Court File and Parties

COURT FILE NO.: CV-13-472848

DATE: 20140731

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

THE POLISH NATIONAL CATHOLIC CHURCH OF CANADA

Plaintiff

– and –

POLISH NATIONAL CATHOLIC CHURCH and ANTHONY A. MIKOVSKY

Defendants/Applicants

Marek Tufman, for the Plaintiff

Odette Soriano & Nasha Nijhawan, for the Defendants/Applicants

HEARD: July 19, 2014

ARCHIBALD j.

OVERVIEW

[1] There are two issues to be initially determined on this motion. The first is whether the corporate plaintiff has legal standing to seek the relief claimed in its Amended Statement of Claim. If it does not, the action should be dismissed on the basis that it discloses no reasonable cause of action under Rule 21.01(1)(b).

[2] The second issue to be determined is whether this action was properly authorized by the corporate plaintiff, or whether it should be stayed for non-compliance with Rule 15.02.

The Parties

[3] The defendant, the Polish National Catholic Church (“the Church”), is an unincorporated voluntary religious association with 118 parishes in 5 dioceses across the United States and Canada. The Constitution and Laws of the Church constitute the supreme law of the Church and are binding on all of its members, clergy, parishes, and dioceses. The Constitution provides that the highest body of the Church is the General Synod, which is convened every four years. The Supreme Council, made up of Bishops and prominent church members, administers the Church between the synods.

[4] Each of the five dioceses of the Church is led by a Diocesan Bishop who is responsible for administering his diocese in accordance with the Constitution. A Diocesan Council, composed of the Diocesan Bishop and elected and appointed members of the diocese, is responsible for assisting the Diocesan Bishop in the administration of the Diocese and is vested with the care of the Diocese`s funds. The Canadian Diocese is one of five dioceses of the Church. It is composed of all eight active parishes in Canada, along with the plaintiff Corporation.

[5] The defendant, Prime Bishop Anthony Mikovsky (the “Prime Bishop”), is the spiritual leader of the Church. He presides over the Synod and Supreme Council.

[6] The plaintiff, the Polish National Catholic Church of Canada (“the Corporation”), is a federal non-share capital corporation. Its objects, as described in its Supplementary Letters Patent, are: a) to carry on the work of the Church in Canada in accordance with the faith, doctrine, acts and rulings of the Church; and b) to uphold the Church’s Constitution. Along with the 8 active parishes in Canada, the Corporation constitutes one part of the Canadian diocese.

[7] The Corporation’s board of directors is composed of the members of the Canadian Diocesan Council. If an individual ceases to be a member of the Diocesan Council, the Constitution mandates that his or her position as a director of the Corporation is automatically vacated.

Bishop Sylvester T. Bigaj and Mr. Anthony Jasinski

[8] Although they are not formally parties to this action, two individuals are very much at the centre of this litigation. Bishop Sylvester T. Bigaj was the pastor of the Hamilton parish and Diocesan Bishop of the Canadian Diocese until he was deposed on January 7, 2013, by the Prime Bishop following a dispute. By virtue of his ecclesiastical position, Bishop Bigaj was also president of the corporate plaintiff.

[9] Mr. Anthony Jasinski is a Toronto businessman and lay member of the Hamilton parish. He was removed from his position on the Diocesan Council and Supreme Council of the Church by the Prime Bishop on March 26, 2013, after the two had a falling out over the disciplining of Bishop Bigaj. Until that time, Mr. Jasinski was also chairman of the corporate plaintiff.

Background

[10] None of the allegations in the parties’ factums or in the Amended Statement of Claim have been proven in court. The narrative that follows has been adapted from the Amended Statement of Claim and from the submissions of the parties and is provided for the purposes of context only. The following general comments, however, are not in dispute between the parties.

[11] Beginning sometime in 2007 or 2008, the Polish National Catholic Churches of the USA and Canada became concerned about the governance of the affairs of their sister church in Poland. The Prime Bishop at that time, Robert M. Nemkovich, appointed Bishop Bigaj as an overseer of Polish affairs.

[12] When the current Prime Bishop Mikovsky was elected in October of 2010, he was apparently less enthusiastic about investigating the affairs of the Polish Church. As early as 2011, Mikovsky started to express his reservations about the scope of Bishop Bigaj’s activities in Poland.

