Sep 2019 Charity & NFP Law Update
On July 30, 2019, the Federal Court released its decision (along with supplementary reasons on August 20, 2019) in Watto v Immigration Consultants of Canada Regulatory Council (“Watto”), being one of numerous court proceedings initiated by a disaffected member of the Immigration Consultants of Canada Regulatory Council (“ICCRC”), a federal not-for-profit corporation governed by the Canada Not-for-profit Corporations Act (“CNCA”). In Watto, the Federal Court held that section 158 of the CNCA does not restrict the power to discipline a member or to terminate their membership to only “the directors, the members or any committee of directors or members of a corporation”.
The ICCRC is the self-governing body for individuals who represent or advise paying clients with regard to immigration matters, as designated by the Minister of Citizenship and Immigration pursuant to the Immigration and Refugee Protection Act. As part of its mandate, the ICCRC establishes entry-to-practice requirements, receives, investigates and adjudicates complaints against members and administers a disciplinary process through the ICCRC’s Discipline Committee (the “Committee”), which is composed of a three-member panel, at least one of whom must be a public member.
In December 2015, the applicant was the subject of a complaint to the ICCRC and the matter was referred to the Committee. One of the objections raised by the applicant was with respect to the composition of the panel on the basis that one of its members was not a member of the ICCRC, contrary to section 158 of the CNCA. Section 158 provides as follows:
The articles or by-laws may provide that the directors, the members or any committee of directors or members of a corporation have power to discipline a member or to terminate their membership. If the articles or by-laws provide for such a power, they shall set out the circumstances and the manner in which that power may be exercised.
The Committee found that, although a narrow interpretation of section 158 was possible, a contextual interpretation of the CNCA would suggest that this section was not intended to exhaustively limit a corporation’s ability to make by-laws to create a discipline committee composed of only directors or members. The Committee reasoned that the language of section 158 was different from that of section 194(1) of the CNCA, which requires a specific composition “of not less than three directors, a majority of whom are not officers or employees” for an audit committee. The Committee also relied on section 152 of the CNCA, which provides that directors have a broad power to regulate the “activities or affairs” of the corporation through by-laws. As such, the Committee concluded that section 158 was intended to confirm that corporations incorporated under the CNCA have the authority to discipline members and was not intended to circumscribe the manner in which a corporation might choose to exercise that authority.
After canvassing similar provisions in provincial corporate statutes and finding no other authoritative sources with respect to the intended meaning of section 158, including no other reported decisions dealing with these provisions, the Federal Court agreed with the Committee’s broader interpretation as being consistent with the CNCA as a whole. Further, the Federal Court agreed with the panel that if Parliament had intended to limit the power to discipline members or circumscribe the class of persons who may exercise this power it would have done so expressly.
The Federal Court concluded that “[t]he reference to directors, members or committees of directors or members in section 158 of the [CNCA] doubtless reflects the fact that for most bodies incorporated under this Act, there would be no reason for anyone else to be involved in disciplining members. Of course, the articles or by-laws of a corporation that provide for a discipline power could limit its exercise to directors, members or committees of members or directors. However, section 158 of the [CNCA] does not require the corporation to limit the class of those who may exercise this power in this way. As long as a corporation that chooses to adopt articles or by-laws providing for a power to discipline members sets out in those by-laws ‘the circumstances and the manner in which that power may be exercised,’ section 158 of the [CNCA] is complied with.”