BC Supreme Court Judgment slams BCMA Board

Public

In a decision released November 17, 2008 the BC Supreme Court upheld a complaint by Dr. Caroline Wang, the former elected Honorary Secretary-Treasurer of the BCMA, and disbanded a "special committee" appointed by the BCMA Board in February to review Dr. Wang's conduct.

The Court noted that, “at no time has Dr. Wang or her legal counsel been notified of a complaint or an allegation that she violated any provision of the BCMA constitution, bylaws, Code of Conduct, or any common law duty of directors or officers.”

The Court also held that Dr. Wang had demonstrated a “reasonable apprehension of bias” that two members of the “special committee”, Dr. Michael Golbey and Dr. Carole Williams, such that they were disqualified from sitting on that committee.

Remarking that “from the outset, the Board appeared to be heavy handed and misguided in its treatment of Dr. Wang,” the Court was critical of a President's letter sent by Dr. Appleton to the membership on February 2, 2008 that was “rich in innuendo.”

As a result of this lawsuit, which was filed in April 2008, the “special committee” is prohibited from issuing any judgment, report or recommendation and the BCMA Board is likewise prohibited from receiving any such report or recommendation or communicating its contents to anyone.

The Reasons for Judgment provides a comprehensive review of facts surrounding the case that raise serious concerns related to the actions and functioning of the BCMA Board.

Members of the BCMA will do themselves a service by reading the entire document and in doing so may determine what further actions and remedies are necessary. It is available on the BC Courts web site:

http://www.courts.gov.bc.ca/Jdb-txt/SC/08/15/2008BCSC1559.htm

In light of the extensive Reasons for Judgment, it is disconcerting to members of the BCMA to see Dr. Bill Mackie issue a BCMA President Bulletin to all members on Tuesday, November 18, 2008 attempting to dispel the Court decision and expressing surprise that the ruling was in Dr. Wang’s favour. This at a time when the BCMA Board should be carefully reviewing the court document and the advice they receive.

As the Board considers what actions and remedies they are prepared to undertake it may be prudent for them to consider, if applicable, the requirements and process of any Directors Liability plan.

Further actions taken in haste may only serve to dig a deeper hole and not be supported by the membership at large.

Code of Conduct Committee

The Reasons for Judgment states, “It is significant that the Code of Conduct provides for the formation of a committee in one discrete instance only; that is where a “complaint of non-compliance with [the] Code of Conduct” has been lodged. At no time has Dr. Wang or her legal counsel been notified of a complaint or an allegation that she violated any provision of the BCMA constitution, bylaws, Code of Conduct, or any common law duty of directors and officers.” (Paragraph 95)

The Honorable Madam Justice Ballance writes, “The respondents’ characterization of the special committee as an entity that is something other than a Code of Conduct committee is not supported by the evidence. I will go so far to say that the respondents’ depiction amounts to a distortion of the real state of affairs.” (Paragraph 90)

The Reasons for Judgment concludes, "the special committee is not properly constituted to carry out a review of any kind relative to Dr. Wang’s conduct as a director. Even if the special committee had been validly formed, Dr. Wang has demonstrated a reasonable apprehension of bias on the part of both Drs. Golbey and Williams such that they are disqualified. Consequently, the special committee ought to be disbanded." (Paragraph 170)

Conduct of Board directors in contravention of s.25 of the Society Act.

The Reasons for Judgment makes specific reference to the conduct of the Board. "I have found that the Board failed to comply with its own procedural requirements stipulated in its Code of Conduct. This basic failing was directed to its attention by Dr. Wang and by her counsel. Rather than disbanding the special committee and starting anew by adhering to the procedure it designed, the Board and the special committee appeared to entrench in the ill-conceived position that the special committee was not a Code of Conduct committee. This position was contrary to the Board’s resolution and the president’s representations to the members." (Paragraph 121)

"It is difficult to imagine how the conduct of the Board, which fails to adhere to its own Code of Conduct designed to govern its own directors, could nevertheless be said to be acting in the best interests of the BCMA. On this basis alone, it can be said that the directors have acted in contravention of s. 25 of the Society Act, and with unintended irony, are thereby in breach of the Code of Conduct itself. Along the same lines, I question how the Board’s conduct can reasonably be seen as being in good faith. This statutory breach on the part of the BCMA justifies intervention by the Court." (Paragraph 122),

Tape Recordings of Board Meetings.

