Court File and Parties

COURT FILE NO.: CV-17-587803-00CL DATE: 20180917 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: The Campaign for the Inclusion of People who are Deaf and Hard of Hearing, Keith Golem and Ian Silver, Applicants AND: Canadian Hearing Society, Respondent

BEFORE: Wilton-Siegel, J.

COUNSEL: C. Spry and K. McMillan, for the Moving Party/Respondent S. Roy and A. Porter, for Responding Parties/Applicants

HEARD: May 8, 2018

Endorsement

[1] On this motion, the Canadian Hearing Society (“CHS”) seeks an order dismissing the application by the corporate applicant, the Campaign for the Inclusion of People who are Deaf and Hard of Hearing (the “Campaign”), and a further order staying the application of each of the individual applicants, Ian Silver (“Silver”) and Keith Golem (“Golem”) (collectively, the “Individual Applicants”), pending arbitration of their claims.

Background

[2] CHS is a national registered charity that was founded in 1940 and has been continued under the Canada Not-for-Profit Corporations Act, S.C. 2009, c. 23 (the “Act”). It provides services, products, programs, and information to all members of the Deaf and Hard of Hearing community.

[3] The Campaign is a corporation also incorporated under the Act on September 5, 2017. The Campaign was established by its incorporating members to represent the culturally Deaf community. It appears that its sole purpose, at least to date, is to bring this application.

[4] The Individual Applicants are both former lifetime members of the CHS whose membership was affected by amendments to the general by-law of the CHS described below. The Campaign and the Individual Applicants are collectively referred to in this Endorsement as the “Applicants”.

Factual Background

[5] In 2014, the CHS faced a serious financial challenge that required it to review its operations and its corporate governance. In this regard, among other things, the CHS took a number of steps to address the inconsistent approach to membership that had developed in the past.

[6] First, at a meeting of the board of directors of the CHS (the “Board”) on May 9, 2016, the Board voted to no longer admit or renew memberships of current and former employees and their families, among others, on the basis of a conflict of interest.

[7] Second, at a Board meeting on June 22, 2016, the Board adopted a new membership policy (the “2016 Membership Policy”). The 2016 Membership Policy set out the following criteria for membership in the CHS:

Membership in CHS is open to individuals who:

a) Demonstrate interest, acceptance and support of CHS’ mission, vision, goals and purposes through:

i. Participation on the board of directors of CHS; ii. Participation on a committee of CHS; and/or iii. In any other way as determined by the board of directors.

b) Agree to comply with CHS’ by-law and policies, which may be amended from time to time;

c) Are at least 18 years of age; and

d) Pay the annual membership fee as set by the board of directors of CHS.

Membership in CHS is NOT available to the following individuals:

a) Individuals who do not support CHS’s mission, vision, goals and purposes as determined by the board of directors in its sole discretion;

b) Current or former employees or contractors of CHS;

c) Family members of current or former employees or contactors of CHS;

i. Family member(s) – in respect of current or former employee or contractor of CHS, includes the following person:

a) Spouse or cohabiting partner;

b) Child, sibling, parent, and the spouse of such child, sibling or parent;

c) Child, sibling, parent of the employee/former employee’s spouse or cohabiting partner, and the spouse of such child, sibling or parent;

d) Grandparents, grandchildren; or

e) Any other relative (e.g. aunt, uncle, niece, nephew, cousin) who lives in the same household as the current or former employee or contractor.

d) Individuals who are involved with organizations that have competing interests with CHS and who the board of directors, in its sole discretion, considers to have a perceived or actual conflict of interest or conflict of loyalty to be not in the best interests of CHS.

i. The following are examples of organizations that have competing interests with CHS:

a) An organization that is competing with CHS for government funding or other forms of funding;

b) An organization whose mission conflicts with that of CHS.

[8] The 2016 Membership Policy also provided as follows with respect to the procedure for the processing of membership applications:

1. The administration of this policy is the responsibility of the board of directors of CHS or such persons as may be designated by the board of directors;

2. Persons who wish to be members or wish to renew their memberships must complete an Application for Membership form;

3. Completed Applications for Memberships will be reviewed by the board of directors or such persons as may be designated by the board of directors to determine whether the membership criteria are met;

4. The board of directors or such persons as may be designated by the board of directors will notify applicants who have been approved as members of CHS and the deadline to pay the applicable annual membership fee in order to confirm their memberships in CHS.

