Public Health Orders
These are stored on the BC Government’s Website.
Orders of note include:
Ministerial Orders
These are stored on BC Laws.
Health and Hospital Orders
Residential Tenancy Orders
Other Orders
M416/2020, Food and Liquor Premises, Gatherings and Events (COVID-19) Order No. 2 (Nov 13/20)
M336/2020 – Amends improvement district letters patent to allow elections on a different date than the AGM.
M334/2020 – Makes Crown Land use applications subject to mass gathering / food and beverage / other orders.
M324/2020 rescinds M257/2020, Haida Gwaii (COVID-19) Order.
M256/2020, BC Ferries Medical Travel (COVID-19) Order – Gives priority ferry boarding to medical travellers who arrive with proof 30 minutes in advance.
M220/2020, Health Care Labour Adjustment No. 2
M193/2020, Correction Centre Measures (COVID-19)
M179/2020, Commercial Tenancy (COVID-19) Order
M162/2020, Electronic Witnessing of Powers of Attorney
M161/2020, Electronic Witnessing of Wills
M159/2020, Local Government Finance (COVID-19) Order
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Forum:
BC Civil Resolution Tribunal (As a Small Claim, not a Societies Claim)
Facts:
The applicant owned a quarter share of a residential strata lot. Each owner in the strata had a sublease with the respondent society, Evolution Owners’ Association (Evolution), which provided that all rentals be managed through Evolution’s rental pool.
Evolution’s bylaw 18.5 (a) prohibited an owner from renting out or advertising their unit for rent other than in accordance with the sublease, which requires that Evolution will manage the rental exclusively. Bylaw 18.5 (b) prohibited an owner from advertising their unit for rent on any service arranged by Evolution or its manager, including Craigslist.
Bylaw 18.5 (d) required an owner in contravention of bylaw 18.5 (a) to pay Evolution the “rack rate” for the strata lot for each day it was rented in contravention of bylaw 18.5 (a). It also requires an owner to pay Evolution $50 for each separate medium or service the owner advertised the strata lot for rent in contravention of bylaw 18.5 (b).
The applicant advertised the unit on Craigslist and rented it to the respondent of a Craigslist ad. The applicant was fined a significant amount ($3,400). The applicant sold the unit and subsequently disputed the fines as a small claim. A counter-claim was brought but will not be addressed in this case comment.
Analysis and Holding:
The CRT decided this case, which involved the interpretation of s. 70 of the Societies Act, without counsel for either the applicant or Evolution (as is the process of the CRT). It stated that even if fines were available as discipline of a member, no procedural fairness was afforded as no prior notice of the fine had been given under s. 70(3) of the Act and no opportunity to be heard was provided. The fine was quashed. The fine amount and court ordered interest was payable to the applicant as a small claims debt.
In coming to its conclusion, the CRT stated the problematic obiter dicta, meaning non-binding comments, underlined in the following:
“Evolution says it has authority to levy fines against its members under section 70 (1) of the Societies Act, which says the bylaws of a society may provide for the discipline or expulsion of members. Evolution says “discipline” must reasonably be interpreted to include fines, as there are limited ways to discipline members of a society.
The question of whether “discipline” in section 70(1) of the Societies Act includes fines has not been judicially considered, but I find it is unlikely that section was intended to allow societies to fine its members. Other sections of the Societies Act refer specifically to fines. If the legislature had intended fines to be a form of discipline under section 70(1) there is no reason it could not have specifically referred to fines in that section, which it did not do. However, because of section 70(3) of the Societies Act which I address below, I find it is unnecessary for me to make a finding as to whether fines are included in discipline under section 70(1) of the Societies Act.”
Critique:
Where are the core societies and corporate law principles?
Bylaws create a contractual relationship between a member and the society as an organization. They are subject to the law of contract, with the remedy for disagreement being resignation (subject to special resolution and now the claim of oppression) or in this case, payment of the fine and sale of the unit that the bylaw rental fees and fines applied to.
As we will recall from Senez c. Montreal Real Estate Board, [1980] 2 S.C.R. 555 (SCC), wherein the Supreme Court of Canada stated the following fundamental principles of societies law, referred to with approval in BC in Lee v Lee’s Benevolent Assn. of Canada, 2007 BCSC 794:
The characterization of the fine as a purely criminal or quasi-criminal fine by the CRT is troubling. In its analysis, it refers to “fine” being used elsewhere in the Act. While that is true, when the word is used it is only in the context of a criminal or quasi-criminal offence, and not in relation to the plain or common meaning of the word, the scheme of the Act, and the general understanding of how societies and other voluntary and social organizations function, or even the model bylaws published by regulation under the former Society Act (as Schedule B) and under the current Act (as Schedule 1). The model bylaws in both cases referred to annual dues, the ability to place a member not in good standing and remove the right to vote without a hearing, and the ability to collect a debt or other subscription owing to the society — all of which point to the ability to impose a fee, charge, or fine for a service.
