Ontario Football Conference v. Brampton Minor Football Association, 2023 ONSC 2373

CITATION: Ontario Football Conference v. Brampton Minor Football Association, 2023 ONSC 2373

FILE NO.: DC-18-50

DATE: 2023 04 19

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Ontario Football Conference Plaintiff

– and –

Brampton Minor Football Association Defendant

– and –

Ian Smith Third Party

COUNSEL: David J. McGhee, for Ontario Football Conference Sean Carter, for Brampton Minor Football Association Steven K. Stauffer, for Ian Smith

HEARD: April 11, 2023

REASONS FOR JUDGMENT

CONLAN J.

I. Introduction

[1] On February 14, 2020, this Court, sitting as a single judge of Divisional Court, heard an appeal and cross-appeals from a Judgment of the Small Claims Court.

[2] In an Endorsement dated February 20, 2020, Ontario Football Conference v. Brampton Minor Football Association, 2020 ONSC 1061, this Court allowed the main appeal and ordered a new trial.

[3] The Court accepted the arguments advanced by the main appellant, the Brampton Minor Football Association (“BMFA”), that there had been a denial of procedural fairness in the court below and, further, that the reasons of the trial judge were insufficient. The Court also accepted the arguments of the two cross-appellants, the Ontario Football Conference (“OFC”) and Mr. Ian Smith (“Smith”), that they had, likewise, been denied procedural fairness.

[4] For some context to the litigation, the following is taken from paragraphs 4-7 of the decision cited above.

[4] In July 2015, the OFC sued the BMFA in Small Claims Court. The OFC sought damages in the amount of $25,000.00, plus interest and costs. The substance of the Claim was that the BMFA owed money to the OFC on account of unpaid fees.

[5] The BMFA defended the action and raised several arguments including that any alleged debt owed to the OFC was not the responsibility of the BMFA because it was incurred by a separate legal entity, the Brampton Bears (“Bears”), a football club.

[6] The BMFA also issued its own Defendant’s Claim against Smith (“Third Party Claim”). The BMFA sought full contribution and indemnity from Smith in the event that the BMFA was found liable in conjunction with the OFC’s Claim. The crux of the Third Party Claim on behalf of the BMFA was an allegation that Smith, as an officer of the BMFA, had exceeded his authority in guaranteeing that the BMFA would be responsible for paying the debt owed by the Bears.

[7] Smith defended the Third Party Claim and denied any wrongdoing.

[5] Rather than remit the matter back to the Small Claims Court for another trial, on consent of all parties, as the Small Claims Court is a branch of the Superior Court of Justice, and as every judge of the Superior Court of Justice is also a judge of the Small Claims Court, the new trial was held before this Court and strictly on the basis of the evidence adduced in the court below, both transcripts of the oral testimony and copies of the exhibits filed, supplemented by one-half day, total, of submissions by counsel.

[6] For the reasons that follow, the main action is allowed, judgment is entered against the BMFA and in favour of the OFC in the full amount claimed, $25,000.00 plus interest, the third party claim is dismissed, and the parties shall deliver written submissions on costs if they cannot be resolved between counsel.

[7] Any written submission on costs shall be limited to two pages in length, excluding attachments. Only one written submission on costs is permitted to be filed on behalf of each party. All submissions must be received by the Court within sixty (60) calendar days after the date of these reasons.

II. A Brief Summary of the Trial Evidence

[8] It means little to the reader to have to endure a relentless quasi-transcription of everything that was said and filed in the court below and, by extension, forms the trial evidence in this Court.

[9] Rather, only a few highlights are provided – those aspects of the evidence that relate directly to the key issues in dispute: (i) the relationship between the BMFA and the Bears and how that relationship impacts on the former’s liability, or not, for the latter’s debts owing to the OFC, and (ii) whether Smith acted improperly and, thus, is personally liable for anything that the BMFA may be found to owe to the OFC.

[10] Paul Bartle (“Bartle”) testified for the OFC. He was a past President of that organization and held executive positions over the years. He stated that, in early January 2013, the OFC became concerned about the debt owing by the Bears. On January 18^th, at a meeting at the Royal York Hotel in downtown Toronto, Smith assured Bartle and others that the BMFA was guaranteeing that the Bears’ debt to the OFC would be paid. Bartle had no difficulty accepting that assurance, as Smith was in fact the President of the BMFA at that time. Bartle had no reason to think that Smith was not speaking for the BMFA and the Bears. Bartle adamantly disagreed with any suggestion that the BMFA had no connection or affiliation with the Bears. He also disagreed with the suggestion made by Mr. Carter in cross-examination that Smith held himself out to the OFC as President of the Bears, and only as President of the Bears. In cross-examination by Mr. Carter, Bartle testified that it was not at all strange that the BMFA would guarantee the debt owed by the Bears because, after all, it was the BMFA that originally applied for the Bears to join the OFC, and it was the BMFA that paid the $1,500.00 application fee, and it was the BMFA that made payments towards the Bears’ fees owing to the OFC – the payments did not come from the Bears. He never considered the Bears and the BMFA to be separate entities.

[11] Robert Annen (“Annen”) testified for the OFC. At the time of the trial in the Small Claims Court, he was the Treasurer of the OFC and had been for some time. He was also an accountant by profession. He stated that Smith, during that January 18, 2013 meeting at the Royal York Hotel, as President of the BMFA, gave assurances that the Bears’ debt owed to the OFC would be taken care of by the BMFA. Annen testified that, after the Bears joined the OFC, all of the invoices rendered by the OFC to the Bears were paid by BMFA cheques. In cross-examination by Mr. Carter, Annen acknowledged that he never spoke with the other members of the BMFA, besides Smith, about the BMFA guaranteeing the Bears’ debt owed to the OFC. In cross-examination by Mr. Stauffer, Annen stated that it was his understanding that the equipment and uniforms of the Bears were the property of the BMFA. He also stated that he never heard anyone with the BMFA, at any meeting of the OFC, say that the Bears’ debt was the responsibility of Smith personally.

[12] George Thomson, past President of a football team in London, Ontario and Governor of the OFC, London, testified for the OFC and stated that the OFC teams agreed to a further extension of the Bears’ indebtedness in January 2013 only because they were told that the BMFA was covering the Bears’ debt.

