Court of Appeal for Ontario
Citation: Pandher v. Ontario Khalsa Darbar, 2010 ONCA 273
Date: 2010-04-14
Docket: C51425
Between:
Ranjodh Singh Pandher, Nardiner Singh Dhillon, Nachhattar Singh Chohan, Gurdev Singh Nahal, Manohar Singh and Swaran Singh Kairon Applicants (Respondents)
and
Ontario Khalsa Darbar, Jasit Singh Bhullar, Harbans Singh, Kashmir Singh, Sukhdev Singh Bains, Avtar Singh Punia, and Kuldeep Singh Lachhar Respondents (Appellants)
Before: Gillese, Lang and Watt JJ.A.
Counsel: Neil M. Abramson and Rebecca Fisch, for the appellants John S. Kelly and Mark Wiffen, for the respondents
Heard: April 9, 2010
On appeal from the order of Justice Thomas M. Dunn of the Superior Court of Justice, dated June 29, 2009.
Endorsement
[1] We see no basis on which to interfere with the application judge’s exercise of discretion to award costs to the respondents (the minority directors) or to fix them as he did at $213,380.64, including $93,308.64 of disbursements.
[2] The application judge expressly considered issues relevant to the disposition of costs, including the relative success of the parties. We see no error in his conclusion that the minority directors were “largely successful”, particularly regarding the contested issue of the membership list.
[3] We also see no error in the application judge’s reference in his reasons to the exclusion of the minority directors “from the Board of Directors”. Although this language is imprecise, it must be taken as a reference to the pre-trial refusal of the appellants (the majority directors) to give the minority directors access to materials such as the Board minutes and the membership list.
[4] Further, it was unnecessary for the application judge to refer to the appellants’ “offer to settle” contained in correspondence. As the appellants acknowledge, this letter did not constitute a Rule 49 offer. Moreover, the minority directors obtained a result that was significantly more favourable than that proposed by the appellants.
[5] Accordingly, we see no basis on which to interfere with the application judge’s exercise of discretion to award costs to the respondents. Nor do we see any basis on which to interfere with the quantum of costs. Indeed, the appellants did not take issue with the quantum.
[6] In our view, however, the application judge erred in ordering costs against the majority directors personally rather than against Ontario Khalsa Darbar.
[7] Such an award is not to be made without a finding of mala fides. See Bennett v. Bennett Environmental Inc., 2009 ONCA 198, [2009] O.J. No. 853 (C.A.) at paras. 28-30.
[8] Considering both the application judge’s reasons on the disposition of costs, and his reasons on the application, as well as the entire record of the proceedings, there is no basis to support a finding of mala fides. The most the application judge found was that “valid criticism” could be made of certain conduct that he did not ascribe to the personal actions of the majority directors.
[9] To the contrary of a finding of mala fides, the application judge specifically found, in the first paragraph of his oral reasons on the application, that he could not “conclude that either side is being obstructionist” or acting otherwise than in what they believed to be “the best interest of the Ontario Khalsa Darbar.”
[10] In addition, the Ontario Khalsa Darbar Constitution specifically provides that every director is entitled to indemnification for costs incurred in a proceeding brought against him for any act done “in or about the execution of the duties of his office.” This indemnification provision is consistent with the public policy considerations that inform the law on director’s liability.
[11] As this court noted recently in Bennett at para. 23, the primary purpose of indemnification is to provide assurance to those who become directors that they will be compensated for adverse consequences that ensue from well-intentioned acts taken on behalf of the corporation. This policy applies with force to not-for-profit organizations.
[12] The respondents seek to raise a new argument as a basis on which the costs award against the individual directors could be upheld, namely, the inherent jurisdiction of the court to supervise charities. This argument was not made below and ought not to be made for the first time on appeal. Moreover, this court questions whether the court’s inherent jurisdiction to supervise charities gives it the power to bar directors from indemnification for their acts.
[13] Accordingly, the appeal is allowed and para. 2 of the costs order of Dunn J. dated June 29, 2009 is varied to read as follows:
- THIS COURT ORDERS that Ontario Khalsa Darbar is responsible to pay the costs.
[14] Given the matters under consideration in this appeal and the findings of the application judge that the individual directors on both sides acted in what they believed to be the best interests of the Ontario Khalsa Darbar, we make no order as to costs of the appeal and the motion for leave to appeal.
“E.E. Gillese J.A.”
“S.E. Lang J.A.”
“David Watt J.A.”