



COURT OF APPEAL FOR BRITISH COLUMBIA




Citation:



Sandhu v. The Khalsa Diwan Society,









2011 BCCA 24




Date: 20110127

Docket: CA038464

Between:

Amarjit S. Sandhu,
Sukhbir S. Gill, Lakhbir S. Khangura,
Karnail Singh Brar, and Gurmeet Singh Gill

Respondents

(Petitioners)

And

The Khalsa Diwan
Society and
Kashmir Singh Dhaliwal

Appellants

(Respondents)




Before:



The Honourable Mr. Justice K. Smith





The Honourable Madam Justice Neilson





The Honourable Madam Justice Bennett




On appeal from:  Supreme
Court of British Columbia, August 30, 2010,
(
Sandhu v. Dhaliwal
, 2010 BCSC 1328,
Vancouver Docket No. S102766)




Counsel for the Appellant:



S.A. Turner





Counsel for the Respondent:



H.A. Mickelson, Q.C.

J. D. Tweedale





Place and Date of Hearing:



Vancouver, British Columbia

December 15, 2010





Place and Date of Judgment:



Vancouver, British
  Columbia

January 27, 2011









Written Reasons by:





The Honourable Mr. Justice K. Smith





Concurred in by:





The Honourable Madam Justice Neilson

The Honourable Madam Justice Bennett














Reasons for Judgment of the Honourable
Mr. Justice K. Smith:

[1]

The Khalsa Diwan Society [the Society] and Kashmir Singh Dhaliwal
appeal from an order of the Supreme Court of British Columbia, pronounced by
the Honourable Mr. Justice Walker on 30 August 2010, granting the
respondents relief on a petition brought pursuant to s. 85 of the
Society
Act
, R.S.B.C. 1996, c. 433, the relevant part of which provides,

85 (1)   Despite anything in this Act, if an omission,
defect, error or irregularity occurs in the conduct of the affairs of a society
by which

...

(b)   there is default in compliance with the ... bylaws of
the society,

...

the court may

(d)   either of its own motion or on the application of an
interested person, make an order

(i)   to rectify or cause to be rectified or to negate or
modify or cause to be modified the consequences in law of the omission, defect,
error or irregularity, or

(ii)  to validate an act, matter or thing rendered or
alleged to have been rendered invalid by or as a result of the omission,
defect, error or irregularity, and

(e)   give the ancillary or consequential directions it
considers necessary.

(2)   The court must, before making an order, consider the
effect of it on the society and its directors, officers, members and creditors.

[2]

Although the appellants raise three grounds of appeal, I find it
necessary to deal with only one, which is whether they were denied a fair
hearing.  In my view, they were, and I would allow the appeal, set aside the
order, and remit the petition to the Supreme Court for a new hearing.

BACKGROUND

[3]

The Khalsa Diwan Society is a non-profit, religious society established
to promote the teachings and philosophy of the Sikh religion.  The appellant
Kashmir Singh Dhaliwal is the current president of the Societys elected
Executive committee.  The individual respondents are members of the Society. 
They describe themselves as organizers and supporters of the opposition slate
of candidates in the next election of the Societys Executive.

[4]

The Societys constitution provides that all memberships expire every
three years.  Consequently, there is a busy enrolment process each time the
expiry date approaches as old members and prospective new members submit their
membership applications.  The constitution also provides for elections of the
Executive at the commencement of every three-year cycle.  The last election was
held in November 2007.

[5]

The Society has a history of litigation respecting membership and
election disputes dating back to 1999.  One of these disputes (indexed as 2004
BCSC 1399) resulted in a detailed consent order, referred to in subsequent
cases as the transparent process, which provided for participation in the
enrolment process of those proposing to contest the re-election of outgoing
Executive members.   It was designed to alleviate concerns that the outgoing
Executive members might influence the enrolment process in such a way as to
promote their re-election.

[6]

The present dispute concerns the validity of membership application
forms accepted by the Societys current Executive in relation to the membership
drive conducted in anticipation of the Executive election that was scheduled to
be held in November 2010, but which has necessarily been postponed pending the
outcome of this proceeding.

