Court File and Parties

CITATION: Gammie v. Jordan, 2018 ONSC 1862

DIVISIONAL COURT FILE NO.: DC-17-12

DATE: 20180319

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

RE: CRAIG GAMMIE, Applicant/Appellant

AND:

DOUG JORDAN, Respondent

BEFORE: Sachs, Wilton-Siegel, Myers JJ.

COUNSEL: Craig Gammie, in Person, the Applicant/Appellant

Doug Jordan, in Person, the Respondent

HEARD at Brampton: March 9, 2018

ENDORSEMENT

[1] The Appellant Craig Gammie appeals the order of Mr. Justice Price dated January 5, 2017 (the “Order”). The Order pertains to an application brought under the Corporations Act, R.S.O. 1990, c. C-38 regarding a disagreement over whether a corporation had improperly taken the name of an unincorporated association. The application judge dismissed the application pursuant to reasons of the same date (the “Reasons”). The Respondent also appeals the costs award of the application judge in this matter. The application judge awarded costs against the Appellant on a partial indemnity basis.

Factual Background:

[2] The following facts are taken from the reasons of the application judge (the “Reasons”).

[3] The Appellant was a member of an unincorporated ratepayer’s association known as the “Amabel Property Owners Association” (the “APOA”). Amabel Township was a township in Ontario that in 1999 became part of the town of South Bruce Peninsula.

[4] For three years or more after April 2009, the APOA was inactive in that neither the board of directors nor the association took any action. In particular, the APOA did not collect annual dues from its members or elect members to its board of directors, which were required to be done on an annual basis under its constitution and bylaws.

[5] A meeting of the board of directors was held on October 26, 2013 at which time, among other things, a resolution was passed that “the Board rejuvenates APOA”, that the directors set an annual general meeting for the spring of 2014, and that the directors continue to act as an interim board until such meeting.

[6] The Respondent, Doug Jordan, was one of the founders of a new ratepayer’s association for Sauble Beach, which comprises half of the former Amabel Township. In June 2013, the Sauble Beach Residents Association was incorporated as a not-for-profit corporation under the Corporations Act. On August 1, 2013, it changed its name to “The Sauble Beach Residential Property Owners Association” (the “SBRPOA”) after acquiring the right to use this name from another not-for-profit corporation that had been inactive for many years. The SBRPOA began welcoming members from beyond Sauble Beach, including the former Amabel Township. After discussions with some of the APOA directors, Jordan decided that the SBRPOA should also consolidate the APOA name and property within its organization.

[7] A meeting of the board of directors of the APOA, who had been elected at the last annual meeting in September 2008, was held on May 3, 2014. Seven of the remaining eight directors attended, including the Appellant. All of the remaining directors had received notice of the meeting. A motion that the APOA be “permanently dismantled, effective immediately” was passed at that time by a vote of 5 votes to 2.

[8] The Appellant opposed the motion and challenged its validity on the basis of a lack of proper notice of the resolution to be considered at the meeting. There is however no basis for concluding that the directors were unaware of the fact that this resolution was going to be considered at the meeting even if formal notice had not been given.

[9] The Appellant then took a number of steps in an attempt to reactivate the APOA under his direction.

[10] First, because the treasurer of the APOA refused to accept the Appellant’s payment of his membership dues during the meeting, the Appellant paid the dues to himself and declared that he was a member of the APOA and that the APOA was therefore an ongoing association.

[11] Thereafter, the Appellant and one other person declared that they were the remaining directors of the APOA and purported to convene a meeting of the board of directors of the APOA limited to themselves. Notice of this meeting was not given to the other directors who had voted in favour of the dissolution resolution. Under the constitution of the APOA, a quorum required five directors. At this purported meeting, the directors declared that the dissolution resolution was invalid. The Appellant then convened a further meeting of the APOA board of directors which was held on or about July 10, 2014. At this meeting, a resolution was passed to the effect that the resolution of the directors passed at the meeting on May 3, 2014, “being a resolution to dissolve, is rescinded.”

[12] In addition, at a public meeting held on July 5, 2014 to discuss a First Nations land claim in relation to Sauble Beach, the Appellant set up a table outside the meeting room and sold memberships in the APOA. He says that the meeting was jointly hosted by the APOA and another community group and that he represented the APOA at that meeting.

[13] The Appellant also purported to call an annual general meeting of the APOA on August 23, 2014. At that meeting, the Appellant and four other individuals were elected as directors.

[14] Lastly, at another public meeting held by the SBRPOA on August 29, 2014 to discuss the First Nations land claim, the Appellant again set up a table outside the meeting room and purported to sell memberships in the APOA.