[13] Tori-Lynn Manchulenko (“Manchulenko”) testified for the BMFA. She was involved with the BMFA between 1992 and 2015, and she was the Vice-President of Finance for the BMFA between 2009 and 2014. Manchulenko testified that she did not recall any Board resolution that authorized a guarantee or payment by the BMFA of the Bears’ debt owed to the OFC, as seemingly required by section 6.07 of the BMFA’s By-Laws (Exhibit 9), which section stipulates that “[n]o money shall be spent by BMFA without permission of the Board of Directors; up to $250.00, Management Board level with approval of the President, Executive Vice-President, or Vice-President of Finance; up to $2,500.00, Executive Board, majority vote of the Executive Board; greater than $2,500.00 would be full Board approval”. Manchulenko testified that, from its inception, the Bears was not affiliated with the BMFA because she, for one, objected to the BMFA funding another team given the BMFA’s indebtedness at the time. The Bears was always a stand-alone entity, she stated, which to her made common sense because the Bears was for adult men while the BMFA was for youth football. Manchulenko acknowledged that the BMFA paid the initial fees owing by the Bears to the OFC but only because the Bears was not yet incorporated and had no bank account at the time. She stated that those initial fees were paid from money that was in the BMFA’s bank account but which was really the Bears’ money in that the City of Brampton had donated $10,000.00 to the Bears, which cheque was given to her to deposit into the BMFA’s bank account, along with registration fees paid on behalf of Bears’ players. Manchulenko testified that there was never any agreement by the BMFA to guarantee or to pay for the Bears’ debt owed to the OFC, and in fact when Smith ultimately suggested to the Board of the BMFA that the BMFA had to do so or else the players would be let down, Smith was removed as President of the BMFA because of a perceived conflict of interest given his dual responsibilities owed to the BMFA and to the Bears.

[14] In cross-examination by counsel for the OFC (not Mr. McGhee at the time of the Small Claims Court trial), Manchulenko denied that BMFA Profit and Loss Statements (Exhibit 10, tab 2), wherein there are notations concerning the Bears, for example “Brampton Bears, $33,297.59” (the 2012 Statement), mean that the Bears was a part of the BMFA. She stated that the said notations were merely to reflect that the Bears owed money to the BMFA because, at some point, the BMFA had agreed to pay some of the Bears’ expenses in order to keep the team afloat. That is why the BMFA continued to write cheques for Bears’ expenses for quite some time after the Bears was formed and had joined the OFC; the BMFA had not much choice, she said, because otherwise the BMFA was having trouble dealing with its own vendors to secure fields, for example. Although the two entities (the BMFA and the Bears) were separate, Smith had seemed to associate them to each other, to the prejudice of the BMFA, Manchulenko stated.

[15] In cross-examination by Mr. Stauffer, Manchulenko disagreed with the suggestion by counsel that the Bears never had its own bank account. It did, and in fact she received statements at her home for that bank account, she stated. Manchulenko agreed that it was only after Smith left the BMFA that the Bears’ “expense” that had been listed on prior Profit and Loss Statements of the BMFA was changed to a “loan”. She explained that the prior Statements represented a clerical error. Manchulenko agreed with counsel that she has never seen any documentation, including any Minutes of BMFA Board meetings, that expressly states that Smith was personally liable for the Bears’ debt. Manchulenko admitted to Mr. Stauffer in cross-examination that she, in January 2016, pleaded guilty to and received an absolute discharge for contravening some legislation regarding the governing of elections (it is not clear to me from the transcript what legislation was violated, but it must have been the Canada Elections Act, S.C. 2000, c. 9, as amended, because the offences were (i) knowingly concealing or attempting to conceal the identity of sources of contribution in a federal election, and (ii) knowingly circumventing the campaign contribution limit for an individual donor). She admitted that she signed cheques in other persons’ names.

[16] Edward Sousa (“Sousa”) testified for the BMFA. He had been with that organization since 2003, was on the Board and was Vice-President, and he became President in 2014 (after Smith was ousted). Sousa testified that the Bears was always a separate entity from the BMFA, which makes common sense because the Bears was for adults and the BMFA for youth; the BMFA had no involvement in the Bears’ application to become a member of the OFC; the BMFA was never a member of the OFC; there was no BMFA Board resolution that authorized Smith to guarantee, on behalf of the BMFA, the Bears’ indebtedness to the OFC; nor was that idea ever discussed by the BMFA Board; the Bears had its own board of directors and its own board meetings, totally separate from the BMFA; and the BMFA could never have been able to afford to finance the Bears. According to Sousa, at a BMFA Board meeting on February 13, 2014, Smith called for a vote for the BMFA to pay approximately $23,000.00 owing to the OFC by the Bears, failing which the BMFA would be suspended from playing in any football league. At the time, Smith was the President of the BMFA, the driving force behind the Bears, and also the President of the governing body that could suspend the BMFA. According to Sousa, he stood up at the meeting and said that the BMFA would not be paying that debt because it was not the BMFA’s debt to pay. Smith stormed out of the meeting. Six days later, the BMFA Board held a special meeting to remove Smith as President of the BMFA. After Sousa became the new President, that is when he first heard from the OFC about a claim that the BMFA owed money to the OFC on account of the Bears. In cross-examination by Mr. Stauffer, Sousa agreed that there is no documentation between the BMFA and Smith which suggests that Smith was personally liable for the Bears’ debt, but he stated that is largely because the Board of the BMFA was not aware of the debt owed by the Bears to the OFC until the BMFA Board meeting in February 2014. When Mr. Stauffer suggested to Sousa that the $35,297.59 “loan” reflected in the BMFA’s 2014 Profit and Loss Statement may be money allegedly owing to the BMFA by the Bears but is certainly not money owing to the BMFA by Smith personally, Sousa replied that, “Ian Smith is the Brampton Bears”.

[17] Naa Dedei Attoh (“Attoh”) testified for the BMFA. She was a BMFA Board member and, in 2014, she replaced Manchulenko as Treasurer of the BMFA. She was also involved with the Bears and attended Bears’ Board meetings in the team’s first year or so. She confirmed that the BMFA was never a member of the OFC and that the Bears was a separate entity from the BMFA. She testified that the Bears borrowed money from the BMFA for things like equipment and uniforms, but that money was never repaid. Attoh was shown Exhibit 15, BMFA Board meeting Minutes from a meeting on February 1, 2012, which Minutes include the clause “2011, BMFA Board Members voted on the Bears being a stand-alone entity and should financially be equipped and not draw upon BMFA funds”, and she stated that she remembered that meeting and that vote. Attoh stated that, throughout her involvement with the BMFA and the Bears, there was never an instance where Smith, President of both entities, recused himself from any decisions regarding loans or guarantees or debts between the BMFA and the Bears, despite section 5.01 of the BMFA By-Laws (Exhibit 9), which section deals with the standard of care for directors of the BMFA. Attoh testified that, notwithstanding section 7.05 of the said By-Laws, there was never a BMFA Board resolution that authorized Smith to, on behalf of the BMFA, guarantee the Bears’ indebtedness owed to the OFC. In cross-examination by Mr. Stauffer, Attoh agreed that there is no documentation that she has seen, including but not limited to Minutes of BMFA Board meetings and BMFA Profit and Loss Statements, to suggest that Smith was to be held personally responsible for paying the Bears’ debt owed to the OFC. She also confirmed that Smith could not have signed any BMFA cheques by himself – another authorized signature would have been required.

