Two recent decisions of the Ontario Superior Court of Justice shed light on how courts will interpret the requirement under corporate legislation to furnish members with a membership list upon request.
Under the Ontario Corporations Act, any person may request from a corporation a list of its members, along with their addresses as shown on the books of the corporation. In order to obtain this information, the person making the request must file a statutory declaration swearing that they are requesting the information for purposes connected to the corporation and that they will not use the information for any other purpose. There are penalties for the misuse of member lists. Other corporate statutes contain similar provisions giving access to member registers. The purpose of these provisions is to promote member democracy and enable members and certain other stakeholders to communicate with and lobby one another in relation to decisions affecting the corporation.
In December 2018, the Court was faced with an application by a member of JAZZ.FM91. JAZZ.FM91 is a registered charity with over 2000 members. The organization has been dealing with various public scandals and a representative of a dissident member group had made a request for a membership list for the purpose of contacting members of the organization to requisition a members’ meeting. While email communication is the primary means by which JAZZ.FM91 communicates with most of its members, the corporation did not provide email addresses to the member making the request. JAZZ.FM91 took the position that its privacy obligations did not allow it to disclose this information. The dissident member applied to the Court for the email addresses of the members.
Dunphy J. stated that JAZZ.FM91 had taken an unduly narrow interpretation of the requirement to provide the membership list. He stated that the real purpose in declining to provide the email addresses was to frustrate the dissident members and was not out of a genuine concern for privacy obligations. Dunphy J. ordered the corporation to provide the email addresses. In so doing, he made the following comments:
“I expect that an honest and open response to a dissident campaign that does not needlessly waste the time and resources of dissident and corporation alike will follow this. The membership will have the last word and this will not be solicited in a manner that places needless/pointless obstacles in favour of communication.”
The Court also ordered costs against JAZZ.FM91 in the amount of $20,000.
A subsequent application by JAZZ.FM91 to stay the order of Dunphy J. was denied. The Court again emphasized the importance of facilitating member democracy. The Court was also not persuaded by the organization’s arguments with respect to the need to protect the privacy of the members. The Court stated:
“Nor is there irreparable harm in a risk to member privacy. Members of a not-for- profit corporation allow the corporation and dissidents to contact them as an incident of membership. The corporation already uses email to do so. Levelling the playing field for dissidents enhances member democracy. It is not harm.”
These decisions make clear that courts in membership disputes place a strong emphasis on enabling open communication between members. The judges in both cases emphasized that it is the members that ultimately control the corporation and that when factions of the membership disagree, the best resolution is to “let democracy play out.” In responding to requests for membership lists, boards of corporations should recognize that courts will be inclined towards a purposive reading of the applicable statute that facilitates membership communication and democracy.
The Courts’ response to the privacy argument is also instructive. The Courts were comfortable that the members had consented to be contacted by email as this was the means by which the corporation normally communicated with them. The result might be different for an organization that does not use email communication regularly, or for members who have specifically requested not to be contacted in this way.