Not So Fast: Contractual Rights As The Basis Of The Court’s Jurisdiction To Review The Treatment By Voluntary Associations Of Their Members – Corporate/Commercial Law

Bizar Male

For insights into the Court of Appeal’s
decision, check out our post
“Contractual
Rights as the Basis of the Court’s Jurisdiction to Review the
Treatment by Voluntary Associations of Their
Members”.

In Ethiopian Orthodox Tewahedo
Church of Canada St Mary Cathedral v Aga
, 2021 SCC 22

(“Aga“), the Supreme Court of Canada
revisited a court’s jurisdiction to intervene in the affairs of
voluntary associations, including religious organizations.

The Supreme Court previously held that jurisdiction in matters
of procedural fairness related to the decisions of voluntary
associations should only be granted when a legal right is present:
Highwood Congregation of
Jehovah’s Witnesses (Judicial Committee) v Wall
, 2018 SCC
26
(“Wall“). In Aga, the
Ontario Court of Appeal held that the existence of an
association’s constitution and bylaws establishes a contract,
thereby creating a legal right. On appeal, the Supreme Court
reversed the Court of Appeal’s decision. Rowe J., writing for a
unanimous Court, held that the mere presence of a voluntary
association’s governing written rules does not automatically
constitute a contract. A contract may be present, but this
is to be determined based on general contract law principles and an
intention to create legal relations.

Background

In Aga, the Plaintiffs were former members of the
congregation of the Ethiopian Orthodox Tewahedo Church of Canada
St. Mary Cathedral (the “Church“). While
the Church is a corporation, the congregation is an unincorporated
association governed by a constitution and bylaws that set rules
for its members and the organization.

In 2016, the Plaintiffs were part of a committee created to
investigate a movement within the Church. After its investigation,
the committee submitted a report with its findings to the
archbishop. He disagreed with the committee’s findings. The
Plaintiffs were dissatisfied with the archbishop’s decision
and, as a result, they were removed from the congregation.

The Plaintiffs sued the Church and members of its senior
leadership, claiming that their expulsion from the congregation is
null and void since it violated the principles of natural justice.
For example, they did not receive any details or opportunity to
respond to the claims against them. They also alleged that the
procedure used did not comply with the constitution and bylaws.

Decisions of the Lower Courts

The Defendants moved for summary judgment on the basis that the
court has no jurisdiction to interfere in their decisions since
they are a religious organization. The motion judge agreed, granted
the summary judgment, and dismissed the action. The motion judge
held that since there is no underlying legal right, the court
cannot intervene, and the constitution and bylaws are not
considered a contract since there was no intention to be bound by
its terms.

The decision was reversed on appeal. It set aside the order
granting summary judgment and returned the matter to the Superior
Court. The Court of Appeal held that there was a contract between
the parties:

Voluntary associations do not always have written constitutions
and by-laws. But when they do exist, they constitute a contract
setting out the rights and obligations of members and the
organization. whether or not a member has specific knowledge of or
expressly consents to the specific terms in the by-laws, becoming a
member of a voluntary association entails agreement to the terms of
the constitution and bylaws (Aga v Ethiopian Orthodox
Tewahedo Church of Canada
, 2020 ONCA 10
at paras 40,
43.)

(Check out our previous blog post about the ONCA decision here.)

The Defendants appealed, arguing that the Court of Appeal erred
by finding that there was a contract and, consequently, a genuine
issue requiring a trial.

Decision of the Supreme Court of Canada

Writing for the Court, Rowe J. – who also wrote the decision in
Wall – allowed the appeal and dismissed the action against
the Church and members of its senior leadership. He reiterated the
longstanding principle of contract law that an agreement is not
enough to form a contract. There must be an objective intention to
create contractual relations. Without more, constitutions and
bylaws are simply practical measures put in place to help an
association further their common goals.

Where a claim has a religious component to it, it does not
necessarily make the dispute non-justiciable and therefore
appropriate for summary judgment. Yet, generally, courts do not
have jurisdiction to intervene in the decisions of voluntary
associations unless some legal right is affected. Private rights
and statutory causes of action are considered legal and can ground
jurisdiction. Natural justice may be relevant to establish that
one’s legal right has been violated, but it alone cannot grant
a party standing. Thus, the court must consider whether the relief
sought against the voluntary association is the vindication of a
legal right.

Rowe J. held that a plaintiff could sue a voluntary organization
in contract law, but they must first prove that a contract exists.
In other words, the plaintiff is required to establish that there
was “an offer by one party accepted by the other with the
intention of creating a legal relationship, and supported by
consideration” (para 35). The intention is to be determined on
a reasonable person standard and whether the parties objectively
intended to be legally bound by the contact. In their analysis, the
courts may consider the relationship between the parties and the
interests at stake.

An objective intention to create legal relations in voluntary
associations is more likely to be present in matters related to
property and employment. In religious contexts, it is a little more
difficult to demonstrate this intention because obligations can be
construed as religious ones rather than legal ones. As such, the
finding of an objective intention is dependent on the facts of a
case. Also, membership in a voluntary organization with written
rules, such as constitutions or bylaws, does not automatically
create a legal right, and this alone will not guarantee court
intervention. When dealing with contracts or the existence of a web
of contracts, there must be an objective intention to create legal
relations.

Turning to the facts of Aga, the Court concluded that
the Plaintiffs failed to adduce evidence that there was an
objective intention to be bound by the Church’s constitution
and bylaws. The members of the congregation were not aware of the
bylaws when they became members. Even if the members committed to
pay membership fees and referred to the rules and regulations while
they were on a committee, there was no indication of an objective
intention to be contractually bound by their rules. Therefore, the
motion judge was correct in deciding there was no contract, and the
court has no jurisdiction.

Key Takeaways

The decision in Wall stands for the proposition that
voluntary associations’ decisions are immune from judicial
review, absent an underlying legal right. Aga clarifies
that even when an association is governed by written rules, courts
still cannot intervene in their decisions unless the parties
objectively intended to be bound by these terms by way of creating
contractual rights.

Aga is a reminder for members of voluntary
organizations to consider the constitutions and bylaws that govern
them. If they wish to be legally bound by the right and obligations
of an organization, then they must agree to the terms with the
intention to create a legal relationship. However, when you are a
member of a religious organization, obligations will likely be
considered religious ones that are non-legally binding. While a
voluntary organization’s written constitution and bylaws are
generally unenforceable, these organizations should still review
their practices and obligations to determine if any support an
intention to create contractual rights with their members.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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