Windels v Reddekopp, 2023 SKCA 38

Court of Appeal for Saskatchewan Docket: CACV3940 Citation: Windels v Reddekopp , 2023 SKCA 38 Date: 2023-03-20 Between: Donald Windels Appellant (Respondents) And Twila Reddekopp, Jerome Hepfner and Ian Hamilton Respondents (Applicants) And Tyrone McKenzie and Elenore Gerbrandt Interested Parties/Respondents (Interested Parties/Respondents) Before: Whitmore, Leurer and Barrington-Foote JJ.A. Disposition: Appeal allowed Written reasons by: The Honourable Mr. Justice Barrington-Foote In concurrence: The Honourable Mr. Justice Whitmore The Honourable Mr.

Justice Leurer On appeal from: 2021 SKQB 313 , Saskatoon Appeal heard: May 5, 2022 Counsel: Andrew Mason for the Appellant Candice Grant for the Respondents No one appearing for the Interested Parties/Respondents Barrington-Foote J.A. I. INTRODUCTION [ 1 ] The Lighthouse Supported Living Inc. (“Lighthouse”) is a charitable, non-profit corporation governed by the provisions of The Non-profit Corporations Act, 1995 , SS 1995, c N-4.2 [ Act ]) . It provides low-cost housing and other services to vulnerable populations, operates a homeless shelter in Saskatoon, and previously operated a shelter in North Battleford.

On July 16, 2021, Twila Reddekopp, Jerome Hepfner and Ian Hamilton [collectively Respondents], all of whom were members and directors of Lighthouse, applied by way of an originating application pursuant to s. 214(1) of the Act [s. 214 Application] for an order directing an investigation of Lighthouse and of Blue Mountain Adventure Park Inc. [Blue Mountain], an affiliated non-profit corporation.

The originating application, which was based primarily on allegations of misconduct by Donald Windels in his capacity as the long-time executive director and a Board member of Lighthouse, requested the appointment of MNP LLP [MNP] as inspector for the purpose of the investigation and other ancillary relief. [ 2 ] On September 10, 2021, a judge of the Court of Queen’s Bench [Chambers judge] ordered that MNP be appointed as inspector to investigate loans allegedly made by Lighthouse to Mr.

Windels and to Mech-El Services Ltd. (a company owned by another Board member, Pierre Trudel) [Mech-El], as well as any additional irregular non-arm’s-length transactions entered into by Lighthouse or Blue Mountain: Hepfner (Re) (10 September 2021) Saskatoon, QBG 751 of 2021 [ Investigation Fiat ]. MNP investigated, and filed reports dated October 15, 2021 [First Report] and October 25, 2021 [Second Report] with the court.

On November 3, 2021, the Respondents applied for an order that there be an additional investigation of Lighthouse and Blue Mountain pursuant to s. 214 of the Act , and for a wide variety of oppression remedies pursuant to s. 225(1) of the Act [Oppression Application]. The application relied heavily on the contents of the MNP reports. [ 3 ] In a fiat dated December 6, 2021, the Chambers judge granted the Oppression Application: Hepfner (Re) , 2021 SKQB 313 [ Oppression Fiat ].

His order provided for both relief that had been identified in the Oppression Application or at the hearing and relief that went beyond what the Respondents had requested or either party had thought possible. Among other things, he ordered that Mr. Windels be removed as executive director and Board member of both Lighthouse and Blue Mountain and be barred from holding any office until December 1, 2023. The memberships of two members of Mr. Windels’ family who were neither named nor represented in the action were revoked, and important amendments were made to the bylaws of Lighthouse.

The order also provided for ongoing supervision by the court of the affairs of Lighthouse and Blue Mountain. [ 4 ] Mr. Windels appeals the Oppression Fiat . He alleges that the Chambers judge committed a wide variety of errors. He contends, among other things, that the Chambers judge breached the duty of fairness by denying him the opportunity to respond to the case against him. Mr.

Windels submits that, in part, that breach resulted from the Chambers judge having decided questions that had not been raised and granting relief that had not been sought, including as against members of his family that were not parties to the action without giving him or his family members the opportunity to make submissions. He also contends that the Chambers judge erred in law in finding that the oppression claim was not barred by The Limitations Act , SS 2004, c L-16.1 , and in his characterization of a loan made by Lighthouse to Mr.

Windels for the purchase and sale of a house for his daughter [Walmer transaction]. [ 5 ] There is no doubt that Lighthouse made an ill-advised personal loan to Mr. Windels to enable him to buy the Walmer house.

That loan did not advance its charitable mission. Mr. Windels does not dispute these facts. Nor does he deny that he received other loans from Lighthouse, and that he and members of his family rented houses to Lighthouse, which it used in carrying out its charitable mandate by providing low-income shelter to clients in Saskatoon. [ 6 ] These, and certain other activities identified by MNP, are troubling and might have called for some form of relief under s. 225 of the Act . However, Mr. Windels, like any litigant, has a right to a fair hearing and to see that justice is done in accordance with the law.

I have concluded that he was not accorded those rights. There were very significant breaches of the duty of fairness in the process that led to the Oppression Fiat . Further, the Chambers judge made other errors of law that affected important aspects of that decision. As result of these various errors, this matter must be remitted to the Court of King’s Bench. My reasons for those conclusions follow. II. BACKGROUND A. The s. 214 Application and the Investigation Fiat [ 7 ] When the s. 214 Application was filed, Mr. Windels had been the executive director of Lighthouse since 2003.

The bylaws of Lighthouse provided that the executive director was a board member unless otherwise stipulated by the membership at the time of an election. For that reason, he was also a very long-serving member of the Lighthouse board. [ 8 ] Ms. Reddekopp and Mr. Hamilton were relative newcomers to Lighthouse. Ms. Reddekopp became a board member in May 2020, and a Lighthouse member in November 2020. Mr. Hamilton became both a Lighthouse and board member in November 2020. Mr. Hepfner, who was then the board Chair, had been a Lighthouse board member for more than 15 years.

At the time of the application, the remaining Lighthouse board members were Adeel Salman, Mr. Trudel and Lisa McCallum. The Respondents and Mr. Windels were also members of the Blue Mountain board. Lighthouse had in excess of 40 members. Blue Mountain had only one member, that being Lighthouse. [ 9 ] On April 29, 2021, the Lighthouse board established an audit and finance committee comprised of the Respondents. In that capacity, the Respondents – who already had concerns about Mr.

Windels – promptly set out to get a full picture of the finances of both Lighthouse and Blue Mountain, working with McKenzie & Company, the Lighthouse auditors, and with Blue Mountain’s bookkeepers. In May 2021, Mr. Hepfner posed certain questions to Mr. Windels, including as to the state of Blue Mountain’s books. The Respondents were not satisfied with the unhelpful response provided by Mr. Windels to those questions. [ 10 ] In the result, on May 18, 2021, Mr. Hepfner and Ms. Reddekopp – acting without board approval – prevailed upon Mr.

Windels to take medical leave, escorted him from the Lighthouse building, took his keys and announced that they would be acting as co-executive directors. They also attempted to change signing authorities at multiple financial institutions without board approval. Mr. Windels would return to work two weeks later. [ 11 ] On July 5, 2021, the Respondents presented Mr. Windels with a set of charges based on his alleged failings, with the stated intent of removing him from office as a board member and executive director in accordance with the process specified in the bylaws. Mr.

Windels responded that he would not be available to meet to discuss the charges until July 21, 2021. On July 16, 2021, the Respondents proceeded with the s. 214 Application, seeking an order for the investigation of Lighthouse and Blue Mountain, and ancillary relief under s. 215 of the Act . Those two sections provide as follows: 214

(1) By application without notice or on any notice that the court may require, a member, a security holder or the Director may apply to the court having jurisdiction in the place where the corporation has its registered office for an order directing an investigation to be made of the corporation and any of its affiliated corporations. … 215

(1) In connection with an investigation pursuant to this Division, the court may make any order it considers appropriate, including an order: (

a) to investigate; (

b) appointing an inspector, who may be the Director, fixing the remuneration of an inspector, and replacing an inspector; … (

i) requiring an inspector to make an interim or final report to the court; … [ 12 ] By the time the s. 214 Application was filed, the board had split into two factions, being a four–person majority made up of the Respondents and Mr. Salman on the one hand, and Mr. Windels and the two remaining board members on the other. Further, Lighthouse members that sided with Mr. Windels had launched an initiative which was intended to result in the removal of the Respondents and Mr. Salman as board members.

