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UNINCORPORATED ASSOCIATIONS AND CLUBS - Membership - Withdrawal - Relations of members to one another - Ownership of assets

Wednesday, August 16, 2017 @ 9:54 AM  


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Appeal by the Polish Alliance of Canada (PAC) from an application judge’s decision that 100 per cent of the members of a PAC branch had voted to leave the PAC and that the “clubman’s veto” applied. The PAC was an umbrella organization that had as its object the promotion of the general cultural, education and social welfare interests of its members. The respondents were members of a local unincorporated branch of the PAC. A dispute arose between the PAC and members of the branch that led to a trial in which the judge decided that title to the branch’s clubhouse was held in trust for the members from time to time of the branch. A purported withdrawal of the branch members from the branch, however, was held to be invalid because unanimous consent of the branch members was not obtained. The branch members appealed the determination. On appeal, it was found there was no basis to interfere with the trial judgment. The members then brought an application for a judgment declaring they were entitled to leave the PAC and take the property with them. The application judge allowed a judgment in the members’ favour, permitting them to depart from the branch and, therefore, from the PAC, and continue as members of a separate and independent not-for-profit corporation, taking with them the property. The application judge found that, this time, 100 per cent of the branch members had voted to leave the PAC and that the “clubman’s veto” applied, which was a common law rule providing that members could leave an association and take association property with them if there was 100 per cent approval of the members of the unincorporated association. While the application judge found the clubman’s veto took the branch members “where they want[ed] to be”, he commented that had the matter been presented under the Variation of Trusts Act, he would have had no hesitation approving a variation of trust to transfer the property to a not-for-profit corporation. The PAC appealed. The PAC argued that the application judge erred in concluding the clubman’s veto applied; that, in any event, there were more members of the branch than the application determined, with the result that application judge erred in concluding that 100 per cent of the members voted to leave; that the application judge erred in concluding that the property was held in trust for the branch members from time to time; and that neither party had argued the application of the Variation of Trusts Act and the application judge therefore erred by suggesting it as an alternative basis for the relief he granted.

HELD: Appeal dismissed. The judge did not err in concluding that the clubman’s veto applied. There was no statute that governed how the contractual relationship of all the members of the branch with each other was to be terminated. There was no basis to interfere with the finding that 100 per cent of the members had voted to leave. The PAC could not now re-visit the question of ownership of the property held in trust for the branch members. The application judge’s reference to the Variation of Trusts Act did not amount to reviewable error. The application judge relied on the clubman’s veto in granting the relief and not the Variation of Trusts Act.

Polish Assn. of Toronto Ltd. v. Polish Alliance of Canada, [2017] O.J. No. 3500, Ontario Court of Appeal, A. Hoy A.C.J.O., K.M. van Rensburg and G.T. Trotter JJ.A., July 5, 2017. Digest No. TLD-August142017006