The BC Government has passed legislation which will change how society disputes are handled. All societies, members, and non-profit partners should be aware of these changes.
On May 7, 2018, the Civil Resolution Tribunal Amendment Act passed third reading, with its changes to come into force by regulation at a future date. The Civil Resolution Tribunal (“CRT”) is effectively a new Small Claims court, where certain low-value disputes are downloaded to lawyers rather than judges, and parties must represent themselves without a lawyer, absent some exceptions. The majority of claims are to be considered by way of written submissions, with a judicial review being available to the BC Supreme Court in chambers if the tribunal member made an error of law, fact, or mixed fact and law.
The idea behind the CRT is laudable: make the process easy, fast and affordable for individuals for low-value or low-complexity claims, and get them out of the court system to free up judicial resources. The CRT to date has been used for smaller debt matters and strata claims. However, the new amendments make a number of changes, outlined in this Canadian Bar Association position paper and were developed and read without a detailed consultation period. You may have heard of these changes, particularly those which involve the Insurance Corporation of British Columbia and low-value motor vehicle claims.
One of the changes, almost as an after thought, is to send certain issues relating to member discipline, interpretation of society bylaws, and production of society records to the CRT rather than the BC Supreme Court, which previously had exclusive jurisdiction over such issues.
The concerns with this new jurisdiction are the following:
- There will be an increase in Societies Act claims. At present, Societies Act claims have to go to BC Supreme Court Chambers, meaning there are court costs (typically $1,500 or more to start) as a penalty for loss and legal fees associated with bringing such a claim as a petition (probably $2,500 to $7,500 or more depending on the lawyer and the nature of the hearing). This means most disputes are resolved early on through letter writing and negotiation, rather than heading straight to court. Now, most claims will go straight to the CRT with little or no costs consequences associated with them (whether or not the CRT has jurisdiction).
- There may be potentially incorrect precedent generated. Lawyers are not permitted, without special leave, meaning that complex societies legal issues may be left to lay-person interpretation, going before a tribunal with an incomplete legal record of Societies cases. Societies law is a mix of administrative and corporate (rather than than strata) law. I do not doubt that trained CRT members will do well with these files, however, the best way to inform a tribunal or court is to have a well drafted legal basis available. Without legal advice, parties may be left (or the tribunal member may be left) to research their own case law and may make significant errors, which are doomed to be repeated. Of course, this may also lead to ghost-written precedents by lawyers, provided to societies as backgrounders for independent claims.
- Danger of missing an issue or an incomplete record for appeal. Hearings are primarily in writing, with only a judicial review on patent unreasonableness available to the BC Supreme Court. This is not a fresh hearing before a judge. No new evidence may be introduced, and the appeal is on the record. Specific errors must be found in the decision; such errors must be determined to be “patently” unreasonable, not merely unreasonable, meaning there is potentially (though perhaps not practically) room for more error in the decision making process. This standard of review is too narrow for my liking.
- The jurisdiction is unclear. It is unclear which claims will be accepted by the tribunal. Under the proposed language, it would appear the tribunal has jurisdiction over something less than oppression and member discipline claims, but does not have jurisdiction over those explicitly. Viewing the provisions below, what does the tribunal have jurisdiction over? It would appear it has a very limited jurisdiction in relation to disputes that are not oppression (e.g. something less than unfair prejudicial or oppressive actions); small value actions by the society or against the society for debt or damages; and disputes regarding records (and likely the extent of disclosure) that do not follow the procedure for disclosure of records set out in the Societies Act. Is this then some sort of attempt to resolve disputes that would normally be dealt with internally, or where there was no court remedy available (e.g. such as where the contemplated action was not oppressive, but there was no formal process for dealing with it at the society)? We will see how the jurisprudence develops.
- Society resources will be stretched. Most voluntary organizations will not be equipped to deal with these claims, which appear to be able to be brought when even a perceived decision is brought. This is concerning, as representation (even student-at-law-representation) may be prohibited by the tribunal. I assume unbundled legal services will fill-in the gap, with claims being prepared by legal counsel in an almost cookie-cutter fashion, and then being argued by staff, as happens with insurance related claims now.
