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Associations - Clubman's Veto. Polish Alliance of Association of Toronto Limited v. The Polish Alliance of Canada
In the case of Polish Alliance of Association of Toronto Limited v. The Polish Alliance of Canada (Ont CA, 2017) the relatively obscure prinipal of the 'clubman's veto' is considered:[9] .... He held that the “clubman’s veto” applied. Citing Wawrzyniak v. Jagiellicz (1998), 1988 CanLII 4528 (ON SC), 64 O.R. (2d) 81 (H.C.J.), at pp. 88-89, he explained this common law rule provides that with the approval of 100% of the members of an unincorporated association, the members can leave the association and take the property of the association with them.
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(1) Myers J. did not err in concluding that the clubman’s veto applied
[14] PAC does not take issue with Myers J.’s articulation of the common law rule sometimes called “the clubman’s veto”[1]. Rather, it renews its argument before Myers J., relying on Ahenakew v. MacKay (2004), 2004 CanLII 12397 (ON CA), 71 O.R. (3d) 130 (C.A.), that the clubman’s veto does not apply in these circumstances because PAC is incorporated under the Corporations Act, and it has supplanted the clubman’s veto.
[15] Nor does PAC dispute Myers J.’s finding that PAC’s constitution does not deal with how a branch can leave PAC. However, it says PAC’s by-laws must be amended with the approval of a 2/3 majority of PAC’s members to create a process for disaffiliation of the members of Branch 1- 7 and Branch 1-7 must then comply with any such process to leave PAC, with the Property.
[16] We reject this argument. In our view, Myers J. correctly determined that the clubman’s veto applied. The respondents – the then members of Branch 1-7, an unincorporated association – sought to leave that association and take with them the Property held in trust for the members from time to time of Branch 1-7. This case is very different from Ahenakew.
[17] In Ahenakew, this court concluded the unanimous consent of all members of the Progressive Conservative Party of Canada (the “PC Party”) was not required for the PC Party to merge with the Canadian Reform Conservative Alliance Party.
[18] Goudge J.A., writing for the court, reviewed this court’s earlier decision in Astgen v. Smith, 1969 CanLII 488 (ON CA), [1970] 1 O.R. 129 (C.A.). He explained that the majority in Astgen held that the common law recognized the voluntary association not as a legal entity, but as nothing more than a complex of contracts between each member and every other member. The majority held that something such as a merger with another voluntary association so fundamentally affects the contractual rights of each member that each member must consent to a termination of his or her existing set of contractual relations directly or through a procedure to which all members had agreed.
[19] In Ahenakew, this court held that the common law requirement of unanimous consent did not apply to the proposed merger involving the PC Party. The legal fiction that a voluntary association is simply a complex of contracts between all its members was inapplicable because the Canada Elections Act clothed the PC Party with legal status as a registered political party. And since this legal fiction was inapplicable, so too was the corollary requirement that unanimous consent of its members be obtained to a merger. Further, Parliament displaced the common law rule by including detailed provisions in the Canada Elections Act about what is necessary for the merger of two registered political parties.
[20] While PAC is incorporated under the Corporations Act, Branch 1-7 of PAC is an unincorporated voluntary association. Unlike in Ahenakew, there is no legislation that gives Branch 1-7 of PAC a legal status that would displace the legal construct identified in Astgen. And, unlike in Ahenakew, there is no statute that governs how the contractual relationship of all the members of Branch 1-7 with each other is to be terminated.
[21] As Myers J. summarized, at para. 23:While the clubman’s veto, like any common law principle, can be displaced by a clear statute as was found to be the case of political parties in Ahenakew, there is nothing in the Corporations Act or any regulatory scheme that regulate this situation…Nothing in the Corporations Act deals with the problem of how trust beneficiaries whose interests are defined with reference to their membership in an unincorporated branch of an incorporated entity can leave with their property.
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