



COURT OF APPEAL FOR ONTARIO

CITATION: Mizrachi Organization of Canada v. Bernstein, 2017
    ONCA 275

DATE: 20170404

DOCKET: C62581

Juriansz, Lauwers and Hourigan JJ.A.

BETWEEN

Mizrachi Organization of Canada, Kurt Rothschild
    in his capacity as Trustee for Torah V'Avodah Congregation, Jack Kahn in his
    capacity as Trustee for Torah V'Avodah Congregation and Joseph Rosenfield in
    his capacity as Trustee for Torah V'Avodah Congregation

Applicants

(Respondents)

and

Harry Bernstein, Yisroel Zlotnick, James Beliak,
    George Vitriol, David Yunger, Binyamin Zlotnick and Torah V'Avodah Congregation

Respondents

(Appellants)

Colby Linthwaite, for the appellants

Gregory M. Sidlofsky, for the respondents

Heard: March 28, 2017

On appeal from the judgment of
    Justice Michael A. Penny of the Superior Court of Justice, dated July 25, 2016.

ENDORSEMENT

[1]

The appellants appeal from the order of the motion judge dated July 25,
    2016. The dispute before the motion judge related to control of the premises of
    a religious organization. The dispute is intense and extensive. The only matter
    on which the parties agree is that the appellant, Torah VAvodah Congregation
    (hereinafter "TVA"), is a religious organization under the
Religious
    Organizations Lands Act,
R.S.O. 1990, c. R.23. Legal title to the
    premises  the subject of the dispute  is held by the trustees of TVA.

[2]

The dispute is so fundamental that the parties do not agree about who
    are members of TVA or how membership should be determined. In fact, both sides
    hesitate to recognize individuals associated with the other as members of TVA.
    They also dispute who the trustees of TVA are or should be, who the beneficial
    owner of the property is, whether the respondent  Mizrachi Organization of
    Canada ("Mizrachi")  has a claim to the premises by way of resulting
    or constructive trust, and whether the original trustees were acting as
    trustees of TVA or Mizrachi when they resolved to sell the premises. This list
    is not exhaustive.

[3]

Wisely, the motion judge ordered that the bulk of the application
    proceed to trial with a direction that the parties attempt settlement after
    full document production and discovery, and consider resolving the issues at a
    hybrid application/trial of issues.

[4]

The motion judge, however, did determine one matter. He declared a
    meeting of TVA held November 16, 2013 to be invalid and set aside the results
    of the meeting. Two resolutions had purportedly been passed at the meeting. The
    first purported to remove the individual respondents as trustees of TVA and to
    replace them with a new slate of trustees. The second resolution purported to
    close the membership of TVA. The motion judge set aside these resolutions and
    declared the original trustees were the trustees of TVA.

[5]

The motion judge held proper notice of the meeting was not given. While
    he was satisfied that the notice given of the meeting complied with the
    provisions of s. 18(2) of the
Religious Organization Lands Act
, he
    went on to find:

[T]o be valid notice, the notice must be effective. In other
    words, formal compliance with the provisions of subs. 18(2) of the [
Religious
    Organizations Lands Act,
R.S.O. 1990, c. R.23] is not sufficient where
    there is evidence that the notice did not reach parties with an interest.

[6]

The motion judge also took into consideration that the appellants chose
    a method of giving notice which they knew would have little chance of reaching
    the respondents. The correctness of the motion judges conclusion that notice
    as stipulated by the statute was inadequate is open to considerable debate, but
    it is a debate we need not resolve to decide the appeal. The question is better
    decided on a full record.

[7]

In our view, the motion judge erred by not ordering the entire
    application proceed to trial. He ought not to have finally determined that the
    November 16, 2016 meeting and the resolutions passed thereat were invalid
    before the more fundamental questions were determined. The question of
    membership is more fundamental and has the potential to affect most of the
    other questions. For example, if the individuals who are named as original
    trustees are not members of TVA they would not have the capacity to be
    trustees.

[8]

We gather the motion judge intended to put into place an interim
    arrangement pending trial. He said:

It is clear that there is a bona fide dispute over ownership
    and control of TVA and the Wilson property. In the circumstances, it is
    appropriate that the status quo be preserved, to the extent consistent with
    public safety and asset value preservation, pending the outcome of this
    litigation. The applicant trustees are fiduciaries. They shall continue to
    administer TVA and the Wilson property in the ordinary course of business,
    consistent with their fiduciary obligations. However, no transactions may be
    taken outside the ordinary course of business (such as a sale or mortgage of
    the property) without prior notice to all parties and the appropriate sanction
    of the court.

[9]

This inclusion of control of TVA as one of the matters to be decided
    at trial seems incongruous with a declaration that the original trustees are
    validly in office. Likewise, the unequivocal determination that their removal
    from office was improper rests uncomfortably with his order that the reinstated
    trustees cannot transact any business outside the ordinary course without prior
    notice to all parties and the appropriate sanction of the court.

[10]

We allow the appeal on the basis that the motion judge erred by not
    ordering the entire application proceed to trial. We set aside paragraphs 1, 2,
    3, and 4 of the motion judges order, and add to the issues listed in paragraph
    8 the questions: whether proper notice of the November 16, 2016 meeting was
    given and whether the resolutions passed at the meeting are valid. We are
    satisfied the motion judge intended to preserve the status quo with the
    original trustees in office pending trial. Therefore, we would not disturb
    paragraphs 5 or 7 of his order.

[11]

The parties may make written submissions (not more than five pages)
    regarding the costs of the appeal to be filed by April 17, 2017.

"R.G.
    Juriansz J.A."

"P. Lauwers
    J.A."

"C.W.
    Hourigan J.A."


