In Barrie & District Association of Realtors v. Information Technology Systems Ontario[1], Justice Sunil S. Mathai of the Ontario Superior Court addressed a dispute at the intersection of association governance and competition in the real estate data ecosystem. The decision provides critical guidance on how not-for-profit corporations governed by the Ontario Not-for-Profit Corporations Act, 2010 (“ONCA”) can amend membership criteria and the limits of judicial intervention when those changes threaten existing members.
Background and Facts
The Barrie & District Association of Realtors (“BDAR”) was one of several local associations that pooled MLS data through Information Technology Systems Ontario (“ITSO”), a not-for-profit entity formed to compete with the Toronto Regional Real Estate Board (“TRREB”).
When BDAR announced an “integration” with TRREB, creating a special membership structure that gave TRREB disproportionate voting control. ITSO’s board viewed it as a threat to the one-member-one-vote principle.
In response, ITSO amended its by-laws to require members to “maintain the same corporate structure and control as when the Member Association first became a Member,” unless ITSO’s board approved a change. BDAR challenged the amendment, arguing it was a retroactive breach of contract, impermissibly vague, inconsistent with ONCA, and made in bad faith to target BDAR.
Issues
(i) Does the amendment amount to a retroactive breach of ITSO’s contractual obligations to BDAR?;
(ii) Is the amendment impermissibly vague and inconsistent with s. 48 of ONCA?; and
(iii) Was the amendment initiated in bad faith to target BDAR?