SUPERIOR COURT OF JUSTICE – ONTARIO

COMMERCIAL LIST

RE: Ontario Korean Businessmen’s Association, Cheol Joong Kang, Yang-Pyung Kim and Hichul Ko, Applicants

AND:

Seung Jin Oh, Hyung Byung Kwon, Jong Hwa Lee, Yang Kon Kim, Gu Yeob Lee, Dong Hun Lee, Seung Yeol Baek, Sang Heum Yeon, Gun Sik Lee, Woo Sik Kim, Doo Seung Lee, Yong Sang Cho, Tae Kyu Choi, Moon Taek Lim and Bum Hee Choi, Respondents

BEFORE: D. M. Brown J.

COUNSEL: R. Macklin and N. Wilson, for the Applicants

M. Hassell, for the Respondents

C. Ho, for the Monitor, Morgan & Partners Inc.

T. Carter, court-appointed election Supervisor

HEARD: January 13, 2012

REASONS FOR DECISION

I. DIRECTIONS FOR COURT-ORDERED ELECTIONS OF A NOT-FOR-PROFIT CORPORATION

[ 1 ] At the Annual General Meeting of the Ontario Korean Businessmen’s Association (the “Association”) held on November 15, 2011, a dispute came to a head about the governance of the Association. By Reasons dated November 25, 2011 ( 2011 ONSC 6991 ), I made a number of orders, including (i) appointing Morgan & Partners Inc. as Monitor of the affairs of the Association, (ii) directing the respondents to vacate the office premises of the Association, (iii) directing the holding of a special meeting of members within 60 days to elect directors and officers of the Association, and (iv) requiring counsel to consult with a view to selecting a corporate lawyer or retired judge of this Court to supervise all aspects of the election process. Finally, I ordered that:

Any party, the Monitor, or the person selected to supervise the elections may apply back to this Court, on two days notice, for directions concerning any matter relating to this order.

[ 2 ] The parties have selected three elections supervisors: The Honourable Patrick J. LeSage, Terrance Carter and Theresa Man, both of Carters Professional Corporation.

[ 3 ] On December 23, 2011 the Monitor brought a motion for directions in respect of the ordered elections, including a request for expanded powers for the Supervisors to decide numerous issues which had arisen about the elections. I adjourned that motion to a 9:30 appointment on January 5, 2012, at which time I gave directions regarding the hearing on January 13, 2012. Those directions included the following order:

Although applicants cannot consent to any order regarding the www.OKBA.ca website, in light of the materials which I have read, I order that from this date forward no information be posted on the website about the pending election or any issues related to it which have not been approved by the Supervisors and that any such information currently posted be removed.

[ 4 ] Two motions were before me at the January 13 hearing: (i) the Monitor’s motion for directions regarding the powers of the Supervisors, and (ii) the Respondents’ motion seeking the determination of certain election-related issues. The Monitor filed a supplementary report containing lists of all issues raised by the parties and the Supervisors. I thank the Monitor for its efforts in that regard; the lists proved quite useful.

[ 5 ] The respondents sought to file some late-served affidavits at the hearing. The applicants opposed, but had prepared a brief responding affidavit. After chastising the parties for the late delivery of materials, I accepted all the affidavits for consideration, but I have discounted many of the disputed items because they are not relevant to the issues which I must decide.

II. APPLICANTS’ OBJECTION TO THE HEARING OF THE RESPONDENTS’ MOTION

[ 6 ] Counsel for the applicants clarified that since my order of November 25, 2011 his firm has acted only as counsel for the Association, and not as counsel for the individual applicants, although he communicates with them from time to time. The Association took issue with some of the relief sought by the respondents arguing that it exceeded the bounds of a motion for directions and was an attempt to revive their application which I had stayed. I disagree with the Association’s position. Most of the relief sought by the respondents related to election issues and was properly brought before the court pursuant to the “come-back” clause in my November Order. As described at the end of these Reasons, the respondents lacked standing to seek relief in respect of Mr. Yoon’s employment.

