Ryerson Students' Union v. Ryerson University

Ontario Reports Ontario Superior Court of Justice Koehnen J. March 9, 2020 149 O.R. (3d) 534 | 2020 ONSC 1490

Case Summary

Injunctions — Interlocutory injunction — Balance of convenience — Irreparable harm — Strength of case — University purporting to terminate operating agreement with student union for financial mismanagement — Union moving for interlocutory injunction to prevent termination — Union's prompt action to address financial issues established strong prima facie case — Withholding of fees payable to union under agreement constituted irreparable harm — Balance of convenience favoured union — Motion allowed.

Schools — Universities — University purporting to terminate operating agreement with student union for financial mismanagement — Union moving for interlocutory injunction to prevent termination — Union's prompt action to address financial issues established strong prima facie case — Withholding of fees payable to union under agreement constituted irreparable harm — Balance of convenience favoured union — Motion allowed.

The plaintiff union and defendant university were parties to an operating agreement in place since 1986. The defendant collected annual fees from its students and remitted those to the plaintiff. An article in the student newspaper in 2019 reported that the executive had engaged in questionable spending through unauthorized use of the plaintiff's credit cards for inappropriate expenses. As a result of those allegations, the defendant took the position that it would be withholding collected fees until the plaintiff conducted a forensic audit into its finances, shared the results of that audit with the defendant, and negotiated a new operating agreement. The plaintiff responded by making changes in executive personnel and implementing new financial training and controls. Certain expenditures were reviewed but there was never a forensic audit. The parties entered negotiations for a new operating agreement, but ultimately the defendant took the position that the plaintiff had repudiated the 1986 agreement through the financial wrongdoing disclosed in the article. The defendant advised the plaintiff that it was terminating the agreement effective immediately. Four days later, the plaintiff issued a statement of claim. The next day the defendant announced a new process for the formation of a student government. The plaintiff brought a motion for an interlocutory injunction restraining the defendant from terminating the agreement pending resolution of the action.

Held, the motion should be allowed.

The plaintiff was seeking a prohibitory injunction rather than a mandatory injunction, and thus only had to demonstrate a serious issue to be tried rather than a strong prima facie case. It was prohibitory because it sought to enjoin the termination of a contract without notice. But regardless of how the injunction was characterized, the plaintiff had made out a strong prima facie case. Assuming that the allegations of wrongdoing constituted actual findings of wrongdoing, once the contractual breaches were discovered they were immediately cured. Isolated breaches that were immediately cured did not constitute repudiation of an agreement, and repudiation was the only reason given for the defendant's termination, so there was a strong likelihood that the plaintiff would ultimately succeed in proving its case. The plaintiff had also shown irreparable harm in that if it did not receive the collected fees, it would have no operating funds and would have to shut down in little more than a month. The balance of convenience also favoured the plaintiff. The defendant provided no evidence to show that the corrective steps promptly taken by the plaintiff fell short of accepted standards of financial control or were otherwise inadequate, and the absence of a forensic audit did not tip the balance in the defendant's favour. The defendant had also not pointed to any aspect of its proposed new governance structures that was superior to that of the plaintiff.

R. v. Canadian Broadcasting Corp., [2018] 1 S.C.R. 196, [2018] S.C.J. No. 5, 2018 SCC 5, 358 C.C.C. (3d) 143, 44 C.R. (7th) 1, 11 C.P.C. (8th) 221, 144 W.C.B. (2d) 163, 287 A.C.W.S. (3d) 745, 63 Alta. L.R. (6th) 1, [2018] 2 W.W.R. 431, 417 D.L.R. (4th) 587, apld