[18] Vincent Macdonald (“Macdonald”) testified for the BMFA. He became the President of the BMFA in November 2015, after Sousa. Macdonald testified that he always understood the Bears to be a separate entity from the BMFA; while he was on the Board of the BMFA, it was never authorized that a team called the Bears was a member of the BMFA; no BMFA Board resolution ever authorized Smith, on behalf of the BMFA, to guarantee the Bears’ indebtedness owed to the OFC; and although the BMFA loaned money to the Bears to help pay for equipment and other items, that money was never repaid. In cross-examination by Mr. Cocchetto, then counsel for the OFC, Macdonald could not explain why section 2.02 of the BMFA’s By-Laws (Exhibit 10, tab 1) lists the Bears as a member of the BMFA. In cross-examination by Mr. Stauffer, Macdonald agreed that he has not seen any documentation that suggests that Smith was to be held personally liable for the Bears’ debt owed to the OFC. Macdonald also agreed with counsel that the “loan” owing by the Bears to the BMFA does not appear as such (as a loan) in the BMFA financials until well after Smith was ousted as President of the BMFA.

[19] I pause here to note that, on the issue of section 2.02 of the BMFA’s By-Laws, Sousa was recalled to testify a second time in the court below. He testified that he thought that the reference to the Bears in that section referred to a previous team by that name (not the team started by Smith while Sousa was on the Board of the BMFA).

[20] Smith testified at the trial in Small Claims Court. The following summarizes the most salient portions of his evidence in direct examination. He joined the BMFA Board in 2003/2004. He stated that, after becoming President, he saw his obligation as doing the best he could to act fairly for the people of the BMFA. He testified that he never entered into any obligations that bound the BMFA without the authority of the BMFA’s Board. Smith testified that, sometime in late 2009, on a football field, the Board of the BMFA unanimously approved a verbal motion put forward by someone named Chevy McCalla to the effect that the BMFA would have a team join either the OVFL (some other league distinct from the OFC but with players of ages that overlap between the two leagues) or the OFC. The Bears’ OFC application cheque was signed by Smith and by Manchulenko, on behalf of the BMFA. The $10,000.00 cheque from the City of Brampton was made payable to the BMFA and deposited into the BMFA’s bank account. The Bears’ equipment was purchased by the BMFA. The Bears never had its own bank account. Players’ registration fees for the Bears went to the BMFA. In 2011, all of the cheques for Bears’ expenses were signed by him and Manchulenko, on behalf of the BMFA. In 2012 and 2013, all of those cheques were signed by Sousa and Manchulenko, on behalf of the BMFA. There was never any discussion, or documentation, or even an understanding that he would be personally liable for the Bears’ debt owed to anyone, including the OFC. Even after he was ousted as the President of the BMFA, between February 2014 and October 2015 (when the BMFA sued him by way of the third party claim), he was never told by anyone at the BMFA that he was personally liable for any of the Bears’ indebtedness.

[21] In cross-examination by Mr. Cocchetto, Smith stated that he never registered the Bears as a corporation or as a sole proprietorship or as anything else, as the Bears was simply a team operated by the BMFA. Smith also confirmed with counsel that he never said anything to anyone at the OFC to suggest that the Bears was not a part of the BMFA and, further, at the January 18, 2013 meeting at the Royal York Hotel in Toronto, he did say to OFC officials that the BMFA would guarantee payment of the debt relating to the Bears.

[22] In cross-examination by Mr. Carter, Smith confirmed that he was the President of both the BMFA and the Bears at the same time, during the years 2010 until 2013. He stated that the Bears never had its own board of directors. He admitted that he has nothing in writing to show that the BMFA Board voted to approve a team joining the OFC. He considered that he had the authority to tell the OFC that the BMFA would pay for the debt owed by the Bears because it was the BMFA that voted to bring the Bears into existence to begin with. Regarding section 2.02 of the BMFA’s By-Laws, Smith testified that the reference therein to “Bears” is to a previous team that played in the 1970s. Smith stated that, during his entire tenure as President of the BMFA, there was never any confusion on anyone’s part about the fact that the Bears was a part of the BMFA. The only person who ever said anything against that was Manchulenko, as she thought that players over 22 years old should not be a part of the BMFA; in the end, however, she always said, “but we approved it”.

[23] In re-examination, Smith stated that the Business Plan for the Bears (Exhibit 1), where it says “owned and operated by the Brampton Bulldogs Football”, means that the Bears was a part of the BMFA because the Bulldogs and the BMFA are/were one and the same thing.

[24] After Smith testified, the trial in the court below concluded with a rash of relatively brief witnesses called on behalf of Smith – Mark Houlder (never a member of the BMFA Board but involved for a long time as a coach, including two years as the head coach for the Bears), Leslie Trotman (BMFA Board member from 2012 to 2014, and also a head coach and a member of the BMFA’s Constitution Committee, which body dealt with the By-Laws and amendments thereto), Dario Marandola (former BMFA and Bears’ equipment manager, and former acting general manager for the Bears), David Smith (brother of the party, Smith, and former coach for several BMFA teams, and former BMFA Board member), and Darren Cocchetto (for some very strange reason, highly improper, the lawyer for the OFC who had conducted the entire trial as counsel for the OFC, both before and after taking the witness box, who also happened to be the President of the OFC, was called as a witness; fortunately, no mistrial was declared in the court below, and this Court has ignored anything and everything said by Mr. Cocchetto in his capacity as a trial witness).

[25] All of these witnesses supported Smith’s assertions at trial, in one way or another. Mark Houlder stated that the BMFA owned the Bears and was financially responsible for the Bears. Leslie Trotman stated that the Bears was a part of the BMFA and, thus, although he cannot say that there was a motion or something formal ever passed at the BMFA that expressly stated that the BMFA was financially responsible for the Bears, that was always his understanding. Dario Marandola testified that it was absolutely not true to suggest that the BMFA had no affiliation with the Bears. In fact, representatives of the BMFA were always at Bears’ games, including working and collecting fees at entrances, and when his own son played for the Bears the dues were always paid to Attoh and the receipts were always issued by the BMFA. David Smith testified that it was Sousa, in his presence, who, on behalf of the BMFA, did most of the talking at the OFC’s Annual General Meeting when the idea of the Bears joining the OFC was first pitched to the OFC. The Bears’ debt was always considered to be that of the BMFA and never considered to be that of his brother personally, David Smith stated.

