DATE: 20021210

DOCKET: C36196

COURT OF APPEAL FOR ONTARIO

CARTHY, LASKIN and BORINS JJ.A.

B E T W E E N:

THE MONTREAL AND CANADIAN DIOCESE OF THE RUSSIAN ORTHODOX CHURCH OUTSIDE OF RUSSIA INCORPORATED

Eric R. Williams, for the plaintiff (respondent) The Montreal and Canadian Diocese of the Russian Orthodox Church Outside of Russia Incorporated

Plaintiff (Respondent)

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PROTECTION OF THE HOLY VIRGIN RUSSIAN ORTHODOX CHURCH (OUTSIDE OF RUSSIA) IN OTTAWA INCORPORATED and ST. VLADIMIR’S RUSSIAN RESIDENCE OF OTTAWA INC.

Anne M. Mullins, for the defendant (respondent) St. Vladimir’s Russian Residence of Ottawa Inc.

Defendants (Respondents)

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DIMITRI SEVER, THE BOARD OF DIRECTORS OF THE PROTECTION OF THE HOLY VIRGIN RUSSIAN ORTHODOX CHURCH (OUTSIDE OF RUSSIA) IN OTTAWA INCORPORATED (ANTOLE JOZWIAK, ALEXANDRE FROLOV, ARKADIUSZ RYDEL, TATIANA PYZHOV, ANNA FROLOV, LYUBOV VOSKRESENSKY, IOURI IOGANOV, ALEXANDER RADTSIG, ANATOLY ILJIN, MARIA JOZWIAK, YURI KRASNOV and VLADIMIR LITVIEN), and MARK PETROVTSI

James M. Wortzman and Jonathan Kulathungam, for the interveners (appellants)

Interveners (Appellants)

Heard: August 14, 2002

On appeal from the judgment of Justice Antoine deLotbinière Panet of the Superior Court of Justice dated February 5, 2001.

BY THE COURT:

[1] The background to this lengthy litigation is set out in the reasons of the trial judge and the decision of Carthy J.A. pending appeal.

[2] The appellants, the interveners, have now joined the Moscow Patriarchate. Thus, the dispute between the parties has narrowed to a contest over the assets of The Holy Virgin Church. In this court, the dispute centred on two principal issues: first, whether the amendments sought by the appellants in September 1999 were governed by the approval requirements in article 54 of the Normal Parish By-laws; and second, whether the trial judge improperly exercised his discretion in ordering a meeting under s. 106 of the Canada Corporations Act, R.S.C. 1970, c. C-32 (the “Act”).

[3] The first issue can be approached in one of two ways. The first way – the approach taken by the trial judge – is to view the Board of Directors under the Supplementary By-laws and the Church Parish Council under the Normal Parish By-laws as equivalent, and to treat the Normal Parish By-laws and the Supplementary By-laws together as the corporation’s by-laws.

[4] Even accepting this approach, the appellants argue either that article 54 of the Normal Parish By-laws contravenes the Act or that article 54 has been superseded by article 12 of the Supplementary By-laws. The trial judge rejected this argument, and we do as well.

[5] The Act provides minimum requirements for amending a corporation’s by‑laws. Nothing in the statute precludes the corporation from imposing additional approval requirements, including the one in question here: that any amendment of a by‑law requires the approval of the Diocesan Bishop. Moreover, the trial judge’s conclusion that article 54 of the Normal Parish By-laws and article 12 of the Supplementary By-laws should be read together, instead of reading the latter as superseding the former, is reasonable. Had the Ministry intended otherwise when it insisted on supplementary by‑laws, it presumably could have said so. By its silence, the court is entitled to assume that the Ministry approved both sets of by-laws as a package, and that it did not consider one in conflict with the other.

[6] The second way to approach the issue is to treat the Church Parish Council and the Board of Directors as separate entities. Under this approach, the Church Parish Council is responsible for questions of Church doctrine and other ecclesiastical questions. Any proposed amendments that deal with these questions will be governed by the approval requirements in article 54 of the Normal Parish By-laws. Corporate law questions, not involving Church doctrine, would be dealt with by the Board of Directors under the Supplementary By-laws.

[7] Taking this approach, the by-law amendments proposed by the appellants deal directly with questions of Church doctrine. These amendments would be subject to article 54. But, because the parties’ dispute over the validity of the proposed amendments and, indeed, over the approval requirements in article 54, is at heart a religious dispute, under the “neutral principles approach” affirmed by the Supreme Court of Canada, the court has no role to play.

[8] Accordingly, under either approach, the appellants’ submission on this first issue must fail.

[9] On the second issue, the trial judge exercised his discretion under s. 106 of the Act by ordering a meeting. The question on appeal is whether he exercised his discretion improperly. In our view, he did.

[10] Section 106 of the Act gives the court the power to order a meeting where “for any reason it is impracticable to call a meeting of shareholders.” The courts have interpreted “impracticable” narrowly, ordering shareholder meetings only in exceptional circumstances. A narrow interpretation reflects the courts’ policy of not interfering in internal corporate affairs. See, for example, Re Morris Funeral Service (1957), 1957 399 (ON CA), 7 D.L.R. (2d) 642 (Ont. C.A.); Airline Industry Revitalization Co. v. Air Canada (1999), 1999 15075 (ON SC), 45 O.R. (3d) 370 (Sup. Ct. Just.).

[11] Here, the trial judge held, “it is impracticable to call a meeting of members in the manner prescribed in the Church By-laws as the authority of the Parish Council to call such a meeting and the status of members who could attend would in all likelihood be in issue.” The dispute between the parties, however, is not over the authority of the Parish Council or over who is a parish member. The dispute is about whether to join the Moscow Patriarchate and about whether Bishop Michael would have to approve the move.

[12] This dispute does not make it impracticable to call a meeting. The Normal Parish By-laws setting out the procedures for calling and holding a meeting have not been challenged. We see no confusion in the By-laws about the appropriate meeting procedures. Instead, what we see, as in the Morris case, is a power struggle between two opposing factions. And, as Aylesworth J.A. observed in Morris at 647:

In my opinion, except in extraordinary circumstances – none of which are present here – the section may not be invoked successfully for the express and sole purpose of placing in control of the company’s directorate and affairs one or two or more contending factions among the shareholders.

We are not persuaded that extraordinary circumstances exist here. We therefore conclude that the trial judge exercised his discretion improperly in ordering a meeting.

[13] Accordingly, the appeal is allowed in part, and paras. 4 and 5 of the judgment of Panet J. are set aside. Because success on the appeal was divided, we make no order for costs.

Released: Dec. 10, 2002

J.J.C Signed: “J.J. Carthy J.A.”

“John I. Laskin J.A.”

“S. Borins J.A.”