That initiative was short circuited by interim orders granted by McMillan-Brown J. on July 19, 2021, and by Bardai J. on August 4, 2021 [ Bardai J. Fiat ], which prevented the members’ meeting necessary to achieve that result from proceeding pending the hearing of the s. 214 Application. If the members had met, the Respondents may have been removed from office and this litigation may have ended. [ 13 ] The Respondents levelled many allegations of misconduct and mismanagement against Mr. Windels in the s. 214 Application.

They included the Walmer transaction and a lack of financial transparency, as well as a broad variety of items related to Mr. Windels’ performance as the executive director of Lighthouse and Blue Mountain, such as a failure to address safety concerns, to follow vacation pay policy, to appropriately manage Blue Mountain and “to investigate and secure other funding options during the pandemic” ( Bardai J.

fiat at 1). The Chambers judge did not authorize an investigation in relation to every item in this list in the Investigation Fiat ; rather, he focused on a limited number of issues that he considered to be relevant to the relief sought by the Respondents, which were as follows: (

a) The Walmer transaction, including the approval of the $60,000 loan to Mr. Windels, the form of the transaction, and the manner in which it was documented and reported in financial statements; (

b) A 2010 loan in the amount of $30,000 by Lighthouse to Mech-El, a company associated with Mr. Trudel, to enable it to pursue a business opportunity; (

c) Other related party transactions, including an alleged loan to Ms. McCallum, and unexplained transactions between Blue Mountain and Mr. Windels’ personal foundation, the Kowach Foundation for Advancing Education Inc. [Kowach], which was also a charitable non-profit corporation; and (

d) Calling a special meeting of members and the annual general meeting of Lighthouse, which the Respondents alleged was an unfair and oppressive attempt to rush the endorsement of the 2020 financial statements in order to endorse any irregular transactions, and to stifle the proposed investigation. [ 14 ] As to the many other allegations levelled against Mr.

Windels by the Respondents, which included “the state of a house in North Battleford, safety issues in the vicinity of the Saskatoon shelter, the state of inter-company accounts between the Lighthouse and Blue Mountain, failure to apply for certain COVID relief funding, and a general lack of financial transparency” ( Investigation Fiat at para 70), the Chambers judge said this: [71] Several of those concerns are in the nature of governance or management issues that this Court cannot resolve on this application. Others may or may not have been answered satisfactorily by Mr.

Windels and other affiants in materials filed on this application, but fall outside the scope of the relief sought of an investigation into related party transactions.

Accordingly I will not delve into them at this time. [ 15 ] The Chambers judge, having assessed the evidence relating to these four issues, concluded that there was prima facie proof that “the interests of the applicants have been subjected to oppressive or unfairly prejudicial actions that have disregarded their interests as Members, and that it is likely that other Members are entirely unaware of the issues raised in this application and accordingly have been subjected to oppressive or unfairly prejudicial actions that have disregarded their interests as Members” ( Investigation Fiat at para 124).

On that basis, he made an order that included the following terms (at para 144): 1) An inspector shall be appointed to conduct an investigation into the following: i. The terms of the loan of $60,000 to Don Windels by The Lighthouse Supported Living Inc., the documentation therefor if any, the repayment of such loan and whether the calculations of interest and additional costs provided by Don Windels are commercially reasonable; ii. The terms of the loan of $30,000 to Mech-El Services Inc. by The Lighthouse Supported Living Inc., and the documentation therefor if any; iii.

Whether any additional irregular or potentially irregular non-arm’s length transactions have been engaged in by The Lighthouse Supported Living Inc. or Blue Mountain Adventure Park Inc. including, without limitation, with or to any member of the board of directors of either corporation, or any person or entity affiliated with or related to any such board member; and iv.

If any such irregular or potentially irregular transactions have been engaged in, the particulars of each such loan or transaction and whether such loans or transactions are appropriately recorded in the records, accounts and financial statements of the relevant corporation. 2) The inspector shall be MNP LLP, provided that within seven days of this order they file written consent to perform the role as an officer of the Court on the terms of the orders set forth herein. … 4) The inspector shall make and deliver to this Court and each Director of The Lighthouse Supported Living Inc. a report containing the inspector’s findings, which report shall be sealed and shall not be disclosed without further order of this Court.

The report shall be delivered as early as possible and in any event within 30 days of filing the consent referred to herein. … 14) Pending further order of this Court: i. Any action concerning the Charges, the Special Meeting and the calling or holding of an AGM will be enjoined. No Board members shall be elected or removed, though if a Board member wishes to resign, he or she shall be permitted to do so. ii.

To ensure that a faction does not attempt to “stack” a future Members’ meeting, the Lighthouse shall not admit any new Members, nor remove any Members, though if a Member wishes to resign their membership, he or she shall be permitted to do so. … B. The MNP reports and the Procedural Fiat [ 16 ] As noted above, MNP conducted an investigation and filed the First Report on October 15, 2021. That report included a

summary of findings that, among other things, stated the following conclusions: (a) “There are extensive transactions between the Lighthouse and related parties, and there appears to be a culture of commingling

personal interests with the interests of the Lighthouse” (at para 4.1). In April 2017 the Lighthouse purchased the Walmer house. Although this transaction was commonly viewed by the members of the board at the time as a loan, Lighthouse became the registered owner of the Walmer house. In December 2020 Mr. Windels paid $81,671 to settle this arrangement, which included the $60,000 loan, interest on the loan (which MNP said was understated), and reimbursement for the utilities, insurance and property tax costs Lighthouse had covered. Title to the house was then transferred to Mr. Windels.

The Walmer transaction was recorded in the accounting records and financial statements in a manner consistent with Lighthouse’s form. The fact that Mr. Windels made personal use of the Walmer house, rent free, for the four years it was owned by Lighthouse, was known to the board, but was not disclosed in the financial statements as it should have been. Effectively, both parties invested in the property (Mr. Windels renovated the house during this period). However, only Mr.

Windels benefitted from any appreciation in its value while Lighthouse bore any risk of ownership. (b) “The Lighthouse made a $30,000 loan bearing 15% interest to Mech-El Services Inc. [a company then owned by Mr. Trudel] pursuant to a loan agreement dated June 24, 2010”. Mech-El agreed to “repay the principal and interest once [it] received full payback related to a patent, or within one year, whichever came first” (at para 4.7). The Lighthouse board authorized the loan. No repayments have been made.

The loan was recorded in the 2013 financial statement, the earliest available, but was not identified as a related party transaction until 2019. Nor do the financial statements show interest owing. (

c) Kowach hired students to work at Blue Mountain. Kowach had a $39,000 surplus for the year ended March 31, 2021, as result of amounts paid by Blue Mountain to it, plus government grants received by it. (d) “Between 2008 and 2013, [Mr. Windels], his wife … and their family corporation 629511 Saskatchewan Ltd. received and repaid loans from the Lighthouse totalling $287,000 [early loans]. Where Board approval was given for these loans, it was after the fact, and granted by a Board that was composed of family members of Mr.

Windels” (at para 4.11). (e) “The Lighthouse lease[d] multiple properties from Windels family members, which [were] in turn rented to Lighthouse clients. While the rents charge[d] may [have exceeded] the lease payments, it is not certain that the transactions optimized the use of Lighthouse resources” (at para 4.11). [ 17 ] Matters proceeded very quickly after the parties received the First Report.

Three days later, on October 18, 2021, the Chambers judge issued a fiat [ Procedural Fiat ] that provided that any further applications would be heard on November 10, 2021, a date that was changed shortly thereafter to November 17 at the behest of the Local Registrar. It directed that such applications would be filed and served by November 3, reply affidavits by November 8, and briefs by November 12. [ 18 ] The Procedural Fiat also directed that MNP be asked if it had recommendations for further investigations. In response, MNP filed its Second Report on October 25, 2021.