5. Applicants who have been approved as members but have not paid the applicable annual membership fee by the deadline will not become members of CHS. The board of directors may extend the deadline to pay the applicable annual membership fee by up to three (3) weeks.

[9] Third, also in 2016, the CHS adopted a new by-law (the “2016 By-Law”) that eliminated all references to lifetime members. The 2016 By-Law was approved by a special resolution of the members at the annual general meeting of the CHS held in September 2016 (the “2016 AGM”).

[10] The previous by-law, herein the “2013 By-Law”, contained the following provisions that contemplated lifetime memberships or are otherwise relevant for the issues in this application:

42. Subject to the Act and the Articles, there shall be one class of members in the Corporation. Members shall consist of individuals who pay membership fees and support the Vision and Mission of the Society, as determined by the Board in its sole discretion.

43. The Board shall set annual and/or lifetime membership fees from time to time.

44. Each member shall be entitled to receive notice of, attend and vote at all meetings of the members of the Corporation.

45. The Board may grant membership to persons who have made contributions or donations to the Society on such terms or conditions which the Board, in its sole discretion, may determine by Board Policy.

[11] The comparable provisions of the 2016 By-Law, which are found in Article 2.01 and which eliminated all references to lifetime members, read as follows:

Subject to the articles, there shall be one class of members in the Corporation. Membership shall consist of individuals who pay membership dues and support the vision and mission of the Corporation, as determined by the board in its sole discretion.

The board may grant memberships to persons who have made contributions or donations to the Corporation on such terms or conditions that the board, in its sole discretion, may determine by board policy.

Each member shall be entitled to receive notice of, attend and vote at all meetings of the members of the Corporation.

In this Endorsement, the 2013 By-Law and the 2016 By-Law are collectively referred to as the “By-Laws”.

[12] The CHS says that, in advance of the 2016 AGM, it sent out a notice of the 2016 AGM and a copy of the proposed by-law to each member of the CHS at the time (the “Notice Package”). The Individual Applicants say that they did not receive the Notice Package, which the CHS disputes. The Campaign also says that, in 2016, the CHS ceased its practice of sending out annual renewal notices to members.

[13] Fourth, as a result of the approval of the 2016 By-Law, all members, including lifetime members, were required to renew their memberships on an annual basis. In June 2017, the CHS sent a letter to the lifetime members advising them that they were required to renew their memberships and to pay an annual membership fee of $25. Silver did so but his application was rejected by the Board in the exercise of its discretion under the 2016 By-Law. Golem did not apply for membership.

[14] Of the 340 lifetime members at the time, only 19 applied for membership. The Board rejected four of the applicants on the grounds that they were employees of the CHS or former employees. The Board rejected the remaining applications, including Silver’s application, on the grounds that the applicants did not demonstrate a connection to the CHS or support its Vision and Mission as required by the 2016 By-Law. Accordingly, the only applications accepted by the Board were the Board members themselves and the only members who voted at the 2016 AGM were the members of the Board.

[15] Subsequently, in 2017, the CHS amended the 2016 By-Law to restrict the membership of the CHS to the members of the Board (the “2017 By-Law”). The 2017 By-Law is not, however, directly relevant to any of the issues in this litigation. It merely confirmed the decisions previously made by the Board.

The Application

[16] The Campaign commenced this Application by Notice of Application dated November 20, 2017 which was amended on February 10, 2018. Subsequently, on February 17, 2018, the Campaign further amended the Notice of Application to add the Individual Applicants.

[17] The Campaign purports to represent the following classes of individuals who the Campaign says had reasonable expectations of continued membership in the CHS and were therefore oppressed for the purposes of s. 253 of the Act: (1) all members of the CHS who did not receive renewal notices in 2016 and who did not apply for a renewal of their memberships; (2) all members of the CHS who did not receive renewal notices in 2016 and who complained to the CHS or reapplied for a renewal of their annual memberships notwithstanding and, in either case, were rejected; and (3) the 19 lifetime members who applied for membership and were rejected.

[18] The Applicants seek relief in the form of an order that, among other things, declares the 2016 By-Law to be invalid, restores the memberships of all annual members and lifetime members of the CHS as of June 1, 2015, and requires a new meeting of members, including the restored members, to consider the 2016 By-Law.

