IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation: Gitxsan Treaty Society, 2012 BCSC 452 Date: 20120327 Docket: S120466 Registry: Vancouver

RE: Section 85 of the Society Act Gitxsan Treaty Society Petitioner Before: The Honourable Mr. Justice McEwan

Reasons for Judgment

Counsel for the Petitioner, Gitxsan Treaty Society: Counsel for the Respondent, Attorney General of Canada: Counsel for the Respondent, British Columbia Treaty Commission: Counsel for the Respondent, Her Majesty the Queen in Right of B.C.: Counsel for the Respondents, Spookw aka Geri McDougall, et al.: Appearing in person, the Respondents: Counsel for the Respondents, Sandra Olson and Charles Muldon: Place and Date of Hearing/Trial: Place and Date of Judgment:

J. McLean and C. Petersen T. Bean R.W. Millen K.J. Phillips C. Joseph and M.L. Macaulay Dawamuxw aka Larry Patsey and Guuhadakw aka Norman Stephens C.M. Tribe Smithers, B.C. March 5-7, 2012 Vancouver, B.C. March 27, 2012

Gitxsan Treaty Society I [1]

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The Gitxsan Treaty Society (GTS) seeks an order under s. 85 of the Society

Act R.S.B.C. 1996, 3433 (the Act) to establish a validly appointed board of directors. The issue arises because the bylaws of the society providing for the election of directors do not conform to the requirements of the Act. [2] The Act provides as follows:
6 (1) The bylaws of a society incorporated under this Act must contain provisions for the following: ... (e) the appointment and removal of directors and officers and their duties, powers and remuneration, if any; ... (2) Subject to subsection (1), the bylaws of a society may be in the form of Schedule B or a modified form or another form altogether. 24 (1) The members of a society may, in accordance with the bylaws, nominate, elect or appoint directors. (2) Subject to this Act and the constitution and bylaws of the society, the directors (a) must manage, or supervise the management of, the affairs of the society, and (b) may exercise all of the powers of the society. (3) A limitation or restriction on the powers or functions of the directors is not effective against a person who does not know of the limitation or restriction. (4) A society must have at least 3 directors. (5) At least one of the directors of a society must be ordinarily resident in British Columbia. (6) The first directors are those named in the list of first directors filed with the registrar. (7) Notice of a change of directors of a society must be filed with the registrar, without delay, in the form established by the registrar. (8) If a society has less than 3 members for more than 6 months, each director is personally liable for payment of every debt of the society incurred after the expiration of the 6 months and for so long as the number of members continues to be less than 3. [emphasis added]

Gitxsan Treaty Society [3] Section 26 of the GTS bylaws reads:

26(1) At each annual general meeting of the society, those directors whose term of office has expired, as specified by their Pdeek at the time of their appointment, shall retire, and their successor shall be appointed.

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(2) For the year 2001 appointment, each Pdeek will appoint an equal number and no more than 3 directors, and will specify their respective terms of office as one, two, or three years. For the year 2002 and subsequent appointments, each director appointed by a Pdeek will serve for a 3 year term. No director for any Pdeek will serve for more than 6 years. (3) At their first meeting following the annual general meeting each year, the directors shall, as required: (i) appoint another person to be the Chair of the Board for a 3 year term, and that person will also become a director of the society. Should that person resign or otherwise cease to hold office prior to the end of his term, the directors will appoint other persons as Chair to complete the term of office; and (ii) appoint one director to be the secretary, and another director to be the treasurer, or one director to fill both offices, and the directors so appointed will continue in such office for the term for which they were appointed as directors. Should those persons resign or otherwise cease to hold office prior to the end of their terms, the directors will appoint other directors to the offices. [emphasis added]

[4]

The difficulty arises because, contrary to s. 24 of the Act, the members of the

GTS do not nominate, elect or appoint directors. Rather, directors are appointed from outside the society by the four houses or Pdeeks of the Gitxsan. This conforms to what some view as to the best way to accommodate traditional forms of Gitxsan government. The GTS submits that the directors were appointed in good faith using a process that was broadly accepted within the Gitxsan community. [5] The petition arises in the context of another proceeding in which the Gitxsan

