Ontario Superior Court Decision Underscores Importance Of Well-Drafted Bylaws For Not-For-Profit Corporations
In a recent case, Mississauga Majors Baseball Association v. Provincial Women’s Softball Association, the Ontario Superior Court considered whether the Provincial Women’s Softball Association (“PWSA”) were obligated to offer membership to the Mississauga Majors Baseball Association (“Majors”).
At question was a provision in PWSA’s bylaws, which stated any applicant for membership in PWSA will be offered membership if it meets certain prerequisites listed in the bylaws.
Majors had twice applied for membership in PWSA, but had their applications rejected both times despite meeting the criteria established in PWSA’s bylaws. As a result, the Majors sought a court order pursuant to Section 191 of the Not-for-Profit Corporations Act (Ontario) to compel PWSA to grant them admission on the following grounds:
- Majors had satisfied the membership criteria established in PWSA’s bylaws.
- The PWSA bylaws state any applicant shall be admitted into membership upon satisfying these criteria.
PWSA argued it had the discretionary power to assess applications for membership and thus was justified in denying Majors’ application for membership.
Ultimately, the court decided PWSA had not abided by its own bylaws, as the bylaws did not allow PWSA discretion to deny membership if the necessary criteria were met by an applicant. Therefore, the court decided that PWSA did not have legal authority to deny membership to Majors, and thus granted an order compelling PWSA to comply with its bylaws and offer membership.
This decision highlights the importance of not-for-profit corporations having bylaws that are well-written, unambiguous and consistent with the organization’s actual intended practices. Poorly drafted bylaws or other governing documents have the potential to cause significant issues. As this case illustrates, not-for-profit corporations cannot invent their own rules as they go. They must always adhere to their bylaws and other governing documents.
If your not-for-profit corporation needs help reviewing or rewriting its bylaws, we are here to help. Please feel free to contact me directly at 905-667-6419 or by email at mramsey@rossmcbride.com if you need assistance.
This article was originally published by The Hamilton Spectator.
