We continue to help National Sport Organizations (NSOs) comply with the new Not-for-Profit Corporations Act and, as part of the governance restructuring that some NSOs are undergoing, we thought it would be valuable to review the current voting structure of ALL NSOs. We found some interesting results.

With assistance from some NSO leaders, we were able to access the governing documents of fifty-one (51) NSOs (not all of them, but close enough!). Particularly, we were interested in answering the following questions:

• At the NSO’s annual meeting, which categories of members may vote?  Board members, provincial/territorial sport organizations, clubs, athletes, or others?
• How many votes does each category or each member have?
• Is there proportional voting, whereby one Provincial/Territorial Sport Organization (P/TSO) has more votes based on membership or other factors?

Each NSO may have very good reasons for instituting the voting structure that they currently use. But even though every NSO is different we did find some commonalities that helped us answer our questions.

WHO VOTES?

Of the 51 NSOs included in our sample, 19 NSOs (37%) give their directors a vote at the annual general meeting (AGM).  In every case, the directors each have 1 vote. Occasionally the voting positions are identified, such as in Baseball Canada where the President, Treasurer, and Secretary have voting privileges, or in the Canadian Luge Association, where 11 identified director positions may vote.  Most NSOs assign voting privileges to the President in the case of a tied vote and some NSOs specify explicitly that directors may cast votes for regular AGM issues – but may not vote for elections. In every NSO that allows directors to vote, there are also other groups that hold voting privileges. There are no examples among NSOs where directors are the only voting members at the AGM.

Forty-seven NSOs (92% of our sample) give their P/TSOs a vote at the AGM. Only 4 NSOs do not permit P/TSOs to vote and in each of these cases the P/TSOs have a reduced role in the operation of the NSO or do not exist at all for that sport (such as in Skate Canada, which follows a ‘unified model’ of governance, wherein provincial and territorial organizations are not independent corporations but are rather branches of the national body). Golf Canada is somewhat unique in that P/TSOs are not a class of member, but each provincial golf association names a representative to a Provincial Council and this representative carries an individual vote at the AGM. For the purposes of this study, we considered that P/TSOs in the sport of golf exercised a vote at the AGM, albeit indirectly.

Seven NSOs in our sample (14%) give their clubs a vote at the AGM. These NSOs include Golf Canada, Rowing Canada Aviron, Skate Canada, and the Canadian Yachting Association. In every NSO where clubs are given a vote, they are assigned a number of votes or voting delegates based on a proportional voting system. Swimming Natation Canada has a unique system in that only the country’s Top Six clubs are given voting rights at the AGM.

Voting privileges are not limited to directors, P/TSOs, and clubs. Eight NSOs (16% of our sample) give voting privileges to athlete representatives. But athletes are usually only given votes when the total number of votes is small and thus a single vote is more meaningful. For example, Judo Canada gives 600+ votes to P/TSOs depending on membership numbers and therefore Judo Canada’s directors do not vote and there are no voting privileges assigned to athletes.  But for Diving Canada Plongeon, where P/TSOs are assigned one vote each, there are three athlete representatives who serve as voting delegates and the athletes’ vote in this scenario carries meaningful weight.

Occasionally NSOs will assign voting rights to delegates from other organizations. For example, Canada Basketball provides NBA Canada with one vote, and WTF Taekwondo Association of Canada allows ‘Special Community Bodies’ to each have a vote. Rowing Canada Aviron grants a single vote to Special Associations, which are rowing entities other than rowing clubs and provincial rowing associations. Other NSOs that are arranged by regions or leagues (like Canadian Soccer Association) assign voting privileges to the league or regional entity.

HOW MANY VOTES?

In every case where directors are given voting privileges, they are only permitted a single vote. But the process is different for P/TSOs. There are 47 NSOs (92% of our sample) that assign voting privileges to P/TSOs and 18 (38%) of these NSOs give an equal number of votes to each P/TSO.  Softball Canada (three votes each), Ringette Canada (five votes each), and Table Tennis Canada (one vote each) are examples of this equality.

A few NSOs (such as Badminton Canada, Baseball Canada, and Hockey Canada) do not assign an equal number of votes to the P/TSOs but also do not use a proportional system. The larger provinces are assigned more votes but the rationale for such numbers is not provided. For example, Hockey Canada assigns five votes to Quebec and Ontario but only two votes to each of the other provinces and territories.