Treaty Society is a defendant. That is an action brought out of the Smithers registry of the Supreme Court of British Columbia under #15150 between the following persons and entities as plaintiffs: Spookw also known as Geri McDougall on behalf of herself and other Gitxsan Chiefs and members, Baskyalaxha also known as William Blackwater Sr., Suu Dii also known as Yvonne Lattie, Luutkudziiwuus

Gitxsan Treaty Society also known as Charlie Wright, Xsimwits, Inn also known as Lester Moore, Moolxhan also known as Noola, and as Norman Moore, Gitanmaax Indian Band, Glen Vowell Indian Band, Gitwangak Indian Band, Kispiox Indian Band, and Gitksan Local Services Society [the Spookw plaintiffs] and, the following as defendants: Gitxsan Treaty Society, British Columbia Treaty Commission, Her Majesty the Queen in Right of the Province of British Columbia and the Attorney General of Canada [6] [7] That action seeks, among other things, the winding up of the GTS.

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In the course of that proceeding the GTS along with the defendants, British

Columbia and the Attorney General of Canada, brought applications to strike out the claim on the basis that the plaintiffs had no standing because they were not members of the society. [8] In the course of submissions on the first of those applications, brought by the

GTS, it became evident that the board of directors of the GTS was not properly constituted because it is not elected by the members. All of the applications to strike the plaintiffs in that proceeding were adjourned pending the opportunity now taken in this petition to seek the assistance of the Court to bring the GTS into compliance with the Act. The GTS submits that the purpose of the petition is narrow, and goes no further than to ask the Court to approve a process to confirm the appointment of GTS directors. The GTS submits that the petition is not concerned with wider questions of the mandate of the GTS to represent the Gitxsan Nation in Treaty or other negotiations with the Crown. The GTS acknowledges that the plaintiffs in the Spookw action have raised these issues, but it submits that this petition is not an opportunity to address that litigation. It also submits that it is not the forum for discussion of the Embridge Pipeline controversy or the personal issues that have been raised by some of the Spookw plaintiffs. [9] The GTS submits that the petition and its submissions are properly about the

following questions:

Gitxsan Treaty Society (a)

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does the process for appointing directors under s. 26 of the GTS

bylaws conform to the requirements of the Society Act? (b) if the process does not conform, what steps should the Court take

under s. 85 of the Society Act to assist the GTS in remedying any defects in its process for appointing directors. [10] The GTS submits that the legal position of the society has only recently

become clear. This is because it submits there has been ambiguity surrounding the operation of s. 24 of the Act as a result of a Court of Appeal decision, Lee v. Lees Benevolent Association of Canada, 2004 BCCA 168. In that case the Court held that a societys bylaws which gave non-member organizations the power to select directors did not offend the Act. The Court expressly found that sections 6(1)(e) and 24(1) of the Act permitted the determination of directors in an indirect manner such as the selection of directors by outside organizations which themselves contain some members. The GTS submits that this is similar to the Gitxsan Pdeeks situation since GTS members belong to a Pdeek. [11] The GTS submits that the law has been clarified recently by the Court of

Appeal in Kwantlen University College Student Association v. Canadian Federation of Students B.C. Component, 2011 BCCA 133. In this case the Court of Appeal stated that it was essential . . . that directors be selected in a manner set out in the societys bylaws, which must place the selection of directors in the hands of members of the society. The GTS submits that the Court of Appeal reconciled this with the earlier Lees Benevolent decision by suggesting that in that case the situation was that some directors may be selected by particular parts of the societys membership . . .. As a consequence of Kwantlen the GTS submits that its bylaws do not conform to the Act because the Pdeeks appoint GTS directors and they are not members of the society. The GTS submits that the Court can take steps under s. 85 of the Act to remedy this defect. [12] Under s. 85 the Court may exercise its powers to rectify or to negate or

