Rarotonga, 2010

simonshields@isthatlegal.ca

Online Lawyer (Ontario)

Most Popular
Contracts / Torts / Evidence / Limitations / Tenant Plus / welfare (ontario works) / odsp / human rights / employment / consumer / COVID Litigation / CRB LAW
ADMINISTRATIVE LAW | SPPA / SMALL CLAIMS / SUPERIOR COURT / APPEALS / JUDICIAL REVIEW

home / about / Little Friends Lefkada (Greece) / testimonials / E-Colleagues / Conditions of Use

What does
Simon Say
about
my case?

Associations

1. General
2. Associations as Contract
3. Clubman's Veto
4. Judicial Review of Private Associations

-----------------------------

1. General

By 'associations' is generally meant un-incorporated groups. Sometimes they are social, political or environmental groups, but really at heart they are just groups of people have a common goal or interests. They sometimes have constitututions, but often not.

Associations occasionally get involved in litigation, and it is there that things get sticky.

2. Associations as Contract

. Brown v. Hanley

In Brown v. Hanley (Ont CA, 2019) the Court of Appeal considered the contractual nature of unincorporated associations:
[38] The motion judge relied on Berry v. Pulley in concluding that the respondents had standing to bring their action. I agree that, pursuant to Berry v. Pulley the respondents would have the right to bring an action against their union to assert their individual claims.

[39] There, the matter involved an intended action by pilots against their own trade union. The issue before the Supreme Court was whether individual union members may be personally liable to other members for breach of contract. The court held, at para. 48, that when a member joins a union, “a relationship in the nature of a contract arises between the member and the trade union”, such that the member can sue the union for an alleged breach. However, the union’s liability in this context is limited to its own assets and cannot extend to its members personally. In reaching this conclusion, the court “discarded” the notion that every union member has a contract with the other members, in favour of a “common sense approach” that “each union member has a contractual relationship with the union itself”: at para. 5.

[40] The court in Berry v. Pulley also recognized, at para. 48, that the contractual relationship between a union and its members is unique:
…this relationship is in the nature of a contract because it is unlike a typical commercial contract. Although the relationship includes at least some of the indicia of a common law contract (for example offer and acceptance), the terms of the contractual relationship between the union and the member will be greatly determined by the statutory regime affecting unions generally as well as the labour law principles that courts have fashioned over the years. [Emphasis in original.]
[41] The court went on at para. 49 to note a number of distinguishing features of the typical union contract:
First, it is essentially an adhesion contract as, practically speaking, the applicant has no bargaining power with the union. Moreover, in many situations, union membership is a prerequisite to employment, leaving the individual with little choice but to accept the contract and its terms. Finally, it must be borne in mind that a statutory labour relations scheme is superimposed over the contract between the member and the union, and can create legal obligations. Consequently, the contract must be viewed in this overall statutory context.
[42] In my view, union contracts are distinct from commercial contracts in two additional respects. First, union contracts result from a process of deliberation among members who share certain interests in common as workers. The union as a legal entity plays no oppositional role in this process, even though it becomes a party to the resulting contract with its members. This is unlike the manner in which commercial contracts are formed or amended, where adverse parties are active participants in negotiations.

[43] A second distinguishing feature of union contracts flows from the democratic character of union membership. Unlike parties to a typical commercial contract, individual parties to a union contract become members of that union. As members they acquire the power to conduct the union’s affairs collectively, often through a system of elected representatives. Union membership confers a range of other rights, obligations, and protections, including the right to propose changes to the contract through a periodic constitutional amendment process. What lone individuals may lack in bargaining power when joining a union thus contrasts sharply with the collective power they exercise as equal members.

[44] While the union contract is unique, and while common law contractual principles may need to be adapted in this context, none of this changes the fact that the respondents are parties to the contract with the capacity to sue. The motion judge concluded as much at para. 41:
Parties to a contract have the standing to sue to enforce the contract and to determine the extent to which a contract creates enforceable promises. In the immediate case, the Plaintiffs have standing to bring their action.
. Aga v. Ethiopian Orthodox Tewahedo Church of Canada

In Aga v. Ethiopian Orthodox Tewahedo Church of Canada (Ont CA, 2020) the Court of Appeal considered the contractual nature of a voluntary association:
ISSUE ONE: WHEN ARE THE RIGHTS AND OBLIGATIONS OF MEMBERS OF A VOLUNTARY ASSOCIATION CONTRACTUAL?