The majority of NSOs that assign voting privileges to P/TSOs do so in a way that supports a weighted proportional voting system. In these systems, P/TSOs are given more votes based on one of either membership numbers or the percentage of membership fees paid to the NSO.

PROPORTIONAL VOTING

Well over half of NSOs we sampled assign voting privileges to P/TSO members by a proportional system whereby a P/TSO can have more votes based on a factor that they can influence. In most cases, but not all, these additional votes are capped after a certain number. The two most common proportional voting structures are based on membership numbers and fees paid to the NSO.

For example, Alpine Canada Alpin permits one vote for each P/TSO but also allows additional votes for every 100 Alpine Competitor Cards issued and additional votes for every 500 general members registered. There is no limit to the number of votes a P/TSO can hold – so it would be in their best interests to recruit more members so they can have more votes at the AGM. Similarly, the Canadian Amateur Boxing Association permits one vote for each P/TSO but allows additional votes for every fifty members registered – but in this case there is a vote cap of four votes for each P/TSO. Speed Skating Canada assigns from one to 13 votes based on registered members, with only one province (Québec) maxing out at the top level (13 votes for having more than 5,000 registered members).

Assigning a number of votes based on a percentage of fees paid is a proportional system used by the Canadian Orienteering Federation, Squash Canada, and Water Polo Canada.

The Canadian Freestyle Skiing Association uses a proportional voting system whereby additional votes are assigned to a P/TSO based on the number of licensed athletes and youth participants. However, this NSO has included a clause stating that one P/TSO may not carry more than 40% of the total votes. A similar clause also exists for Canadian Soccer Association and for Judo Canada (which prevents one or two P/TSOs from having a majority of votes).

PROXIES, TIES AND OTHER INTERESTING RESULTS

• Some NSOs permit proxies, some NSOs do not permit proxies, and most NSOs do not specify whether proxies are permitted or not. Under the Canada Corporations Act, proxy voting is allowed but only where the mechanism for it is stated clearly in the bylaws. If the bylaws are silent, proxy voting is not allowed.

• Some NSOs permit the President to break a tied vote, some NSOs prefer a tied vote to be automatically defeated, and some NSOs do not specify what to do if there is a tied vote.

• A handful of NSOs (such as Ringette Canada) only permit P/TSO votes to be cast as a block.

• One NSO (Tennis Canada) assigns the number of votes to P/TSOs based on the population of the province or territory, and not based on registration or participation numbers.

• A couple of NSOs (Equine Canada and Bobsleigh Canada Skeleton) permit every individual member to have a vote. This creates some logistical and communications challenges as every member entitled to vote must also receive a direct notice of member meetings.

THE BEST APPROACH

Though it is difficult to recommend a ‘best’ approach because of the many differences between the sports and their contexts, it is easier to identify the most ‘common’ approach to NSO voting structures.  With a few exceptions, there appear to be three main categories:

• NSOs that permit directors to vote and give each P/TSO an equal vote
• NSOs that do not permit directors to vote and give each P/TSO votes on a proportional system
• NSOs that are too unique to fit into the previous two categories

Certainly with the changes arising in the new NFP Act, choosing the ‘best’ approach to who should vote at an NSO’s annual meeting would take the following issues into consideration:

• Who should have a vote? (Directors, P/TSOs, clubs, athletes, other organizations, etc.) Under the new Act, directors do not need to be members which could call into question whether a director should vote. Our perspective is that this is an antiquated approach – directors are elected to serve the members, and should not step into the role of a member by voting at a meeting of members.

• How many votes should P/TOs have? (Should they be equal, unequal, or weighted proportionally based on membership numbers or fees). Just as we liken Canada to a confederation of equal provinces, should a national body be a confederation of equal provincial bodies? Should tiny PEI have the same democratic clout as massive Ontario?

• Should there be limits to the number of P/TO votes or the percentage of overall votes cast? The concern here is that the affairs of the national body should not be controlled by just one or two provincial bodies. Virtually all sports have varying capacities and sizes across provinces and territories. Depending on the sport, Ontario, Quebec, B.C. and sometimes Alberta usually dominate in terms of participant numbers. Care may need to be taken to ensure that they do not dominate the business of the national body.

• Will ‘absentee voting’ be permitted? This is the language used in the new Act, whereas the term ‘proxy voting’ is used in the current Canada Corporations Act. Canada is a big country presenting huge challenges to mobility and travel, and absentee voting may be the only logical option.

