Court File and Parties
COURT FILE NO.: CV-21-00660791-0000 DATE: 20220302 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Deidra Murphy and Kim Moseley, Applicants AND: Kim Borden Penney, Bernice Carnegie, Brooke Chambers, Nicole Veira and Black Women for Change Foundation, Respondents
BEFORE: Carole J. Brown J.
COUNSEL: Kayla Theeuwen and Max Skrow, Counsel for the Applicants George (Knia) Singh, Counsel for the Respondents
HEARD: February 17, 2022
Endorsement
[1]
Introduction
The applicants, Deirdra Murphy (“Murphy”) and Kim Moseley (“Moseley”), bring this application for numerous declarations and orders related to the not-for-profit organization entitled Black Women for Change Foundation (“BWFC”), which they and the respondent, Kim Borden Penney (“Penney”) founded in the summer of 2020 to support and elevate black professional women and to eradicate rivalry among black women. The applicant explained that the organization was born out of the moment of inflection marked by the death of George Floyd.
2By the end of 2020, the organization had begun to grow, building momentum and expanding membership. However, in February 2021, the respondent, Penney, purported to declare herself to be President, and to install a new Board of Directors of the non-share capital Corporation, without adhering to the corporate governance legislation. She has since acknowledged that she failed to adhere to the applicable corporate governance legislation.
3However, she also locked the applicants out of the BWFC website and other BWFC accounts and will not permit them access to, or return the BWFC property to the Corporation.
4It is the position of the applicants that the organization was created by the three women to promote leadership in professional black women. It was their position that, at a certain point, Penney attempted to usurp power, to take over the organization and oust the applicants, and to lock them out of the various BWFC accounts.
5It is Penney’s position that the organization had been created by her, flowing from her PhD thesis and that all of the accounts also belonged to her and the PhD study.
[6]
Background and Facts
Based on all of the evidence adduced by the applicants and respondents, the following are the seminal facts.
7Murphy and Moseley, who were both professional black women working in downtown Toronto, met in the spring of 2020 through their participation in Penney’s PhD thesis entitled Banking on Equity: Bay Street and Black Women’s Leadership in Banks. Murphy was director of Project Delivery and Management and Strategy Performance and Marketing at the Royal Bank of Canada. Moseley was the Vice President of Product, Marketing and Communications at Alterna Savings and Credit Union.
8Through their participation and association, they realized that they shared an interest in promoting black women in business and, as a result, agreed to establish an organization aimed at assisting in that goal. As a result, the Black Women for Change Foundation was incorporated on 7 July 2020, with the stated objective being “to support and elevate black professional women in corporate Canada, support and foster future generations of young black women professionals, and eradicate rivalry amongst black women”. The three women agreed to be equal directors and cofounders, and agreed that Murphy would be responsible for Operations, Moseley would be responsible for Marketing, and Penney would be Treasurer.
9Moseley proposed the name “Black Women for Change”, Penney registered the domain name in anticipation of BWFC having a web presence and Murphy began designing a logo. Moseley leveraged her connection with a marketing and communications company, Direct Focus, to secure their assistance in developing a website for BWFC. Moseley was friends with Taylor Crawford, the CEO of Direct Focus, who filed an Affidavit in support of the application. As stated by Mr. Crawford in his Affidavit, Direct Focus ultimately did their work for BWFC on a pro bono basis, and did so on the basis of his friendship with Moseley.
10On 18 July 2020, BWFC’s logo was finalized. On 4 August 2020, BWFC was incorporated pursuant to Letters Patent. All three women were listed as applicants and the first directors of BWFC.
11From the date of incorporation until February 2021, BWFC operated with great success. The three women conducted monthly chapter meetings, hosted a holiday event, launched a book club, completed the BWFC website, added members to the foundation and met regularly as directors. They also opened a BWFC bank account, purchased marketing software and shared the cost thereof.
12However, on 25 January 2021, Penney independently and without the knowledge of the applicants, sent email correspondence to one Sarah Corbett of Direct Focus requesting that Penney’s profile on the BWFC website be revised to list Penney as the “President” of BWFC and to indicate that BWFC was created “as a direct result of her PhD study”. She reiterated this demand on 6 February 2021.
13The applicants became aware of the fact that Penney was listed as “President” on the BWFC website on 13 February 2021. They attempted to convene a meeting to be held 15 February 2022 to discuss this with her. However, she cancelled this meeting and three subsequent meetings that were scheduled. As a result, Moseley and Murphy decided to postpone the BWFC members’ meeting scheduled for 15 February 2021, as they had been unable to meet with Penney to resolve the issues of directorship and officer roles.
14As a result of the cancellation of this members’ meeting, Penney locked Moseley and Murphy out of numerous BWFC accounts, including the BWFC Gmail account, the Google Drive account, the Mailchimp marketing account, the Trello Collaboration tool and the BWFC website. She further removed the BWFC website from the Direct Focus server, as a result of which Direct Focus demanded return of the website. Further, she filed a notice of change with the Ministry of Government Services, changing the directors of BWFC from Penney, Murphy and Moseley to Penney and the three respondents, Nicole Veira, a friend; Bernice Carnegie, who Penney describes as an aunt and Brooke Chambers, who Penney describes as a cousin. These changes were not voted upon by a general meeting of members, and were in contravention of the applicable corporate legislation. It appears that Penney changed the name associated with BWFC’s email address such that all emails would thereafter be sent under the name Black Women’s Leadership in Canada.