[26] In addition to the viva voce evidence summarized above, there were sixteen exhibits entered at the trial in the Small Claims Court. This Court has reviewed all of them. What follows is a brief outline of the nature of those exhibits, by reference to the exhibit numbers. Unfortunately, many of the exhibits filed were duplicitous, many were never referred to at trial, and many were, frankly, irrelevant to the issues in contention.

1. Brampton Bears Business Plan

This Business Plan, for 2010-2011, demonstrates that the Bears was owned and operated by the Brampton Bulldogs Football, which, according to some evidence at trial, was the same thing as the BMFA.

2. Invoice dated November 23, 2009, with accompanying cheque

This invoice and cheque were sent from the BMFA to the OFC in the amount of $1,500.00 for the initial OFC application fee on behalf of the Bears.

3. Email – Brampton Guardian article

This is an email from Ian Smith to Doug Dittmer, dated November 4, 2009, about the Brampton Guardian article which stated that the Bulldogs applied for re-entry into the Canadian Junior League, and the organization was going to change its name from the Bulldogs to something else – potentially the Satellites or the Bears.

4. E-mail dated October 6, 2010

This is an email from Doug Dittmer to Ed Sousa and Ian and Debbie Smith, about collecting outstanding debts owed to the OFC.

5. E-mail dated March 3, 2014

This is an email from Ed Sousa to Rob Annen at OFC indicating that there is no affiliation or connection between the BMFA and the Bears. It also contains the email from Darren Cocchetto to Ed Sousa, dated March 8, 2014, expressing confusion about the said assertion of non-affiliation.

6. Statement of Account dated June 30, 2015

This statement of account/invoice was made to the GTA Bears, c/o Ian Smith, [home address excised here]. It notes that a payment was made on June 20, 2012. It was given in evidence that this payment came from the BMFA.

7. E-mail dated February 25, 2014

This email was sent from Rob Annen to Ed Sousa—the new President of the BMFA at the time, regarding the outstanding bill for the Bears. It refers to Ian Smith’s meeting with the OFC at the 2013 AGM and the assurances he gave that any outstanding Bears’ debt would be covered by the BMFA.

8. Correspondence re: outstanding amount owing

This is a letter from Sean Carter, counsel for the BMFA, to Darren Cocchetto, counsel for the OFC, stating that the BMFA has no objection with the quantum of outstanding debt that the OFC is claiming. Rather, the primary issue for trial is which entity is responsible for the debt.

9. By-Laws of BFMA

This is self-explanatory.

10. BMFA’s Document Disclosure

This contains several items that formed the document disclosure from the law firm of counsel for the BMFA.

Tab 1 – BMFA By-Laws, including the amendments thereto.

Tab 2 – BMFA Profit and Loss Statements from 2012 and 2013; BMFA Balance Sheet from 2013; BMFA Trial Balance from 2014 (this notes the $35,297.59 “loan” allegedly owed to the BMFA from the Bears/Ian Smith).

Tab 3 – BMFA Board meeting Minutes dated February 3, 2012.

Tab 4 – BMFA Board meeting Minutes dated March 2, 2012.

Tab 5 – BMFA AGM Minutes dated December 6, 2013.

Tab 6 – BMFA Board meeting Minutes dated February 13, 2014. This was the meeting discussed in evidence where, shortly thereafter, Smith was ousted as President of the BMFA.

Tab 7 – BMFA Board meeting Minutes dated February 28, 2014. This was the first meeting of the Board after the special meeting where Smith was removed from the presidency.

Tab 8 – BMFA Board meeting Minutes dated May 2, 2014.

Tab 9 – E-mail thread from March 2011, between Ian Smith, Ed Sousa, and Tori Manchulenko, regarding an outstanding bill from the equipment company that relates to Bears’ equipment specifically.

Tab 10 – E-mail thread from 2010 and 2011 related to the equipment issue that the BMFA had with the Bears due to the Bears’ outstanding bills.

Tab 11 – Email thread dated April 2012 between Tori Manchulenko and Julie Bills (Bills then working on some of the finances for the Bears).

Tab 12 – E-mail thread dated July 2012. Tori Manchulenko asks Ed Sousa whether he has received funds from the Bears to cover the money that BMFA had already spent.

Tab 13 – A reply e-mail dated April 10, 2013, from Tori Manchulenko to Shirley at Coach Canada, which was copied to Julie Bills and Ian Smith. Manchulenko indicates that the bus was for the Bears, which has no affiliation with the BMFA.

Tab 14 – E-mail thread dated April 2013, from Ed Sousa to Gary Hardy (Recreation Supervisor for the City of Brampton), indicating that he dropped off a cheque in the amount of $10,685.58. He also indicated that this amount reflects BMFA’s outstanding balance, that the remaining balance is the responsibility of the Bears, and that the Bears is currently restructuring and will provide payment details once finalized.

Tab 15 – E-mail dated February 17, 2014, from Tori Manchulenko to Ed Sousa and Vince Macdonald recounting what appears to be her recollection of discussions had during the BMFA Board Meeting held on February 16, 2014.

Tab 16 – E-mail thread dated February 2014 when Vince Macdonald called for the emergency special meeting to discuss the Bears’ financial issues.

Tab 17 – Brampton Bears Administration Meeting notes, dated November 4, 2009.

Tab 18 – 2010/2011 Brampton Bears Business Plan.

11. Documents of Ian Smith

This contains all of Ian Smith’s documentary disclosure.

Tab 1 – E-mail dated October 2, 2009, from Ian Smith to the BMFA Board, regarding the BMFA Board meeting to discuss the OFC application.

Tab 2 – E-mail dated October 22, 2009, from Ian Smith to Tori Manchulenko and others. He sent them a copy of BMFA’s presentation to join the OFC and asked for suggestions. A copy of the presentation is also included.

Tab 3 – E-mail dated November 4, 2009, between members of the BMFA Board regarding the Brampton Guardian article about the anticipated name change of the Brampton Bulldogs. Ian Smith explains why they decided to go with the “Bears” name change.

Tab 4 – E-mail dated March 12, 2010, regarding the Bears’ meeting Minutes from February 25, 2010. Those Minutes are included, along with the OFC’s 2010 Game Schedule.

Tab 5 – Email dated June 25, 2010 - Ian Smith sending Bears’ meeting Minutes from the meeting held on April 13, 2010.

Tab 6 – BMFA Board meeting notes, dated October 13, 2010.

