CITATION: Bose v. Bangiya Parishad Toronto, 2019 ONSC 5625
DIVISIONAL COURT FILE NO.: 19-525 DATE: 20190930
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
BETWEEN:
BASU DEB BOSE, DR. PRASANTA KUMAR SARKAR, RANENDRA N. GHOSH, SUNIL SENGUPTA, ASISH KUMAR GHOSH, SAILESH K. ROY, SWAPAN KUMAR GHOSH, RUPA DUTTA, and BASANTI ROY
Respondent
– and –
BANGIYA PARISHAD TORONTO (also known as BANGIYA PARISHAD)
Appellant
Wade Morris and Elizabeth DeYoe, for the respondents Bose et al.
Suvendu Goswami, for the appellant Bangiya Parishad Toronto
AND BETWEEN:
RATHIN GHOSE, SANJIB MUKHERJEE, SUBHRA SUR, APURBA MUKHERJEE, KOBI BANERJEE, ANIRBAN KARGUPTA, PRABASI BENGALI CULTURAL ASSOCIATION, and BANGIYA PARISHAD TORONTO
Respondents
-and-
JNAN CHOWDHURY, also known as Ananda Chowdhury also known as Ananda Jnan Chowdhury, ASHOKE NEOGI also known as Ashok Neogi, ARPITA MUKHERJEE, PARTHA BANERJEE also known as Bapi Banerjee also known as Partha Bapi Banerjee, MRINMOY BHAKTA. UJJAL CHOWDHURY, NIRMAL DE, RUBY MUKHERJEE and SANDIP GOSWAMI
Appellants
John Lo Faso, for the respondents Ghose et al.
Suvendu Goswami, for the appellants Chowdhury et al.
HEARD at Toronto: September 19, 2019
REASONS FOR DECISION
F.L. Myers J.
The Motion
[1] The appellants appealed to the Court of Appeal from the order of Belobaba J. dated August 26, 2019. On September 19, 2019 the appellants moved for a stay pending appeal in the Court of Appeal. Trotter JA determined that the appeal should have been brought in the Divisional Court rather than the Court of Appeal. In dismissing the motion for a stay for that reason, Trotter JA endorsed his recommendation that the motion be heard in this court on an urgent basis. He indicated that the counsel remained available to argue the motion that day. Therefore, I heard the motion during the afternoon of September 19, 2019.
[2] As the subject of the motion was a proposed election of a board of directors that was scheduled for Sunday, September 22, 2019, the parties urgently needed to know if a stay was granted to prevent the vote from proceeding that weekend.
[3] After hearing counsel on September 19, 2019, I endorsed the record as follows:
The election ordered by Belobaba J. is scheduled to be held this weekend. I cannot have reasons prepared in time. However, the parties need an answer to know if the election is to occur or not.
I am not convinced that it is just or convenient to grant a stay of Justice Belobaba’s order pending the appeal. Legal order needs to be re-established for the religious organization. Shareholder/member democracy requires an election to do so. I do not see much risk of harm if the members vote even if the appeal is later allowed. Motion dismissed.
[Costs and a separate consent order omitted.]
[4] These are my reasons for dismissing the motion.
Background
[5] Many of the background facts are recited in the decision of Perell J. in this matter dated December 20, 2018 that is reported at 2018 ONSC 7639. I will only summarize the facts necessary to this decision.
[6] Prabasi Bengal Cultural Association is a not-for-profit corporation under the Corporations Act, RSO 1990, c C.38. As its name suggests, it promotes and hosts cultural events for members of the Bengali community. I will refer to it as the “Cultural Organization”.
[7] Bangiya Parishad Toronto is a religious congregation. It too is a not-for-profit corporation under the Corporations Act. I will refer to it as the “Religious Congregation”.
[8] For several decades, the two organizations operated in tandem. They had a common board of directors and issued consolidated financial statements.
