Court of Appeal for Ontario

Date: 2017-04-04 Docket: C62581

Justices: Juriansz, Lauwers and Hourigan JJ.A.

Between

Mizrachi Organization of Canada, Kurt Rothschild in his capacity as Trustee for Torah V'Avodah Congregation, Jack Kahn in his capacity as Trustee for Torah V'Avodah Congregation and Joseph Rosenfield in his capacity as Trustee for Torah V'Avodah Congregation

Applicants (Respondents)

and

Harry Bernstein, Yisroel Zlotnick, James Beliak, George Vitriol, David Yunger, Binyamin Zlotnick and Torah V'Avodah Congregation

Respondents (Appellants)

Counsel

Colby Linthwaite, for the appellants

Gregory M. Sidlofsky, for the respondents

Heard

March 28, 2017

On Appeal

On appeal from the judgment of Justice Michael A. Penny of the Superior Court of Justice, dated July 25, 2016.

Endorsement

[1] The appellants appeal from the order of the motion judge dated July 25, 2016. The dispute before the motion judge related to control of the premises of a religious organization. The dispute is intense and extensive. The only matter on which the parties agree is that the appellant, Torah V'Avodah Congregation (hereinafter "TVA"), is a religious organization under the Religious Organizations' Lands Act, R.S.O. 1990, c. R.23. Legal title to the premises – the subject of the dispute – is held by the trustees of TVA.

[2] The dispute is so fundamental that the parties do not agree about who are members of TVA or how membership should be determined. In fact, both sides hesitate to recognize individuals associated with the other as members of TVA. They also dispute who the trustees of TVA are or should be, who the beneficial owner of the property is, whether the respondent – Mizrachi Organization of Canada ("Mizrachi") – has a claim to the premises by way of resulting or constructive trust, and whether the original trustees were acting as trustees of TVA or Mizrachi when they resolved to sell the premises. This list is not exhaustive.

[3] Wisely, the motion judge ordered that the bulk of the application proceed to trial with a direction that the parties attempt settlement after full document production and discovery, and consider resolving the issues at a hybrid application/trial of issues.

[4] The motion judge, however, did determine one matter. He declared a meeting of TVA held November 16, 2013 to be invalid and set aside the results of the meeting. Two resolutions had purportedly been passed at the meeting. The first purported to remove the individual respondents as trustees of TVA and to replace them with a new slate of trustees. The second resolution purported to close the membership of TVA. The motion judge set aside these resolutions and declared the original trustees were the trustees of TVA.

[5] The motion judge held proper notice of the meeting was not given. While he was satisfied that the notice given of the meeting complied with the provisions of s. 18(2) of the Religious Organization Lands Act, he went on to find:

[T]o be valid notice, the notice must be 'effective.' In other words, formal compliance with the provisions of subs. 18(2) of the Religious Organizations' Lands Act, R.S.O. 1990, c. R.23 is not sufficient where there is evidence that the "notice" did not reach parties with an interest.

[6] The motion judge also took into consideration that the appellants chose a method of giving notice which they knew would have little chance of reaching the respondents. The correctness of the motion judge's conclusion that notice as stipulated by the statute was inadequate is open to considerable debate, but it is a debate we need not resolve to decide the appeal. The question is better decided on a full record.

[7] In our view, the motion judge erred by not ordering the entire application proceed to trial. He ought not to have finally determined that the November 16, 2016 meeting and the resolutions passed thereat were invalid before the more fundamental questions were determined. The question of membership is more fundamental and has the potential to affect most of the other questions. For example, if the individuals who are named as original trustees are not members of TVA they would not have the capacity to be trustees.

[8] We gather the motion judge intended to put into place an interim arrangement pending trial. He said:

It is clear that there is a bona fide dispute over ownership and control of TVA and the Wilson property. In the circumstances, it is appropriate that the status quo be preserved, to the extent consistent with public safety and asset value preservation, pending the outcome of this litigation. The applicant trustees are fiduciaries. They shall continue to administer TVA and the Wilson property in the ordinary course of business, consistent with their fiduciary obligations. However, no transactions may be taken outside the ordinary course of business (such as a sale or mortgage of the property) without prior notice to all parties and the appropriate sanction of the court.

[9] This inclusion of "control of TVA" as one of the matters to be decided at trial seems incongruous with a declaration that the original trustees are validly in office. Likewise, the unequivocal determination that their removal from office was improper rests uncomfortably with his order that the reinstated trustees cannot transact any business outside the ordinary course without prior notice to all parties and the appropriate sanction of the court.

[10] We allow the appeal on the basis that the motion judge erred by not ordering the entire application proceed to trial. We set aside paragraphs 1, 2, 3, and 4 of the motion judge's order, and add to the issues listed in paragraph 8 the questions: whether proper notice of the November 16, 2016 meeting was given and whether the resolutions passed at the meeting are valid. We are satisfied the motion judge intended to preserve the status quo with the original trustees in office pending trial. Therefore, we would not disturb paragraphs 5 or 7 of his order.

[11] The parties may make written submissions (not more than five pages) regarding the costs of the appeal to be filed by April 17, 2017.

R.G. Juriansz J.A.

P. Lauwers J.A.

C.W. Hourigan J.A.