Feb 2019 Charity & NFP Law Update
On December 14, 2018, the Ontario Superior Court of Justice published the transcribed written endorsement in Hemming v JAZZ.FM 91 Inc., involving a dispute between an incorporated registered charity (“JazzFM91”) and a group of dissident members who requested that JazzFM91 provide them with a membership list in accordance with the statutory provisions of the Corporations Act (Ontario), including email addresses. At the time of writing, the dissident member group was successful in replacing the previous board of JazzFM91 with their own slate at a special meeting earlier in February 2019.
Although most of JazzFM91’s over 2,000 members are primarily contacted and sent meeting notices by JazzFM91 via email, JazzFM91 refused to release the email addresses of its members, adopting a narrow reading of the Corporations Act (Ontario) and arguing that it had an obligation to protect its members’ privacy. However, the court disagreed with JazzFM91 and stated that:
Among the purposes advanced by allowing members/shareholders to access the list of members is to allow shareholders/members the means to requisition a shareholder meeting. The Respondent [JazzFM91] has decided to withhold electronic address information. That narrow view of its obligations to provide addresses was clearly adopted to frustrate the applicants and not – as suggested – out of concern to maintain privacy.
As such, the court ordered JazzFM91 to provide the “postal and electronic addresses (email) as it possesses when responding to the applicant or any other member’s request.”
The court was also concerned with the message that an order on costs in this application would send to other not-for-profits. In this regard, the court ordered JazzFM91 to pay $20,000.00 in costs, stating that the best way to deal with a dissident group is at members’ meetings and not misusing the corporation’s money by “tossing roadblocks in the way of democracy.”
A week later, officers of JazzFM91 appeared before the Divisional Court requesting a stay of the order of December 14, 2018. Even though JazzFM91 did not bring a proper motion on notice, the Divisional Court found that there was no risk of serious harm to JazzFM91 and no risk of irreparable harm to members’ privacy resulting from the order to provide the email addresses. In this regard, the Divisional Court held that: “[m]embers of a not-for-profit corporation allow the corporation and dissidents to contact them as an incident of membership. The corporation already uses email to do so. Levelling the playing field for dissidents enhances member democracy. It is not harm.”
While the obligation to disclose email addresses or other personal information of members may depend on the statute applicable to the not-for-profit corporation or information collected, these decisions are a reminder of the statutory obligation to provide membership lists, and the willingness of the court to read the statute in favor of the members’ rights in a dispute. The tension between corporate disclosures obligations and privacy obligations was earlier reviewed in the decision of Rodgers v Calvert, discussed in Charity Law Bulletin No. 70. However, increasingly, it is apparent that information collected from members during the membership process will need to be weighed carefully given the disclosure obligations of the not-for-profit corporation under corporate statutes.