(a) Jurisdiction to Address the Affairs of a Voluntary Association

[39] Adherence to a religious organization alone is not enough to create a contract. Jurisdiction to address a voluntary association’s adherence to its own procedures and, in some cases, the fairness of those procedures depends on the presence of an underlying legal right to be adjudicated, such as a property or a civil right in contract or tort. As noted in Wall, at para. 24:
[T]here is no free-standing right to procedural fairness with respect to decisions taken by voluntary associations. Jurisdiction cannot be established on the sole basis that there is an alleged breach of natural justice or that the complainant has exhausted the organization’s internal processes. Jurisdiction depends on the presence of a legal right which a party seeks to have vindicated. Only where this is so can the courts consider an association’s adherence to its own procedures and (in certain circumstances) the fairness of those procedures.
[40] Voluntary associations do not always have written constitutions and by-laws. But when they do exist, they constitute a contract setting out the rights and obligations of members and the organization. In Ahenakew et al. v. MacKay et al. (2004), 2004 CanLII 12397 (ON CA), 71 O.R. (3d) 130 (C.A.), at paras. 20 and 26, this court affirmed that voluntary associations are “a complex of contracts between each and every other member. The terms of these contracts are to be found in the constitution and by-laws of the voluntary association.”

[41] Once it is established that a contract exists, an expectation of procedural fairness may attach as a way of enforcing the terms of a contract: Wall, at para. 26. The requirements of procedural fairness depend on the circumstances, including the nature of the organization and the seriousness of the consequences of discipline. However, the basic requirements include: notice, opportunity to make representations, and an unbiased tribunal: Lakeside Colony of Hutterian Brethren v. Hofer, 1992 CanLII 37 (SCC), [1992] 3 S.C.R. 165, at p. 195.

[42] In Senez v. Montreal Real Estate Board, 1980 CanLII 222 (SCC), [1980] 2 S.C.R. 555, the Supreme Court of Canada considered the rights of a member of a real estate board who was expelled from the organization, resulting in a loss of access to services available to members. The expelled member sued in contract and in tort. Beetz J. held, at p. 566-567, that when an individual joins a voluntary association:
he accepts its constitution and the by-laws then in force, and he undertakes an obligation to observe them. In accepting the constitution, he also undertakes in advance to comply with the by-laws that shall subsequently be duly adopted by a majority of members entitled to vote, even if he disagrees with such changes. Additionally, he may generally resign, and by remaining he accepts the new by-laws. The corporation may claim from him arrears of the dues fixed by a by-law. Would such a claim not be of a contractual nature? What other basis could it have in these circumstances? In my view, the obligation of the corporation to provide the agreed services and to observe its own by-laws, with respect to the expulsion of a member as in other respects, is similarly of a contractual nature. [Emphasis added.]
[43] In other words, whether or not a member has specific knowledge of or expressly consents to the specific terms in the by-laws, becoming a member of a voluntary association entails agreement to the terms of the constitution and bylaws. As such, members of the voluntary association, including the organization itself, are bound by the terms in the constitution and by-laws and there is an obligation on the part of an organization to observe its constitution and by-laws.

3. Clubman's Veto

. Polish Alliance of Association of Toronto Limited v. The Polish Alliance of Canada

In the case of Polish Alliance of Association of Toronto Limited v. The Polish Alliance of Canada (Ont CA, 2017) the relatively obscure prinipal of the 'clubman's veto' is considered:
[9] .... He held that the “clubman’s veto” applied. Citing Wawrzyniak v. Jagiellicz (1998), 1988 CanLII 4528 (ON SC), 64 O.R. (2d) 81 (H.C.J.), at pp. 88-89, he explained this common law rule provides that with the approval of 100% of the members of an unincorporated association, the members can leave the association and take the property of the association with them.

....

(1) Myers J. did not err in concluding that the clubman’s veto applied

[14] PAC does not take issue with Myers J.’s articulation of the common law rule sometimes called “the clubman’s veto”[1]. Rather, it renews its argument before Myers J., relying on Ahenakew v. MacKay (2004), 2004 CanLII 12397 (ON CA), 71 O.R. (3d) 130 (C.A.), that the clubman’s veto does not apply in these circumstances because PAC is incorporated under the Corporations Act, and it has supplanted the clubman’s veto.