Tab 7 – Letter dated December 20, 2012, written to Gary Hardy from Ian Smith on BMFA letterhead, proposing a payment plan for field rental fees.

Tab 8 – E-mail dated September 6, 2013, regarding Dunbar Medical invoices for the GTA Bears and the BMFA. Two invoices are included.

Tab 9 – E-mail dated September 16, 2013, regarding “Bowling with the Bears”, a fundraising initiative.

Tab 10 – E-mail dated September 27, 2013, regarding adjustments to BMFA and BMFA Bears’ permits with the City of Brampton for BMFA field allotments. The relevant rental agreements are included.

Tab 11 – E-mail dated October 30, 2013, regarding the BMFA and “Sports Day in Canada”, for which Ian Smith confirmed arrangements.

Tab 12 – E-mail dated December 23, 2013, in which Ian Smith sends an updated letter to Ed Sousa and Debbie Smith. The letter is to Gary Hardy regarding a payment plan for outstanding BMFA amounts for field rentals. The letter is included.

Tab 13 – A print-out of the Government of Canada website demonstrating a final disposition at trial, dated January 29, 2016, showing that Tori Manchulenko pleaded guilty to offences related to the governing of elections.

12. Documents submitted with the BMFA’s Defence

Tab 1 – The BMFA By-Laws.

Tab 2 – BMFA Board meeting Minutes dated February 13, 2014 (same as in Exhibit 10).

Tab 3 – Invoice from OFC to BMFA for the application fee, dated November 23, 2009, and the BMFA cheque for $1,500.00.

Tab 4 – Brampton Bears 2010/2011 Business Plan.

Tab 5 – Appears to be football equipment (jerseys, helmets, pants, etc.) mock-ups from the equipment provider.

Tab 6 – E-mail thread dated April 20, 2010, between Ian Smith and Brampton Mayor Susan Fennell, about attending the Bears’ dinner and the Mayor’s intention to give $10,000.00 to the Bears. Ian Smith indicates that the cheque should be made payable to the BMFA.

Tab 7 – E-mail dated April 25, 2011, from Tori Manchulenko to the equipment company, stating that the BMFA will pay the Bears’ bill but “do not assume the debt.”

Tab 8 – E-mail dated September 9, 2011, from Tori Manchulenko to Ed Sousa and Ian Smith about having outstanding bills, including the equipment company’s bills for the Bears, and no money left to pay.

Tab 9 – A list of BMFA voters as of 2013.

Tab 10 – BMFA AGM Minutes, dated December 6, 2013 (same as Exhibit 10).

Tab 11 – BMFA 2012 Profit and Loss Statement, indicating a Brampton Bears expense of $33,297.59 (same as Exhibit 10).

Tab 12 – BMFA Board meeting Minutes dated January 7, 2011.

Tab 13 – BMFA Board meeting Minutes dated February 11, 2011.

Tab 14 – BMFA Board meeting Minutes dated January 13, 2012.

Tab 15 – BMFA Board meeting Minutes dated February 3, 2012 (same as Exhibit 10).

Tab 16 – BMFA Board meeting Minutes dated March 2, 2012 (same as Exhibit 10).

Tab 17 – BMFA Board meeting Minutes dated April 13, 2012.

Tab 18 – BMFA Board meeting Minutes dated September 21, 2012.

Tab 19 – Email dated February 16, 2014, which was when Vince Macdonald called the special meeting.

Tab 20 – Email dated February 18, 2014, from Ian Smith to the BMFA Board in response to the above email (same as Exhibit 10).

13. Appendix to OFC’s document disclosure

This contains the OFC’s supplementary documents - an OFC invoice to the Brampton Bulldogs dated November 23, 2009, and the BMFA cheque containing the $1,500.00 OFC application fee for the Bears dated November 12, 2009, and three other BMFA cheques dated September 30, 2010, October 8, 2010, and November 10, 2010.

14. E-mail dated March 1, 2010

This is between Ian Smith and his counsel, Mr. Stauffer, forwarding other emails from way back on December 10, 2008.

15. Brampton Bears Meeting Minutes – February 1, 2012

This is self-explanatory.

16. Supplementary Documents of Ian Smith

Tab 1 – BMFA meeting Minutes dated May 1, 2009.

Tab 2 – BMFA meeting Minutes dated June 1, 2009.

Tab 3 – Email re: OFC junior team dated October 16, 2009.

III. The Positions of the Parties, and the Law as Related to those Positions

[27] Even if this Court accepts that the Bears was, in fact, a separate legal entity from the BMFA, and/or even if this Court accepts that Smith acted improperly or exceeded his authority, both of those points being arguments advanced by the BMFA, the OFC relies on the “indoor management rule”.

[28] That principle was very neatly summarized by Justice Penny at paragraph 4 of His Honour’s decision in The Midas Investment Corporation v. Bank of Montreal, 2016 ONSC 3003 (S.C.J.), set out below.

[4] The indoor management rule originated in the English case of Royal British Bank v. Turquand (1856), 119 E.R. 886 (Eng. Exch.). The principle is that if a corporation holds someone out as a director, officer or agent to third parties, the corporation cannot deny that the person is duly appointed or that he or she has the authority customary or usual for such a director, officer or agent. A person dealing in good faith with a corporation is entitled to assume that the corporation’s internal procedures have been followed. The outsider is not required to conduct an inquiry into compliance with those procedures unless that person has actual knowledge to the contrary or where the person ought to have had knowledge to that effect. The rule is based on the assumption that the company, which has hired and supervises its officers and holds them out as its agents, should bear the burden of their unauthorized activity, as opposed to the outsider dealing with the company in good faith who has no opportunity to investigate compliance with the company’s internal procedures.

[29] Citing Midas Investment, supra, the Court of Appeal for Ontario, at paragraph 20 of its fairly recent decision in AOD Corporation v. Miramare Investment Incorporated, 2022 ONCA 95, put it this way: “[the indoor management] rule provides that parties dealing with a corporation, acting in good faith and without knowledge of any irregularity, are entitled to assume that a corporation’s internal policies and proceedings have been followed and complied with.”

[30] Mr. Carter, counsel for the BMFA, in able submissions, argued that the OFC knew or ought to have known that the Bears was separate and distinct from the BMFA, and thus, the BMFA would not be, or at least may not be, liable for the debts owing to the OFC by the Bears.

[31] When pressed by this Court to point to evidence in the record to suggest that the OFC had actual knowledge of those alleged facts, Mr. Carter conceded that there is none.

[32] When this Court indicated that the “ought to have known” argument is premised on the alleged suspicious circumstances of Smith effectively wearing two hats at the same time, one as President of the BMFA and the other as the leading protagonist of the Bears, Mr. Carter agreed.

