Ahmed v. Hossain, 2017 ONSC 5660

CITATION: Ahmed v. Hossain, 2017 ONSC 5660

COURT FILE NO.: CV-17-11823-00CL

DATE: 20170922

ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST

B E T W E E N:

MD. AKIL AHMED, MUHAMMAD KAMRUZZAMAN, FAZAL MUHAMMAD, AKM JOINAL ASBEDIN, and SHAHJAHAN MD. UDDIN

Applicants

– and –

LOKMAN HOSSAIN, MONIRUZ ZAMAN and MOHAMED Z. RAHIM a.k.a MD. ZAHIDUR RAHIM a.k.a. MOHAMMED JAHIDUR RAHIM a.k.a. BOBBY Z a.k.a. ZAHID BOBBY

Respondents

BEFORE: F.L. Myers J.

COUNSEL: Jayson W. Thomas, for the Applicants

Mohammad Abdur Razzak, for the Respondents

HEARD: September 20, 2017

endorsement

The Issues

[1] Danforth Community Center is a not for profit, charitable corporation in Toronto. It serves as a community centre and mosque for Bengali speaking members of the Sunni Muslim faith.

[2] The respondents are the elected members of the board of trustees of the DCC. The applicants claim that the trustees have unlawfully taken control of the board of directors of DCC. The applicants also claim that the respondents have unlawful purported to bar the applicant Kamruzzaman from entering the Mosque indefinitely and unlawfully barred him and the applicant Muhammad from the running for any administrative office of the DCC for 10 years.

Outcome

[3] While there are some facts in dispute between the parties, I do not need to resolve any competing evidence to resolve the issues in the case. Neither the board of trustees nor the members at emergency general meetings on April 2 and 9, 2017 had the right under the corporation’s constitution or the Corporations Act, RSO 1990, c C.3 to dissolve the board of directors or to oust the two applicants. The court therefore declares the purported dissolution of the board of directors and the suspensions of rights of the applicants Kamruzzaman and Muhammad to be unlawful and of no force or effect.

The Facts

[4] The DCC was founded in 2008. It has between 50 and 60 voting members. However I am told that as many as 800 people attend services and programmes at the Mosque and community centre.

[5] The corporation’s general by-law serves as its constitution. It was enacted in 2008 and appears to have been amended in 2015. While the applicants argue that the respondents did not prove specifically all of the formalities of the enactment of the 2015 amendments, I am satisfied on the balance of probabilities that the 2015 version of the constitution is the operative document. Prior to the litigation, the parties acted under it without controversy. The version before the court appears to be a copy of a valid document taken from the corporate register in accordance with the documentary proof provisions of sections 298 to 302 of the statute.[^1]

[6] The constitution creates a board of trustees and a board of directors. Both are elected bodies. The trustees hold the property of the DCC in trust for members. They are required to monitor the use of the DCC to ensure that the property is used in accordance with DCC’s objectives as a Masjid, School for Islamic Education, for Muslim Funeral Services, for Dawa and Social Services. The trustees are also required to monitor the performance of the board of directors. If the trustees are dissatisfied with the performance of the board in certain listed areas, they are obliged to meet with the board of directors and the trustees can then require the directors to adhere to the trustees’ decision or recommendation on such matters. Otherwise, the trustees are required to respect the decisions of the board of directors.

[7] The board of directors is responsible for managing the daily operations of the DCC. It is responsible for hiring employees, managing the financial affairs of the centre, planning, interpreting and proposing amendments to the constitution, and the like. If a vacancy occurs on the board of directors between biennial elections, the President, or in his absence, the Vice President, is empowered to appoint interim replacements pending the next election.

[8] On March 29, 2017, the Corporate Secretary of the DCC called an emergency members’ meeting after consultation with a trustee and the President. The meeting was called for April 2, 2017. The minutes of the meeting record that:

Considering the eminent [sic] urgency and the disagreement between the board of Trustees and [Board of Directors] – by-law -5.4 [actually 5.6] Finding no other alternative, both boards agreed to attend the meeting rightfully repealing by-law 10.3/b, since the organization got tangled in multiple lawsuits, police involvement, legal expenses issue, Imam issues- above all the reputation and the future of the Mosque.

[9] The reference to repealing by-law 10.3 seems to be a reference to the provision that allows the board of directors to call an emergency members’ meeting on service of a written notice “clearly stating the purpose and reasons for calling that meeting.” The notice sent to members spoke of a desire to resolve “ongoing issues” and falls far short of “clearly stating the purpose and reasons” for the meeting.

[10] Paragraphs 3 and 4 of the minutes of the April 2, 2017 meeting record that the meeting was conducted by the board of trustees, the President, and the Secretary. The board of trustees purported to dissolve the board of directors and to usurp the right to act as the board of directors. It recites paras. 9.a, 9.c and 9.e of the constitution as the basis for these actions. Para. 9.1 (a) simply provides that the board of trustees holds the property of the DCC in trust for the members. Para. 9.1 (c) is the provision referred to above by which the board of trustees can require the board of directors to meet with it and to follow its directions on certain listed matters. Para 9.1 (e) provides the board of trustees with the power to:

Act as a Board in the event that the Board is dissolved or ceases to exist for any reasons until such time that a new Board is elected. But no more than one month after the Board of Directors is dissolved.

