[Vol. 18
Natural Justice and Self-Regulating Voluntary Associations
With the recent furor over the right of stock exchanges to
sanction the actions of its members, certain questions surface once
again with respect to the role and the power of self-regulating
voluntary associations such as trade unions, stock exchanges, and
real estate boards.
A recent judgment of The Honourable Mr. Justice Claude Bisson
in the case of Triangle Realties Inc. v. Montreal Real Estate Board I
is most informative in dealing with these questions. A word of
caution must preface an analysis of this judgment in that the
judgment dealt with an application for an interlocutory injunc-
tion and the issuance of a writ of mandamus; it was not a final
judgment on the merits. Yet, this judgment deals exhaustively with
the issues, the doctrine and the jurisprudence, and the acceptance
of certain principles cannot be dispelled by the stage of proceedings
at which they were accepted.
The salient facts of this case were that Petitioner Triangle
Realties Inc., an amalgamation of two companies, one of which
had been a charter member of the Montreal Real Estate Board,
had notified the Board of its new name and organizational set-up
and was advised by the Board that this new set-up was unaccepta-
ble and that “unless you are able to effect a re-arrangement of
your firm satisfactory to the Board by December 31, 1969, all rights
and privileges of (the predecessor company’s) membership in the
Board shall be withdrawn without further notice to you”.
There were no charges; no hearing; no knowledge of what
re-arrangement would be satisfactory to the Board; no opportunity
to meet the Directors of the Montreal Real Estate Board. In this
situation, Triangle Realties Inc. sought an interlocutory injunction
to prevent the Board from depriving it of its membership privi-
leges and the issuance of a writ of mandamus to order the Board
to note the amalgamation and that Petitioner had all the rights
of its predecessor and to continue these rights. The Montreal Real
Estate Board, for its part, relied upon its discretionary power,
according to its By-laws, to withdraw Triangle’s membership upon
the new application made by Triangle to change its name and
set-up. It should be noted that membership in the Montreal Real
1 S.C.M. 785,103. Judgment of January 20, 1970.
No. 2]
NOTES
Estate Board entitles the member to participation in photo multi-
ple listing service (MLS) –
a very valuable service to its members.
That the Petitioner was entitled to be heard and to be made
aware of the charges against it was affirmed by the Court:
… le concept de la simple justice naturelle ne semble pas avoir dtd
respect6 lorsqu’elle a refus6 de recevoir et d’entendre la requ6rante.
A complete review of Quebec and other relevant and accepted
jurisprudence 2 on the applicability of the rules of natural justice
was made and accepted by the learned trial judge. In addition, the
dictum of Lord Reid in the House of Lords decision of Ridge v.
Baldwin et al.3 was accepted, as was the ratio of Mr. Justice Gale in
the Ontario case of Posluns v. Toronto Stock Exchange et al.4 :
Turning now to domestic tribunals, which term refers mainly to clubs,
trade union groups, and committees thereof, the cases invariably relate
to the expulsion or suspension of a member from one of those organiza-
tions. It can broadly be stated that all of the cases hold that before
a member of a social club, trade union, trade or professional association,
can be expelled or suspended therefrom, he must be given notice of the
charges against him and be afforded an opportunity of answering those
charges.
It is respectfully submitted that this judgment, albeit at the
interlocutory stage, definitively deals with the question of the
applicability of the rules of natural justice to self-regulating volun-
tary associations; and the answer is in the affirmative. But so that
the issue and its answer not be applied incorrectly, it is useful
to delineate the framework within which the judgment should be
applied.