[13] In the fall of 2012, the relationship between the defendant Prime Bishop and Bishop Bigaj deteriorated. There is considerable disagreement between the parties as to what happened during this period. The Prime Bishop allegedly ordered Bishop Bigaj to stop all activities related to the Polish Church. Disagreements ensued, multiple meetings were convened, and votes were taken. In the wake of all of this activity, the Prime Bishop deposed Bishop Bigaj as a Bishop and priest of the Church in January 2013.

[14] This lawsuit was initiated in response to the Prime Bishop’s actions. Following these events, Mr. Jasinski openly criticised the actions of the Prime Bishop. The Prime Bishop, in turn, removed him from the Diocesan Council and the Supreme Council in March 2013. Neither Bishop Bigaj nor Mr. Jasinski have availed themselves of the internal appeal processes which are provided for in the Church’s Constitution.

[15] The initial Statement of Claim concerning the removal of Bishop Bigaj was amended to include declarations with respect to the removal of Mr. Jasinski. A meeting was held on May 23, 2014 to authorize the action against the defendants nunc pro tunc.

[16] Whether or not the Prime Bishop’s actions were authorized by the Constitution or done in accordance with the principles of natural justice are not to be determined on this summary motion. Those issues can only be resolved following a trial of this action on its merits. The only issues to be initially resolved by me are whether the corporate plaintiff has legal standing to bring this action, and whether the action was duly authorized.

ISSUE 1: STANDING

[17] The defendants assert that the corporate plaintiff lacks standing to bring this action. They primarily move under Rule 21.01(1)(b) to have the action dismissed on the basis that the pleadings disclose no reasonable cause of action.

[18] Rule 21.01(1)(b) reads as follows:

Any party may move before a judge to strike out a pleading on the ground that it discloses no reasonable cause of action or defence.

[19] The purpose of a Rule 21 motion is to enable a judge to strike claims and defences from the pleadings that do not, in law, have a chance of succeeding. No evidence is admissible on a Rule 21.01(1)(b) motion. The test to be applied in determining whether a pleading should be struck is whether, assuming the facts as stated in the Amended Statement of Claim can be proven, it is plain and obvious that no reasonable cause of action is disclosed. If the facts, taken as proven, disclose a reasonable cause of action, i.e. a cause of action with some chance of success, then the action should proceed. The threshold for sustaining a pleading is not high and a pleading must be read generously to allow for drafting deficiencies: See Hunt v. Carey Canada Inc., 1990 90 (SCC), [1990] 2 S.C.R. 959.

The Pleadings

[20] The plaintiff is seeking several declarations, including:

(a) That Bishop Bigaj continues to be a Bishop and priest of the Polish National Catholic Church (“PNCC”) and head of the plaintiff corporation.

(b) That Mr. Jaskinski remains an elected member of the Supreme Council of the PNCC and member of the Canadian Diocesan Council.

(c) That several decisions made by the Prime Bishop were contrary to the Church’s constitution and/or the principles of natural justice, and are of no force or effect; and

(d) That any steps taken by the Prime Bishop in respect of the administration of the affairs of the plaintiff are contrary to the principles of natural justice and are of no effect.

[21] The plaintiff also seeks a permanent injunction prohibiting the defendants from interfering with the status of Bishop Bigaj and Mr. Jasinksi within the PNCC and the plaintiff corporation and $2 million in punitive damages. According to the Amended Statement of Claim, the plaintiff alleges that Prime Bishop Mikovsky removed Bishop Bigaj as overseer in Poland unilaterally and without authority. It claims that only the Supreme Council had the authority to remove Bishop Bigaj because it was the body that had appointed him.

[22] It further states that Prime Bishop Mikovsky’s decision to depose Bishop Bigaj, ostensibly made by him in conjunction with a “college of bishops”, was contrary to and in gross excess of the powers and jurisdiction granted to the Prime Bishop by the PNCC Constitution. There is no “college of bishops” under the Constitution. The plaintiff also claims that the decision was contrary to the principles of natural justice. The plaintiff claims that Prime Bishop Mikvosky’s conduct was outrageous, malicious, and deliberately designed to harm the plaintiff and its Head Pastor.

