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

Friday, October 25, 2019 @ 8:34 AM  


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Appeal by the plaintiffs, the Chinese Benevolent Association and five members, from dismissal of their application for declaratory relief. The defendant, the Chinatown Multilevel Care Foundation, was a charitable organization with bylaws that permitted membership by majority vote, and initially had no restrictions capping membership. Membership could be terminated by expulsion for cause, or withdrawal with notice to the Board. The plaintiff Association was a non-profit society that acted as an umbrella organization for the Chinse community in Edmonton. The individual plaintiffs were members or directors of the Association. The two organizations were independent, with some past connectivity and support. Two of the five individual plaintiffs, Gee and Hung, were past directors of the defendant Foundation. In 2009, the Foundation passed bylaws limiting its membership to 10. The plaintiffs sought a declaration that the new bylaws were invalid, and sought a determination of Foundation membership, and an order directing a meeting to elect a new board. The chambers judge dismissed the application on the basis the relief sought was statute-barred, and that only Hung and Gee had standing to bring the application. The chambers judge found that in any event, the 2009 bylaws were properly enacted. The plaintiffs appealed.

HELD: Appeal dismissed. The chambers judge did not err in limiting standing to Hung and Gee as members and directors of the Foundation at the time of the 2009 bylaw change. There was no evidence of breach of fiduciary duty or malfeasance and impropriety on the part of the Foundation that justified granting the other plaintiffs standing. Nor did the other plaintiffs establish any material interest in the Foundation or direct stake in its affairs justifying granting standing. The chambers judge did not err in finding that the plaintiffs' claim was statute-barred. Despite the relief sought being framed as declaratory by the plaintiffs, the chambers judge correctly and reasonably found that the essence of the application, when viewed in its entirety, was remedial in nature, and therefore the action was statute-barred.

Chinese Benevolent Assn. of Edmonton v. Chinatown Multilevel Care Foundation, [2019] A.J. No. 1228, Alberta Court of Appeal, T.W. Wakeling, E.A. Hughes and D. Pentelechuk JJ.A., September 16, 2019. Digest No. TLD-October212019012