Is it Possible for Courts to Delay AGMs and EGMs?

by MH Law | April 16, 2024 | Case Study

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Tetap Tiara Sdn Bhd v Pengurusan Perbadanan Jaya One & 21 Ors (and 2 Other Appeals) [2024] 1 AMR 499

The case revolves around a disagreement regarding the management of a commercial development named Jaya One in Malaysia. The plaintiffs, who own units in Jaya One, took legal action against the management corporation (MC) and others for various reasons, such as failing to address certain wrongdoings and breaching fiduciary duties. The core of the dispute concerns maintenance charges and sinking fund contributions dating back to 2009.

While awaiting the main trial, the MC and the developer filed applications in the High Court for injunctions. The developer aimed to prevent the MC from blocking its voting rights in meetings, while the MC wanted to halt the organization of Annual General Meetings (AGMs) and Extraordinary General Meetings (EGMs) until the main trial concluded. The High Court rejected the developer's application but approved the MC's requests.

Dissatisfied with the High Court's rulings, some of the defendants appealed to the Court of Appeal.

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Court of Appeal Decision

The Court of Appeal stressed that the Management Corporation (MC), being a statutory body, is obligated to conduct Annual General Meetings (AGMs) regularly and convene Extraordinary General Meetings (EGMs) as needed by parcel owners. These responsibilities are outlined in the Strata Management Act 2013 (SMA) and its associated schedules, with supporting regulations.

The Court dismissed the MC's argument that it could prolong AGMs/EGMs under a broad provision of the Courts of Judicature Act 1964 (CJA), asserting the precedence of specific SMA provisions. No provision in the SMA allows for the postponement of AGMs/EGMs until the conclusion of a major lawsuit.

The Court highlighted that the plaintiffs' claims could progress even if the meetings were held, rejecting the proposal to halt AGMs/EGMs and upheld the MC's legal obligation to conduct AGMs annually and EGMs as necessary, emphasizing the importance of fulfilling these duties without obstruction.

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Implications

By rejecting the MC's attempt to use injunctions to delay or prevent AGMs and EGMs, the decision prevents potential abuses of legal processes. It underscores the principle that legal mechanisms should not be misused to circumvent statutory duties or impede the exercise of legal rights.
Protects the rights of parcel owners by ensuring that they have avenues to convene meetings when necessary. This helps maintain transparency, accountability, and democracy within strata developments, as owners can voice their concerns and make decisions collectively through AGMs and EGMs.
The Court of Appeal's decision upholds the integrity of the judiciary by affirming the primacy of specific statutory provisions over general legal principles. It reinforces the principle that courts should interpret and apply laws in accordance with their explicit provisions and legislative intent.

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Key Takeaways

This case holds importance as it sets the standard for a management corporation to conduct an Annual General Meeting (AGM) and/or Extraordinary General Meeting (EGM) yearly upon a valid request by property owners as per the SMA. The court clarified that it lacks the authority to extend the deadline for holding any required AGM and/or EGM.

One key point is that the Court of Appeal ruled that the MC should not be prevented from organizing an AGM and/or EGM because the plaintiffs could still pursue their claims even if the meetings are held. It would be intriguing to see if the court's decision would be the same under different circumstances.