[33] Mr. Carter submitted that, perhaps, the OFC ought to have done more to satisfy itself that what Smith was saying and doing was, indeed, authorized by the BMFA, citing the decision of Justice Cavarzan in Ramey v. Winkleigh Co-operative Housing Corporation, 2010 ONSC 4676, at paragraphs 36-39, set out below.

[36] The plaintiffs invoke section 19 of the Business Corporations Act R.S.O. 1990, c.B. 16 (the O.B.C.A.). Section 19 represents a codification of the common law “indoor management rule” which originated in the English case of British Bank v. Turquand (1856) 119 E.R. 886 (Exch. Ct.). The rule provides that “if a corporation makes a representation to a third party by holding someone out as a director, officer, or agent, the corporation cannot deny that the person is duly appointed or that she has the authority customary or usual for such a director, officer, or agent.” See Van Duzer, J. Anthony, The Law of Partnerships and Corporations, 3d Ed. (Toronto, Irwin Law, 2009) at 217.

[37] The rule is based upon the general principle of agency law that acts of an agent bind the principal to the extent that those acts are within the actual, usual or apparent authority of the agent. The policy underlying the rule is that “third parties should not have to worry about whether internal housekeeping is in order”, (Van Duzer, supra, at 218). The purpose of the rule and s. 19 of the O.B.C.A. is to ensure that internal corporate restrictions on authority or failure of the corporation to follow its procedures do not stand in the way of its obligations to a third party.

[38] Section 19 of the O.B.C.A. contains a major qualifier, however, in that a third party will not benefit from the protections where he or she knew or ought to have known of the defect in the authority of the person they were dealing with.

19. A corporation...may not assert against a person dealing with the corporation or with any person who has acquired rights from the corporation that,

(d) a person held out by a corporation as a director, an officer or agent of the corporation has not been duly appointed or does not have authority to exercise the powers and perform the duties that are customary in the business of the corporation or usual for such director, officer or agent;

except where the person has or ought to have, by virtue of the person’s position with or relationship to the corporation, knowledge to that effect.

[39] The form of contract under which Clarissa Powell had been hired as administrative co-ordinator for Winkleigh (Exhibit 19) describes her responsibilities to include (at p. 12) “Negotiate and execute contracts on the co-op’s behalf as authorized by the Board”. She had no actual authority to sign contracts without the board’s approval. In any event, as noted earlier in these reasons, Arthur Ramey was aware of this limitation on her authority. In the circumstances, it was incumbent upon him to make the necessary inquiries to ensure that the roofing contract had board approval.

[34] In support of the principle that directors of a corporation must avoid any conduct that amounts to a breach of trust, something that the BMFA submits that Smith was guilty of, Mr. Carter cited a very old but still quoted decision of the Supreme Court of Canada in The Theatre Amusement Company and Others v. Louis B. Stone, 1914 40, as well as a much more recent decision of the Supreme Court of Canada which deals, generally, with the fiduciary duties and duty of care owed by directors and officers of a corporation – Peoples Department Stores v. Wise, [2004] 3 S.C.R.; 2004 SCC 68.

[35] Finally, Mr. Carter, in support of the BMFA’s position that Smith was in a conflict of interest and, thus, breached his fiduciary obligations owed to the BMFA, took this Court to paragraphs 51-53 of the decision of Justice Perell in Rakowski v. Malagerio (2007), 2007 2214 (ON SC), 84 O.R. (3d) 696; 2007 2214 (ON SC), reproduced below.

[51] In People Department Stores Inc. (Trustee of) v. Wise, 2004 SCC 68, [2004] 3 S.C.R. 461, [2004] S.C.J. No. 644, at para. 35, Major and Deschamps JJ. discussed the duty of directors of corporations and stated:

The statutory fiduciary duty requires directors and officers to act honestly and in good faith vis-à-vis the corporation. They must respect the trust and confidence that has been imposed on them to manage the assets of the corporation in pursuit of the objects of the corporation. They must avoid conflicts of interest with the corporation. They must avoid abusing their position to gain personal benefit. They must maintain the confidentiality of information they acquire by virtue of their position. Directors and officers must serve the corporation selflessly, honestly, and loyally; see K. McGuiness, The Law and Practice of Canadian Business Corporations (1999), at p. 715.

[52] Major and Deschamps JJ. were speaking about directors of business corporations, but their words were apt for directors for not-for-profit corporations, who also have fiduciary obligations to the corporation of which they are directors. In Directors' Duties in Canada, 3rd ed. (Toronto: CCH Canadian Ltd., 2006), [page714] Barrie Reiter discusses conflicts of interest with respect to non-profit corporations and states:

A conflict of interest occurs where a personal interest is sufficiently connected with public or professional duties that it results in a reasonable apprehension that the personal interest may influence the exercise of professional or public responsibilities. Conflicts of interest can arise for directors when they or their friends of family stand to benefit financially from the actions of the board of directors, or when a director serves two or more organizations that may have adverse interests. As conflicts of interest can be both direct and indirect, directors must be vigilant in thinking about and identifying possible personal conflicts of interest.

[53] Mr. Reiter notes that a director may have a conflict of interest if he or she serves two or more organizations. This notion of conflict of interest being rooted in circumstances where a person has obligations of service to two or more persons or entities is a commonality of conflicts of interest problems. As lawyers know very well, it is a particularly acute concern in circumstances of advocacy where one is a spokesperson and representative of another. The undertaking of HSF is an advocate for the students of Humber College, and, in my opinion, it is not unreasonable to require that the Directors of HSF not be advocates for another student organization.

IV. Findings and Conclusions

[36] As Justice Rothstein for a unanimous Supreme Court of Canada has told us, at common law, there is only one civil standard of proof in Canada. That standard is proof on a balance of probabilities. What does that mean? It means anything above 50% probability. It means “more likely than not”. F.H. v. McDougall, 2008 SCC 53, [2008] 3 S.C.R. 41; 2008 SCC 53, at paragraphs 40, 43, 44, and 49.

[37] That may appear trite, but it is important here, particularly with regard to the third party claim. I do not at all agree with counsel for Smith that the third party claim has “no merit”, or that it is nothing more than some fanciful “distraction”. But, on the evidence as a whole, I am unable to conclude that it is more likely than not that Smith did anything, or failed to do anything, that makes him personally liable to indemnify the BMFA for what is owed to the OFC.

[38] Remember, this third party claim is against Smith in his personal capacity. I recognize that the BMFA had no real alternative to framing the claim that way, as the Bears does not appear from the evidence to have been a registered entity of any sort. If it was a “business”, then it was not a corporation, not a partnership, and not really a sole proprietorship either because it was not operated by Smith alone. It was not a charitable organization. It was not a non-profit corporation. It was a sports team, a sort-of unincorporated association.