[9] The Cultural Organization is properly organized under its incorporating statute. It has members, holds proper elections, and the like. The Religious Congregation, by contrast, was never properly organized from a formal, corporate law perspective. Nevertheless, members of the Cultural Organization have always been treated as members of the Religious Congregation. The board of directors of the Cultural Organization functioned as the board of directors for both corporations. Historically, although the by-laws of the Cultural Organization did not mention the Religious Congregation, at membership meetings to elect the common board of directors, the members also elected a President of the Religious Congregation.
[10] The basic facts are set out in para. 8 of Justice Perell’s decision and were recited expressly in the factum of the appellants before Belobaba J. That is, they are not disputed.
[11] In 2016, the members of the Cultural Organization elected eleven directors. Mr. Ghose was elected as President of the Cultural Organization. Mr. Ananda Chowdhury was elected President of the Religious Congregation. The board of directors then elected the slate of officers for the Cultural Organization proposed by its President-elect Mr. Ghose. But the board of directors declined to elect the slate of officers for the Religious Congregation proposed by its President-elect Mr. Chowdhury.
[12] As a result of this conflict, Mr. Chowdhury, supported by a minority of the directors, purported to nullify the election of directors for the Religious Congregation. Over the course of the next few months, they purported to organize a membership list for the Religious Congregation and formed a new titular board of directors for the Religious Congregation.
[13] Perell J. noted that, as a result of there being competing boards of directors, there was uncertainty as to the proper, lawful board of directors of the Religious Congregation. The Cultural Organization and its directors brought an application to determine this question. This proceeding has been referred to as the “Governance Application”. It is the second-named proceeding in the double title of proceedings above.
[14] The appellants are the Religious Congregation as represented by its self-proclaimed board of directors.
[15] The Religious Congregation owns the community centre from which both organizations carried out their good works historically. Since the dispute arose in 2016, the Religious Congregation, under the control of its self-proclaimed board of directors, has excluded the Cultural Organization from the community centre. In the first proceeding named in the title of proceedings above, referred to as the “Lease Application”, members of the Cultural Organization claim that it is entitled to occupy the community centre pursuant to a two-page written lease dated February 6, 1995. The validity of the lease is disputed in the Lease Application.
[16] The two proceedings were scheduled to be heard by Belobaba J. for a full day on August 26, 2019. According to the appellants, Belobaba J. indicated that he could not hear the contested factual issues in an application format and he engaged with counsel discussing terms pending a trial of the contested issues. Initially, the appellants agreed to allow the Cultural Organization to have keys to the community centre. However, once they realized that the terms being discussed were not final settlement but just interim terms, they retracted their “offer”. They say that thereafter, Belobaba J. helped the applicants amend the Lease Application to claim possession of the premises, ordered the keys turned over, and ordered a meeting of the members of the Cultural Organization to hold an election of a new board of directors for the Religious Congregation.
[17] The salient parts of Justice Belobaba’s handwritten adjournment endorsement are:
The background facts are set out by Perell J. in 2018 ONSC 7639. Having read and reread the factums, having heard submissions in court and additional submissions in Ctrm H (in conference with counsel) I find it fair & reasonable on the record before me to make the following orders in the Lease and Governance application[s]:
(1) Putting to one side the disputed facts and credibility issues re lease validity, transfer of building, and custom & practice of Presidents appointing their own officers – it is clear beyond any doubt that the actions of Mr. Chowdhury after July 10/16 to lock out the [Cultural Organization] / to constitute [the Religious Congregation] with its own officers and additional directors / to conduct [the Religious Congregation] in disregard of decades of common understanding was contrary to law and wholly unauthorized.
(2) The fairest and most reasonable outcome of today’s hearing is to order a NEW ELECTION* for a new [Cultural Organization/Religious Congregation] bd of directors – as per amended 1(f) in the Governance Application. Order to go accordingly. The balance of the Governance Application is adjourned to be heard by me if & when appropriate.
- New Election w/i 30 days – persons entitled to vote are paid up members of [the Cultural Organization] up to the day before election.
(3) On the Lease Application, the respondents initially agreed to give copies of the keys to the Centre to the [Cultural Organization] Directors but at the Ctrm H conference counsel Mr. Goswami advised that his consent had been withdrawn. There is no good or legal reason for [the Religious Congregation] to retain complete control of the Centre. Order to go that the key (keys)* must be delivered to [the Cultural Organization] Directors by 12 noon tomorrow – w/o prejudice to Lease Applicants pursuing a damages claim, if so desired, in Sm. Cl. Ct.