[7]

In January 2010, the respondents asked to meet with the Executive to
discuss what they suggested were procedures being followed for the acceptance
of membership applications that did not comply with the Societys bylaws. 
After some back-and-forth communications in which they felt the Executive was
not addressing their concerns and was not abiding by the transparent process,
they filed their petition in April 2010, naming the members of the Executive
and the Society as respondents.  They sought an order that they be allowed to
inspect all new membership applications and related records, an order that new
membership forms accepted to date by the Executive be declared invalid, and a
number of ancillary orders calculated to bring fairness and order as they saw
it to the membership drive and the forthcoming election.

[8]

The respondents position was that members of the Executive had been for
some time processing invalid membership applications and thereby deliberately
distorting the membership list.  They filed affidavits in support of their
position, including an affidavit summarizing their conclusions from a review of
4,156 membership applications delivered to them by the Executive before they
filed their petition.  The Executive members filed responding affidavits in
which they denied the allegations of irregularities and the allegations that
they were complicit in processing irregular applications.  On the morning of
the first day of the hearing, another 2,523 applications were delivered to the
respondents by counsel for the Executive, bringing the total to 6,679.  The
respondents reviewed these applications overnight and filed an affidavit
summarizing the results of their review on the morning of the second day of the
hearing.  However, as will become apparent, the hearing concluded before the
appellants could file evidence responding to suggestions of irregularities
contained in this affidavit.

[9]

The hearing of the petition commenced on Thursday, August 26, 2010, and
took up one full day and two partial chambers days.

[10]

The respondents submissions occupied the first two days.  During his
submissions, Mr. Mickelson, counsel for the respondents, referred to evidence
of various membership forms accepted by members of the Executive that he
contended clearly did not comply with the Societys bylaws because, he
submitted, they were

a)

Forms signed by the same person, with the same address, on different
dates, and with a different signature;

b)

Forms purported to be signed by a different person, at a different
address, on different dates, bearing the same signature;

c)

Forms containing no signature at all; and

d)

Forms apparently verified by family members of applicants who ostensibly
attended with a member of the executive and provided written verification as to
the accuracy of the form on behalf of applicants who could not attend, which
were accepted in questionable circumstances.

[11]

Near the beginning of his submission, Mr. Mickelson submitted, in what
he referred to as his limited pitch, that there should be an order that these
allegedly non-compliant forms be independently inspected and validated in some
way and that his clients would be content to accept the other membership
applications as valid, but qualified his position by adding that you may come
to the conclusion that ... its widespread and everything needs to be thrown
out and we need to start from scratch.  And Im not saying that that isnt the
right answer, but Im going to stay on my limited pitch.   Near the end of the
first day of Mr. Mickelsons submissions, the following exchange with the
chambers judge occurred:

THE COURT:  ...
If I accept everything you say, how
can I be sure that ordering relief where both parties have representatives at
the same table will work if there truly was nefarious conduct on the part of --
the president of the society signed this document or took it in
.

MR. MICKELSON:  Yes.

THE COURT:  If I follow where you're going, or the thrust
of your submissions,
shouldn't I be appointing somebody independent so that
there can be true -- perception of true fairness in the process
?

MR. MICKELSON:
Well, My Lord, this is why I started
by saying I have the main relief, which is what Your Lordship is speaking of,
and then I talked about the limited relief.  If it's systemic, the relief is
the first prayer for relief which is everything is thrown out and we start
fresh with the transparent process.  We don't need an independent -- the
transparent process will work, it's what my clients want
.  If you sit at a
table, this won't happen because --

THE COURT:  No, but on a moving forward basis for the transparent
process.
If there has been fraud
.

MR. MICKELSON:  Yes.  Then it's a band-aid and it's a problem.

THE COURT:
Then shouldn't there be an independent person
in charge of the membership application drive
?

MR. MICKELSON:  Well, if Your Lordship becomes concerned
that it's systemic -- and we can't know -- other courts have said we can't
know, and it's in the best interests of the society to take the relief further,
then it's actually a simpler process.  They're gone.  And all I'm saying -- maybe
I'm at cross purposes with Your Lordship -- you don't need anybody independent
because we're now starting from scratch if the election gets postponed a couple
of months.

THE COURT:  Right.  But we're
ad idem
there in
terms of the thought process?

