Vietnamese Association, Toronto v. Duong, 2023 ONSC 2072
CITATION: Vietnamese Association, Toronto v. Duong, 2023 ONSC 2072
DIVISIONAL COURT FILE NO.: 193/23
DATE: 20230330
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
BETWEEN:
VIETNAMESE ASSOCIATION, TORONTO
Trung Nguyen, for the Appellant/Moving Party
Applicant/Appellant/Moving Party
– and –
NGA BICH DUONG, DUY LE, LOC XUAN LE, TU KHIEM TRAN, HUNG QUOC VU, PHONG TIEN DANG, THU LE, DUY NGOC NGUYEN, TAN VAN NGUYEN, NGHIEP THANH TRAN, E DING NGUYEN and MING CONG NGUYEN
Sam A. Presvelos and Evan Presvelos, for the Respondents Nga Bich Duong, Duy Le, Loc Xuan Le, Tu Khiem Tran, Hung Quoc Vu, E Dinh Nguyen, Duy Ngoc Nguyen, Tan Van Nguyen, Phong Tien Dang And Minh Cong Nguyen
Respondents
HEARD at Toronto (by videoconference): March 30, 2023
MATHESON J. (Orally)
[1] The appellant, the Vietnamese Association, Toronto (“VAT”), seeks an urgent stay of paragraph 3 of the order of Steele J. dated January 30, 2023. That urgent stay is sought pending the determination of the appeal of part of paragraph 3 of that order.
[2] The underlying appeal was brought in error in the Ontario Court of Appeal in the first instance. By order of Favreau J.A. dated March 28, 2023, the appeal has been transferred to the Divisional Court under s. 110 of the Courts of Justice Act, R.S.O. 1990, c. 43. As set out in the endorsement of Favreau J.A., the jurisdiction for the appeal is properly in the Divisional Court not the Court of Appeal.
[3] As a result, the motion for a stay that was before Favreau J.A. was dismissed and the stay motion brought in this court.
[4] The stay motion is being heard urgently today because the order in question relates to the conduct of an annual general meeting of VAT that has been scheduled to take place tomorrow, March 31, 2023.
[5] On agreement between the parties who filed court material in the Ontario Court of Appeal, that same motion material is being used for the motion today except to the extent that it related to jurisdiction. Jurisdiction is no longer an issue.
[6] There are two self-represented respondents in these proceedings neither of whom appear today. One of those two respondents, specifically Thu Le, communicated to the court yesterday that she was not going to attend but supports the decision of the application judge that is the subject of this appeal.
[7] By way of background, I adopt the brief description of the underlying situation that was set out by Favreau J.A. in her endorsement at paragraphs 3-9 as follows:
[3] The VAT is a publicly funded, not-for-profit corporation, governed by the Not-For-Profit Corporations Act, 2010, S.O. 2010, c. 15.
[4] The VAT’s board of directors is elected at its annual AGM.
[5] On June 26, 2022, the VAT held an AGM. The respondents disrupted the AGM before the members had a chance to vote on a new board of directors. The board of directors in place at the time of the meeting adjourned the AGM, intending to reconvene it at a later date. However, after most of the board members and other members had left the building, the respondents held a vote and appointed themselves as the VAT’s “interim board”. They then changed the locks to the VAT’s office and took other steps that were meant to implement the newly appointed board of directors.
[6] The VAT brought an urgent application to the Superior Court seeking injunctive relief and to invalidate the June 26, 2022, appointment of the “interim board”. The VAT also sought to reinstate the board of directors that had previously been in place until the VAT holds its next AGM.
[7] The application judge granted an order reinstating the board of directors that had been in place prior to June 26, 2022. In addition, the application judge established a 60-day deadline for the next AGM and a procedure to be followed in determining the membership for the AGM.
[8] The VAT is appealing the portion of the order that prescribes the process for determining the membership for the AGM. The VAT argues that the procedure is contrary to its own by-laws and that it could result in the election of a board of directors that would not have been eligible for election under its own processes.
[9] In order to comply with the application judge’s order, the VAT has scheduled the next AGM for March 31, 2023. However, the VAT seeks a stay of the portion of the order that requires it to hold an AGM within 60-days and that sets out the process for determining the membership.