- Keys plus alarm code
[18] Mr. Goswami argues that Belobaba J. effectively decided the Governance Application on the merits without holding a trial on the facts that both Perell J. and Belobaba J. recognized were contested. Moreover, he argues that the Cultural Organization has no legal entitlement to control or elect the board of directors of the Religious Congregation. They are two separate legal entities. Mr. Goswami submits that in allowing the members of the Cultural Organization to elect the board of directors of the Religious Congregation, Belobaba J. was allowing historic tradition to trump the law. The self-proclaimed board of the Religious Congregation therefore appeals the decision of Belobaba J. to this court pursuant to the appeal provisions of the Corporations Act.
[19] The appellants seek an urgent stay pending appeal to prevent the election of a new board of directors for the Religious Congregation this coming Sunday and to preserve the status quo pending an appeal (and ultimately pending the outcome of a trial and further appeal) some months or years hence.
[20] I note that no one mentioned that the orders made by Belobaba J. were terms of an adjournment and therefore may be interlocutory in nature. If that is the case, then leave to appeal is likely required. I do not need to assess whether the election as ordered was final or interlocutory as the test for a stay pending appeal is the same in any event. While the issue to be resolved on a motion for leave to appeal is broader than just an assessment of the merits, I would not resolve this motion on an assessment of the strength of the leave to appeal test alone in any event. Therefore, the discussion that follows is not to be taken as an indication that leave to appeal is or is not required in this proposed appeal.
Stay Pending Appeal
[21] In determining whether to stay an order pending an appeal, the court applies the usual three-part test that is also applied when a party seeks an interlocutory injunction. The court is required to consider:
(a) whether there is a serious issue to be determined on the appeal;
(b) whether the appellant will suffer irreparable harm if a stay is not granted; and
(c) whether the balance of convenience favours granting a stay pending appeal.
Stuart Budd & Sons Ltd. v. IFS Vehicle Distributors ULC, 2014 ONCA 546, at para. 21.
Is there a Serious Issue to be Determined on the Appeal?
[22] The “serious issue” test presents a low threshold. It will be met provided that the appeal is not frivolous or vexatious. Stuart Budd & Sons Ltd., at para. 23.
[23] I am very dubious as to the strength of the appeal. While Mr. Goswami argues strenuously that the Cultural Organization has no right to elect a board of directors for the Religious Congregation, he assiduously redirects the discussion away from his own clients’ legal rights.
[24] There can be no doubt that Belobaba J. is correct that Mr. Chowdhury and his supporters had absolutely no legal basis to proclaim themselves to be the board of directors of the Religious Congregation. They had no right nor colour of right to purport to dissolve the board, declare themselves in charge, and impose a membership process on the corporation. They are usurpers - nothing more and nothing less. They had no right to act for the Religious Congregation to exclude the members of the Cultural Organization from the community centre. Moreover, the facts that allowed Belobaba J. to make those determinations are not in dispute. They flow from the facts set out at para. 8 of Justice Perell’s decision that were recited and adopted expressly in Mr. Goswami’s factum before Justice Belobaba.
[25] Mr. Goswami was unable to point to any legal basis for his clients’ actions purporting to take over and act on behalf of the Religious Congregation. There is none.
[26] Therefore, before one arrives at considering what the current and proper legal status of the Religious Congregation may be, there is no way to undermine at all the finding by Belobaba J. that “it is clear beyond any doubt that the actions of Mr. Chowdhury…[were] contrary to law and wholly unauthorized.”
[27] Belobaba J. was then confronted with a quandary. Recognizing that on their own facts, the appellants had no right to act for the Religious Congregation, the corporation had no functioning board of directors to act pending the hearing of the adjourned proceedings. How then could a legal order be put in place pending the outcome of the proceeding? The corporation has no formal members to elect a board. But, all sides agree that the members of the Cultural Organization had been treated, recognized, and functioned as the “de facto members” of the Religious Congregation for decades (as recited by Perell J. at para. 8 of his decision).