MR. MICKELSON:  Yes.

THE COURT:  Now we've started from scratch.  Moving forward,
what's the process.  Who runs it?

MR. MICKELSON:  Yes.  So here's how this works and
here's
how the transparent process works.  One representative of the executive and the
other person are sitting at a table.  Now this gentleman shows up and says, I'm
submitting my form
.

THE COURT:  All right.  That's what I thought.  But then
my question to you was -- and I didn't clearly explain myself well.
How can
that work in

an environment where there's been fraud alleged, or fraud
suggested, given -- and particularly given the background of two prior
proceedings?  How can the members of this society be confident that these
parties sitting at the same table will act in the best interests of the
society?  And shouldn't I, as a matter of what's in the best

interests
of the society, and for all of the members, simply -- if I was convinced that
this was systemic, or suspected it to be so, simply

annul all of the
membership applications to start a new process where there's an independent
person in charge
?

[Emphasis added.]

[12]

Shortly thereafter, there was the following exchange:

MR. MICKELSON:  ... I think this is systemic.  I didn't
reach for that --

THE COURT:  No --

MR. MICKELSON:  -- because in my submission I didn't need
to.  But I want to be clear; I believe this is systemic and it gets worse as we
move through this.

THE COURT:  I had a sense that's where you were taking me
to.

MR. MICKELSON:  Yes.

THE COURT:  And so
I thought I would telegraph that
to you and your friends right off the bat
, that if I find there's a lack of
compliance that invokes the court's jurisdiction, and now dealing with the relief
provision, and
I need to know whether or not there is a systemic aspect to
this, and it does help me to know your results of the other forms
.

[Emphasis added.]

[13]

On the morning of the second day, the chambers judge said, during a lengthy
colloquy with Mr. Mickelson,

THE COURT: 
Well, you've taken it to the point that's really troubling me, which is,
assuming that I accede to your submission that this Court's jurisdiction is
engaged and that this is something beyond just mere trifling or technical incompliance
but shows something much more, in terms of a relief that's granted and the
history of litigation, what relief can be fashioned so that there can be an end
of this so that the parties moving forward can have confidence in the membership
drive, the election process, so they're not constantly coming back before the
Court seeking relief.

[14]

Thus, at this point in the hearing, the judge had been shown a number of
forms that Mr. Mickelson contended were, on their face, not compliant with the
bylaws and he had signalled his view that the respondents results of the
other forms (in respect of which the appellants had not yet filed any
evidence) had help[ed] him on the question whether there was a systemic
aspect to this, and that, if he should find irregularities that were beyond
just mere trifling or technical incompliance but represented something much
more, he would be considering a remedy that would put an end once and for all
to such disputes.

[15]

After the luncheon adjournment, the hearing adjourned in order to allow
the parties to attempt to negotiate a resolution over the weekend.  The
negotiations did not succeed, however, and the appellants discharged their
counsel.

[16]

On Monday morning, the third day of the hearing, counsel for the
appellants appeared and told the chambers judge they had been discharged.  They
withdrew and new counsel, Mr. de Groot, advised the judge that he was a junior
associate in the office of Mr. Turner, counsel for the appellants on this
appeal, who had been retained by the appellants on the weekend to continue with
the hearing.  Mr. de Groot said Mr. Turner was out of the country and
he sought an adjournment of several days to permit Mr. Turner to appear.  In
explaining the appellants reasons for changing counsel, he said his clients
were concerned with how the case was proceeding and they wanted to have new
counsel.  Then, following Mr. Mickelsons submissions opposing the
adjournment, the following occurred:

THE COURT:  All right.  Thank you.  Mr. de Groot, you
were retained last evening?

MR. de GROOT:  I was only informed this morning.

THE COURT:  When was your firm retained?

MR. de GROOT:  I believe there was a conversation at the
end of Friday, but no actual retainer at that time.  I spoke to Mr. Turner on
the telephone this morning outside the courtroom.

THE COURT:  All right.  What do you have to say in
response to Mr. Mickelson's submissions?

