by Dev User | Sep 26, 2019 | Uncategorized
Sep 2019 Charity & NFP Law Update
As was referenced in the Charity & NFP Law Bulletin No. 431, federal Bill C-45, the Cannabis Act received Royal Assent on June 21, 2018, legalizing the use of recreational cannabis in Canada. Following this, the final Regulations Amending the Cannabis Regulations (New Classes of Cannabis) (“Regulations”) were published in the Canada Gazette on June 26, 2019. The Regulations, in addressing the public health and public safety risks, will come into force on October 17, 2019 and legalize the sale of “edible cannabis, cannabis extracts, and cannabis topicals” (collectively, “cannabis edibles”) in Canada. While initially limited in supply, Health Canada has stated that these products are anticipated to be made available for sale by mid-December 2019.
Once available, employers may potentially face the challenge of employees using cannabis edibles at work and thereby having to manage workplace impairment issues. While there are restrictions on the smoking and vaping of cannabis in enclosed workplaces in Ontario, no such restriction exists for the ingestion of cannabis edibles in the workplace at either the federal or provincial levels. Regardless, employers have the right and obligation to set rules and workplace policies to ensure the health and safety of employees in their workplaces, such as under Ontario’s Occupational Health and Safety Act.
Some examples of strategies to avoid employee workplace impairment may include setting up and implementing hazard prevention programs that prohibit the consumption of cannabis edibles in the workplace, or restriction on attending work impaired due to the consumption of cannabis edibles. Any existing policies requiring employees showing “fit” to work or relating to drug or alcohol use, should also be updated to include a new category for recreational cannabis, including consumption of cannabis edibles.
Unlike some other substances, cannabis edibles may take a longer time to take effect after consumption, and may have longer-lasting and unanticipated effects for the consumer. As such, both employers and employees need to be mindful of these potential effects, which may cause workplace impairment. Further, self-assessing impairment as both a consumer of cannabis edibles and for an employer is also harder than for other substances, creating further challenges.
The legalization and sale of recreational cannabis edibles will bring novel and challenging issues for employers to monitor employee conduct in the workplace. Charities and not-for-profits need to be aware of these challenges and take proactive measures in avoiding potential issues.
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by Dev User | Sep 26, 2019 | Uncategorized
Sep 2019 Charity & NFP Law Update
The Supreme Court of British Columbia released its decision in Brun v Deep Cove Yacht & Sport Club on August 22, 2019 concerning the termination of the membership of the appellant, Robert Brun, at the Deep Cove Yacht & Sport Club (the “Club”), a non-profit recreational association incorporated under the British Columbia Societies Act. Numerous invoices had been sent to Mr. Brun over the course of 2017 for mooring fees, which were not immediately paid. As a result, various emails and letters for overdue accounts were sent to Mr. Brun before he eventually paid his fees, sometimes more than 90 days late.
The Club’s by-laws provide that “[e]very member must uphold the Constitution and comply with these By-laws and the Policies and Regulations as approved by the Executive Committee, including the prompt payment of dues, moorage assessment and other member accounts.” Section 2.9 of the by-laws contains provisions for member expulsion “for cause”, and contains general terms for the process, including members’ appeal rights. Additionally, the Club’s policies indicate that membership may be terminated where membership dues are 90 days in arrears. However, they do not specify a termination procedure.
As a result of Mr. Brun’s overdue accounts, on November 14, 2017, the Club’s Executive Committee had decided to terminate Mr. Brun’s membership. At a December 12, 2017 Executive Committee meeting, a motion was brought and passed to send Mr. Brun an expulsion letter for non-payment. He was advised that he could write to the Commodore if he wished to appeal his expulsion. Mr. Brun did so, and attended an Executive Committee meeting on January 9, 2018 where he explained that cash flow problems had prevented him from paying his fees on time. The Executive Committee put forward a motion to consider upholding its November 2017 decision to expel Mr. Brun, and a majority voted not to overturn that decision. Mr. Brun was then given a final avenue of recourse, which was to have an active member provide a petition for his reinstatement. However, he instead brought the matter to court.