[28] Recognizing that the members of the Cultural Organization are the de facto members of the Religious Organization is not allowing tradition to trump law as asserted by Mr. Goswami. Rather, it is a finding of fact or mixed fact and law based on undisputed evidence that for decades the voting members of the Religious Congregation have been the members of the Cultural Organization. The members are the community, the users of the services of the organizations, and the funders and supporters of the organizations.
[29] Corporate law is practical law meant to help businesspeople organize and conduct themselves. It is not applied based on the most technical analysis that leads to the most impractical outcome. Mr. Goswami would leave the Religious Congregation with an unfillable lacuna or governance vacuum. He argues in favour of a Catch-22 - that there are no de jure members to elect a board and without a board there can be no membership bylaw created.
[30] Efforts to find the initial members set out in the Letters Patent of the corporation to see if they could somehow create a legal order have apparently already been tried and failed.
[31] Corporate law is also premised on the construct of shareholder or member democracy. That is, it is for the members to decide how they wish their corporation to be governed. While a court might be able to impose an interim outcome under various theories of the law, none is as satisfactory in theory or in practice as a democratic election. Members of both factions were elected to the joint board in 2016. So, it is not a given that holding an election now, with each side able to campaign for a month, is a nod to one side or the other.
[32] The way to respect the organizations and their long-time community of members, and to ensure that member democracy prevails, is to do precisely what Belobaba J. did – to call an election. Recognizing the same membership community to vote as had voted for decades and has been recognized by all as the voting membership of the Religious Congregation is as close to technically legally correct as possible in the circumstances. Mr. Goswami offered no basis to support the legal propriety of any other membership list (such as the one created by his usurper clients naming members of their side only).
[33] While I am not prepared to find that an appeal of the orders made by Belobaba J. is frivolous or vexatious, in my view, the prospects on appeal from the terms of the adjournment imposed by Belobaba J. are, at best, weak.
Will the Appellants likely suffer Irreparable Harm if the Election Proceeds?
[34] Irreparable harm is harm that cannot be compensated with an award of monetary damages later. Where a party suffers economic loss by the wrongdoing of the other party pending an appeal and the injured party then wins the appeal, that party can usually be compensated by payment of an equivalent amount of money by wrongdoer later. A stay is not necessary in those circumstances because any loss suffered pending the appeal can be compensated or repaired. But losses that are not economic in nature and cannot be avoided or compensated later are said to be irreparable. A stay is most apt to avoid irreparable harm.
[35] Appellants are entitled to have their appeals heard and resolved. The court will protect them from irreparable harm occurring while the appeal is in progress. Moreover, where steps may occur that would render the appeal moot, those steps too are likely to be found to amount to be irreparable harm and be stayed.
[36] Mr. Goswami argues that a new board may take steps that cannot later be undone if his clients succeed on the appeal. He adopted my invocation of the popular metaphor that one cannot “unscramble an egg”. However, he was unable to articulate how this concern could arise in this case. If, for example, an appellate court were to agree with the process issues raised by Mr. Goswami’s clients and allow the appeal, there is still no likelihood that his clients will ever be recognized as the lawful representatives of the Religious Congregation absent an election. A court that overrules the order made by Belobaba J. will be faced with the same governance vacuum that he faced. A receiver could be appointed for the interim period I suppose, or some other caretaker mechanism created. None will have the legitimacy of a democratic election by the members. Moreover, Mr. Goswami could not articulate anything that could be imposed by a democratically elected board in this case that could not be undone by a subsequent court order. Moreover, nothing prevents the appellants from seeking an interim stay or injunction to prevent implementation pending the appeal of anything specific that is proposed by a new, democratically elected board of directors that might irreparably scramble the congregational egg.
[37] Accordingly, while I am cognizant of the risk of undermining the appeal and, in fact, I raised the issue with Mr. Goswami, I simply do not see that scenario as a realistic outcome on the facts of this case.
[38] Therefore, the appellants have not established that they will likely suffer irreparable harm unless the election is stayed.
