Court Declines to Intervene in Affairs of Special Act Corporation

By Ryan M. Prendergast

Mar 2023 Charity & NFP Law Update
Published on March 30, 2023



The Supreme Court of Nova Scotia recently considered whether it had jurisdiction to intervene in a board governance dispute of a special act corporation. In Conrad v Nova Scotia Federation of Anglers and Hunters, the Applicant, a member of the board of directors of the Nova Scotia Federation of Anglers and Hunters (“NSFAH”), sought an order from the court to invalidate a resolution passed by the board approving the credentials of certain clubs and renewing their membership in the NSFAH. After considering caselaw about voluntary associations, the court concluded that it did not have the jurisdiction to intervene in this matter.

NSFAH was incorporated in 1930 by the Nova Scotia Federation of Anglers and Hunters Act (the “Act”), which was subsequently amended over the decades. At a board meeting on March 19, 2022, the board of directors adopted a motion to approve the application of several clubs to join the membership of NSFAH. At least 16 of these clubs had been members of NSFAH in previous years but had not provided the necessary information (according to NSFAH’s bylaws and policies) to have their credentials approved by the board. The Applicant therefore sought an order from the court invalidating the motion that approved the credentials of these 16 clubs.

In its analysis, the court stated that “there is no remedy without a right”. The special act under which NSFAH was incorporated did not have an oppression remedy and, with regard to admission of membership, it used permissive language which, in the opinion of the court, “does not rise to the level of creating a legal obligation arising out of a statutory breach”.  Because the court found that “it is not clear that the governing statute of the NSFAH creates a legal right”, it instead considered whether there were other legal rights it should consider. Therefore, the court found that it must consider whether there was a contractual relationship between NSFAH and its members. Such a relationship, the court stated “would require an intention to create legal relations”.

In considering whether there was a contractual relationship, the court reviewed and quoted extensively from several decisions from the Supreme Court of Canada including Ethiopian Orthodox Tewahedo Church of Canada St. Mary Cathedral v. Aga (“Aga”), discussed in Charity & NFP Law Bulletin No. 494. The court found that Aga “established that the presence of a constitution and bylaws is not sufficient to establish a legal right”. In considering other caselaw about voluntary associations and applying it to the situation before it, the court found that NSFAH’s requirements of an application for membership, payment of a membership fee, and provision of member voting rights could perhaps be sufficient to establish a contractual relationship, but this was not clearly supported by the caselaw.

In considering whether there was an intention to create legal relations, the court applied the test from an Alberta Court of Queen’s Bench decision, Hon v. Liao (“Liao”). In Liao, a case about a voluntary association which had its own constitution and by-laws, the court established that knowledge and consent to abide by the constitution and by-laws, together with the use of revenue from membership fees for the operation of the association demonstrated an intention to create legal relations by the parties. In this case, the court found that members were aware of their obligations to abide by NSFAH’s constitution and by-laws but members were not clearly entitled to any benefits in return for their membership fees. Therefore, there was not an intention to create legal relations, and there was not a contractual relationship between NSFAH and its members. As a result, the Applicant had no legal right on which to bring a claim.

This case is interesting in that it represents a rare situation where courts will look for contractual relationships between an incorporated not-for-profit entity and its members. Generally, a court will be able to rely on the wording of the incorporating statute to find a legal right, but in this circumstance, the language in the incorporating act did not provide any specific rights that the Applicant could rely on. All voluntary associations, whether they are incorporated or not, should be aware of the situations in which the court may find that a member has a legal right that is sufficient to warrant the court’s intervention in the affairs of the organization.


Read the March 2023 Charity & NFP Law Update