Court File and Parties
COURT FILE NOS.: CV-18-604730-00CL and CV-18-604726-00CL DATE: 20190206 ONTARIO SUPERIOR COURT OF JUSTICE
Court File No.: CV-18-604730-00CL IN THE MATTER OF AN APPLICATION UNDER SECTION 253 OF THE CANADA NOT-FOR-PROFIT CORPORATIONS ACT, S.C. 2009, c. 23 AND IN THE MATTER OF RULES 14.05(2) AND 14.05(3) OF THE RULES OF CIVIL PROCEDURE AND IN THE MATTER OF MUHAMMAD WATTO TO BE AN APPROVED CONTINUING PROFESSIONAL DEVELOPMENT PROVIDER OF THE IMMIGRATION CONSULTANTS OF CANADA REGULATORY COUNCIL
BETWEEN: Muhammad Watto, Professional Development and Legal Education Society, and Legal and Professional Education College Ltd. Applicants – and – Immigration Consultants of Canada Regulatory Council Respondent
Counsel: Rolf M. Piehler, for the Applicants Jeffrey Larry and Glynnis Hawe, for the Respondent
HEARD: January 24, 2019
AND:
Court File No.: CV-18-604726-00CL IN THE MATTER OF AN APPLICATION UNDER SECTION 242 OF THE CANADA NOT-FOR-PROFIT CORPORATIONS ACT, S.C. 2009, c. 23 AND IN THE MATTER OF RULES 14.05(2) AND 14.05(3) OF THE RULES OF CIVIL PROCEDURE AND IN THE MATTER OF APPOINTING AN INSPECTOR TO CONDUCT AN INVESTIGATION OF THE IMMIGRATION CONSULTANTS OF CANADA REGULATORY COUNCIL
BETWEEN: Muhammad Watto Applicant – and – Immigration Consultants of Canada Regulatory Council Respondent
Counsel: Rolf M. Piehler, for the Applicant Jeffrey Larry and Glynnis Hawe, for the Respondent
HEARD: January 24, 2019
Reasons for Judgment
Dietrich J.
[1] The applicant, Muhammad Watto, brings two applications before this court. In the first, he and two corporations he controls, namely, Professional Development and Legal Education Society, and Legal and Professional Education College Ltd., seek a declaration that the Regulatory Council was oppressive in its conduct vis à vis the applicants. In the second, Mr. Watto seeks the appointment of an inspector to conduct an investigation of the Regulatory Council.
[2] For the reasons that follow, I find that Mr. Watto and the corporate applicants have not proven oppression by the Regulatory Council. I also find that Mr. Watto has not demonstrated the need for an inspector to be appointed to investigate the affairs of the Regulatory Council.
Factual Background
[3] The Regulatory Council is a not-for-profit corporation that governs the field of immigration consulting in Canada. It is the regulatory body of all Registered Canadian Immigration Consultants. Mr. Watto is both a Registered Canadian Immigration Consultant and a member of the Regulatory Council.
[4] In addition to being a member, Mr. Watto offered continuing professional development programs through the applicant corporations to members of the Regulatory Council and others. The Regulatory Council pre-approved the programs. The applicant corporations are not members of the Regulatory Council.
[5] The unfortunate history of these proceedings involves Mr. Watto making serious allegations against the Regulatory Council including accounting fraud, money laundering, election-rigging, racial discrimination, and election fraud. None of these allegations has been proven and Mr. Watto no longer seeks to prove any of them in the applications now before the court.
[6] As part of Mr. Watto’s proceedings, Mr. Watto published untrue, unsupported and defamatory statements on multiple websites, repeated these allegations in email blasts, gave testimony before the Parliamentary Standing Committee on Citizenship and Immigration that the Regulatory Council was engaged in rampant financial mismanagement and systematic racial discrimination, initiated unsuccessful litigation against the Regulatory Council and its members, and participated in an interview with the CBC for an article in which Mr. Watto alleged that the Regulatory Council was engaged in fraud, forgery and human rights violations. Two of the civil claims brought by Mr. Watto were dismissed as frivolous, vexatious and an abuse of process. The Parliamentary Standing Committee on Citizenship and Immigration did not pursue Mr. Watto’s allegations.
Issues
[7] The issues in this matter are:
- Has the Regulatory Council conducted its affairs in a manner that is oppressive to Mr. Watto and the corporate applicants?
- Should an inspector be appointed to conduct an investigation into the Regulatory Council?
Analysis
1. Has the Regulatory Council conducted its affairs in a manner that is oppressive to Mr. Watto and the corporate applicants?
[8] To succeed in an oppression claim, the Canada Not-for-Profit Corporations Act, S.C. 2009, c. 23 provides that a complainant must establish that it has reasonable expectations regarding a right in its favour that has been infringed. The complainant must satisfy the two-part test set out in The Campaign for the Inclusion of People who are Deaf and Hard of Hearing v. Canadian Hearing Society, 2018 ONSC 5445. Specifically, the complainant must: i) prove he had reasonable expectation; and ii) if proven, demonstrate that his expectation was violated by conduct that demonstrates “oppression”, “unfair prejudice” or “unfair disregard” of a relevant interest.
