No Foul: Court Declines to Apply Oppression Remedy to NFP Corporation

In Regina Soccer Assn. Inc. v. Saskatchewan Soccer Assn. Inc. (released January 2016), the Saskatchewan Court of Appeal was asked to apply the statutory oppression remedy in favour of a regional member of a provincial soccer association. However, applying the leading jurisprudence on the oppression remedy developed under business corporations legislation, the Court did not find that the provincial association acted oppressively in refusing to give the local member exclusive rights to govern the administration of the sport in its geographic region.

1. Facts

The Saskatchewan Soccer Association Inc. was a non-profit, charitable corporation incorporated under The Non-profit Corporations Act of Saskatchewan and the governing body for amateur soccer in Saskatchewan. The Regina Soccer Association Inc. was also a non-profit, charitable corporation incorporated under the Act. RSA is a regular member of the SSA and is the governing body and regulator of soccer in the City of Regina and defined surrounding area.

A third organization, the Queen City South United Soccer Club Inc. was also a central character in the story. QC had been a member of RSA.

However, RSA altered its by-laws to go from a four-club model (which included QC) to a one-club governing model. QC objected to the change - in part because it had committed to enter into a long-term lease of a 17,000 square foot soccer facility in Regina. QC was concerned about its financial viability as a member of RSA.

QC took steps to operate independently from RSA and, therefore, applied for and was granted a type of associate membership directly in SSA. As an associate member of SSA, QC was no longer governed by RSA. RSA cried foul and sought to reverse the extension of associate membership status to QC, even appealing the decision to the Canadian Soccer Association. RSA contended that it had a reasonable expectation that it was the exclusive governing body for amateur soccer in Regina and surrounding area.

When its efforts to reverse SSA's decision admitting QC to associate membership failed, RSA sought to invoke the oppression remedy enshrined in the Act. The Canada Not-for-profit Corporations Act contains a similar provision.

2. Rulings

(a) Saskatchewan Court of Queen's Bench

The trial court found that the actions of SSA were not unfairly prejudicial to RSA. The effect of RSA's one-club decision put QC in a financial dilemma with its new lease commitment.

(b) Saskatchewan Court of Appeal

The Court of Appeal affirmed the decision of the trial court. In doing so, the Court of Appeal applied the leading decision on the oppression remedy in Canada, namely the Supreme Court of Canada's ruling in BCE, a case decided under the Canada Business Corporations Act.

While the Court of Appeal found that RSA satisfied the threshold of having a reasonable expectation that it would be the sole governing body in Regina and surrounding area, it did not find that RSA's reasonable expectations were violated by SSA conduct that was oppressive or unfairly prejudicial. Traditional league play was still wholly administered by RSA. QC's interests were in high-performance soccer, including providing high-level training and participation in tournaments in the premier league. To the court, this provided for minimal overlap with the purposes of governing and instituting policies.

The Court of Appeal found that SSA attempted to resolve the differences between RSA and QC and attempted to ensure that young players continued to play soccer in Regina, which is a stated goal of SSA. SSA tried to act in the best interests of all parties and tried to craft a solution that allowed all children to play soccer. Thus, RSA's appeal was dismissed.

3. Key Observations

This case is notable because, first, it is a rare example of a provincial court of appeal considering the application of the oppression remedy to a not-for-profit corporation. Second, the court had no difficulty applying principles enunciated by the Supreme Court in BCE, a quintessential business corporation, to the very different world in which a group of NFP corporations regulate amateur soccer within the province of Saskatchewan.

While the Saskatchewan courts did not invoke the business judgment rule by name, their decisions are entirely consistent with the Supreme Court's directive in BCE that courts should pay deference to the good faith exercise of business judgement falling within the range of reasonableness. Under the circumstances, SSA's admission of QC as an associate member was a reasonable decision, given SSA's purpose and QC's financial predicament.

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