There is an argument to be made, in the words of Carters (Canada’s leading charity law firm) that “organizations may want to collapse all membership classes into one class and remove non-voting membership classes”. This is excellent advice. It will help avoid future problems related to the new Act’s requirement that non-voting members will gain the right to vote on certain future matters relating to membership. It will also help avoid the problem of having to put certain future changes to a ‘special class vote’ where each class of member has to independently approve a change. In our view, member classes should be reduced in number as much as possible, and any class of members should have neither too many members/votes, nor too few.

TRENDS WE’RE SEEING

The trend we are seeing among those NSOs that have now spent some time considering their future membership structure is that simpler is better. Rowing Canada Aviron is considering shifting from a complex structure of 12 classes of voting and non-voting members to a single class of voting members made up of various rowing associations (provincial bodies, special bodies and rowing clubs). Other NSOs are leaning towards the same simple structure.

In almost all cases, NSOs are also moving away from multiple categories of non-voting members (associates, affiliates, individual athletes, individual coaches, leagues, teams, honourary members, life members, etc.) towards different terminology – the ‘registered participant’. By distinguishing registered participants from members in the strict legal sense, they are taking steps now to ensure that desired changes in the future can be more easily achieved. This approach of shifting to ‘registered participants’ has been endorsed by Sport Canada and many insurance companies.

These are interesting times for national sport bodies in Canada. While the main challenge is compliance with a new law, this is also an opportunity to make changes to improve overall governance structures and practices. We encourage NSOs to communicate with each other and share what they are learning and considering.

For further information on the new Not-for-Profit Corporations Act and how sport is making the transition, feel free to contact us at the Sport Law & Strategy Group.

Even though the WADA Code prohibits penalties beyond those specified in the Code itself, a number of sport organizations, operating under the WADA Code, do impose such penalties. The International Olympic Committee (IOC) was one of those organizations. It had a rule prohibiting athletes who had been sanctioned for more than 6 months by any anti-doping organization, from participating in the next edition of the Olympic Games.  CAS found that this IOC rule went beyond what was allowed by the WADA Code and struck it down. We wrote about that decision back in October, 2011.

The British Olympic Committee (BOC) had the same rule as the IOC and was ardent in wishing to maintain it, particularly leading into the 2012 summer Olympic Games. The matter went to CAS, which again found the additional rule went beyond the provisions of the WADA Code and struck it down. This means that two British athletes, David Miller and Dwain Chambers, who have both been subject to sanctions for doping, are now eligible for selection to the British Olympic Team.  You can read the details of the CAS decision here.

The Arbitration Panel noted that further penalties can be assessed, but only through changes to the WADA Code. This might promote some movement towards extending sanctions, perhaps to a four-year or even lifetime ban in such cases. Ross Tucker at the The Science of Sport blog writes that the harsher the punishment, the more vigilant the legal oversight, and from a broader perspective he questions whether the new techniques in the arsenal of anti-doping can withstand the added scrutiny – both legally and financially.

A number of Canadian sport organizations have either a rule similar to the IOC and BOC rule or have other rules that impose some further penalty in doping cases. While it is always important to look at the individual circumstances of each rule, CAS has been very clear through both these decisions that for those sport organizations requiring compliance with the WADA Code, such additional sanctions are not acceptable.

The 2012 London Olympic and Paralympic Games are fewer than 90 days away and many NSOs are preparing to select, or are in the middle of selecting, the teams and athletes that will represent Canada in London. Athletes who are not selected for a major event like the Olympics or Paralympics may appeal these selection decisions. Such appeals can create a major distraction for the appellant athlete, for other athletes who may be adversely affected by the appeal, for coaches and high performance directors, and for the sport organization as a whole.  We have prepared this detailed resource for NSOs so that we can to share what we think you need to know to be ready for selection disputes and to minimize their harmful impact on the entire team’s preparations for these upcoming Games.

At the end of this article are a number of links to more resources that we have prepared over the last four Olympic quadrennials.

Pre-Selection

All NSOs have written criteria to guide how athletes compete for and become selected to Olympic and Paralympic teams. These criteria often are general and applied to every event, or they might be event-specific. In the case of the Olympic and Paralympic Games, it is expected that a selection policy will be very specific and detailed. Indeed, certain sport agencies – the Canadian Olympic Committee, Canadian Paralympic Committee and Own the Podium, for example, require that NSOs have appropriate team selection criteria prepared and published well in advance.

