Sep 2019 Charity & NFP Law Update
The Supreme Court of British Columbia released its decision in Brun v Deep Cove Yacht & Sport Club on August 22, 2019 concerning the termination of the membership of the appellant, Robert Brun, at the Deep Cove Yacht & Sport Club (the “Club”), a non-profit recreational association incorporated under the British Columbia Societies Act. Numerous invoices had been sent to Mr. Brun over the course of 2017 for mooring fees, which were not immediately paid. As a result, various emails and letters for overdue accounts were sent to Mr. Brun before he eventually paid his fees, sometimes more than 90 days late.
The Club’s by-laws provide that “[e]very member must uphold the Constitution and comply with these By-laws and the Policies and Regulations as approved by the Executive Committee, including the prompt payment of dues, moorage assessment and other member accounts.” Section 2.9 of the by-laws contains provisions for member expulsion “for cause”, and contains general terms for the process, including members’ appeal rights. Additionally, the Club’s policies indicate that membership may be terminated where membership dues are 90 days in arrears. However, they do not specify a termination procedure.
As a result of Mr. Brun’s overdue accounts, on November 14, 2017, the Club’s Executive Committee had decided to terminate Mr. Brun’s membership. At a December 12, 2017 Executive Committee meeting, a motion was brought and passed to send Mr. Brun an expulsion letter for non-payment. He was advised that he could write to the Commodore if he wished to appeal his expulsion. Mr. Brun did so, and attended an Executive Committee meeting on January 9, 2018 where he explained that cash flow problems had prevented him from paying his fees on time. The Executive Committee put forward a motion to consider upholding its November 2017 decision to expel Mr. Brun, and a majority voted not to overturn that decision. Mr. Brun was then given a final avenue of recourse, which was to have an active member provide a petition for his reinstatement. However, he instead brought the matter to court.
The court reviewed sections 102 and 105 of the British Columbia Societies Act, which contain provisions respectively concerning member complaints and giving the court jurisdiction to address errors and irregularities in the conduct of societies’ affairs. Having considered the sections and relevant case law, the court stated that:
Even where a society fails to comply with its by-laws and does not extend procedural fairness to a member whose expulsion is being voted upon, the court will not necessarily grant an order requiring reinstatement or reconsideration of the decision. Such remedies may be refused where they may be futile, i.e., reconsideration would lead to the same result, or where the practical effect of reinstatement would significantly challenge the continued operation of the club.
The court also reviewed the Club’s by-laws and policies and found that it did not contain any procedure for expulsion. Given that the policy was “designed only to complement the [by-laws]”, the court held that the expulsion should have been conducted pursuant to section 2.9 of the by-laws. Given that the Club did not follow the procedures in section 2.9 of the by-laws, the court found that Mr. Brun had been denied procedural fairness and ruled in favour of Mr. Brun.
The court noted that there would be practical obstacles arising from Mr. Brun’s reinstatement as a member, due to the docks having been given to other members since Mr. Brun’s expulsion. Despite the Club’s argument that Mr. Brun’s reinstatement would be impractical, the court noted that these obstacles were “not insurmountable,” and provided a remedy that preserved Mr. Brun’s membership rights and his entitlement to two docks without challenging the Club’s operation or prejudicing innocent third parties’ interests. It further required Mr. Brun to pay his fees on time.
Despite the court’s discretion under the British Columbia Societies Act to refuse remedies where a charity or not-for-profit has not complied with its by-laws, this case is a reminder that such measures will only be utilized in limited situations where providing such remedies is impractical. Organizations should, therefore, comply with their by-laws, policies and other governance documents, particularly in contentious matters, such as member expulsion, and should ensure procedural fairness in all such cases.