It contained the following recommendation: 5. We recommend additional investigation be conducted into Lighthouse and Blue Mountain transactions involving the Kowach Foundation for Advancing Educations Inc. (“Kowach”).

Such an investigation would consider: a. the necessity of involving Kowach in the hiring of students to work at Blue Mountain; b. the contractual terms of the business relationship between the parties; c. an assessment of the services provided by Blue Mountain, including confirmation that employees paid to work at Blue Mountain did so; d. analysis of the flow of funds between the parties, including any short term loans; e. the purchase of land and computer equipment from Kowach; and f. the disposition of any government grants or emergency subsidies received by Kowach for employees hired to work at Blue Mountain. [ 19 ] It also recommended further investigation of payments made by Lighthouse to certain credit cards held by Lighthouse employees and related parties, including 629511.

C. The Oppression Application [ 20 ] On November 3, 2021, the Respondents filed the Oppression Application pursuant to ss. 214 and 225 of the Act , with a return date of November 17, 2021, as specified in the Procedural Fiat .

Section 225 provides that a complainant may apply for the relief contemplated in that section. For that reason, the Oppression Application should have been commenced pursuant to Rule 3-49 of The Queen’s Bench Rules , namely, by originating application. However, it was instead brought by a notice of application that was issued in the existing s. 214 proceeding, thus engaging the timelines specified in the Procedural Fiat . As I will explain further below, this was the first of several missteps that would lead to the breach of the duty of fairness owed to Mr. Windels. [ 21 ] Mr.

Windels responded to the Oppression Application in accordance with the timelines fixed by the Procedural Fiat . However, at the November 17 hearing, he objected at the outset to the procedure that had been followed. He also asked for an adjournment to prepare his full answer and defence to the Oppression Application. The Chambers judge dismissed his objections and denied the adjournment request orally, later providing written reasons in a brief fiat issued the same day.

In that November 17 fiat, he stated that he had the authority under Rules 1-6(5) and (6) and 3-2(7) to “correct a form where an action has been started in one form and a different form should have been used and to not set aside a proceeding because it has been commenced incorrectly”. He then exercised that authority, explaining as follows: Mr. Windels filed an affidavit in response to this application in which he did not object to the application having been brought in the

manner that it did. Instead, he responded on the merits. I consider that to be analogous to him having attorned to the Court’s jurisdiction in a matter. The brief objecting to this on a procedural basis was not filed until after his affidavit was sworn and filed with the Court. Accordingly, I determine that the application will proceed today. I deny the procedural objection. [Counsel for Mr. Windels] brought to my attention that he seeks an adjournment to provide a response. I consider him to have sufficient time to have prepared a response.

As well, the vast majority of factual matters are either admitted to or have been in evidence for a very long time in these proceedings, so the request for an adjournment is denied. (Emphasis in original) [ 22 ] In the course of his submissions on the merits at the November 17 hearing, Mr. Windels’s counsel also requested an opportunity to apply pursuant to the rules of court to cross-examine the Respondents’ affiants and the inspector, as the First Report was received as evidence of the facts as found by MNP.

That request was also rejected. [ 23 ] The Chambers judge adverted briefly to these procedural issues in the Oppression Fiat , as follows: [63] Argument on these applications opened with a procedural objection by Mr. Windels. He argued that the oppression remedy was brought improperly, that it was required to be initiated by statement of claim or originating notice [ sic ]. While that is correct, The Queen’s Bench Rules contain provisions to promote efficiency and minimize duplication of proceedings. The Queen’s Bench Rules authorize the Court to cure such procedural defects.

I exercised my discretion to do so and dismissed the procedural objection. [64] Mr. Windels insisted repeatedly (raising it for the first time during oral argument) that he needed an adjournment to enable him to take steps such as cross-examine on affidavits and cross-examine the Inspector. I denied the adjournment for reasons given orally during argument. [ 24 ] In the Oppression Fiat , the Chambers judge referred to this exchange, commenting as follows: [64] Mr.

Windels insisted repeatedly (raising it for the first time during oral argument) that he needed an adjournment to enable him to take steps such as cross-examine on affidavits and cross-examine the Inspector. I denied the adjournment for reasons given orally during argument. … [66] The First Report was delivered on October 15, 2021. Mr. Windels has not brought forward a single document since then to suggest that any of the Inspector’s information or analysis was inaccurate or other than objective.

Nor do his prior affidavits do so, nor the numerous affidavits from other individuals involved in the Lighthouse who support Mr. Windels. [67] Cross-examination on affidavits is permitted only sparingly in Saskatchewan and in any event the Court has received no application in this matter to cross-examine any party. Further, the Inspector was appointed to carry on a role akin to that of a receiver or monitor in insolvency proceedings.

There is a longstanding practice in and beyond Saskatchewan that such court officers are not subject to cross-examination. [68] I see nothing in the Inspector’s reports or other evidence filed in this matter to suggest that cross-examination would be appropriate or desirable. I find his reports to be objective, balanced and informative. They are supported by documentation where available. They express limitations where appropriate. Mr. Windels has admitted the central conduct that has been brought to light. The Court will not permit its court-appointed Inspector to be cross-examined.

This application will be decided on the affidavit evidence and the Inspector’s reports, and the Court is deeply grateful for the work of the Inspector in this matter. (Emphasis in original) D. The Oppression Fiat [ 25 ] In addition to Mr. Windels and the Respondents, Tyrone McKenzie and Elenore Gerbrandt – appearing in their capacity as Lighthouse members – made submissions at the November 17 hearing. The Chambers judge commented that Mr. Windels, Mr. McKenzie and Ms.

Gerbrandt were effectively the respondents for the purpose of the Oppression Application, as they generally opposed the relief sought by the Respondents. [ 26 ] The Oppression Fiat was lengthy and far-reaching. The Chambers judge identified four areas of concern, being the Walmer transaction, the Mech-El loan, the early loans and the Kowach-Blue Mountain dealings. As noted above, he found that the MNP reports were “objective, balanced and informative”, and that, in any event, Mr. Windels had “ admitted the central conduct that has been brought to light ” by MNP (at para 68, emphasis in original). He rejected Mr.

Windels’ submission that the applications before him were not urgent, reasoning as follows: [69] The respondents argued several times that these applications are not urgent. I disagree. The Court file, and the existence of this matter, have been held confidential to date. The publication ban will be lifted effective December 9, 2021. In my opinion, it is critical for the Lighthouse’s future that a decision be rendered on the oppression remedy application before the removal of the publication ban goes into effect.

It is not in the public interest, nor in the Lighthouse’s interests, that the oppression remedy application be undecided and up in the air when these matters become public. [70] At the same time, Tyrone McKenzie and Elenore Gerbrandt argued that it is urgent that the Court return control of the Lighthouse to its Members and permit them to hold meetings in an unfettered manner. With that I largely agree. The Members need to meet and conduct business.

As discussed below, I am authorizing the Members to do so, though not without constraints. [ 27 ] The Chambers judge made several key substantive findings in the Oppression Fiat . He rejected Mr. Windels’ submission that

the claim for oppression remedies had been brought outside the limitation period provided for by The Limitations Act . His analysis of this issue included several steps. He began by characterizing the Walmer transaction. In the course of doing so, he noted that, in the First Report, MNP had described it as a purchase by Lighthouse and had made the following findings: 5.16 In substance, this was a loan of $60,000 from the Lighthouse to Mr. Windels. Although there is no evidence to document the arrangement between the parties, it is acknowledged by Mr.

Windels and multiple other Board members at the time that the transaction was intended to allow Mr. Windels to secure housing for his daughter. 5.17 Between 2017 and 2020, Mr. Windels maintained personal and exclusive use of the property. He reported making extensive renovations to the property to improve its condition, however, this process precluded his daughter from living there. The Lighthouse held title to the property as security on the “loan”. 5.18 In December 2020, Mr. Windels repaid the $60,000 “loan”, plus interest and expenses such as utilities and property taxes. With the approval of Mr.

