In Amir-Afzal Watto v. ICC (decided October 2017), Justice Diamond of the Ontario Superior Court of Justice dismissed the fourth separate proceeding brought by a disaffected member of a non-profit corporation on an preliminary basis, finding that a two-year limitation period had expired and therefore the claim was out of time.
Immigration Consultants of Canada Regulatory Council ("ICC") is a non-share capital corporation continued under the Canada Not-for-profit Corporations Act ("CNCA"). ICC has been designated as the regulatory body for all registered immigration consultants and citizenship consultants in Canada. Its mandate is to protect consumers of immigration or citizenship services through regulation of consultants.
Mr. Amir-Afzal Watto ("Watto") has been a member of ICC from its inception.
Over a span of four years, there were no less than five separate legal actions involving ICC and Watto. Two were defamation actions involving Watto and either ICC or other ICC members. The other three actions were brought Watto against ICC. The first was started in 2014 and dismissed in 2015. The second was started a month later in 2015 and disposed of in June 2016. The third was was brought in Federal Court in 2016 and dismissed in January 2017. Finally, Watto brought an action under the oppression remedy provision of the CNCA in October 2017, which Mr. Justice Diamond dismissed within the short span of four weeks.
In his fourth action against ICC, Watto claimed that ICC had acted oppressively in enacting a by-law disqualifying any member from running or being elected as a director if he or she has brought any proceeding against ICC in any court or before any tribunal. The amendment was passed by ICC's board of directors on May 22, 2014 and confirmed by an overwhelming majority of ICC's members at its annual meeting held on December 2, 2014. The by-law change took effect on May 22, 2014 (when the board enacted it).
Watto commenced the oppression action to set aside the 2014 by-law amendment on October 3, 2017. ICC then brought an application to have his claim dismissed before a hearing on the merits on the basis that the two-year basic limitation period applicable in Ontario had expired and, therefore, Watto was barred from bringing an action in relation to ICC's adoption of the 2014 by-law amendment.
Mr. Justice Diamond of the Ontario Superior Court of Justice ruled as follows:
● Ontario's two-year limitation period (running from the time that Watto knew or ought to have known that a legal proceeding was an appropriate means to remedy the injury caused to him by the adoption of the 2014 by-law amendment) applies to a federal corporation.
● More than two years had elapsed between the adoption of the by-law amendment in 2014 and the commencement of the oppression action in 2017. Therefore, Watto was out of time to bring any action in relation to the adoption of the by-law amendment.
3. Key Observations
ICC's board and members were no doubt within their rights to adopt a by-law amendment disqualifying any member from standing as a candidate in a board election, or being elected as a director, while he or she was party to litigation against the corporation. It is reasonable for a not-for-profit corporation to take steps to disqualify those whose interests are pitted against the corporation - particularly where the member is standing in the position of plaintiff by suing the corporation. The circumstances might well be different if the corporation was suing a member (for example, Watto) and using its own pending action to disqualify the member from election to the board. The corporation's action may not have merit and could be brought against a potential candidate for tactical reasons. But this was not the situation with Watto, who had brought a series of separate actions against the very corporation on whose board he thought he should sit.
More generally, a corporation faced with vexatious or serial litigants such as Watto may consider the adoption of arbitration as a means of protecting itself from a series of legal proceedings. A skilled arbitrator may be more successful than a court in shutting down a vexatious liti