Election law is not confined to political elections. Under corporate law, incorporated companies and voluntary membership associations are generally required to hold elections to choose, among other things, boards of directors. When those elections are held contrary to the governing documents or by-laws of a corporation or a voluntary association, the disputes can be resolved by a court.
In Hon v. Liao, 2022 ABQB 43, an Alberta court was required to determine whether it had jurisdiction to resolve a dispute over an election of the Hakka Tsung Tsin Association of Edmonton (the "Association"). This Association was registered under the Societies Act.
The Association was described in its by-laws as a non-profit organization to promote friendship, unity and welfare of members. As well, the purpose of the Association was to uphold the values of peace and democracy and to promote Chinese culture.
In March 2020, an election was held to select new executive members for the Association. However, contrary to the Association's by-laws, rather than electing a new executive the election simply was held to choose a new President. In addition, all ballots were marked with the voter's membership number.
After the election, the chosen President appointed all members of the Association's two separate Executive and Supervisory Boards.
The Executive Board consisted of the positions of president, vice-president, secretary, treasurer, and various other positions responsible for organizing the Association's activities. The Supervisory Board served as a check and balance. It was responsible for monitoring the Executive Board and consisted of a chairman (who was the Association's president), vice-chairman and auditing supervisor.
As a result of the way in which the election was held and the appointments were made, applicant members contended that they had been oppressed and that the election should be declared invalid.
The applicants argued that the Association's by-laws constituted a contract between the Association and its members and that the applicants had a justiciable civil right to have the by-laws enforced by the Court. In the alternative, the applicants argued that the Court could grant an oppression remedy under the Alberta Business Corporations Act.
The applicants showed that the Association was governed by by-laws, that there were three different categories of members in the Association, that members were required to pay dues and that the Association funded its operation through participation in the Alberta Gaming, Liquor & Cannabis charitable gaming program. As of March 2020, the Association had approximately $100,000 in savings.
The Association's elected president and the Association opposed the application on the grounds that there was no justiciable right which required vindication and that the oppression remedy was unavailable to the applicants. They contended that the Court had no jurisdiction to interfere in the election either at common law or under statute, and that, in any event, there had not been a direct election for president or that the ballots had not been cast in secret.
The Court explained that under the common law it had the ability to review the decisions of a voluntary association.
Based on Highwood Congregation of Jehovah's Witnesses (Judicial Committee) v. Wall, 2018 SCC 26, for the Court to assume jurisdiction the applicant was required to show that there was an underlying legal right at stake, such as a contractual right. While the existence of by-laws might be evidence of a contractual right, their existence alone, as determined by the Supreme Court of Canada in Ethiopian Orthodox Tewahedo Church of Canada St. Mary Cathedral v. Aga, 2021 SCC 22, did not automatically give rise to a justiciable right. In Aga, the Court stated at paragraph 49:
Membership in a voluntary association is not automatically contractual. Even a written constitution does not suffice. Membership is contractual only where the conditions for contract formation are met, including an objective intention to create legal relations. Such an intention is more likely to exist where property or employment are at stake. It is less likely to exist in religious contexts, where individuals may intend for their mutual obligations to be spiritually but not legally binding. A voluntary association will be constituted by a web of contracts among the members only where the conditions for contract formation are met.
The respondents relied on this decision and others to defend the election.
However, the Court distinguished Aga and other cases relied upon by the respondents.
Among the distinguishing features was that the Association was not a religious organization and that members were acutely aware of the Association's by-laws when joining the Association.
As well, mandatory membership fees were not paid for solely charitable or religious purposes. The fees were revenue for the operation of the Association. In return for those fees, members acquired rights to elect leadership and run for leadership in the Association. As well, members received specialized activities, education, programming and assistance during "major life events".
In the circumstances, the Court found that the basic elements of a contract were present. There was evidence of objective intention to enter into legal relations between members and the Association, and the dispute contained an important proprietary aspect given that the Association was engaged in significant fundraising efforts.
These factors gave the Court the jurisdiction to review the election and to determine whether the Association's by-laws had been breached.
Ultimately, the Court rejected the respondents' argument that there had not been a direct election for president. The language of the ballot and subsequent announcement of the results supported a finding that the election was clearly conducted for the purpose of directly electing the Association's president, which was contrary to the Association's by-laws.
The Court also found that the ballots had not been cast in secret because they contained information which made it possible to identify each voter. A ballot which permitted a voter to be identified was not secret.
Accordingly, the election was declared invalid and the rights of the applicant members were found to have been breached.
This case demonstrates that voluntary organizations are not immune from internal disputes and that in the appropriate circumstances a Court can intervene to provide a remedy. This will particularly be the case for voluntary associations that are not religious organizations, and where members pay a fee to acquire and maintain their status, and receive some value for being part of the organization. Of course, the Court dispute in this case could have been avoided by simply following the Association's by-laws, which is always strongly recommended. A PDF version is available to download https://grllp.com/misc/pdf/255-Election_for_President_Declared_Invalid.pdf here.
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