Hepfner, the Board Chair, the property was transferred to Mr. Windels at that time as security on the loan was no longer required. 5.19 In form, the Lighthouse purchased the house for $60,000. The accounting records and financial statements appropriately recorded the purchase of this asset. Given the form of this transaction, we would not expect a $60,000 loan to Mr. Windels to also be recorded in the financial statements, as this would overstate the assets of the Lighthouse by $60,000. … 5.21 However, the fact that Mr.

Windels was essentially a tenant of the property for four years, rent-free, should have been disclosed in the financial statements. This may also create a taxable benefit to Mr. Windels that, to our knowledge, was not accounted for. 5.22 Further, when Mr. Windels repaid the purchase price, interest, and related costs and took title of the property, the form of that transaction was to allow Mr. Windels to purchase the asset with a market value of $230,000 (less his personal renovation costs) for less than $82,000. Effectively, both parties invested in the property but only Mr.

Windels benefitted from any appreciation while only the Lighthouse bore any risk of ownership. This related party transaction is noted on the draft 2020 financial statements of the Lighthouse. [ 28 ] As the Chambers judge also pointed out, MNP had observed that, on January 20, 2021, the Windels borrowed $176,250 against the Walmer house, that the land titles document disclosed that the value of the house was $230,000, and that it was not clear whether the $170,000 in value was due to the renovations performed by Mr.

Windels, market appreciation or a combination of the two. [ 29 ] The Chambers judge confirmed that both Mr. Windels and Mr. Hepfner viewed this transaction as a loan and noted that if it was “treated as a loan, with the title held by the Lighthouse as security, then the circumstances of the repayment are closely connected with the advance of the ‘loan’” (at para 84). However, he then emphasized that it was not recorded as a loan, but rather, as the acquisition of capital asset each year until the 2020 draft audit statements were prepared.

He then summarized his conclusions as to the characterization of the Walmer transaction, as follows: [86] Mr. Windels is a CPA. That expertise, along with his dual role as a Board member and Executive Director, along with his direct participation in the transactions, leave no doubt that Mr. Windels had the ability to control how the purchase of the Walmer House was entered in the Lighthouse’s financial records. [87] Further, there is no agreement, certainly none in writing, as to any terms. There was no agreement drawn or executed between the Lighthouse and Mr. Windels.

For something akin to a mortgage to have existed, it must have been in writing and must have complied with s. 129 of The Land Titles Act, 2000 , SS 2000, c L-5.1 . For an agreement for sale to have been enforceable, it must have been in writing. That requirement arises from the Statute of Frauds , 1677 (UK), 29 Cha II, c 3) [ Statute of Frauds ]. See, for example, Semchyshen v Semchyshen , 2016 SKCA 108 at paras 55 to 57 , 402 DLR (4th) 623. [88] No funds flowed to Mr.

Windels in the manner one would expect under a loan transaction, except reimbursement of the $2,000 deposit he had paid. [89] In my view, for the purpose of determining this application, it is appropriate for the Court to rely on the legal form of transaction as it was recorded from 2017 through most of 2020 – that the Lighthouse purchased the Walmer House, and held it. In December 2020, the Lighthouse sold it to Mr. Windels, though there was no enforceable legal obligation for it to do so. The Lighthouse did so in 2020 because Mr.

Windels had the practical ability to orchestrate that result. [90] Accordingly, I find that the proper characterization of the 2017 transaction is as a purchase of the Walmer Home by the Lighthouse, not as a loan. [ 30 ] The Chambers judge turned next to the limitation issue. He reproduced what he considered to be the relevant provisions of The Limitations Act .

These included s. 5, which states that “no proceedings shall be commenced with respect to a claim after two years from the day on which the claim is discovered”, and the following portions of ss. 6 and 17, which deal with the discovery and concealment of claims: 6

(1) Unless otherwise provided in this Act and subject to subsection (2), a claim is discovered on the day on which the claimant first knew or in the circumstances ought to have known: (

a) that the injury, loss or damage had occurred; (

b) that the injury, loss or damage appeared to have been caused by or contributed to by

an act or omission that is the subject of the claim; (

c) that the act or omission that is the subject of the claim appeared to be that of the person against whom the claim is made; and

(

d) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it.

(2) A claimant is presumed to have known of the matters mentioned in clauses (1)(

a) to (

d) on the day on which the act or omission onwhich the claim is based took place, unless the contrary is proved. … 17 The limitation periods established by this Act or any other Act or regulation are suspended during any time in which the person againstwhom the claim is made: (

a) wilfully conceals from the claimant the fact that injury, loss or damage has occurred, that it was caused by or contributed to by an actor omission or that the act or omission was that of the person against whom the claim is made; or … [31] Having outlined this framework, the Chambers judge applied it. He first explored the question of whether The Limitations Actapplies to applications for oppression remedies at some length and concluded that it does. He opined that “a broad purposive

interpretationmust be applied to oppression remedy claims” in order to avoid applying limitation periods in a manner that would effectively condoneongoing oppressive conduct (at para 113). He noted that where the issue relates to a charitable corporation, s. 225 provides that theoppression remedy “may be sought in respect of acts or omissions that are oppressive to “the public generally”, and that an applicant mayaccordingly seek to protect the public interest (at para 115).

On the basis of these principles, he then reached the following sweepingconclusions: [117] In my opinion, the protection of the public interest impacts in important ways on the application of The Limitations Act.

It isimpossible for the public generally, or for stakeholders such as Members, funders, regulators and licensing bodies, CRA, the director ofcorporations or other stakeholders to have any knowledge of the underlying facts of this case. [118] This is an appropriate circumstance to recognize an exception to the general rule that the complainant’s knowledge of theunderlying facts governs when the limitation period starts to run. I determine that such an exception exists.

The exception applies to anapplication under s. 225 for an oppression remedy to protect the public interest in respect of a charitable corporation. [119] Protection of the public interest cannot be barred by reason of a limitation period where such parties who represent the publicinterest have no knowledge. Indeed, as the publication ban has not yet been lifted, the limitation period cannot even now have started torun. (Emphasis added) [32] This finding was sufficient to dispose of the limitation issue. However, the Chambers judge nonetheless proceeded to conductthree alternative analyses.

He first considered the possibility that any limitation periods may have been tolled – that is, that they wouldhave not have run – as a result of the application of the adverse domination doctrine, which he summarized as “an equitable doctrine thattolls statutes of limitations for claims by corporations against its officers, directors and advisors for so long as the corporation is controlledby those acting against its interests” (at para 124).

He noted that some commentators view that the adverse domination doctrine as beingakin to the discoverability rule, and that “for so long as wrongdoers remain in control of a corporation, the corporation cannot be treated ashaving notice of claims against the wrongdoers” (at para 125). After referring once again to the fact that the Respondents sought to protectthe public generally, he concluded as follows: [128] I have not created a detailed analytical framework for importing the adverse domination doctrine into Canada, but I consider it toapply here. The importance of applying a broad purposive approach to

interpretation of legislation in the context of oppression claimsagain must not be forgotten. The Court must not condone and enable ongoing oppression by unduly strict application of limitation periods,particularly where a charitable corporation is involved. [33] After briefly exploring the law relating to concealment, the Chambers judge considered “the relationships between older andmore recent conduct” (at para 132). He reviewed two decisions of the Ontario Court of Appeal in this context: Maurice v Alles, 2016ONCA 287, 401 DLR (4th) 482; and Zhao v Li, 2020 ONCA 121, 149 OR (3d) 353.

In Maurice, the Court concluded that where “a partyengages in conduct that is in furtherance of, or based upon, earlier oppressive conduct, this is a new cause of action because it is newoppressive conduct” (at para 2).

In Zhao, the Court also noted that Maurice had found that “conduct may consist of singular discrete actsof oppression even where the later oppressive conduct was based on or in furtherance of the earlier oppressive conduct” (at para 132). [34] The Chambers judge commented that “it does not follow that Zhao should blindly be applied” (at para 140), concluding that“the rule is not that there be no relationship between older and subsequent acts for the oppression remedy to be available when the olderacts were discoverable more than two years earlier” (at para 141, emphasis in original).

Differently stated, he found that the existence of arelationship between two separate acts, one of which had occurred more than two years before the expiration of a limitation period, did notpreclude a finding that the second act was a separate act of oppression, and for that reason, was actionable. [35] On a related note, the Chambers judge then held that he could take account of evidence of early conduct by Mr.

