In the 2016 Ontario Superior Court decision, Jacobs v Ontario Medical Assn. (2016 ONSC 4977) ("Jacobs"), the Court used its jurisdiction governed under the Ontario Corporations Act (R.S.O. 1990, c. C.3) to intervene and supervise the governance of an association. The decision reinforces the need for not-for-profits to draft proxy forms that are clear and promote fair conduct at member meetings. The decision also discusses the Court's jurisdiction to appoint a new chair for a members' general meeting. While Canadian common law has permitted the exercise of such jurisdiction, Jacobs reinforces the principle that Courts will exercise such jurisdiction only cautiously.
Jacobs centers on a governance dispute between the Ontario Medical Association (the "OMA") and various members of the OMA. The Ministry of Health ("MOH") had negotiated a physician services agreement ("PSA") with the OMA. The PSA, which set out the physicians' fees that were to be paid by the MOH, had expired. The dispute relates to the conduct of a members' general meeting to ratify the PSA.
The Court ruled on multiple items relating to the dispute. First, the Court decided that the notice of meeting did not contravene the OMA's by-laws. Second, the Court denied the members' request for a membership list, which contained the members' personal information (e.g. phone numbers), since there was no statutory obligation on the OMA to provide such information. Third, the Court did not use its jurisdiction to appoint a new chair for the members' general meeting due to prior precedent dictating that such jurisdiction should be exercised sparingly. Finally, the Court did decide to use its discretion to order a revision of the proxy form circulated for the members' general meeting.
The bulk of the Court's analysis centered on the request for a new proxy form. The proxy covered three resolutions, and contained a recommendation to vote "For" the resolution ratifying the PSA. However, no recommendations were given for the other two resolutions. The Court found that "the current proxy is likely to compromise the fair conduct of the meeting at which the proxyholders will vote because by providing instructions for only one of the resolutions to be addressed at the meeting it provokes a controversy about how the voting should be conducted and ordered."
The Court referred to the discretion given to it under s. 297 of the Ontario Corporations Act and found that when a meeting that cannot be fairly conducted, then, using the language of s. 297, "it is impracticable to conduct the meeting in the manner prescribed by the by-laws and the court may order a meeting to be conducted in such manner as the court thinks fit." In ordering a revision of the proxy form the Court emphasised the significance of maintaining the integrity of the proxy system, stating, "maintaining the integrity of the proxy system is particularly important in the immediate case where the exercise of the members of their democratic rights, voting rights, and rights of the OMA will affect the entire population of Ontario."
Jacobs highlights the active role courts will take in supervising the governance of not-for-profits. In particular, the case emphasises the significance of clearly drafted and fair proxy forms that allow proxyholders to effectively exercise their voting rights at members' meetings.