In Barrie & District Association of Realtors v. Information Technology Systems Ontario, the Applicant, Barrie & District Association of Realtors (“BDAR”), a local not-for-profit association of real estate agents and brokers in the Barrie and District area, brought an application under section 191 of the Ontario Not-for-Profit Corporations Act, 2010 (ONCA), which in general terms, permits a complainant to request the court to make an order directing the corporation or its representatives to comply with the ONCA, regulations or governing documents or restrain the corporation and its representatives from acting in breach of the same.
BDAR challenged the validity of a by-law amendment relating to criteria for maintaining membership (the “By-law Amendment”) adopted by the board of Information Technology Systems Ontario (ITSO), a separate not-for-profit corporation (NFP) governed by the ONCA, of which BDAR was a member association. As a result of the By-law Amendment, member associations were required to “[m]aintain the same corporate structure and control as when the Member Association first became a Member Association, unless notice of the proposed change is provided to the Board and approved by the Board.” Where there was a change in corporate structure or control, ITSO’s board retained the right to decide whether or not the association would remain a member association.
Through ITSO, member associations, including BDAR, pool multiple listing service (MLS) data into one large database and pay fees to ITSO to enable their respective members to access the pooled data. The By-law Amendment was adopted after BDAR decided to integrate with the Toronto Regional Real Estate Board (TRREB), which ITSO viewed as a competitor MLS data provider.
BDAR brought this application, arguing that the By-law Amendment (i) amounts to a retroactive breach of ITSO’s contractual obligations to BDAR (as described later in this article), (ii) was impermissibly vague and inconsistent with section 48 of the ONCA (which states the by-law must set out the conditions required for being a member of the corporation), and (iii) was enacted in bad faith for the purpose of targeting BDAR (given its recent integration with the TRREB). In its decision released on June 9, 2025, the Ontario Superior Court of Justice dismissed the application and rejected each of the arguments from BDAR.
The court confirmed that judicial review of internal corporate governance decisions is warranted in narrow circumstances. In this regard, the court stated that absent a breach of statute, non-compliance with governing documents, a denial of procedural fairness, or evidence of bad faith, courts will not substitute their judgment for that of a NFP’s board, and even then, “courts will only intervene when a legal right of sufficient importance, such as a property or contractual right, are at stake.” As the court noted, “[b]oard decisions, including those of not-for-profit corporations, are owed deference by the court because the directors are in a far better position to make decisions in the best interests of the corporation.”
The court held that ITSO’s By-law Amendment did not retroactively breach its contractual relationship with BDAR, noting that members enter into a contractual relationship with an association on the understanding that the relationship will be regulated by by-laws that may be amended. The court held that BDAR’s membership had not been retroactively terminated, as the By-law Amendment allows the Board to approve a change in corporate structure and control after it has occurred.
The court did not find the By-law Amendment to be impermissibly vague because the doctrine of vagueness does not apply to a private corporation’s by-laws. The court explained that section 48 of the ONCA requires by-laws to set out the conditions for “being a member”, but does not require that every discretionary factor considered by a board be enumerated in the by-laws. The By-law Amendment adequately set out the conditions for maintaining membership and explicitly granted the board authority to approve changes in corporate structure and control, which was sufficient to comply with section 48 of the ONCA.
The court noted that while the By-law Amendment was prompted by BDAR’s integration with a competitor, the court accepted that ITSO’s board was responding to legitimate competitive concerns about a non-member competitor exerting influence over ITSO’s governance. In that regard, the court stated that acting to address those concerns, even where the amendment was directed at a specific situation, did not amount to bad faith.
For charities and NFPs, this decision underscores that boards retain broad discretion to amend by-laws and membership provisions contained in by-laws, provided the boards act within their statutory authority and follow required procedures set out in an existing by-law. This decision also affirms the approach taken by courts in previous case law in which courts have shown significant deference to internal governance decisions and will intervene only in limited and clearly defined circumstances