Zafar v Muslim Association of Calgary, 2021 ABQB 285

Court of Queen’s Bench of Alberta Citation: Zafar v Muslim Association of Calgary, 2021 ABQB 285 Date: 20210413 Docket: 2001 12754 Registry: Calgary Between: Ghazanfar Zafar Applicant - and - Muslim Association of Calgary, Muslim Community Foundation of Calgary, and Mohamed Charanek Respondents _______________________________________________________ Reasons for Decision of the Honourable Madam Justice D.L. Shelley _______________________________________________________ Nature of the Application [ 1 ] Mr.

Zafar applied for the appointment of an interim receiver in relation to the Muslim Association of Calgary (MAC), the Muslim Council of Calgary (MCC), and the Muslim Community Foundation of Calgary (MCFC).

[ 2 ] In addition, Mr. Zafar sought removal of the 14 Court-appointed members of the MCC Board, and revocation of their signing and decision making authority. [ 3 ] Mr. Zafar, sought, in the alternative, a mandatory injunction requiring Mr. Charanek to pay employees of the MCC, MAC and the MCFC, and to preserve the status quo of these organizations until after the next MCC election or further order of the Court. This would include requiring the Respondents not to terminate any employees.

Background [ 4 ] The context in which this Application arose relates to a disputed election and an apparent fight for control of the MAC, the MCFC and the MCC. [ 5 ] On November 16, 2020, the MAC and the MCFC appeared before Justice Jeffrey in a separate Action related to challenges to the election. As a result of that appearance, Justice Jeffrey ordered a number of forms of relief, including the confirmation of interim board members, officers, and authorized banking signatories. Mr.

Zafar appears to be mentioned in para 7 of the Order (although his first name is spelled “Gazanfar”), wherein Justice Jeffrey ordered that he “is not and shall not be a member of the 2020 MCC Election Committee”. [ 6 ] On December 18, 2020, the parties to this Action appeared before Associate Chief Justice Rooke. ACJ Rooke ordered payment of all “legitimate teachers, employees or contractors” of the MAC and MCFC “who have not been terminated as of December 18, 2020”. He further directed that disputed amounts in relation to salaries, etc., were to be paid into Court.

He adjourned the balance of the application, including those aspects of the application related to standing, procedure, evidence, conflicts and costs. The order was to be served on “all teachers, employees or contractors whose salaries, remuneration or other amounts are disputed”. [ 7 ] Since the disputed election, a number of lawsuits have been commenced by the Respondent organizations, including against some of their former directors. [ 8 ] Following the appearance before ACJ Rooke, the MCC issued letters, signed by the MCC current Chairman, Mr.

Charanek, to various teachers and other individuals whose employment by the MCC/MAC was disputed.

The letters indicated that these individuals were not being recognized as employees, provided formal termination in the event that this position was ultimately found to be mistaken, and demanded repayment of amounts that were considered to have been paid without authority. [ 9 ] While there are other matters in dispute, much of the Application before me focused on the operations of the Al-Amal Academy (the Academy) and whether the MAC, MCC or MCFC are liable for payment of its employees and the rent of the Academy premises. [ 10 ] On March 19, 2021, I wrote to counsel for the parties, advising them that I was dismissing the Application, with written Reasons to follow.

These are those Reasons. Issues [ 11 ] The main issues before this Court were: 1. whether Mr. Zafar had standing to bring this Application; 2. if Mr. Zafar did have standing, whether he met the test in relation to the granting of an interim receiver; and 3. if the appointment of an interim receiver was not appropriate, whether the alternative remedy was available and appropriate in these circumstances. Position of the Parties Position of the Applicant [ 12 ] Mr.

Zafar argued that the Orders of Justices Jeffrey and Rooke have not been complied with because, in relation to Justice Jeffrey’s Order, three of the 14 interim board members have been “suspended” and, in relation to the Order of ACJ Rooke, the Respondents have terminated the employment of people who were to be paid pursuant to that Order. [ 13 ] Mr. Zafar argued that the current Board is “out of control” and that its commencement of litigation has created conflict, chaos, and the potential for claims from various people. [ 14 ] Mr.

Zafar acknowledged that he is not personally making a claim, but brought the Application because the Academy, its staff and students may suffer irreparable harm due to the actions of the Respondents. In that regard, staff and the rent are not being paid, which may lead to the closure of the Academy. [ 15 ] In addition, Mr. Zafar alleged that there has been improper use of restricted funds which may threaten the charitable status of the Respondent organizations. Mr.

Zafar submitted that appointment of an interim receiver will effect a stay, putting a hold on the numerous lawsuits and ensuring that the Academy can continue for the balance of the year. He submitted that the receiver can then “sort all of this out” in the next four months, pending the holding of the next election of the Board of Directors. He proposed that the interim

receiver would act as more of an inspector during this period. Position of the Respondents [ 16 ] The Respondents submitted that Mr. Zafar had no standing to bring this Application as he is not directly affected by the actions of which he complains. Those who may be affected by decisions of the Respondents are not parties to this Application. The Respondents submitted that this is fatal to the Application. In addition, the Application suffers from evidentiary problems, in that Mr. Zafar relied entirely on what others have told him or on documents that have been provided to him.