[15] On August 27, 2014, letters patent were granted incorporating a further not-for-profit corporation having the name the “Amabel Property Owners Association” (“APOA Co”). The board of directors of APOA Co was identical to the board of directors of the SBRPOA, which had caused the application of letters patent to be made some time earlier. The Respondent, Douglas Jordan, was a member of each board of directors and is the president of APOA Co.

[16] On November 24, 2014, the Appellant commenced this litigation by way of an application under section 13(3) of the Corporations Act seeking an order that the Respondent change the name of APOA Co “to something that is distinct from the (unincorporated) association called Amabel Property Owners Association and that is acceptable to the [Appellant]”. In the application, the Appellant argued that the registration of a corporate name “Amabel Property Owners Association” contravened section 13(1) of the Corporations Act as that name was the name of a known association and, accordingly, its use by the Respondent and others “would be certain to deceive”.

[17] Subsequently, Douglas Gammie, who had been elected the president of the APOA at the time of its last annual meeting in 2008 and who was the brother of the Appellant, signed a document dated September 27, 2015 that assigned “all the rights and responsibility for the name Amabel Property Owners Association to the newly-incorporated Sauble Beach Residential Property Owners Association.”

The Decision of the Application Judge

[18] In the Reasons, the application judge considered that the issue before him was whether the Sauble Beach Residential Property Owners Association may continue to use the name “Amabel Property Owners Association” for the corporation which they incorporated on August 27, 2014. The motion judge dismissed the application. He concluded that the APOA ceased to exist during the prolonged period when it was inactive and failed to take the steps which its constitution and by-laws required. He found that the APOA therefore had no further use for the name, that its former president and signing officer became a trustee of its name and property, and that he was entitled to transfer them to the newly incorporated APOA Co in trust for the property owners of former Amabel Township.

[19] The application judge began his analysis by noting that the APOA was an unincorporated association. As such, the relationship among the members was contractual in nature. In this case, the objects and purposes of the APOA, as well as the rights among its members, were spelled out in the constitution, bylaws or rules of the APOA.

[20] The application judge further noted that there was no provision in the APOA constitution and bylaws for dissolving the association. The application judge held that, where the constitution of an unincorporated association does not contain a provision governing dissolution, the members in good standing must make any decisions that concern the continued existence or identity of the association, including its dissolution, or its fundamental objects, on a unanimous basis.

[21] Based on his review of articles III, IV and VI of the APOA constitution, the application judge found that after 2010, no new members were elected to the board of directors, no existing board members were re-elected, and no annual general meetings were held as required by article VI. In particular, the application judge found that, beginning in 2010, the APOA ceased to have any members and, accordingly, when the terms of the directors expired, ceased to have any members remaining on the board of directors.

[22] With respect to the Appellant’s attempt to revive the APOA in 2014, the application judge found that the Appellant had no authority to convene a meeting of the board of directors in July 2014 as he was not the president of the APOA as was required by article IV of the constitution. In addition, the application judge held that the decision to reverse the motion to dissolve the APOA at the meeting in July 2014 was invalid for two reasons – the fact that the meeting was improperly convened as discussed above and the fact that the decision was a fundamental one affecting the continued existence of the APOA and was not authorised by the constitution.

[23] The application judge further held that “[t]he APOA’s Constitution, read as a whole, does not support a conclusion that it was the intention of the APOA’s members that their association would survive inaction for an extended period of time.” On this basis, he concluded that “the APOA ceased to exist in 2010, when the memberships of its members lapsed, and the terms of its directors expired.”

[24] The application judge then held that, in the absence of a unanimous divestiture by the APOA of its property, the property continued to be held in trust for the benefit of the membership as a whole. He found that, in the present circumstances, Douglas Gammie, as the last-serving president and signing officer of the APOA, became trustee of the name and property (an amount of $13,000) of the APOA, holding such assets for the benefit of all property owners of the former Amabel Township in accordance with the purposes and goals set out in article II of the APOA constitution.

[25] The application judge further held that Douglas Gammie, with the support of the majority of the former members of the APOA board of directors at their meeting on May 3, 2014, validly assigned the name and property of the APOA to the SBRPOA which then incorporated APOA Co to carry on the mandate of the APOA. He concluded that “[t]his court must recognize [the decision to effect such assignment] … as a means of furthering the objects set out in the APOA’s constitution and its by-laws.”

[26] The application judge concluded with the following analysis and conclusion at paras. 66-68:

If Doug Gammie transferred the funds to [APOA Co], that transfer was subject to the same trust set out in the former APOA’s constitution, i.e. for the benefit of all of the property owners in the former Amabel Township, and that of the property owners of Sauble Beach alone.