[15] Nor does PAC dispute Myers J.’s finding that PAC’s constitution does not deal with how a branch can leave PAC. However, it says PAC’s by-laws must be amended with the approval of a 2/3 majority of PAC’s members to create a process for disaffiliation of the members of Branch 1- 7 and Branch 1-7 must then comply with any such process to leave PAC, with the Property.

[16] We reject this argument. In our view, Myers J. correctly determined that the clubman’s veto applied. The respondents – the then members of Branch 1-7, an unincorporated association – sought to leave that association and take with them the Property held in trust for the members from time to time of Branch 1-7. This case is very different from Ahenakew.

[17] In Ahenakew, this court concluded the unanimous consent of all members of the Progressive Conservative Party of Canada (the “PC Party”) was not required for the PC Party to merge with the Canadian Reform Conservative Alliance Party.

[18] Goudge J.A., writing for the court, reviewed this court’s earlier decision in Astgen v. Smith, 1969 CanLII 488 (ON CA), [1970] 1 O.R. 129 (C.A.). He explained that the majority in Astgen held that the common law recognized the voluntary association not as a legal entity, but as nothing more than a complex of contracts between each member and every other member. The majority held that something such as a merger with another voluntary association so fundamentally affects the contractual rights of each member that each member must consent to a termination of his or her existing set of contractual relations directly or through a procedure to which all members had agreed.

[19] In Ahenakew, this court held that the common law requirement of unanimous consent did not apply to the proposed merger involving the PC Party. The legal fiction that a voluntary association is simply a complex of contracts between all its members was inapplicable because the Canada Elections Act clothed the PC Party with legal status as a registered political party. And since this legal fiction was inapplicable, so too was the corollary requirement that unanimous consent of its members be obtained to a merger. Further, Parliament displaced the common law rule by including detailed provisions in the Canada Elections Act about what is necessary for the merger of two registered political parties.

[20] While PAC is incorporated under the Corporations Act, Branch 1-7 of PAC is an unincorporated voluntary association. Unlike in Ahenakew, there is no legislation that gives Branch 1-7 of PAC a legal status that would displace the legal construct identified in Astgen. And, unlike in Ahenakew, there is no statute that governs how the contractual relationship of all the members of Branch 1-7 with each other is to be terminated.

[21] As Myers J. summarized, at para. 23:
While the clubman’s veto, like any common law principle, can be displaced by a clear statute as was found to be the case of political parties in Ahenakew, there is nothing in the Corporations Act or any regulatory scheme that regulate this situation…Nothing in the Corporations Act deals with the problem of how trust beneficiaries whose interests are defined with reference to their membership in an unincorporated branch of an incorporated entity can leave with their property.

4. Judicial Review of Private Associations

. Highwood Congregation of Jehovah’s Witnesses (Judicial Committee) v. Wall

In Highwood Congregation of Jehovah’s Witnesses (Judicial Committee) v. Wall (SCC, 2018) the Supreme Court of Canada extensively canvassed that judicial review for procedural fairness is a public law remedy, in the context of a religious association:
IV. Analysis

[12] Courts are not strangers to the review of decision making on the basis of procedural fairness. However, the ability of courts to conduct such a review is subject to certain limits. These reasons address three ways in which the review on the basis of procedural fairness is limited. First, judicial review is reserved for state action. In this case, the Congregation’s Judicial Committee was not exercising statutory authority. Second, there is no free-standing right to procedural fairness. Courts may only interfere to address the procedural fairness concerns related to the decisions of religious groups or other voluntary associations if legal rights are at stake. Third, even where review is available, the courts will consider only those issues that are justiciable. Issues of theology are not justiciable.