[19] Both the Campaign and the Individual Applicants assert the same claims of oppression based on the same actions of the Board directed against both the annual members and the lifetime members as they existed in 2015. In each case, the alleged oppression is said to have commenced with the adoption of the new membership policy (erroneously alleged to have occurred in 2015) and further included, among other things, the failure to send out renewal letters to the annual members as in the past commencing in 2016, an alleged inadequate disclosure in the Notice Package, the conduct of the 2016 AGM, including the deferral of the 2016 AGM from its customary time in June to September, the adoption of the 2016 By-Law notwithstanding the alleged deficiencies in the notice and conduct of the 2016 AGM, and, in the case of the lifetime members, the alleged invalid termination of their memberships. The Notice of Application also alleges that all members have been oppressed by the Board’s failure to advise the members of the Board’s intentions to restrict CHS membership to the Board members and by the restrictive criteria imposed or applied by the Board in its consideration of new and renewal membership applications. The Campaign and the Individual Applicants say that the foregoing actions violated the reasonable expectations of all of the annual and lifetime members of the CHS of continued membership in the CHS and therefore give rise to a strong prima facie case of oppressive activity by the Board for the purposes of s. 253 of the Act.

[20] The Campaign says its motivation in bringing this application is the conviction of the culturally Deaf community that the CHS cannot provide proper services to the culturally Deaf community without proper consultation. The Campaign says it expresses the strong will of the culturally Deaf community that there should be no services provided for the benefit of such persons without consultation with them. It says that such consultation requires broad representation from that community among the membership of the CHS. The Campaign says, however, that its actions in bringing this application are intended to benefit not only the culturally Deaf community but also the broader Deaf and Hard of Hearing community.

Applicable Law

[21] The applicable provisions of the Act are the following:

253 (1) On the application of a complainant, a court may make an order if it is satisfied that, in respect of a corporation or any of its affiliates, any of the following is oppressive or unfairly prejudicial to or unfairly disregards the interests of any shareholder, creditor, director, officer or member, or causes such a result:

(a) any act or omission of the corporation or any of its affiliates;

(b) the conduct of the activities or affairs of the corporation or any of its affiliates; or

(c) the exercise of the powers of the directors or officers of the corporation or any of its affiliates.

[22] For the purposes of s. 253, “complainant” is defined in s. 250 of the Act as follows:

complainant means

(a) a former or present member or debt obligation holder of a corporation or any of its affiliates;

(b) a present or former registered holder or beneficial owner of a share of an affiliate of a corporation;

(c) a former or present director or officer of a corporation or any of its affiliates;

(d) the Director; or

(e) any other person who, in the discretion of a court, is a proper person to make an application under this Part.

The Issues

[23] I will address the relief sought against the Campaign and against the Individual Applicants separately in turn.

The Corporate Applicants

[24] In order to proceed with the application, the Campaign must be a “complainant” for the purposes of s. 253 of the Act. As the Campaign is not a person referred to in paragraphs (a) to (d) of s. 250, the Campaign seeks an order of the Court that it is a “complainant” by virtue of the provisions of paragraph 250(e). As set out above, paragraph 250(e) provides that a “complainant” includes any person not referred to in paragraphs (a) to (d) of s. 250 “who, in the discretion of a court, is a proper person to make an application”.

[25] The CHS argues that the Court should not exercise its discretion under that provision to find that the Campaign is a “proper person” to advance the oppression claim asserted in the Amended Amended Notice of Application. It seeks an order dismissing the application of Campaign on the basis that the Campaign has no standing to bring it.

[26] I am not prepared to exercise the Court’s discretion to find that the Campaign is a proper person to bring this application. I find that the Campaign is not a “complainant” pursuant to paragraph 250(e) of the Act for three principal reasons.

[27] First, the Campaign is not entitled to the relief sought on this application as described above unless it can establish that it has reasonable expectations regarding a right in its favour that has been infringed. However, the Campaign has never been a member of CHS nor has it applied for membership in the CHS. It therefore lacks a private right entitling it to assert its claim of oppression. In short, the Campaign has no reasonable expectation in its own right that has been frustrated by the actions of the Board and that can therefore ground a claim of oppression under the Act.

[28] Second, to the extent that it is not necessary to establish a private right of the Campaign that has been infringed, the Individual Applicants have brought their own applications asserting an infringement of their personal rights and reasonable expectations as members of the CHS. Their counsel has confirmed that, in addition to their claims that they were personally subjected to oppressive actions by the Board, the Individual Applicants assert the same claims regarding oppression in respect of all of the other lifetime members and annual members as does the Campaign. It is therefore not necessary to grant the Campaign status as a complainant for the oppression claims asserted in this application to be before the courts.