The Position of the Parties

The Moving Party Defendants

[23] The moving party defendants assert that the plaintiff, as a corporate entity, whose objects are to promote the interests of the Church and uphold its Constitution, cannot initiate a proceeding which seeks declaratory relief regarding the private rights of two individuals to hold religious and administrative positions in the Church. In their submission, there is no or insufficient legal privity between the Corporation and the defendants with regard to the subject matter of the dispute.

[24] The defendants assert that a declaration that Bishop Bigaj is still a priest and a Bishop is an ecclesiastical matter and not a matter that has a direct connection to the Corporation. For the same reason, the Corporation has no interest in having Mr. Jasinski hold a particular position in it. That is both an ecclesiastical matter and a matter of personal concern of his and his colleagues.

[25] Finally, the defendants assert that the plaintiff has not pled any facts in the Amended Statement of Claim that give the Corporation legal standing to bring this suit. At no point is there an express pleading that articulates why or how the Corporation has a private law interest in having specifically Bishop Bigaj as its president and Mr. Jasinski as a corporate officer.

[26] I agree with the moving party’s submissions.

The Plaintiff

[27] The plaintiff submits that the composition of its own Board of Directors and the governance of the Canadian Diocese is of vital interest to it. It is of such a vital interest that it has a private law standing to seek the declarations in the Amended Statement of Claim. It submits that the removal of Bishop Bigaj and Mr. Jasinski from its Board of Directors has adversely affected it.

[28] Counsel for the plaintiff also points out that Statements of Claim have previously been issued in the name of the corporate plaintiff on behalf of individual members of the Church and on behalf of the Church as a whole. I was directed to Polish National Catholic Church of Canada et al. v. Cybruch et al (Court File No. 05-CV-286372 PD2) and Polish National Catholic Church of Canada v. Vercammen (Court File No. CV-05-012614-00).

[29] The plaintiff relies on several academic contributions, but no supportive case law, for the proposition that the specific composition of a Board of Directors is crucial to the success or failure of a corporation. These articles included papers published by the National Association of Corporate Directors, entitled Key Agreed Principles, 2009, and Board Composition Whitepaper, 2010.

[30] During submissions, counsel for the plaintiff specifically drew my attention to the following passage from Dr. Richard Leblanc’s book entitled Inside the Board Room: How Boards Really Work and the Coming Revolution in Corporate Governance (Wiley, 2005, Toronto), ch 7. at p. 156:

Boards of directors are small decision-making groups, who, in the final analysis, collectively determine, through the decisions that they make, the fate of a corporation. A board is not some amorphous entity that functions independently of its members. It is a group of people who have individual prejudices and views, behaviour patterns and cultural backgrounds. Whether a board works well and makes good decisions, or is dysfunctional and makes poor ones, depends largely on the manner in which board members work together. This in turn depends, to a considerable degree, upon the combination of behavioural characteristics of the various directors of the board. Finding that combination is the key to the unknown element in board effectiveness – board process – or to give it a generic term – board processes. As in most things, in the last analysis, the fate of the corporation depends on people.

[31] The plaintiff’s position is that this passage demonstrates that experts in corporate governance agree that the specific make-up of a board of directors is extremely important to the success of a corporation. I agree with that comment, but it does not advance the resolution of the question of whether the corporate plaintiff has legal standing to bring this lawsuit.

The Law

[32] An entity that has the capacity to sue or be sued can still only bring or defend an action if it has standing to do so. The basic requirements that must be met to have private law standing to bring a claim are summarized by Justice Perell in his text The Law of Civil Procedure in Ontario at p. 297:

Standing has been defined as “[a] party’s right to make a legal claim or seek judicial enforcement of a duty or right”. Standing or locus standi refers to the idea that to be permitted to present a matter to be resolved by the court, a person must have a sufficient private or special interest in the matter… Standing concerns whether a person with legal status has sufficient connection with the matter before the court to be permitted to participate in the resolution of the matter.

