April 2020 Charity & NFP Law Update

By Esther S.J. Oh

Membership in Religious Society Reinstated by Court for Unfair Expulsion

On February 14, 2020, the Supreme Court of British Columbia released its decision in Bains v Khalsa Diwan Society of Abbotsford, a case where certain directors and members of the executive committee (“respondents”) of the Khalsa Diwan Society of Abbotsford (the “Society”), had expelled voting members (the “petitioners”) from the Society and barred them from attending the Society’s premises. The Society is a large religious society under the British Columbia Societies Act with over 8400 voting members. Given the complexity of the background facts, this article summarizes only a few key points. At an annual general meeting (“AGM”) on April 12, 2018, some of the petitioners asked questions from the floor concerning the Society’s affairs. They alleged the respondents refused to answer these questions, and instead cancelled the AGM. The respondents, on the other hand, alleged that they attempted to address the petitioners’ concerns, but that the petitioners’ conduct became so disruptive that it was impossible to continue the AGM.

After the AGM, the Society’s executive committee passed a special resolution to initiate procedures to expel the petitioners pursuant to the Society’s bylaw. The Society’s bylaw required that the Society must send each member written notice of the proposed expulsion (including reasons for the proposed expulsion) and provide each member a reasonable opportunity to make representations regarding their proposed expulsion. Written notices were sent to the petitioners advising them of the decision to expel them as a result of their “disorderly” conduct and “derogatory and slanderous language against the Executive Committee” during the AGM, and directing them to attend the Society’s premises to argue their case. While the petitioners denied the allegations and requested further details concerning the allegations, the Society’s president stated that the written notices and video of the AGM (provided to the petitioners) were sufficient notice. No further specific details were provided to the petitioners. After the meetings with the petitioners, the executive committee expelled 12 petitioners, leading them to bring the matter to court seeking, in part, an order setting aside the expulsion.

The court considered whether the respondents acted in contravention of the Societies Act and the Society’s bylaws by breaching the principles of natural justice when it failed to provide the petitioners with sufficient details of the allegations against them, an opportunity to be heard, and an unbiased decision maker. The court stated that “the level of procedural fairness owed is flexible” and stated that “membership in a religious organization may be a significant aspect of a person’s wellbeing.” This attracted a level of procedural fairness above that of a purely social club, but not as high as an organization that affected a person’s property rights or employment.

On the issue of notice, the court found that the respondents had provided insufficient notice, as the notice provided to the petitioners contained no specific details of the alleged disruptive conduct, but instead stated that the petitioners “purposely disrupted the … meeting by [their] conduct and did not allow the said meeting to proceed.” The court found this statement was a conclusion, rather than an allegation to which the petitioners could respond. The court also found there was a reasonable apprehension of bias, because the respondents were the accusers, witnesses, and also the victims of the slanderous comments and physical intimidation which were alleged to have been committed by the petitioners. The court therefore found an omission, defect or error in the conduct of the Society’s internal affairs, contravening s. 14 of the Society’s bylaws and s. 70 of the Societies Act. As such, the court therefore ordered that the executive committee’s decision to expel the petitioners be set aside, and that the petitioners’ memberships be reinstated.

This case is a reminder of the importance for charities and not-for-profits to generally adhere to principles of procedural fairness when carrying out discipline or removal of a member, which would include providing sufficient notice of allegations (including details of the claims made against them) and providing each person under discipline with an opportunity to be heard before an unbiased decision maker. This case indicates the courts’ recognition that the level of procedural fairness owed to a person may be higher where “decisions of associations…may affect a person’s significant interests such employment or property rights, where a very high level of procedural fairness may be required.” This case also reflects recognition by the courts that membership in a religious organization “may be a significant aspect of a person’s wellbeing." As such, the court in this case was able to find that interests at stake are of sufficient importance to attract a level of procedural fairness above that of a purely social club act, but not as high as an organization that could affect property rights or employment." 

Read the April 2020 Charity & NFP Law Update

Direction and Control: Current Regime and Alternatives
COVID-19 UPDATE
-   Ontario PGT Allows Access to Restricted Charitable Purpose Funds
-   COVID-19 Federal Government Support for Charities and NFPs
-   COVID-19 CRA News
-   COVID-19 Provincial Emergency Relief for AGM and Annual Return Filing Deadlines
-   Practical Strategies for Dealing with Termination of Contracts in a Pandemic
-   Federal Privacy Commissioner Releases Privacy Framework for COVID-19
-   Canada Emergency Wage Subsidy (“CEWS”): An Overview for Charities and NFPs
OTHER CHARITY AND NFP MATTERS
-   Corporate Update
-   Ontario Court Decision Provides Reminder to Carefully Follow By-laws
-   Membership in Religious Society Reinstated by Court for Unfair Expulsion
-   Carters is Pleased to Welcome Heidi LeBlanc as a New Associate
-   Friend of CAGP Award