An application by two members of the Islamic Association of Saskatchewan (Saskatoon) Inc. (IAS) seeking to reinstate a terminated Imam has been dismissed by the Court of King’s Bench for Saskatchewan. It concluded that the board of directors was not legally obligated to implement a membership resolution calling for his reinstatement.
The dispute arose after the IAS board terminated its Imam — I.S. — in 2022 over allegations of theft and misappropriation of property. The termination sparked internal conflicts within the IAS membership, leading to multiple court proceedings and a divide among members regarding board governance.
At the IAS annual general meeting (AGM) on Dec. 18, 2023, the board presented a resolution to the members, offering two options regarding I.S.’s employment:
- Agree that I.S.’s employment has been terminated and that any future employment or financial proceedings related to his case should be confined to the legal system.
- Support the reinstatement of I.S. with repayment of all his lost privileges and a formal apology.
Members vote for reinstatement
The majority of members — 481 to 356 — voted in favour of reinstating I.S. One of the applicants, M.G., stated that “the lack of Imam I.S.’s spiritual wisdom and uplifting presence at the Mosque has left a significant void in my day-to-day prayers, and has negatively affected my well-being as a Muslim person.” He believed the board would act on the resolution and reinstate I.S.
However, despite entering negotiations with I.S., the board did not reach an agreement to reinstate him. I.S. had also commenced a wrongful dismissal lawsuit against the IAS in June 2023. The board cited the ongoing legal proceedings and complexities arising from the termination as reasons for not reinstating him immediately.
The applicants argued that the board’s failure to implement the resolution was oppressive and unfairly disregarded their interests as members, seeking remedies under The Non-profit Corporations Act, 2022. They contended that the resolution was legally binding and that the board was required to act upon it.
Board, not members, dictate decisions: Court
Justice D.G. Gerecke dismissed the application, stating that the applicants failed to establish a reasonable expectation that the board would implement the resolution. “The applicants have failed to establish the existence of a reasonable expectation that the board would implement the resolution,” Justice Gerecke wrote. He emphasized that matters concerning employment decisions are within the sole authority of the board of directors and that members cannot dictate such decisions.
The court referred to corporate law principles, noting that “the separation of roles and powers, where directors have full and exclusive responsibility for managing a corporation, has existed for over 100 years and sources back to English law.” Justice Gerecke highlighted that the IAS is governed by The Non-profit Corporations Act, 2022, which assigns the power to manage to the directors, subject only to the Act, the articles, or a unanimous member agreement — none of which altered the board’s authority in this case.
Bylaw in question
The applicants relied on a bylaw stating that the board “shall be responsible for implementing the resolutions passed at any general meeting and shall manage the affairs of the Association between general meetings.” However, the court found that bylaws cannot override the statutory allocation of authority to the directors. “I determine that the bylaws were incapable of re-allocating authority as the applicants suggest,” Justice Gerecke stated.
The court also addressed the applicants’ argument that past practice established a reasonable expectation, as a previous board had reinstated I.S. following a similar resolution in October 2022. Justice Gerecke found this unpersuasive, noting that a single prior event does not establish a binding past practice capable of generating reasonable expectations.
Furthermore, the court dismissed the notion that the board’s communications leading up to the AGM created a binding obligation to implement the resolution. The board had expressed gratitude for the upcoming vote and committed to accepting the community’s verdict “with open hearts,” but the court interpreted this as a commitment to consider the members’ views rather than a legal obligation to act upon them.
Injunction
In addressing the request for an injunction to compel the board to reinstate I.S., the court concluded that such a remedy was inappropriate. “Only unlawful conduct can be enjoined,” Justice Gerecke wrote. “While the board acted imprudently in inviting members to vote on the resolution, the resolution did not generate a legal obligation for the board to reinstate I.S. and it was not unlawful for the board to decline to reinstate him.”
The court acknowledged the complexities faced by the board, including the ongoing wrongful dismissal lawsuit filed by I.S. and the fact that a new Imam had been appointed. Justice Gerecke noted that the board was attempting to navigate conflicting interests within the membership responsibly.
“The board has made serious errors in judgment, but the court is left with the impression that they are making an earnest effort,” he stated. The decision emphasizes the legal principle that directors are responsible for managing the affairs of a corporation and are not bound by resolutions from members that intrude upon managerial decisions.
Justice Gerecke left open the possibility for the applicants to pursue a differently framed expectation, particularly concerning the pairing of the confidence vote with the resolution at the AGM. He noted that the combination might have “tainted the outcome of the confidence vote,” potentially affecting whether the board was retained.
“If the applicants wish to pursue a remedy relating to this discussion, in the interests of judicial economy I am prepared to hear that application if it is served and filed within 30 days of the date of this fiat,” he stated.
In conclusion, the court’s decision affirms that the board of the IAS acted within its legal rights in not reinstating I.S., despite the membership vote. The applicants’ expectations, while sincere, were not deemed reasonable under the governing corporate law principles.
For more information, see Ghani v Islamic Association of Saskatchewan (Saskatoon) Inc, 2024 SKKB 186 (CanLII).
