



COURT OF APPEAL FOR ONTARIO

CITATION: Polish Alliance of Association of Toronto Limited
    v. The Polish Alliance of Canada, 2017 ONCA 574

DATE: 20170705

DOCKET: C63099

Hoy A.C.J.O., van Rensburg and Trotter JJ.A.

BETWEEN

Polish Alliance of Association of Toronto
    Limited, Marian Celej, Helen Celej, Albert Joseph Flis, Emily Flis, Helena
    Grabowska, Krystyna Kowalska, Wladyslawa Kucharska, Adam Miasik, Andrzej
    Miasik, Piotr Miasik, Marek Miasik, Maria Miasik, Renata Miasik, Eugeniusz
    Neuff, Ksawery Neuff, Juno Piltz, Janina Pomorska, Lucjan Pomorski, Virginia
    Ross, Teresa Skibicki, Constance Zboch, Cecylia Zwara, Jan Argyris, Czeslawa
    Eriksen, Jadwiga (Vicky) Dunwoody, Halina Rabczak, Wladyslaw Rabczak, and Maria
    Dreher, by her Litigation Guardian, Ed Dreher

Applicants (Respondents)

and

The Polish Alliance of Canada

Respondent (Appellant)

Bogdan A. Kaminski, for the appellant

Bernie Romano and Jordan Nussbaum, for the respondents

Heard:  June 21, 2017

On appeal from the judgment of Justice F.L. Myers of the Superior
    Court of Justice, dated November 21, 2016, with reasons reported at 2016 ONSC
    7230.

REASONS FOR DECISION

[1]

The respondents are 28 members of Branch 1-7 of the
    appellant, The Polish Alliance of Canada (PAC). The application judge, Myers
    J., granted judgment in the respondents favour, permitting them to depart from
    Branch 1-7 (and, as a consequence, from PAC) and continue as members of a
    separate and independent not-for-profit corporation, taking with them a property
    held in trust for the members from time to time of Branch 1-7. PAC appeals.

[2]

For the following reasons, the appeal is
    dismissed.

Background

[3]

The judgment under appeal is hopefully the final
    step in a long-standing dispute between PAC and Branch 1-7.

[4]

PAC is an umbrella organization incorporated
    under the
Corporations Act
, R.S.O. 1990, c. C.38. The respondents are
    all the members of Branch 1-7, a local unincorporated branch of PAC.  PAC and
    Branch 1-7 are voluntary associations that have as their objects to promote the
    general cultural, education and social welfare interests of their members.

[5]

The dispute led to a lengthy trial before Myers
    J.  In his trial reasons, Myers J. found that title to Branch 1-7s clubhouse
    on Lakeshore Boulevard in Toronto (the Property), estimated to be worth $50
    million or more, was held in trust for the members from time to time of Branch
    1-7.  However, he also determined that the purported withdrawal of Branch 1-7
    from PAC was invalid because the unanimous consent of Branch 1-7s members had
    not been obtained:
The Polish Association of Canada v. Polish Association
    of Toronto Limited
, 2014 ONSC 3216, [2014] O.J. No. 2542.

[6]

The then-members of Branch 1-7 appealed Myers
    J.s determination that their withdrawal was invalid, and PAC in turn
    cross-appealed. PACs cross-appeal was dismissed and it was precluded from
    making any response to the appeal because of its failure to file materials
    within the required deadlines.

[7]

This court found that there was no basis to
    interfere with Myers J.s determination that the purported withdrawal by Branch
    1-7 from PAC was invalid. However, it noted that he did not determine that any
    future attempt would be invalid or ineffective:
The Polish Alliance of
    Canada v. Polish Association of Toronto Limited
, 2016 ONCA 445, [2016]
    O.J. No. 3820.

[8]

Subsequently, the respondents brought an
    application before Myers J. for judgment declaring that they were entitled to
    leave PAC and take the Property with them.

[9]

Myers J. found that, this time, 100% of the
    members of Branch 1-7 had voted to leave PAC. He held that the clubmans veto
    applied. Citing
Wawrzyniak v. Jagiellicz
(1998), 64 O.R. (2d) 81
    (H.C.J.), at pp. 88-89, he explained this common law rule provides that with
    the approval of 100% of the members of an unincorporated association, the
    members can leave the association and take the property of the association with
    them.

[10]

While Myers J. found the clubmans veto took the
    members of Branch 1-7 where they want to be, he commented that had the matter
    been presented under the
Variation of Trusts Act
, R.S.O. 1990, c. V.
    1, he would have had no hesitation approving a variation of trust to transfer
    the Property to a not-for-profit corporation.

[11]

He granted the requested judgment.

PACs Arguments on Appeal

[12]

PAC argues that:

1.

Myers J. erred in concluding that the clubmans veto applied;

2.

in any event, there were more members of Branch 1-7 than Myers J.
    determined, with the result that he erred in concluding that 100% of the
    members voted to leave;

3.

Myers J. erred in concluding that the Property was held in trust for the
    members of Branch 1-7 from time to time; and

4.

neither party had argued the application of the
Variation of Trusts
    Act
and Myers J. therefore erred by suggesting it as an alternative basis
    for the relief he granted.