In general, I support the CRT and the work it does as necessary for access to justice in BC — but I do believe it is unwise to place such obiter dicta of a personal, non-binding opinion into a publicly accessible decision, all without detailed argument and analysis. This may may lead to additional litigation or societies changing how they constitute their affairs. That portion relating to the member’s personal opinion should not have been included, the same way that names of witnesses and parties were anonymized, as it is not part of the vital reasoning which comes towards the final decision in the case.
In less than 5 minutes on CanLII, using the query “fine”, “society” and “society act”, I located Langas v. Sicamous Sands Resorts Society, 2004 BCSC 398, on all fours with the issue in the present case:
[9] It should be noted that neither the Society Act, R.S.B.C. 1996, c.433 nor the bylaws provide for fines. The only reference to fines is in the Rules and Regulations [ED: a schedule of the bylaws, which all members had to agree to in order to obtain membership]. The defendant contends that members, by signing the contract, become subject to fines if they commit infractions. I agree that it is possible for parties to contractually agree to some form of a penalty system. Unfortunately, the Rules and Regulations do not prescribe a maximum fine, do not stipulate some form of notice to the alleged wrongdoer, or provide some form of a hearing whereby the alleged wrongdoer can be heard before a penalty is imposed.
[10] Consequently, the management, with the endorsement of the Board of Directors, simply levied a fine without giving the plaintiff an opportunity to respond before the penalty was levied against him. In so doing, the management and board violated the rules of natural justice. Mullan D.J. Administrative Law (Ontario: Irwin Law, 2001) at 232 describes natural justice in the following terms:
The rules of procedural fairness or natural justice are divided into two separate categories. The first category comprises the various elements of the requirement that the decision maker provide adequate opportunities for those affected to present their case and respond to the evidence and arguments being advanced by other participants or in the knowledge or possession of the decision maker. … The second limb of the rules covers the requirement that decision makers be independent and unbiased.
[11] The requirement to ‘hear the other side’ is a fundamental principle of procedural fairness. Persons must be given an opportunity to influence a decision potentially adverse to their interests, and the explanation provided should assist the decision maker in making an informed decision. See Blake, S., Administrative Law in Canada, 3rd ed. (Toronto: Butterworths, 2001) at p.12; Baker v. Canada (Minister of Citizenship and Immigration) (1999), 1999 CanLII 699 (SCC), 174 D.L.R. (4th) 193 at 211.
[12] The defendant society was required to give the plaintiff an opportunity to respond to the possible imposition of a penalty prior to a final decision being made. Consequently, natural justice was not served. Accordingly, I find the fine to be a nullity. I will not, however, accede to the plaintiff’s request to issue some form of injunction against the defendant.
It would have been ideal for the CRT to cite this case as it is directly on-point with these facts. The procedural fairness issue was properly characterized by a higher level of court and supports the CRT’s final holding. It may also have avoided the need for the problematic obiter dicta to be included in the case.
Rent charge, liquidated damage, bylaw fee and charge, or fine?
No discussion on the characterization of the fine was performed or at the least, reported. It would appear the parties agreed what would otherwise be a rent charge, liquidated damage under contract (such as the sublease), or legitimate fee and charge under a schedule to Evolution’s bylaws, was automatically an impermissible quasi-criminal fine. Perhaps this is because Evolution in its defence focused on the definition of the word “discipline” and not on the inherent ability of a society to impose dues, fees and charges on its members. Perhaps this is because the sub-lease agreement that all owners enter into with Evolution did not have a separate contractual right to payment as a liquidated damage. Perhaps this whole scheme should have had a charge on title, permitting the strata to make a rent charge — not as a liquidated damage — to restrict rentals of its units (similar to the rent charge imposed by the Whistler Housing Authority on its affordable rental units). Perhaps it would be permissible if the ticket or fine of a society had a dispute mechanism or timeline for payment (such as a municipal ticket information).
A restructuring of the fine into a contract (personal covenant) or rent charge (running with the land) fee, outside of membership, would avoid the issue of having to send a fairness letter explaining the nature of the fine and provide a chance to make submissions.
How did the applicant become a “member” of Evolution?