[33] Where a party is seeking declaratory relief, there must be both a dispute and a sufficient level of legal privity between the parties, as explained by Hood J. in Fraser v Houston, [1996] B.C.J. No. 2096 at para. 29 and 31:

It is my opinion, that while there need not necessarily be a cause of action between the parties before the court will have jurisdiction to grant declaratory relief, and that jurisdiction is quite broad, it is not at large or unfettered. A litigant seeking declaratory relief must demonstrate that he or she has a right which has been infringed by, or requires protection from, the other party. If the right cannot be demonstrated, the party does not have standing and the court does not have declaratory jurisdiction.

Generally there must be a dispute, and some privity in law, between the parties. In this regard it is stated in The Law of Declaratory Judgments at page 23:

A proper case for a declaratory judgment generally requires some privity in law between parties concerned, an existent right and an interference or dispute concerning the right. A petitioner who has no right in the nature of a claim capable of being enforced or redressed in a civil action cannot seek a judicial declaration for the evident reason that he cannot take advantage of or suffer the consequences of such an order: the lack of standing to sue robs the court of its declaratory jurisdiction.

Questions which are purely academic, hypothetical, obscure or of no relevance to the parties cannot form a suitable basis for an application for relief.

[34] Again, the question to be resolved on this motion is whether there is sufficient legal privity between the corporate plaintiff and the defendants to allow the plaintiff to seek the declarations and other relief set out in the Amended Statement of Claim.

Analysis

[35] In my view, the corporation does not have legal standing to bring this claim and as such, the pleadings disclose no reasonable cause of action against the defendants.

[36] I take no issue with the proposition advanced by the plaintiff that the composition of a Board of Directors is very important to the success of a company, but that proposition does not mean that the corporation itself has a legal interest in the composition of its own board. A corporation does not have a private law standing to seek declarations to appoint individuals to particular positions within itself. Neither does this plaintiff have the right or power to appoint individuals to particular positions in the defendant church. That is a purely ecclesiastical matter.

[37] Although it exists as a vehicle to support the work of the Church, the Corporation does not, in law, have a Bishop and has no interest in whether Bishop Bigaj is the Bishop of the Canadian Diocese. Similarly, the Corporation has no legal interest in whether or not Mr. Jasinski has a particular administrative role within the Church. These interests are the personal interests of those individuals and not the interests of the Corporation. The Corporation is a vehicle that furthers the objects of the Church, not vice versa.

[38] The Prime Bishop did not declare that Bishop Bigaj was no longer a member of the Board of Directors. He declared that he was no longer a priest. Certainly that decision, in effect, also rendered him unable to sit on the Board; however, there is nothing in the Constitution of the corporate plaintiff that gives it any authority over the appointment of priests. Neither does the Corporation have standing to say who the Diocesan Bishop is, or who should sit on the Supreme Council. Quite the opposite, it is only through standing in the defendant Church that an individual can be appointed to a position of authority within the Canadian Corporation.

[39] With respect to the prior lawsuits of the Polish National Catholic Church of Canada referenced above, they do not help the plaintiff in this case. It is of no consequence that the plaintiff has had statements of claim issued in its own name on behalf members of the church in the past. First of all, I should point out that these are not “cases” in the sense that the substance of the dispute was brought before a judge in an adversarial setting and thoroughly litigated. Each of these matters settled without any judicial disposition. They are not evidence that the corporate plaintiff has previously been found to be a proper party to litigate on behalf of the Church as a whole.

[40] Moreover, there is no question that in the right circumstances, the corporate plaintiff would very much be the proper party to initiate proceedings. Indeed, in the above referred actions, the substance of the litigation had to do with alleged interferences with real property and other tangible assets of the church which were held in the name of the corporate plaintiff. The case at bar, on the other hand, has nothing to do with the property and assets of the corporation.

[41] It is also important to point out that the plaintiff has not pled material facts in its Amended Statement of Claim that would somehow give it a private law interest in the relief it is seeking. Nowhere in the Claim does it articulate how a right or interest of the corporation has been adversely affected by the actions of the defendants. Baldly asserting in the abstract that it is ‘important’ to the affairs of the Corporation is not enough.

[42] The corporate body is not a proper plaintiff and, as a consequence, the pleadings cannot stand. The pleadings should have been constituted and commenced in the names of the individual parties, Bishop Bigaj and Mr. Jasinski.

