By Esther S.J. Oh

On July 18, 2024, the Supreme Court of Canada denied leave to appeal from the decision of the Ontario Court of Appeal in Birhane v. Medhanie Alem Eritrean Orthodox Tewahdo Church.

As reported in our October 2022 Charity and NFP Law Update concerning the original case involving the Superior Court decision, members of the church (“Applicants”), sought a court order requiring that a general membership meeting and election of the board of directors of the Medhanie Alem Eritrean Orthodox Tewahdo Church (the “Church”, with the Church as an entity and the individual members of the board of directors constituting the “Respondents”) take place. While the background facts of the case are complex, the more cogent facts are summarized below.

The Church was incorporated as a not-for-profit corporation under the Ontario Corporations Act (“OCA”) in 1997 (although the OCA was replaced by the Ontario Not-for-Profit Corporations Act (“ONCA”) on October 19, 2021). From 2000 to 2018 the Church held annual general meetings (“AGMs”) and board elections every three years. However, no AGMs or director elections occurred in 2019 and 2020, the last elected board (elected in 2016 to take office starting on January 1, 2017) continued in office and were named as individual respondents in the action. In July 2021, over 90 members signed a petition asking that an AGM be called and that an election of directors be conducted, among other things. The board initially failed to respond. While the board later did call membership meetings, the manner and form in which the meetings were called and held were not in compliance with corporate law requirements, but instead reflected a number of irregularities and were not otherwise done in an orderly manner.

In the Superior Court case (decision released October 11, 2022), the Respondents took the position that the Court did not have the jurisdiction to determine the issues before it, claiming that the Applicants were members of a voluntary religious association (i.e. an unincorporated congregation) and were not members of the Church (a corporation incorporated under the OCA). Among other things, the Respondents argued that since voluntary religious associations are not governed by corporate statutes, the ONCA does not apply to the Church as a congregation. The Superior Court found these arguments did not make any sense when reviewing the background facts and history of the Church. The corporate records of the Church clearly reflected elections of directors by members of the Church corporation, with no evidence indicating there was ever any intention to distinguish between the Church (as a corporation) and an alleged unincorporated association.

At the Court of Appeal (decision released December 8, 2023), the Church and directors (now the “Appellants”) raised four issues they alleged were errors in the Superior Court decision:

1. The Application Judge’s finding that the Church members (now the “Respondents”), by virtue of their membership in the Church congregation were also members of the incorporated Church entity and therefore had justiciable legal rights under the ONCA.
2. The holding that the interpretation of the Canon Law Promulgation (which were canon law rules governing the AGM reflected in specific resolutions from the Church’s governing diocese) was justiciable.
3. The holding that the Respondents were not required to exhaust alternative remedies available within the Eritrean Orthodox Church, and that the Respondents nevertheless satisfied this requirement.
4. Finding that the Appellant directors failed to satisfy their obligations as volunteer directors of the Church.

Regarding the first issue, the Court of Appeal found that the Superior Court reasonably inferred from the evidence that the Church is a single incorporated entity and that the Respondents are members of that entity (as there was an absence of evidence to support the claim there were two separate organizations, an unincorporated congregation and a corporation).

Regarding the second issue, the Court of Appeal acknowledged that while the local church is incorporated as a single entity and is subject to civil law obligations, canon law can still apply. The Court of Appeal highlighted the importance of respecting canon law in matters of church governance and the need for courts to avoid encroaching upon non-justiciable matters of religious doctrine.

The Court of Appeal found that the Superior Court's order conflicted with canon law in that it required the local church to hold the AGM in accordance with bylaws which may not be in line with applicable canon law requirements set out in the Canon Law Promulgation. The Court of Appeal therefore struck this condition and allowed the Church to hold a special or emergency meeting to vote on amending the bylaws to conform to canon law.

On the third issue, the Court of Appeal found that the Appellants had a legal obligation to hold an AGM in 2019 and conduct director elections, but they neglected this responsibility. As a result, the Respondents were within their rights to seek legal recourse through the civil courts. While it is generally expected that individuals aggrieved by decisions within self-governing organizations, particularly religious ones, should seek resolution through internal dispute mechanisms, the Appellants failed to provide sufficient evidence of such a mechanism. In the absence of this evidence, the Superior Court’s order for an AGM was justified.

On the final issue, the Appellants argued that the Superior Court held them to an overly strict standard and should have been more lenient due to technical deficiencies reflected in the corporate records. They claimed they should be judged based on historical practices rather than strict administrative requirements. However, the Court of Appeal disagreed, stating that the Superior Court was entitled to draw adverse inferences against the Appellants for failing to provide evidence for their defences when such evidence, such as corporate records, if it existed, would have been in their control. The Court of Appeal stated that it was reasonable for the Superior Court to determine that corporate bylaws and canon law required an AGM to be held.

The appeal was partially allowed. The court-ordered AGM was ordered to proceed, but the conditions requiring compliance with the bylaws were removed. Instead, the Church was ordered to hold a special or emergency meeting to vote on amending the bylaws in accordance with canon law requirements. This meeting was to have a court-appointed neutral chair, agreed upon by the parties or appointed by the court if no agreement is reached. The Church was then ordered to hold an AGM in accordance with whatever bylaws result from the meeting.

The Court of Appeal decision confirms that courts must avoid “straying into non-justiciable matters of church doctrine when addressing matters of church governance.” However, as Court of Appeal noted, it is settled law that the civil law “will nevertheless require religious organizations to uphold their obligations to their members in property and governance disputes”.

In light of the Supreme Court of Canada’s decision to deny the Church’s leave to appeal, the Court of Appeal’s decision remains unchallenged and is the law in Ontario. Although the decision is not binding outside of Ontario, it could provide persuasive value for parties in similar situations in other provinces and territories.

​Read the August 2024 Charity & NFP Law Update