But just because a selection policy has been carefully prepared by a high performance committee, approved by an external body, or triple-checked by a lawyer or sport consultant does not mean that it is appeal-proof. Depending on the sport, team selection can be a complex matter, involving consideration of objective performance criteria, the application of performance standards, and subjective assessments of the athlete’s potential. Performances, rankings, and results must be achieved within certain windows of time, or qualification periods, which vary from sport to sport. The point here is that the existence of written selection criteria, even those that have been very carefully constructed, will not prevent legitimate appeals.

Pre-selection, it is vitally important that the decision-makers fully understand the selection criteria. A mis-application of the criteria (for example, by evaluating an athlete on items not specified in the criteria, or by not considering all athletes in a consistent way against published criteria) would be an appealable ground. So too would be placing greater weight on one criterion and lesser weight on another criterion, when the criteria are presented as being equally important.  It is not possible for an NSO to change the selection criteria once athletes have started competing for selection. After one recent successful appeal of a sport selection, the adjudicator who heard the appeal wrote “Selection criteria are important and highly technical documents. They should say what they mean and will be interpreted to mean precisely what they say”.

What Goes Into A Selection Policy?

Again, most NSOs already have selection criteria and it is likely too late to change anything before selection to the Olympic or Paralympic Games team. But in any case, the following items typically fit into a selection policy:

• Purpose (the event for which the policy is being used)
• Objective (the overall purpose of the selection as well as the number of athletes being selected and in which categories)
• Eligibility (age, citizenry, residency, membership in good standing, signed agreements/contracts/codes of conduct)
• Selection Process (the entire selection process from start to finish, contingency for pre-selection or medical exemption, performance criteria the athletes must meet, weighting of objective and subjective criteria, ranking athletes, scoring system, how ties are broken, selection of alternate athletes, timelines, accommodating injury, addressing unforeseen circumstances)
• Authority for Selection (which body/group/coach serves as a ‘selection committee’ and selects athletes, how they are determined, why they cannot have a conflict of interest, what criteria they use for selection (referencing the above section))
• Dismissal (how athletes, once selected, may be dismissed from the team)
• Appeals (referencing the appeal policy and how to appeal the selection decision)
• Alternate Athletes (describing how and when replacement athletes are selected to fill in for athletes who become ill or injured)
• Appendix (includes all of the forms/data sheets/scorecards/ranking systems/performances that the selection committee uses in their selection decision)

The selection criteria for team sports would be different than the selection criteria for individual sports. For example, an NSO that is assembling a team from a collection of individuals (like in Field Hockey) may choose to weigh subjective criteria like adaptability and leadership in addition to objective criteria like shot power and running speed, whereas an individual sport (like Diving) may choose to include only objective criteria (like scores at events) in their selection policy. In terms of subjective criteria, variables like ‘leadership’, ‘team cohesion’ or ‘creativity’ should be operationalized and defined. No matter the selection criteria, they must be clearly stated in the selection policy and understood by both the athletes and the decision-makers who are determining selection.

Coaches may be selected too. Some NSOs may make coach selection as simple as a Board vote or appointment by a high performance director; while other NSOs may prefer having selection criteria for coaches similar to the selection process for athletes. Even with the ‘simple’ appointment route, there still should be a formal means of selection (such as a nominating committee, an application, an interview/presentation, etc) which must be written down and must provide the coaches who were not selected with the opportunity to know the basis for their non-selection.

Selected! What Next?

Once a selection committee has decided which athletes have been selected, they must document their decision with reasons showing why these athletes have been selected instead of other athletes. For objective criteria, the documentation is easier – “Athlete A finished higher than Athlete B at the Trials and therefore Athlete A is selected” – but becomes more complicated when multiple objective criteria are weighted and when subjective criteria are used. The selection committee should be prepared to explain why Athlete A received a leadership score of ‘7’ and why Athlete B received a leadership score of ‘5’. In these cases it would help to have detailed definitions of the subjective variables.

Detailed spreadsheets showing rankings, weightings, and objective and subjective criteria are not uncommon. This data does not need to be shared with athletes but should be retained and ready to be produced in case of an appeal. What does need to be submitted to athletes is the official selection decision, with reasons. The date of the communication of the decision to the athlete is also important because an appeal policy almost always has a deadline for appeals that starts ticking once athletes are notified of the decision.