A. The Availability of Judicial Review

[13] The purpose of judicial review is to ensure the legality of state decision making: see Canada (Attorney General) v. TeleZone Inc., 2010 SCC 62, [2010] 3 S.C.R. 585, at paras. 24 and 26; Crevier v. Attorney General of Quebec, 1981 CanLII 30 (SCC), [1981] 2 S.C.R. 220, at pp. 237-38; Knox v. Conservative Party of Canada, 2007 ABCA 295, 422 A.R. 29, at paras. 14-15. Judicial review is a public law concept that allows s. 96 courts to “engage in surveillance of lower tribunals” in order to ensure that these tribunals respect the rule of law: Knox, at para. 14; Constitution Act, 1867, s. 96. The state’s decisions can be reviewed on the basis of procedural fairness or on their substance. The parties in this appeal appropriately conceded that judicial review primarily concerns the relationship between the administrative state and the courts. Private parties cannot seek judicial review to solve disputes that may arise between them; rather, their claims must be founded on a valid cause of action, for example, contract, tort or restitution.

[14] Not all decisions are amenable to judicial review under a superior court’s supervisory jurisdiction. Judicial review is only available where there is an exercise of state authority and where that exercise is of a sufficiently public character. Even public bodies make some decisions that are private in nature — such as renting premises and hiring staff — and such decisions are not subject to judicial review: Air Canada v. Toronto Port Authority, 2011 FCA 347, [2013] 3 F.C.R. 605, at para. 52. In making these contractual decisions, the public body is not exercising “a power central to the administrative mandate given to it by Parliament”, but is rather exercising a private power (ibid.). Such decisions do not involve concerns about the rule of law insofar as this refers to the exercise of delegated authority.

[15] Further, while the private law remedies of declaration or injunction may be sought in an application for judicial review (see, for example, Judicial Review Procedure Act, R.S.B.C. 1996, c. 241, s. 2(2)(b); Judicial Review Procedure Act, R.S.O. 1990, c. J.1, s. 2(1)2; Judicial Review Act, R.S.P.E.I. 1988, c. J-3, ss. 2 and 3(3)), this does not make the reverse true. Public law remedies such as certiorari may not be granted in litigation relating to contractual or property rights between private parties: Knox, at para. 17. Certiorari is only available where the decision-making power at issue has a sufficiently public character: D. J. M. Brown and J. M. Evans, with the assistance of D. Fairlie, Judicial Review of Administrative Action in Canada (loose-leaf), at topic 1:2252.

[16] The Attorney General has a right to be heard on an originating application for judicial review, and must be served notice where an application has been filed: Alberta Rules of Court, Rules 3.15 and 3.17. Other originating applications have no such requirements: ibid., Rule 3.9. This suggests that judicial review is properly directed at public decision making.

[17] Although the public law remedy of judicial review is aimed at government decision makers, some Canadian courts, including the courts below, have continued to find that judicial review is available with respect to decisions by churches and other voluntary associations. These decisions can be grouped in two categories according to the arguments relied on in support of the availability of judicial review. Neither line of argument should be taken as authority for the broad proposition that private bodies are subject to judicial review. Both lines of cases fail to recognize that judicial review is about the legality of state decision making.

[18] The first line of cases relies on the misconception that incorporation by a private Act operates as a statutory grant of authority to churches so constituted: Lindenburger v. United Church of Canada (1985), 10 O.A.C. 191 (Div. Ct.), at para. 21; Davis v. United Church of Canada (1992), 1992 CanLII 7731 (ON SC), 8 O.R. (3d) 75 (Gen. Div.), at p. 78. The purpose of a private Act is to “confer special powers or benefits upon one or more persons or body of persons, or to exclude one or more persons or body of persons from the general application of the law”: Canada, Parliament, House of Commons, House of Commons Procedure and Practice (2nd ed. 2009), by A. O’Brien and M. Bosc, at p. 1177. Thus, by its nature, a private Act is not a law of general application and its effect can be quite limited. The federal Interpretation Act, R.S.C. 1985, c. I-21, s. 9, states that “[n]o provision in a private Act affects the rights of any person, except only as therein mentioned and referred to.” For instance, The United Church of Canada Act (1924), 14 & 15 Geo. 5, c. 100, gives effect to an agreement regarding the transfer of property rights (from the Methodist, Congregationalist and certain Presbyterian churches) upon the creation of the United Church of Canada; it is not a grant of statutory authority.

