ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 1551/15

DATE: 2015-12-07

BETWEEN:

ASAD ALI SYED, SHAHID MUBEEN, JAMEEL ALAVI and CHRISTOPHER DANIEL BRAUN

Applicants

– and –

SHOUKAT CHOUDRY, EHAB MAHTAR, MUSLEHUDDIN MUZAMMIL, KHAMIS DOKA, NIGHAT PARVEEN, IQBAL HUSSAIN, SYED ABDUL BASIT, JUNAID KAYANI, MASOOD PEHLVI and ZIYAAD VAHED

Respondents

Shahzad Siddiqui, for the Applicants

Ravinder Sawhney, for the Respondents

HEARD: December 1, 2015

REASONS FOR JUDGMENT

GRAY J.

[1] This application has to do with the governance of a non-profit charitable corporation known as the Muslim Association of Milton. Fundamentally, it is contended that an election of directors purportedly held on February 22, 2015 should be declared null and void, and a new election should be held.

[2] For the reasons that follow, the application is granted.

Background

[3] Muslim Association of Milton (“MAM”) was incorporated under the Canada Corporations Act on August 23, 2006. The letters patent were amended by the issuance of supplementary letters patent on April 26, 2007.

[4] I have been furnished with by-law number 1 of the corporation, but it contains no information as to when it was promulgated. An amendment to the by-law was approved by Industry Canada on July 12, 2010.

[5] While the corporation was incorporated under the Canada Corporations Act, it is now governed by the Canada Not-for-Profit Corporations Act, S.C. 2009, c.23.

[6] Certain provisions of the by-law have particular relevance to the matter before me. Those provisions are:

Conditions of Membership

A. Membership in the corporation shall be limited to person(s) interested in furthering the objectives of the corporation and shall consist of anyone whose application for admission as member has received the approval for the Board of Directors of the corporation.

B. There shall be no membership fees or dues unless otherwise directed by the Board of Directors.

C. Any member may withdraw from the corporation by delivering to the corporation a written resignation and lodging a copy of the same with the secretary of the corporation.

D. Any member may be required to terminate by a vote of three-quarters (3/4) of the members at the annual meeting.

Member’s Meetings

A. The annual or any other general meeting of the members shall be held at the head office of the corporation or at any place in Canada as the Board of Directors may determine new election and on such day, as the said directors shall appoint.

B. At every annual meeting, in addition to any other business that may be transacted the report of the directors, the financial statement and the report of the auditors appointed for the ensuing year. The members may consider and transact at any business either special or general at any meeting of the members.

C. The Board of Directors or the president or Chairman shall have the power to call, at any time, a general meeting of the members of the Corporation. The Board of Directors shall call a special general meeting of the members on written requisition of three-quarters (3/4) of the members overall and one-third (1/3) of the members overall present shall constitute a quorum.

D. Fourteen (14) days written notice shall be given to each voting member of any annual or special general meeting members enough information must be given to each member in the bulletin to make reasoned decision.

E. Each voting member present at a meeting shall have the right to exercise one vote, a member may, by means of a written proxy, appoint a proxy holder to attend and act at a specific meeting of members, in the manner and to the extent authorized by the proxy. A proxy holder must be member of the corporation, if proxy right given a form proxy or a reminder of proxy right to be attached to notice of meeting.

F. A majority of the votes cast by the members present and carrying voting rights shall determine the question in the meetings except where the votes or consent of a greater number of members is required by the Act or these By-laws.

G. No error or omission is giving notice of any annual or general meeting or any adjourned meeting whether annual or general, of the members of the corporation shall invalidate such meetings or make void any proceedings taken thereat and any member may at any time wave notice of any such meeting and ratify, approve and confirm any or all proceedings taken or had thereat. For the purpose of sending notice to any member, director or officer for any meeting or otherwise, the address of the member, director or officer shall be his last address recorded on the books of the corporation.