Other cases referred to

Axiom Group Inc. v. Intier Automotive Closures Inc., [2005] O.J. No. 597, 2 B.L.R. (4th) 171, 137 A.C.W.S. (3d) 621, 2005 ONSC 3718 (S.C.J.); BP Global Special Products (America) Inc v. Conros Corp., [2010] O.J. No. 814, 2010 ONSC 1094, 185 A.C.W.S. (3d) 346 (S.C.J.); Erinwood Ford Sales Ltd. v. Ford Motor Co. of Canada, [2005] O.J. No. 1970, 6 B.L.R. (4th) 182, 139 A.C.W.S. (3d) 562, 2005 ONSC 16616 (S.C.J.); Glooscap Heritage Society v. Canada (Minister of National Revenue), [2012] F.C.J. No. 1661, 2012 FCA 255, 440 N.R. 232, 2013 D.T.C. 5029; Guarantee Co. of North America v. Gordon Capital Corp., 1999 SCC 664, [1999] 3 S.C.R. 423, [1999] S.C.J. No. 60, 178 D.L.R. (4th) 1, 247 N.R. 97, 126 O.A.C. 1, 49 B.L.R. (2d) 68, 15 C.C.L.I. (3d) 1, 39 C.P.C. (4th) 100, [2000] I.L.R. I-3741, 91 A.C.W.S. (3d) 796; MacRae v. Woermke, [2019] B.C.J. No. 1975, 2019 BCCA 355; RJR-MacDonald Inc. v. Canada (Attorney General), 1994 SCC 117, [1994] 1 S.C.R. 311, [1994] S.C.J. No. 17, 111 D.L.R. (4th) 385, 164 N.R. 1, 60 Q.A.C. 241, 54 C.P.R. (3d) 114; TDL Group Ltd. v. 1060284 Ontario Ltd., [2001] O.J. No. 3614, 150 O.A.C. 354, 109 A.C.W.S. (3d) 139 (Div. Ct.); Therriault v. United Freight Services Ltd., [2006] A.J. No. 1440, 2006 ABCA 350, 153 A.C.W.S. (3d) 770

Statutes referred to

Business Corporations Act, R.S.O. 1990, c. B.16

MOTION for an interlocutory injunction to enjoin the termination of an agreement.

Counsel: Alexi Wood and Jennifer Saville, for plaintiff. Louis Century, Mariam Moktar and Geetha Philipupillai, for intervenor Canadian Federation of Students and CESAR. Geoff Hall and Julia Shin Doi, for defendant.

Endorsement

[1] Endorsement of KOEHNEN J.: — This is a motion by the Ryerson Students' Union ("RSU") for an interlocutory injunction to restrain Ryerson University ("Ryerson") from terminating an operating agreement that has been in place since 1986 pending resolution of this action.

[2] For the reasons set out below, I grant the injunction and order Ryerson to transfer those funds to RSU that should have been transferred pursuant to the operating agreement and to continue to transfer such funds to the RSU pending disposition of this action.

A. The Facts

(a) The parties

[3] Ryerson is a university located in downtown Toronto with approximately 44,000 students. Ryerson collects an annual fee from each student and remits it to the RSU pursuant to an agreed-upon timetable.

[4] The RSU has served as an independent student union at Ryerson since approximately 1948. It was incorporated in 1967 pursuant to letters patent.

[5] RSU funds and supports over 200 student groups. In addition it operates a number of centres that offer various forms of support to students including a printing and copying centre, a tax filing clinic, a lawyer to provide students with free legal advice; an academic advocate to help students facing academic misconduct charges, emergency bursaries, seven Equity Service Centres that provide, among other things, advocacy and support for marginalized students on campus; a drop-in food bank; free sexual health, menstrual and hygiene supplies; and peer-to-peer drop-in support sessions. RSU also administers a health and dental plan for Ryerson students.

[6] In addition to providing services for students, the RSU also advocates on behalf of its members with respect to issues of interest to students. Recently, this has included advocacy measures to end unpaid internships; lower tuition fees; introduce two reading weeks to address students' mental health concerns; and advocate for gender-neutral bathrooms across campus.

[7] The RSU employs 79 people. Ryerson students elect a board of directors and an Executive Committee for the RSU each year to serve for a one-year term.

[8] The RSU receives approximately $4.6 million a year in student fees which the University collects on its behalf.

(b) The dispute between the RSU and Ryerson

[9] In January 2019, an article in the Ryerson student news-paper reported that the 2018--2019 executive had engaged in questionable spending through unauthorized use of the RSU's credit cards for inappropriate expenses. The article alleged questionable expenditures of approximately $250,000.

[10] Approximately one week later, Ryerson told RSU that, because of these allegations, it would be withholding the fees it had collected until RSU (i) conducted a forensic audit into its finances; (ii) shared the results of that audit with Ryerson; and (iii) negotiated a new operating agreement with Ryerson.

[11] The RSU responded to the allegations quickly. It impeached the then president, suspended the VP of operations, and removed her signing authority, retained PricewaterhouseCoopers ("PwC)", hired a certified general accountant as full-time financial controller, hired a full-time executive director, implemented new credit card procedures, required staff to undergo financial training, tightened approvals needed for expenditures, and removed removing the executive team's ability to dismiss full-time management staff without RSU Board approval.