Firstly, one must differentiate between domestic tribunals and
administrative tribunals in order to define the discussion to self-
regulating voluntary associations. One definition of an adminis-
trative tribunal has been offerred as follows:
2Local Government Bd. v. Arlidge, (1915), 84 L. .K.B. 72 cited in The King
ex. rel. Lee v. Workmen’s Compensation Board, [1942] 2 D.L.R. 665 (B.C.C.A.);
Klymchuk v. Cowan, (1964), 45 D.L.R. (2d) 587; La Caisse Populaire de St-
Grggoire Le Grand v. La Fgddration de Montreal des Caisses Desiardins et aL.,
(1964) R.P. 299; Lapointe v. L’Association de Bienfaisance et de Retraite de
la Police de Montrial, (1906) C.R.A.C. 379; Le Club de la Garnison de Quebec
v. Lavergne, (1918), 27 B.R. 37; Dussault et al. v. Association Internationale
des dgbardeurs, [1945] B.R. 353; Association de Taxis La Salle et al v. Giller,
[1950] B.R. 622; J. Ldopold Gagner v. La Socidtd St-Jean-Baptiste de Montrdal,
(1957) R.L. 358; Wyman v. Vancouver Real Estate Board, (1959), 19 D.L.R.
(2d) 336 (B.C. Sup. Ct.); Andreas v. Edmonton Hospital Board, [1944] 4
D.L.R. 747 (Alta. Sup. Ct.).
3 [1963] 2 All E.R. 66, at pp. 74-75.
4 (1965), 46 D.L.R. (2d) 210 (Ont. High Ct.), at p. 292.
McGILL LAW JOURNAL
[Vol. 18
… a tribunal may be defined as administrative if it is established and
constituted by legislation, and is in effect an arm or branch of Govern-
ment. The latter qualification that the legislature –
established tribunal
is virtually an arm of the Government, excludes from the term “adminis-
trative tribunals” such tribunals as the Discipline Committee of the
Law Society, and the various other bodies that regulate the conduct of
members of their respective professions … 5
While in another decision the definition offerred was:
If a minister is considering whether to make a scheme for say an
important new road, his primary concern will not be with the damage
which its construction will do to the rights of individual owners of
land. He will have to consider all matters of public interest… His
officers will have to gather and sift all the facts including objections
by individuals and no individuals can complain if the ordinary accepted
methods of carrying on public business do not give him as good
protection as would be given by the principles of natural justice in a
different kind of case.6
Where the functions of the tribunal are held to be administra-
tive or executive, the tribunal is not bound by the rules of natural
justice and need not afford a hearing to an individual whose rights
are touched by its decision.7
Domestic Tribunals on the other hand have been defined as:
-.. committees or the councils or the members of trade unions, of
members’ clubs and of professional bodies … while acting in a quasi-
judicial capacity.8
and as:
… the bodies or committees in whom authority is vested in professional
or trade or sporting organizations, in various social groups or clubs or
in various guilds or trade unions.9
It is inherent in the judgment of Bisson, J. that the Montreal
Real Estate Board fell into the category of a domestic tribunal.
The next step is to determine whether the domestic tribunal
is acting in a quasi-judicial capacity, that is to say, whether there
are civil consequences of its action. This is accomplished:
… by examining the nature of the power exercised by the tribunal in
order to ascertain whether the tribunal is acting in a quasi-judicial
capacity on the one hand, or in -what has been termed an ‘executive’
5 Ibid., at p. 290.
6 Ridge v. Baldwin, op. cit., n. 3, at p. 76 (per Lord Reid).
7 Calgary Power Ltd. et al. v. Copithorne, (1958), 16 D.L.R. (2d) 241; [1959]
8 Maclean v. Workers Union, [1929] 1 Ch. 602, at p. 620 (per Maugham, J.).
9 Lord Justice Morris, The Courts and Domestic Tribunals, (1953), 69 L.Q.
S.C.R. 24.
Rev. 318, at p. 321.
No. 2]
NOTES
or ‘administrative’ capacity on the other, it
is well established that
in those instances where a tribunal acts in a judicial or quasi-judicial
capacity, the rules of natural justice prevail.’0
Or, as Mr. Justice Gale held:
… The determination of whether the function of a tribunal is judicial
or quasi-judicial as opposed to administrative or executive is based
upon the nature of the power exercised by it: see Lord Reid’s judgment
in Ridge v. Baldsvin, [1963] 2 All E.R. 66, at pp. 78 and 79 where he
refers to the judgment of Bankes, L.,
and of Atkin, LJ. in The King
v. Electricity Com’rs, Ex. p. London Electricity Joint Committee Co.
