Ex Parte Relief : Limits To Be Aware Of Before Taking Action

So, you have a great idea. Maybe it is a community sports association, a charitable foundation, a cultural organization, or a group dedicated to a cause you care deeply about. You want to make it official, incorporate it as a nonprofit, and you have started doing a bit of research online.

And then you hit the question that stops most people in their tracks: Do I incorporate federally or provincially?

It seems like it should have a simple answer – it does not.

Two Different Laws. Two Different Processes.

In Canada, nonprofits can be incorporated under federal legislation, the Canada Not-for-profit Corporations Act, or under provincial legislation, which in Saskatchewan means The Non-profit Corporations Act, 1995. These are entirely separate legal regimes, with different rules around governance, membership, directors, recordkeeping, and reporting obligations.

The differences are not just administrative. They can affect how your organization is structured, how decisions get made, what your obligations are going forward, and how much flexibility you will have as your organization grows or changes.

Choosing the wrong framework for your situation is not the end of the world but it could create headaches down the road that are time-consuming and expensive to fix.

Here Is the Part Most People Get Wrong

One of the most common misconceptions we see is this: people assume that if they incorporate federally, they are covered across Canada – including in Saskatchewan – and that there is nothing else they need to do at the provincial level.

That is not how it works.

A federally incorporated nonprofit that carries on activities in Saskatchewan is generally required to also register extra-provincially in Saskatchewan. That is a separate registration, with its own requirements, fees, and ongoing obligations. Skipping this step does not make the requirement go away – it just means your organization may be operating out of compliance with provincial law without even knowing it.

This is one of the most frequent mistakes we see when clients come to us after trying to navigate the incorporation process on their own.

And That Is Just the Beginning

Beyond the federal versus provincial question and the extra-provincial registration issue, there are layers of additional complexity that most people are not aware of when they start this process:

• Whether your nonprofit intends to apply for charitable status with the Canada Revenue Agency, and how your corporate structure can either support or complicate that application
• What your constituting documents (your articles and bylaws) need to say, and why getting this wrong at the start can create real problems later
• Director eligibility, residency requirements, and liability protections
• Member versus non-member structures, and which one fits your organization
• Ongoing annual filing obligations at both the federal and provincial levels
• What happens if your organization’s activities expand, or if you eventually want to dissolve or amalgamate

None of these questions has a one-size-fits-all answer. The right approach depends on what your organization does, who it serves, where it operates, and what your long-term goals are.

Why It Is Worth Getting Help

The DIY approach may be tempting. There are online incorporation services that make it look straightforward. But incorporating a nonprofit is not like filling out a form – it is laying the legal foundation for everything your organization will do. Getting it right from the start protects your organization, the people who run it, and the people it is meant to serve.

At McKercher LLP, we help individuals and groups navigate the nonprofit incorporation process from start to finish. We will ask you the right questions, explain your options in plain language, and make sure your organization is properly set up federally, provincially, or both so you can focus on the work that actually matters to you.

If you are thinking about starting a nonprofit in Saskatchewan, we would love to talk. Reach out to us to set up a consultation.

This Is Where Good Legal Advice Pays for Itself

This process is not simple, but it is traversable – with the right guidance.

At McKercher LLP, we work with nonprofit organizations at every stage, from initial incorporation through to charitable registration and ongoing compliance. We will review where you are starting from, identify any structural issues that need to be addressed, help you put together an application that accurately and compellingly represents what your organization does, and make sure you understand your obligations once registration is granted.

The principle of natural justice, audi alteram partem, dictates that all parties to a dispute must be heard before a judgment is rendered. However, some exceptional situations allow this principle to be waived, in which case a hearing may be held without the other party being present or having been notified beforehand. In such cases, the party appearing before the Court must fully disclose all evidence with complete transparency, act in good faith, and behave irreproachably throughout the proceedings.

Under What Circumstances May a Court Proceed Without Having Heard the Other Party?

As a rule, in legal proceedings, all parties to a dispute must be present at the hearing. This allows them to plead their case and respond to the other party’s arguments, thus ensuring fair and just representation.

However, under exceptional circumstances, a hearing may proceed without the opposing party being notified beforehand and heard, such as when there is a reasonable fear that evidence may disappear or that funds may be squandered. In such cases, “extraordinary” and “ex parte” relief, such as Norwich, Mareva or Anton Piller injunctions or seizure before judgment, may be sought.

