It depends on an uncertainty and on a point that you don't mention.
Although the statute states unequivocally that the chairman must preside if present, it is unclear whether the proceedings are invalidated if the chairman refuses to do so. For a meeting to be validly constituted, someone must preside, and that condition was fulfilled by the vice chair.
The other point hinges on whether the vice chair was elected or not. Although you are correct in saying that chair and vice chair remain in office irrespective of whether elected, if not elected they do not have a vote in the appointment of the new chair, only a casting vote if there is a tie.
It would seem unreasonable to allow the refusal of the former chair to invalidate the proceedings, since it is not possible to deny the right to attend as a member of the public and it is impractical to force someone to preside if they do not wish to do so. But if you want further reassurance, I suggest you could put the point to the senior legal officer at your district (or other principal authority) council.