[11] Mr. Razzark argued several times that the members voted to dissolve the board of directors. This submission was not supported by the evidence. In addition to the contemporaneous minutes and agenda confirming that the board of trustees purported to dissolve the board of directors, the respondents’ evidence in para. 26 of Mr. Rahim’s affidavit is that,

The Trustees took over the Board of Directors of the Center on April 2, 2017. This takeover was made under clause 9.1 (e) of the Constitution and was approved by a resolution dated April 2, 2017 which was adopted by the members in the [Emergency General Meeting] on April 9, 2017

[12] This evidence is ambiguous as it does not say how the board of directors came to be dissolved. It rightly confined the scope of para. 9.1 (e) to give the trustees only the power to act as the interim board of directors after the board is dissolved or ceases to exist. But nothing in para. 9.1 gives the board of trustees or the members at an emergency members’ meeting the power to dissolve the board of directors. The absence of any meaningful notice, however brief, as to the substance of the proposal that would be on the table at the meeting also deprives the meeting of validity even if the members or the trustees had the power to act as they did.

[13] The evidence also indicates that on April 1 and 2, 2017, four members of the nine member board of directors, including the President of the DCC, resigned from the board. This appears to have been an effort to create an argument that the board of directors had dissolved or ceased to exist.[^2] However, five members remained. The Vice President subsequently advised that he needed to take time off due to ill health. However, prior to delivering that advice, he convened a meeting of the remaining members of the board of directors on April 4, 2017 and properly filled the vacancies created by the resignations.

[14] There is no evidence before the court that the board of directors had dissolved or ceased to exist prior to the board of trustees purporting to appoint itself as interim board under para. 9.1 (e) of the constitution.

[15] There is also no specific evidence about any events that led to the call of the April 2 meeting and the four resignations. I have quoted above references to “issues” and “multiple lawsuits, police involvement, legal expenses issue, Imam issues.” There is no evidence before me of any lawsuits, police involvement, or legal expenses.

[16] As to “Imam issues,” Mr. Rahim testified that in 2011 and 2014 Mr. Kamaruzzaman was removed from his position as the founding Imam of the Mosque due to “illegal and immoral activities.” Mr. Kamaruzzaman testified that his visa expired in 2011 so he had to leave. In cross-examination, Mr. Rahim admitted that he signed a letter to Canadian immigration authorities in 2011 supporting an extension to Mr. Kamaruzzaman’s visa. In the letter, Mr. Rahim and other members of the board of directors told immigration officials that Mr. Kamaruzzaman is a “positive influence in the youth members of our congregation.” They also said that they were “highly delighted about his performance.” There is no indication of any alleged “illegal or immoral activities” relied upon or what they had to do with events of April, 2017.

[17] Mr. Rahim says that Mr. Kamaruzzaman was removed in 2017 “for his aggressiveness and disrespectful attitude towards the Current Imam, Trustees” and others. Mr. Rahim says that Mr. Kamaruzzaman and other directors have made an effort to drive out the existing Imam. In 2016, Mr. Rahim says, Mr. Kamaruzzaman “insulted the Imam, created a hostile environment” in the DCC. “Peace and harmony and a sense of brotherhood” were challenged by the “egregious conducts of the Applicants.” Mr. Rahim discusses efforts to find a resolution earlier this year but says that “the disruption continued.” The applicants, he says, made the administration of the DCC “so chaotic that the management of the center was at the verge of being collapsed.” This led the Secretary, President, and a trustee to call the emergency general meeting for April 2, 2017.

[18] As the April 2, 2017 meeting lacked a quorum to allow for constitutional amendments as would be required to dissolve the board of directors or for the trustees or members to have the power to oust or suspend the election rights of members, the meeting was adjourned to April 9, 2017. Neither meeting was preceded by proper notice of proposed constitutional amendments as is required by the constitution. Accordingly, constitutional amendments could not be made at the meetings and were not made at the meetings as discussed in the minutes of the April 9, 2017 meeting. Apparently several non-binding and unparticularized resolutions concerning possible constitutional changes were adopted at the meetings. But the minutes of the April 9, 2017 makes it clear that the constitutional issues were deferred to the next annual general meeting where they can be proposed and dealt with properly.

Analysis

[19] The applicants fairly complain that the allegations made by Mr. Rahim are completely unparticularized. He does not testify to any specific acts. He does not make clear at all whether he personally witnessed whatever acts he relies upon. Most of his evidence is conclusory or just amount to statements of his opinions. I am not in a position to determine what the underlying issues are at the DCC. However I do not have to do so in order to decide this case.

[20] There was no discussion at the hearing as to who has the jurisdiction to change the Imam at the Mosque. I would expect this to fall within the powers of the board of directors since that is the body charged with hiring and administration of the affairs of the DCC. But I make no finding on that issue. If the board of directors is empowered to change the Imam, then raising a proposal to do so, while perhaps unpopular, would fall directly within the board’s jurisdiction. If the matter was beyond the board’s powers, then any attempt by a group of members of the board of directors to change the Imam would necessarily fail. As to the bald, sweeping allegations that Mr. Kamaruzzaman was disrespectful or disrupted the peace and harmony of the DCC, all of that, assuming something tangible can be proven, falls to be dealt with within the constitutional framework of the DCC. See for example, paras. 15 and 17 of the constitution.