[29] Third, as discussed further below, there are significant difficulties with the Campaign’s assertion that it represents either the former lifetime or the former annual members of the CHS that it purports to represent.

[30] The Campaign says that, in determining whether to exercise its discretion, the Court should be guided by the three-fold test articulated by Newbould J. and approved by the Court of Appeal in Ernst & Young Inc. v. Essar Global Fund Limited, 2017 ONCA 1014, 139 O.R. (3d) 1, at para. 123 as follows: (1) there is a prima facie case that merits an oppression action or application; (2) the proposed action or application has a restructuring purpose, which the Campaign suggests in the present case would mean a purpose related to the Act; and (3) other stakeholders are not better placed to be a complainant.

[31] In Essar Global, the Court of Appeal described this “test” as factors that a supervising judge under the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36 (the “CCAA”) should consider when exercising discretion under that statute in deciding whether a monitor in proceedings under the CCAA should be authorized to be a “complainant” for the purposes of s. 241 of the Canada Business Corporations Act, R.S.C. 1985, c. C-44. It is by no means clear that such factors are applicable in the determination of whether a non-member of a not-for-profit corporation purporting to represent members or former members is a “proper person” for the purposes of s. 250(e) of the Act. In any event, I do not think that the Campaign satisfies these requirements for the following reasons.

[32] First, the Campaign relies heavily on its assertion that the Board’s actions raise a prima facie case of oppression, particularly given the low threshold of a prima facie case as opposed to the test for interim relief under s. 253, which is not at issue on this motion. However, there is a serious difficulty with the fundamental premise of the Campaign’s oppression action. It proceeds on the basis that the members of a not-for-profit corporation play a consultative role on behalf of the larger community served by the corporation.

[33] The Campaign says that its purpose in bringing this application is to restore an important consultative mechanism to the CHS by restoring membership in the form of members of the Deaf and Hard of Hearing community. It says it seeks to give voice and agency to the Deaf and Hard of Hearing community which has been excluded by the Board’s actions respecting the membership of the CHS. However, this view overstates the significance of membership in a non-profit corporation.

[34] The directors of a not-for-profit corporation are not responsible to the members of such corporation in the same manner as the shareholders of a for-profit corporation. As the CHS notes, the role of a member of a not-for-profit corporation is limited to approving the annual financial statements and the auditor, and to electing the directors on an annual basis. It is questionable whether the board of directors of a not-for-profit corporation owes any fiduciary duties to the members of the corporation: see London Humane Society, Re, 2010 ONSC 5775, 77 B.L.R. (4th) 119 at para. 19. Moreover, the Board has a responsibility to ensure that the corporation fulfills its charitable purposes and, in this regard, has a responsibility to ensure that the membership does not impose its own priorities over the stated purposes of the corporation or restrict the provision of services to a narrow segment of the community served by the corporation.

[35] Accordingly, the members of a not-for-profit corporation do not have a formal consultative function or authority in relation to proposed policies of the corporation. Any consultative role depends entirely on a discretionary decision of the board of directors of the corporation to invite such consultation. In this case, there is no evidence that the Board has consulted the members of the CHS in the past nor that the membership in June 2015, which the Campaign seeks to restore, was representative of the Deaf and Hard of Hearing community and therefore capable of performing a meaningful consultative role. Moreover, as the CHS notes, there are a number of other means by which consultation with the Deaf and Hard of Hearing community can, and does, take place. It is not persuasive that the Board cannot provide proper services to the culturally Deaf, or to the larger Deaf and Hard of Hearing community, without broad representation among the membership of the CHS for consultation.

[36] In the present circumstances, therefore, invalidation of the 2016 By-Law and restoration of the membership as of June 1, 2015 will not meaningfully further the Campaign’s stated purpose of restoration of an important consultative mechanism between the CHS and the culturally Deaf community, or the larger Deaf and Hard of Hearing community. Such an order would only further the Campaign’s alleged purpose if it were followed by action by the Campaign to replace the existing Board members with individuals who it considers to be representative of the culturally Deaf community and who intend to implement the priorities of the Campaign. However, the Campaign denies that it is engaged in a “power play” and that this is its objective in seeking the relief sought on this application.

[37] Given the foregoing, I think there is serious reason to doubt that the actions of the Board can be characterized as oppressive, unfairly prejudicial, or unfairly disregarding of the interests of the members or former members of the CHS that the Campaign purports to represent, even if it were possible to establish a breach of their expectations to remain as members or otherwise. Put another way, the alleged expectation of the Campaign is not reasonable. For the same reason, the evidence does not establish that the application furthers an important purpose of the Act.

