The Uncommon Common Law Rule of the "Clubman's Veto"

A few weeks ago I read a case from the Ontario Court of Appeal addressing a common-law rule that was new to my repertoire:  the “Clubman’s Veto”.[1]  I immediately pictured the Simpsons' Stonecutters sitting around drinking their ale and singing songs in their private clubhouse. However, what I learned was the “Clubman’s Veto” provides that with the approval of 100% of the members of an unincorporated association, the members can leave the association and take the property of the association with them. This can be a powerful tool for members in a voluntary association, especially if there is valuable property at stake, which was the case in Polish Alliance of Association of Toronto Limited v. The Polish Alliance of Canada.

The members of Branch 1-7 of the Polish Alliance of Canada, wished to leave the Alliance. While the Alliance itself was incorporated under the Corporations Act, RSO 1990, c. C.38, the Branch was not. The Branch members argued that the Clubman’s Veto allowed them to leave the Alliance and take the property held in trust for the members from time to time. What was the property they wished to take? The Branch’s clubhouse located on Lakeshore Boulevard in Toronto and worth approximately $50 million. The Alliance said no.

After a lengthy trial, Meyer’s J. concluded that the Clubman’s Veto applied.[2] 100% of the Branch members had voted to leave the Alliance; therefore the members can leave and take the property of the unincorporated association with them.

The Alliance appealed arguing that as the umbrella organization was incorporated the Clubman’s Veto did not apply. The Court of Appeal disagreed. While the Alliance was incorporated, the Branch was an unincorporated voluntary association. The Court noted that the “common law recognized the voluntary association not as a legal entity, but as nothing more than a complex of contracts between each member and every other member.”  There was no legislation that gave the Branch a legal status that would displace this legal construct.  The Appeal was dismissed.
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A quick search shows that the “Clubman’s Veto” rule has been applied in reported cases only seven times in the past three or four decades, and a couple of those cases are related to the dispute and parties to this case. While this is a common law rule that is not commonly applied, it may be a good idea for lawyers to tuck this rule in the back of their minds; you never know when you might represent some “clubmen” and it could come in handy. (And perhaps we can come up with a more inclusive term the next time it is used: Club Member’s Veto?)
 


[1] Obviously, “clubman” is not an inclusive term and a new name for this common law rule may be appropriate. “Clubperson’s  Veto” just doesn’t have the same sound to it though. “Club Member’s Veto”? A little better…

[2] Citing Wawryzniak v. Jagiellicz (1998), 64 OR (2d) 81 (HCJ)

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