[21] Regardless of the allegations among the parties, under the constitution, the Corporations Act, and the common law, the board of trustees has no authority to dissolve the board of directors. The resignation of four members did not result in the dissolution of the board. Neither did it cease to exist. Rather, it continued and in the absence of the President who had resigned, the Vice President filled the vacancies as provided in the constitution. Simply put, the board of trustees and the members at the April 2 and 9 meetings had no legal right to dissolve the board or to install the trustees or other appointees in the board’s place.

[22] Under para. 20 of the constitution, only the board of directors can suspend a member. Suspensions are limited to two years and are subject to confirmation by an arbitration committee. Under the constitution, the Corporations Act, or common law, the board of trustees and the members have no authority to bar Mr. Kamaruzzaman indefinitely or to prevent him and Mr. Muhammad from running for administrative office for 10 years.

[23] The legal issues in this case are straightforward. Without determining if the applicants or the respondents are at fault for whatever dissension exists among the membership, nothing gave the respondents the legal right to dismiss the board and replace it as they have done or to suspend two applicants. Subject to the right of the members to amend the constitution properly, the terms of the existing members of the board of directors expire in mid-2018. Until then, the board of directors continues to exist and is entitled and required to fulfill its duties.

Remedy

[24] The applicants are entitled to a declaration that the purported dissolution of the board of directors and the suspensions of rights of the applicants Kamruzzaman and Muhammad at the emergency general meetings on April 2 and 9, 2017 are unlawful and of no force or effect. The board of directors as constituted after the meeting on April 4, 2017 is the validly composed board of directors of the DCC.[^3]

[25] Under s. 297 of the Corporations Act, the court is empowered to order a general meeting. I floated the idea of ordering a members’ vote to confirm the members’ confidence in the board of directors or to elect a new board. However, Mr. Thomas argues fairly, that given the failure of the respondents to prove any particulars of wrongdoing by the applicants or to show any real support for their position among the members or the laity generally, ordering an election now would empower three members who want to oust the duly elected members of the board of directors to obtain an early election by their own unlawful conduct. I do not ignore that some thirty members attended the two emergency meetings on April 2 and 9 and the minutes say that a majority voted to support the respondents. But that does not raise a legal question or come close to establishing an insoluble rift that requires court intervention. The DCC has adopted rules under which it is governed democratically. The fact that some members are unhappy with some of the members of the board of directors may be grist for the next election. But bald, sweeping allegations concerning amorphous concepts like peace, harmony, chaos, and verge of collapse, are just subjective opinion and speculation. There is no evidence of facts that provide a basis for intervention of the court in the domestic affairs of the corporation.

This is not an invitation to the respondents to try again on better evidence. Rather, the parties must all follow the constitution and the law to work out their internal problems under their internal law. The court can deal with issues of law, interpretation, and natural justice. It tries to approach the internal affairs of a private organization in a non-technical, common sense way. In re GKN Bolts & Nuts Ltd. (Automotive Division) Birmingham Works Sports and Social Club, [1982] 1 W.L.R. 774, 776. If the members are in deadlock, then the court can dissolve the DCC. If they are not in deadlock, then they should manage the affairs of DCC in accordance with the constitution, try to tolerate differences of opinion, and get on with the difficult task of rapprochement among the members.

[26] Costs are claimed by the applicants of $11,000 on a partial indemnity basis. That is a very fair amount given both the amount of effort involved in this case. The applicants also had to confront many procedural irregularities and procedural and substantive deficiencies in the respondents’ materials. The respondents are therefore jointly and severally liable to pay to the applicants jointly and severally costs in the amount of $11,000 all-inclusive within 30 days. The respondents shall not be reimbursed by the DCC for any portion of their own costs or the costs that they are required to pay to the applicants.

F.L. Myers J.

Date: September 22, 2017

[^1]: The amendments in 2015 allow the board of trustees to call an emergency members’ meeting. Previously, only the board of directors was empowered to do so. The amendments also provide that if a members’ meeting fails to have a quorum, then there is no quorum required for the next meeting. This removes one argument raised by the applicants as to the invalidity of the April 2 and 9 meetings. Whether there was a quorum under the 2008 constitution at the April 9 meeting is unclear. However, as discussed below, the purported dissolution of the board of directors and the suspension of rights of the two applicants remains unlawful despite the 2015 amendments.

[^2]: How the President then purported to remain in office for the purpose of running the April 2, 2017 meeting is not explained.

[^3]: Mr. Razzak argued that the board appointments made on April 4, 2017 were not valid because the board failed to notify the trustees of the appointments as required. He seized on an ambiguous answer in the cross-examination of Mr. Kamruzzaman and ignored the next several answers and the irrefutable email evidence establishing that notice of the appointments of replacement board members was given to the membership, including the trustees, on a timely basis.