(1920), Ltd., [1924] 1 K.B. 171.11
This test to determine a quasi-judicial function, namely, the
nature of the power exercised by the body was stated in The King
v. Electricity Commissioners, and cited with approval by Lord Reid
in Ridge v. Baldwin:
…
‘powers so far-reaching, affecting as they do individuals as well as
property, are powers to be exercised judicially and not ministerially…’
So he inferred the judicial element from the nature of power. (p. 78)
Thus, for Lord Reid, the audi alteram partem rule applies to
every body with power “to adjudicate upon matters involving civil
consequences to individuals”.1 2
A more precise instance of a tribunal decision having civil conse-
quences is the case where private property rights are affected by
expulsion from a professional or business organization. Expulsion
from a body which has control over the professional or working
life of its members has been treated as a matter involving at least
prima facie the exercise of a quasi-judicial function by the body
in question.13
Being deprived of membership of a voluntary association by
expulsion constitutes an infringement of the right of property and
such expulsion is a quasi-judicial function.14 In conducting such
an inquiry, these voluntary associations are said to have:
10 Posuns v. Toronto Stock Exchange et al, op. cit., n. 4, at p. 291.
11 Id.
12 (1964) 22 Faculty of Law Review, U. of Toronto 148.
1a Abbott v. Sullivan, [1952] 1 K.B. 89; Lee v. Showmen’s, Build of Great
Britain, [1952] 2 Q.B. 329; Barnard v. National Dock Labour Board, [1953]
1 All E.R. 1113.
14 Rigby v. Connol, 14 Ch. D. 482, at p. 487; Baird v. Wells, 44 Ch. D. 661,
at p. 675; Millican v. Sullivan, (1888), 4 T.L.R. 203, at p. 204; Weinberger v.
Inglis, (no. 2), 1919 A.C. 606; Cookson v. Harewood, [1932] 2 K.B. 478, at p. 481
and p. 489; Donaldson v. Institute of Botano-Therapy, (1937), L.TJ. 384, at
p. 385; Young v. Ladies Imperial Club, Ltd., [1920] 2 K.B. 523.
McGILL LAW JOURNAL
(Vol. is
… occupied a quasi-judicial position and were bound to give reasonable
notice to the member whose conduct was attacked of the precise nature
of the charge upon which he was to be tried;…x1
In other words, a function is held to be judicial or quasi-judicial
when it effects the extinguishment or modification of private rights
or interest. 6
audi alteram partem –
Once having established that we are concerned with a domestic
tribunal exercising a quasi-judicial function, the last argument is
that the rules of natural justice –
apply
principle as follows:
to such domestic tribunals. Thus Mr. Justice Gale stated the general
Turning now to domestic tribunals, which term refers mainly to clubs,
trade unions and professional groups, and committees
the
cases invariably relate to the expulsion or suspension of a member
from one of these organizations. It can broadly be stated that all of
the cases hold that before a member of a social club, trade union,
trade or professional association can be expelled or suspended therefrom,
he must be given notice of the charges against him and be afforded
an opportunity of answering those charges.17
thereof,
While in another case the rule was phrased in the following manner:
But they are bound in the exercise of their functions by the rule expressed
in the maxim audi alteram partem, that no man shall be condemned
to consequences resulting from alleged misconduct unheard and without
having the opportunity of making his defence. This rule is not confined
to the conduct of strictly legal tribunals, but it is applicable to every
tribunal or body of persons invested with authority to adjudicate upon
matters involving civil consequences to individuals.’ s
Mr. Justice Goldberg talking of the Securities Act said that:
No policy reflected in the Securities Exchange Act is, to begin with,
served by denial of notice and an opportunity for hearing. Indeed, the
aims of the statutory scheme of self-policy –
to protect investors and
promote fair dealing –
are defeated when an exchange exercises its
tremendous economic power without explaining its basis for acting,
for the absence of an obligation to give some form of notice and, if
timely requested, a hearing creates a great danger of perpetration of
injury that will damage public confidence in the exchangeslD
15Kemerer v. Standard Stock & Mining Exchange, (1927), 32 O.W.N. 295,
at p. 297.