[12] During the course of the following months, the RSU repeatedly told the University that PwC was conducting a "forensic audit" or an "audit" of the RSU's finances. These statements were not accurate. PwC was in fact conducting a "review" of the RSU's credit card expenditures.

[13] RSU says it considered retaining PwC to conduct a forensic audit, but that the cost was prohibitive, especially in light of Ryerson withholding funds. In an effort to be efficient with time and money, RSU focused its attention on analyzing the most serious allegations that had been raised, namely, the improper use of RSU's credit cards. The RSU never asked Ryerson to pay for the forensic audit nor did it ask Ryerson to release an amount of money sufficient to pay for a forensic audit.

[14] Negotiations over a new operating agreement between the RSU and Ryerson proceeded. The information I have at this preliminary stage about those negotiations and the nature of Ryerson's demands with respect to the new operating agreement is limited. However, the first draft agreement that Ryerson presented to the RSU included the following clause:

RSU shall not directly or indirectly . . . take any action that might impair the reputation of Ryerson, . . . criticize, disparage, defame or express negative comments, statements or images about any of the Reputational Beneficiaries; . . . or (c) take any other action which might otherwise be detrimental in any way to any Reputational Beneficiaries.

[15] The idea that a public body like a university would demand of its students that they not "criticize" or "express negative comments" about the University is concerning. Such a clause would prevent the RSU from conducting many of its advocacy activities. While I understand that a student union may often be a thorn in the side of university administrators, a university is intended to be, among other things, a forum for the development and free exchange of ideas.

[16] In oral argument, Mr. Hall submitted that this provision had been removed from subsequent drafts. There is, however, no evidence of that in the record.

[17] Negotiations for a new operating agreement occurred in fits and starts throughout 2019. In addition, Ryerson asked the RSU for updates about the PwC audit. In November, the RSU advised that PwC would not be presenting a report but that the RSU and its counsel would do so.

[18] On January 24, 2020, Ryerson advised the RSU that it was terminating the 1986 agreement effective immediately.

[19] On January 28, 2020, the RSU issued its statement of claim which, among other things, asked for an interim and interlocutory injunction restraining the Ryerson from terminating the 1986 Agreement.

[20] On January 29, 2020, Ryerson announced a new process for the formation of a student government.

[21] In early February, the RSU released its financial review. It disclosed for the first time that PwC had not performed a forensic audit but had performed a review of certain expenditures.

B. The Test for an Interlocutory Injunction

[22] The test for an injunction is well known. To obtain an interlocutory injunction, the moving party must demonstrate that

(a) it has a strong prima facie case or there is a serious issue to be tried;

(b) it will suffer irreparable harm if the injunction is not granted;

(c) the balance of convenience favours granting an injunction;

(a) Strong prima facie case/serious issue to be tried

[23] In R. v. Canadian Broadcasting Corp., [2018] 1 S.C.R. 196, 2018 SCC 5 ["CBC"], at para. 18, the Supreme Court of Canada affirmed that the moving party was required to demonstrate a strong prima facie case to obtain a mandatory interlocutory injunction but was required to demonstrate only the presence of a serious issue to be tried to obtain a prohibitory interlocutory injunction.

[24] The RSU submits they are seeking a prohibitory injunction. Ryerson submits the RSU is seeking a mandatory injunction.

[25] In my view, the RSU is seeking a prohibitory injunction. That said, I nevertheless find that the RSU has demonstrated a strong prima facie case to warrant an interlocutory injunction. I will first address the issue of whether this is a mandatory or prohibitory injunction and then address the merits of the RSU's case.

(i) Mandatory or prohibitory injunction

[26] To support its argument that the RSU is seeking a mandatory injunction, Ryerson points to the following language, in para. 15 of the Supreme Court of Canada's decision in CBC:

A mandatory injunction directs the defendants to undertake a positive course of action, such as taking steps to restore the status quo, or otherwise "put the situation back to what it should be", which is often costly or burdensome for the defendant and which equity has long been reluctant to compel.

[27] Ryerson submits that the proposed injunction aims to restore a previously existing status quo which renders the injunction mandatory.

