does not make it a pointless talking shop; other statutory provisions enable occupiers of buildings to be able to express their views to management without actually making the decisions, for example the consultation procedures for major works under section 20 of the Landlord and Tenant Act 1985.

The general meeting certainly does make some decisions, namely those reserved to them by the rules (as rule 69 points out) such as expelling members (rule 15c), electing the committee (rule 28), appointing the auditor (rule 67) and changing the rules themselves (an important policy decision that is not left to the committee) (rule 119). But day-to-day management decisions are made, and all the powers of the respondent that are not reserved to the general meeting are exercised, by the committee.

Therefore the respondent’s rules do not “secure” that “all management decisions of the society are made by the members (or a specified quorum of members) at a general meeting which all members are entitled to, and invited to, attend” as paragraph 2B(2)(b) requires. The FTT was wrong about that and its decision about the effect of the rules is set aside.