[8] I note that the appellant takes issue with the use of the word “reinstate” in paragraphs 6 and 7 of the above summary and would say that it more accurately should say continue. I further note that the respondents submit that the last sentence of paragraph 5 in the above description is fully explained in the evidence on the application. I do not find that these two submissions have a material impact on the outcome of this motion.
[9] With respect to the timing of the appeal in this court, that appeal has been expedited. The appeal is scheduled for hearing before a panel of this court on May 8, 2023.
[10] I further adopt paragraph 11 of the endorsement of Favreau J.A., which sets out the principles that apply to the stay motion as follows:
On a motion for a stay pending appeal, as held in BTS Global Opportunity Trading Limited v. RBC Dexia Investor Services Trust, 2011 ONCA 620, 283 O.A.C. 321, at para. 16, the overall consideration is whether it is in the interests of justice to grant a stay. In making that determination, the court is to consider the following three factors:
a. Whether the appeal raises a serious issue;
b. Whether there will be irreparable harm if the stay is not granted; and
c. Whether the balance of convenience favours granting the stay.
[11] As submitted by the respondents it is the moving party that bears the onus to show that there should be a stay pending its appeal.
[12] I will begin with the three factors mentioned above and then return to the overall consideration of the interests of justice.
[13] The first factor is whether or not the appeal raises a serious issue. The threshold for a serious issue is low. The moving party need only show that its appeal is not frivolous or vexatious.
[14] The appeal challenges para. 3 (ii) – (vi) of the application judge’s order. Those subparagraphs relate to who will be entitled to notice of the annual general meeting, have voting rights and be eligible to be a member of the board of directors, among related matters.
[15] The moving party submits that the application judge erred in four ways. Very briefly, they are as follows:
(i) by purporting to override Article 18 of the VAT By-laws.
(ii) by failing to consider Article 9.3 of the VAT By-laws.
(iii) by using outdated internal VAT rules; and
(iv) by failing to have due regard for certain evidence.
[16] The moving party submits that these are substantial issues of principle.
[17] The respondents submit that there is no serious issue to be tried in this appeal. They note that the application judge expressly considered Article 18.1 and submit that she properly exercised her jurisdiction to override that Article. They rely on the jurisdiction in ss. 31 and 191 of the Not-for-Profit Corporations Act in this regard. The respondents further submit that the application judge properly considered Article 9.3, that she requested and was given the correct information about the internal rules of VAT, and that she properly addressed the evidence where relevant.
[18] The responding parties further rely on the standard of review, submitting that it is especially high on this appeal to the extent that the issues relate to the exercise of discretion.
[19] I have considered all of the submissions about the merits of this appeal. On this motion, I do not make a decision about the merits, only about whether or not this proposed appeal is frivolous or vexatious. I do not find that it is frivolous or vexatious.
[20] I then move to the question of irreparable harm if a stay is not granted. The moving party submits that without a stay pending the appeal, there will be irreparable harm because the meeting scheduled for tomorrow will proceed in accordance with paragraph 3 of the order appealed from. In turn, the moving party submits that the relief sought on the appeal will become unavailable, even if the appeal is successful. The moving party submits that it will be worse off because the otherwise successful application before the application judge will result in harm to its organization.
[21] Further, the moving party submits that the outcome of tomorrow’s meeting could be rendered invalid if the appeal is successful and the meeting will have to be done over again. Whatever steps taken in the interval could result in irreparable harm to the organization. At an extreme end of that harm, the moving party submits that a newly elected board could also decide to withdraw the appeal altogether.
[22] The respondents dispute the suggestion that the appeal could become moot. However, the respondents accept that the results of the upcoming meeting could be set aside if the appeal is granted. The respondents emphasize that this court has jurisdiction to invalidate the results of tomorrow’s meeting, require a new meeting, and set the terms of the meeting including about the membership issues that are currently at issue in this appeal. The respondents note that this court could do so or could send the matter back to a judge of the Superior Court, and the whole AGM process could be redone in accordance with the decision on the appeal.
[23] The respondents submit that whomever might be elected tomorrow, what they might do as a newly constituted board, and whether they would take steps that might harm the organization before the appeal, is too speculative to amount to irreparable harm.