Windels –despite the expiry of the limitation period relating to that conduct – as similar fact evidence or, as he put it, as “historical background oftransactions between the Lighthouse and its directors to aid me to better understand the more recent transactions” (at para 145). Asauthority for this proposition, he cited Bautz Estate v Advantage Credit Union, 2011 SKQB 215 at paras 29–38, 376 Sask R 213, andSafarik v Ocean Fisheries Ltd. (1993), 10 BLR (2d) 246 (BCSC), reversed on other grounds (1994), (BC CA), 22 BLR(2d) 1 (BCCA).

On that basis, he determined that evidence of the early loans “sheds light on what occurred with respect to the WalmerHouse and the handling of those transactions by Mr. Windels and the Board”. In his view, there was no prejudice to Mr. Windels in usingthis evidence for that purpose, as “all of the underlying facts are admitted by Mr. Windels” (at para 147). [36] Having established what he viewed as the governing legal principles, the Chambers judge listed his “findings of fact relevant tolimitation periods” (at para 149), noting that the detailed review of the facts was in Appendix A to his reasons.

That list dealt solely with

facts relating to the Walmer transaction, as this was the only act of oppression found to have occurred by the Chambers judge, a point reiterated in Appendix A to the Oppression Fiat . It stated the following findings of fact (at para 149): a. No Board minutes or resolutions in writing exist concerning the purchase of the Walmer House or any related transactions in 2017. b. Other than the Walmer Purchase Agreement entered into between the Lighthouse and the individual vendors in March 2017, no written agreement exists concerning the House Transactions. c.

The Walmer House was recorded in the Lighthouse’s records as a capital asset worth $60,000. d. It would be impossible to review the 2018 Audit Statements or the 2019 Audit Statements and learn anything about the Walmer House or the transactions involving it. e. The 2019 Audit Statements were not finalized until November 30, 2020. f. While in possession of the Walmer House, Mr. Windels paid no rent to the Lighthouse, and he neither provided an accounting nor allowed an opportunity for an accounting to be done as to what rent should have been paid. g.

The Walmer House’s value increased from $60,000 in 2017 to $230,000 at the end of 2020. During that time, the entire risk concerning the property was borne by the Lighthouse. h. At the time of the transfer to Don and Bonnie Windels, the Board was not advised. No Board approval was obtained. The only other Board member who may have had knowledge was Jerome Hepfner, who remembers nothing. Not only did Don Windels not recuse from any decision-making, he signed the Walmer House Transfer. i.

No accounting has ever been provided to the Lighthouse concerning the increase in value from $60,000 to $230,000 and what portion of it should accrue to the Windels by reason of the renovations they did. j. No documentation has ever been provided concerning the cost of renovations done on the Walmer House, nor evidence of payment of those costs. k. Irrespective of whether Mr.

Windels might, following an accounting, be found to be entitled to the entire increase in value from $60,000 to $230,000, he received a substantial benefit from: i. the Lighthouse paying the $60,000 to enable the purchase of the Walmer Home when Mr. Windels says he could not have obtained a loan from a traditional lender to finance its purchase, and the opportunity to purchase the Walmer House might have been lost otherwise; ii. the Lighthouse paying for the annual costs of utilities, insurance and property taxes so that Mr.

Windels did not have to pay those costs until he could obtain that mortgage; and iii. being able to occupy the Walmer House rent free for over 3½ years while he worked on renovating it. l. Mr. Windels failed to disclose the foregoing to, or concealed it from, the Lighthouse’s auditors (specifically, McKenzieCo), so that until April 20, 2021, the auditors had no knowledge that Mr. Windels claimed an interest in the Walmer House or that it should be disclosed in the 2019 Audit Statements as a related party transaction.

As a result, the Lighthouse’s Board and Members approved materially incorrect audited financial statements which were then filed. As a result, material misrepresentations were made to funders, CRA, other stakeholders and the public. m. When McKenzieCo first learned of them in 2021 they considered the House Transactions to be sufficiently material as to include substantial reference to them in the Draft 2020 Audit Statements.

Similarly, the House Transactions must be considered to have been material for each of 2017, 2018 and 2019. [ 37 ] Based on these findings of fact, the Chambers judge concluded that there were four reasons that the Oppression Application was not statute-barred, and that the first three of these meant that he could grant remedies in respect of any oppressive conduct arising from or relating to the Walmer transaction. As he put the matter: [189] To summarize, I find as follows with respect to the applicability of limitation periods to the oppression remedy application: a.

No limitation period has started to run because the Lighthouse is a charitable corporation and the public and stakeholders are unaware of the facts. b. By application of the adverse domination doctrine, the limitation period did not start to run until some time in 2021. c. By operation of s. 17 of The Limitations Act , the limitation period did not start to run until some time in 2021. d.

If I am mistaken with respect to the foregoing, at a minimum, the Court may grant remedies in respect of conduct that occurred since November 3, 2019. [ 38 ] As to the fourth item in this list, the Chambers judge found that there were discrete acts of oppression that had occurred since November 3, 2019, both of which related to the Walmer transaction, as follows: [184] Thus, there are two discrete potentially oppressive acts falling within the two-year limitation period – the failure to ensure proper disclosure in the 2019 Audit Statements, and the failures to account, recuse and obtain Board approval in December 2020.

The Court is empowered to grant remedies in respect of those acts if the test for oppressive conduct is satisfied. [185] If the two-year limitation period is what applies, I am entitled to consider the earlier acts and omissions that form part of the House

Transactions as background, similar to what I discuss elsewhere concerning the Early Loans. [ 39 ] Having disposed of the limitations issues, the Chambers judge turned to the substantive question; that is, did the Walmer transaction constitute oppression? He stated his conclusions at the outset: [191] I find that certain impugned actions were oppressive or unfairly prejudicial to the interests of Members, Board members or the public, or unfairly disregarded such interests. I have provided a brief

summary above, and will repeat that

summary here for convenience: a. Don Windels committed multiple acts and omissions that represent oppressive conduct under s. 225 of the Act . Those include: i. causing the Lighthouse to enter into the House Transactions or orchestrating the same, which wrongfully conferred personal benefits on Mr. Windels; ii. failing to ensure that the House Transactions were transparently recorded in the Lighthouse’s books and records; and iii. failing to ensure that complete and accurate audited financial statements were prepared and filed.

All of the foregoing breached the reasonable expectations of the applicants, stakeholders of the Lighthouse and the public interest. [ 40 ] The Chambers judge then explained the legal and factual basis for these conclusions at length. He reviewed the legislation and case law relating to the oppression remedy, posing the following two questions based on the analysis in the leading decision in BCE Inc. v 1976 Debentureholders , 2008 SCC 69 , [2008] 3 SCR 560 [ BCE ]: [199] … a. What are the reasonable expectations of stakeholders asserted by the applicants, as supported by the evidence? b.

Does the evidence establish that the reasonable expectations were violated by conduct that was oppressive to, unfairly prejudiced, or unfairly disregarded, a relevant interest, which includes the interests of the public generally? [ 41 ] In his view, the “burden of proof” that had to be met by the Respondents was as follows: [200] The burden on an applicant is to prove its position on a strong prima facie case basis of oppression, unfair prejudice or unfair disregard of a stakeholder’s reasonable expectations.

See Moosomin First Nation v 10106 1721 Saskatchewan Inc. , 2010 SKCA 110 at para 26 , [2011] 2 WWR 193 and Gordon v White , 2020 SKCA 129 at para 29 [ Gordon ]. [ 42 ] After highlighting legal principles that he considered to be of particular relevance, including that it was not necessary to show bad faith or a breach of fiduciary duty, the Chambers judge summarized his answer to the first of the two BCE questions as follows: [232] The Lighthouse’s status as a charitable corporation informs what reasonable expectations exist.

Certain reasonable expectations are obvious in light of statutory requirements already discussed. In my opinion, they need not be formally established by evidence. In particular, I refer to the following: a. The directors and officers of a charitable corporation will ensure that it maintains complete and accurate records, sufficient to permit the Minister to determine whether there are any grounds for revocation of the organization’s charitable registration. That has two components.

