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Judicial Review of the Internal Decisions of NFPs

In its 2009 decision in Boucher v. Métis Nation of Alberta Assn., the Alberta Court of Appeal held that the discipline decision of the council of a private not-for-profit corporation was not subject to judicial review and declined to quash a decision punishing an officer for breaching his duty of loyalty to the association.

1. Facts

Métis Nation of Alberta Association was a voluntary society incorporated under the Alberta Societies Act. Membership was not required to join a Métis settlement or to receive a land allocation. Aboriginal rights exist independently of membership in the association. For example, one can resign from the association and still be a Métis.

The association's Judiciary Council conducted a disciplinary hearing, found that Mr. Boucher had acted improperly and punished him by removing him as a regional vice-president of the association. Specifically, the council found that Boucher had tried to arrange a contract for the supervision and allocation of certain federal education and health funding for Alberta Métis between the association and a third party company. However, the association's provincial council had resolved to enter into a contract with a different party, and the two contracts with rival suppliers could not co-exist. While Boucher was not in a conflict of interest, he was found to have breached one of the association's by-laws.

Boucher sought to quash the Judiciary Council's decision before the Alberta Court of Queen's Bench. When that failed, he appealed the trial court's decision to the Alberta Court of Appeal.

2. Rulings

(a) Inapplicability of Judicial Review

While the association received public money, the court held that this was not an acceptable test to make the association's internal tribunal a public tribunal for judicial review purposes. Governments often give assistance or large grants of money to voluntary associations such as privately-established universities, churches, charities, cultural organizations, ethnic organizations, recreation or sports associations, veterans' associations and political parties. At one time, new railways were heavily aided by government.

Therefore, the grounds and standard of review for judicial review of public tribunals do not apply to the association's internal council. The court added that, if quashing the association's decision was possible, it may be limited to the grounds of breach of internal rules, lack of procedural fairness or bad faith.

(b) Unconditional Nature of the Duty of Loyalty

At the Court of Appeal, Boucher argued that the decision of the Judiciary Council was unreasonable because the policy of the association was already doomed to fail at the time that the association signed a competing contract with a rival supplier.

The Court of Appeal's response was two-fold.

First, even assuming that such assessment was correct, it was reasonable for the Judiciary Council to conclude that its officer owed the association duties of loyalty and adherence to its established policy. Therefore, Boucher owed the association a duty not to pursue inconsistent policies, still less a course of action that would frustrate the known policy of the association.

Second, it is not the job of the courts to decide whether the declared policy of the association was wise or practical or had a reasonable chance of success. The duty of loyalty is unconditional. It does not depend on whether the association's policy was well-chosen.

3. Key Observations

The Court of Appeal was correct to block an attempt to import and apply administrative law principles to voluntary associations making internal-governance decisions. It was also correct to require more than the receipt of public money to make the tribunal of a voluntary organization a public tribunal for judicial review purposes. If one had to be a member of the association to join a Métis settlement, get a land allocation or enjoy other aboriginal rights, then the situation would be more analogous to, say, ouster from the College of Physicians and Surgeons. One cannot practice medicine without being a member of the College. Therefore, judicial review standards should apply.

The court's ruling on the unconditional duty of loyalty is also to be applauded. Voluntary organizations must speak with one voice and act according to the expressed democratic will. Individual officers cannot be allowed to act unilaterally to thwart the organization's choices - however strongly they may feel that the organization has made a poor choice. Just as citizens cannot take the law into their own hands, so too, in voluntary organizations, officers and directors can advocate strongly but, in the end, must accept the declared will of the majority. An officer who disagrees must either accept the result or leave. What he cannot do is undermine or thwart the majority's choice, once made.

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