Pruner v. Ottawa Hunt and Golf Club Ltd., 2015 ONCA 609

• Judge: Simmons, Epstein and Pardu, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: May 25, 2015
• Jurisdiction: Ontario
• Citations: 2015 ONCA 609;(2015), 339 O.A.C. 79 (CA)

Pruner v. Ottawa Hunt & Golf Club (2015), 339 O.A.C. 79 (CA)

MLB headnote and full text

Temp. Cite: [2015] O.A.C. TBEd. SE.008

Joseph Pruner (applicant/appellant) v. Ottawa Hunt and Golf Club Limited (respondent/respondent)

(C59707; 2015 ONCA 609)

Indexed As: Pruner v. Ottawa Hunt and Golf Club Ltd.

Ontario Court of Appeal

(sitting as Divisional Court)

Simmons, Epstein and Pardu, JJ.A.

September 14, 2015.

Summary:

Pruner was a "Fully Privileged Golfing" member who held a Class B voting share. He wished to transfer to a "Senior Social" member, but retain his share. The golf club's board of directors denied the transfer request. Instead, the board adopted a policy that a member wishing to transfer from a permanent golfing category to a social category had to resign (cancelling their Class B share), then reapply for membership in the new category. Pruner applied for an order that the board accept his transfer, arguing that the newly-adopted policy constituted a variation or restriction of the rights attached to his Class B share. He argued that the Corporations Act applied and required the board to issue supplementary letters patent following a shareholder vote.

The Ontario Superior Court dismissed the application, finding that the policy fell within the board's jurisdiction and was reasonable under the business judgment rule. Pruner appealed.

The Ontario Court of Appeal, sitting as a panel of the Divisional Court, dismissed the appeal. The court rejected the submission that the policy was ultra vires the board because it varied or restricted the rights attached to the Class B voting shares. There was therefore no need for a shareholder vote and supplementary letters patent. It was reasonable for the board to adopt a policy that would prevent members with the least at stake in the golf club's affairs (members other than in the three permanent golfing categories) from making decisions affecting the golf club's future.

Company Law - Topic 6590

Nonprofit corporations - Rights of members and interested persons - Shares (incl. cancellation) - Pruner was a "Fully Privileged Golfing" member who held a Class B voting share - Only permanent golfing members in three categories (those who paid the most dues) could hold Class B shares - Pruner wished to transfer to a "Senior Social" member, but retain his share - The golf club's board of directors denied the transfer request - Instead, the board adopted a policy that a member wishing to transfer from a permanent golfing category to a social category had to resign (cancelling their Class B share), then reapply for membership in the new category - Pruner applied for an order that the board accept his transfer, arguing that the newly-adopted policy constituted a variation or restriction of the rights attached to his Class B share - He argued that the Corporations Act applied and required the board to issue supplementary letters patent following a shareholder vote - The trial judge dismissed the application, finding that the policy fell within the board's jurisdiction and was reasonable under the business judgment rule - The Ontario Court of Appeal, sitting as a panel of the Divisional Court, dismissed Pruner's appeal - The court rejected the submission that the policy was ultra vires the board because it varied or restricted the rights attached to the Class B voting shares - There was therefore no need for a shareholder vote and supplementary letters patent - It was reasonable for the board to adopt a policy that would prevent members with the least at stake in the golf club's affairs (members other than in the three permanent golfing categories) from making decisions affecting the golf club's future - See paragraphs 1 to 33.

Company Law - Topic 9730

Actions against corporations and directors - Practice - Appeals - Pruner was a "Fully Privileged Golfing" member who held a Class B voting share - Only permanent golfing members in three categories (those who paid the most dues) could hold Class B shares - Pruner wished to transfer to a "Senior Social" member, but retain his share - The golf club's board of directors denied the transfer request - Instead, the board adopted a policy that a member wishing to transfer from a permanent golfing category to a social category had to resign (cancelling their Class B share), then reapply for membership in the new category - Pruner applied for an order that the board accept his transfer, arguing that the newly-adopted policy constituted a variation or restriction of the rights attached to his Class B share - He argued that the Corporations Act applied and required the board to issue supplementary letters patent following a shareholder vote - The trial judge dismissed the application - Pruner appealed to the Court of Appeal - After the appeal was heard, a jurisdictional issue arose as to whether the decision appealed from "was from any order made by a court under this Act [Corporations Act]" - If so, the appeal should have been to the Divisional Court - The Ontario Court of Appeal held that the trial judge's order was made under the Act - Accordingly, the appeal should have been to the Divisional Court - To avoid the expense and inconvenience of rearguing the appeal before the Divisional Court, the remedy was to designate the panel of the Court of Appeal as a panel of the Divisional Court for the purposes of this appeal - See paragraphs 34 to 54.

Cases Noticed:

Amaranth L.L.C. v. Counsel Corp. (2004), 186 O.A.C. 395; 71 O.R.(3d) 258 (C.A.), refd to. [para. 40].

Ontario Securities Commission et al. v. McLaughlin et al. (2009), 248 O.A.C. 54; 2009 ONCA 280, refd to. [para. 42].

Rexdale Singh Sabha Religious Centre v. Chattha, 2006 CanLII 39456 (Ont. C.A.), refd to. [para. 51].

Lawrence v. Toronto Humane Society, [2006] O.A.C. Uned. 479; 2006 CanLII 20224 (C.A.), refd to. [para. 51].

Smith et al. v. Toronto Police Association (2008), 234 O.A.C. 1; 2008 ONCA 5, refd to. [para. 51].

Villa Verde L.M. Masonry Ltd. v. Pier One Masonry Inc. et al. (2001), 144 O.A.C. 136; 54 O.R.(3d) 76 (C.A.), refd to. [para. 53].

Authors and Works Noticed:

Carter, Terrance S., and Man, Theresa L.M., Share Capital Social Clubs ans NPOs: Issues to Consider, Ontario Bar Association Charitable and Not-For-Profit conference (October 27, 2004), online: http://www.carters.ca/pub/article/charity/2004/tlmtsc1027.pdf, p. 2 [para. 8, footnote 1].

Counsel:

Craig M. Bater, for the appellant;

R. Aaron Rubinoff and Emily S.S. Rahn, for the respondent.

This appeal was heard on May 25, 2015, before Simmons, Epstein and Pardu, JJ.A., of the Ontario Court of Appeal, sitting as a Divisional Court. Pardu, J.A., delivered the following judgment on September 14, 2015.