Typically, athletes are notified individually of their selection or non-selection to an event or team. For larger NSOs, not every athlete may receive a personalized message – but they would instead receive a mass email. It also varies by NSO whether they announce, to the non-selected athletes, the identities of the athletes who were selected. Athletes who were close to being selected and who may have reason to appeal should be provided with additional details for why they were not selected. We have occasionally seen athletes appeal a decision primarily because the announcement of the non-selection by the NSO was a terse message with no reasons. The NSO does not benefit from withholding information – and in fact, being more open and proactive can go a long way toward averting an appeal.

Generally, since only athletes who were not selected to a team appeal the selection decision, here are some approaches that NSOs can use in their announcements to those athletes who were not selected:

• Personalize the message
• Inform the athlete that they were not selected
• Summarize the selection process (briefly) – the athlete should be fully aware of the process and criteria that were used
• Describe those areas of deficiency or weakness that prevented that athlete from being selected
• Provide the athlete with the contact information for the selection committee, coach and/or high performance director in case of further specific inquiry
• Encourage and support the athlete
• Thank the athlete

If the athlete has been selected as an alternate athlete (a process which should be described in the selection policy), the letter should inform the athlete what the status of alternate means (some alternates travel with a team while others do not), and how it may occur that they take the place of a selected athlete.

Letters to selected athletes can also describe how the athlete was selected (but generally do not need to – the athlete may not be that interested in the selection process any longer!) but should definitely describe the ‘next steps’ in terms of who will be contacting the athlete, what the athlete needs to do to remain selected, and how it may occur that the athlete becomes ‘unselected’ or dismissed from the team. All of these aspects should also be set out clearly in writing as part of the organization’s selection policy or other national team policies.

Responding to an Appeal

Even with a comprehensive letter explaining the decision, an athlete (or multiple athletes) may still decide to appeal. NSOs are required to have an internal Appeal Policy that describes the timelines for an athlete to appeal the decision, the grounds on which an appeal would be allowed, the group or committee hearing the appeal (who must be different than the selection committee), and other possible recourses for the athlete (such as appealing to the SDRCC, which we will explain later). Some NSOs have a panel of three people hear appeals, while other NSOs refer appeals to a single adjudicator.

The first step for an NSO upon receiving an athlete appeal is often to appoint an independent third party to administer the appeal. The Sport Law & Strategy Group regularly handles this process for numerous NSOs and PSOs. The advantage of an appeals administrator is that the NSO’s staff and volunteers are not burdened with the administrative work, pressure, and inherent conflict of the appeal. Prior to a Major Games, their focus should be elsewhere.

In our experience, NSOs are often successful in defending their selection decisions if they can demonstrate the following:

• Detailed and descriptive selection criteria, clearly written and published well in advance of the selection itself
• Clear evidence that the selection committee had authority for selection and was free from bias and conflict of interest
• Clear evidence that the selection committee followed the selection criteria, making no deviations and taking no shortcuts
• Relevant documentation supporting the decision (scorecards, ranking sheets, performance data, etc.)
• Evidence that the selected athlete, per the selection criteria, deserved selection instead of non-selected athletes
• If there are multiple criteria that entered into the selection decision, a completed matrix showing the weighting of the criteria and how different athletes fared relative to the different criteria – a key consideration is that the athletes were treated in an ‘even-handed’ manner, meaning that the criteria were applied in an identical fashion for all of them
• The letter or email informing the non-selected athlete of the decision, with reasons

When an Appeal Succeeds

In a written decision, the adjudicator or appeal panel will either allow or dismiss the appeal and will provide reasons for this decision. In our experience administering appeals, we have seen successful appeals of selection decisions about 40% of the time.  Usually appeals are allowed because the NSO has improperly applied its written selection criteria or the selection decision was made by a group or body that did not have the authority for selection. In these cases, the adjudicator will point out where the process was done improperly and direct the NSO to re-do the selection process from that point, or remit the decision to the group or body properly responsible for the decision. Rarely does this decision involve additional competition, but instead a clarification of the selection process and applying the proper process to the existing performance results.

A successful appeal may also result in placing the athlete who appealed onto the team, and removing a different athlete from the team. This effect of pitting one athlete against another adds to the complexity and controversy of appeals, and is another reason why independent appeals management is a good idea.

