What happens when a meeting is unable to complete its agenda but runs out of time?

This question was considered by the Singapore High Court in the case of Chan Sze Ying v. The Management Corporation Strata Title Plan No. 2948 (Lee Chuen T’ng, intervener) [2020] SGHC 88 (Chan Sze Ying).

In that case, the Dentons Rodyk & Davidson LLP team led by Senior Partner Ling Tien Wah represented the chairperson of the meeting and successfully argued that the chairperson had a residual power at common law to adjourn the meeting even though there was no formal motion to adjourn passed at the meeting, and such power was validly and reasonably exercised.

The High Court’s decision in Chan Sze Ying thus provides important guidance not only on some provisions within the Building Maintenance and Strata Management Act (the BMSMA) but also on legal principles relating to the conduct and adjournment of meetings in general.

This article aims to briefly examine the key takeaways of the High Court’s decision.

Background to the dispute

On 3 August 2019, the Management Corporation Strata Title Plan No. 2948 held its 13th annual general meeting at an external venue. Based on usual practice, the external venue was only booked up to 7 p.m. that day.

However, due to lengthy discussions among the subsidiary proprietors, the meeting unexpectedly overran. The managing agent sought a short extension of time from the venue operator but notwithstanding the extension of time, the meeting at 9 p.m. was still unable to complete all of the items on its agenda.

At that time, the meeting was still electing the members of the incoming management council. After the votes were tallied, it turned out that there was a tie for the 11th (and final) position on the incoming management council but there was insufficient time to continue with the meeting, even to resolve the 11th council position. On the advice of the managing agent, the chairperson declared the meeting adjourned to 19 October 2020. This was done without any formal motion to adjourn the meeting.

The plaintiff, who was a subsidiary proprietor and a council member-elect of the incoming managing council, was dissatisfied with the chairperson’s adjournment and commenced an action against the Management Corporation seeking to invalidate the adjournment.

The plaintiff commenced an action against the Management Corporation and sought two separate declarations: first, a declaration that the meeting was improperly adjourned as there was no formal motion to adjourn being passed, and as a result the meeting concluded on 3 August 2019; and second, a declaration that the council members-elect (notwithstanding that the 11th and final position remained unresolved) took office that day.

Even though the action was brought against the Management Corporation, the Management Corporation took a neutral position at the hearing. The chairperson therefore successfully applied for leave to intervene in the proceedings in order to argue against the plaintiff’s claims.

Key takeaways from the High Court’s judgment

1. The chairperson of a meeting has the power at common law to adjourn meetings

The first significant aspect of the High Court’s decision was its ruling that the common law empowers a chairperson in certain circumstances to adjourn the meeting without a formal motion to adjourn being passed. Such circumstances generally relate to the presence of extraneous factors which incapacitated the continuance of the meeting (for example, if there is a fire or black-out at the meeting venue). The High Court held that the chairperson must exercise this power in good faith.

In the instant case, the High Court noted that the chairperson had the responsibility to ensure: (i) the safety of all attendees; and (ii) the Management Corporation did not breach its contractual obligations to the venue operator which was threatening to turn off the lights at that time. The High Court further noted that to extend the meeting, which had originally been planned to conclude by 7 p.m., beyond 9 p.m., may prejudice the interests of subsidiary proprietors who had to leave. Finally and most importantly, the High Court noted that there was no allegation of bad faith against the chairperson. Based on these facts, the High Court found that the chairperson had validly and reasonably exercised her power to adjourn the meeting.

In the course of its judgment, the High Court appeared to suggest that the chairperson had the power to adjourn the meeting even if a motion to adjourn the meeting had been put up for a vote and was defeated (see paragraph 39 of the High Court’s judgment). It is suggested that this part of the judgment should be read in context and be limited to the extraneous factors which incapacitated the continuance of the meeting because save in these circumstances, a decision against the will of the meeting would arguably be unjustifiable.