‘GAlliance des Professeurs Catholiques de Montrdal v. Labour Relations
Board of Quebec, [1953] 2 S.C.R. 140; appl’d in Saltfleet Board of Health v.
Knapman, [1956] S.C.R. 877.
17 Posluns v. Toronto Stock Exchange et al., op. cit., n. 4, at p. 292. See also:
Innes v. Wylie, (1844), 174 E.R. 800; Fisher v. Keane, (1879), 11 Ch. D. 353;
Dawkins v. Antrobus, 17 Ch. D. 615; Kemerer v. Standard Stock & Mining
Exchange, op. cit., n. 15.
Is Wood v. Woad, L.R. 2 Ex. 190.
19Silver v. New York Stock Exchange, [U.S. 1963] S. Ct. 1246, at p. 1259.
No. 2]
NOTES
And Harman, J. spoke in the following terms:
It seems to me that bodies like K.R.S. who exercise monopolistic powers
and may ruin a man by their recommendations, ought not to act in an
arbitrary manner, or at least that if they do, as this body did, set up
an investigation committee which is a quasi-judicial body, they must
be taken to hold out to those over whom they claim to exercise juris-
diction the assurance that the proceedings will be fair.20
Lord Reid in Ridge v. Baldwin 21 dealt specifically with this very
situation:
I shall now turn to a different class of case – deprivation of member-
ship of a professional or social body (emphasis mine). In Wood v. Woad
the Committee purported to expel a member of a mutual insurance
society without hearing him and it was held that their action was
void and so he was still a member. KELLY, C.B., said of audi alteram
legal
partem: ‘this rule is not confined to the conduct of strictly
tribunals but is applicable to every tribunal or body of persons invested
with authority to adjudicate upon matters involving civil consequences
to individuals.’ This was expressly approved by Lord MacNaghten giving
the judgment of the Board in Lapointe v. L’Association de Bienfaisance
etc.
Then there are the club cases Fisher v. Keane and Dawkins v. Antrobus.
‘They ought
In the former JESSEL, M.R., said of the committee:
not as I understand it according to the ordinary rules by which
justice should be administered by committees of clubs, or by any other
body of persons who decide upon the conduct of others, to blast a
perhaps to ruin his prospects for life
man’s reputation for ever –
without giving him an opportunity of either defending or palliating his
conduct.’ In the latter case it was held that nothing had been done
contrary to natural justice. In Weinberger v. Inglis (no. 2) a member of
enemy birth was excluded from the stock exchange and it was held that
the committee had heard him before acting. LORD BIRKENHEAD, L.C.,
said: ‘if I took the view that the appellant was condemned upon grounds
never brought to his notice I should not assent to the legality of that
course unless compelled by authority.’ He said this although the rule
under which the committee acted was in the widest possible terms –
that the committee should each year re-elect such members as they
should deem eligible as members of the stock exchange.22
The Quebec jurisprudence was summarized recently in the case
of Association de Taxis La Salle et al. v. Giller 23 where Hyde, J.A.
referring to the case of Le Club de la Garrison de Qudbec v. Laver-
gne 24 said:
2 0 Byrne v. Kinematograph Renters Society Ltd., [1958] 1 W.L.R. 762.
21 Op. cit., n. 3, at p. 74 et seq.
22 See: Gray v. Allison, (1909), 25 T.L.R. 531; Lamberton v. Thorpe, (1929),
141 L.T. 638.
23Op. cit., n. 3, at p. 629.
24 [1918] 27 K.B. 37, at p. 44.
McGILL LAW JOURNAL
[Vol. 18
Speaking generally it can be said that the Court will not inquire into
the merits or demerits of the reasons for expulsion from membership
in a social club, except in so far as these may be involved in the question
whether the decision was capricious or not. The Courts will limit the
exercise of their jurisdiction to an inquiry into two questions, namely:
did the member have an opportunity of being heard and second, was
the decision capricious or not?
Mr. Justice Surveyer, ad hoc, cited with approval the authorities
on the question of expulsion in the case of Lamarche v. Le Club de
Chass6 & Courre Canadien: 25
The Court in that case, was considering the expulsion of a member
of a social club… The Appellant Association is not a social club, it is
a cooperative syndicate to assist the members in earning their living.