MR. de GROOT:  I have a few points in reply here.  Mr.
Mickelson states with some certainty that the respondents were unhappy about
the affidavit and that the change of counsel is merely a tactical move.  I'm
not sure it's in my friend's knowledge to be certain about that.  And, in fact,
the respondents were also under some misapprehension as to the process and were
under misapprehension that Your Lordship was prepared to give judgment today. 
And they were confused about the process.

THE COURT:  Your clients have been engaged in this
process at least three times before and according to the cases, it's more perhaps,
that I've just been shown, four or five times in the past.

MR. de GROOT:  Yes, My
Lord.  But they were under that concern, and that concern was associated with
previous counsel.

[17]

Mr. de Groot continued with a brief submission to the effect that there
would be a delay in the sign-up process whether or not the hearing was
adjourned and that Mr. Turners experience acting in these membership disputes,
including his previous dealings with Mr. Mickelson, might facilitate an early
resolution rather than the lengthy delay predicted by Mr. Mickelson in having
the hearing reconvened.

[18]

Immediately after the conclusion of Mr. de Groots submissions, the
chambers judge delivered reasons dismissing the application to adjourn:  see
2010 BCSC 1327.  In his reasons, he said,

[2]        ... I am told that the basis for the respondents'
decision to discharge their counsel and seek an adjournment is that they are
unhappy with the manner in which the case is unfolding during the hearing.  I
find that submission remarkable because counsel for the petitioners is still
making oral submissions on the merits of the case (
and the respondents'
counsel have yet to make their submissions on the merits
).

[3]        I am satisfied that the respondents' decision is a
reaction to the evidence that has been adduced in the affidavits and shown to
me by counsel for the petitioners. In essence,
the evidence shows that a
number of the membership application forms (membership forms) are, on their
face, clearly non-compliant with the bylaws of the Society
.

[4]
I find, from all of the evidence contained in
the affidavits in the chambers record, that the Societys executive, who are
respondents in this litigation, have been engaged in obtaining membership forms
that are not compliant with the Society's bylaws. I find that their conduct
goes beyond mere technical non-compliance and that they have been actively
engaged in obtaining membership forms that are clearly non-compliant since
2008, and onward, through the height of the dispute between the respondents and
the petitioners.  This conduct continued to occur as recently as last week,
just prior to the commencement of the hearing of the petition
.

[Emphasis added.]

[19]

He added that the appellants had many months to prepare for the hearing
and that, since Mr. Turner had acted for them before in other matters, they
could have retained him earlier for this litigation (at para. 5).  In this
regard, he said,

[6]        Mr. Turner is out of the country and, I am told,
not available until at least September 9.
I am satisfied that the decision
made by the respondents to discharge their counsel is a tactical decision to
gain advantage from delay.

It is a decision that, in the wake of the
evidence I have so far seen, should not be condoned by this Court
.

[Emphasis added.]

[20]

He concluded,

[8]        It would be unfair and prejudicial to the Society
and its members to allow the executive members to discharge their counsel and
adjourn this application
considering evidence showing the executives prior
history and recent participation in obtaining non-compliant membership forms
,
all in the wake of a hotly contested membership drive and a looming election. 
To allow an adjournment would, in my view, bring the entire membership drive
and election process into disrepute.

[Emphasis added.]

[21]

After delivering his reasons, the chambers judge said,

THE COURT:  Now, Mr. Mickelson, I'm not sure what you wish
to do here.
On Friday you were of two minds about the nature of the relief
you wish to seek, and I wonder if this has an impact upon it.  It certainly
does in my thinking
, I do want to hear from you.  And I'm sure your friend
will want to make submissions.

[Emphasis added.]

[22]

Mr. Mickelson then submitted that all of the forms be thrown out and
that there be a new process put in place.  When he had finished his
submissions, the following occurred:

THE COURT:  Yes, I was going to offer Mr. de Groot the
opportunity, in view of what Mr. Mickelson said and the exchange between Mr.
Mickelson and myself, to see if you wish to take instructions from his client,
either as to process or simply what you're going to say in reply.

MR. de GROOT:  It would be helpful for --

THE COURT:  All right.

MR. de GROOT:  -- me to have some time.

THE COURT:  And I'll give you 20 minutes to do that, and
if you need longer, let Madam Registrar know.  But I'd like to get back by
11:30 if you can, given that the matter was put over -- or stood down more than
it was heard on Friday.