modify the consequences in law of an omission defect or irregularity, and it may

Gitxsan Treaty Society

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validate an act or omission rendered invalid by virtue of a defect error or irregularity. The Court may also give the ancillary or consequential directions it considers necessary, although the Court should interfere with the internal affairs of the society no more than is necessary (see Khalsa Diwan Society v. Garcha et al 2004 BCSC 252 at paragraph 17). [13] The GTS submits that before granting a remedy under s. 85 the Court must

consider the effect of the remedy on the society and its directors, officers, members and creditors. The interests of the Crowns must also be considered as a consequence of loans advanced to the GTS through the B.C. Treaty process over the years. [14] The Courts powers are constrained to the extent that it may not alter or

impose bylaws on a society, which is a power vested in the societys members by way of a special resolution. The Court may, however, where there has been a problem with the drafting of bylaws, or an unwillingness or inability on the part of someone to call a meeting to address the problem, order that a meeting be held and to give directions as to those who have a right to attend the meeting. (See Erickson v. Luggi, 2004 BCCA 52 paragraphs 5 to 7; Hong v. Young Kwang Presbyterian Church, 2007 BCCA 544 paragraph 7 and Nigra et al v. The Kulsa Diwan Society et al., 1997 Can.Lii 3229 (BCSC), paragraph 16). [15] The GTS submits that the Court ought to craft decisions that are most in line

with the existing bylaws of the society giving effect to the underlying basis of those bylaws (See Bnai Brith Canada v. Deslauriers, 2011 BCSC 322 at paragraphs 26 to 31). The GTS suggests that the Courts assistance is required to facilitate a resolution of the conflict between s. 26 of the bylaws and s. 24 of the Act. Because of the conflict a meeting of the existing members of the GTS cannot be called to amend the bylaw. The GTS suggests that the Court fashion a remedy that serves the GTS purpose and structure of the GTS as set out in the existing bylaws and which interferes as little as possible with GTS affairs.

Gitxsan Treaty Society [16] The GTS submits that the intent of a by-law may be ascertained if the

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interpretation meets the following criteria:

(a) (b) plausibility: it complies with the bylaws text; efficacy: it promotes the bylaws intent;

(c) acceptability: the outcome complies with legal norms; it is reasonable and just. (Hong v. Young Kwang Presbyterian Church, 2007 BCSC 502 affirmed 2007 BCCA 544 at paragraphs 50 to 51).

[17]

The GTS submit that the existing bylaws define Pdeeks or houses as those

Huwilp with a common ancestry who associate themselves as Pdeek, one of the four phratries or clans: the Gnaneda, also known as the Lax Seel (Frog clan), the Lax Gibuu (Wolf clan), the Lax Skiik (Eagle clan), and the Giskaast (Fireweed clan). Huwilp is the plural of Wilp, a group of individuals related along the Matriline which may range in size from 25 to 250 people. [18] The GTS submits that the intention of the bylaws was to integrate certain

Gitxsan government structures into the societys own structures, and to integrate the practices of Gitxsan governance with the requirements of the Act. This is embodied, for example in the requirement that members and directors make decisions by consensus wherever possible (ss. 11(a), 22 and 40(1) of the bylaws), and by the fact that voting membership in the society is limited to persons who belong to a Gitxsan Wilp (ss. 11(g), 4(1) and 23). The GTS submits that the Gitxsan Wilp is the primary governance unit of the Gitxsan Nation, while each Wilp belongs to a Pdeek which is a group of Gitxsan Huwilp (houses). Each Wilp also has a number of Simgiigyet (Hereditary Chiefs) including, typically, one head chief and a number of wing chiefs. The Simgiigyet are the leaders of their respective Huwilp and consequently also leaders of the Gitxsan Nation. Within Gitxsan tradition they hold the Huwilps resources on behalf of the Huwilp members and make decisions on their behalf. [19] The GTS submits that it was incorporated to facilitate the Simgiigyets

engagement in the B.C. Treaty process on behalf of their Huwilp members, and to address the need for such an entity to deal in the treaty process with the Federal

Gitxsan Treaty Society and Provincial Governments. The bylaws are an attempt to introduce Gitxsan structures into a mechanism consonant with the Act. [20] The GTS submits that by delegating the power of appointment equally