Board of Directors

A. The property and business of the corporation shall be managed by a board of directors, comprised of a minimum of three (3) directors. The number of the directors shall be determined from time to time by a majority of the directors at a meeting of the Board of Directors. Directors must be individuals, 18 years of age with power under law to contract. Directors need not to be members.

B. The applicants of the corporation shall become the first directors whose term of office on the Board of Directors shall continue until their successors are elected.

C. Directors shall be elected for a term of five (5) years by the members at an annual meeting of members.

D. The office of a director shall be automatically vacated:

a) If at a special general meeting of the members a resolution is passed by three-quarters (3/4) of the members overall that (s)he be removed from office.

b) If a director has resigned his or her office by delivering a written resignation to the secretary of the corporation.

c) If (s)he is found by a court to be of unsound mind.

d) If (s)he become bankrupt or suspends payments or compounds with his creditors.

e) On death,

Provided that if any vacancy shall occur for any reason in this paragraph contained, the Board of Directors by majority vote, may, by appointment, fill the vacancy with a member of the corporation.

A retiring director shall remain in office until the dissolution or adjournment of the meeting at which his or her retirement is accepted, and his successor is elected.

There may be no renumeration to the directors as agreed upon.

[7] The governance of the corporation has been the subject of some controversy in the past.

[8] The respondent Shoukat Choudry swears that the organization was started by him through a personal donation of $30,000. He acknowledges that in the past few years MAM has faced challenges which have arisen from some board members not following protocol. Included in this was an audit by the Canada Revenue Agency, in which it criticized the organization’s record-keeping, and reminded the corporation that, as a charitable corporation, it could only make donations in accordance with its charitable objects.

[9] In his affidavit sworn on April 28, 2015, Mr. Syed, one of the applicants, swears that after getting charitable status in 2009, MAM held its first ever elections in 2011. He asserts that Mr. Choudry and his supporters stacked the membership of the corporation with their family, friends and neighbours for the purposes of the election. There were complaints about irregularities and the fairness and transparency of the election process. He alleges that Mr. Choudry has been in control of MAM finances and was a signing officer from 2005 until 2012, and from December, 2014 to date. Mr. Choudry has also been the president of the organization for much of that period. From the time of the 2011 election, Mr. Choudry was asked to produce financial records and legal documents and no proper records could be located. On September 13, 2012, a letter was sent to Mr. Choudry by a number of concerned members, complaining about his activities. A further letter was sent to him on October 4, 2012, requesting an investigation into certain financial transactions. Rather than conduct an investigation, Mr. Choudry resigned on October 9, 2012, without explanation. Mr. Choudry’s membership was suspended by the Board after the CRA audit.

[10] A petition was delivered to the Board of Directors, signed by 63 members, requesting a special general meeting of the members. Such a meeting was held on December 7, 2014, although it is alleged by the applicants that some non-members were in attendance.

[11] All of the members of the Board resigned.

[12] Junaid Kayani, the solicitor for the corporation, advised those present at the meeting that since the entirety of the Board had resigned, it would be necessary to elect a new Board. He advised that volunteers would be needed to transition the organization until an election could be called, which was set for February 22, 2015. An interim Board of Directors was selected by those present at the meeting by a show of hands.

[13] As of December 7, 2014, the membership list of the corporation consisted of 197 members.

[14] A meeting was called by the interim Board on January 18, 2015. Mr. Syed, in his affidavit, says the interim Board announced they would be staying on indefinitely until certain changes they were proposing were implemented. He says members who were present demanded that an election proceed on February 22, 2015 as previously announced, and ultimately the interim board and the solicitor, Mr. Kayani, agreed that the election would proceed on February 22, 2015.

[15] There were rumours circulating among the membership that the interim Board was expanding the membership list to include people who were not on the list of 197 that was in existence on December 7, 2014, the date the old Board of Directors resigned. A petition was delivered to the interim Board, signed by 78 people, in February, 2015, complaining about the addition of members by the interim Board. Notwithstanding these complaints, the members’ list that was used for the election actually contained 281 names.