[9] Mr. Watto submits that notwithstanding the ongoing disputes between the parties, the Regulatory Council approved continuing professional development programs submitted by Mr. Watto on behalf of his corporations Professional Development and Legal Education Society, and Legal and Professional Education College Ltd. On April 17, 2018, the Regulatory Council approved 16 such programs. However, on July 19, 2018, without any notice to Mr. Watto, the Regulatory Council revoked its approval of all previous and pending approvals for future continuing professional development programs. At that time nine of the 16 programs remained to be delivered.
[10] Mr. Watto submits that the revocation was a consequence of the long-standing disagreements between the parties and Mr. Watto’s public grievances about the Regulatory Council’s internal affairs. He alleges that it did not follow due process and that the issuing of the notice of revocation is oppressive.
[11] The evidence is clear that the Regulatory Council had approved applications by Mr. Watto’s corporations to provide continuing professional development programs and a number of the programs had been provided. The approval for such programs was expressly limited to a 90-day period and further approvals for additional programs were never automatic or guaranteed. Each new proposal required a fresh application. Mr. Watto could, therefore, have no reasonable expectation that applications submitted by him on behalf of his corporations would always be approved. In fact, the evidence is that some of his corporations’ programs were not approved.
[12] It was after Mr. Watto’s interview with the CBC and the publication of its article that the Director of Education of the Regulatory Council determined that Mr. Watto and his corporations, which delivered the continuing professional development programs, were no longer going to be listed as approved providers of continuing professional development programs. Given Mr. Watto’s extensive and malicious campaign of harassment against the Regulatory Council, the Director of Education decided that it was not in the interests of the Regulatory Council to have Mr. Watto and his corporations represent it. It then issued the notice of revocation.
[13] The Regulatory Council’s regulation regarding continuing professional development, known as the CPD Regulation, specifically states that approval of a provider is at the sole discretion of the Regulatory Council. Mr. Watto treats the issuance of the revocation notice as oppressive conduct, yet there is no evidence of bad faith on behalf of the Director of Education or any evidence that her decision unfairly prejudiced him or that his interests as a member of the Regulatory Council were unfairly disregarded.
[14] Soon after the issuance of the revocation notice, without filing any complaint with the Director of Education, Mr. Watto brought a motion before Justice Brown of this court seeking a mandatory injunction in his oppression proceeding. Justice Brown, in her decision of August 14, 2018 (Watto v. Immigration Consultants of Canada Regulatory Council, 2018 ONSC 4825), dismissed the motion for interlocutory relief. She found that there was no evidence of oppression, or of unfair prejudice or unfair disregard (see para. 17). Her reasons also state that the oppression application appeared to be “no more than frivolous and vexatious” (see para. 18). The Divisional Court dismissed Mr. Watto’s motion for leave to appeal Justice Brown’s decision. I see no reason to disagree with Justice Brown’s findings.
[15] Further, it is important to note that a “complainant”, for the purposes of making a claim in oppression under the Canada Not-For-Profit Corporations Act, must provide evidence that the alleged oppressive conduct has caused harm in his capacity as a shareholder, creditor, director, officer or member of the not-for-profit corporation (see s. 253). Mr. Watto is a member of the Regulatory Council, but he is not the provider of continuing professional development programs. The CPD regulation provides that, as an individual member, he is precluded from providing these programs. Accordingly, it is only the interests of his corporations, which are not members of the Regulatory Council, that are affected by the revocation notice. The oppression remedy is only available to vindicate Mr. Watto’s reasonable expectations as a member of the Regulatory Council and not in any other personal or corporate relationship with it. The revocation notice does not affect Mr. Watto’s membership. Mr. Watto, as a member, is still eligible to work as a Registered Canadian Immigration Consultant, eligible to vote at annual general meetings, and eligible to serve on committees of the Regulatory Council.
[16] Mr. Watto lacks standing to seek a finding of oppressive conduct on behalf of non-members of the Regulatory Council. Despite this lack of standing, it was simply not reasonable for him to expect that the corporations, which he controls, would be permitted to continue to provide continuing professional development programs in light of the serious allegations he was making against the Regulatory Council in very public ways. The action of the Regulatory Council in the face of these allegations and ongoing harassment was not oppressive.
2. Should an inspector be appointed to conduct an investigation into the Regulatory Council?
[17] In Mr. Watto’s application seeking the appointment of an inspector to conduct an investigation into the Regulatory Council, he again alleges that its officers and directors are committing “major” acts of fraud, embezzlement, election rigging and human rights violations.
[18] Mr. Watto submits that the Regulatory Council has not met the reasonable expectations of the members, including himself, in that it is not transparent in its use of funds collected from the members, or how it carries out its investigative and disciplinary functions to fulfil its mandate, or how it manages its financial affairs. Accordingly, he seeks an order appointing an inspector to investigate the affairs of the Regulatory Council.