The High Court’s ruling on this issue has helpfully clarified the law in this area. Chairpersons presiding over all forms of meetings (including but not limited to general meetings of companies) should be aware that they have a limited power to adjourn the meeting without a formal resolution to adjourn. Should these chairpersons decide to exercise this power, they should ensure that the circumstances are sufficiently extenuating and their decisions made in good faith.

2. The chairperson’s common law power to adjourn meetings is not excluded by paragraph 3A of the First Schedule of the BMSMA

The second significant aspect of the High Court’s judgment is the finding that the chairperson’s common law power to adjourn the meeting without a formal motion to adjourn (as discussed above) is not excluded by statute.

Paragraph 3A of the First Schedule of the BMSMA provides that “[a] general meeting of a management corporation or any subsidiary management corporation may be adjourned for any reason if a motion to adjourn the meeting is passed at the meeting”. The plaintiff relied on this paragraph and argued that even if the chairperson had a common law power to adjourn, this power was unavailable to the chairperson here because it was expressly excluded by statute. According to the plaintiff, the provision would otherwise be rendered meaningless.

The High Court disagreed and held that the said paragraph is descriptive, not prescriptive. In other words, it served to guide Management Corporations on how a meeting could be adjourned but it did not displace or circumscribe the chairperson’s common law power to adjourn meetings as discussed above.

Notably, paragraph 3A of the First Schedule of the BMSMA (along with a series of other amendments to the First Schedule of the BMSMA) came into force only on 1 February 2019 and the amendments have created some ambiguity on the conduct of meetings; particularly, whether all the paragraphs stated therein have to be strictly followed.

The High Court’s ruling in this regard is therefore another timely clarification.

3. Persons elected into the management council only take office at the end of the AGM unless there is an extraordinary general meeting

The third significant aspect of the High Court’s judgment is its interpretation of section 54(1)(e) of the BMSMA.

Section 54(1)(e) provides that a person who is the chairperson, secretary or treasurer or a member of a council shall vacate his office as such a member “at the end of the next annual general meeting of the management corporation or upon the election at a general meeting of another person to that office, if earlier”.

As part of her submissions in support of the 2nd declaratory relief prayed, the plaintiff contended that the words “general meeting” in section 54(1)(e) referred to both an annual general meeting and an extraordinary meeting. In the result, she argued that the incumbent management council vacated (and the council members-elect took) office at the elections of each of the council positions on 3 August 2019.

Hence, the High Court was required to interpret section 54(1)(e) of the BMSMA.

The High Court held that the words “general meeting” in that section refer exclusively to extraordinary general meetings and not annual general meetings. Any other interpretation would render the remaining part of section 54(1)(e) which relate to the management council vacating office the end of the next annual general meeting otiose.

In this regard, the subsidiary proprietors who were elected at the meeting on 3 August 2019 remained council members-elect until the end of the adjourned meeting on 19 October 2019.
Even though this interpretation exercise related to a particular section in the BMSMA, it emphasises the need to read statutory provisions in a manner that would give effect to the entire provision.

4. The courts will lean in favour of supporting decisions by members of management councils

The fourth and final significant aspect of the High Court’s decision is its concluding remarks.

The High Court observed that members of management councils administering estates all over Singapore are typically volunteers, and generally comprise of persons who are not legally trained or have extensive experience in conducting meetings. To this extent, the High Court said that as long as the volunteer chairpersons act in good faith during the meeting, courts will not overly scrutinize their decision; on the contrary, they will lean in favour of supporting their decisions even if there may have been technical non-compliance with statutory provisions. The High Court also encouraged subsidiary proprietors to resolve their disputes amicably and not resort to legal action unnecessarily.

These are timely words of comfort to the numerous volunteers running estates around Singapore. One can only hope that management corporations in Singapore has heard and will heed the High Court’s clarion call so there will be lesser feuds and fractions in strata developments in future.