One is that the records will be complete and accurate, and there is an inherent requirement that complete and accurate records would not provide grounds for revocation. b. Building on the above expectation, the directors and officers of a charitable corporation will ensure that it conducts its business in a manner consistent with its charitable objects. Put another way, they must ensure that the organization devotes all of its resources to its charitable activities. c. As a corollary, they must ensure that no personal benefits are conferred on members of the organization. d.

The directors and officers will not engage in self-dealing without proper recusal, protection from conflicts of interest, and full and proper disclosure, including that the directors and officers at all times will comply with s. 107 of the Act . e. The directors and officers will exercise their powers and discharge their duties honestly and in good faith with a view to the best interests of the corporation, at all times complying with s. 109 of the Act . f. The directors and officers will ensure that financial reporting for the corporation be complete and accurate.

This is required for compliance with the Income Tax Act [RSC 1985,c 1 (5th Supp)] and compliance with ss. 159 and 280(1) of the Act . [ 43 ] As to the second BCE question, the Chambers judge found that “each of the reasonable expectations that I described above has been breached by Mr. Windels, with assistance and approval by other members of former Boards” (at para 240). In the result, he confirmed that this meant that the Respondents had made out a strong prima facie case (see para 252). [ 44 ] Finally, the Chambers judge dealt with remedies.

He stated that the court had broad historic jurisdiction to supervise the activities of charities, and that the oppression remedy is remedial and is to be given a broad and purposive

interpretation. He then adopted the following approach: [258] In fashioning a remedy, the Court should act with restraint. Bourgeois [Donald J. Bourgeois, The Law of Charitable and Not-for- Profit Organizations , 5th ed (Toronto: Lexis Nexis Canada Inc., 2016)] observes at pages 264 and 266 that a court will generally use the least interventionist approach available, to the extent necessary to “right the ship”. I agree with the principle, but the context matters a lot. There is no particular model to be followed. Once it intervenes, my view is that the Court should intervene to an appropriate level to enable the ship to be righted.

[ 45 ] Having set the table in this fashion, the Chambers judge again emphasized the breadth of his remedial authority, that highly interventionist options were available, and that ongoing supervision by the Court was both possible and advisable. As he said: [260] The fact that a remedy might not be enumerated in s. 225 certainly does not mean that I do not have power to order it. When s. 225 states that the Court “may make any interim or final order it considers appropriate”, that is not merely a catch-all.

Rather, it represents a statement of intent by the legislature that s. 225 grants broad discretion to the Court. … [264] After liquidation and receivership, I consider the following remedies to be the most interventionist steps a court might take under the enumerated powers set out in s. 225 (not in particular order): appointing and removing directors, amendment of articles and bylaws, setting aside transactions and directing the corporation as to dealings with its property. [265] To the extent possible, and when practicable, it is preferable that the directors, members and employees take over steering the ship.

That may be possible up front, or it may be gradual. I do not consider myself bound to make a single order now, and then to completely “let go” if that is not what would be in the Lighthouse’s interests. [266] In this situation, at least some continuing supervision by the Court seems advisable. The Lighthouse’s problems are not limited to Mr. Windels’ self-dealing and the failures to provide appropriate financial reporting. Conflicts among Board members have been acute. Certain Members are clearly suspicious of and probably hostile to the applicants.

Senior management employees appear to share such suspicions and hostility. It appears that many view Mr.

Windels as having been the beating heart of the Lighthouse for years, and what they perceive as attacks on him have raised their hackles. [267] There is little to be gained by making orders that fall short of what the Lighthouse needs to turn the corner, right the ship, or whatever metaphor one prefers. [ 46 ] The Chambers judge also concluded that “it is appropriate for the Court to take a detailed approach to determining what it should do with respect to directorships and other leadership roles, in appropriate circumstances” (at para 278). [ 47 ] He then outlined what he considered to be the objectives that should be served by the remedies he had decided to grant.

He believed that Mr. Windels must be removed from his offices with Lighthouse and Blue Mountain to rebuild trust with the public and stakeholders and that he must barred from those roles for at least two years. He concluded that amendments to the bylaws were required, including the elimination of the dual role of executive director and board member, and the establishment of term limits for directors. He concluded that Mr. Hamilton, Ms. Reddekopp and Mr. Hepfner should not be subject to removal from the board for a specified period, for the sake of continuity.

As the Respondents’ positions would be protected and Mr. Windels would be removed from office, it was the Chambers judge’s view that members should be permitted to hold their long-delayed meeting to approve financial statements. [ 48 ] In the result, the Chambers judge made the following order [Oppression Order], which not only dealt with Mr.

Windels’ participation in Lighthouse and Blue Mountain, but made fundamental changes in the governance structure of Lighthouse, gave directions to all board members and to the most senior managers to attend mandatory training, and contemplated an ongoing oversight role for the Chambers judge: [325] In light of the foregoing objectives, I make the following orders. As I will remain seized of this matter, and will receive further submissions on December 13, 2021, this is not necessarily the full extent of orders I will make. a.

Effective immediately Don Windels is removed from the Board of Directors of each of the Lighthouse and Blue Mountain. b. Effective immediately, Don Windels is removed as Executive Director of each of the Lighthouse and Blue Mountain. c. Subject to future orders that I may make, including as a result of submissions I receive on December 13, 2021, Don Windels is barred from holding any office with either of the Lighthouse or Blue Mountain, or any present or future affiliate thereof, prior to December 1, 2023. For clarity, I do not consider Kowach to be an affiliate. d.

The status of Don Windels, Bonnie Windels, Tiffany Klassen as active or charter members of the Lighthouse, as applicable, is revoked immediately. They shall not be eligible to enjoy voting privileges as members prior to December 1, 2023. For so long as the class of associate members provided for in

section 4(

c) of the bylaws does not carry with it voting rights, they may hold memberships as associate members. e. The bylaws of the Lighthouse are amended as follows. The amendments I make shall not be capable of amendment without further order of this Court for two years from the date of this order. i.

Section 16(

b) is struck in its entirety; ii. The first sentence of

section 17 is struck in its entirety. iii.

Section 18 is amended as follows: 1. The language of subsection (1) is removed in its entirety, to be replaced by the language contained in subsection (4). 2. The existing subsections (2), (3) and (4) are removed in their entirety. 3. A new subsection (2) shall be inserted which states as follows: “No director shall serve in that capacity for more than 10 consecutive years or for more than 10 out of any 12 years.

For transition purposes, existing directors as at December 1, 2021 who would be subject to removal as a result of this term limit may serve for up to 24 additional months, such that they may not continue as directors beyond December 1, 2023. After reaching this term limit, an individual shall not be eligible to be elected to the Board for two years”.

4. A new subsection (3) shall be inserted which states as follows: “No employee of the Charity shall be eligible for election as a director”. f. Other than by voluntary resignation or order of this Court, Twila Reddekopp and Ian Hamilton shall not be removable from the Board prior to December 1, 2023. Their current terms as directors shall be deemed to expire at the first annual general meeting following such date. g. Absent further order of this Court, effective December 20, 2021 at 12:01 a.m., the orders restraining the Members from meeting shall end and be of no further force and effect.

The Members shall be free to meet and conduct normal business, provided that they do not contravene or attempt to counteract the orders made herein. This order will not preclude notices of a meeting of Members from being served earlier than December 20, 2021. h. The Lighthouse shall cause its auditors to restate prior audited financial statements to accurately reflect the House Transactions and Mr. Windels’ interest in the Walmer House in a transparent manner, consistent with the findings I have made.

As well, the notes to the Draft 2020 Audit Statements concerning related party transactions shall be revised to accord with the findings I have made. i. The Board shall immediately initiate a search for a new Executive Director. I will leave it to the Board to determine the search’s scope and duration. j.

Within 90 days of the first Members’ meeting of which they elect directors, all the current members of the Board shall attend, at the same time and in the same room (in compliance with COVID-19 gathering and other restrictions that are in effect) a one-day training session on fundamentals of corporate governance, with a focus on non-profit corporations, conducted by a corporate governance organization, which may be locally based. No exceptions to attendance shall be permitted, provided that if any Board member is under quarantine requirements he or she shall attend by video.