[16] On January 28, 2015, the interim Board issued a notice outlining the procedure for the election to be held on February 22, 2015. It was stated that a board member’s term is two calendar years. It was announced that the notice and call for nominations would be on Wednesday January 30, 2015. The membership list for the election was to be as at Sunday February 15, 2015. The close of nominations was to be Sunday February 15, 2015, at 4:00 p.m. Candidates would meet members on Friday February 20, 2015, from 7:00 p.m. to 10:00 p.m. The election and counting of results would occur on Sunday February 22, 2015.

[17] On February 16, 2015, one of the applicants requested a list of members. No list was forthcoming.

[18] On February 17, 2015, Mr. Kayani, the solicitor, requested photo identification from candidates. This was supplied by February 18, 2015.

[19] On February 19, 2015, another request for a list of members was made. Mr. Kayani provided a list that day, at 3:18 p.m. The list had increased from 197 to 281.

[20] On February 19, 2015, Mr. Syed requested an independent investigation of the election process. The next day, counsel for some of the applicants requested that the election be postponed. It was asserted that if the election went ahead on February 22, 2015, legal proceedings would be commenced.

[21] On the evening of February 20, 2015, a “meet and greet” was held for members to meet the candidates. Hardly any members attended.

[22] On Saturday February 21, 2015, six out of 15 candidates boycotted the election and withdrew their names as candidates.

[23] On Sunday February 22, 2015, the election proceeded and members of the interim Board were elected as directors for two years.

[24] Little explanation has been offered by the respondents for why the membership list was increased from 197 members to 281. In his affidavit, Mr. Choudry says additional members were added to the list because their membership had been improperly revoked. No other details are provided. The respondents produced what appeared to be slides shown to the attendees at the meeting on January 18, 2015, in which it is stated that the interim Board reconciled membership lists for years 2012, 2013 and 2014; found that some memberships were discontinued; sent letters to 2012/2013 discontinued members, reinstating their memberships; and sent letters to all members to renew their memberships. Once again, no other explanation or any details are provided.

Submissions

[25] Mr. Siddiqui, counsel for the applicants, submits that there must be a new election for the Board of Directors. He submits that the election on February 22, 2015 was fundamentally flawed in a number of respects.

[26] First, he submits that the so-called meeting on December 7, 2014, was not a proper meeting of the members of the corporation. It appears that a number of non-members were in attendance. What occurred was done by way of a show of hands, which is not a proper way to run an election, even for an interim Board. There was no opportunity to have proper nominations of candidates for an interim Board, nor to properly elect them.

[27] Even if it could be concluded that the deficiencies in that meeting can be overlooked, what happened subsequently was not in accordance with the by-laws of the corporation, and was not done according to law.

[28] Mr. Siddiqui submits that the election should have been run based on the membership list as it existed on December 7, 2014, the date the election was called. No explanation has been provided, except for vague generalizations, as to how the list ballooned from 197 to 281. Furthermore, there is nothing in the by-law that requires members to “renew” their memberships before an election. Such a requirement could well have served to eliminate people who were properly members who did not renew.

[29] Furthermore, no real opportunity was given to candidates, particularly the applicants, to meaningfully campaign. They were denied information about how to contact members either by telephone or email, while that information was available to the respondents. They were only provided with a membership list very late in the process. It is doubtful that members were aware of the “meet and greet” on February 20, 2015, because very few showed up.

[30] In the result, Mr. Siddiqui submits, the election held on February 22, 2015, was fundamentally flawed, and must be set aside. A new election must be held.

[31] Mr. Sawhney, counsel for the respondents, submits that the application should be dismissed.

[32] Mr. Sawhney submits that the corporation is run by volunteers, and a standard of perfection is not required of them. While it is clear that perfection was not achieved here, any defects were of a minor variety, and would not affect the overall fairness of the election. He submits that the court should step back and determine, on an overall basis, whether the election was fairly run. If it was, the court should decline to interfere.