MR. de GROOT:  Yes.  Thank
you, My Lord.

[23]

Chambers thereupon adjourned and, when chambers reconvened 35 minutes
later, the chambers judge called on Mr. de Groot, who made submissions on
behalf of the appellants as to the appropriate remedy.

[24]

At the conclusion of Mr. de Groots submissions, the chambers judge said
he did not need to hear Mr. Mickelson in reply.  Then, he gave oral judgment in
favour of the respondents (see 2010 BCSC 1328) in which he expanded on the
findings he made in his earlier reasons.

[25]

After reviewing the evidence, the judge noted (at para. 30) that the
documents he had been shown raise questions as to the integrity and validity
of the verification process and the role of certain members of the executive
who accepted those documents in very questionable circumstances.  He concluded
(at para. 31) that the evidence of non-compliant membership forms was not
limited to a few documents such that it could be said that non-compliance [was]
limited, inadvertent, or the result of the conduct of a naive and innocent
member of the executive.  He noted that non-compliant membership forms had
been taken over a considerable period of time, since at least August 2008, and
that in many instances they were taken while the dispute between the parties in
this proceeding was fully engaged.  He concluded no effort had been made by the
Executive to check for duplicate or other questionable forms or to ensure that
no errors had been made in accepting the forms (at para. 32) and observed (at
para. 33) that no explanation had been provided to explain or justify the accepting
of non-compliant forms.  In the result, he concluded that the non-compliance was
such as to engage the courts jurisdiction under s. 85 (at para. 34).

[26]

After describing what he considered to be the obvious and egregious
nature of the non-compliance, the chambers judge said,

[38]      Recent revelations of additional and substantial
numbers of membership forms show that the Societys executive continues to be
actively involved in taking membership forms that are clearly non-compliant. 
In my opinion, non-compliance is so pervasive that the integrity of the entire
membership application process is called into question.

[39]      This is the third time since 2000 that members of
the Society have been before the Court to deal with election and membership
form issues. In light of that history, given the executive's outright rejection
of the petitioners' request for a transparent process, and due to the very
recent and blatant activity of certain members of the executive in accepting
clearly non-compliant membership forms, I believe that no right-thinking member
of the Society would have any confidence in the validity of the membership
documents. I can say that I do not.

[40]      I am also of the view
that ordering a transparent process remedy, which would involve each side
having a representative participate in the taking of forms, is likely to lead
to further conflict and further court proceedings. The time has come for the
Society to conduct a membership process and an election in such a way that its
members can have confidence that those processes are fair and conducted in an
impartial manner.

[27]

Accordingly, he made the following orders:

a)

All membership forms taken since the last election are
invalidated;

b)

A neutral, independent person ("Electoral
Officer"), will be appointed to run the membership drive and to conduct
the Society's next election;

c)

The parties are to agree upon the identity of the
Electoral Officer within seven days, failing which the judge would do so;

d)

The election presently scheduled to take place in
November 2010 is postponed to a date to be agreed upon by the parties in
accordance with the recommendation of the Electoral Officer, and failing
agreement, by order of the Court;

e)

The Electoral Officer shall provide recommendations to
the parties and the Society concerning the process to be used in conducting the
membership drive, including the taking of membership forms, and the process to
be used to conduct the election; and

f)

Those recommendations shall be contained in written
form and provided to the Court for its approval.

[28]

As a further term of the order, the judge retained supervisory
jurisdiction over the process until the election should be completed and
allowed for the parties and the Electoral Officer to apply for further
directions and corollary relief as necessary.  He also limited the Executives
authority to current operations and to running the affairs of the Society in
the ordinary course of business until the election results should be in hand and
the new Executive should be elected.

DISCUSSION

[29]

Thus, the judges conclusion
that there was not only non-compliance with the bylaws in some membership
applications but also that the members of the Executive had been acting
deliberately in such a way as to call into question their own integrity and the
integrity of the entire membership application process played a significant
role in his decision to grant relief that intruded substantially into the right
of the Society to govern its own affairs, something the courts are generally
reluctant to do:
Garcha v. Khalsa Diwan Society - New Westminster
, 2006
BCCA 140 at para. 9, 223 B.C.A.C. 295.