If Doug Gammie and the former board members of the APOA did not assign APOA’s name or property to the SBRPA [sic] or the newly incorporated [APOA Co], the funds would be subject to escheat by the Crown by reason of the … APOA having ceased to exist. …

The policy of ensuring that the property of unincorporated associations is used to further the objects of the association, as reflected in their constitutions, favours a decision that gives effect to the assignment made by Doug Gammie and the majority of the former members of the APOA board to assign the name and property of the [APOA] to the entity best able to carry out the [APOA’s] purposes, rather than permitting the name to fall into disuse and the funds to be forfeited to the Crown.

[27] On the basis of the foregoing, the application judge held that, because the APOA had ceased to exist, the use of its name by APOA Co was not likely to deceive the public for the purposes of section 13 of the Corporations Act.

The Jurisdiction of the Court

[28] The Appellant’s application was brought pursuant to s 13(3) of the Corporations Act which reads as follows:

(3) A person who feels aggrieved as a result of the giving of a name under subsection (1) or the changing or refusing to change a name under subsection (2) may, upon at least seven days notice to the Minister and to such other persons as the court directs, apply to the court for a review of the matter, and the court may make an order changing the name of the corporation to such name as it considers proper or may dismiss the application.

[29] For the purposes of the Act, the term “court” refers to a judge of the Superior Court.

[30] This appeal of the Order is brought pursuant to section 329 of the Corporations Act which provides that an appeal lies to the Divisional Court from any order made by a court under the Act.

The Standard of Review

[31] The issues raised on this appeal involve questions of mixed fact and law and, accordingly, the standard of review is palpable and overriding error. With respect to the costs award, a court may only interfere with a costs award if the judge at first instance has made an error in principle or if the costs award is plainly wrong.

Applicable Law

[32] The applicable provision of the Corporations Act is section 13, the relevant portion of which reads as follows:

13 (1) A corporation shall not be given a name,

(a) that is the same as or similar to the name of a known corporation, association, partnership, individual or business if its use would be likely to deceive, except where the corporation, association, partnership, individual or person consents in writing that its, his or her name in whole or in part be granted, and, if required by the Minister,

(i) in the case of a corporation, undertakes to dissolve or change its name within six months after the incorporation of the new corporation, or

(ii) in the case of an association, partnership or individual, undertakes to cease to carry on its, his or her business or activities, or change its, his or her name, within six months after the incorporation of the new corporation; [emphasis added

Issues on this Appeal

[33] The Appellant raises the following issues on this appeal:

(1) The application judge erred in finding that the APOA had ceased to exist at the time the Respondent incorporated APOA Co;

(2) The application judge erred in finding that the continued use of the name “Amabel Property Owners Association” by APOA Co did not deceive the public;

(3) The application judge erred in finding that the requirements in s. 13(1)(a)(ii) for the assignment of the name of the APOA by Douglas Gammie in September 2015 were satisfied;

(4) The application judge erred in taking into consideration the possible escheat of the APOA funds; and

(5) The cost award was unreasonable.

Did the application judge err in finding that the APOA had ceased to exist at the time the Respondent incorporated APOA Co?

[34] The principal issue on this appeal is the Appellant’s assertion that the application judge erred in finding that the AOPA had ceased to exist at the time of incorporation of the APOA. We do not agree.

[35] In support of his position on this point, the Appellant submitted that the application judge made a palpable and overriding error in basing his decision on the APOA’s constitution, a document that the Appellant argued was not a binding document. This submission is directly contrary to the evidence that the Appellant put before the application judge, which was that the document relied upon by the application judge was the APOA’s constitution.

[36] While it is probable that the individuals who were elected as directors at the 2008 annual general meeting continued on as directors until such time as they were replaced by validly elected people, the application judge did not err in finding that the APOA had no members after 2010 and that no annual general meetings were held after that date. The Appellant does not dispute that there were no members or annual general meetings until at least May 2014. In our view, his actions after that date were ineffective to reactivate the APOA for the following reasons.

[37] While the dissolution resolution passed at the directors meeting held on that date was not effective to dissolve the APOA in the absence of unanimity, it was in effect a resolution that confirmed the reality that the APOA had terminated all existing operations and should take no further actions. Among other things, the resolution confirmed the mandate to the treasurer that the treasurer should not accept any further membership fees, including the Appellant’s attempted tender of his membership dues. Accordingly, the Appellant did not become a member of the APOA at that time or, indeed, at any later time.