NSOs have a couple of options when an appeal is allowed – but usually these options are time dependent. Even with an efficient appeals administrator, the appeal process can take 7-14 days and the event draws closer with each day. Athletes need time to prepare and the window to make a new selection decision is shorter still. NSOs with more time may challenge the appeal decision at the SDRCC (and athletes who ‘lose’ an appeal can take this path also) but in the vast majority of cases, NSOs respect their internal appeal decisions and re-do the selection with the proper procedure or criteria. It is certainly possible that the result of the new selection will remain the same even with a corrected process.

Internal Appeals vs. the SDRCC

The Sport Dispute Resolution Centre of Canada is a government-funded arms-length agency that acts as the highest tribunal in Canada for disputes involving amateur sport organizations. The SDRCC uses a similar process to an NSO’s own internal appeals policy and, in fact, the result of the NSO’s internal appeal can itself be appealed to the SDRCC.  SDRCC decisions are not appealable and therefore some disputing parties may choose to bypass the NSO’s internal appeals process and proceed straight to the SDRCC tribunal. There are benefits and drawbacks to going straight to the SDRCC – and CanoeKayak Canada’s CEO Lorraine Lafrenière explained the differences in a recent article for the SDRCC newsletter.

Each NSO may have different reasons for taking the path of an internal appeal versus using the SDRCC as the first and only step in the process. Legally, the two mechanisms are quite different, as internal appeals are limited in scope to procedural grounds, while SDRCC appeals may be heard on the selection decision’s merits. In other words, the tribunal in a SDRCC hearing can consider every aspect of the initial decision, while a tribunal in an internal appeal hearing is limited to considering potential procedural errors in the initial decision. Hearings before the SDRCC may be unduly complex as lawyers are frequently involved and the adjudicators hearing these cases may not be familiar with the particular sport. On the other hand, the final and binding nature of a SDRCC ruling can be attractive as it can bring closure to a drawn-out dispute.

The advice we would give an NSO is to do an internal appeal using their appeal policy and independent administration, and make the effort and commitment to get it right. Professionally managed appeals rarely go beyond the NSO jurisdiction. In fact, we are unaware of any internal appeal that the Sport Law & Strategy Group has administered being overturned by a subsequent SDRCC tribunal.

Resources

This is not the first time we have written about appeals in advance of an Olympic or Paralympic Games. These issues come up every two years. Here are some links to our previous pieces from previous Olympics and Paralympics – which are all still very relevant for the upcoming Games in London this summer:

• Program from Beijing 2008 Dispute Resolution Workshop for NSOs (includes articles about selection decision-making, internal appeals, the written appeal decision, the SDRCC experience, and other parties in the decision)
• Improving Your Selection Policies (includes rules for selection policies and a skeleton for a selection policy template)
• Lessons Learned from Appeals Management (includes nine tips for dealing with an appeal)
• What Coaches Need to Know (includes some basic and advanced information that coaches should know about selection and appeals)
• Principles Underlying the Adjudication of Selection Disputes (includes an academic research article that reviewed sport selection disputes)

Final Tips

We mentioned that appeals can be controversial and emotionally taxing. An athlete who feels that he or she deserved to be selected to the team attending a Major Games can become embittered or disillusioned. It is important for the NSO to not only provide this athlete with a fair process for an appeal, but to also retain the athlete’s interest, involvement, and commitment after the appeal has ended. Here are some final thoughts:

• Publish your selection criteria well in advance and ensure all athletes are aware of the contents of the document
• Makes selection decisions based on the selection criteria, and only on the selection criteria – follow the criteria exactly as written
• Eliminate or reduce all possible instances of bias or conflict of interest among those making selection decisions
• Athletes should understand why they were not selected – provide the athletes with the reasons and knowledge for why they were not selected
• If an athlete appeals the selection decision – do not cast them as a villain but recognize and support their inherent right to pursue this process

At the Sport Law & Strategy Group, we have administered countless appeals in our 20-year history.  In the role of an appeals administrator we:

• Act as an independent third party able to assist all participants in the process
• Collect and distribute submissions from the Appellant, Respondent, and any Affected Parties
• Help the parties understand the process and manage preliminary and procedural issues
• Find and appoint the adjudicator or panel
• Coordinate all aspects of the appeal including the hearing
• Provide advice and support to the adjudicator or panel, as required
• Do all the above in a timely, professional, confidential, and cost-effective fashion

We are pleased to offer these services to NSOs in advance of the upcoming Olympic and Paralympic Games. If you would like to start the conversation about your selection process and/or appeals administration please feel free to contact us at rmc@sportlaw.ca

