COURT OF APPEAL FOR ONTARIO

CITATION: The Polish Alliance of Canada v. Polish Association of Toronto Limited, 2016 ONCA 445

DATE: 20160608

DOCKET: C59002

Laskin, Lauwers and Roberts JJ.A.

BETWEEN

The Polish Alliance of Canada

Respondent (Plaintiff)

and

Polish Association of Toronto Limited, Markek Miasik aka Marek Adam Miasik, Maria Miasik, Jan Argyris aka Louis John Elie Argyris aka Louis John Argyris aka John Argyris, Wladyslaw Jaslan aka Wladyslaw Julian Jaslan, Helena Jaslan, Eugeniusz Skibicki, Czeslawa Ericksen, Stanislawa Rogoz aka Stan Rogoz, Albert Joseph Flis and Richard Rusek

Appellants (Defendants)

Bernie Romano, for the appellants

Bogdan A. Kaminski, for the respondent

E. Patrick Shea, for the Receiver and Manager, Collins Barrow Toronto Limited

Heard: May 31, 2016

On appeal from the order of Justice Frederick L. Myers of the Superior Court of Justice, dated May 27, 2014, with reasons reported at 2014 ONSC 3216.

ENDORSEMENT

Overview

[1] The appellants appeal from the order of the trial judge following a trial of various issues, including those in the order of C. Campbell J. dated February 21, 2012, and others raised by the parties before the trial judge.

[2] By order of this court dated May 26, 2016, the respondent’s cross-appeal was dismissed and the respondent was precluded from making any response to this appeal by reason of its failure to file materials within the required deadlines. As a result, the appeal was heard on the merits on an uncontested basis, although counsel for the respondent was present.

[3] These proceedings arise out of the longstanding dispute between the respondent, The Polish Alliance of Canada (“PAC”), and the individual appellants, who are present and former members of Branch 1-7 of PAC. PAC and Branch 1-7 are voluntary associations that have as their objects to promote the general cultural, educational and social welfare interests of their members. PAC is incorporated while Branch 1-7 is not.

[4] Their dispute came to a head when the individual appellants purported to cause Branch 1-7 to withdraw from PAC, taking the branch assets with it. These assets consisted of the shares of the appellant, Polish Association of Toronto Limited (“PATL”), and valuable Toronto real estate held by PATL and others.

[5] The trial judge determined that the shares of PATL and real property were held in trust for the members of Branch 1-7 of PAC; that the purported withdrawal of Branch 1-7 from PAC with branch property was invalid; and that the individual appellants had resigned from and could not reapply to the membership of PAC or to any branch of PAC, including Branch 1-7.

Issues and Analysis

[6] On appeal, the appellants submitted that the trial judge made the following errors:

(i) He erred in finding that Branch 1-7’s withdrawal from PAC, along with the shares in PATL and the real property, was not valid and effective;

(ii) He erred in finding that PAC held legal title to the shares of PATL as stated in paragraph 3 of the May 17, 2014 order.

(iii) In any event, the trial judge erred in determining that the individual appellants had resigned from the membership of PAC and Branch 1-7 and were barred from reapplying for membership.

(i) Validity of Branch 1-7’s withdrawal from PAC

[7] We do not accept the appellants’ submissions on this issue.

[8] The validity of the purported withdrawal by Branch 1-7 from PAC was a live issue raised in the statement of claim and the statement of defence and counterclaim. The trial judge was required to determine this issue in order to resolve the question of the ownership of the shares of PATL and the real property that the trial judge found were held in trust for Branch 1-7.

[9] It was open to the trial judge on the evidence before him to find that insufficient notice had been given to the members of Branch 1-7 of the extraordinary meeting for the withdrawal vote and that, as less than one-third of the members of the branch attended the meeting, the required unanimous consent of the branch members had not been provided. We see no overriding or palpable error in these findings or any other basis that would permit us to interfere with them.

[10] We also observe that the trial judge’s determination was limited to the failure of the 2006 attempt to withdraw Branch 1-7 from PAC. He did not determine that any future attempt would be invalid or ineffective.

(ii) Legal title to PATL’s shares

[11] Counsel for the appellants agreed that if we did not accept the argument that Branch 1-7 validly withdrew from PAC, then paragraph 7 of the trial judge’s order was correct.