The Reasons for Judgment also contains details related to the tape recordings of Board meetings. “Proceedings at Board meetings have traditionally been tape recorded. Dr. Wang understands that this has been the practice at the BCMA for over thirty years and that copies of the tapes are generally kept for two years … The executive committee was also actively considering whether the tapes and transcriptions of past Board meetings should be destroyed once the minutes of the particular meeting were ratified.” (Paragraph 58)

The Honorable Madam Justice Ballance writes, “I find it astonishing that the executive of the Board would move to destroy tapes and transcripts of its February Board meeting in circumstances where it was plain by virtue of the Board’s own accusations that Dr. Wang’s conduct during the February meeting was in issue. The audio tapes, in particular, would be the best evidence of the exchange during that meeting.” (Paragraph 63)

Competing views and Debate on the Duties of Directors

“For the past several years, there has been a debate within the BCMA membership, and among members of the Board and the executive committee in relation to issues touching on the governance of the BCMA. … One view is that the BCMA is, or should be, run using a top-down corporate approach. In this model, the Board and executive committee would have the power to make decisions with a minimum of membership participation between elections. The other view is that the BCMA is a representative, grassroots organization intended to reflect the interests and views of the membership. Under the latter paradigm, proceedings of the Board and of the executive committee would be shared with the BCMA membership unless there was a specific and overriding concern to maintain confidentiality.” (Paragraph 8)

A brief summary of the legal opinions, on the fiduciary duties of directors, obtained by the BCMA Board and independently by Dr. Wang is provided in paragraphs 14 and 15.

“It is amply clear on the evidence that Dr. Wang and the Board and other likeminded Board members had become engaged in a major and ongoing controversy over the entitlement of a member of the Board or executive committee to express dissent of Board decisions and the acceptable parameters of such dissension.” (Paragraph 16)

President Letter February 2, 2008

The Reasons for Judgment refers to the President Letter of February 2, 2008 (paragraph 50), “Dr. Appleton’s letter was rich with innuendo. It did not identify any specific offensive conduct alleged to have been carried out by Dr. Wang. Instead, it raised the spectre of her involvement in a “series of events” of misconduct that left it to the imagination of the members to speculate on the details. Reporting that Dr. Wang had been asked to step aside from her position carries an accusation, by innuendo, that her misconduct under investigation was so grave that there was a danger in allowing her to remain in her post; there was a further accusation, by innuendo, that her decision not to step down was, of itself, improper.”

In the conclusion of the Reasons for Judgment, the Honorable Madam Justice Ballance continues (paragraph 173), "I cannot leave these reasons without remarking that, from the outset, the Board appeared to be heavy handed and misguided in its treatment of Dr. Wang. ... Based on the evidence before me, I cannot say whether Dr. Appleton or any member of the Board deliberately intended to sabotage Dr. Wang’s participation in the election. However, it would have been reasonably foreseeable to them that the contents of the February 2 letter put her reputation and integrity squarely in issue and would cast a dark cloud of suspicion over Dr. Wang. The impression I am left with is that the Board’s conduct was due in large measure to the human dynamics at play, ... It would seem that those personal features overtook the process of fair-minded and informed decision-making on the part of the Board."

Actions and Remedies

These highlights alone have far reaching implications and clearly show the need for members of the BCMA to expect actions and remedies be undertaken by the BCMA Board.

Members of the BCMA may be concerned or even outraged by the conduct of the Board in failing to follow the requirements of its own Code of Conduct, the BCMA Constitution, and the Society Act, giving Dr. Wang no alternative but to resort to the Courts to ensure her right to natural justice be upheld.

Members may be concerned or even outraged that the actions of the Board were ill conceived with resulting significant expense and expect the Board to consider immediate remedies to Dr. Wang.

The actions of the BCMA Board and President and the actions of other Board members during the elections may have been prejudicial, misleading and inflammatory regarding Dr Wang's electability for office, thus raising into question the validity of the May 2008 elections.

Members of the BCMA may insist that a Special meeting be called to address accountability for the actions of the Board.

Zafar Essak, M.D.