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amongst the four Gitxsan Pdeeks, s. 26 sought to ensure fair and equal representation of all the Gitxsan Huwilp on the board, permitting each Pdeek to select directors according to its own internal processes. [21] The GTS submits that the appropriate remedy to give effect to the purposes

of the bylaws would be to direct that:

(a) an extraordinary general meeting of the society be convened for the sole purpose of appointing directors; (b) the eligible members of the extraordinary general meeting would be all known GTS members and the head Simgiigyet as deemed interim members for the purpose of that extraordinary general meeting only; and (c) each of the four Pdeeks as represented by their Simgiigyet be entitled to appoint an equal number of directors up to three per Pdeek.

The GTS submits that this approach aligns with the intent or underlying basis of s. 26 and conforms to the requirement of s. 24 of the Act while also respecting the traditional governance structure of the Gitxsan. [22] The GTS submits that the current bylaws do not grant all members of a

Gitxsan Huwilp the power to elect GTS directors and do not adopt universal suffrage as the method for selecting GTS directors. Section 26 of the bylaws expressly removes the right from the GTS members, who under the bylaws could be every member of a Gitxsan Huwilp. Section 4 reads as follows:
4(1) a person who is a member of a Gitxsan Huwilp and who supports the societys purposes may apply for voting membership in the society.

[23]

The GTS submits that s. 26 expressly adopts an appointment process rather

than an election, and that this is an important feature of s. 26 since it permits each Gitxsan Pdeek to use a selection process that makes sense to the decision makers within each clan. The GTS submits that if the drafters of the bylaws had wanted to achieve universal suffrage the bylaws would have adopted an election process and left the selection power in the hands of GTS members. The GTS submits that this

Gitxsan Treaty Society

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decision is reflective of how the Gitxsan deliberate, not premised on concepts of one-Gitxsan, one-vote but on the role and authority of the Simgiigyet as leaders of their respective Huwilp. [24] Moreover, the GTS submits, a one-Gitxsan, one-vote system of selecting

the board would destroy the intended balance on the GTS board among the four Gitxsan Pdeeks. The GTS submits that the merits of its proposal is that the bylaws would continue to govern insofar as they possibly can, and new directors would be appointed in a manner that respects the process contemplated under s. 26(2) of the GTS bylaws. The GTS also submits that, once established, the newly constituted board could take any number of steps including resolving questions around membership and amending s. 26 of its bylaws. [25] The GTS also submits that this approach also aligns with Simgiigyets own

decision expressed at a January 17, 2012 meeting, where approximately 50 leaders attended to discuss the Courts suggestion that the GTS board of directors may not be properly constituted. The GTS submits that the Simgiigyet passed a resolution to strengthen the GTS on a vote of 45 in favour and 3 opposed, and that this reflects the will of the Simgiigyet that their internal structures be accommodated within the GTS. The resolution that was passed at that meeting read as follows:
(1)The Simgiigyet (Hereditary Chiefs) agree that the Gitxsan Treaty Society constitution of bylaws be amended so: (a) the Simgiigyet (Head Chief) for each of the Gitxsan houses become the members of the Gitxsan Treaty Society, and (b) the Simgiigyet who are members will appoint the directors of the Gitxsan Treaty Society with each of the four clans being entitled to three directors appointed by the Simgiigyet from these plans, (2)The current board of directors in the Gitxsan Treaty Society have authority to fulfil this task. The GTS submits that at that meeting it was understood that the Simgiigyet have ultimate authority to make that decision so that in addition to respecting the intention of the bylaws the proposed remedy aligns with the will of the Simgiigyet.