Analysis

[13]

We reject PACs arguments.

(1)

Myers J. did not err in
    concluding that the clubmans veto applied

[14]

PAC does not take issue with Myers J.s
    articulation of the common law rule sometimes called the clubmans veto
[1]
. Rather, it renews its
    argument before Myers J., relying on
Ahenakew v. MacKay
(2004), 71
    O.R. (3d) 130 (C.A.), that the clubmans veto does not apply in these
    circumstances because PAC is incorporated under the
Corporations Act
,
    and it has supplanted the clubmans veto.

[15]

Nor does PAC dispute Myers J.s finding that
    PACs constitution does not deal with how a branch can leave PAC.  However, it
    says PACs by-laws must be amended with the approval of a 2/3 majority of PACs
    members to create a process for disaffiliation of the members of Branch 1- 7
    and Branch 1-7 must then comply with any such process to leave PAC, with the
    Property.

[16]

We reject this argument.  In our view, Myers J.
    correctly determined that the clubmans veto applied. The respondents  the
    then members of Branch 1-7, an unincorporated association  sought to leave
    that association and take with them the Property held in trust for the members
    from time to time of Branch 1-7.  This case is very different from
Ahenakew
.

[17]

In
Ahenakew
, this court concluded the
    unanimous consent of all members of the Progressive Conservative Party of
    Canada (the PC Party) was not required for the PC Party to merge with the
    Canadian Reform Conservative Alliance Party.

[18]

Goudge J.A., writing for the court, reviewed
    this courts earlier decision in
Astgen v. Smith
, [1970] 1 O.R. 129
    (C.A.). He explained that the majority in
Astgen
held that the common
    law recognized the voluntary association not as a legal entity, but as nothing
    more than a complex of contracts between each member and every other member.
    The majority held that something such as a merger with another voluntary
    association so fundamentally affects the contractual rights of each member that
    each member must consent to a termination of his or her existing set of
    contractual relations directly or through a procedure to which all members had
    agreed.

[19]

In
Ahenakew
, this court held that the
    common law requirement of unanimous consent did not apply to the proposed
    merger involving the PC Party. The legal fiction that a voluntary association
    is simply a complex of contracts between all its members was inapplicable
    because the
Canada Elections Act
clothed the PC Party with legal
    status as a registered political party. And since this legal fiction was
    inapplicable, so too was the corollary requirement that unanimous consent of
    its members be obtained to a merger.  Further, Parliament displaced the common
    law rule by including detailed provisions in the
Canada Elections Act
about what is necessary for the merger of two registered political parties.

[20]

While PAC is incorporated under the
Corporations
    Act
, Branch 1-7 of PAC is an unincorporated voluntary association. Unlike
    in
Ahenakew
, there is no legislation that gives Branch 1-7 of PAC a
    legal status that would displace the legal construct identified in
Astgen
. 
    And, unlike in
Ahenakew
, there is no statute that governs how the
    contractual relationship of all the members of Branch 1-7 with each other is to
    be terminated.

[21]

As Myers J. summarized, at para. 23:

While the clubmans veto, like any common law
    principle, can be displaced by a clear statute as was found to be the case of
    political parties in
Ahenakew
, there is
    nothing in the
Corporations Act
or any
    regulatory scheme that regulate this situationNothing in the
Corporations
    Act
deals with the problem of how trust beneficiaries
    whose interests are defined with reference to their membership in an
    unincorporated branch of an incorporated entity can leave with their property.

(2)

There is no basis to interfere with Myers J.s finding that 100% of the
    members of Branch 1-7 had voted to leave

[22]

In calculating the number of members of Branch
    1-7, Myers J. relied on the order dated September 3, 2014, as amended by order
    dated September 17, 2014, determining that at that time there were 20 members.
    It is not now open to PAC to seek to go behind the prior court orders and argue
    that there were more than 20 members at that time, and therefore more than the
    total number of members Myers J. determined.  Further, this argument is
    inconsistent with its position before Myers J. that there were no members of
    Branch 1-7 remaining.

(3)

PAC cannot now re-visit the question of the
    ownership of the Property

[23]

PACs cross-appeal of the trial judgment that
    determined that the Property was held in trust for the members of Branch 1-7
    from time to time was dismissed. As Myers J. held, it is not open to PAC to now
    revisit questions of title to the Property.

(4)

Myers J.s reference to the
Variation of Trusts Act
does not
    amount to reviewable error

[24]

Myers J. relied on the clubmans veto in
    granting the relief that he did, and not the
Variation of Trusts Act
.
    His comment that the
Variation of Trusts Act
would have been a basis
    for granting the requested relief had it been argued does not amount to
    reviewable error.

Disposition

[25]

Accordingly, the appeal is dismissed. The
    respondents shall be entitled to costs of the appeal fixed in the agreed upon
    amount of $25,000, inclusive of disbursements and HST.

Alexandra
    Hoy A.C.J.O.

K. van Rensburg J.A.

G.T.
    Trotter J.A.





[1]
As Myers J. used this term, we employ it in these reasons.