[19] The Regulatory Council submits that an inspector should not be appointed because Mr. Watto has not demonstrated any oppressive conduct against him by the Regulatory Council. Further, it submits that even if oppression were found, the appointment of an inspector is a drastic and extraordinary measure that should not be granted in this case.
[20] The Canada Corporations Not-For-Profit Act provides that a court may appoint an inspector to conduct an investigation if a member of the not-for-profit corporation has established a prima facie case that one of the circumstances found at s. 242(2) of the Act applies, namely:
a) the activities of the corporation have been carried on with intent to defraud any person, b) the activities or affairs of the corporation have been conducted in a manner that is oppressive or unfairly prejudicial to or that unfairly disregards the interests of a member, c) the corporation was formed for a fraudulent or unlawful purpose, or d) persons concerned with the formation, activities or affairs of the corporation have acted fraudulently.
[21] The court must also consider the appropriateness of the investigation, having regard to its usefulness, reasonableness in the circumstances and the expected benefits of an investigation compared to its expense. See: Trackcom Systems International Inc. c. Trackcom Systems Inc., 2014 QCCA 1136, paras. 53-55.
[22] Mr. Watto has not pursued his claims to prove fraud with respect to the Regulatory Council itself, the activities it carries on, or any person concerned with its formation, activities or affairs. Therefore, to succeed in his request for the appointment of an inspector, Mr. Watto must demonstrate that the activities or affairs of the corporation have been conducted in a manner that is oppressive or unfairly prejudicial to him, or that unfairly disregards his interests as, a member.
[23] In support of his request, Mr. Watto alleges that the Regulatory Council may have failed to follow its own procurement policy with respect to one contract entered into seven years ago with NR Complaints & Discipline Solutions Inc. This company was engaged to handle complaints and discipline matters. Mr. Watto also complains that the contract with this service provider was not disclosed to the membership.
[24] There is no evidence before the court to suggest that the procurement policy was not followed. The parties disagree on whether the procurement policy ought to have applied when the original contract came to an end. The Regulatory Council characterizes the subsequent process as a contract renewal whereas Mr. Watto characterizes it as a fresh contract subject to the procurement policy. Regardless of which party’s view is correct, Mr. Watto has not demonstrated that the renewal of the contract resulted in unfair prejudice to him or the unfair disregard of his interests as a member of the Regulatory Council.
[25] Similarly, Mr. Watto has not provided any evidence to suggest that he had a reasonable expectation to be provided with a copy of the contract or to be informed of corporate matters beyond the information contained in the Regulatory Council’s annual report. He is not entitled to this information under Canada Corporations Not-For-Profit Act, or the by-laws, regulations or policies of the Regulatory Council. Mr. Watto has not provided any concrete evidence of improper dealings with the service provider or the negotiating or handling of its fees for service. The evidence of the Regulatory Council’s auditor is that the invoices submitted by the service provider were subject to a random audit and no issues were identified.
[26] Mr. Watto also complains that his interests have been unfairly disregarded because the Regulatory Council has not been “proactively transparent” with respect to its financial affairs. Specifically, he sought information relating to expenses paid to the directors and senior management of the Regulatory Council. It was suggested to Mr. Watto that he review the Annual General Report available to all members. Again, Mr. Watto has failed to point to any obligation, statutory, contractual or otherwise, that the Regulatory Council has failed to fulfil, to his prejudice, in not providing the level of detail in its reporting that he would prefer.
[27] To succeed in his request to have an inspector appointed, it is not enough for Mr. Watto to merely allege misconduct or raise suspicion: Khavari v. Mizrahi, 2016 ONSC 4934. He must demonstrate a prima facie case of oppression, unfair prejudice or unfair disregard of his interests as a member. On the evidence, Mr. Watto has not demonstrated such a prima facie case.
Disposition
[28] The application by Mr. Watto, Professional Development and Legal Education Society, and Legal and Professional Education College Ltd. seeking an order that the Regulatory Council’s conduct with regard to the revocation of its approval of continuing professional development programs offered by the corporations was oppressive is dismissed. Mr. Watto’s application seeking the appointment of an inspector to conduct an investigation into the Regulatory Council is also dismissed.
Costs
[29] The Regulatory Council is successful in both applications and is entitled to its costs. Given the allegations of intentional torts and Mr. Watto’s conduct in this litigation, the respondent is entitled to its costs on a substantial indemnity basis. Such conduct includes the issuance of subpoenas to 15 witnesses, seven of whom were examined, and whose evidence was largely unhelpful to the court; and the filing of nearly 4,000 pages of material. Notwithstanding the extent of the materials and the examinations, which the respondent attended, I find the number of hours spent by the respondent on these applications to be high. As such, I have reduced the overall fees and award costs of $75,000, inclusive of disbursements and HST. Of this amount, Mr. Watto, Professional Development and Legal Education Society, and Legal and Professional Education College Ltd. shall be jointly and severally liable to the Immigration Consultants of Canada Regulatory Council for $55,000. Mr. Watto shall pay the remaining $20,000 in costs to the Immigration Consultants of Canada Regulatory Council.
Dietrich J.