In Banda v. Romanian Cdn. Cultural Club (decided 1986), the Saskatchewan Court of Appeal overturned a lower-court decision and restored the decision of a majority of the members of a non-profit association to terminate a membership.
The Romanian Canadian Cultural Club was a non-profit corporation incorporated under the Saskatchewan Non-Profit Corporations Act (the "Act').
George Banda became a member of the club in 1946 and had been a very active club member for three decades, into the 1980s. He had been a director and had held various positions on the club's executive. However, by April 1984, various altercations had taken place and his relationship with the club's leadership had deteriorated to the point where the board voted to terminate his membership. This vote was confirmed by a simple majority of the members at a general meeting in May 1985, with 53 members (53.5%) voting for termination and 46 (46.5%) members voting against.
Banda appealed to the Saskatchewan Court of Queen's Bench and was successful in having his membership interest in the club restored. However, the club appealed further.
A majority of the Saskatchewan Court of Appeal reversed the decision of the chambers judge and upheld the termination of Banda's membership.
The main reasons in the Court of Appeal were written by Justice Brownridge, who held that it was for the general membership (not the court) to decide whether the charges against Mr. Banda were true or false. The membership were well aware of the positions taken by each side. The decision of the membership is final under the by-laws.
Justice Cameron agreed with Brownridge J.A. and added that the court would simply be substituting its judgment for that of the directors and a majority of the members, which would be inappropriate. The members had arrived at their conclusion democratically, after a fair hearing. In the judgment of the directors and a majority of the members, termination of Banda's membership was in the best interests of the club.
Chief Justice Bayda would have reduced the discipline to a two-year suspension of Banda's membership.
3. Key Observations
The crucial contribution of Banda v. Romanian Cdn. Cultural Club to the law of not-for-profit organizations is the court's respect for the autonomous decision-making of the board and its membership. It did not matter whose version of the contentious facts was correct or what was said to the membership. What was important was that Banda received an adequate hearing and the directors and the membership voted. The court had to respect the autonomy of the club's internal decision-making and not substitute its judgment for that of the club members and directors, who had the final say on what was in the best interests of the club.