Gitxsan Treaty Society II [26]

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In the unusual circumstances of this case, the Spookw plaintiffs, the British

Columbia Treaty Commission, Her Majesty the Queen in Right of the Province of British Columbia and the Attorney General of Canada have filed responses. [27] The Treaty Commission takes no position except to observe that it wishes the

Court to ensure that any orders or reasons for judgment it issues will not affect the validity of or otherwise affect any contracts entered into by the petitioner prior to any such decision, and in particular, on account of the provision of the current GTS bylaws regarding the appointment of directors. [28] The Province of British Columbia takes the position that the Courts

consideration of the petitioners application should be guided by the vital importance of the Treaty process and the need for a legal, legitimate and representative body capable of speaking for the Gitxsan. The Province expressed the view that the proceeding should not affect the validity of any past agreements entered into between the GTS and other parties in the Treaty process. It submits that otherwise it takes no position. [29] Canada does not take any position regarding the means by which the Court

fashions a remedy under s. 85 of the Act in relation to the existing bylaws of the GTS, the composition of the GTS membership or the appointment of GTS directors. It does, however, remind the Court that it is a creditor of the GTS, and that any order should not prejudice Canadas interest as a creditor, and should not affect the status of any past acts or obligations on the part of the GTS, including funding contracts to support Treaty negotiations. (see Hong v. Young Kwang Presbyterian Church 2007 BCCA 502 at paragraph 61). III [30] The Spookw plaintiffs describe themselves as Gitxsan Hereditary Chiefs.

Each submits that he or she is responsible for a Gitxsan house. The respondent Gitxsan Indian Bands describe themselves as councils elected under s. 74 of the

Gitxsan Treaty Society

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Indian Act, R.S.C. 1985 c.1-5. They say they hold 25 reserves totalling 6,000 hectares and over 5,000 band members. The respondent Gitxsan Local Service Society known as the Gitxsan Government Commission (GGC) is a non-profit society established in 1983 which delivers programs and services to member bands. [31] The Spookw plaintiffs submit that the GTS was established as a non-profit

society in November 1994, to support Gitxsan people in treaty and other negotiations and support the Gitxsan people and other initiatives, according to its Constitution. The point of the GTS was to meet the Treaty Commission requirement for a legal entity to receive treaty negotiation funding. The Spookw plaintiffs submit that since 2003, Gordon Sebastian has been the Executive Director of the society and that other senior staff include Elmer Derrick, Beverly Clifton Percival and Gimlitxwit coordinator Barb Huson. [32] The Spookw plaintiffs take the position that the GTS has always operated

with a small membership and has never set out an established process for membership applications or had any process for persons to become members. They submit that annual general meetings have never been held, and that the only meetings that are held are a form of directors meetings. The Spookw plaintiffs also allege that the GTS has not created or maintained a register of members in accordance with the Act, so that it is impossible to know who the members are. They suggest that quite apart from the problem with s. 26 of the 2002 bylaws there does not appear to be any evidence of a special resolution of the members repealing the 1994 bylaws and bringing into force the 2002 bylaws. They submit that this constitutes a breach of s. 23 of the Act and clauses 62 of the 1994 bylaws and 65 of the 2002 bylaws. The essence of these detailed concerns is a complaint that the GTS has become unrepresentative of the people it purports to represent in the Treaty process. The essence of the Spookw action (the proceeding within which the defects in the bylaws came to light) is a claim that the GTS be wound up on grounds of oppression and undue prejudice.

Gitxsan Treaty Society [33]

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As I indicated earlier, the context in which this application arose was in the

midst of a motion by the GTS to strike out the Spookw plaintiffs claims on the grounds that as non-member they had no standing. The Spookw plaintiffs take a different view of Gitxsan governance and submit that the Gitxsan Hereditary Chiefs have already decided that the GTS does not represent them, and have taken steps to close the GTS office and terminate the staff. They view the fact that the GTS has continued to be an example of the disregard of the GTS for the decision of the Hereditary Chiefs. They submit that, from their perspective, the question of the legitimacy of the GTS has already been decided. IV [34] I think it important to emphasize how strongly the GTS, in the course of its

submissions, urged the Court bear in mind the limits of a s. 85 petition. There is no question that the enquiry is narrow and does not engage the merits of the larger issues raised in the Spookw litigation and in the other matters that have arisen in connection with the closure of the office and the purported Embridge dealings. [35] Ordinarily a society that brings a petition under s. 85 is seeking to cure a

