On October 31, 2016, the Ontario Superior Court of Justice issued its decision in Lash v Lash Point Association Corp. Lash Point Association Corporation (“LPAC”) is a not-for-profit corporation which holds 30 acres of cottage property, called Lash Point, on Lake Rousseau in Muskoka. Various Lash family members transferred their interests in the property to the corporation in 1996. This case deals with the significant disagreements about the future of the LPAC as some family members wish to “realize on the fair market value of their interest in Lash Point” while others “want LPAC to continue so that they and future generations can continue to enjoy Lash Point.”
In this regard, the group wishing to retain ownership proposed to buy out those wishing to leave, while those wishing to leave preferred to have the corporation wound up and the entire property sold. Both sides attempted to apply different remedies under the Canada Not-for-profit Corporations Act; either a court ordered winding-up in the case of those wanting to sell the property; or the broad authority the court has under the CNCA to construct an appropriate remedy in the case of those wishing to remain.
The court considered each side’s position before deciding that the test was not met for a court ordered wind-up after considering the leading cases on such a remedy in the for-profit context. The court largely accepted the draft buyout agreement proposed by those wishing to retain ownership with some changes and appointed a receiver to oversee the buyout.
The decision is of interest since the analysis of the court considered many of the provisions of the CNCA in light of previous decisions concerning for-profit corporations. The analysis of the court concerning the membership remedies discussed will be of value in future cases dealing with membership remedies under the CNCA.