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Can a Non-Proprietor (i.e. Parcel Owner) Vote in the Annual General Meeting of Management Corporation?

CASE UPDATE: THAM SAU HOONG v PERBADANAN PENGURUSAN PANTAI EMAS RESORT [2021] 1 LNS 56

INTRODUCTION:

The Plaintiff is the proprietor of a parcel in a condominium known as Gold Coast Resort in Penang (“Condominium”).

The Defendant is the management corporation of the condominium. The Defendant was established by operation of law pursuant to Section 17 of the Strata Titles Act 1985 (“STA 1985”), which states that upon the opening of a book of the strata register in respect of a subdivided building, there shall come into existence a management corporation consisting of all the proprietors.

FACTS:

The Plaintiff in the instant originating summons brought an action against the Defendant for declarations that:

  1. All proceedings at the 11th AGM is null and void and consequently an order that a fresh 11th AGM to be held within one month thereof; and
  1. The election and appointment of the new management committee members during the 11th AGM are null and void.

The brief grounds being put forth by the Plaintiff in support of the declarations are as follows:

  1. That there were 8 persons, who are not registered proprietors, being listed as persons entitled to attend the 11th AGM on the notice board of the Condominium;
  • There were 8 instances of proxy forms that were in violation of the Second Schedule of the Strata Management Act 2013 (“SMA 2013”), among others,  the proxy forms were either defective or where a proxy represented more than one parcel proprietor;
  • There were 4 parcel proprietors who were allegedly not eligible to contest for a seat in the management committee as they have breached paragraphs 11, 22(1) and 27(1) of the Third Schedule of the Strata Management (Maintenance and Management) Regulations 2015 (“SMR 2015”).

FINDINGS OF THE COURT

The findings of the court against the grounds in paragraphs (a), (b) and (c) above are set out in brief, as follows:

Ground (a)- Non-registered proprietors are not entitled to attend and vote at the AGM

  • appears in paragraph 21 of the Second Schedule of the SMA 2013 is derived from reading Section 2 SMA 2013, which provides that a proprietor carries the meaning assigned to it under Section 4 of the STA 1985, i.e. a “registered proprietor”. Section 4 of the STA 1985 is reproduced below:
  • Whilst the Defendant argues that the 8 persons who have purchased parcels and paid maintenance charges to the parcels have a right to attend the 11th AGM notwithstanding them not being registered as proprietors yet.
  • The court held that by the clear definition provided statutorily, only a registered proprietor is entitled to attend and vote at the AGM. A purchaser who has purchased a parcel but is yet to be registered as a proprietor has no such right.

Ground (b)-Defective proxy forms / Proxy represented more than one parcel proprietor

  • The Plaintiff contends that the entire proceedings of the 11th AGM is rendered null and void by virtue of the 8 proxies who attended the AGM with defective proxies forms were in violation of paragraphs 18(1) and (4) and paragraph 22(1) of the Second Schedule of the Strata Management Act.
  • The court disagreed on the Plaintiff’s contention for the following reasons:
  1. SMA 2013 is silent on the effect where ineligible persons have attended and/or voted in an AGM;
  • The court opines that the attendance of the 16 ineligible persons do not carry any impact on the Defendant’s 11th AGM, as the election to the management committee were uncontested.

Ground (c)- A serious breach of the by-laws and failure to remedy the breach

  • The Plaintiff contends that among the elected management committee, 4 were ineligible to contest as they were in breach of paragraphs 11, 22(1) and 27(1) of the Third Schedule of the SMR 2015.
  • The court disagreed on the Plaintiff’s contention for the following reasons:
  1. There is no provision in any statute or subsidiary legislation that disqualifies a parcel proprietor from contesting on the basis that the person is in breach of paragraphs 11, 22(1) and 27(1) of the Third Schedule of the SMR 2015.
  • Paragraph 3(1)(1) of the Second Schedule of the SMA 2013 which was being relied upon by the Plaintiff in support of his contention does not stand as this paragraph refers to instances taking place after a parcel proprietor has been elected as a member of the management committee as opposed to being disqualified automatically from contesting due to breaches of by-laws. In short, this paragraph is irrelevant to the present case and is only triggered when the seat of an existing member becomes vacant or is deemed to be vacated on the happening of certain events. This paragraph has nothing to do with eligibility or qualification of parcel proprietors to contest a seat on the management committee.
  • Further, the eligibility for election as a member of the management committee is as governed under paragraph 2 of the Second Schedule of the SMA 2013.

TAKEAWAYS

A general meeting shall not be invalidated by virtue of the alleged violations as illustrated in grounds (b) and (c) above.

However, it is important to note that the court has enunciated that the word “proprietor”, shall only carry the meaning as assigned to it under Section 4 of the STA 1985, i.e. a registered proprietor and nothing else.

The fact that a parcel owner, who has purchased a parcel but has yet to be registered as a proprietor, shall not be eligible to vote at and attend a general meeting, even though he has been diligent in paying his maintenance charges.

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Author
Legal Associate at Chee Hoe & Associates.
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