[2024] UKUT 349 (LC)

It will be recalled that paragraph 2B(2)(b) of Schedule 14 to the 2004 Act requires:

“that all management decisions of the society are made by the members … at a general meeting which all members are entitled to, and invited to, attend.”

Obviously the rules provide for general meetings to be held, both annual and ordinary, and for all members to be entitled to and invited to attend and vote. The issue the FTT had to decide was whether the rules provide for “all management decisions” to be taken by the members in general meetings, as argued by the respondent, or whether they provide for some or all management decisions to be taken by the management committee (comprising a few but not all the members), as the appellant argued. In the appeal Mr Manning pointed out that either way, the respondent is a self-governing organisation and there is no question of anyone who is not a member being able to take any management decisions; but that is not enough to satisfy the statute which requires that all management decisions are made by the members at meeting to which all are invited.

The FTT took the view that the rules so provide:

“17.

In our judgement the structure of the Applicant is clear from its Rules. It is governed by its Members in General Meeting. Day to day running of the business is undertaken by the Management Committee. There is nothing unusual in this arrangement. Most organisations have a decision making board which delegates the running of the organisation to its appointed managers.

18.

Rule 30 specifically provides that General Meetings shall “discuss all management

decisions”. This is entirely consistent with the wording of Paragraph 2B(2)(b) which refers to “all management decisions”. Rule 44 provides for equal voting rights at General Meetings. We find that this satisfies the requirement for “all management decisions” to be made by Members in General Meeting on the basis of equal voting rights at such a meeting as required by Paragraph 2B(2)(c).

19.

The powers of the Members in General meeting to take “all management decisions” can be contrasted with the duties of the Management Committee under Rule 48 to “control and direct the management of the day to day business”. Rule 69 provides that “the business of the Co-operative shall be conducted by the committee”. Put simply the Members make all the decisions and the Committee conducts the day to day business. This ensures the primacy is accorded to the Members in General Meeting.

20.

We find that on a plain reading the effect of the Rules is to secure that all

management decisions are made by Members in General Meeting.”

The FTT also decided, having heard evidence and looked at minutes, that in practice the buildings are managed in accordance with the requirements of paragraph 2B(2).

The appellant has permission to appeal, granted by this Tribunal, on the ground that the FTT was wrong about the rules.

The appellant also has permission to appeal on a second ground, that the FTT was in error in making its findings of fact about the way the respondent is managed. In the appeal the parties agreed that what actually happens in practice does not matter; if the rules secure that the conditions in paragraph 2B(2) are met then whether or not the co-operative is managed in accordance with them is irrelevant, and likewise even if the co-operative is so managed if the rules do not “secure” that that happens the building falls outside the exception. Therefore neither addressed me about ground 2 and I have not decided ground 2. Therefore the FTT’s findings of fact remain undisturbed.