[19] A second line of cases that allows for judicial review of the decisions of voluntary associations that are not incorporated by any Act (public or private) looks only at whether the association or the decision in question is sufficiently public in nature: Graff v. New Democratic Party, 2017 ONSC 3578, at para. 18 (CanLII); Erin Mills Soccer Club v. Ontario Soccer Assn., 2016 ONSC 7718, 15 Admin. L.R. (6th) 138, at para. 60; West Toronto United Football Club v. Ontario Soccer Association, 2014 ONSC 5881, 327 O.A.C. 29, at paras. 17-18. These cases find their basis in the Ontario Court of Appeal’s decision in Setia v. Appleby College, 2013 ONCA 753, 118 O.R. (3d) 481. The court in Setia found that judicial review was not available since the matter did not have a sufficient public dimension despite some indicators to the contrary (such as the existence of a private Act setting up the school) (para. 41).

[20] In my view, these cases do not make judicial review available for private bodies. Courts have questioned how a private Act — like that for the United Church of Canada — that does not confer statutory authority can attract judicial review: see Greaves v. United Church of God Canada, 2003 BCSC 1365, 27 C.C.E.L. (3d) 46, at para. 29; Setia, at para. 36. The problem with the cases that rely on Setia is that they hold that where a decision has a broad public impact, the decision is of a sufficient public character and is therefore reviewable: Graff, at para. 18; West Toronto United Football Club, at para. 24. These cases fail to distinguish between “public” in a generic sense and “public” in a public law sense. In my view, a decision will be considered to be public where it involves questions about the rule of law and the limits of an administrative decision maker’s exercise of power. Simply because a decision impacts a broad segment of the public does not mean that it is public in the administrative law sense of the term. Again, judicial review is about the legality of state decision making.

[21] Part of the confusion seems to have arisen from the courts’ reliance on Air Canada to determine the “public” nature of the matter at hand. But, what Air Canada actually dealt with was the question of whether certain public entities were acting as a federal board, commission or tribunal such that the judicial review jurisdiction of the Federal Court was engaged. The proposition that private decisions of a public body will not be subject to judicial review does not make the inverse true. Thus it does not follow that “public” decisions of a private body — in the sense that they have some broad import — will be reviewable. The relevant inquiry is whether the legality of state decision making is at issue.

....

B. The Ability of Courts to Review Decisions of Voluntary Associations for Procedural Fairness

[24] Even if Mr. Wall had filed a standard action by way of statement of claim, his mere membership in a religious organization — where no civil or property right is granted by virtue of such membership — should remain free from court intervention. Indeed, there is no free-standing right to procedural fairness with respect to decisions taken by voluntary associations. Jurisdiction cannot be established on the sole basis that there is an alleged breach of natural justice or that the complainant has exhausted the organization’s internal processes. Jurisdiction depends on the presence of a legal right which a party seeks to have vindicated. Only where this is so can the courts consider an association’s adherence to its own procedures and (in certain circumstances) the fairness of those procedures.

[25] The majority in the Court of Appeal held that there was such a free-standing right to procedural fairness. However, the cases on which they relied on do not stand for such a proposition. Almost all of them were cases involving an underlying legal right, such as wrongful dismissal (McCaw v. United Church of Canada (1991), 1991 CanLII 7048 (ON CA), 4 O.R. (3d) 481 (C.A.); Pederson v. Fulton, 1994 CanLII 7483 (Ont. S.C. (Gen. Div.)), or a statutory cause of action (Lutz v. Faith Lutheran Church of Kelowna, 2009 BCSC 59). Another claim was dismissed on the basis that it was not justiciable as the dispute was ecclesiastical in nature: Hart v. Roman Catholic Episcopal Corp. of the Diocese of Kingston, 2011 ONCA 728, 285 O.A.C. 354.

[26] In addition, it is clear that the English jurisprudence cited by Mr. Wall similarly requires the presence of an underlying legal right. In Shergill v. Khaira, [2014] UKSC 33, [2015] A.C. 359, at paras. 46-48, and Lee v. Showmen’s Guild of Great Britain, [1952] 1 All E.R. 1175 (C.A.), the English courts found that the voluntary associations at issue were governed by contract. I do not view Shergill as standing for the proposition that there is a free-standing right to procedural fairness as regards the decisions of religious or other voluntary organizations in the absence of an underlying legal right. Rather, in Shergill, requiring procedural fairness is simply a way of enforcing a contract (para. 48). Similarly, in Lee, Lord Denning held that “[t]he jurisdiction of a domestic tribunal, such as the committee of the Showmen’s Guild, must be founded on a contract, express or implied” (p. 1180).