[28] In addition, Ryerson points to the RSU's motion record which seeks:

An interim and interlocutory order:

(i) requiring the Defendant to comply with its obligations under the 1986 Agreement, [ ] pending the ultimate determination of this Action, which include but are not limited to:

(1) releasing all Withheld Fees, [ ] to the Plaintiff,

including all profits and interest realized thereon; and

(2) recognizing RSU as "the student association which represents students . . .".

[29] RSU relies on a line of cases which holds that an injunction that prevents a breach of contract or prevents the denial of a previously agreed to right is prohibitory, while an injunction that establishes a new right not previously agreed to is mandatory: TDL Group Ltd. v. 1060284 Ontario Ltd., [2001] O.J. No. 3614, 150 O.A.C. 354 (Div. Ct.), at para. 9; MacRae v. Woermke, [2019] B.C.J. No. 1975, 2019 BCCA 355, at para. 16.

[30] Ryerson distinguishes TDL from CBC by noting that Ryerson had already terminated the contract with RSU, as a result of which the court is being asked to restore the status quo rather than being asked to prohibit a breach or termination of a contract. I do not agree.

[31] In CBC, the Supreme Court of Canada was not dealing with an injunction relating to a contract. Rather, it was dealing with an injunction that sought to have the CBC remove information from its website. The court recognized at para. 16 that the line between mandatory and prohibitory injunctions is not always clear. Given this lack of clarity, the Supreme Court of Canada noted that courts

. . . will have to look past the form and the language in which the order sought is framed, in order to identify the substance of what is being sought and, in light of the particular circumstances of the matter, "what the practical consequences of the . . . Injunction are likely to be" in short, the application judges should examine whether, in substance, the overall effect of the injunction would be to require the defendant to do something or to refrain from doing something.

[32] Ryerson's submission that this is a mandatory injunction because Ryerson has already terminated the contract would lead to injustice in contract cases. By way of example, a party that ignored ordinary requirements of notice to terminate a contract would be in a better position than a party who complied with notice requirements. A party that ignored the law and terminated without notice would face a moving party who is forced to meet the more stringent strong prima facie case test while a party who complied with the law would have the disadvantage of facing a moving party who was required to meet the less stringent serious issue test.

[33] As the Supreme Court of Canada noted in CBC, the proper analysis goes well beyond such formalism and requires courts to take a closer look at the substance of the matter at hand.

[34] In CBC, the court noted, at para. 15, that the more stringent test applies to mandatory injunctions because they direct defendants to undertake a positive course of action which is often costly or burdensome.

[35] The consequences on Ryerson of the injunction the RSU seeks are not costly or burdensome. It simply requires Ryerson to comply with the contract that Ryerson has acted under since at least 1986.

[36] A contract that has been in place since 1986 would ordinarily require some degree of notice to terminate. Indeed, here the RSU has at least an argument to the effect that the arrangement the contract codifies has been in place for approximately 70 years. Whether the contract has been in place for 70 or 24 years is of little importance. In either case, termination would ordinarily demand an extended period of notice (assuming it is not a perpetual contract as RSU argues). Seen in this light, the injunction RSU seeks is one that would enjoin a breach of contract. The breach, RSU seeks to enjoin is, at a minimum, the termination of a contract without notice.

[37] Here, Ryerson terminated on January 24 and the RSU commenced its action and request for an interlocutory injunction four days later. There was no change in the status quo between January 23 and January 28. Thus, the request on January 28 [to] prohibit termination of the contract does not put Ryerson to any greater disadvantage than it was under on January 24.

[38] Moreover, the only thing required of Ryerson by the injunction is to continue to perform under the contract. Its obligations in that regard are minimal. It is merely required to transfer money to the RSU at predetermined intervals. Those transfers are of money that Ryerson collected on behalf of the RSU. It is not Ryerson's money but the RSU's. Requiring Ryerson to give the RSU what is theirs to start with is also not burdensome or costly to Ryerson.

[39] In my view, the policy concerns underlying the different tests for mandatory and prohibitive injunctions militate towards a finding that this is a prohibitive injunction. By definition, many prohibitive injunctions will have some mandatory consequences. An injunction to restrain termination of a contract that has not yet been terminated by definition obliges the contracting party to engage in mandatory actions of contractual performance. Continued contractual performance does not impose any new rights or obligations. It merely continues a status quo to which the party has already agreed.

(ii) Analysis of the merits

[40] Regardless of whether the injunction sought is prohibitory or mandatory, in my view the RSU has made out a strong prima facie case.

