By Esther S.J. Oh and Jacqueline M. Demczur

In the College of Family Physicians of Canada v Resident Doctors of Canada decision, issued on March 5, 2025, the Ontario Superior Court of Justice exercised, for the first time, its powers under subsection 288(4) of the Canada Not-for-Profit Corporations Act (“CNCA”) to “make any other order that the court thinks fit” under paragraph 288(4)(c), ordered the correction of articles under paragraph 288(4)(a), as well as determined the rights of members of the subject corporation under paragraph 288(4)(b).

The College of Family Physicians of Canada (“CFPC”), is a not-for-profit professional organization (“NFP”) that represents over 43,000 members practicing family medicine in Canada. The applicable background facts and requirements under the CNCA are complex and beyond the scope of this brief article. However, by way of an overview, the CFPC unknowingly failed to comply with key requirements of the CNCA when approving changes to its membership classes as reflected in articles of continuance and by-laws obtained in 2013, as well as additional amendments to the member classes set out in articles of amendments and by-laws made in both 2014 and 2022.

In this regard, section 199 of the CNCA requires that any changes to the voting rights of a membership class (including where there is the granting of superior rights to one membership class as compared to another membership class) the impacted membership class(es) must have the right to vote separately to approve the proposed change by a two-thirds majority of that specific class. Based on legal advice (which was later determined to be erroneous) the amendments to CFPC’s articles and bylaw were only approved by a majority vote of the voting members of the CFPC rather than by a two-thirds majority of each affected membership classes voting separately as required under the CNCA.

As was explained in the applicant’s factum:

Therefore, unbeknownst to the CFPC, the articles of continuance and by-laws approved by the members at the 2013 annual meeting, and submitted to Corporations Canada, as part of the continuance process under the CNCA were not approved in conformity with the CNCA. Corporations Canada subsequently issued a certificate of continuance, which evidenced the continuance of the CFPC under the CNCA and enclosed the articles of continuance, on June 1, 2014.

After becoming aware that the amendments made to its previous articles and by-laws were not in compliance with the CNCA as a result of an inquiry from one of its members, the CFPC filed an application with the court for an order validating its articles and by-laws, particularly those adopted in 2013 and 2022 (collectively “Constating Documents”), under subsection 288(4) of the CNCA or through the court’s inherent jurisdiction. While a number of member classes were significantly changed in the by-law amendments, only the respondent, the Resident Doctors of Canada, while generally supporting the application, sought to modify the relief by restoring a distinct voting class for family medicine resident doctor’s membership class with the CFPC.

A central issue in this case was the interpretation of section 288 of the CNCA. Notably, to date, section 288 had not previously been judicially considered. The CFPC argued that its non-compliance with sections 199 and 212, which stemmed from procedural errors based on erroneous advice from former corporate counsel, amounted to an “error” that could be rectified under subsection 288(4). This provision allows courts to order the correction of corporate documents, determine the rights of members and make any other order deemed fit.

The court adopted a broad and remedial interpretation of this provision, consistent with the principles of statutory interpretation outlined by the Supreme Court of Canada in Rizzo & Rizzo Shoes Ltd. and section 12 of the Interpretation Act (Canada). The court emphasized that as the CNCA is remedial legislation, it should be interpreted liberally to ensure its objectives are met. The term “error” was interpreted broadly to allow the court “to exercise a discretion to validate corporate documents not properly enacted as a result of procedural error”, thus, validating the CFPC’s Constating Documents.

This court decision also addressed the voting rights of family medicine resident doctors raised by the respondent, Resident Doctors of Canada. Previously, this group had had their own voting class of members but, in 2022, were reclassified into a non-voting “Learner Class” without any voting rights. The Resident Doctors of Canada argued this change made to the family medicine resident doctors membership class was disempowering and prevented them from having a voice in decisions affecting their interests at the CFPC.

Although the Resident Doctors of Canada initially opposed the CFPC’s application in part, seeking restoration of voting rights for resident members, the parties subsequently reached an agreement to reclassify family medicine resident doctors as part of the “Practising” membership class which has voting rights. The court approved this resolution, finding it reasonable and consistent with the remedial relief granted under subsection 288(4) of the CNCA.

This case sets a precedent for charities and NFPs, clarifying that courts can validate governing documents with procedural errors pursuant to subsection 288(4) of the CNCA. However, in its decision, the court noted that CFPC had acted in good faith to correct the errors made as a result of the deficient advice provided by its former legal counsel, with proper notice of all of the proposed changes having been sent by the CFPC to the members who later voted in favour of them.  

In addition, the court stated that CFPC’s proposed relief, being an order validating the CFPC’s Constating Documents with retroactive effect, was a fair, proportional, efficient and practical approach to remedy the situation and preferable to embarking on a process of validating by-laws retroactively on an annual basis or returning the CFPC wholesale to its 2012 status. As such, while it continues to be essential to comply with the membership voting requirements set out in the CNCA, where procedural errors have occurred due to deficient professional advice or otherwise, and where the proposed relief is determined to be fair and practical, the courts may be willing to exercise its powers under subsection 288(4) of the CNCA.  

​Read the March 2025 Charity & NFP Law Update