Does the Balance of Convenience support a stay?
[39] The balance of convenience refers to the comparison of possible harms caused by the granting or the refusing of the order sought. Here, the appellants say that the wrong people will be taking over the Religious Congregation unless the election is stayed. As I noted in the prior section however, the appellants are unable to articulate how this is so or what harm might befall anyone that cannot be controlled pending the appeal or reversed later.
[40] By contrast, the respondents submit that much mischief may befall them and the two community organizations unless a proper legal order is put into place right away. They point to evidence that the appellants seem to have allowed the parking lot of the community centre to be used for vehicle storage by unrelated commercial businesses. There have apparently also been bedrooms fabricated in the community centre with some people possibly living there or renting short term rooms there under the watch of the self-proclaimed board.
[41] But those issues have been resolved in the main by separate terms that I ordered on consent at the hearing of the motion. Moreover, with the Cultural Organization now sharing access to the community centre once again, any such issues can be dealt with by Belobaba J. as part of the case management process leading to the hearing of the remaining issues. The Cultural Organization points to these facts to suggest that there is a risk that Mr. Chowdhury and his supporters may engage in scorched earth tactics to the prejudice of the membership community if they are not ousted from control of the Religious Congregation. This is perhaps a risk, especially given the overheated nature of the dispute in this proceeding to date. But this too seems a low risk. Mr. Chowdhury and his supporters are acting in their own perception of the best interests of the community. I cannot discern any incentive on them to damage the community centre, either organization, or the community as a whole. Doing so would impair their standing in their community which is the opposite of their goals.
[42] In my view, neither side is hurt one way or the other. However, restoration of member democracy at least ends the wrongful usurpation of control of the corporation, ends the internecine battle on the ground, and brings these two applications that much closer to resolution by Belobaba J.
Outcome
[43] With a weak issue for appeal, no irreparable harm, and the balance of convenience even or titled slightly towards the earliest restoration of member democracy to the Religious Congregation, it follows that the appellants have not made out a basis to impose a stay pending appeal.
[44] I would note however, that with an appeal and hearings on the merits outstanding, the elected board will be well-advised to be very transparent and measured in its steps. Perhaps it may wish to seek community and professional input to study ways in which to reconstitute the corporations going forward so as to avoid the risk of a governance vacuum in future. Whether such steps could be completed prior to the resolution of these proceedings or ought to await the outcome of the appeal is best left to the parties to resolve. The case management judge remains available to assist them if necessary.
[45] The motion is therefore dismissed. I have already dealt with costs in my handwritten endorsement.
___________________________ F.L. Myers J.
Released: September 30, 2019
CITATION: Bose v. Bangiya Parishad Toronto, 2019 ONSC 5625
DIVISIONAL COURT FILE NO.: 19-525 DATE: 20190930
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
BASU DEB BOSE, DR. PRASANTA KUMAR SARKAR, RANENDRA N. GHOSH, SUNIL SENGUPTA, ASISH KUMAR GHOSH, SAILESH K. ROY, SWAPAN KUMAR GHOSH, RUPA DUTTA, and BASANTI ROY
Respondent
– and –
BANGIYA PARISHAD TORONTO (also known as BANGIYA PARISHAD)
Appellant
AND BETWEEN:
RATHIN GHOSE, SANJIB MUKHERJEE, SUBHRA SUR, APURBA MUKHERJEE, KOBI BANERJEE, ANIRBAN KARGUPTA, PRABASI BENGALI CULTURAL ASSOCIATION, and BANGIYA PARISHAD TORONTO
Respondents
-and-
JNAN CHOWDHURY, also known as Ananda Chowdhury also known as Ananda Jnan Chowdhury, ASHOKE NEOGI also known as Ashok Neogi, ARPITA MUKHERJEE, PARTHA BANERJEE also known as Bapi Banerjee also known as Partha Bapi Banerjee, MRINMOY BHAKTA. UJJAL CHOWDHURY, NIRMAL DE, RUBY MUKHERJEE and SANDIP GOSWAMI
Appellants
REASONS FOR DECISION
F.L. Myers J.
Released: September 30, 2019