[41] Ryerson purported to terminate the contract for cause. Its termination letter takes the position that the RSU has repudiated the 1986 agreement because it has breached s. 2(a), which provides that the RSU will

comply with the provisions of the Corporations Act and with the requirements of all applicable Federal, Provincial and Municipal legislation and will cause its directors to be elected annually.

[42] The termination letter states that the breach of s. 2(a) has gone on too long as a result of which Ryerson accepts the RSU's repudiatory breach and terminates the agreement. The closest the letter comes to a specific allegation of breach is the following:

RSU has not complied with the Corporations Acts and, its own bylaws and accordingly, RSU remains in breach of its obligations under the Agreement. Furthermore, members of the Executive of RSU have recently been impeached and a petition by students for further impeachment is ongoing.

[43] In oral argument, Ryerson underscored that it was the financial wrongdoing disclosed in the Ryerson newspaper and more recent impeachments that constitute the repudiation of the agreement.

[44] To find a strong prima facie case, the motion judge must be satisfied that there is a "strong likelihood on the law and the evidence presented that, at trial, the applicant will be ultimately successful in proving the allegations set out in the originating notice": CBC, at para. 17 [emphasis in original omitted].

[45] The only reason Ryerson has advanced to terminate the contract is the alleged repudiation by the RSU. The question then is whether the RSU has a strong prima facie case to the effect that it has not repudiated the agreement. In my view, the RSU has a strong prima facie case to this effect.

[46] Repudiation occurs where "one party indicates its intention not to fulfill any future obligations under the contract" (emphasis added): Guarantee Co. of North America v. Gordon Capital Corp., [1999] 3 S.C.R. 423, 1999 SCC 664, at para. 47; BP Global Special Products (America) Inc. v. Conros Corp., [2010] O.J. No. 814, 2010 ONSC 1094 (S.C.J.), at paras. 50-51. While there is much law about what does or does not constitute a repudiation, both counsel agreed in argument that the essence of repudiation is a breach that deprives the innocent party of the heart of the contract.

[47] There is no such deprivation here. The RSU has not indicated any intention that it will not fulfil its future obligations under the contract. For the purpose of this analysis, I will assume that the allegations of financial wrongdoing against former officers and directors and the RSU's report in this regard amount to findings of wrongdoing. While the wrongdoing is serious, it relates to an allegation concerning $250,000. Subsequent investigation by the RSU revealed that $96,000 in expenditures could not be that justified based on the documentation available. Whether that amounts to repudiation must be considered in the context of the relationship and in the context of the RSU's response.

[48] As regards the context of the relationship, the issue arose with respect to spending during one year of a 24- to 70-year relationship.

[49] The RSU's response was not to ignore the misuse of funds. As noted earlier, it impeached or suspended the wrong-doers, hired a full-time Certified General Accountant, hired a full-time executive director, implemented financial training for directors and officers and implemented a series of financial controls. Ryerson has not introduced any evidence to suggest that these new financial controls are inadequate. Put another way, once the breaches were discovered they were immediately cured. Isolated breaches that are immediately cured do not constitute repudiation of an agreement.

[50] Similarly, the RSU as a strong prima facie case to the effect that the more recent impeachments to which Ryerson refers do not amount to breaches or repudiation of the agreement but may well mark compliance with the agreement.

[51] In December 2019 and January 2020, a number of other officers of the RSU resigned or were removed from office. The RSU demands that officers and directors devote 40 hours per week to the RSU. A number of individuals had not been doing that and were removed as a result. Given that the RSU had been subject to heightened scrutiny because of spending irregularities, it is understandable that the RSU would want to take steps to hold officers and directors to their commitments.

[52] In oral submissions Ryerson highlighted that the alleged breach of the Business Corporations Act, R.S.O. 1990, c. B.16 related to the failure of officers and Directors to act honestly, in good faith and in the best interests of the Corporation. Requiring officers and directors to meet their commitments and expectations is consistent with the enforcement of that obligation, not its breach.

[53] While Ryerson did not take the position in argument that it had the right to terminate the agreement without cause, to the extent Ryerson takes that position the RSU would have a strong prima facie case that notice of such termination is required. It would not be at all unusual that an organization that has been party to an agreement for at least 24 years, has 79 employees and is entirely reliant upon the agreement for its existence would be entitled to at least 12 months' notice. That means the injunction still has considerable time to run before it would operate so as to effectively extend the notice period. If the agreement is found to be a perpetual contract, the injunction would have no such effect even beyond a conceptual notice period.