It is quite repugnant to one’s sense of elementary justice that a member
of such an organization should be subject to dismissal without having
the opportunity of making his defence and apparently for the reason
that he was not in agreement with the policies of the officials for the
time being.26
If the rules of natural justice are to apply, need a hearing be
granted where dismissal is in the discretion of the tribunal? In
the Posluns case, Mr. Justice Gale stated:
I am of the opinion, too, that a hearing must be granted where the
power of dismissal is exercisable in the discretion of a domestic tribunal.
Ridge v. Baldwin, [1963] 2 All E.R. 66, is certainly one of the most
important cases on this whole subject.2 7
And further at p. 308 after referring to the jurisprudence he
stated:
The immediate effect of all of those authorities is to suggest to me
that when dismissal is in the discretion of a domestic tribunal…. the
person affected must be given reasonable notice of the complaint made
against him and must have a fair hearing before being dismissed.
De Smith summarized the principle in the cases of R. v. St.
Pancras Vestry 28 and Nelson Catchment Board v. Wauinea County
and Richmond Borough,9 at p. 323 of his text: 3 0
If people who have to exercise a public duty by exercising their discretion
take into account matters which the Courts consider not to be proper
for the guidance of their discretion, then in the eye of the law they
have not exercised their discretion.
25 (1901), 4 R.P. 75.
26 Association de Taxis La Salle et al. v. Gillier, op. cit., n. 3, at pp. 633-634.
2 7 Posluns v. Toronto Stock Exchange et al., op. cit., n. 4, at p. 298.
28 (1890), 24 Q.B.D. 371, at p. 375.
29 (1955) N.Z.L.R. 1126.
30 SA. de Smith, Judicial Review of Administrative Action (2nd ed., 1968),
at p. 323.
No. 2]
NOTES
For any such body to rely upon its discretion is illusory for
no discretion can be so absolute as to avoid the rules of natural
justice. A body which has discretion is obliged to exercise that
discretion legally, or in accordance with the principle of audi alte-
ram partem.
One might add to this comment that even an administrative
inquiry must be conducted in a fair and impartial manner. Thus,
Lord Halsbury, L.C. was of the opinion that:
An extensive power is confided to the justices in their capacity as
justice to be exercised judicially; and “discretion” means when it is
said that something is to be done within the discretion of the authorities
that something is to be done according to the rules of reason and
justice, not according to private opinion: Rooke’s Case; according to
law and not humour. It is to be, not arbitrary, vague and fanciful, but
legal and regular. And it must be exercised within the limit, to which
an honest man competent to the discharge of his office ought to confine
himself: Wilson v. Rastall’
Brossard, J. in similar language held:
Consid6rant que, si en principe les tribunaux ne doivent pas intervenir
par voie de mandamus ou autrement, en substituant leur jugement h
celui des commissaires dans les cas d’exercice par une commission scolaire
ou par un officier d’icelle du pouvoir discrdtionnaire conf6r6 par la loi,
il est cependant de leur devoir et pouvoir d’intervenir dans les cas de vol
ou de fraude, d’abus, d’arbitraire, d’erreur ou d’116galit6 manifeste8 2
Thus, even a private club, such as a golf or fishing club, where
no proprietary rights or civil consequences are involved, must act
in good faith.P
Samuel Wex.*
31Sharp v. Wakefield, (1891) A.C. 173, at p. 179.
32 Brunet v. Les Commissaires d’Ecoles pour la Municipalitg de St-Benoit,
(1962) C.S. 86.
33 Ville de Montrdal v. Tourville, (1949) R.L. 428, at pp. 437, 441, 447 and 448;
Simon v. City of Verdun, (1956) R.P. 337; Hopkinson V. Marquis of Exeter,
L.R. 5 Eq., at p. 68; Lamarche v. Le Club de Chass6 a Courre Canadien,
op. cit., n. 25; Le Club de Garrison de Quebec v. Lavergne, op. cit., n. 24.
* Of the Montreal Bar.
