By Esther S.J. Oh and Urshita Grover

7.1.  Court Orders Production of Financial Documents for Oppression Remedy under the CNCA

In its December 6, 2024 decision in Gwich’in Tribal Council et al v Gwichya Gwich’in Council et al, the Supreme Court of the Northwest Territories reviewed an application made by the Gwich’in Tribal Council (“GTC”) and six individual members of the Gwichya Gwich’in Council (“Member Applicants”) (collectively, the “Applicants”) for relief under the provisions of the Canada Not-for-profit Corporations Act (“CNCA”) against the Gwichya Gwich’in Council (“GGC”), as one of the respondents. The GTC is comprised of a number of institutions, including four designated Gwich’in organizations (“DGOs”), with one DGO in each of the four Gwich’in communities to represent the interests of the Gwich’in participants in a Comprehensive Land Claim Agreement, dated April 22, 1992 (“1992 Land Claim Agreement”). The GGC is one of the DGOs.

The court reviewed an application for relief of alleged election irregularities pursuant to section 169 of the CNCA (which gives the court jurisdiction to determine any controversy regarding elections), and also reviewed the allegation that the combined effect of financial irregularities (including omission to prepare audited financial statements for many years) and the election irregularities constituted conduct that was oppressive, unfairly prejudicial or unfairly disregards the interests of the Applicants contrary to section 253 of the CNCA. 

While it is beyond the scope of this article to review all of the relevant background facts and legal issues raised in this case, two of the central issues from a corporate law perspective under the CNCA were: 1) whether the Applicants had standing to bring an application for a review of the 2023 Election, and 2) whether the Applicants had standing to seek an oppression remedy, together with a determination of what the appropriate remedies would be on both issues.

Based on the applicable background facts, the court determined it was not necessary to make a determination on whether both Applicants had standing to bring an application for a review of the alleged election irregularities. In addition, after reviewing the evidence concerning the alleged election irregularities, the court made a determination that the evidence did not support an oppression remedy.  

On the second issue of whether the GTC had standing under section 253 of the CNCA to apply for an oppression remedy, the court determined that the GTC is a “‘proper person’ to make an application” given the significant nexus between the GTC and the DGOs (of which the GGC is one), in accordance with the 1992 Land Claim Agreement negotiated between the Government of Canada and the GTC, representing the interests of all Gwitch’in. On this point, the court stated:

“While I would not go so far as to say that the GTC plays an oversight role, or that the GGC is subordinate to the GTC, the principles underlying the [1992 Land Claim Agreement] reflect a careful balance of community autonomy and collective strength. Although both organizations are separate legal entities, the wording and principles of the [1992 Land Claim Agreement] make it clear that there is a strong nexus between the GTC and the GGC and that the interests and activities of one organization affects the other.”

After reviewing the evidence concerning the alleged financial irregularities, the court recognized that the GGC had not provided audited financial statements since 2017, thereby violating subsection 172(1) of the CNCA which requires presentation of financial statements at annual meetings and sharing of a summary of financial documents with members. The court also noted the duties of directors and officers under subsection 148(1) to act honestly and in good faith, and under subsection 148(2) to comply with the CNCA. Invoking its authority under subsection 253(3)(i) of the CNCA, the court ruled that the GGC had acted in a manner that was oppressive, unfairly prejudicial to, or unfairly disregarded the interests of the Applicants, and directed the GGC to prepare and provide financial statements from 2017 to 2023 to its members and the GTC within four months after of the court decision.    

This case underscores the importance of complying with statutory requirements under the governing corporate legislation that apply to not-for-profit corporations, including, but not limited to, the important statutory obligation to present financial statements to members before each annual meeting. Even though Corporations Canada does not always monitor compliance with the provisions of the CNCA, in the event of a legal action, any non-compliance and/or irregularities in a not-for-profit corporation’s operations can be scrutinized by a court and lead a court to order remedial steps including in situations where there is a policy-based reason to provide accountability and transparency in respect of the actions of a corporation. 

