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NON-PROFIT CORPORATIONS (CORPORATIONS WITHOUT SHARE CAPITAL) - Bylaws - Membership - Expulsion

Friday, February 08, 2019 @ 7:54 AM  


Lexis Advance® Quicklaw®
Application by Royal Demaria Wines for declaratory relief finding the rules and regulations pertaining to the respondent Vintner’s Quality Alliance were ultra vires. The applicant, a producer of icewine, had been a member of the Alliance, a not-for-profit corporation that operated as the designated wine authority. The applicant’s membership was terminated after none of its wines were approved over an 18-month period. The wines had failed the taste test required for approval. The Alliance advised the applicant it had 12 months to sell its remaining inventory labelled with regulated terms, including icewine. After the 12-month period, the applicant continued to sell its previously approved wines using the Alliance’s designations. It was prosecuted and acquitted on the basis that the Alliance had no authority to revoke the approval of pre-approved wines on the basis of a lapse in membership. After that decision, new regulations were passed that allowed the Alliance to suspend or revoke approval for a wine if the manufacturer ceased to be an Alliance member. The Alliance then revoked its approval of the applicant’s two previously approved icewines.

HELD: Application dismissed. The taste test rule was not a rule that required ministerial approval. It was properly enacted under s. 5(1)(d) of the Vintner’s Quality Alliance Act. The Alliance’s choice to use taste tests to further the purposes of the Act was reasonable. The bylaw requiring members to obtain one new approval during an 18-month period was connected to the purpose of the Act and was a reasonable exercise of the Alliance’s jurisdiction. The new regulation was not irrelevant, extraneous or completely unrelated to the purpose of the Act. There was no conflict between the Act and the Trade-marks Act or the Canada Agricultural Products Act that would necessitate the application of the doctrine of paramountcy. Even if the new regulation was enacted in response to the applicant’s acquittal, there was nothing improper about Cabinet responding to judicial decisions interpreting existing law.

Royal Demaria Wines Co. v. Ontario, [2018] O.J. No. 6645, Ontario Superior Court of Justice - Divisional Court, T.A. Platana, H.E. Sachs and C.J. Horkins JJ., December 18, 2018. Digest No. TLD-February42019009