Kaye & Anor v Oxford House (Wimbledon) Management Company Ltd & Ors

Once directors have duly called a general meeting, they have no continuing power under Companies Act 2006 s 303(5) to prevent resolutions stated in the notice from being considered. The question is then for the members at the meeting. A chairman must conduct the meeting for the company’s benefit and cannot dissolve it merely because he considers the resolutions ineffective, frivolous or vexatious, even if acting on legal advice. Members may continue a meeting wrongly closed by the chairman and appoint another chairman. A resolution to remove directors and appoint replacements is not ordinarily vexatious merely because the proposed directors may later take controversial action. Longstanding unanimous practice may establish approval under the Duomatic principle to dispense with procedural requirements for director nominations.

The claim concerned a general meeting of Oxford House (Wimbledon) Management Company Limited requisitioned by shareholders to remove three directors and appoint six replacements. The sitting chairman, Mr Drake, refused to put the resolutions to the meeting, declaring it closed on the grounds that the resolutions were ineffective and, in some cases, vexatious under s 303(5) of the Companies Act 2006. The remaining shareholders continued the meeting under a new chairman and passed the resolutions. The claimants sought declarations as to the validity of the removals and appointments. The central issues were whether the chairman could close the duly convened meeting, whether the members could continue it, and whether non-compliance with Table A regulation 76(b) invalidated the appointments.

1. Meeting requisition and s 303(5). Sections 303 and 304 establish a limited screening role for directors during the period before a requisitioned meeting is called. Directors must consider whether proposed resolutions are intended to be moved and may properly be moved. If they call the meeting, they have completed that role. They have no residual power at the meeting to invoke s 303(5) and prevent listed resolutions being put to the members (paras [91]-[104]).
2. Chairman’s powers. The chairman must preserve order, conduct the proceedings properly and ascertain the sense of the meeting. Regulation 45 of Table A permits adjournment only with the meeting’s consent or on its direction, subject to a limited common-law power where the majority’s views cannot validly be ascertained. The chairman has no power simply to stop the meeting or declare it dissolved because he dislikes the business or considers the resolutions invalid (paras [105]-[110]).
3. Continuation of the meeting. The attempted closure was ineffective. The remaining members were entitled to appoint a new chairman and continue the meeting to transact the business for which it had been convened. Corpique (No 20) Pty Ltd v Eastcourt Ltd was inconsistent with National Bank v Sykes and did not represent the law of England and Wales. In any event, the advice obtained by Mr Drake had not addressed the conduct of the meeting, and his reliance on substantially misleading instructions would at least have been neglectful (paras [113]-[133]).
4. Vexatious resolutions. In this context, “vexatious” may describe business troublesome or burdensome from the company’s standpoint, or proposed for no proper company purpose. A resolution exercising the members’ fundamental right to remove directors and appoint replacements could not ordinarily be characterised in that way merely because the appointees might later take action exposing former directors to investigation or claims. The court’s comments on the merits of the advice were obiter (paras [134]-[135]).
5. Regulation 76(b) and the Duomatic principle. Regulation 78 remained subject to regulation 76(b). However, the company’s business had long been conducted without compliance with the nomination formalities. It would therefore be inequitable for members to rely on the non-compliance, and their unanimous approval could be inferred under the Duomatic principle. The appointments in December 2018 and June 2019 were consequently valid (paras [136]-[139]).
6. The articles preserved the directors’ powers despite there being fewer than five shareholder directors, and the quorum was two. The appointments were therefore effective. Declarations were to be made that the three defendants had been removed and the six named claimants’ nominees validly appointed (paras [140]-[145]).