It is assumed but not explained by the CRT that the applicant was made a member of Evolution, a society. No analysis occurs on how the applicant became a member, whether a schedule of fines or rental charges was set out in the sub-lease (contract) or whether the applicant ever consented to membership in the society or was provided with the bylaw and fee schedule in advance of notice of a fine. I note the decision does correctly focus on the procedural fairness concerns in imposing a fine or discipline on a member.
Where is the recent Supreme Court law on rental pools?
Rental pool arrangements are used in Whistler, and are not mentioned in this case (or likely argued). No discussion on any covenant on title is provided. No analysis or summary of the law in this area is provided, despite it appearing to be directly relevant to the dispute in issue — that is, whether the rental pool arrangement is valid, whether Evolution’s management of the property is valid, and whether the fee/fine imposed is valid or was validly applied.
What can we take from this: The CRT should have alerted the parties to the possibility of remedying the breach of procedural fairness
The analysis of the CRT should not be taken as a proper, fulsome, or correct statement on the ability of a society to levy fines, fees, or charges which members have agreed to by bylaw or posted fee schedule, and which the province has signaled is appropriate when it is a due, debt, or subscription owing to a society.
The BC Supreme Court has the power to remedy irregularities in a society’s affairs. Under s.105 of the Societies Act, the BC Supreme Court may step in and remedy a breach of procedural fairness in a discipline action: see a summary of the law at paras 40 onward in Brun v. Deep Cove Yacht & Sport Club, 2019 BCSC 1409. It may choose not to set aside a breach of procedural fairness where it is futile, as reconsideration may lead to the same result or the practical effect would lead to challenges in the operation of a society (Brun, above, citing Turnbull-Spence et al v. Kamloops Long Blades Assn., 2004 BCSC 1500).
If improper notice was given, the more appropriate route for the CRT and Evolution may have been to issue or request a stay of the CRT proceeding until the matter of whether the procedural irregularity could be remedied by the BC Supreme Court. This minor breach — the failure to provide notice or a deadline for dispute — may have been approved by the BC Supreme Court on review and the outcome of this case different.
Remedying irregularities is outside the jurisdiction of the CRT. The CRT would be wise to inform the parties when the potential for the remedying of an irregularity exists and either ask the parties to refer to the matter to the Supreme Court, or refer it to the court in its capacity as a tribunal. As this tribunal restricts access to counsel, it is incumbent on the tribunal to take such protective steps for participants in its processes. At the very least, it should have mentioned to the parties that the remedying of an irregularity was available to them.
Image courtesy of Elvind Lindseth, via a Creative Commons license. No alterations were made to this image.
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More information is available directly from the BC Government here.
Photo by Siomonn Pulla under a Creative Commons license. No changes were made to this image.
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The 2014 white paper is useful for societies and lawyers looking to make sense of some of the newer provisions, and to reconcile them with earlier versions in the former Society Act. The explanatory notes can also be relied on by the courts in interpreting the underlying purpose of certain provisions and the legislation as a whole, depending on context. The paper is available here: Society Act White Paper [Archived for research and private study].
Photo by Chris Higgins used under a Creative Commons license. No changes were made to this image.
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BOOKKEEPER EMBEZZLEMENT
Ms. Dunkers was the CFA’s bookkeeper, with day to day control over its finances. From January 2008 to January 2010, she made 270 cheques payable to herself from the CFA’s operating account. She altered accounting records to make it appear cheques had been issued to employees or contractors. This fraud was discovered by the CFA’s new bookkeeper, who replaced after Ms. Dunkers quit in early 2010. As a result of the fraud, CFA could not continue operations, lost support of significant donors and grants, and was forced to shut down.
The trial decision is indexed as 2014 BCSC 1315, while the trial sentencing decision is 2014 BCSC 1316.
I was still a newspaper reporter when I heard about this, visiting CFA’s offices (in the process of shutting down) for an unrelated story. I spoke with the Executive Director about this fraud, and she was very open about the destructive effect it had on the family and community services provided by the organization. It’s good to see a proportional and fair sentence upheld by the Court of Appeal. In Canada, our principles of sentencing for Criminal Code offences, such a criminal fraud and theft, are set out. These principles provide a guiding list for trial judges, who typically have wide discretion in determining a proportional sentence that reflects the magnitude of the offence and the degree of responsibility of the offender. Five years and restitution seems to fit these facts, particularly as the theft was long term and repeated.
WHAT CAN WE TAKE FROM THIS CASE?
This organization fell victim to forgery and fraud. Trust your staff, but have signing and payment policies in place to provide good oversight of financials. There is no substitute for proper financial controls, and for ensuring that payment and purchase orders confirm that work has actually been done and/or contractors exist when issuing cheques.
Photograph by A. Davie under a Creative Commons license. No changes were made to this image.