[54] While the RSU made submissions about the perpetual nature of this contract, I do not need to address that point given my findings on repudiation and notice. That will be an issue for trial.

(b) Irreparable harm

[55] Ryerson submits that the RSU has not shown irreparable harm because the harm it asserts can be adequately compensated by an award of damages. Ryerson submits that the RSU must produce "evidence at a convincing level of particularity that demonstrates a real probability that an unavoidable irreparable harm will result": Glooscap Heritage Society v. Canada (Minister of National Revenue), [2012] F.C.J. No. 1661, 2012 FCA 255, at para. 31. Ryerson points to interim arrangements that it has put in place to ensure the continuation of funding of student services until a new government is in place. In light of those interim arrangements, Ryerson says there is no irreparable harm.

[56] I disagree. Irreparable harm refers to the nature of the harm. It is harm that is either unquantifiable or that cannot be cured: RJR-MacDonald Inc v. Canada (Attorney General), [1994] 1 S.C.R. 311, 1994 SCC 117, at p. 341 S.C.R.

[57] Putting a party out of business cannot be cured and constitutes irreparable harm: Erinwood Ford Sales Ltd. v. Ford Motor Co. of Canada, [2005] O.J. No. 1970, 2005 ONSC 16616 (S.C.J.), at para. 87; Axiom Group Inc. v. Intier Automotive Closures Inc., [2005] O.J. No. 597, 2005 ONSC 3718 (S.C.J.), at paras. 47-49.

[58] If Ryerson does not transfer to the RSU the funds that Ryerson collected on the RSU's behalf, it is undisputed that the RSU will have to shut down in a little over one month from now. It will simply have no more funds with which to operate. That will result in the termination of 79 employees, a lack of funding to the many student organizations the RSU supports and the shutdown of many of the student service services the RSU administers. The interim arrangements the University has put in place are no answer. Ryerson is using the fees it has withheld to fund only three of the over 200 programs the RSU supports. The remaining 197 will go unserviced.

[59] Without money the RSU will, as a practical matter, simply shut down. As noted, it is well-established that this amounts to irreparable harm.

(c) The balance of convenience

[60] The balance of convenience requires me to determine whether the RSU would suffer greater harm if I fail to grant the injunction than the University would suffer if I grant the injunction.

[61] As noted above, if I refuse to grant the injunction, the RSU will be at an end and the majority of services the RSU provides will stop.

[62] Ryerson submits that it will suffer irreparable harm if I grant the injunction because doing so

would stop the process of selecting a new student government at Ryerson dead in its tracks and would hand control of student government and the millions of dollars collected on behalf of Ryerson students back to the dysfunctional entity that wasted hundreds of thousands of student dollars and failed for a year to get its house in order.

[63] I will address the financial concern first. Although Ryerson suggests throughout its materials that the RSU had acted in a financially irresponsible way, the RSU, as noted earlier, acted quickly in response to reports of financial irregularity. Ryerson has not provided any evidence to suggest that the steps the RSU has implemented fall short of accepted standards of financial control or are somehow otherwise inadequate. Ryerson has not pointed to a single financial control which should be in place that the RSU has not put in place.

[64] While the absence of a forensic audit after being promised a forensic audit is frustrating, it does not in and of itself tip the balance of convenience in Ryerson's favour. The RSU had PwC conduct a review. Presumably, the real benefit of a forensic audit going forward would be to identify financial controls that are not in place and should be in place. The parties do not need a forensic audit to determine what financial controls they should have in place. There are far cheaper ways of obtaining that advice than by way of a forensic audit.

[65] The other aspect of a forensic audit that might be helpful is that it could disclose information that would help pursue those who misused funds. It is not, however, as if the RSU swept wrongdoing under the carpet. It conducted a review of questionable expenditures and found that approximately $96,000 were unsupported. Although $96,000 is not an amount simply to be swept aside, it is proper for an organization to think long and hard about whether it warrants the additional cost of pursuing those who misused the money through civil litigation. Funds spent litigating are funds that are no longer available for student services. The RSU did, however, report their findings to the Toronto Police.

[66] The allusion to selecting a new form of student government, in para. 60, above, refers to a process to create a new student government structure that Ryerson announced on January 29, 2020.

