The oppression remedy seeks to protect members from unfair actions taken by a society, its members, or its directors. Outside a request to wind-up a society, the new Societies Act brings in a wider and more accessible oppression remedy which borrows from corporate law but does not exactly reproduce it.
A member of a society may apply to court for an order on the grounds that (s.102, Societies Act):
- the society’s activities are being or were conducted, or the directors are executing their powers, in a manner oppressive to the member and others; or
- an act of the society was done or is threatened, or a resolution of the members or directors was passed or proposed, that is unfairly prejudicial to the member and others.
This is what is often referred to as the “oppression remedy.” It provides powers to the BC Supreme Court to rectify unfair conduct that, though it may be legal, unduly disregards or unfairly treats one or more members. Though it is borrowed from corporate law, it is not an exact duplication. For example, most corporate law statutes allow anyone who the court determines appropriate to make a claim for oppression, whereas the Societies Act only allows a member to do this.
The Societies Act White Paper refers to an earlier version of this remedy, which allowed for claims by any interested person, not just members:
This section gives members, usually representing the voice of the minority, the right to go to court if they think they are oppressed or have been treated unfairly by the society, its directors or other members. The court has a wide selection of possible orders to remedy the situation — everything from directing the society’s activities to ordering the society to liquidate and dissolve. It is the same remedy as that provided to shareholders under the [Business Corporations Act], and was recommended by the British Columbia Law Institute in its 2008 Report.
Concerns have been raised that the oppression remedy may not be appropriate in the non-profit context, given that oppression is a remedy designed to protect minority interests which don’t arise in a one member/one vote context. Moreover, members of societies, unlike shareholders in companies, usually do not have direct financial interests in society decisions.
Some suggest that even if there is a need for such a remedy, it should not be available where the directors are acting in furtherance of the society’s purposes. This type of limitation would recognize that a society, in fulfilling its purposes, may routinely have to prefer some interests over others, or apply the society’s funds for one purpose over another. This limitation could severely restrict the usefulness of the remedy, and therefore is not proposed for the new Act.
The final version only allows for claims by members, not any interested person.
Few cases consider the scope of the oppression remedy under the former Society Act. A recent case which considers whether a wide-variety of member and director actions in an application for winding-up are “oppressive” is Lee v Lee’s Benevolent Assn. of Canada, 2007 BCSC 794 [Lee’s].
In Lee’s, numerous bylaw changes were made by the membership which restricted the ability of individuals to apply for membership, limited the geographic location of annual meetings, limited how many proxy votes an individual could hold (from unlimited to one), restricted who may be qualified to be an officer, and made other major changes. As these were passed directly by the membership, these were held by the BC Supreme Court not to be unfairly prejudicial or oppressive, as these fell within the powers of the members generally.
In coming to its conclusion, the BC Supreme Court considered Senez c. Montreal Real Estate Board, [1980] 2 S.C.R. 555 (SCC) [Senez], wherein the Supreme Court of Canada stated the following fundamental principles of societies law, adopted in Lee’s:
- By becoming a member of a society, an individual accepts its constitution and bylaws and undertakes to observe them;
- A member undertakes to comply with future bylaw and constitution changes, even if he or she disagrees. The recourse on disagreement is to generally resign — but by remaining, the member accepts the new bylaws.
By implication, this acts as an internal limit on the oppression remedy. For example, if members were to take an action which targeted a specific group (for example, removing voting rights from a specific identifiable group or removing membership) this may be considered unfairly prejudicial conduct. However, if members were to remove all voting rights, changing the organizational structure, this may not be considered unfairly prejudicial, as the membership makes the final decision on this change.
It is still up to the BC Supreme Court to interpret how this broader oppression remedy will be applied in practice, and how much of the general body of corporate oppression law will be incorporated in this analysis.
Photograph by +Jethro+ under a Creative Commons license.