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A bare-bones transition is detailed here, here, and here. If you want to transition as a member-funded society, you must have a special resolution of the members to do so. If you do not, no worries. You can bring a simple court application at a future date.
If you’re wondering why be an incorporated society, and why it’s worth not being struck from the register, read this post here.
Photograph by A. Davie under a Creative Commons license. No changes were made to this image.
]]>Minor clean-up of the Societies Act continues. Sections 18 to 20 and 22 to 26 of the Miscellaneous Statutes Amendment Act (No. 2), 2018, c. 23 (Bill 24) are in force October 1, 2018 (BC Reg 192/2018), and the Societies Transitional Interim Regulation (BC Reg 99/2016) is repealed.
The changes to the Societies Act are as follows (references are to the Miscellaneous Statutes Amendment Act (No. 2)):
18 Section 11 (4) of the Societies Act, S.B.C. 2015, c. 18, is repealed and the following substituted:
(4) If the bylaws of a society provide for a higher voting threshold than the threshold set out in the definition of “special resolution” in section 1 [definitions] to effect any action that, under this Act, requires authorization by special resolution, the provisions of the bylaws prevail if they
(a) set out the higher voting threshold as a fraction or percentage of the votes cast or as a specific number of votes,
(b) establish the higher voting threshold by requiring a unanimous decision of all the voting members, or
(c) set out a formula for calculating the higher voting threshold.
(5) For certainty, an action referred to in subsection (4) includes altering all or part of one or more provisions of a society’s constitution or bylaws.
(6) Despite subsection (4), a society must not have a bylaw that provides for a higher voting threshold to remove a director from office under section 50 (1) (a) [removal of directors].
19 Section 20 (1) (i) and (2) (a) (ii) is amended by striking out “passed at the meeting;” and substituting “voted on at the meeting;“.
20 Section 107 is amended
(a) by repealing subsection (2) and substituting the following:
(1.1) If, on the application of a person referred to in subsection (1), it appears to the registrar that a society has, contrary to section 24, 25, 27 or 28, failed to provide the applicant with access to, or a copy of, a record, the registrar may furnish a written notice to the society that the registrar will issue an order under subsection (2) of this section unless the society provides to the registrar within 15 days after the date on which the notice is furnished whichever of the following the society chooses to provide:
(a) a copy of the record;
(b) a signed statement of a director or senior manager of the society that sets out the reason why access to, or a copy of, the record is not being provided to the applicant.
(1.2) The registrar must
(a) set out in a notice under subsection (1.1) an explanation of the basis on which the applicant claims to be entitled to obtain access to, or a copy of, the record, and
(b) furnish a copy of the notice to the applicant.
(2) If a society referred to in a notice under subsection (1.1) does not provide to the registrar, in accordance with the notice, a copy of the record or a signed statement of a director or senior manager, the registrar must order the society to provide to the registrar whichever of the following the society chooses to provide:
(a) a copy of the record referred to in subsection (1.1) (a);
(b) a signed statement referred to in subsection (1.1) (b). ,
(b) in subsection (4) by striking out “15 days” and substituting “10 days“,
(c) in subsection (5) by striking out “under subsection (2) (a)” and substituting “under subsection (1.1) (a) or (2) (a)“, and
(d) in subsection (6) by striking out “under subsection (2) (b)” and substituting “under subsection (1.1) (b) or (2) (b)“.
…
22 Section 161 is amended by adding the following subsection:
(2.1) Subsection (2) does not apply to the restoration of a society if
(a) the society was dissolved under section 214 [involuntary dissolution by registrar] for one or more of the reasons set out in section 214 (1) (a) to (d), and for no other reason under that section, and
(b) the application for restoration is filed no later than one year after the date of dissolution.
23 The following section is added:
References to special resolutions
232.1 A reference in this Act to a special resolution includes a special resolution, as defined in section 1 of the former Act, passed or consented to, as the case may be, before November 28, 2016.
24 The following section is added to Division 4 of Part 16:
Timing of special resolution authorizing alteration to
previously unalterable provision or reporting society provision in bylaws
241.1 A pre-existing society must not submit to the registrar for filing a bylaw alteration application under section 17 [alterations to bylaws] in relation to a provision that, under section 240 (2) (b) (iii), is identified in the bylaws of the society as having previously been unalterable or that is a reporting society provision referred to in section 240 (2) (b) (iv), unless the special resolution referred to in section 17 (2) authorizing the alteration is passed or consented to, as the case may be, after the society has filed the society’s transition application under section 240.
Photograph by A. Davie under a Creative Commons license. No changes were made to this image.