[39] In any event, my point is that, although the Court understands why the BMFA has claimed against Smith personally, as opposed to the “Bears” (whatever that was/is), the consequence is that the Court must assess the evidence through that lens and query, is there a basis for Smith to be held personally liable for what is owed to the OFC? I do not think so.

[40] First, however, let us deal with the main action.

[41] As indicated above in these reasons, Mr. Carter, counsel for the BMFA, has conceded that there is no evidence that the OFC was actually aware that the Bears and the BMFA were separate and distinct entities, such that the BMFA would not be, or at least may not be, liable for the debts owing to the OFC by the Bears, if those alleged facts are facts at all.

[42] I agree with that concession. No such evidence exists in the record, whether testimonial or by way of exhibit.

[43] As indicated above in these reasons, when this Court suggested to Mr. Carter that the BMFA’s “ought to have known” argument is premised on the alleged suspicious circumstances of Smith effectively wearing two hats at the same time, one as President of the BMFA and the other as the operating mind of the Bears, Mr. Carter agreed.

[44] I agree that Smith should not have remained as President of the BMFA if he intended to be the President of and the driving force behind the Bears, especially not after it became clear that the Bears was struggling financially and would have to lean on the BMFA for assistance. The perception of a conflict of interest ought to have been clear, both to Smith and to everyone else on the Board of the BMFA. The potential to alienate other parents and players of the other BMFA teams, who invested time and money in the BMFA and who probably did not expect that the said money would be used, even in part, to prop-up a non-youth team that could not make it on its own, with the full blessing of the President of the BMFA who also happened to be the person in charge of that beneficiary team, the Bears, ought to have been obvious to all concerned – Smith and others on the Board of the BMFA.

[45] I find, however, that there was no good reason for the OFC to be suspicious. First, and I do not say this to be mean-spirited or condescending, as this Court recognizes, and admires, the exorbitant amount of time and effort that these volunteers of organizations like the OFC and the BMFA expend, all for the benefit of our communities and our young people, it must be observed that the OFC does not appear to be an organization that would have been sensitive to the notion of a perception of a conflict of interest. This is, as I understand the facts to be, the same organization that had its legal counsel also as its President and also as its trial counsel and a witness (albeit, at the behest of another party) at the same trial. Second, and more important, the circumstances here are markedly different than those that confronted the court in Ramey, supra, the case relied upon by Mr. Carter. In that case, the learned judge made an express finding of fact that the contracting party seeking to rely on the “indoor management rule” was aware that the person who signed the contract for the other side had no actual authority to sign the contract without the board’s approval, and that, therefore, it was incumbent on the party seeking to rely upon the said rule to make the necessary enquiries to ensure that the person who signed for the other side had done so with board approval (paragraph 39). In our case, there was no contract between the OFC and Smith/BMFA. Further, I make no finding that the OFC was aware of the BMFA’s By-Laws pertaining to, for example, expenditures that required Board approval. In addition, from the very outset, there was direct involvement of the BMFA quite apart from Smith himself, involvement that would have caused any reasonable party in the shoes of the OFC to conclude that the BMFA was fully aware of and in support of what Smith was doing, such as the BMFA paying the initial application fee for the Bears to join the OFC.

[46] In my view, the OFC dealt in good faith with Smith, whom it knew to be the President of the BMFA, and the BMFA as a whole, and the OFC was entitled to assume that the BMFA’s internal procedures had been followed. The OFC was not required to conduct any further enquiries about compliance with the BMFA’s internal procedures because the OFC had no actual knowledge to the contrary, and this Court cannot say that the OFC ought to have had knowledge to that effect, if in fact it is true that the BMFA’s internal procedures had not been complied with. The indoor management rules applies in these circumstances.

[47] Having dealt with and dismissed the couple of arguments made by Mr. Carter against the main action, this Court concludes that the OFC’s claim must be allowed. Mr. Carter was smart to write the letter that is marked Exhibit 8. Judgment is entered against the BMFA and in favour of the OFC in the full amount claimed, $25,000.00 plus interest.

[48] Let us now turn to the third party claim.

[49] There is no evidence, testimonial or by way of exhibit, that there was ever any discussion, agreement, or understanding of any kind, whether verbal or written, between Smith and anyone else at the BMFA or between Smith and the BMFA as a whole, to the effect that Smith was personally liable for the indebtedness of the Bears, whether that indebtedness was to the OFC or otherwise.

[50] There is no evidence, testimonial or by way of exhibit, that there was ever any demand to Smith from anyone else at the BMFA or from the BMFA as a whole, whether verbal or written, that Smith pay all or some of the Bears’ indebtedness, whether that indebtedness was to the OFC or otherwise, until well after Smith was ousted from the BMFA.

[51] There is no evidence, testimonial or by way of exhibit, that Smith ever did, in fact, personally pay for expenses owed by the Bears, whether those expenses were on account of the OFC or otherwise.

[52] There is no evidence, testimonial or by way of exhibit, that any of the Bears’ expenses, whether on account of the OFC or otherwise, were paid for by anyone or any entity besides the Bears (if one accepts that certain money in the BMFA’s bank account was specifically for the Bears) and the BMFA itself.

[53] Finally, there is no evidence, testimonial or by way of exhibit, that the other side of the Bears’ indebtedness, that is the OFC (the creditor), ever considered Smith to be personally liable for the Bears’ indebtedness to the OFC.

[54] Thus, the liability of Smith must depend on something quite apart from contract and/or debtor-creditor law. What, then, is the legal basis for Smith’s liability? We must look to the BMFA’s pleading to try to answer that question.

[55] The BMFA’s amended third party claim (called a “Defendant’s Claim” in Small Claims Court) includes allegations that Smith acted fraudulently (paragraph 5). That is a serious allegation. There is insufficient evidence to support it. This Court does not believe that Smith gave to the OFC the assurance that he did, that is that the BMFA would guarantee the Bears’ indebtedness, knowing that the said assurance was false and deliberately giving the false assurance in order to deceive the OFC.

[56] The BMFA’s amended third party claim alleges that the Bears is liable to the OFC (paragraph 5). The BMFA has not sued the Bears, however, but rather has claimed against Smith personally.

[57] The BMFA’s amended third party claim alleges that “[a]ny debts the Bears may owe OFC are solely the Bears and the responsibility of their officers/directors” (paragraph 10). The BMFA has not sued the Bears or any of those alleged officers/directors, however, except Smith.