We recently posted a blog about a simple, yet powerful set of principles that, when implemented, can help sport leaders make better decisions and determine appropriate strategies. In today’s Ottawa Citizen, I read about Porter Airlines’ success story and the simple principles that CEO Robert Deluce shared recently when asked what made his organization not simply survive, but thrive in such turbulent times. Here is my take on what he had to say:

Key principle 1 – Know what you’re doing: For Deluce, this meant knowing the aviation industry and having a deep passion for it. For NSO leaders, this means taking the time to understand all aspects of your business; getting a handle on financial realities, possibilities and legal requirements; examining the structure that underpins your organization and being open about new ways to organize your business; being strategic in your decisions and tactics; and managing your organization in such a manner that brings added value to all involved … staff, athletes, coaches, volunteers, funders, and supporters.

Key principle 2 – Setbacks can make you stronger: Deluce and his team did not give up when the building of a bridge to the airport was blocked. He said that “That was one of many speed bumps that turned out to strengthen us. We hired more talent and raised more money. We are certainly better off for it.” For NSO leaders, facing setbacks is nothing new. But what might be new is the approach you take when facing these challenges. One way to bleed opportunities from setbacks is to use a risk management approach. By asking “what are the risks associated with this roadblock” AND “what are the risks if we don’t find a way around it”, you open up all kinds of new ways to think about the issue. Learning from mistakes is what athletes and coaches thrive on. Let’s bring that attitude to our daily work environment the next time a setback occurs.

Key principle 3 – Build your own brand: Deluce did not go the conventional route when uncovering his company’s new brand. Porter’s mascot is the raccoon, which is the epitome of nuisance for most of us. But not for Deluce and his team. They believe the raccoon exemplifies qualities that Porter prizes above all else: innovation, adaptability, and persistence.  For me, Deluce has been able to translate core values into an image that connects with both employees and clients. He’s also incorporated a few critical marketing truisms to capture and retain our attention by connecting his brand to something unexpected. He’s made it simple for us to remember, concrete enough for us to make the leap, and credible with staff and leadership buying into the core message. He’s also savvy enough to connect their core values back to his clients in an interesting way which is a critical aspect of branding your message… or the art of storytelling. So what can sport leaders learn from this? Create a brand that distinguishes your sport from others. Create an inviting platform that connects people who are passionate about your sport and want to contribute, and adapt some of his strategies when you build your marketing and communications plans. Or check out what Dan and Chip Heath have to say about this in their book Made to Stick.

Key principle 4 – Stick to your core: Deluce is clear on this point. Don’t get distracted by what your competitors are doing… even if it seems so enticing. If you know what you’re good at and you know what you value, then sticking to your core is much easier. Porter promises speed, convenience, and exceptional service; and offering service out of huge Pearson Airport in Toronto, for instance, would distract from that. For sport leaders this could mean not duplicating another sport’s LTAD approach or not trying to increase participation numbers if you are a highly specialized sport. I’m not suggesting that you don’t adopt a spirit of innovation and entrepreneurship but, if you do, do so with a view of helping you achieve your strategic vision… one that is connected to your mission and reflective of your values.

Key principle 5 – Share the wealth: For Deluce, sharing the wealth meant creating profit-sharing opportunities for his staff. For sport leaders, sharing the wealth might mean finding creative ways to reward high performing staff using innovative and customized methods. Research tells us that people feel really appreciated and are most happy working in an environment where they are paid an appropriate salary for their work, provided with opportunities for growth and learning, recognized by their peers for going above and beyond, and mentored by people they value and look up to. Keep in mind that remuneration is only one of many things smart leaders can use when rewarding exceptional performance.

Key principle 6 – Create value everywhere: Porter’s message is clear. They are proud of their made-in-Toronto fleet, and they are committed to providing an airfare cost reduction of 70% to any new location destination. For sport leaders, creating value means recognizing that sport is primarily played in communities across the country with volunteers serving as gatekeepers… think coaches, officials, cheerleaders, chauffeurs, administrators, etc. Creating value means being connected to the lived experience of the sport at all levels. It means listening to what your members have to say and offering them a voice when it makes strategic sense to do so. It means understanding what critical role your provincial and territorial partners have played, are playing, or can play in the future. It means connecting your LTAD plans from grassroots to podium and working tirelessly to get a consistent message out.