[38] Secondly, with respect to the third factor articulated in Essar Global, as addressed above, the Individual Applicants are at least as well placed to pursue the claims of oppression in their capacities as “complainants” under section 250(a). Moreover, there is no evidence that the Campaign would be in a position to honour any costs award made against it if it were unsuccessful in its application.

[39] Lastly, as a related matter, even if the purpose of the action is accepted, there are significant problems with the Campaign’s purported authority to represent both the former lifetime and the former annual members.

[40] The Campaign had 19 members as of the most recent date on which information is given. There is no information regarding the identity of the members of the Campaign other than the Individual Applicants and Silver’s wife, who says that she had applied for a new membership and was rejected, and the following three individuals who provided affidavit evidence: (1) a lifetime member who objected in writing to the termination of her lifetime membership upon receipt of a renewal notice in June 2017 but did not apply for annual membership; (2) a former director who had allowed her annual membership to lapse and was rejected when she reapplied for membership in 2016 several years later; and (3) a lifetime member who did not apply for annual membership upon receipt of a renewal notice in June 2017.

[41] With respect to the former lifetime members, as mentioned, of the 340 lifetime members, only 19 reapplied for membership. There is no evidence that, apart from the two Individual Applicants and the two individuals mentioned in the preceding paragraph, any of the former lifetime members has given the Campaign the authority to represent them or that any of these individuals has raised any objection to the Board’s decision to reject their application.

[42] With respect to the annual members whose memberships lapsed without receiving a renewal notice prior to the 2016 AGM, or who reapplied or complained and were rejected, there is also no evidence that the Campaign has the authority to represent them. They have not come forward individually, and there is no evidence that there are any such persons who are truly concerned about the lapse of their membership.

[43] With respect to both classes of members, the Campaign suggests that they have not come forward because of a concern for bullying by the Board, or because they relied on the Campaign to represent them. There is, however, no support for this assertion in the evidence.

[44] Further, there is no evidence that the members of the Campaign are representative of the various segments of the Deaf and Hard of Hearing community. The Campaign states that its core purpose relates to the culturally Deaf community. Given the issues of representation described above, it is questionable whether the Campaign has sufficient support among this community to constitute it an appropriate representative of the culturally Deaf community. The Campaign suggests that its actions in bringing this application also benefit the broader Deaf and Hard of Hearing community, which is the community served by the CHS. However, there is no evidence of any support to constitute it a representative of this larger community. The vast majority of individuals who are part of the broader Deaf and Hard of Hearing community have never been members of CHS. Nor is there any evidence that this broader community seeks the relief sought on the application.

[45] Based on the foregoing, the CHS is entitled to an order dismissing the application of the Campaign on the basis that it is not a “complainant” for the purposes of s. 253 of the Act and therefore lacks standing to bring this application.

The Individual Applicants

[46] The CHS also seeks an order pursuant to s. 7 of the Arbitration Act, 1991, S.O. 1991, c. 17 (the “Arbitration Act”) staying the application of the Individual Applicants on the grounds that the By-Laws require their disputes with the CHS to be arbitrated pursuant to the provisions thereof.

[47] The relevant provisions of the By-Laws are sections 134 of the 2013 By-Law and article 12.01 of the 2016 By-Law, which read as follows:

134. Subject to Section 40, in the event that a dispute or controversy among Members, Directors, Officers, Committee members or volunteers of the Society arising out of or related to the articles or By-laws, or out of any aspect of the operations of the Society is not resolved in private meetings between the parties, then without prejudice to or in any other way derogating from the rights of the Members, Directors, Officers, Committee members, employees or volunteers of the Society as set out in the Articles, By-laws or the Act, and as an alternative to such person instituting a law suit or legal action, such dispute or controversy shall be settled by a process of dispute resolution as follows:

12.01 If a dispute or controversy among members, directors, officers or committee members of the Corporation arising out of or related to the articles or by-laws, or out of any aspect of the activities or affairs of the Corporation is not resolved in private meetings between the parties, then such dispute or controversy shall be settled by a process of dispute resolution as follows to the exclusion of such persons instituting a lawsuit or legal action:

(a) the dispute shall be settled by arbitration before a single arbitrator, in accordance with the Arbitration Act, 1991 (Ontario) or as otherwise agreed upon by the parties to the dispute. All proceedings relating to arbitration shall be kept confidential, and there shall be no disclosure of any kind. The decision of the arbitrator shall be final and binding and shall not be subject to appeal on a question of fact, law or mixed fact and law; and

(b) all costs of the arbitrator shall be borne by such parties as may be determined by the arbitrator.