[58] The BMFA’s amended third party claim alleges that the BMFA “does not retain possession or control of any property of the Bears” (paragraph 8). That allegation implies that the BMFA once did have possession or control of the property of the Bears, and that implication runs contrary to the BMFA’s argument that the BMFA had no affiliation with the Bears.

[59] The BMFA’s amended third party claim does not appear to admit that Smith did, in fact, guarantee to the OFC that the BMFA would cover the Bears’ indebtedness. See, for example, paragraphs 5, 6, and 7 of the pleading. With respect, I do not understand that non-admission. If Smith made no such guarantee, then the very underpinning for the third party claim evaporates.

[60] In any event, Bartle, Annen, and Smith all agree that the said assurance was given by Smith at the meeting at the Royal York Hotel, and this Court accepts that evidence and makes a finding of fact that Smith gave the said assurance.

[61] The BMFA’s amended third party claim alleges that Smith never had the authority to make the said assurance (paragraph 3). The pleading does not specify any By-Law or internal procedure of the BMFA that may be relevant to that assertion.

[62] It could be that the said assertion relates to section 6.07 of the BMFA’s By-Laws, which section was discussed in the evidence at trial, including by Manchulenko. That section does not apply, however, as it relates to “money spent” by the BMFA and not to the BMFA’s capacity to contractually guarantee indebtedness.

[63] It could be that the said assertion relates to section 5.01 of the BMFA’s By-Laws, which section was discussed in the evidence at trial, including by Attoh. That section, likewise, does not apply, however, as it relates to the general standard of care expected of directors and officers of the BMFA and not specifically to the BMFA’s capacity to contractually guarantee indebtedness.

[64] It could be that the said assertion relates to section 7.05 of the BMFA’s By-Laws, which section was discussed in the evidence at trial, including by Attoh. That section, also, does not apply, however, as it relates to the general duties of the various officers of the BMFA and not specifically to the BMFA’s capacity to contractually guarantee indebtedness.

[65] In fact, there is no specific By-Law or internal procedure of the BMFA that arises from the evidence at trial and which would appear to cover this situation (Smith, on behalf of the BMFA, guaranteeing the indebtedness of the Bears to the OFC) and which the BMFA can point to as having not been followed, which would support its argument that Smith did something that he had no authority to do.

[66] Of course, this Court is not blind to the fact that the By-Laws, generally, do not appear to have been complied with in terms of the entire idea of the Bears. In fact, the most important section of the entire By-Law #1, the stated “purpose” of the BMFA, which stated purpose appears not only in the first substantive section of the By-Law, section 2.01(a), but also under the heading of the document at the top of the very first page, is, on its face, inconsistent with the whole notion of the Bears. The BMFA is clearly for “youth”. Presumably, though it is not defined in the By-Law, “youth” means what it normally means – not adults. The Bears was a team, primarily if not exclusively, for adults. It makes no sense.

[67] But that incongruity cannot be the responsibility of Smith, alone. The BMFA clearly went along with it, despite the reservations of Machulenko. If the BMFA wanted to distance itself from the Bears, it ought to have never had anything to do with the application for entry into the OFC, or the payment of the application fee, or the holding of funds for the Bears including the donation from the City of Brampton, or the paying of any bills for the Bears, or providing equipment to the Bears, or loaning funds to the Bears (which its own third party claim, at paragraph 4, says that it did), and so on.

[68] In the end, this Court simply does not accept the theory that the Bears and the BMFA had very little or nothing to do with each other. To the contrary, the Bears, this Court finds, was every bit a part of the BMFA as any other BMFA team.

[69] When Smith, at the Royal York Hotel, stated to the OFC that the BMFA would take care of the Bears’ debt, he was simply saying what he would have said about the debt of any other BMFA team – it is the debt of the BMFA, and thus, the BMFA is responsible for it.

[70] This Court does not accept the assertion made in paragraph 3 of the BMFA’s amended third party claim – that Smith had no authority to say/do what he did. There was no formal BMFA Board resolution required, just as there would have been no formal BMFA Board resolution required for Smith to have said to the equipment supply company, for example, that the BMFA would cover the cost of the uniforms for team “X”. The Bears was similarly a team of the BMFA, and the OFC indebtedness was similarly a cost of doing business incurred by the BMFA on behalf of one of its teams.

[71] Finally, this Court should address the allegations made at paragraphs 6 and 7 of the BMFA’s amended third party claim.

[72] With regard to paragraph 6, this Court does not find that Smith breached the standard of care expected of him and as defined in section 5.01 of the By-Laws. I think that he acted honestly, in good faith, and in the best interest of the BMFA. I think, further, that he exercised an imperfect but sufficient degree of care, diligence, and skill that a reasonably prudent person would exercise in a comparable circumstance.

[73] Having said that, I repeat what was said earlier in these reasons. It was an error in judgment for Smith to have worn both hats of leading the BMFA and the Bears simultaneously, especially after it became clear that the Bears was not self-sufficient and in fact would be a drain on the BMFA’s financial resources. That error in judgment was not just his, however, as nobody else seemed to complain, except for perhaps Manchulenko, until near the very end of the Bears’ life.

[74] This Court agrees, as well, with Attoh, whose evidence I find generally to be impressive, that it would have been better for Smith to have not involved himself in the decision-making process of the BMFA, where those decisions stood to benefit directly the team that he was spearheading, because to do so may have created a perception of a conflict of interest. This Court finds no actual conflict of interest and no breach of fiduciary duty on the part of Smith, as alleged in paragraph 7 of the amended third party claim, but the optics were bad and should have been avoided.

[75] I think that what Smith and the others at the BMFA were trying to do was good for the BMFA and good for its players. The success of the Bears would have the been the success of the BMFA and would have provided a future for the youth that the BMFA was dedicated to. The BMFA has a pool of limited funds, however, and you should not have the leader of the organization also be the protagonist of one of its teams, vying for limited funds along with all of the other teams. It is fodder for complaint.

[76] If the BMFA goes down this road again, it should reach out to someone not on the Board to run the team, and it should amend its By-Law #1 to make it clear that the BMFA supports not only “youth” in football. Otherwise, it should have nothing at all to do with any Bears-like team in the future.

[77] In conclusion, the main action is allowed, and the third party claim is dismissed. Judgment against the BMFA, accordingly. Costs shall be dealt with as outlined above in these reasons, although the Court would encourage the parties and counsel to settle the issue of costs as between themselves.

[78] “More likely than not” is the standard of proof in a civil case. That is what proof on a balance of probabilities means. That standard has not been met by the BMFA, and that is why its third party claim was dismissed. It had some merit, but not enough.

___________________________ Conlan J.

Date of Release: April 19, 2023