November 2017 Archives

Another Rare Winding up of a Fractious NFP Corporation

In Sobrinho v. Oakville Portuguese Canadian Club (decided 1982), an Ontario trial court ordered the winding up of a corporation without share capital because of deep and irreconcilable differences between two almost equally divided factions. A winding up is a rarely used remedy of last resort.

Proper Exercise of Business Judgment Rule by Charitable Housing Society

In Hadjor v. Homes First Society (decided 2010), the Ontario Superior Court of Justice explicitly recognized and applied the business judgment rule to the decisions of a charitable housing society on the re-composition of its membership. The case is particularly significant because it is the first explicit judicial recognition that the business judgement rule ("BJR") applies to a charitable corporation, and as an illustration of how the BJR is applied.

Ontario Court of Appeal Extends Business Judgment Rule to Boards of Condo Corporations

In 3716724 Canada Inc. v. Carleton Condominium Corp. No. 375 (decided August 2016), the Ontario Court of Appeal recognized and applied the business judgment rule to the decision of the board of a condominium corporation, which is a type of corporation without share capital. Therefore, the case is significant for other types of non-business corporations, including charitable and other not-for-profit corporations.

Appeal to Members to Resolve Problem of Rival Boards

Croatian Peasant Party of Ontario v. Zorkin (decided 1981) involved warring factions within a not-for-profit corporation, each of which had called meetings to pass by-laws and elect directors, resulting in total confusion. The Ontario Supreme Court held that the only way to resolve the governance issues was to hold a court-ordered meeting of members at which the board of directors would be elected and a set of by-laws would be confirmed.

Close Election Equals Closer Scrutiny

In Hara v. Khalsa Diwan Society - New Westminster (decided 1996), the British Columbia Court of Appeal upheld a trial court decision setting aside the election of directors of a religious institution governed by the British Columbia Society Act (now the Societies Act).

Appointment of Receiver-Manager Warranted Where Critical Supplier Cannot Otherwise be Paid

In Precision Feeds Ltd. v. Rock Lake Colony Ltd. (decided 1994), the Manitoba courts approved the appointment of a receiver-manager to take control of a non-profit corporation owned by a Hutterite colony where an internal dispute resulted in an impasse resulting in an inability to pay a critical supplier, which threatened irreparable harm to the corporation.

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