Voluntary organizations and member disputes take another trip to the Supreme Court

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The Supreme Court of Canada in Ottawa, photographed in 2012. Image: Robert Linsdell/Flickr

According to a June 2020 Statistics Canada study, in 2018 more than 12.7 million people in Canada volunteered for charities, non-profits and community organizations, contributing more than 1.6 billion hours. While not all are members of the organizations for which they volunteer, many are. 

Under what circumstances does their membership have the legal status that will attract a judge's jurisdiction and oversight, particularly when there are disputes leading to the expulsion or other discipline of members? This question is again headed to the Supreme Court of Canada for an answer later this fall.

The question is not an abstract one. It involves the interplay between the rights of the members and the discretion of those in charge of the organizations to make decisions that affect their members' rights. If a member is dissatisfied with the decision, can they go to court? 

The general position in Canadian law is that, unless there is an underlying legal right, a court lacks jurisdiction to settle disputes within voluntary organizations, including enforcing the organizations' internal rules and ensuring procedural fairness in applying the rules. The Supreme Court of Canada affirmed this position most recently in 2018, in the case of Highwood Congregation of Jehovah's Witnesses (Judicial Committee) v Wall.  

In a nutshell, the courts' position means that members dissatisfied with their organizations' decisions are prevented from having a judge arbitrate the dispute, unless they can persuade the judge that there is a property or other legally recognized civil right that is in play.

"Property and civil rights" refer to legal transactions between private persons, which can include individuals, corporations, unincorporated groups, but which do not include government action. Property and civil rights can arise out of contracts, and encompass all manner of commercial transactions. But they have also been found to be at play when membership in an organization affects a person’s business opportunities or the ability to play an organized sport or the opportunity to use a piece of property.

These sorts of rights can also arise under statute, for example under corporate legislation governing a voluntary organization that is incorporated.

The Ontario Court of Appeal's January 2020 decision Aga v. Ethiopian Orthodox Tewahedo Church of Canada has called into question this position of the courts. In its decision in Aga, the Ontario court held that when an unincorporated association or group has a written constitution and by-laws, then these instruments constitute a contractual relationship setting out the rights and obligations of the unincorporated association and its members. 

In other words, according to the court, an organization's constitution or by-laws will alone be sufficient to establish a legal basis for a court to have jurisdiction to adjudicate the organization's internal disputes.  

In the Wall decision, the Supreme Court held that members of voluntary organizations don't have a freestanding, separate right to procedural fairness permitting their organizations' decisions to be reviewed by a court. The court's view was that only if a decision affects a member's legal rights (property/civil rights referred to above) will the court have jurisdiction to intervene.

Legal rights could include a right to earn income or some enforceable contract between the organization and the member; enforceable legal rights are not established, however, simply by being a member or the existence of a constitution or by-laws.

The Aga decision seems to shift the threshold for court involvement. The legal right that grounds a court's jurisdiction is the membership itself, since the membership arises from the organization's constitution or by-laws. Put simply, the Aga decision is that membership is itself a contractual relationship between each member with every other member of an organization, and between each member and the organization. 

That is sufficient to establish the court's jurisdiction to exercise oversight of the organization's decisions affecting members, including questions and concerns about procedural fairness.  

You might ask, so what? The effect of the Aga decision is that organizations' constitutions, rules and by-laws will be viewed as contracts that are subject to court oversight. Aga has the potential to open up organizations' decisions to litigation, a distraction and financial drain for the organizations, not to mention also a drain on limited court resources. 

Although the Wall and Aga decisions involved religious organizations, the principles apply equally to other non-profit, voluntary, including political, organizations.

The courts in Canada have generally been reluctant to get drawn into the internal disputes of organizations, and rightfully so. Given the number of people in Canada who are involved with voluntary organizations, and the potential for disputes, it is not surprising to see the Supreme Court take on so soon after last having done so this question of the proper role for the courts in overseeing the internal affairs of voluntary organizations. 

The court will hear arguments in the Aga appeal on December 9.

Edward M. Hyland is a lawyer at Iler Campbell LLP, Toronto, Ontario.

Pro Bono provides legal information designed to educate and entertain readers. But legal information is not the same as legal advice -- the application of law to an individual's specific circumstances. While efforts are made to ensure the legal information provided through these columns is useful, we strongly recommend you consult a lawyer for assistance with your particular situation to obtain accurate advice. Submit requests for future Pro Bono topics to [email protected]. Read past Pro Bono columns here.

Image: Robert Linsdell/Flickr

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