[67] The process is advancing in two stages. In a first stage, the structure of the reconstituted student government is being considered. In oral argument, counsel for Ryerson described this as a democratic process. Ryerson did not, however, consult with students in creating the process. The process is being facilitated by a Selection Committee comprised of four current students, one Ryerson alumni, and a "process manager". Ryerson selected all of the committee members.

[68] The role of the committee appears to have been to receive proposals for new structures of student government and select which ones to put to a vote of Ryerson students. There is no information in the record about the criteria the selection committee used to choose which models of government would be put to a vote. Nor is there information about who devised those criteria. Likewise, there is no information about which models the selection committee rejected and the reasons for those rejections.

[69] On March 5, 2020, Ryerson students voted to choose which form of student government would apply in the future. There is no information in the record about how many Ryerson students participated in the election to choose a new student government.

[70] Ryerson proposes to hold an election for the reconstituted student governments' leadership before final exams in April 2020. The RSU has already held its own elections for its board of directors and Executive Committee for the 2020 --2021 academic year.

[71] Any harm that Ryerson suffers to this process as a result of an injunction is harm of its own making. It announced the process after RSU's statement of claim was issued and served. The statement of claim sought an interlocutory injunction. To the extent Ryerson wanted to proceed with its own process to create a new student government, in the face of a request for an interlocutory injunction, it did so at its own risk. A party cannot rely on harm that it created to claim that the balance of convenience favours itself: Therriault v. United Freight Services Ltd., [2006] A.J. No. 1440, 2006 ABCA 350, at para. 7.

[72] In a similar vein, Ryerson has not pointed to any aspect of the new governance structures that were put to students that is somehow superior to that of the RSU. Nor does Ryerson indicate how the new form of government would provide stronger financial control over student fees than the RSU's new policies do.

[73] Given that the only information I have of Ryerson's efforts to create a new form of student government is one that prohibits the student government from criticizing the University and given that Ryerson has not pointed to the absence of a single necessary financial control, within the RSU's new management policies, I have questions about the extent to which Ryerson's position is motivated by either democratic ideals or fiscal prudence.

[74] In light of the circumstances I find that the balance of convenience favours granting the injunction.

C. Disposition

[75] In light of the foregoing, I grant the motion for an interlocutory injunction and order

(i) Ryerson to comply with its obligations under the 1986 Agreement, pending the ultimate determination of this action, which include but are not limited to

(1) releasing to the RSU all student fees that it has withheld including all profits and interest realized thereon; and

(2) recognizing RSU as "the student association which represents students enrolled at Ryerson".

(ii) requiring that Down & Company Professional Corporation immediately transfer to the RSU any and all health and dental plan fees that it is holding in trust.

[76] I recognize that there are serious issues in play that require both a satisfactory level of fiscal control and ultimate resolution. I will therefore continue to be available to assist the parties in that regard. If there are concerns about the financial controls in place within the RSU, either party can approach me to arrange a quick case conference to resolve the issue. Similarly, the injunction should not be used as a tool to defer the ultimate resolution of the issues. I therefore direct the parties to confer about dates that they would be available for a one-hour case conference either before or after ordinary court hours to set a schedule that would see the action get to trial quickly.

[77] As best as I can make out from the materials, the true issues between the parties appear to relate to fiscal controls and potentially, but not necessarily, some governance concerns. Those are issues that are more easily resolved through discussion and compromise than through litigation. It strikes me that much of the current dispute is caused by mutual misunderstanding and by both sides taking positions that may have been more rigid than was necessarily ideal. To the extent that a judicial mediation would be helpful to the parties, I am also happy to arrange that.

D. Costs

[78] Both parties agree that cost should follow the event.

[79] Ryerson has submitted a bill of costs that reflects partial indemnity fees of $32,339.38 including HST and disbursements. The bill of costs covers only Ryerson's external counsel. Ryerson concedes that most of the preparatory work including drafting of affidavits and its factum was done by in-house counsel for whom Ryerson is not claiming reimbursement.

[80] The RSU claims partial indemnity costs of $76,286.47, including HST and disbursements. In many cases the RSU had three lawyers working on particular tasks. While that may often be the most efficient way of completing tasks given the different levels of seniority of the lawyers, it can lead to unnecessary duplication. I also appreciate, however, that there is urgency to injunctions which means one needs more hands on deck in order to get things done on time. To address these competing tensions, I would reduce the RSU's fees by 10 per cent and award it costs of $68,657.82 including disbursements and HST.

Motion allowed.

End of Document