Most member discipline matters occur in large membership, widely held societies, typically with some form of volunteer interaction. Sports societies and religious organizations are two places where tensions run particularly high. I have compiled the below list from my experience in practice, both defending claims and bringing such claims against societies.
1. You can’t terminate a member by not accepting their annual dues.
Some societies believe they can terminate a membership by not accepting an annual due or membership fee payment from someone they consider unwanted. This is not the case! I can’t stress it enough, you cannot admit someone to membership then decide, on an administrative basis, the society will simply not accept their annual due or membership fee payment to force them out of membership status.
Yet this happens! And often enough there is a recent reported decision on it: Basra v Shri Guru Ravidass Sabha (Vancouver), 2017 BCSC 1696. I recently posted on this decision, but I mention it again as it’s recommended reading.
This is different from a member choosing not to pay their annual dues, which may put them not in good standing and lead to their membership being terminated (typically set out in the bylaws). But the intentional or negligent decision to not accept a payment received is an irregularity in the fair and transparent activities of the society and will be set aside.
Note that a member who has had previous, legitimate, and fair disciplinary action taken can be expelled provided it is done in compliance with the Act. This was recently done at the time of a pending annual membership renewal in Roberts v. Vernon Pickleball Association, 2018 BCSC 1834. I note that Roberts did not explicitly consider Basra, nor do I know if it was argued. The case also did not address in any detail whether the expelled member, whose membership renewal was placed into pending status and had numerous justified prior disciplinary actions against them, was given a final chance to respond. Based on the facts both in the case and as reported by CBC, it looks like this irregularity was remedied in the society’s favor, though not explicitly as it was brought as an oppression proceeding. This is distinguishable from Basra which was based on a prior failure to take disciplinary action — that disciplinary action (not taken within a reasonable time) cannot be dredged up to be used in future [Added October 25, 2018].
2. You can’t pass a bylaw to automatically terminate or expel anyone who brings or contemplates a court proceeding against you.
Societies lawyers and insurers everywhere would rejoice if this were possible. I know several who would high five. Any member discipline requires notice and an ability to make submissions (s.70, Societies Act). A suspension or expulsion cannot be “automatic”. This is non-compliant with the Societies Act and likely would be found to be oppressive.
You may make operational decisions suspending member privileges, subject to the bylaws. I take the position that privileges of membership, above the right to receive notice of meetings and voting, may be revoked or suspended, subject to a fair hearing at a later reasonable date (determined by the importance of the decision to the member). This is often the case in sports societies, where a play suspension is issued against a problematic player (or parent). Consider as well a squash club that pulls the ability to book a court from a member with a record of bad behaviour; the member may still attend meetings and vote but does not have the added privilege of court booking. Consider a member that falls within the disciplinary or harassment policy — he or she can still vote and attend meetings, but he may be prohibited from participation in certain activities or from engaging with staff or volunteers. This all depends on the bylaws and the structure of the society, of course.
3. If you are to discipline or expel a member, you must be fair.
I have written so many member-side letters explaining fairness to boards, and given lectures on the topic. Too often, in a society with a dispute, those in charge have the best intentions but do not respect the due process mandated by the Societies Act. Always take a calm, rational, and transparent approach to discipline or expulsion — without it, your society’s decision is vulnerable to challenge.
The Societies Act sets out the basic procedural fairness rules applicable to member discipline or expulsion (in s.70):
Discipline and expulsion of member
70 (1)The bylaws of a society may provide for the discipline or expulsion, or both, of members.
(2) Unless the bylaws provide otherwise, a member of a society may be disciplined or expelled by special resolution.
(3) Before a member of a society is disciplined or expelled under subsection (2) or the bylaws, the society must
(a) send to the member written notice of the proposed discipline or expulsion, including reasons, and
(b) give the member a reasonable opportunity to make representations to the society respecting the proposed discipline or expulsion.
At a minimum, the society:
1) must have a valid reason for disciplining the member. Discipline based on a dislike of someone’s personality, desire or lack of desire to be involved in the society, or reasons other than actual misconduct or misfeasance of some sort is arbitrary and will not stand.
2) should undertake a fact finding function and consideration of remedies. It is not enough to receive a complaint and act on it. There must be some kind of active consideration of the complaint, such as speaking to the complainant and validating that the incident occurred. It is also advisable to prepare a memo summarizing the complaint, take statements from other witnesses, etc. Some organizations use a judicial committee to investigate complaints to streamline this function. At this point, an assessment of the complaint and whether it is behaviour actually contravening a bylaw, purpose, or policy of the society should be undertaken. If it does not or it has nothing to do with membership (“Joe will only volunteer for events he enjoys” or “Bob talks too much at the AGM”) it is advisable to terminate the discipline process at this point and take action through compliance or another route.