7.2.  Court Ruling Highlights Importance of Procedural Fairness and Respect for Democratic Vote in Overturning Board Decision to Call New Election

In Blake v Kyikavichik and Gwich’in Tribal Council, the Supreme Court of the Northwest Territories declared Frederick Blake Jr. duly elected as Grand Chief of the Gwich’in Tribal Council (“GTC”) and ordered the Board of Directors of the GTC as a not-for-profit corporation to abstain from holding a new election for the Office of Grand Chief, citing breaches of natural justice and procedural fairness.   

The court ruling, released on January 14, 2025, was made after the only other candidate in the election, Ken Kyikavichik, lodged a complaint to the GTC Board of Directors alleging violations of the GTC Elections Rules (i.e. including alleged breach of provisions regarding elections procedures contained in the GTC’s governing By-law and its Executive Elections Policy and Procedure Manual).

In accordance with the GTC Elections Rules, the GTC Elections Committee carried out an investigation and dismissed the allegations as unfounded. However, the Board reached a different conclusion and ordered a new election.

Mr. Blake asked the court to exercise its power to determine a controversy relating to an election of a director of a not-for-profit corporation under section 169 of the Canada Not-for-profit Corporations Act (“CNCA”). Mr. Blake claimed that there were several procedural deficiencies in the decision-making process undertaken by the Board as they failed to adhere to principles of natural justice and procedural fairness. Mr. Blake also argued that the evidence did not establish any substantial irregularity in the election process that justifies calling a new election. 

Contrary to Mr. Kyikavichik’s claims that the court should dismiss the application, the court found that section 169 of the CNCA was the proper procedural avenue to challenge the Board’s decision.

The GTC argued that strictly applying corporate law principles would conflict with Gwich’in’s rights to self-government, self-determination, and principles of reconciliation. While acknowledging the GTC’s unique role as an Indigenous organization, highlighting its responsibilities in managing lands, waters, and resources in the Gwich’in Settlement Region, as well as providing public functions like housing and language revitalization programs, the court also stated as follows:

“…section 169 of the [CNCA] specifically gives not-for-profit corporations, their members, and their directors the ability to seize the court with any dispute related to an election. In fact, a judicial review is a discretionary remedy, and the existence of an adequate alternative remedy, such as a statutory recourse, is a reason to deny an application for judicial review”.

The court identified several procedural deficiencies in the Board’s decision-making process, emphasizing that under section 148 of the CNCA, “Board members have a duty to ‘act honestly and in good faith with a view to the best interests of the corporation’ and to ‘exercise care, diligence and skill that a reasonably prudent person would exercise in comparable circumstance’.”

The court specifically stated that the above duties “…include making decisions in accordance with the principles of procedural fairness and natural justice …, although the level of fairness required will vary depending on the circumstances.” While the court did not agree that all of Mr. Blake’s allegations of procedural deficiencies were substantiated, the court noted several items where procedural deficiencies did occur, including the Board’s failure to provide Mr. Blake with an opportunity to respond to the libel allegations, its inflexibility in refusing to accept Mr. Blake’s late-submitted receipts, and a reasonable apprehension of bias of the Board’s Vice-Chair.

On the election-related allegations, while the court acknowledged that some violations of the GTC Elections Rules had occurred, such as Mr. Blake’s late filing of campaign expense receipts and certain libelous social media posts by his campaign representatives, the court ruled these infractions did not justify overturning the results of the election. In its review of the evidence, the court also found that the allegations of libel in relation to the Gwich’ya Gwich’in Council’s (“GGC”) application before the court “seeking various relief related to the governance of the GTC and naming as respondents the GTC and several individuals, including Mr. Kyikavichik and other GTC Board members” were unfounded.

As mentioned at the beginning of this article, the court set aside the Board’s decision to call a new election and in declaring Mr. Blake duly elected Grand Chief of the GTC, the court ordered the Board “to abstain from holding a new election for the position of Grand Chief until Frederick Blake Jr.’s term expires or until his position otherwise becomes vacant.”

In this case, the court recognized the importance of respecting the democratic choice of voters, noting that the threshold to invalidate an election requires a high threshold of irregularities in order to alter the entire outcome of an election. This decision also underscores the importance of following principles of natural justice and procedural fairness in the decision-making processes of not-for-profit corporations, where such principles may apply.

​Read the January 2025 Charity & NFP Law Update