The organization’s two or three or more most senior (by authority) members of management shall also be required to attend. k. Within six months, the Board shall submit a report to the Court, attached to or contained within a sworn affidavit, as to the compliance with my orders and the steps taken to improve the organization’s governance. Following receipt of that report I will determine whether it is necessary to reconvene these proceedings. l. This decision shall be served, and in accordance with para. 332 below, posted on the Lighthouse’s website. [326] I remain seized of this matter.

On December 13, 2021, I will receive submissions as to further orders that the Court should make. Although Mr. Windels will have no standing following issuance of this decision, he has substantial knowledge of the organization and its affairs, relationships and operations, and I wish to hear from him and his counsel on that date. [ 49 ] The three bylaws that were either struck or amended related to the office of executive director and to the board. The amendment to s. 16 deleted the provision that the executive director, like the president and treasurer, was an ex officio board member.

Section 17, which was to be entirely deleted, fixed terms of office for directors. It provided that the executive director would hold office for an indefinite period unless otherwise stipulated by the membership at the time of election, that the president and treasurer would hold office for three years, and that every other director – other than the immediate past president, who would hold office ex officio – would be elected at each annual meeting to hold office until the end of the next annual meeting. [ 50 ]

Section 18 of the bylaws contained unusual rules related to the removal of directors and the executive director by the members, as follows: 18.(

l) The Charity may, by ordinary resolution, at a meeting of members called for the purposes, remove any director or directors from office.

(2) Grounds for such action shall be: (

a) Illegal, unethical or unscriptural conduct: (

b) Incompetence in office

(3) If a charge is brought against the executive director it must be in writing, detailed as to facts and evidences and signed by the person(

s) bringing the charge. The charge must be brought to the executive director in person and in the presence of at least one other director. (

a) If the charges are denied by the executive director then every effort will be made to bring the situation to a peaceful resolution. If the charges persist, witnesses are brought to a meeting of the Board. The entire motivation of every party should at all times be to let truth and peace prevail. If a peaceful resolution cannot be obtained, the appointed counselor will be asked to preside as judge at a meeting of the Board, (

b) If the executive director is guilty by admission then the appointed counselor is contacted by the executive director himself or the Board and asked to preside over the restoration and/or replacement of the executive director. The appointed counselor’s judgments and recommendations for action will be binding upon [the] executive director and therefore the Board.

(4) The directors, or members in general meeting, may fill any vacancy among the directors by appointing a director to hold office for the remainder of the term of the director whom he is replacing. III. ANALYSIS A. Introduction

[ 51 ] To begin, and with respect, I have difficulty with many aspects of the Oppression Fiat . However, it is unnecessary to identify and address all of my concerns, as I have concluded that the Chambers judge has committed errors which require that the entire decision be set aside and the matter remitted to the Court of King’s Bench.

For that reason, I will deal with the merits of the oppression decision only to the extent necessary to decide this appeal. [ 52 ] Given the nature of these errors and, in particular, the breach of the duty of fairness, the judge that rehears the matter afresh should proceed on the basis that there is a clean slate in relation to all questions of law, fact and mixed fact and law that may arise, regardless of whether they were dealt with by the Chambers judge, except to the extent provided by this judgment.

That would include, among other things, and assuming it arose, the important question as to the admissibility and use of the First Report as proof of the facts found by MNP as inspector, particularly if Mr. Windels or another interested party objects, and whether the inspector should then be subject to cross-examination. These reasons should not be interpreted as deciding this question. [ 53 ] In this appeal, Mr. Windels emphasized the alleged procedural errors, but has also identified other grounds of appeal. I will restate the matters that I consider it necessary to address, as follows: (

a) Did the Chambers judge breach the duty of fairness by denying Mr. Windels the opportunity to respond to the case against him? (

b) Did the Chambers judge err in law in finding that The Limitations Act did not bar the oppression claim in whole or in part? (

c) Did the Chambers judge err in law, or in mixed fact and law, in deciding that the Walmer transaction was a purchase and sale rather than a secured loan? B. Did the Chambers judge breach the duty of fairness by denying Mr. Windels the opportunity to respond to the case against him? 1. Was the use of the wrong commencement document fatal? [ 54 ] Initially, Mr.

Windels cast his procedural fairness argument in a fashion that emphasized that the Respondents brought the Oppression Application by filing a notice of application in the existing s. 214 proceeding – which they were not entitled to do – rather than by commencing a new action by filing an originating application as required by Rule 3-49 of The Queen’s Bench Rules . He contended that the form of the proceeding was mandated by s. 27 of The Queen’s Bench Act, 1998 , SS 1998, c Q-1.01 , and by Rules 3- 1 and 3- 2 , the relevant portions of which provide as follows: The Queen’s Bench Act 27

(1) Procedure in the court is to be in accordance with this Act and the rules of court. The Queen’s Bench Rules 3-1 A Court action for a claim may only be brought and carried on, applications may only be filed and proceedings may only be taken in accordance with these rules. 3-2

(1) An action, other than a family law proceeding, may only be started by filing in the appropriate judicial centre described in rule 3-3 or 3-4: (

a) a statement of claim by a plaintiff against a defendant; (

b) an originating application by an originating applicant against a respondent; or (

c) a notice of appeal, reference or other procedure or method specifically authorized or permitted by an enactment. [ 55 ] Mr. Windels also argued that The Queen’s Bench Rules do not grant the authority to cure this defect. He posited that since a commencement document had not been used, no action had been commenced at all, and that the curative provisions in Rules 1-6(1) and 3- 2(7) were accordingly of no avail to the Respondents. These Rules provide as follows: 1-6

(1) If a person contravenes or does not comply with these rules, or if there is an irregularity in a commencement document, pleading, affidavit, Form or other document, a party may apply to the Court: (

a) to cure the contravention, non-compliance or irregularity; or (

b) to set aside an application, proceeding or other thing because of prejudice to that party arising from the contravention, non-compliance or irregularity. … 3-2

(7) If an action that is started in one form should have been started or should continue in another, the Court may make any procedural order to correct and continue the proceeding and deal with any related matter. [ 56 ] However, it must be emphasized that Mr. Windels never suggested that this was a mere matter of form. Rather, he asserted that the principles of natural justice are essential components of a properly functioning civil justice system, and that the use of the designated procedure is the means of ensuring that disputes are fairly adjudicated in accordance with these principles.

Differently put, he contended that the requirement to choose a particular form of commencement document engages the procedures associated with that form – such as the filing of a statement of defence and questioning in the case of a statement of claim – which accord natural justice.

[ 57 ] Mr. Windels also submitted that, even if this defect could be cured, the Chambers judge proceeded in a manner that breached procedural fairness. He noted that, if an originating application had been used, he could have applied under Rule 3-53 for an order that rules applicable to actions commenced by statement of claim applied, such as document production and questioning, and under Rule 3-54 for an order to cross-examine. He had repeatedly asked the Chambers judge to allow him the opportunity to cross-examine the Respondents’ affiants. The Chambers judge responded that if Mr.

Windels had made such an application, it would have been refused. Mr. Windels also asked for an opportunity to apply for leave to cross-examine the inspector on his findings and his

interpretation or inferences from the evidence if his report was to be admitted as evidence. This request was also denied. [ 58 ] The Respondents, on the other hand, submitted that this Court should not disturb the decision by the Chambers judge to reject Mr. Windels’ procedural argument.

Indeed, they took the position that the appeal was out of time, as an appeal of the November 17 fiat should have been filed within 15 days of that date, being the date the Chambers judge made that decision, or in the alternative, that the November 17 fiat should have been challenged in the notice of appeal related to the Oppression Action.