[48] The arbitration provisions of the 2013 By-Law extend to all disputes or controversies among members, directors, officers, committee members, or volunteers of the CHS arising out of or related to the articles or by-laws, or out of any aspect of the operations of the CHS. The arbitration provisions of the 2016 By-Law are substantially similar.

[49] The actions of the Board that ground the claims of oppressive activity asserted by the Individual Applicants have been set out above. In particular, the Individual Applicants allege that notice of the 2016 AGM, and of the special resolution to be voted thereon, was not properly given by the CHS to the members. On this basis, they say that neither the 2016 By-Law nor the 2017 By-Law was validly enacted and, accordingly, they remain lifetime members of the CHS. Further, Silver says that, even if the 2016 By-Law was validly enacted, his application, and those of the other lifetime members who applied for an annual membership, were improperly rejected by the Board for a reason that is not permitted under the 2016 By-Law. The Individual Applicants submit that the criteria for membership set out in the 2016 Membership Policy are either not authorized by the 2016 By-Law or, to the extent they were authorized, were not reasonably applied by the Board.

[50] In my view, the arbitration provisions of the By-Laws apply for two reasons.

[51] First, the claims of the Individual Applicants, as described above, proceed on the basis that they are still members of the CHS whose membership is governed by the By-Laws. They seek rectification of the list of members to reflect their continued membership. The Board actions upon which the Individual Applicants base their claims involve disputes between members and the directors related to the Act, the articles, and the By-Laws of the CHS or, at a minimum, are arguably so described such that the competence-competence principle should apply.

[52] Second, and more generally, the Individual Applicants say that all of the actions of the Board upon which they rely in asserting the oppression claims in this application were designed by the Board to exclude the former lifetime and annual members from CHS membership with a view to eliminating any role of such members in the determination of the policies and services of the CHS. The oppression claims are therefore fundamentally issues between individuals who allege that they remain members of the CHS and the Board regarding the manner in which the CHS carries on its business of identifying and providing products and services to the Deaf and Hard of Hearing community. This falls squarely within the words of both the 2013 By-Law – “arising out of … the operations of the Society” – and the 2016 By-Law – “arising out of the activities or affairs of the Society”.

[53] The Individual Applicants make five submissions in support of their position that the arbitration provisions of the By-Laws should not apply, which are rejected for the following reasons.

[54] First, the Individual Applicants say that the CHS position is that they are not members and, therefore, the Individual Applicants argue that the By-Laws are inapplicable. They say the By-Laws only pertain to disputes between the CHS and members, not “disenfranchised members”. In this regard, the Individual Applicants refer to the decision in Brown v. Quinn, 2007 NBQB 259, 323 N.B.R. (2d) 202, at paras. 19-20 and 25-26, which they suggest mandates that arbitration agreements in corporate by-laws should be read narrowly to exclude the ouster of the authority of the courts.

[55] I do not think that Brown v. Quinn is of relevance for the present proceedings. The corporation in that case was established to enable self-regulation of real estate agents in the province of New Brunswick. The issue for the court was whether the objects of the corporation were broad enough to encompass a power to enact a by-law requiring such arbitration. It was therefore an issue of ultra vires. In the present case, because the CHS is governed by the Act, the applicants do not assert a lack of corporate authority, except in a more limited context addressed below. Moreover, the self-regulatory role of the corporation in Brown v. Quinn raised policy considerations relevant for the interpretation of the scope of the corporate objects that are not present in this proceeding. In short, I do not think that Brown v. Quinn is authority for a general proposition that the by-laws of a not-for-profit corporation should be read narrowly to exclude the operation of arbitration clauses of the nature of the provisions at issue in this case.

[56] Second, the Individual Applicants argue that the phrase in section 134 of the 2013 By-law “without … derogating from the rights of the Members, Directors, Officers, Committee members, employees or volunteers of the Society as set out in the Articles, By-laws or the Act” is intended to preserve a member’s right to proceed by way of an action in the Superior Court as an alternative to arbitration under section 134. I do not agree.