[12] We agree with counsel’s submission that paragraph 3 of the trial judge’s order should be deleted. It is inconsistent with paragraph 7 of the order in that it purports to say that it is only PAC and not also the other registered shareholders who hold the shares of PATL in trust for the members of Branch 1-7.

(iii) Status of the individual appellants’ membership in Branch 1-7 and PAC

[13] We agree that the trial judge erred in finding that the individual appellants had resigned from their PAC and branch membership and in ordering that they cannot reapply.

[14] While PAC sought a declaration in its statement of claim that the individual appellants were no longer members of PAC or any branch of PAC including Branch 1-7, PAC did not seek to bar them from reapplying for membership until closing arguments at the trial. As a result, this issue was not properly before the trial judge and should not have been determined in this summary fashion.

[15] The trial judge’s determination was also inconsistent with the evidence before him. The evidence was that some, but not all, of the individual appellants had given notice in August 2006 to PAC that Branch 1-7 was withdrawing from PAC. Moreover, it is clear that those appellants who gave notice were not tendering their individual resignations from PAC and Branch 1-7 but were writing on behalf of Branch 1-7.

[16] The trial judge found that Branch 1-7 did not cease to exist. Its status did not change following the ineffective withdrawal. Having found that the withdrawal by Branch 1-7 was invalid, it follows that the individual appellants remain members of that branch and PAC. Indeed, counsel for the receiver and manager appointed by the trial judge confirmed that but for the trial judge’s order, the individual appellants would have been included in the Branch 1-7 membership list that the receiver and manager was required to compile. In consequence, they are not required to reapply for membership but remain members in good standing of Branch 1-7 and PAC.

[17] Counsel for the appellants advised the court that PAC is not approving membership applications for Branch 1-7 members as they had done in the past. Rather, departing from past practice, PAC is rejecting almost all new applications. In particular, counsel advised that PAC has rejected all but 3 of 55 new applications.

[18] We are unable to determine without fresh evidence the extent to which this is the case. However, there is no reason for PAC to depart from past practice. As the trial judge noted in paragraph 8 of his June 20, 2014 order, “As to approval of new members in the ordinary course by the PAC as I have ordered, the ordinary course for this organization has not involved an inquisition”.[^1] PAC should process any membership applications in good faith and reasonably quickly.

Other submissions

[19] Counsel for the appellants submitted that paragraphs 4, 5, 6 and 12 should be deleted from the trial judge’s May 27, 2014 order, and that references to “32 Twenty-Fourth Street” in paragraph 8 should be removed, because they have been superseded by further orders and events subsequent to that order.

[20] That provisions of the May 27th order may have been carried out by subsequent orders and events does not invalidate them or provide a basis for this court to amend the order. If the appellants require any amendment to the order, they should return before the trial judge.

Disposition

[21] For these reasons, the appeal is allowed in part.

[22] The May 27, 2014 order shall be amended as follows:

(i) In paragraph 1, the words, “provided that the members did not know that their dues were not being paid to the PAC” shall be deleted from the order;

(ii) In paragraph 2, the words, “other than the defendants”, shall be deleted from the order; and

(iii) Paragraph 3 shall be deleted from the order.

[23] The appellants seek their partial indemnity costs of the appeal in the amount of $45,000. While the appellants achieved divided success on the appeal, they prevailed on the very important issue of their membership. The appeal record was voluminous and the appellants’ disbursements were over $9,000. Moreover, the case management of this appeal and the respondent’s cross-appeal involved a number of appearances. Accordingly, the appellants are entitled to partial indemnity costs of the appeal and cross-appeal in the amount of $40,000, inclusive of all amounts, payable forthwith by the respondent.

[24] Given their partial success on this appeal, the appellants also seek payment of some of their trial costs. They ask that this issue be remitted back to the trial judge for determination because the trial judge is in the best position to assess what costs, if any, should be ordered. The appellants are therefore at liberty to return before the trial judge to seek costs in accordance with the outcome as noted in these reasons.

[25] The receiver manager did not require an order for its costs from this court but will seek payment of its costs as part of the receivership costs before the trial judge. The appellants submit that the respondent should be required to pay the costs of the receiver manager on this appeal. We leave that issue for the trial judge’s determination as part of the receivership costs.

“John Laskin J.A.”

“P. Lauwers J.A.”

“L.B. Roberts J.A.”

[^1]: Reasons reported at 2014 ONSC 3821.