[38] Further, article VI of the constitution of the APOA provided, among other things, that “[a]ll of the above meetings [being annual, general or special meetings of the members] will be called from time to time throughout the year by the Director/President of the association and at the sanction of the Board.” Clearly, at no time after October 23, 2013 did the Board sanction a meeting of the members to be held on a specific date, much less actually convene such a meeting through the Director/President who was Douglas Gammie. Accordingly, at all relevant times, the directors elected, and the officers appointed, in 2008 remained in place

[39] Further, even if the Appellant had become a member of the APOA, that status did not give him the authority to call a meeting of the members on his own if the board of directors refused to sanction such a meeting. In such circumstances, the Appellant was required to provide a members requisition, or, possibly, seek an order of the court, convening a meeting of the members. He did not take any such action.

[40] This raises the issue of the status of the Appellant and the other individuals who purported to have been elected at a meeting held on or about July 10, 2014. The individuals who attended that meeting had not paid membership dues to the APOA. Insofar as they paid money to the Appellant as purported membership dues, they did not pay such monies to an officer or director of the APOA. Therefore, any such payments were not effective to constitute them members of the APOA. Accordingly, the purported election of the Appellant and four other individuals as directors of the APOA at that meeting was also ineffective to constitute them directors of the AOPA. Similarly, any appointment of the Appellant as the president of the APOA following that meeting was ineffective.

[41] In short, at all times after the meeting of the board of directors in May 2014, the Appellant acted outside of the constitution of the APOA and without any authority thereunder. In effect, the Appellant created his own organization and sought to appropriate the name “Amabel Property Owners Association” for that organization.

[42] Based on the foregoing, we find that the application judge did not make a palpable and overriding error in concluding that, because the APOA had ceased to operate, the use of its name by APOA Co would not be likely to deceive the public for the purposes of s. 13 of the Corporations Act.

Did the application judge err in finding that the continued use of the name “Amabel Property Owners Association” by APOA Co did not deceive the public?

[43] It also follows from the analysis above that the application judge did not err in finding that the continued use of the name “Amabel Property Owners Association” by APOA Co did not deceive the public. The application judge found that the APOA had ceased to exist by which he meant had ceased to have any members and to operate in any manner.

[44] Insofar as there is any possibility of confusion regarding that name, it arises as a result of the Appellant’s attempted appropriation of that name for the purposes of his own organization. However, the application judge implicitly found that the Appellant’s modest activities in this regard were not sufficient to make APOA Co’s use of the name “Amabel Property Owners Association” deceptive in the manner pleaded by the Appellant.

[45] On this basis, there is no palpable and overriding error of the application judge.

Did the application judge err in finding that the requirements in s. 13(1)(a)(ii) for the assignment of the name of the APOA by Douglas Gammie in September 2015 were satisfied?

[46] The Appellant argues that the application judge erred in finding that the requirements in s. 13(1)(a)(ii) for the assignment of the name of the APOA by Douglas Gammie in September 2015 were satisfied. However, the application judge did not make any such finding. We do not read the comments of the application judge in paragraph 65 of the Reasons as constituting a finding that the exception provided for in s. 13(1)(a)(ii) applied in the circumstances. Once the judge concluded that s. 13 (1) did not apply because there was no deception, he was not required to go further and also find an exception to that section applied as well. His remarks therefore were merely a confirmatory or supporting argument that do not affect the outcome.

Did the application judge err in taking into consideration the possible escheat of the APOA funds?

[47] In our view, any findings of the application judge regarding the possible escheat of the APOA funds are of no relevance for his finding regarding the use of the name “Amabel Property Owners Association” by APOA Co, which was the only issue before him. As such, this is not a viable ground of appeal.

Was the cost award unreasonable?

[48] The application judge awarded costs in favour of the Respondent in the amount of $21, 287.57. He held that the issues in the application were factually and legally complex. He noted that the Appellant’s materials and cross-examination were considerably longer than the Respondent’s and that the Appellant, though a self-represented litigant, was an experienced litigant who should be aware of the costs of a proceeding. He concluded, however, that there was no need to apply a higher scale to indemnify the Respondent for the costs incurred.

[49] The Appellant argues that the cost award was unreasonable, particularly given the fact that the application judge accepted that the matter was factually and legally complex.

[50] However, the Appellant has failed to identify an error in principle of the application judge nor has he demonstrated that the costs award was plainly wrong. Accordingly, this ground of appeal must be dismissed.

Conclusion

[51] Based on the foregoing, the appeal is dismissed in its entirety. The Respondent may make written submissions as to costs not to exceed three pages within ten days of the date of release of this Endorsement and the Appellant shall have a further ten days to make responding submissions of no greater length. All written costs submissions shall be served on the party opposite and then filed in triplicate, with proof of service, with the office of the registrar of the Divisional Court at Brampton.

Sachs J.

Wilton-Siegel J.

Myers J.

Date: March 19, 2018