Court of Appeal for Ontario
Date: 2017-07-05
Docket: C63099
Panel: Hoy A.C.J.O., van Rensburg and Trotter JJ.A.
Parties
Between
Polish Alliance of Association of Toronto Limited, Marian Celej, Helen Celej, Albert Joseph Flis, Emily Flis, Helena Grabowska, Krystyna Kowalska, Wladyslawa Kucharska, Adam Miasik, Andrzej Miasik, Piotr Miasik, Marek Miasik, Maria Miasik, Renata Miasik, Eugeniusz Neuff, Ksawery Neuff, Juno Piltz, Janina Pomorska, Lucjan Pomorski, Virginia Ross, Teresa Skibicki, Constance Zboch, Cecylia Zwara, Jan Argyris, Czeslawa Eriksen, Jadwiga (Vicky) Dunwoody, Halina Rabczak, Wladyslaw Rabczak, and Maria Dreher, by her Litigation Guardian, Ed Dreher
Applicants (Respondents)
and
The Polish Alliance of Canada
Respondent (Appellant)
Counsel
Bogdan A. Kaminski, for the appellant
Bernie Romano and Jordan Nussbaum, for the respondents
Hearing and Appeal
Heard: June 21, 2017
On appeal from the judgment of Justice F.L. Myers of the Superior Court of Justice, dated November 21, 2016, with reasons reported at 2016 ONSC 7230.
Reasons for Decision
Introduction
[1] The respondents are 28 members of Branch 1-7 of the appellant, The Polish Alliance of Canada ("PAC"). The application judge, Myers J., granted judgment in the respondents' favour, permitting them to depart from Branch 1-7 (and, as a consequence, from PAC) and continue as members of a separate and independent not-for-profit corporation, taking with them a property held in trust for the members from time to time of Branch 1-7. PAC appeals.
[2] For the following reasons, the appeal is dismissed.
Background
[3] The judgment under appeal is hopefully the final step in a long-standing dispute between PAC and Branch 1-7.
[4] PAC is an umbrella organization incorporated under the Corporations Act, R.S.O. 1990, c. C.38. The respondents are all the members of Branch 1-7, a local unincorporated branch of PAC. PAC and Branch 1-7 are voluntary associations that have as their objects to promote the general cultural, education and social welfare interests of their members.
[5] The dispute led to a lengthy trial before Myers J. In his trial reasons, Myers J. found that title to Branch 1-7's clubhouse on Lakeshore Boulevard in Toronto (the "Property"), estimated to be worth $50 million or more, was held in trust for the members from time to time of Branch 1-7. However, he also determined that the purported withdrawal of Branch 1-7 from PAC was invalid because the unanimous consent of Branch 1-7's members had not been obtained: The Polish Association of Canada v. Polish Association of Toronto Limited, 2014 ONSC 3216.
[6] The then-members of Branch 1-7 appealed Myers J.'s determination that their withdrawal was invalid, and PAC in turn cross-appealed. PAC's cross-appeal was dismissed and it was precluded from making any response to the appeal because of its failure to file materials within the required deadlines.
[7] This court found that there was no basis to interfere with Myers J.'s determination that the purported withdrawal by Branch 1-7 from PAC was invalid. However, it noted that he did not determine that any future attempt would be invalid or ineffective: The Polish Alliance of Canada v. Polish Association of Toronto Limited, 2016 ONCA 445.
[8] Subsequently, the respondents brought an application before Myers J. for judgment declaring that they were entitled to leave PAC and take the Property with them.
[9] Myers J. found that, this time, 100% of the members of Branch 1-7 had voted to leave PAC. He held that the "clubman's veto" applied. Citing Wawrzyniak v. Jagiellicz, 64 O.R. (2d) 81, he explained this common law rule provides that with the approval of 100% of the members of an unincorporated association, the members can leave the association and take the property of the association with them.
[10] While Myers J. found the clubman's veto took the members of Branch 1-7 "where they want to be", he commented that had the matter been presented under the Variation of Trusts Act, R.S.O. 1990, c. V.1, he would have had no hesitation approving a variation of trust to transfer the Property to a not-for-profit corporation.
[11] He granted the requested judgment.
PAC's Arguments on Appeal
[12] PAC argues that:
Myers J. erred in concluding that the clubman's veto applied;
in any event, there were more members of Branch 1-7 than Myers J. determined, with the result that he erred in concluding that 100% of the members voted to leave;
Myers J. erred in concluding that the Property was held in trust for the members of Branch 1-7 from time to time; and
neither party had argued the application of the Variation of Trusts Act and Myers J. therefore erred by suggesting it as an alternative basis for the relief he granted.