On that basis, they contended that the procedural issues were, at least to the extent they related to compliance with The Queen’s Bench Rules , not properly before this Court. [ 59 ] The Respondents relied in this respect on s. 9(5) of The Court of Appeal Act, 2000 , SS 2000, c C-42.1 , which deals with the filing of appeals relating to incidental decisions: 9

(5) Where a decision is made during or after the hearing of an application in chambers and the decision is only incidental to the application and does not dispose of the matter in issue, a notice of appeal from the incidental decision must be served not later than 15 days after the date of the judgment on the matter in issue in the application, and a party appealing from the judgment may include in the notice of appeal of the judgment an appeal from the incidental decision. [ 60 ] The Respondents also relied on Rule 12-2 of The Court of Appeal Rules (as it then was), which is as follows: 12

(2) Where an order is made or a decision is given during or after the hearing of an application in chambers and such order or decision is only incidental to the application and does not dispose of the matter in issue therein, the time for appealing from such order or decision shall continue for a period of 15 days after the date of the judgment on the matter in issue in such application, and a party appealing from the judgment may also include in the notice of appeal an appeal from such incidental order or decision. [ 61 ] This technical aspect of the Respondents’ procedural argument can be readily disposed of.

Given that the Chambers judge issued the November 17 fiat, Mr. Windels should have explicitly referred to it in his notice of appeal as relating to the oppression decision. However, his failure to do so is of no moment. The notice of appeal clearly engages both the Oppression Order and the rulings that were made preliminary to it. In this regard, it identifies the issues raised by Mr. Windels as to the failure to properly commence the action, the lack of jurisdiction to cure the defect, the refusal to permit cross-examination and to allow access to other procedures, and the refusal to grant an adjournment.

It also more broadly alleges a breach of natural justice. All of these arguments are also developed in Mr. Windels’ factum. [ 62 ] Rule 13 of The Court of Appeal Rules provides that a notice of appeal may be amended at any time with leave of the Court or a judge. The Respondents were well aware of what was at issue and suffered no prejudice as a result of the failure to refer explicitly to the November 17 fiat.

Assuming an amendment is required, leave to amend to refer specifically to that fiat is granted. [ 63 ] As to the substance of the issue, I am satisfied that, in the circumstances of this case, the Chambers judge did not err in his conclusion that he had the authority to cure the failure by the Respondents to use the correct form to commence their action – provided that he did so in a fashion that, in substance or effect, accorded Mr. Windels the same degree of procedural protection that he had insisted on and that he would have had if the action had been properly initiated by an originating application. This

interpretation of Rules 1-6(1) and 3-2(7) accords with Rule 1-3, which provides that “[t]he purpose of these rules is to provide a means by which claims can be justly resolved in or by a court process in a timely and cost effective way” and “to facilitate the quickest means of resolving a claim at the least expense”. As Richards C.J.S. said in Agrium Vanscoy Potash Operations v United Steel Workers Local 7552 , 2014 SKCA 79 at para 57 , 442 Sask R 42, the principles cited in Rule 1-3 are necessarily applicable to all proceedings brought pursuant to the Rules . [ 64 ] This

interpretation is also consistent with Rule 1-6(4), which provides as follows:

(4) The Court may cure any contravention, non-compliance or irregularity but only if: (

a) to do so will cause no irreparable harm to any party; (

b) in doing so the Court imposes terms or conditions that will: (

i) eliminate or ameliorate any reparable harm; and (ii) prevent the recurrence of the contravention, non-compliance or irregularity; (

c) in doing so the Court imposes a suitable sanction, if any, for the contravention, non-compliance or irregularity; and (

d) it is in the overall interests of justice to cure the contravention, non-compliance or irregularity. [ 65 ] As Kalmakoff J. (as he then was) commented in Edenwold (Rural Municipality No. 158) v Murray , 2017 SKQB 15 , 3 LCR (2d) 187: [35] At its essence, Rule 1-6 permits the court to cure defects, noncompliance with the Rules, or irregularities in documents or proceedings if doing so is necessary to ensure that justice is done, and will not unfairly prejudice any party.

When read in accordance with Rules 1-3 and 1-7, it is apparent that Rule 1-6 is intended to give the court the power to amend or correct pleadings and documents in order to ensure that disputes are fairly determined on the basis of real issues, and not on the basis of whether or not there was compliance with technicalities. As Chief Justice Richards said in Borowski v Stefanson , 2015 SKCA 70 , at para 24 , 467 Sask R 71 [ Borowski ], the Rules are intended to be the servant of the court process, not its master.

See also, to the same effect, Yashcheshen v Canada (Attorney General), 2021 SKCA 116 at para 78, and Smooke v Rosemont EstateCondo Corp 101222494, 2017 SKQB 201 at para 24, 80 RPR (5th) 277. In Smooke, an applicant commenced an oppression application byusing a notice of application instead of an originating application. Justice Danyliuk “exercised and used [his] discretion under Rule 3-2(7) and Rule 1-6 to cure this irregularity to allow the application to proceed”.

However, he did so on the basis that the “respondent wasnot prejudiced by this procedure as it clearly knew the case it had to meet, and the parties were saved time and expense”. [66] The question that would arise here is whether the Chambers judge erred by curing the defect, while at the same time refusing togrant Mr. Windels an adjournment to better prepare or to permit cross-examinations. That combination of circumstances raises thequestion of prejudice. However, it is not necessary to resolve this question, as Mr.

Windels effectively abandoned the argument based onthe form in which the Oppression Application was commenced at the hearing of this appeal, and instead emphasized the substance of hisargument; that is, that he was entitled to and was denied a fair hearing that accorded with the principles of natural justice regardless of theform of the commencement document. For the following reasons, I agree with this submission. My reasons for that conclusion follow. 2. Was procedural fairness accorded regardless of the form of the commencement document? [67] Mr.

Windels alleges that there has been a breach of natural justice or the duty of fairness. The standard of review on such anappeal is correctness: Mission Institution v Khela, 2014 SCC 24 at para 79, [2014] 1 SCR 502; and Canada (Citizenship and Immigration)v Khosa, 2009 SCC 12 at para 43, [2009] 1 SCR 339. In practical terms, that means it is for the appellate court to determine whether theprocedure at issue was fair in the circumstances: Kupsar v Regina Provincial Correctional Centre, 2020 SKCA 142 at para 36, 474 CRR(2d) 285.

It is clear that the Chambers judge was required to conduct this judicial proceeding in a manner that complied with the principlesof natural justice. The issue is what those principles demanded in the circumstances. As L’Heureux-Dubé J. wrote in Knight v IndianHead School Division No. 19, (SCC), [1990] 1 SCR 653 at 682: Like the principles of natural justice, the concept of procedural fairness is eminently variable and its content is to be decided in the specificcontext of each case.

In [Nicholson v Haldimand-Norfolk regional Board of Commissioners of Police, (SCC), [1979] 1SCR 311], at pp. 326-27, Laskin C.J. adopts the following passage from the decision of the Privy Council in Furnell v. Whangarei HighSchools Board, [1973] A.C. 660, a New Zealand appeal where Lord Morris of Borth-y-Gest, writing for the majority, held at p. 679: Natural justice is but fairness writ large and juridically. It has been described as “fair play in action”. Nor is it a leaven to be associatedonly with judicial or quasi-judicial occasions. But as was pointed out by Tucker L.J. in Russell v.

Duke of Norfolk [1949] 1 All E.R. 109,118, the requirements of natural justice must depend on the circumstances of each particular case and the subject matter underconsideration. (Emphasis in original) [68] In Baker v Canada (Minister of Citizenship & Immigration), (SCC), 1999 SCC 699, [1999] 2 SCR 817,L’Heureux-Dubé J. affirmed this statement in Knight, and offered the following explanation of the factors affecting the content of the dutyof fairness: [23] … The more the process provided for, the function of the tribunal, the nature of the decision-making body, and the determinationsthat must be made to reach a decision resemble judicial decision making, the more likely it is that procedural protections closer to the trialmodel will be required by the duty of fairness. … [69] In David J.M.

Brown & John Evans, Judicial Review of Administrative Action in Canada (Toronto: Thomson Reuters, 2022)[Brown], the learned authors explore the same fundamental principles which apply equally in an administrative law context.

As they pointout, there was a “full panoply of adjudicative procedural rights that the courts came to associate with the rule of natural justice” (at §7:9)and that were accorded in actions conducted in courts of law, “including, for example, personal service of notice, full disclosure of relevantinformation, and an oral hearing before the decision-maker, with the right to be represented by counsel, to call witnesses, to produceevidence, and to cross-examine”. However, as they also not

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