[57] When section 134 is read as an entirety, I think it is clear that this phrase is intended to confirm that a member’s rights are not to be limited or restricted in any way by the obligation to arbitrate any disputes contemplated by section 134 in accordance with its terms, rather than to make arbitration optional at the discretion of the member. The intention is made manifest by the language “such dispute or controversy shall be settled by a process of dispute resolution as follows” (emphasis added). It is also reflected in the phrase “as an alternative to such person instituting a law suit or legal action”. The phrase would be redundant, given the language relied upon by the Individual Applicants, unless it meant “to the exclusion of a legal action in the Superior Court” (although I acknowledge that this intention is awkwardly expressed).

[58] Third, the Individual Applicants say that Parliament has provided for a statutory oppression remedy and must, therefore, have intended that any oppression claims would be adjudicated by a court rather than arbitrated. The CHS submits that there is no legal prohibition against a consensual agreement to require arbitration of oppression claims.

[59] I do not accept this submission of the Individual Applicants for the reason that there is no necessary connection between the existence of a statutory remedy and the proper tribunal for the resolution of any claims asserted in respect of that remedy. In particular, the law is now well established that parties can agree to adjudicate oppression claims by way of arbitration: see, for example, Blind Spot Holdings Ltd. v. Decast Holdings Inc., 2014 ONSC 1760, 25 B.L.R. (5th) 122.

[60] In this case, the 2013 By-Law was approved by the members of the CHS by a special resolution at a general meeting of members. In doing so, the members agreed to the arbitration provision therein. Any subsequent member agreed to such provisions on becoming a member of the CHS. The 2016 By-Law, to the extent relevant for the issues herein, was similarly approved by the members of the CHS, subject to a determination of the alleged invalidity of the 2016 By-Law raised in the application.

[61] Fourth, the Individual Applicants argue that special circumstances exist as in Deluce Holdings Inc. v. Air Canada (1992), 12 O.R. (3d) 131, 98 D.L.R. (4th) 509 (O.C.J. (Gen. Div.)), such that the arbitration provision should not be enforced. I do not agree.

[62] In that decision, the dispute between the parties pertained to the validity of a majority shareholder’s exercise of an option in its favour to acquire the shares of the minority shareholder. This issue turned on whether the termination of the employment of the shareholder violated his reasonable expectations as a shareholder, given the express language of a shareholders agreement between the parties. However, the only provision for arbitration in the shareholders agreement addressed any dispute regarding the fair market value of the parties’ shares. There was no general “resort to arbitration” clause in the event of any dispute arising in connection with the agreement. The motion judge concluded that the subject matter of the dispute, being the minority shareholder’s oppression claims, was not a matter that the parties had agreed to submit to arbitration, in large part based on the language of the arbitration provision. It therefore lay beyond the scope of s. 7 of the Arbitration Act and brought into play the customary principles respecting a stay of arbitration proceedings.

[63] In the present case, however, for the reason set out above, I do not think that the subject-matter of the dispute is one that falls outside the arbitration provisions of the By-Laws as in Deluce Holdings, rather than one which the parties have agreed to submit to arbitration.

[64] Fifth, the Individual Applicants suggest that, even if it is arguable that the subject-matter of the claims of the Individual Applicants is arbitrable so that the competence-competence principle in Dell Computer Corp. v. Union des consommateurs, 2007 SCC 34, [2007] 2 S.C.R. 801 and Haas v. Gunasekaram, 2016 ONCA 744, 62 B.L.R. (5th) 1 would otherwise apply, the Court should not enforce the arbitration clause because the arbitration clause is invalid. They say that the effect of the arbitration clauses is to deprive the court of its inherent jurisdiction to direct and control the administration of charities. The Individual Applicants argue that there is no power in the Act that specifically permits a corporation governed by it to enact an arbitration provision and, further, that such a provision is “inconsistent with the structure and intent of the legislation, which is plainly intended to facilitate good governance and transparency, when necessary with the Court’s intervention.”

[65] The Individual Applicants overstate the role of the courts in respect of charities. Courts have an equitable or inherent jurisdiction to intervene if charitable funds are misapplied by trustees of a fund or by directors of a corporation. However, I do not think that such jurisdiction extends to matters of corporate governance such as membership in a corporation. Such matters are governed by the Act, including remedies provided thereunder, and the well-established principles of corporate law. There is no need, and no room, for an additional and overriding inherent jurisdiction of the courts to address disputes regarding corporate governance of a not-for-profit corporation.

