An injunction has been issued following a civil war at a housing association. Sian Evans, head of the housing team at Weightmans, explains
In May the High Court had to intervene in a dispute between officers and board members of Ash-Shahada Housing Association. The association owns and manages 113 general needs properties and 51 hostel bed spaces.
Ash-Shahada’s board had delegated all operational matters to the chief executive. But at a contentious board meeting, complaints had been made about how the CEO was running the housing association. An issue then arose about people claiming to be board members who were not in fact board members due to the rules of attendance at meetings.
Following the disputes two directors and two former board members then took possession of the housing association’s offices and papers, and they also purported to act on the association’s behalf in speaking to its accountant, instructing staff and controlling assets.
Ash-Shahada took injunction proceedings in respect of trespass and interference with lawful business, and obtained an injunction. The judge at the interim hearing made a mandatory order requiring the defendants to give up possession of the premises, give up all documentation and restraining them from running the housing association.
Another hearing then took place to deal with whether it was appropriate to continue the interim injunction against the defendants in this case. The court held there was a serious issue to be tried and arguably the defendants’ conduct did constitute trespass, and disrupting the lawful business of the association.
The judge felt that if the defendants did try to run the housing association in contravention of its constitution, it would not be adequately compensated in damages and if, in fact, the defendants purported to be authorised to act or contract on the association’s behalf, reputational damage could be done as well as the putting at risk the value of contracts or liability incurred.
The court did, however, order that the defendants who were directors at the association would be able to advise the board in accordance with their skills and experience, draw the board’s attention to the CEO’s use of the association’s assets for non-charitable purposes and speak on the association’s behalf.
Full judgement pending
This is a very unusual case and the full judgement is not yet available. Governance arrangements in place previously, which delegated all operational matters to the CEO, would not have helped when concerns were raised about the running of the association.