Court Recognizes Importance of Indigenous Traditions in NFP Governance Dispute
April 2022 Charity & NFP Law Update
Published on April 28 2022

By Esther S.J. Oh
   
 

In a Decision concerning the governance of an Indigenous not-for-profit corporation, the Saskatchewan Court of Appeal (“SKCA”) has recognized the importance of considering Indigenous custom and tradition when interpreting general corporate legislation and the common law. Agency Chiefs Tribal Council Inc. v Big River First Nation is a SKCA judgment heard on March 3, 2021 and published on February 4, 2022 (“Agency Chiefs Case”). This case is an example of a case where Indigenous customs and tradition were recognized in a dispute concerning the governance of a not-for-profit corporation. The SKCA dismissed the appeal from a lower court decision (“Chambers Decision”) that found in favour of the plaintiff, Big River First Nation (“Big River”). The Chambers Decision had involved an application for an oppression remedy under section 225 of the Saskatchewan Non-profit Corporations Act, 1995 (“NPC Act”).

The case involved the Agency Chiefs Tribal Council (the “Tribal Council”) and the Agency Chiefs Tribal Council Inc., a not-for-profit corporation incorporated under the NPC Act that conducts key aspects of the Tribal Council’s business (the “Council Corp.”).

Big River was one of three member nations of the Tribal Council, together with the Pelican Lake First Nation and Witchekan Lake First Nation (collectively referred to as the “Member Nations”). While the Council Corp. was incorporated by the Member Nations in 1990, no general operating bylaw outlining the procedures to govern the Council Corp. (such as the election of directors) was ever adopted. Instead, the Tribal Council developed a practice of having each of the three Member Nations appoint two of their own members to sit on the Council Corp’s six-person board of directors.

In 1991, the Member Nations signed the “Agency Chiefs’ Tribal Council Convention Act” (the “Convention Act”), a document which, although never formally ratified, was signed by all parties to the agreement. It was therefore accepted by the court in the Chambers Decision as a written intention of the parties to be bound by its terms, including the expression of Cree custom and tradition.

In 2019, as a result of differences, Big River decided that it would resign as a member from the Council Corp. effective as of the future date on which two conditions stipulated in the Band Council resolution adopted on September 9, 2019, had occurred. These two conditions were as follows: (1) that the directors of the Council Corp. approve its annual audited financial statements for the fiscal year ending on March 31, 2020; and (2) receipt of federal government funding from Indigenous Service Canada “in such amounts and on such terms and conditions as [Big River] deems appropriate, in its sole discretion.” The Council Corp. then took the position that Big River had resigned as a member of the Council Corp. effective immediately as of September 9, 2019, the date of the Band Council resolution, as opposed to the date on which all conditions to the resignation were completed. The Council Corp. proceeded to replace the two directors appointed by Big River with other individuals.

In the Chambers Decision, the court found that the Council Corp. contravened section 225 of the NPC Act and acted in a manner that was unfairly prejudicial to the Big River by removing two directors appointed by Big River from both the Tribal Council and the board of the Council Corp.

The court in the Chambers Decision also rejected the Council Corp.’s arguments and cited a common law principle to interpret the NPC Act that confirms that a party resigning from a non-profit corporation could specify a future date when a resignation would be effective. The Council Corp. appealed and alleged that the judge in the Chambers Decision “erred by truncating its oral arguments, thereby denying it a full and fair response”; and also alleged multiple violations of procedural rules of court. The SKCA did not agree, and upheld the Chambers Decision, amending the particular remedy granted by the Chambers Decision by restoring Big River’s membership on the Council Corp. with the ability to appoint two directors on the board of the Council Corp.

The Agency Chiefs Case is of interest for charities and not-for-profits because while statutory law and common law governing not-for-profits continues to apply, the court recognized that Indigenous custom and tradition can inform and serve as an interpretive framework for applying general legislation and the common law where Indigenous organizations are involved.

   
 

Read the April 2022 Charity & NFP Law Update