III. CLARIFYING THE SUPERVISORS’ POWERS

[ 7 ] The Monitor seeks an order clarifying and expanding the powers of the Supervisors regarding their management of the ordered elections. Specifically, the Monitor seeks the following order:

The Supervisors are hereby directed and empowered to supervise and direct the Association in calling, holding and conducting the special meeting of members to elect directors and officers of the Association and have the power to deal with all aspects of the said meeting on a summary basis, including but not limited to interpreting the bylaws, rules and policies of the Association; resolving any inconsistencies or deficiencies in the bylaws, rules and policies; as well as determining the list of eligible members who can vote at the meeting, the number of and which directors and officers are eligible to be elected, how proxy votes are to be conducted, how the said meeting is to be held including, but not limited to, determining the time and location, setting rules for the conduct of the meeting, and chairing the meeting.

Both parties consent to the order sought.

[ 8 ] Given the number of issues which have arisen about the ordered elections, it is clear that the Supervisors require broad powers to manage the elections given the likelihood of numerous practical questions arising before and during the election. I will grant the order, but with one significant modification.

[ 9 ] In my November Order I directed the holding of a special meeting of members to conduct the elections of officers and directors. The issues raised by the Supervisors revealed the practical implications of a tension inherent in that order. Whereas Section 20(2) of the Articles (By-laws) provides for the election of a certain number of directors at the regular general members’ meeting, Article 7 of the Rules of Election describes a regional ballot-style process, not a meeting, for the election of the President and Vice-Presidents. The ballot process appears designed to ensure the greatest possible participation in an officers’ election by Association members across Ontario.

[ 10 ] Given the significant number of members who reside outside of the Toronto/Mississauga area, I am concerned that requiring an election for both officers and directors by way of a special meeting of members in one location, in the middle of the winter, could place obstacles in the way of many members participating in the election. At the same time, the cost of establishing ballot stations throughout the Association’s regions could be significant.

[ 11 ] Mr. Carter, one of the Supervisors, suggested that one option would be to conduct a parallel process under which (i) the election of officers – i.e. the President and the two Vice-Presidents – would take place by way of ballots mailed-in to the Supervisors, while (ii) the election of directors would occur at a special members’ meeting called for that purpose. Members could vote at that meeting either in person or by mailing to the Monitor directed proxies specifying the candidates for whom they wished to vote. The meeting to elect directors would be held, the Monitor would have no discretion in voting the proxies, but would have to vote them as directed by the members, and professional scrutineers would assist the Supervisors. Such a parallel process would honour the different voting methods contained in the Articles and Rules, while providing protection against the misuse of proxies by requiring the mailing-in of specifically directed proxies.

[ 12 ] On reflection, I think the process proposed by Mr. Carter is a fair one in the circumstances, respecting (albeit in a slightly modified way) the different voting methods found in the Association’s governance documents. I approve it. It has also become apparent that (unfortunately) a number of election-related issues have arisen, necessitating more time to prepare for the election than initially anticipated. Accordingly:

(i) I vary paragraph 52(iv) of my November Order to read: “The election of directors and officers of the Association shall take place on or before March 31, 2012, with the election of the President and two Vice-Presidents to be conducted by way of a mail-in ballot and the election of directors and auditors to occur at a special members’ meeting called solely for that purpose”; and,

(ii) I grant the motion of the Monitor in respect of the powers of the Supervisors and order as follows:

THIS COURT ORDERS THAT the Supervisors are hereby directed and empowered to manage, supervise and direct the Association in conducting the election of directors and officers of the Association and have the power to deal with all aspects of the election on a summary basis, including but not limited to interpreting the bylaws, rules and policies of the Association; resolving any inconsistencies or deficiencies in the bylaws, rules and policies; as well as determining the list of eligible members who can vote in the election, the number of and which directors and officers are eligible to be elected, how proxy votes are to be conducted, how the election to be held including, but not limited to, determining the time(s) and location(s), setting rules for the conduct of the election, and managing the election.

THIS COURT ORDERS THAT the Supervisors shall keep the Monitor advised in the course of discharging their duties.

THIS COURT ORDERS THAT the costs and services of the Supervisors shall be borne by the Association.

[... remainder of the decision continues verbatim exactly as provided ...]

________ (original signed by) _____________
D. M. Brown J.

Date : January 15, 2012