15The hearing of this application was to have been held on 25 November 2021 before Myers J. However, the respondents requested an adjournment which was granted. Further, Myers J. noted that the respondents conceded that Penney’s purported removal of the applicants as directors was inappropriate, stated that they were not removed properly pursuant to the relevant corporate legislation in respect of the purported removal of Moseley and Murphy as directors, and confirmed that the applicants are directors of BWFC, including recognition of their statutory rights as directors. Myers J. further stated that a directors’ meeting should be held. Further, the change notice filed by Penney removing Moseley and Murphy as directors and instead appointing the three respondents as directors was contrary to the corporate legislation and, accordingly, invalid.
16A directors’ meeting was called for 21 January 2022 at which time it was voted to hold a special meeting of members on 1 February 2022 to consider whether Penney should be removed as a director of BWFC. A majority of the members voted to remove Penney as director at that special meeting. As a result, the applicants do not, on this application, pursue the request to have Penney removed as a director of BWFC, as this has already been done by membership vote pursuant to the relevant corporate legislation.
17Penney, in her defence, states that she was advised by Ontario Business Central that she could make changes to the directorship and the officers of BWFC in this way. I am not satisfied with this explanation and it is, in any event, not correct, and not consistent with the statutory legislation.
[18]
Analysis
As a result, the sole remaining issues are the reversal of the lockout of Moseley and Murphy from the various BWFC accounts.
19It is the position of Penney in this regard that the entire organization arises from and was created by her as a result of her PhD thesis. She further states that all the accounts are the property of herself and her PhD study. Unfortunately for her, the evidence does not support any of her contentions. For example, the sworn affidavit of Zoe Mitchell, a new member of BWFC, states that Ms. Mitchell was never told and had no idea that BWFC was in any way affiliated with Penney’s PhD study. Upon the creation of BWFC, Penney applied for a website for the foundation. There was no evidence to indicate that this was in any way affiliated with her own PhD study. As regards the logo, it in no way makes any reference to Penney’s PhD study, but depicts three strong black women, communicating strength, leadership and sorority, which aligns with the vision of the founders. The sworn affidavit of Taylor Crawford testifies that his company provided pro bono work in the form of creation of a website for BWFC. The work was done pro bono due to his friendship with Moseley. I am satisfied that Direct Focus did not do this work pro bono for Penny’s PhD thesis. As regards the Mailchimp marketing software, Penney states that this was paid for by herself and belongs to her PhD thesis. However, the evidence adduced on this application indicates that Moseley and Murphy covered the costs equally with Penney, and reimbursed Penney for the cost of Mailchimp. There was no evidence adduced to the contrary.
20No evidence has been adduced which satisfactorily establishes that any of the BWFC accounts, website or software belongs to Penney rather than to BWFC.
21The Ontario Corporations Act, s. 332 enables this Court to make such orders as it deems fit where a corporation or director, officer or employee of a corporation fails to perform any duty imposed by the Act. While I am cognizant of the fact that judicial intervention in the affairs of a corporation without share capital is rare, I am satisfied that in all of the circumstances of this case, court intervention is necessary and justified: Malik v Sabha, 2020 ONSC 5535, at para. 23.
22Based on all of the evidence before me, I am satisfied that Penney breached the provisions of the Ontario Corporations Act by removing the applicants as Directors and naming a new Board of Directors, without holding a general members’ meeting to vote on the new Board: see Bose v Bangiya Parishad Toronto, 2021 ONSC 59 at paras. 2-4 (Div. Ct.). Further, I find that she misappropriated the property of BWFC, including all of the accounts listed at para. 14, supra.
23I am satisfied that the applicants are members and directors of the respondent Black Women for Change Foundation within the meaning of the Ontario Corporations Act RSO 1990 c C 38 and of the Corporations Information Act, RSO 1990 c C 39. I am further satisfied that the respondents, Bernice Carnegie, Brooke Chambers and Nicole Veira are not directors or officers of BWFC, and their appointment by Penney was not in compliance with the applicable corporate legislation. I am further satisfied that Penney failed to comply with s. 13 of the Corporations Information Act.
[24]
Disposition
I further find that Penney improperly blocked access to BWFC accounts to the applicants and took property which is rightfully the property of BWFC. This includes the documents and register to be kept by BWFC pursuant to the Ontario Corporations Act, s. 300; the minutes of all BWFC directors’ meetings; all documentation pertaining to the BWFC website domain registration, all content developed for the BWFC website to date; all passwords and other access requirements with respect to the BWFC website. I order that this property be returned to BWFC. I further order that Penney shall provide the applicants with all passwords and other access requirements in respect of the BWFC Gmail account, Google Drive account, Mailchimp marketing account, Trello Project Management tool, and any other software services or accounts to which the applicants had and ought to have access as directors of BWFC. This is to be done within 30 days of the date of this Order.
25Further, I order that Penney is permanently enjoined from holding herself forth as the president of BWFC or as a director or member thereof; using or referencing BWFC to make any application for any bursaries, grants or other funding; and making any changes to the BWFC website, except as required to comply with this Order.
26Orders to go as above, and as contained in the full order to be signed by me.
27This is one of the more unfortunate cases that I have seen recently. To see such conduct by a director in circumstances where the organization was created to encourage leadership, guidance and cooperation among black women professionals and leaders in the community, and at a time when such leadership, guidance and cooperation are so important is truly sad.
[28]
Costs
Counsel are urged to agree on costs to be paid. Failing an agreement, they are to provide their bills of costs to me, with a maximum of 3 pages, within 60 days.
C.J. Brown J.
Date: March 2, 2022