defect that concerns an identifiable class of member or potential members of the society. In the particular circumstances of this case the context is much larger, and the implications of ordering the remedy sought by the GTS would be for the Court to endorse the views of one side in a larger dispute which remains before the Court. [36] The Spookw plaintiffs submit that the breaches they have identified are not

mere irregularities. Because the Court cannot, under s. 85, amend or impose bylaws on the society the Spookw plaintiffs submit that the remedy proposed by the GTS is unavailable. They submit that the effect of the remedies sought by the petitioner is to seek Court imposed bylaws about who would be entitled to membership and how directors are elected. They submit that the Court should dismiss the petition and direct the registrar to consider the petitioners registration under paragraphs 91(a) and (b) of the Act to make interim directions regarding the interim management of the societys operations until the proceeding is decided. For reasons I do not

Gitxsan Treaty Society

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consider it necessary to address, I do not consider s. 91(a) and (b) pertinent in this case. [37] I have reviewed the voluminous material tendered by both sides in this

matter. I have concluded that although the question on a s. 85 petition is narrow and evidence going to the controversy raised in the Spookw action is not directly relevant to the question to be decided, it is impossible for the Court to ignore the context, which includes a controversy that engages a large segment of the Gitxsan community and involves serious divisions between factions on two or more sides of the question as to whether the GTS is a legitimate representative of the Gitxsan people it purports to support in the Treaty process. The GTS proposal requires the Court to accept a view of the appropriate model of governance of the Gitxsan that is highly controversial. The effect of accepting it would be to appear to legitimize the current leadership of the society in the context of the ongoing Spookw litigation. In that litigation the GTS would then presumably renew its application to strike the Spookw litigation on the basis that they have no standing. [38] Refusal to do anything, on the other hand, leaves all of the parties in an

untenable situation. [39] The respondents, Treaty Commission, the Province of British Columbia and

Canada have all cautioned that the Court must bear their interests in mind. It seems to me that there is only one way out of this difficult situation for all parties. It may be that no one will be happy with my directions, but I do not see the remedy to lie either with the proposal of the GTS, which would effectively create at least the appearance of the Court endorsing something close to the status quo, or with the proposal of the Spookw plaintiffs, which would leave all of the interests involved in a state of paralysis. [40] The appropriate way for the parties to address these controversies is through

a process that permits all the Gitxsan an opportunity to be heard if they wish to be heard. I think it inappropriate that the Court be invited to select a particular group or class to be members of a society that purports to represent a whole people. On the

Gitxsan Treaty Society

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other hand, I consider it important that the GTS continue, provided the membership is opened to all who wish to participate. Whether the Gitxsan wish to participate in the process, or to decline to do so, or to conduct an examination of what has been done so far on their behalf, or to change direction, can only reasonably take place in a forum where the definitive expression of those views may be heard and acted upon through a transparent process of election or appointment that has the confidence of the people as a whole, or of those who express enough interest to participate. [41] Refusal to participate in an open process might well give rise to questions of

standing on the part of those who choose to continue to complain from outside. [42] In my view the issues in the Spookw litigation are affected by the governance

model adopted by the GTS. The question of standing would largely be addressed by a transparent membership process. Those who are unhappy with the current model would have an opportunity to effect the kind of changes they seek including the commissioning of audits of the governance of the society of the GTS to date, if they were able to persuade enough members and directors of their views. Continuance of the GTS is also the best means to protect the interests of the Treaty Commission and the Government respondents as well. [43] In the result I will not order the relief sought by the GTS, nor will I endorse the

result favoured by the Spookw plaintiffs. Rather, I adjourn this petition on the basis that I expect a better model for open participation and membership to be developed. I think I have indicated that an indirect model might work as long as there is a transparent process informing the appointment of members that gives all who wish to participate an opportunity to do so. I say no more beyond that. I would encourage such dialogue as is possible. The controversies that have arisen would be far better

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dealt with in one forum where the whole community is engaged in the exercise of persuasion on an ongoing, accountable basis. I make no order for costs at the present time.

T.M. McEwan J. The Honourable Mr. Justice McEwan