Recent Court cases have reinforced my belief in the importance of the wording of governing documents of charities and not-for-profits organizations. Whether it is trying to ascertain what the members have agreed to in the rules of membership, the specific procedures contained in bylaws or the actual wording of the often outdated charitable purposes of a registered charity, the words used (or not used) are in focus when a dispute is put in front of the Courts.
I don’t know if this is a trend but it does seem that there are more cases in front of our Courts that come from disputes arising out of voluntary sector organizations that end up with a literal interpretation of the documents put in front of the Court. Consider the brief discussion below highlighting some of the most recent cases and take note of this for your own information. Transport it to an organization you are familiar with to see if anything needs to be fixed before those documents end up in Court for a literal interpretation.
First, there is the much written about the case of Highwood Congregation of Jehovah’s Witnesses (Judicial Committee) v. Wall. This case has been written about in many different contexts but what I find most interesting is the Court’s confirmation that even in the case of a simple unincorporated group of people who have come together for a common interest, there can be rules and breaking these rules comes with consequences. In this case, the Court noted the rule was as follows:
To become a member of the Congregation, a person must be baptized and must satisfy the elders that he or she possesses a sufficient understanding of relevant scriptural teachings and is living according to accepted standards of conduct and morality. Where a member deviates from these scriptural standards, elders meet and encourage the member to repent. If the member persists in the behaviour, he or she is asked to appear before a committee of at least three elders of the Congregation.
The committee proceedings are not adversarial, but are meant to restore the member to the Congregation. If the elders determine that the member does not exhibit genuine repentance for his or her sins, the member is “disfellowshipped” from the Congregation. Disfellowshipped members may still attend congregational meetings, but within the Congregation they may speak only to their immediate family and limit discussions to non-spiritual matters.
Randy Wall became a member of the Congregation in 1980. He remained a member of the Congregation until he was disfellowshipped by the Judicial Committee.”
When Wall was disfellowshipped the Court proceedings began. There are other points of law that are considered in this case that aren’t relevant to this article but it is an interesting read for anyone involved in an unincorporated association that has rules. These rules should be read because they will be found to be binding on you. The Court’s conclusion was “In the end, religious groups are free to determine their own membership and rules; courts will not intervene in such matters save where it is necessary to resolve an underlying legal dispute.” The key take away from this case is that the Courts will read the rules that you signed up for when you become a member and if you breach the rules and the organization takes action against you then the Courts are not going to interfere in that action that has been taken against you. There were all sorts of other nuances in this case and other discussions about judicial fairness, religious beliefs, etc. but at the end of the day, the plain literal interpretation of the language reigned supreme in our Supreme Court.
Secondly, there is the case of Dhillon v. Sikh Society of Calgary where a bylaw provision was put in front of the Court for interpretation. Without getting into the facts of the case, for the purpose of this article it is most interesting to note that the bylaws of the Society used the word “charge” in a different way than its ordinary legal meaning. The Court opined as to the legal effect of the bylaw and quoted the Societies Act.
As to the legal effect of a bylaw such as this, we note s 17 of the Societies Act, RSA 2000 c S-14:
Powers of society
17(1) A society may acquire and take by purchase, donation, devise or otherwise all kinds of real estate and personal property, and may sell, exchange, mortgage, lease, let, improve and develop it, and may erect and maintain any necessary buildings.
(2) The funds and property of the society shall be used and dealt with for its legitimate objects only and in accordance with its bylaws.
Put simply, the Legislature states that a society is empowered to set its own rules for dispositions of property of a society. The members of a society may reasonably expect the governors of a society to comply with those rules. As such, the rules reflect the consensus view of the members of a society as to what limits should exist under the bylaws. They are akin to contractual terms. Here, the same propositions apply.”
This decision should not be surprising considering the word bylaw in its ordinary dictionary.com meaning means “a rule made by a company or society to control the actions of its members”. The Court in this case went so far as to suggest that the bylaws even had the power to change the legal meaning of a word for the needs of this Society. In this case, the meaning of the word that they were looking at was the word “charge”. So quite literally, the Court said the bylaws said what they said and used language suitable for this specific organization. So that was the way they were going to interpret the word “charge” in this particular case, not necessarily the usual legal meaning.
The third case of note involves a different kind of interpretation and no doubt we will be hearing more about it in Canada as legislative reform occurs or further appeals are taken through the Courts. Much has been already written about the recent Ontario Superior Court Case of Canada Without Poverty v. AG Canada, a constitutional challenge against the sections of the Income Tax Act that purport to limit political activities of a charitable organization. One interesting aspect of this case, potentially, is that the actual literal wording of the purposes of a registered charity will become more important as they are microscopically dissected by those who have a vested interest in whether or not a certain charity can undertake activities that are political in nature. For our purposes, the Court, in this case, found as follows:
As long as the advocacy is done in pursuit of the overall charitable purpose – for the Applicant, the relief of poverty – such “political activities” are charitable activities.
Accordingly, an organization such as the Applicant can spend “substantially all” of its resources on non-partisan public policy advocacy or communications aimed at changing hearts and minds with respect to poverty and its causes and remedies- “political activities”, in CRA’s view- and still be spending “substantially all” of its time on charitable activities as required by s.149.1(6.2).”
One takeaway from this case of interest to me is that a registered charity should not just embark upon on political activities with abandon without first doing some serious navel gazing to see if in fact the activities in question are related to their approved charitable purposes. It is not uncommon to find that some organizations have charitable purposes that they have forgotten about and due to mission drift, change in personnel or boards, or a general disregard for what their constitutional documents actually say, have embarked on a direction that is different from their originally approved one when they applied for charitable status. This might end in a flurry of charitable organizations looking at their charitable purposes or indeed attempting to change their charitable purposes to ones that can allow them to carry on the types of political activities that they want to pursue in their organization. As this case proceeds through any appeals it will be interesting to watch. It will also be interesting to watch the response of the Canada Revenue Agency Charities Directorate and for the issuance of any guidance, perhaps.
At the end of the day, however, the most important thing for any voluntary sector organization, incorporated or not, a registered charity or not, is that the time has come to sit down and review the rules, bylaws, purposes or any other kind of constitutional or constating document that applies to the organization. In any dispute where these documents are put in front of the Court, be aware that the wording may be interpreted on a literal basis. There may be no room for figurative interpretation so literal meanings should be well understood by everyone.
 Highwood Congregation of Jehovah’s Witnesses (Judicial Committee) v. Wall, 2018 SCC 26
 Dhillon v Sikh Society Calgary, 2018 ABCA 193
 Canada Without Poverty v. AG Canada, 2018 ONSC 4147