3) must give a copy of the complaint to the member to be disciplined; must provide an outline of the discipline proposed; and must provide a chance to make submissions. This may or may not include an in-person hearing. It could be as simple as a written response. A reasonable time must be given to make submissions.
4) must actually consider the submissions. It cannot make its decision with a closed mind. If the decision is made by someone other than the membership (the Board, a judicial committee, etc), written reasons should be provided.
5) must make an actual decision, rather than delaying a decision indefinitely.
6) there is no requirement for an appeal, but some organizations have an appeal process, either to the board, membership, or arbitration.
Photo by Ian Brown used under a Creative Commons license. No changes were made to this image.
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Societies in BC may have alternative directors, provided the bylaws set out the process for appointment/election. Unlike other corporate statutes, there is no restriction in BC in using such directors. Unlike a de facto director, who exercises the powers of a director on his or her own account and is deemed to be a director under corporate / societies legislative provisions, an alternate director is an individual, appointed under a power in articles, to exercise the power of a director when the director is absent.
Director voting by proxy
In general, the stance from English corporate law is that directors cannot vote by proxy as they are unable to delegate their individual fiduciary duty to others. They may delegate their powers as permitted to committees of directors or by way of transfers of power until corporate articles (or bylaws, in the case of a society). They may not, on a meeting by meeting basis, assign those powers to other individuals by way of proxy, which is not contemplated in corporate (or societies) legislation. An attempt to do this was called “absurd” in Re Portuguese Consolidated Copper Mines Co. [1890] 45 Ch 16 (Trial Decision).
Shareholders and members may vote by proxy, subject to articles or bylaws, as they do not owe the corporation a fiduciary duty and may delegate expressly under the Business Corporations Act (BC) or the Societies Act (BC).
What’s the difference between an alternative director and a director voting by proxy?
An alternative director structure is expressly set out in the corporate articles, or in the case of a society, the bylaws. It should allow for appointment/election; acceptance of the position; that notices of meetings must expressly be sent to the alternate; that the alternate may sign a consent resolution; whether the appointment/election can be revoked by the primary director; matters delegated; qualifications; reimbursement of expenses and remuneration; and end of the alternative directors term, whether by resignation, death, disqualification or otherwise. It should also expressly set out whether the alternate director, if also a director in his or her own right, may vote twice at directors’ meetings (typically, yes — once for the absent director and once under his or her own commission).
A director voting by proxy, on the other hand, is a meeting-by-meeting assignment of voting rights. This is prohibited by Re Portuguese Consolidated, absent a provision in the articles permitting it (which seems like a bad idea).
How do we know alternative directors are permitted?
There are few good sources in the societies context that discuss this. We can borrow principles from general corporate law, which assume that alternative directors (unlike proxies) have always been acceptable. For example, the BC Continuing Legal Education Society of BC (CLEBC) model corporate articles include provisions on appointing alternate directors, though the Business Corporations Act (BC) is silent on the ability to do this. Multiple cases also discuss actions taken by alternate directors and their appointment, without challenging the ability of a corporation to actually use such a structure.
The model Articles from CLEBC include a detailed structure and I would recommend these to individuals looking to use alternative directors. CLEBC access is available through most Courthouse Libraries in BC.
Cases which discuss this use of alternative directors are also helpful to understand the structure:
16.4 A Director may, and the Secretary or an Assistant Secretary upon request of a Director shall, call a meeting of the Board at any time. Reasonable notice of such meeting specifying the place, day and hour of such meeting shall be given by mail, postage prepaid, addressed to each of the Directors and alternate Directors at his address as it appears on the books of the Company or by leaving it at his usual business or residential address or by telephone, telegram, telex, or any method of transmitting legibly recorded messages. It shall not be necessary to give notice of a meeting of Directors to any Director of alternate Director (i) who is at the time not in the Province of British Columbia or (ii) if such meeting is to be held immediately following a general meeting at which such Director shall have been elected or is the meeting of Directors at which such Director is appointed.
16.5 Any Director of the Company may file with the Secretary a document executed by him waiving notice of any past, present or future meeting or meetings of the Directors being, or required to have been, sent to him and may at any time withdraw such waiver with respect to meetings held thereafter. After filing such waiver with respect to future meetings and until such waiver is withdrawn no notice need be given to such Director and, unless the Director otherwise requires in writing to the Secretary, to his alternate Director of any meeting or Directors and all meetings of the Directors so held shall be deemed not to be improperly called or constituted by reason of notice not having been given to such Director or alternate Director.