Analysis
[13] We reject PAC's arguments.
(1) Myers J. did not err in concluding that the clubman's veto applied
[14] PAC does not take issue with Myers J.'s articulation of the common law rule sometimes called "the clubman's veto"[1]. Rather, it renews its argument before Myers J., relying on Ahenakew v. MacKay, 71 O.R. (3d) 130, that the clubman's veto does not apply in these circumstances because PAC is incorporated under the Corporations Act, and it has supplanted the clubman's veto.
[15] Nor does PAC dispute Myers J.'s finding that PAC's constitution does not deal with how a branch can leave PAC. However, it says PAC's by-laws must be amended with the approval of a 2/3 majority of PAC's members to create a process for disaffiliation of the members of Branch 1-7 and Branch 1-7 must then comply with any such process to leave PAC, with the Property.
[16] We reject this argument. In our view, Myers J. correctly determined that the clubman's veto applied. The respondents – the then members of Branch 1-7, an unincorporated association – sought to leave that association and take with them the Property held in trust for the members from time to time of Branch 1-7. This case is very different from Ahenakew.
[17] In Ahenakew, this court concluded the unanimous consent of all members of the Progressive Conservative Party of Canada (the "PC Party") was not required for the PC Party to merge with the Canadian Reform Conservative Alliance Party.
[18] Goudge J.A., writing for the court, reviewed this court's earlier decision in Astgen v. Smith, [1970] 1 O.R. 129. He explained that the majority in Astgen held that the common law recognized the voluntary association not as a legal entity, but as nothing more than a complex of contracts between each member and every other member. The majority held that something such as a merger with another voluntary association so fundamentally affects the contractual rights of each member that each member must consent to a termination of his or her existing set of contractual relations directly or through a procedure to which all members had agreed.
[19] In Ahenakew, this court held that the common law requirement of unanimous consent did not apply to the proposed merger involving the PC Party. The legal fiction that a voluntary association is simply a complex of contracts between all its members was inapplicable because the Canada Elections Act clothed the PC Party with legal status as a registered political party. And since this legal fiction was inapplicable, so too was the corollary requirement that unanimous consent of its members be obtained to a merger. Further, Parliament displaced the common law rule by including detailed provisions in the Canada Elections Act about what is necessary for the merger of two registered political parties.
[20] While PAC is incorporated under the Corporations Act, Branch 1-7 of PAC is an unincorporated voluntary association. Unlike in Ahenakew, there is no legislation that gives Branch 1-7 of PAC a legal status that would displace the legal construct identified in Astgen. And, unlike in Ahenakew, there is no statute that governs how the contractual relationship of all the members of Branch 1-7 with each other is to be terminated.
[21] As Myers J. summarized, at para. 23:
While the clubman's veto, like any common law principle, can be displaced by a clear statute as was found to be the case of political parties in Ahenakew, there is nothing in the Corporations Act or any regulatory scheme that regulate this situation…Nothing in the Corporations Act deals with the problem of how trust beneficiaries whose interests are defined with reference to their membership in an unincorporated branch of an incorporated entity can leave with their property.
(2) There is no basis to interfere with Myers J.'s finding that 100% of the members of Branch 1-7 had voted to leave
[22] In calculating the number of members of Branch 1-7, Myers J. relied on the order dated September 3, 2014, as amended by order dated September 17, 2014, determining that at that time there were 20 members. It is not now open to PAC to seek to go behind the prior court orders and argue that there were more than 20 members at that time, and therefore more than the total number of members Myers J. determined. Further, this argument is inconsistent with its position before Myers J. that there were no members of Branch 1-7 remaining.
(3) PAC cannot now re-visit the question of the ownership of the Property
[23] PAC's cross-appeal of the trial judgment that determined that the Property was held in trust for the members of Branch 1-7 from time to time was dismissed. As Myers J. held, it is not open to PAC to now revisit questions of title to the Property.
(4) Myers J.'s reference to the Variation of Trusts Act does not amount to reviewable error
[24] Myers J. relied on the clubman's veto in granting the relief that he did, and not the Variation of Trusts Act. His comment that the Variation of Trusts Act would have been a basis for granting the requested relief had it been argued does not amount to reviewable error.
Disposition
[25] Accordingly, the appeal is dismissed. The respondents shall be entitled to costs of the appeal fixed in the agreed upon amount of $25,000, inclusive of disbursements and HST.
"Alexandra Hoy A.C.J.O."
"K. van Rensburg J.A."
"G.T. Trotter J.A."
[1] As Myers J. used this term, we employ it in these reasons.