[27] Mr. Wall argued before this Court that Lakeside Colony of Hutterian Brethren v. Hofer, 1992 CanLII 37 (SCC), [1992] 3 S.C.R. 165, could be read as permitting courts to review the decisions of voluntary organizations for procedural fairness concerns where the issues raised were “sufficiently important”, even where no property or contractual right is in issue. This is a misreading of Lakeside Colony. What is required is that a legal right of sufficient importance — such as a property or contractual right — be at stake: see also Ukrainian Greek Orthodox Church of Canada v. Trustees of the Ukrainian Greek Orthodox Cathedral of St. Mary the Protectress, 1940 CanLII 59 (SCC), [1940] S.C.R. 586. It is not enough that a matter be of “sufficient importance” in some abstract sense. As Gonthier J. pointed out in Lakeside Colony, the legal right at issue was of a different nature depending on the perspective from which it was examined: from the colony’s standpoint the dispute involved a property right, while from the members’ standpoint the dispute was contractual in nature. Either way, the criterion of “sufficient importance” was never contemplated as a basis to give jurisdiction to courts absent the determination of legal rights.

[28] Mr. Wall argues that a contractual right (or something resembling a contractual right) exists between himself and the Congregation. There was no such finding by the chambers judge. No basis has been shown that Mr. Wall and the Congregation intended to create legal relations. Unlike many other organizations, such as professional associations, the Congregation does not have a written constitution, by-laws or rules that would entitle members to have those agreements enforced in accordance with their terms. In Zebroski v. Jehovah’s Witnesses (1988), 1988 ABCA 256 (CanLII), 87 A.R. 229, at paras. 22-25, the Court of Appeal of Alberta ruled that membership in a similarly constituted congregation did not grant any contractual right in and of itself. The appeal can therefore be distinguished from Hofer v. Hofer, 1970 CanLII 161 (SCC), [1970] S.C.R. 958, at pp. 961 and 963, Senez v. Montreal Real Estate Board, 1980 CanLII 222 (SCC), [1980] 2 S.C.R. 555, at pp. 566 and 568, and Lakeside Colony, at p. 174. In all of these cases, the Court concluded that the terms of these voluntary associations were contractually binding.

[29] Moreover, mere membership in a religious organization, where no civil or property right is formally granted by virtue of membership, should remain outside the scope of the Lakeside Colony criteria. Otherwise, it would be devoid of its meaning and purpose. In fact, members of a congregation may not think of themselves as entering into a legally enforceable contract by merely adhering to a religious organization, since “[a] religious contract is based on norms that are often faith-based and deeply held”: R. Moon, “Bruker v. Marcovitz: Divorce and the Marriage of Law and Religion” (2008), 42 S.C.L.R. (2d) 37, at p. 45. Where one party alleges that a contract exists, they would have to show that there was an intention to form contractual relations. While this may be more difficult to show in the religious context, the general principles of contract law would apply.

[30] Before the chambers judge, Mr. Wall also argued his rights are at stake because the Judicial Committee’s decision damaged his economic interests in interfering with his client base. On this point, I would again part ways with the courts below. Mr. Wall had no property right in maintaining his client base. As Justice Wakeling held in dissent in the court below, Mr. Wall does not have a right to the business of the members of the Congregation: Court of Appeal reasons, at para. 139. For an illustration of this, see Mott-Trille v. Steed, [1998] O.J. No. 3583 (C.J. (Gen. Div.)), at paras. 14 and 45, rev’d on other grounds, 1999 CanLII 2618 (Ont. C.A.).

[31] Had Mr. Wall been able to show that he suffered some detriment or prejudice to his legal rights arising from the Congregation’s membership decision, he could have sought redress under appropriate private law remedies. This is not to say that the Congregation’s actions had no impact on Mr. Wall; I accept his testimony that it did. Rather, the point is that in the circumstances of this case, the negative impact does not give rise to an actionable claim. As such there is no basis for the courts to intervene in the Congregation’s decision-making process; in other words, the matters in issue fall outside the courts’ jurisdiction.



CC0

The author has waived all copyright and related or neighboring rights to this Isthatlegal.ca webpage.