77. A director whose permanent place of residence is outside of the Province of British Columbia, or who is about to leave, or is temporarily outside of the said Province, or who is ill, of which fact or facts he alone shall determine, may appoint as an alternate director during his absence or residence outside of British Columbia, or illness, any person whether a member or director of the Company or not, and such appointment shall have effect until revoked and such appointee whilst he holds office as an alternate director shall be entitled to notice of meetings of the directors and to attend and vote thereat accordingly and, he shall, if present, be included in the count for a quorum and, if he be a director, he shall be entitled to two votes, one as a director and another as alternate director, but he shall ipso facto vacate office if and when the appointor vacates office as a director or removes the appointee from office and any appointment and removal under this clause shall be effected by notice, which may be in writing under the hand of the director making the same or may be made by telegram or cable.
78. And notwithstanding anything in these Articles contained relating to resolutions by the directors, a resolution in writing signed by all the directors for the time being in British Columbia, or their appointees as provided in Paragraph 77 hereof, shall be as valid and effectual as if it had been passed at a meeting of the directors duly called and constituted and such resolution shall be entered in the minute book of the Company.
What about the Canada Not-for-Profit Corporations Act (Canada)?
We can also look to other similar corporate legislation, such as the Canada Not-for-Profit Corporations Act. Unlike the Societies Act (BC), the Canada Not-for-Profit Corporations Act, SC 2009, c 23 expressly prohibits alternate directors:
No Alternate Directors
126 (3) No person shall act for an absent director at a meeting of directors.
Suppléance
126 (3) Nul ne peut agir à une réunion du conseil d’administration à la place d’un administrateur absent.
The Societies Act contains no such limitation.
When are alternative directors typically used?
Alternative directors are typically used in special act corporation structures or in local government, where individual appointees or elected officials are anticipated to have many duties and may not be able to attend specific meetings, but have trusted staff or other elected officials they may send instead. They may also be used where an organization (such as a corporation or a partnership) appoints individuals to hold a specific voting mix, and the individuals must split duties due to other commitments.
Are they a good idea?
This depends on how you want your society structured and whether your society wants the alternative director to be appointed or elected. If the members of the society are all corporations or local governments who appoint a director and an alternate director representing their interests, it is likely a good idea to have them; if the membership are individuals (e.g. a sports club), and it is not anticipated directors will often miss meetings, or if director positions come with other responsibilities, then they are likely unnecessary.
How do I change my bylaws to allow for alternative directors?
After deciding on appropriate wording and workshopping the language with directors and members, the society’s board of directors can either schedule an annual or special general meeting of the members and give notice to members, directors, and the auditor (if any) of the revised text of the bylaws, along with the example special resolution to modify the bylaws. On a special resolution vote (a two-third majority, subject to what the society bylaws say) the society may adopt the new language. Note that the language cannot be changed at the meeting itself, the subject of another post on this site.
Alternatively, if the society is closely held (meaning it has a small membership), it may be easiest for the members may unanimously consent in writing to the changes which is acceptable as a special resolution. If the members wish to make the change, they may either make a members’ proposal or ask that it be placed on the agenda of an upcoming annual general meeting.
Image courtesy of Elvind Lindseth, via a Creative Commons license. No alterations were made to this image.
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WHEN DOES THIS COME UP?
This typically comes up when there is an individual who is stuck on visitor status, either while awaiting their spousal or common-law open work permit, while waiting for a program of study to start, or just while they are in Canada for a lengthy vacation. Such individuals have “visitor” status, which allows them to remain in Canada provided they do not engage in “work”: an activity for which wages or commissions are paid, or that is in “direct competition” with Canadian citizens or permanent residents.
This captures both paid and unpaid work, or work where an honorarium is given in exchange for services. It captures agreements to pay in future, as well as capturing activities that a Canadian or permanent resident could perform for wages, but which are being performed by a volunteer (e.g. such as an unpaid bookkeeper position, or an unpaid reporter position for a newsletter — even though they are unpaid, it is still an entry into the labour market and the actual work should be paid). It also captures unpaid employment undertaken for the purpose of obtaining work experience, such as an internship or practicum normally done by a student.
This issue affects guest speakers, clergy and religious workers, and workers performing charitable functions, such as volunteering to build houses for the homeless or perform project work for a religious organization.
WHAT ARE THE CONSEQUENCES?
Organizations that employ persons without verifying their authorization to work may be charged with an offence under s.124(1)(c) of the Immigration and Refugee Protection Act: employing a foreign national in a capacity in which the foreign national is not authorized to be employed, with punishments up to $50,000 and two years in prison. The foreign national can receive a five year ban from Canada, or if they have a valid study or work permit but they are working outside its terms, a six month ban.