The Respondents further submit that the Application is brought in bad faith because Mr. Zafar, in bringing the Application, is attempting to avoid significant personal exposure, particularly in relation to various contracts signed by him in relation to the Academy. [ 17 ] The Respondents noted that the Respondent organizations have approximately $80 million in assets and millions of dollars in the bank.

They are not insolvent and have the means to satisfy any awards which may result from any litigation related to these matters. [ 18 ] The Respondents took the position that this Application was not brought to preserve the assets of the Respondent organizations but, rather, to force two charitable organizations to continue to pay unauthorized obligations. In that regard, the Respondents submitted that the establishment of the Academy was never approved by either of their Boards of Directors or of their membership at large. It pointed out that Mr.

Zafar has not produced any authorizing resolutions in relation to the Academy, its staff, or its lease obligation. Nor has he produced any document which provides duly authorized delegation of authority to bind the MCC to these obligations. The Respondents submitted that the Applicant is requesting this Court to direct substantial payments in the absence of any proof that these expenditures were properly authorized and to ignore the requirements of four Bylaws of the organizations. [ 19 ] In relation to the allegation that restricted funds have been used improperly, the Respondents submitted that Mr.

Zafar has failed to identify the restricted purpose to which they related. The Respondents submitted that, to the contrary, the funds were in general accounts of the Respondent organizations and not held in accounts reserved for restricted purposes. [ 20 ] While the Respondent organizations have the means to pay any amounts subsequently found to be owing, the same cannot be said of Mr. Zafar if the Respondents are forced to pay large sums which are ultimately found to have been unauthorized and for which they are not ultimately determined to be liable. Mr.

Zafar has not offered any security for repayment of such sums and there is no evidence that he would be able to satisfy such a significant award. [ 21 ] The Respondents submitted that, if an interim receiver is appointed, it would simply be reinvestigating that which has already been investigated by the current Board, which resulted in the lawsuits that have been commenced. It took the position that a receiver would not be able to resolve these disputes, which have been ongoing since August of 2020. Rather, the lawsuits would have to be completed and decisions rendered by the Court in any event.

Analysis [ 22 ] Whether or not Mr. Zafar has standing by virtue of his membership in the MAC, I find that both the Application for the mandatory injunction and a receiver must fail. [ 23 ] Mr. Zafar has provided no evidence that the contracts he seeks to have paid pursuant to these Applications were authorized in accordance with the bylaws of the Respondent organizations. The absence of such evidence is fatal to this Application. So is the lack of any evidence of Mr.

Zafar’s ability to repay any amounts, if they were ordered to be payed pursuant to this Application and are subsequently determined to have been unauthorized. [ 24 ] I cannot accept Mr. Zafar’s argument that the current Board is out of control because it refuses to make payments on contracts that it denies were properly authorized by the Respondent organizations.

Nor is it an indication that the Board is out of control when, having conducted an investigation and obtained evidence that in its view indicates improper conduct, it commences litigation against those the Board has concluded have caused harm to the Respondent organizations. [ 25 ] I find that the Application for a mandatory injunction is an attempt to make the Respondent organizations pay amounts under contracts that the Board has concluded have not been validly authorized.

Similarly, I find that the Application for an interim receiver is an attempt to stay the ongoing litigation and to prevent the current Board from carrying on its functions and responsibilities. These are not proper reasons to grant such extraordinary remedies. [ 26 ] A receiver would be in no position to determine the outcome of the ongoing litigation or the validity of the contracts. These are ultimately matters for court determination, in the absence of internal resolution within the organizations. [ 27 ] The Respondent organizations currently have a Board of Directors which was appointed by this Court.

In these particular circumstances, the relief sought is not warranted and the test for granting them have not been met. The Board should continue to fulfill its duties and responsibilities until the next election of the Board, unless, in the interim, more compelling reasons are provided for why it should not do so. [ 28 ] While it is unfortunate that the Academy’s operations may be significantly impacted, in the absence of proof that the Respondent organizations validly assumed legal liability for payments associated with the Academy, those affected ought to be looking to those who entered into the contracts.

If it is determined that the Respondent organizations were liable for these payments, it is clear that they have the financial resources to satisfy any judgments that may be obtained in that regard. [ 29 ] The Respondents are entitled to costs of the Application. If the parties are unable to agree on the quantum of costs, the matter should be referred to the Review Officer for determination. Any matters outside the jurisdiction of the Review Officer may be referred to me for determination. In that regard, my Assistant ought to be contacted for arrangements to be made for such determination.

Heard on the 22 nd day of February, 2021. Dated at the City of Edmonton, Alberta this 13 th day of April, 2021. D.L. Shelley J.C.Q.B.A. Appearances: Grant Vogeli, QC and Jonathan Selnes Lawson Lundell LLP for the Applicant Predrag Anic and Halley Auger Miles Davidson LLP for the Respondents Aidan Henderson Caron & Partners LLP for the N. Amjadi and A. Adnan (Teachers) Mihai Tomos Fasken for the Islamic Association of Northwest Calgary Vanessa Allen MNP Ltd for the Interim Receiver