[30]

As I have set out above, in giving his reasons for dismissing the
adjournment application, the chambers judge concluded that a number of the
membership applications were on their face, clearly non-compliant with the
bylaws of the Society (at para. 3).  This finding was a precondition to his
jurisdiction under s. 85(1)(b) of the
Act
.  At the hearing of the
appeal, Mr. Turner outlined submissions that these applications were not
necessarily non-compliant with the bylaws, yet the chambers judge decided this
issue against the appellants without hearing these submissions.  The judge
found, as well, that the Societys executive have been engaged in obtaining
membership forms that are not compliant with the Societys bylaws; that their
conduct goes beyond mere technical non-compliance; that they have been
actively engaged in obtaining membership forms that are clearly non-compliant
since 2008, and onward; and that [t]his conduct continued to occur as
recently as last week, just prior to the commencement of the hearing of the
petition (at para. 4).  Again, Mr. Turner refers to evidence and submissions,
which the chambers judge failed to hear or consider, that might refute these
findings.

[31]

The respondents submit that the appellants are the authors of their own
misfortune  ̶  that they should not have discharged their counsel in the
middle of the hearing.  Discharging their counsel at that time may or may not
have been wise.  It is clear the appellants were not pleased with the way the
respondents case had been developed over the first two days of the hearing or
with the progress of the weekend negotiations and that they wished to have Mr.
Turner, who had represented them in similar matters on previous occasions, take
over their case.  The chambers judge characterized the dismissal of counsel as
a tactical decision taken to gain advantage from delay, but he did not
indicate what that advantage might be, nor did counsel in their submissions
before him or on appeal.  Moreover, in light of the judges comments during Mr.
Mickelsons submissions (some of which I have set out above), it might have reasonably
seemed to the appellants on the weekend that they were in imminent danger of
having judgment given against them.  It may be that, in their minds, their
situation was so precarious that they felt the need to retain Mr. Turner
and to run the risk an adjournment might be refused.

[32]

The decision to dismiss the adjournment application was a discretionary
one.  The appellants contend the discretion was not exercised judicially. 
However, it is not necessary to decide that question since, having refused an
adjournment, the chambers judge ought to have at least offered Mr. de Groot an
opportunity to address him on the question whether the respondents had met the
threshold necessary to engage his jurisdiction under s. 85.  He did not do so. 
He decided that question in favour of the respondents in his reasons for
refusing the adjournment and limited submissions thereafter to the question of
the appropriate remedy.

[33]

In my view, the chambers judge erred in so doing.  In deciding as
he did without hearing the appellants, he violated the
audi alteram partem
rule of natural justice.  I would adopt as apt the following remarks of Prowse
J.A., for this Court, i
n
R. v. Gustavson
,
2005 BCCA 32 at para. 64,
249 D.L.R. (4th) 598:

[64]      While the
audi alteram partem
principle is most often discussed in the administrative law context, it is not
limited to that context. Rather, it has been described as a basic tenet of our
legal system. In
A. (L.L.) v. B. (A.),
[1995] 4 S.C.R. 536, for example,
Madam Justice L'Heureux-Dubé, speaking for the court on this point, stated at
para. 27:

The
audi alteram partem principle
,
which is a rule of natural justice and one of the tenets of our legal system,
requires that courts provide an opportunity to be heard to those who will be
affected by the decisions
. The rules of natural
justice or of procedural fairness are most often discussed in the context of
judicial review of the decisions of administrative bodies, but they were
originally developed in the criminal law context. In
Blackstone's Criminal
Practice
(Murphy rev. 1993), the authors remark at p. 1529:

Traditionally, the rules of natural justice
have been defined with a little more precision, and are said to involve two
main principles - no man may be a judge in his own cause, and
the tribunal
must hear both sides of the case
. [Emphasis added by L'Heureux-Dubé J.]

[Emphasis in
original.]

CONCLUSION

[34]

For those reasons, I would allow the appeal, set aside the order made by
the chambers judge, and remit the petition for a new hearing.

The Honourable Mr. Justice K. Smith

I agree:

The
Honourable Madam Justice Neilson

I agree:

The Honourable Madam Justice
Bennett