The requirement on the non-profit is to exercise due diligence as to whether or not the individual is authorized to “work” or volunteer in Canada. This post seeks to outline some circumstances where work or volunteer activities are acceptable, but note that it is not legal advice and is no substitute for the verification of an employee or volunteer’s ability to work in Canada.
THE GENERAL RULE
The general rule is that visitors to Canada cannot work without a work permit, an authorization issued by Immigration, Refugees and Citizenship Canada (formerly Citizenship and Immigration Canada). Work permits are difficult to obtain in many situations, or require wages to be paid, something many non-profits and charities either cannot afford or don’t want the administrative hassle of organizing.
WHEN IS A VOLUNTEER NOT CONSIDERED “WORKING”?
Some occupations, however are work permit exempt; as are activities performed by visitors which do not have the characteristics of “work”.
The following activities have been found not to be “work” for the purposes of Canadian immigration law:
Far more activities have been found to be work, such as:
WHAT ARE YOUR OPTIONS?
In general, appropriate volunteer tasks for visitors have some of the following qualities:
WHAT ABOUT WORK PERMIT EXEMPTIONS?
Clergy, which include members of a religious order preaching doctrine, are work permit exempt. Commercial speakers and guest lecturers are work permit exempt. In general, these only apply to short-entry periods. Directors and members who are coming into Canada for meetings but are not entering into the day to day work of the organization are work permit exempt. Judges of competitions (sports, fairs, etc.) are also work permit exempt. A full list is available online.
WHAT ABOUT CLOSED WORK PERMITS FOR THE NON-PROFIT, CHARITY?
Charitable and Religious Workers can obtain work permits, which allow them to work for pay and for free. IRCC guidance provides the following useful definitions as to who is a “volunteer” and who is a “charitable” worker:
A volunteer worker, whose activity is incidental to their main purpose for entering Canada and does not meet the definition of work, does not require a work permit (e.g., being a Big Brother or Big Sister to a child, being on the telephone line at a crisis centre, canvassing for donations). A charitable worker usually takes a position involving an activity that meets the definition of work and requires a work permit because they are participating in a competitive activity or are being paid wages (e.g., group home worker, carpenter for Habitat for Humanity).
Charitable work is that which can be tied to a head of charity: advancement of education or religion; relief of poverty; and other purposes beneficial to the community. Border services officers will consider the specific duties performed by the foreign national, based on a list of factors in IRCC guidance.
Religious work should reflect a particular religious objective, such as providing religious instruction or promoting a particular faith. It is not a requirement that the applicant be a member of the faith of the particular religious institution. The work should involve advancing the spiritual teachings of a religious faith as well as maintaining the doctrines and spiritual observances on which those teachings are based.
Unpaid positions are eligible for the Employer Compliance Filing Fee exemption (this is an online filing required for an employer to hire a foreign national and obtain a work permit). Charitable and religious workers may be paid but are not fee exempt. If they intend to apply for permanent residence in future based on the work experience, note that they must be paid under the current law for the Canadian work to count towards their Express Entry or other scores. Consult an immigration lawyer or regulated Canadian immigration consultant for more information.
WHAT ABOUT STUDENTS, YOUTH AND WORKERS?
Students. This is less of an issue for students with study permits. Provided the student is in full-time studies, they may work up to 20 hours per week off campus, and if they are on a study period break (such as summer), they may work full-time. If the organization is based on campus (such as an inter-faith chapel, club, student radio station, or newspaper), there is no permit required.
Youth often come to Canada either on a Working Holiday (which grants them an open work permit) or on a Young Professional or Co-op program. It depends on their nationality as to what programs are available. A full list is available online. For Working Holiday, typically it is under 30 and a lottery is held to determine who can apply. For Young Professional and Co-op, eligibility is dependent on a job offer which requires an Employer Compliance Filing.
Workers with open work permits also have less to worry about. A worker with an open work permit can do any volunteer task, provided it is not “healthcare” oriented which requires a medical exam.
Note that a worker with a closed work permit (not for the charity or non-profit) can volunteer in a non-“work” capacity as a visitor would.
WHAT ABOUT SPOUSES / COMMON-LAW PARTNERS?
Spouses and common-law partners of those foreign nationals with work or study permits may be eligible for an open work permit, provided their spouse or common-law partner has at least six months of validity on their permit and depending on the profession of their spouse or common-law partner, if a worker.
Spouses and common-law partners who are members of the in-Canada family class application stream may be eligible for an open work permit, provided they have submitted a complete application for permanent residence and a complete sponsorship application. Information is available online.
Photo by Chris Higgins used under a Creative Commons license. No changes were made to this image.
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