[66] It has been suggested that Rivard J. found otherwise in Trow v. Toronto Humane Society, 16 B.L.R. (3d) 298, [2001] O.T.C. 692 (S.C.), at para. 21. It is not clear from the wording in that decision whether the application judge intended to address matters of corporate governance. In that decision, Rivard J. refused to appoint a trustee of the corporation to replace the board of directors so the court’s authority based on its inherent jurisdiction did not actually arise. Moreover, the relevant passage in Trow contemplates the exercise of the court’s jurisdiction in cases “where charitable trusts are not being properly administered, where funds are being mismanaged or where the trustees of the funds are breaching their fiduciary obligations.” Even if the reference to trusts is extended to corporations and the reference to trustees is extended to directors, the passage does not suggest that a court has inherent jurisdiction except in circumstances in which the directors have failed to discharge their obligations to the corporation. In any event, to the extent that the language in that decision could be interpreted to provide jurisdiction in circumstances involving corporate governance issues between a board of directors and the members of a not-for-profit corporation, I do not think it is consistent with the law. In any event, that decision was decided under the Corporations Act, R.S.O. 1990, c. C.38, which was a very different statute from the Act. Among other things, the Corporations Act did not include an oppression remedy to address corporation governance issues. I therefore do not think that the principle in Trow is applicable to corporations governed by the Act.

[67] Lastly, there is no merit to the submission of the Individual Applicants that the CHS delayed its reliance on the arbitration provisions. The CHS had no obligation to assert the operation of the arbitration provisions in the By-Laws until the Individual Applicants asserted their claims in this proceeding.

[68] Based on the foregoing, I conclude that the provisions of the By-Laws require that the oppression claims asserted by the Individual Applicants be arbitrated. Accordingly, the CHS is entitled to an order staying the application of the Individual Applicants pending arbitration of their claims in this application pursuant to the provisions of the 2013 By-Law and the 2016 By-Law, as applicable.

Costs

[69] The CHS was successful in respect of its motions in respect of both the Campaign and the Individual Applicants. It seeks costs on a partial indemnity basis of $114,000 plus HST, of which $104,000 represents legal fees.

[70] It is agreed that some portion of the legal work of the CHS’ counsel in respect of these motions will be relevant for the arbitration of the claims of the Individual Applicants, although the parties disagree on the applicable proportion. In my view, no more than 50% will be relevant, being $52,000 in legal fees.

[71] Accordingly, it is necessary to address the remaining $52,000 in legal fees and $10,000 in disbursements. There are three issues relative to these fees.

[72] First, the Campaign and the Individual Applicants challenge the quantum. However, the Campaign raised a considerable number of issues in respect of its claim of standing. The CHS was entitled to respond. It did so in a manner that attempted to limit its legal fees. I do not think that the quantum is unreasonable.

[73] Second, the remaining legal fees and disbursements should be allocated between the CHS motion seeking a dismissal of the application of the Campaign for lack of standing and the CHS motion seeking a stay of the application of the Individual Applicants. Based on the relative proportions of the application and motion materials dedicated to these separate matters, as well as the amount of time spent on their respective issues at the hearing, I think the fees should be allocated 2/3 to the motion respecting the Campaign and 1/3 to the motion respecting the Individual Applicants, being $46,700 to the Campaign motion and $23,500 to the Individual Applicants’ motion, in each case being calculated inclusive of disbursements and HST.

[74] Third, the amounts allocated to the Individual Applicants should be split between them equally but borne jointly and severally by the Campaign, given the Campaign’s predominant role in bringing this application.

[75] Lastly, the Campaign says that it should not bear any costs because it represents a marginalized group and the issues are novel. I do not accept this argument. I have considerable sympathy for the Deaf and Hard of Hearing community and the challenges that members of that community face on a daily basis. However, based on the record before the Court, the Campaign and the community it purports to represent are not co-extensive and the Campaign’s representative authority is questionable. Moreover, the issue of its status is only novel in the sense that every claim of standing under paragraph 250(e) presents novel circumstances. There is no reason why charitable funds should be diverted to pay for the judicial resolution of an unmeritorious claim of standing.

[76] Accordingly, the Campaign shall pay costs of $46,700 to the CHS forthwith. Further, the costs payable by each of the Individual Applicants should be split such that each Individual Applicant shall pay costs of $11,675, which amount shall be payable by each Individual Applicant and the Campaign jointly and severally.

Wilton-Siegel J. Date: September 17, 2018