[24] Both sides rely on the decision in Bose v. Bangiya Parishad Toronto 2019 ONSC 5625 another decision of the Divisional Court on a motion to stay. Having reviewed that case I see that it includes discussion that is helpful to each side of the motion before me. However, I do not conclude that it materially disposes of this motion either way. I note that it is based on a situation that is significantly different because in Bose it was the invalid board that was seeking the stay pending its appeal. That is not the case here.
[25] I then move to the balance of convenience. As always seems to be the case, there is overlap between the submissions on irreparable harm and on balance of convenience.
[26] In addition to the moving party’s submissions on irreparable harm, the moving party relies on the fact that the appeal has been expedited and will be heard within a relatively short period of time. That is so, although there is no way of knowing whether the appeal panel will dispose of the appeal on that day or take the matter under reserve.
[27] The moving party further submits that given the divergence of interests that is shown in considerable evidence, giving rise to this litigation, the AGM tomorrow is likely to result in a further disruption within the organization. In contrast to that submission, the respondents submit that the governance problems of this organization need the meeting to proceed tomorrow in order that there can be a properly constituted board of directors and that the organization and its members can begin to move forward.
[28] The respondents also submit that it is problematic to continue with the old board, because there are continuing problems. The respondents submit that many new memberships continue to be rejected, that the current board is not fully constituted because it does not currently have a sufficient number of directors, and that, for other reasons, the status of the governance of the organization is out of step with the By-laws and the governing legislation.
[29] I accept that the governance is out of step to some degree but it cannot be overlooked that that it is in large part due to the conduct at the last AGM, which was highly problematic and resulted in this litigation. The steps in the court process that followed have also had an impact on the ordinary governance.
[30] The respondents also rely on the statutory obligation on directors to fulfill their obligations in good faith. The respondents submit that this obligation should address any concern about potential problematic behavior by a newly constituted board.
[31] Despite their submission that this organization needs the AGM to proceed and to get on with moving forward, the respondents also submit that there is no problem if the appeal is granted because the court can render tomorrow’s vote invalid and it all can be done again.
[32] I move to the overall justice of the case. I have considered all of the materials before me and all submissions made. Without limiting that consideration, I highlight the following:
(i) there is ample evidence of divergence of interests that, in the past, resulted in a substantial disruption at the prior attempt to conduct an AGM, giving rise to the potential for irreparable harm;
(ii) there is a substantial dispute about who should be entitled to vote at the meeting tomorrow;
(iii) the proposed appeal is not frivolous or vexatious;
(iv) there is an expedited appeal date;
(v) there is the potential, accepted by both sides, that the appeal may result in the need to set aside all that may occur tomorrow and forward, and start all over again.
[33] I also note that paras. 1 and 2 of the application judge’s order are not under appeal by either side and those paragraphs provide as follows:
[1] THIS COURT DECLARES THAT the vote held by the respondents on January 26, 2022, to appoint themselves as VAT’s “interim board” was invalid and a nullity;
[2] THIS COURT DECLARES THAT the [prior Board] is authorized to continue managing VAT’s business and affairs in accordance with its By-law until such time as VAT can hold its AGM;
[34] Bearing all of this in mind, I grant a stay of paragraph 3 of the application judge’s order until such time as this court disposes of the appeal, or until further order of this court. The parties are free to raise terms with the panel at the hearing of the appeal and would be well advised to do so if the appeal is taken under reserve.
[35] The motion is therefore granted. Costs are awarded to the moving party in the agreed upon amount of $5,000 all inclusive.
___________________________ MATHESON J.
Date of Oral Reasons for Decision: March 30, 2023
Date of Written Release: April 3, 2023
CITATION: Vietnamese Association, Toronto v. Duong, 2023 ONSC 2072
DIVISIONAL COURT FILE NO.: 193/23
DATE: 20230330
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
BETWEEN:
VIETNAMESE ASSOCIATION, TORONTO
– and –
NGA BICH DUONG, DUY LE, LOC XUAN LE, TU KHIEM TRAN, HUNG QUOC VU, PHONG TIEN DANG, THU LE, DUY NGOC NGUYEN, TAN VAN NGUYEN, NGHIEP THANH TRAN, E DING NGUYEN and MING CONG NGUYEN
Responding Parties
ORAL REASONS FOR DECISION
MATHESON J.
Date of Oral Reasons for Judgment: March 30, 2023
Date of Written Release: April 3, 2023