Decision Date: May 17, 2017
Link: Case Summary Document
Citation: Supreme Court of British Columbia, Russell J
Acknowledgement:The Pemsel Case Foundation thanks The Australian Centre for Philanthropy and Nonprofit Studies for its contribution in the drafting of this Case Note.
Summary:
This case concerned an action by Moose International Inc (MI) brought in British Columbia in Canada. The Supreme Lodge of the World, Loyal Order of Moose was incorporated in the US state of Indiana in 1908. It became Moose International in 1951. The Duncan Community Lodge Society became affiliated with MI in 1946, and was incorporated as a society under the Societies Act, R.S. 1951, c. 74 (the Act) in 1952. From 25 February 1952 until 6 April 2010 the Society maintained an affiliation with MI. As required by British Columbia legislation, the Society had its own constitution and bylaws, and operated under the legislative requirements of the Societies Act (i.e. it was a separate legal entity from MI). At no time did the Society agree that it was a branch of MI or that it had adopted MI’s bylaws and constitution. However, its aims and purposes were consistent with those of MI.
In severing its ties with MI, it became necessary to determine whether land (valued today at $810,000) was owned by the Society had devolved at some point to MI. A dispute had previously arisen in 1988 as to the ownership and control of this land, which was improved with sporting and clubhouse facilities, and was much used locally. MI had attempted to take over control of the land and facilities by changing the locks and taking control of the Society’s local bank accounts. An injunction was granted to stop this, ultimately leading to a settlement in February 1989.
The Society abided by the settlement’s terms, sending a percentage of its monthly dues to MI, and supporting international charities as specified by MI. However, the membership of the Society began to take exception to the large proportion of dues being sent out of Canada to MI, to the detriment of the local facilities and local charities. In 2008, MI reacted to this dissension by once again trying to take control of the property and facilities of the Society. However, this attempt was foiled by the terms of the settlement of 1989.
In 2010, the Society again decided to separate from MI, on the grounds that MI excluded women from membership, insisted on belief in a Supreme Being, and was generally out of step with the times. The redirection of funds to local charities was also again a motive. An Extraordinary General Meeting (EGM) was called for 6 April 2010. Thirty-four of 52 members attended, of which 79% voted in favour of severance from MI. The Society has since carried on its activities in a local way, and permitted women to be members.
The first issue in this case, brought by a 2010 member of the Society aligned with MI (MI could not establish standing in British Columbia) was whether the EGM had been properly conducted. The court held the MI had no standing to challenge the results of the EGM. Even if it had, the court said that the meeting had been properly conducted under the Act (section 85 applied, together with the test in Hong v. Young Kwang Presbyterian Church, 2007 BCSC 502). The court said on this point (at [107]-[109]):
Given the plaintiffs’ actions, the Society’s bylaws, and those of the International, clearly it was the norm for directors to organize and hold an EGM. In addition, the plaintiffs do not dispute that the authority to call such a meeting is held by the directors, and so it seems that, if there were an irregularity with the process of calling the meeting, this irregularity would not otherwise render this meeting ineffective. As such, the first two prongs of the Hong test are made out. In any event, in regard to prong 3 of the Hong test, looking at the effect of the vote on the membership, it would not be appropriate for this Court to intervene to change its results. As outlined earlier in this decision, the directors made serious efforts to ensure that 14 days’ notice of the EGM was provided as required by the Act, as opposed to the 7 days’ notice prescribed in their own bylaws. In addition, the directors ensured that all the members at the EGM were members in good standing, and that there was a quorum of such members. In the result, I do not find that there was any default or irregularity committed by the Society in its conduct of the EGM which would require the intervention of this Court under s. 85(1)(d)(ii).
The second issue in the case was the ownership of the Society’s property. Section 76 of the Act applied, referring to the procedure for the registration of a body as an extraprovincial society. MI was not so registered. Registration of an extraprovincial society is discretionary (with some exceptions), but failure to register has consequences. Section 81 of the Act did not allow MI, an unregistered extraprovincial society, to sue to enforce a contract made in British Columbia. It also did not allow an unregistered extraprovincial society to hold title to land in British Columbia.
The court held further that even if MI had been properly registered as an extraprovincial society, the separate legal status of the Society and the 1989 settlement precluded MI from owning the property in question (at [117], [119]):
The financing for the Property was raised locally, and the property itself was constructed for the express purpose of being used by the Society, not the International. If this was not already apparent from the Property’s initial establishment in 1952, it was surely confirmed by the Society’s dealings with the International in 1988/1989…the 1988/1989 accord between the International and the Society made it clear that the latter was essentially an autonomous entity required to abide by the International’s general principles and provide its membership fees. The relationship was not one in which the Society was subject to the International’s constitution or bylaws. Therefore, as a result of the International’s lack of registration in British Columbia, the circ*mstances around the Property’s initial establishment, and the 1988/1989 dealings between the Society and International, I find that the International is not entitled to the Property.
The case brought by MI was dismissed with costs.
The case may be viewed at: http://www.courts.gov.bc.ca/jdb-txt/sc/17/08/2017BCSC0818.htm