[33] Mr. Sawhney submits that traditionally the courts have been reluctant to interfere in the internal governance of a charitable or religious organization. He submits that the court should adopt a policy of deference, and in the circumstances of this case there are no grounds to interfere.

[34] Authorities referred to by counsel include Noori v. Abdin (2011), 2011 ONSC 5452, 92 B.L.R. (4th) 145 (Ont. S.C.J.); Islamic Society of Toronto v. Abowat, 2012 ONSC 1853; Rexdale Singh Sabah Religious Centre v. Singh, 2015 ONSC 1807; Bala v. Scarborough Muslim Association (2008), 2008 63179 (ON SC), 305 D.L.R. (4th) 186 (Ont. S.C.J.); Warriors of the Cross Asian Church v. Masih (2007), 2007 41440 (ON SC), 87 O.R. (3d) 169 (S.C.J); Nigerians in Diaspora Organization Canada v. Ozemoyah, 2011 ONSC 4696; and Pankerichan v. Djokic (2014), 2014 ONCA 709, 123 O.R. (3d) 131 (C.A.).

Analysis

[35] It is clear that the court should be reluctant to interfere in the internal workings of a charitable or religious organization: see Lakeside Colony of Hutterian Bretheren v. Hofer, 1992 37 (SCC), [1992] 3 S.C.R. 165; Sahaydakivski v. YMCA of Greater Toronto, [2006] O.J. No. 1368 (S.C.J.); Wang v. Pritchard, [2007] O.J. No. 798 (S.C.J.); and Bala v. Scarborough Muslim Association, supra. In Lee v. Lee’s Benevolent Assn. of Ontario, [2004] O.J. No. 6232 (S.C.J.), Nordheimer J. stated, at para. 12:

Non-profit organizations such as the Association should not be required to adhere rigorously to all of the technical requirements of corporate procedure for their meetings as long as the basic process is fair. Nor should the court be too quick to grant relief in such circumstances that may only serve to encourage a disgruntled member of such an organization to seek such relief. Absent some demonstrated evidence that any irregularities went to the heart of the electoral process or lead to a result which does not reflect the wishes of the majority, the court should be loathe to interfere in the internal workings of such groups.

[36] With this perspective as a starting point, it is nevertheless the case that the statutory requirements and the by-laws of the corporation set out basic requirements that must be followed. Some of these requirements are not technical. The definition of who can and cannot vote is one of them. The term to be served by a person elected is another. Furthermore, some elements of basic fairness are required. Candidates must have some ability to reach the people who may vote for them. This is particularly important if some candidates have information that allows them to reach members and others do not.

[37] There are some elements here that cause me to conclude that the election on February 22, 2015 was flawed, and must be set aside. A new election must be held. My brief reasons follow.

[38] It is clear that the Board of Directors that was in place prior to December 7, 2014 was properly elected and had full authority to govern the affairs of the corporation. It is not contended otherwise. What caused all the members of that board to resign effective December 7, 2014 is not, strictly speaking, before me. Until that date, the Board of Directors that was in place had in its possession a membership list. In my view, it is that list that should govern unless it can be shown that it was inaccurate.

[39] What was put in place on December 7, 2014, was an interim board. It was likely not properly elected pursuant to the by-law of the corporation, but in my view that would not be fatal. It was appointed only as an interim body to be in place pending properly-conducted elections for a new board.

[40] The onus is on the respondent to show, on a balance of probabilities, that the membership list that was in place on December 7, 2014 was inaccurate. They have not done so. At best, they have suggested that members had had their memberships improperly revoked in 2012 and 2013. No other details are provided. That is not sufficient. There is a suspicion that the respondents have inflated the list with their supporters. The respondents have not dispelled that suspicion.

[41] The interim Board also required that members “reaffirm” their memberships prior to the election. There was no authority to do so under the by-law. Members of the corporation are those who are approved as such by the Directors. The by-law states that a member may withdraw from the corporation by delivering a written resignation. There are no membership fees or dues. A member may be terminated by a vote of three-quarters of the members at an annual meeting. There is simply nothing in the by-law that requires that a member reaffirm his or her membership.