ISSUE 2: AUTHORIZATION

[43] The defendants concede that the corporation could authorize this action (assuming it has standing to do so) nunc pro tunc. They complain, however, that the authorization was irregular and therefore invalid. Unlike standing, this is a procedural issue and not substantive in nature.

[44] Given my findings on Issue 1, I need not answer this question. That said, even if I had found that the plaintiff did have standing to bring this action, I would have decided that this particular issue can only be adequately answered with a short trial of the issue with the assistance of viva voce evidence.

[45] The defendants submit that on the issue of whether the action was properly authorized nunc pro tunc at the corporate directors’ meeting in Hamilton on May 23, 2014, the uncontested affidavit evidence of the Rev. Tadeusz Czelen should be accepted as dispositive of the matter. Counsel for the plaintiff had the opportunity to cross-examine Rev. Czelen on this specific issue but did not do so, nor did he file affidavit evidence to contradict Rev. Czelen’s assertions that the corporation did not validly authorize the law suit.

[46] The plaintiff, on the other hand, points out that while Rev. Czelen voted against the authorization, a majority of the corporate officers at the meeting voted in favour. Attached as exhibit ‘A’ to the supplementary affidavit of Mr. Jasinksi dated May 27, 2014, is a copy of the notice of the meeting of the Board of Directors which was distributed in advance of the meeting. A copy of the current Amended Statement of Claim was attached and also distributed in advance of the meeting. The plaintiff also submitted a copy of the minutes from that meeting, which reflects that each motion was introduced, seconded, and voted upon by the members present, with both Bishop Bigaj and Prime Bishop Mikovsky abstaining. Each of the motions was passed by a majority. This fact stands in contrast to the assertion made by Rev. Czelen that the directors did not know what they were doing when they voted at the meeting.

[47] The plaintiff relies on Bozzo v. Giampaolo, [2002] O.J. No. 5382 at para. 12 for the proposition that “ordinarily, obtaining a resolution of the board of directors of a corporation is dispositive of the question of whether or not a solicitor has the requisite authority of a corporate client.” In that case, Stinson J. went on to explain the purpose of a rule 15.02 motion at para 15:

One must not lose sight of the fact that the purpose of the rule 15.02 process is not to engage the court in a view of corporate governance issues, but rather, to require a solicitor to demonstrate that he or she has been duly authorized by a corporate client to commence the proceeding. Absent some evidence of fraudulent documentation or a complaint by a defendant who is either a corporate shareholder or director disputing the propriety of the commencement of the proceeding (which complaint, in any event, might more properly be raised in a parallel oppression remedy application under the relevant business corporations statute) the court should accept a corporate resolution that is proffered on its face as sufficient authority for a solicitor to act.

[48] Counsel for the defendants submitted in reply that the foregoing passage is only applicable where the authorization is made in the regular course of a corporation’s business, and the contents of the affidavit of Rev. Czelen dispute the propriety of the commencement of the proceeding.

[49] Based on the materials before me, including the sworn affidavit of Rev. Czelen, the combined minutes of the ratification meeting, and the majority vote in favour of the authorization, I am not prepared to make a determination without hearing viva voce evidence on this issue. In any event, there is no need for a trial of this issue to take place since I have concluded on a substantive basis that the corporate plaintiff had no standing to commence the lawsuit.

Costs

[50] The parties on this motion agreed in advance of hearing the motion that if the moving party defendants were successful, a fair amount in costs that the plaintiff could reasonably expect to pay was $36,500 all inclusive.

[51] I agree with that figure. It is a reasonable amount given the extensive materials compiled by both parties. I would also like to take this opportunity to thank all counsel for their focussed and eloquent submissions.

[52] This claim is struck because the corporate plaintiff has no legal standing to bring this claim.

Archibald J.

Released: July 31, 2014

COURT FILE NO.: CV-13-472848

DATE: 20140731

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

THE POLISH NATIONAL CATHOLIC CHURCH OF CANADA

Plaintiff

– and –

POLISH NATIONAL CATHOLIC CHURCH and ANTHONY A. MIKOVSKY

Defendants/Applicants

REASONS FOR JUDGMENT

Archibald J.