The court reviewed sections 102 and 105 of the British Columbia Societies Act, which contain provisions respectively concerning member complaints and giving the court jurisdiction to address errors and irregularities in the conduct of societies’ affairs. Having considered the sections and relevant case law, the court stated that:
Even where a society fails to comply with its by-laws and does not extend procedural fairness to a member whose expulsion is being voted upon, the court will not necessarily grant an order requiring reinstatement or reconsideration of the decision. Such remedies may be refused where they may be futile, i.e., reconsideration would lead to the same result, or where the practical effect of reinstatement would significantly challenge the continued operation of the club.
The court also reviewed the Club’s by-laws and policies and found that it did not contain any procedure for expulsion. Given that the policy was “designed only to complement the [by-laws]”, the court held that the expulsion should have been conducted pursuant to section 2.9 of the by-laws. Given that the Club did not follow the procedures in section 2.9 of the by-laws, the court found that Mr. Brun had been denied procedural fairness and ruled in favour of Mr. Brun.
The court noted that there would be practical obstacles arising from Mr. Brun’s reinstatement as a member, due to the docks having been given to other members since Mr. Brun’s expulsion. Despite the Club’s argument that Mr. Brun’s reinstatement would be impractical, the court noted that these obstacles were “not insurmountable,” and provided a remedy that preserved Mr. Brun’s membership rights and his entitlement to two docks without challenging the Club’s operation or prejudicing innocent third parties’ interests. It further required Mr. Brun to pay his fees on time.
Despite the court’s discretion under the British Columbia Societies Act to refuse remedies where a charity or not-for-profit has not complied with its by-laws, this case is a reminder that such measures will only be utilized in limited situations where providing such remedies is impractical. Organizations should, therefore, comply with their by-laws, policies and other governance documents, particularly in contentious matters, such as member expulsion, and should ensure procedural fairness in all such cases.
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by Dev User | Sep 26, 2019 | Uncategorized
Sep 2019 Charity & NFP Law Update
New Brunswick Passes New Cooperatives Act
On June 14, 2019, New Brunswick’s Bill 35, Cooperatives Act received Royal Assent. The new Cooperatives Act has not yet been brought into force, and will come into force on a day or days to be fixed by proclamation. As indicated by New Brunswick’s Financial and Consumer Services Commission, this date is currently targeted to be January 1, 2020. Once in force, the new Cooperatives Act will repeal and replace the current Co-operative Associations Act, which came into force in 1978 and has not had substantial updates since then, along with the regulations under the Act.
The new Cooperatives Act governs “persons that wish to organize, operate and carry on business on a cooperative basis.” In this regard, section 6 sets out the requirements for an organization operating on a “cooperative basis,” including matters such as open membership; no proxy votes for members; membership interest on any membership loan and dividends on any membership share being limited to the maximum percentage fixed in the by-laws; requirements to have surplus funds arising from the cooperative’s operations; and requirements for cooperatives to educate their members, officers, employees and the public on the principles and techniques of cooperative enterprise. The new Act modernizes the cooperatives regime in New Brunswick to bring it in line with the modern corporate law approach and best practices in other Canadian jurisdictions, modernizes the administrative processes for cooperatives, and reduces administrative red tape. Additionally, it enhances cooperatives’ access to capital by allowing them to issue investment shares in addition to membership shares, and by providing for small business tax credit incentives for investment shares.
Once the new Act is proclaimed into force, all existing co-operative associations incorporated or continued under that Act will be deemed to be continued as a cooperative under the new Cooperatives Act. Their letters of incorporation, directors and by-laws in force at the time of the transition will be deemed to be valid articles of incorporation, directors and by-laws in force under the new Cooperatives Act, despite any inconstancies with provisions of the new Act. However, articles of amendment for the continued articles of incorporation and by-laws to ensure that those documents are in compliance with the new Act and its regulations will need to be filed within 18 months of the deemed continuance. Failure to do so may result in the dissolution of the cooperative.