[42] In the result, the election was run based on a membership list of 281 members, a significant number of whom had been added to the list that was current as of December 7, 2014. No satisfactory explanation has been offered, other than the general statement that those who were improperly discontinued in 2012 and 2013 were reinstated. Furthermore, since members were required to reaffirm their memberships, in the absence of any requirement to do so under the by-law, it is quite possible that some members who were actually entitled to vote were denied the opportunity to do so.

[43] The election that was held on February 22, 2015 was for directors who would serve a term of two years. The term specified by the by-law is five years.

[44] These defects, in my view, are fundamental. They cannot be overlooked as mere technical irregularities. Apart from the allegations as to the fairness of the election, such as giving candidates inadequate opportunities to canvass, these defects are so fundamental as to require the election to be set aside, and to require a new election to be held.

[45] Because of the factionalism that has plagued this organization, it is important, in my view, that the election be conducted by an independent person. The current members of the board, who in my view were improperly elected, cannot be charged with the obligation of running the election. They have a personal stake in the outcome, and anything they do will be suspect.

[46] I do not think I need to appoint a monitor, as was done by Brown J. (as he then was) in Ontario Korean Businessmen’s Assn. v. Oh, [2011] O.J. No. 5285 and [2012] O.J. No. 138. I think it will be sufficient if I appoint an independent solicitor to run the election and report to the court.

[47] I appoint Robert Martin, of Martin & Hillyer in Burlington, as the independent solicitor to conduct the election.

[48] The election shall take place on January 24, 2016, on terms and conditions as specified by the independent solicitor, subject to the following:

a) the election shall be conducted based on the list of 197 members in existence on December 7, 2014, subject only to any resignations the independent solicitor is satisfied have occurred;

b) no canvassing of members shall be by telephone or electronic means, unless the independent solicitor is satisfied that all candidates have access to the same information.

[49] The reasonable fees and disbursements of the independent solicitor will be paid by the corporation. If there is any dispute as to the amount, it will be resolved by me.

Disposition

[50] For the foregoing reasons, I order as follows:

a) the election of the Board of Directors of the Muslim Association of Milton, held on February 22, 2015, is declared to be null and void;

b) a new election for the Board of Directors of the Muslim Association of Milton shall be conducted on January 24, 2016;

c) five (5) Directors shall be elected;

d) the members of the association entitled to vote at the election shall be those listed on Exhibit “V” of the affidavit of Asad Ali Syed, sworn March 19, 2015, save and except persons who have resigned, as determined by the independent solicitor;

e) the election shall be held under the supervision of an independent solicitor, Robert Martin, as appointed by the court, pursuant to terms and conditions as specified by the Court and by the independent solicitor;

f) I direct that the parties, and their counsel provide the independent solicitor with whatever information and material he requires in order to conduct the election;

g) the fees and disbursements of the independent solicitor shall be paid by the Muslim Association of Milton as fixed by the court;

h) pending the election, the current members of the Board of Directors, and its officers and employees, may manage the affairs of the Association on a day-to-day basis, but shall not spend any funds of the Association other than in the ordinary course of business and for maintenance of the mosque.

[51] The independent solicitor shall report to the Court after the election is held. At the same time, he shall submit his invoice for his fees and disbursements. No hearing is necessary. I will fix the fees and disbursements of the independent solicitor after I have received submissions of the parties, as provided for in the next paragraph.

[52] I will entertain written submissions with respect to costs of this application, not to exceed three pages together with a costs outline or bill of costs. At the same time, I will entertain submissions as to the fees and disbursements of the independent solicitor. Mr. Siddiqui shall have five days after the filing of the report of the independent solicitor with the Court to file his submissions, and Mr. Sawhney shall have five days to respond. Mr. Siddiqui shall have three days to reply.

Gray J.

Date: December 7, 2015