A Norwich injunction is used to obtain information held by a third party to the dispute, whereas a seizure before judgment and a Mareva injunction are primarily intended to protect a party’s property and assets while a proceeding is pending to ensure the execution of a final judgment against that party. As for an Anton Piller order, its main purpose is to safeguard evidence that might be destroyed if such an order is not obtained.

The Duty of Transparency and Full and Frank Disclosure

In addition to meeting the legal criteria for obtaining these orders, the party seeking extraordinary ex parte relief must be fully transparent with the Court and make full and frank disclosure of the case. Since the other party is not heard at the time the application is presented, the applicant has a duty to disclose all evidence and present a fair and honest account of the facts and applicable law.

The party must disclose all relevant facts, evidence and legal principles, including those that may be unfavorable to its position. In other words, the applicant cannot only disclose evidence in its favour. Moreover, the party seeking extraordinary ex parte relief must act in the utmost good faith and behave in an irreproachable manner throughout the proceedings.

Consequences of a Lack of Transparency

Failure by the applicant to abide by this duty to make full and frank disclosure may result in the quashing a posteriori of the ex parte order issued by the Court, even if the other legal criteria are met. It may also result in a declaration of abuse of procedure and lead to an order requiring the reimbursement of the opposing party’s professional fees. For example, in Lévesque et al. v. Angeli et al.1, the plaintiffs, Lévesque et al., had obtained, in the judicial district of Montréal, without notifying the defendants, seizure before judgment and Mareva injunction orders on the pretext that recovery of their claim might be jeopardized without these reliefs.

The plaintiffs had thus seized all the defendants’ assets and obtained orders prohibiting them from disposing of any of their assets. The defendants then asked the Superior Court to annul the seizure before judgment and the Mareva injunction ordered against them.

Before the plaintiffs filed for and obtained the seizure before judgment and Mareva injunction orders in the judicial district of Montréal, some of the defendants had already filed, in the judicial district of Québec, an oppression remedy application. An application for safeguard order had also been filed and heard, and the parties were awaiting a judgment.

The Superior Court, hearing the defendants’ application to annul the seizure before judgment and Mareva injunction orders, found that the applicants’ course of action, namely bringing the matter before a judge in another judicial district without the defendants’ knowledge while a related proceeding was already underway between the same parties, was more than surprising and appeared to be contrary to the requirements of good faith and, at the very least, to the judicial courtesy required by the guiding principles of the Code of Civil Procedure.

Furthermore, while the plaintiffs alleged that they had a claim against the defendants to justify these two exceptional remedies, the Court found that there was no claim due and payable by the defendants.

Abuse of Procedure and Clean Hands Doctrine in Extraordinary Relief  

Plaintiffs’ conduct also led to a declaration of abuse of procedure. In the subsequent judgment, Angeli et al. v. Lévesque et al.2, the Court questioned the decision not to file the ex parte application in the Court record already pending in Québec City and ruled that the lack of genuine transparency in Montréal regarding the existence of this Court record filed in Québec City constitutes an additional source of abuse.

As a result of this declaration of abuse of procedure, the plaintiffs were ordered to reimburse the defendants for the professional fees incurred in challenging this abusive application.

The Court also recognized that the clean hands doctrine applies to ex parte relief, under which the party seeking the extraordinary relief must conduct itself in an irreproachable manner. Courts may thus dismiss the relief sought solely on the grounds that the party is not blameless.

Ex parte relief: Best Practices to Follow

When filing an extraordinary ex parte application, the party must not only meet the criteria established by law, but must also demonstrate irreproachable procedural conduct as well as utmost good faith and transparency toward the Court by disclosing all relevant facts, evidence, and applicable legal principles honestly and completely, regardless of whether they may be unfavorable to its position.

Failing to do so may result in the ex parte order issued by the Court being quashed on that ground alone, and the applicant may face a declaration of abuse of procedure and an order requiring the reimbursement of the opposing party’s professional fees.

Consequently, good practice for the party seeking an ex parte order is to disclose the factual circumstances and legal principles which favour the other party. Similarly, the ex parte application and the supporting affidavit should set forth the relevant facts completely and honestly, without distorting or minimizing them.