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by Dev User | Sep 26, 2019 | Uncategorized
Sep 2019 Charity & NFP Law Update
On September 23, 2019, the Office of the Privacy Commissioner of Canada (“OPC”) announced that it had concluded its consultation on data transfers of personal information for processing (“Consultation”). As was discussed in the June 2019 Charity & NFP Law Update, the Consultation was originally launched on April 9, 2019 alongside the OPC’s Equifax Report of Findings, and was reframed on June 11, 2019. In the Equifax Report of Findings, the OPC had strayed from its longstanding position on transfers of personal information for processing, characterizing them as “disclosures” of personal information, rather than “use”, within the meaning of the Personal Information Protection and Electronic Documents Act (“PIPEDA”), and therefore requiring consent. However, the OPC has now concluded that its position under the current law, as outlined in the January 2009 Guidelines for processing personal data across borders, will remain unchanged and that consent will not be required in such instances.
In coming to this conclusion, the OPC took into consideration the 87 submissions it had received, including the Canadian Bar Association’s submission discussed in the August 2019 Charity & NFP Law Update. The vast majority of the submissions to the OPC took the view that there was no consent requirement under PIPEDA for transfers for processing and doing so would create enormous challenges for business processes. Further, the OPC relied on the Federal Court of Appeal’s decision in Englander v Telus Communications Inc. to illustrate that the “non-legal drafting” of PIPEDA makes it open to be interpreted in more than one way, and in such situations, “flexibility, common sense and pragmatism will best guide the Court.” As such, the OPC applied a pragmatic approach in maintaining the status quo until legislative reform occurs (for which it is currently in the process of developing recommendations) in order to modernize Canada’s federal private sector law.
In its announcement, the OPC further reminded organizations of the legal requirement of transparency in handling personal information and advising customers of the potential of their personal information being sent to another jurisdiction where it may be accessed by law enforcement, courts, or national security authorities. In addition, the OPC also shared its expectation that organizations will continue to apply the 2018 Guidelines for obtaining meaningful consent, and allow individuals to make informed decisions regarding the handling of their personal information by specifying certain key elements, including “what personal information is being collected; with which parties personal information is being shared; for what purposes personal information is collected, used or disclosed; and any residual meaningful risk of harm or other consequences.”
Charities and not-for-profits that are either subject to or choose to comply with PIPEDA and that may transfer personal information for processing would not be required under the current law, or under the OPC’s practices and policies, to obtain the consent of parties whose personal information is being used. However, these charities and not-for-profits should continue to ensure compliance with the privacy obligations imposed by PIPEDA as described in the previous paragraph.
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by Dev User | Sep 26, 2019 | Uncategorized
Sep 2019 Charity & NFP Law Update
Application Form T2050 to be Phased Out
As part of the Canada Revenue Agency’s (“CRA”) rollout of the Charities IT Modernization Project (CHAMP) under way since June 1, 2019, the CRA implemented a new online application for charitable status through the CRA’s My Business Account (“MyBA”). During the early days of implementation of the online application process, the CRA has been continuing to accept applications using Form T2050, Application to Register a Charity Under the Income Tax Act. However, the CRA will no longer accept the T2050 Form after September 30, 2019. There are differences in the questions contained in the online application form and the T2050 Form. Those who do not wish to use the online application may obtain from the CRA a paper form of the application (Form T1789).
To assist with filing applications online, the CRA has recently added more information on the CRA’s MyBA webpage and has posted a webpage to guide applicants through the application process. The information includes directions on setting up MyBA, as well as tips about the online application form and tips to avoid delays. For example, to guide applicants, the CRA notes that applicants will need to provide detailed information for each charitable activity, either currently carried out or proposed to be carried out. It further indicates that multiple individuals can take turns logging in to complete different sections of the form. Further, once an application has been submitted, applicants will be able to log into MyBA to review their application status.
Applicants should also be aware that the online application has not been updated to reflect the new PPDDA regime that replaced the previous “political activities” regime under the Income Tax Act. In this regard, the CRA has indicated that the online application will be revised to reflect the new rules in November 2019. Prior to this, applicants will need to follow the CRA’s instructions on the CRA’s webpage on how to complete the application as if it concerned PPDDAs rather than political activities, rather than following the wording in the online application itself.
Read the September 2019 Charity & NFP Law Update
