BC Court Assesses Fiduciary Duty to a Board

In Kamloops-Cariboo Regional Immigrants Society v Herman, the plaintiffs, including Kamloops-Cariboo Regional Immigrants Society (the “Society”) and one of the Society’s directors, alleged that Wanda Herman, the former executive director of the Society, had committed a number of torts against them. The Society is a not-for-profit society incorporated under the British Columbia Society Act with charitable status and a mandate to assist immigrants and visible minorities integrate into Canadian society. Prior to the case being brought to court, several employees of the Society, including Ms. Herman, had a tumultuous relationship with the Society’s Board, resulting in some employees taking medical leave for stress, as well as accusations of mistreatment and harassment from Board members that in a few cases resulted in human rights complaints.
The plaintiffs brought the action against Ms. Herman on a number of grounds, including allegations of (1) breach of confidentiality, (2) breach of fiduciary duties, and (3) conspiracy to injure the Society. The plaintiffs alleged that Ms. Herman breached her duty of confidentiality to the Society by sharing information concerning internal efforts to resolve the Society’s employment disputes to the press and with the human rights tribunal (“HRT”). The plaintiffs alleged that Ms. Herman breached her fiduciary duties when she established a committee that had the intention of replacing the Board, and filing complaints with the HRT, among other things. The Board’s allegations involving Ms. Herman’s conspiracy to injure the Society included Ms. Herman’s attempt to arrange a meeting of members to replace the Board, as well as filing complaints with the HRT against the Society and its board.
In dismissing all of the causes of action, the court found that Ms. Herman did owe a fiduciary duty to the Society, as an officer of the Society, and that she had acted in compliance with her duty to the Society. The court stated that the Plaintiffs had not demonstrated that the complaints to the HRT were unfounded and that Ms. Herman’s actions were not done in malice. Instead, the court found that Ms. Herman’s actions were taken based on her perception that the Board’s actions were putting the Society at risk. With respect to the allegations of breaches of confidentiality, the court found there was no evidence Ms. Herman directly made statements to the press concerning the Society (the comments were attributed to other Committee members); and the information concerning employment disputes were not subject to confidentiality since that information was obtained through other employees who contacted Ms. Herman while Ms. Herman was on sick leave (i.e., not during Ms. Herman’s term as executive director).
The court further found that the tort of conspiracy to injure the Society should fail because Ms. Herman’s actions were lawful, and she did not act in a way that would imply intent to injure the Society. Instead, the court found Ms. Herman had genuine concerns with the function and role of the Board, as did many other Society members, and that Ms. Herman’s actions were taken to remediate what the judge described as the Society’s “chronic dysfunction.”