The relevant sections of the amending act are below:
Claims within jurisdiction of tribunal for society claims [To be inserted into the Civil Resolution Tribunal Act]
129 (1) Except as otherwise provided in section 113 [restricted authority of tribunal] or in this Division, the tribunal has jurisdiction in a dispute over a claim, in respect of the Societies Act, concerning one or more of the following:
(a) the interpretation or application of the Societies Act or a regulation, constitution or bylaw under that Act, including a request to inspect, or to receive a copy of, a record of a society;
(b) an action or threatened action by the society or its directors in relation to a member;
(c) a decision of the society or its directors in relation to a member.
(2) For the purposes of this Act, the tribunal is to be considered to have specialized expertise in respect of claims within the jurisdiction of the tribunal under this Division.
Who may request resolution by civil resolution tribunal [To be inserted into the Societies Act]
109.2 (1) A society, or a member of a society, may make a request under section 4 [asking the tribunal to resolve a claim] of the Civil Resolution Tribunal Act asking the civil resolution tribunal to resolve a dispute concerning a society claim.
(2) A person [NB: a non-member], other than a person referred to in subsection (1), who claims
(a) to be entitled, under section 24 [inspection of records] of this Act, to inspect a record of a society,
(b) to be entitled, under section 27 [copies of records] of this Act, to receive a copy of a record of a society, or
(c) to be entitled, under section 28 [copies of financial statements] of this Act, to receive a copy of a record of a society
may make a request under section 4 of the Civil Resolution Tribunal Act asking the civil resolution tribunal to resolve a dispute concerning a society claim that relates to the person inspecting or receiving a copy of the record.
(3) A person may make a request in accordance with subsection (1) or (2) whether or not the person has applied to the registrar for an order under section 107 [registrar or court may order access or copies] of this Act.
(4) Nothing in this section or the Civil Resolution Tribunal Act limits a person’s right to apply to the registrar for an order under section 107 of this Act.
(5) A request under section 4 of the Civil Resolution Tribunal Act may not be made with respect to any matter relating to the termination of membership in a society.
Certain claims are beyond the jurisdiction of the CRT.
Claims beyond jurisdiction of tribunal for society claims [To be inserted into the Civil Resolution Tribunal Act]
130 (1) The tribunal does not have jurisdiction under this Division in relation to a claim that may be dealt with, by the Supreme Court, under any of the following provisions of the Societies Act:
(a) the following provisions of Part 5 [Management]:
(i) section 44 (3) [persons qualified to be directors];
(ii) section 58 [validity of contracts];
(iii) section 59 [directors’ liability for money or other property distributed];
(iv) section 65 (2) [indemnification or payment prohibited];
(b) section 80 [powers of court respecting general meetings];
(c) Part 8 [Remedies]
[Note: As of this writing, Part 8 [Remedies] includes ss. 102 to 106, which include the oppression remedy for disputes between members and the society; derivative actions which allow interested individuals to bring claims on behalf of the society, when it can’t do so in its own name; compliance / restraining injunctions to force compliance with bylaws; court’s power to remedy irregularities in a society’s affairs (the most common court application); and indemnification/relief in legal proceedings; as well as ss. 107 to 109, disputes regarding records];
(d) the following provisions of Part 12 [Special Societies]:
(i) section 193 [altering constitution to become member-funded society];
(ii) section 194 [other restrictions on becoming member-funded society];
(iii) section 205 [injunction].
(2) The tribunal does not have jurisdiction under this Division in relation to a claim that is in respect of any of the following matters or provisions of the Societies Act:
(a) a matter relating to the termination of membership in the society;
(b) a matter relating to the liquidation, dissolution or restoration of a society, including under Part 10 [Liquidation, Dissolution and Restoration], except section 143 (1) (b) [duties of liquidator];
(c) Part 7 [Corporate Reorganizations];
(d) Part 9 [Audit].
(3) The tribunal does not have jurisdiction under this Division in relation to any of the following:
(a) a claim that is an appeal of a direction, decision, order, ruling or refusal of the registrar;
(b) a claim to which Part 5 [Resolving Disputes] or 5.1 [Administrative Penalties] of the Residential Tenancy Act applies or Part 6 [Resolving Disputes] or 6.1 [Administrative Penalties] of the Manufactured Home Park Tenancy Act applies;
(c) a claim to which all parties have agreed that the Arbitration Act will apply.