Key principle 7 -Service matters: Porter is exceptionally proud of a recent Ipsos survey that showed that 83% of travelers reported they were very satisfied or extremely satisfied with Porter’s service. “It’s the highest rating Ipsos has ever seen,” said Deluce. What’s your sport’s rating look like? If you were to ask how satisfied your ‘clients’ (members, athletes, coaches, funders, etc.) were, how would your rating fair? From my perspective, this kind of environmental scanning is a critical aspect of any progressive organization and most of the clients I work with have asked us to help them implement a system-wide inquiry to figure out how well they are servicing their members.

Key principle 8 - Nimble wins: For Porter this means cutting prices for a few days and by the time the competition catches up to the new standard, Porter has already moved on to something else.  What is your sport doing to set standards and how are you trying to exceed them? How nimble is your sport when it comes to making decisions, scanning the environment, assessing risks and opportunities, saying no, sticking to what is core, or finding new ways? What does being nimble mean to your sport? This could be a question worth asking at your next Board or Management Team meeting.

Key principle 9 – Fasten your seat belts: For Porter this means smart growth and the expansion of a new Porter Escapes division. For your sport is might mean a strategic alliance with other NSOs and developing a common approach to get young kids active. It might mean being among the first NSOs  to participate in a new project (like the nine sports that have led the way on the Risk Management Project supported by True Sport and coordinated by the Sport Law & Strategy Group). Or it might mean developing a new financial management plan to secure longer term funding for your organization. There is a clear invitation to think beyond today so that the organization of tomorrow is in a better place than it was when you first found it.

If you have any comments or ideas based on the above, send them my way at dbl@sportlaw.ca

Okay, so Dina and Rachel got to thinking about what it takes for organizations to perform at a high level. Most of us working in sport have a good idea of what athletes and coaches need to be their best – these are our prescriptions for what sport organizations need to excel.

Strategic Management

There is a science and art to managing people in organizations. Managing them strategically means paying attention to the following principles. Keep in mind that your approach needs to be customized to meet your organization’s available resources (time, money and capacity):

• Have a strategic framework to guide your work. This includes mission, vision, values, strategic priorities, and expected results over a defined period of time.
• Engage your members at varying levels throughout your planning cycle. People feel like implementing what they have had a hand in creating.
• Communicate …. strategically. Pay attention to who you are communicating to, what you are telling them, how frequently you are connecting with them, through which medium, and why you are sharing this information with them.
• Operationalize your strategic framework, paying particular attention to the two year timeframe, and provide staff with guidance on how they can use this information to develop their individual work plans.
• Develop a performance management strategy that specifies how you will monitor and evaluate your organization’s performance over time, including the performance of your staff and key volunteers.
• Pay attention to your culture… workplace wellness is a critical aspect of your organization’s health and overall performance.

Good Governance

Good governance is related to strategic management because it is about the systems and structures people use to steer an organization towards its vision. It is also about how volunteers and staff, working in partnership, create a culture that supports and promotes the values of the organization.

Sport Canada has published principles of good governance for the Canadian sport community. At the core of these principles is the imperative of every organization to set and demonstrate high standards of ethical behavior. These standards must be reflected in all the work of the Board, its committees and the staff of the organization.

Effective governance in sport also means:

• Having clearly written and understandable governing documents and policies to guide the work of the organization.
• Being clear about the roles and responsibilities of volunteer and staff resources – Board, committees and staff must work in a partnership with clear expectations and written job duties.
• A board that is educated about its fiduciary role, committed to working without conflict of interest in a manner that is transparent and accountable for results.
• Implementing systems and controls that ensure fiscal responsibility and prudent risk management.
• Having a long-term view of the human resources needs of the organization, and intentionally planning for volunteer and staff succession.

We last wrote about RCAAAs (Registered Canadian Amateur Athletic Associations) in February 2012, noting that recent changes to the Income Tax Act have placed RCAAAs on the same footing as mainstream charities in terms of their legal obligations. As we learn more about the legislative changes, new wrinkles continue to emerge that will impact NSOs in Canada.

Under section 126 of the new Not-for-Profit Corporations Act (now in effect, and to which all NSOs and MSOs must transition before October 2014), a director of a corporation has to meet certain qualifications. Directors must be of legal age, they may not have been declared incapable by a court in Canada or another country, and they may not have the status of a bankrupt. The bylaws of many NSOs incorporated under the Canadian Corporations Act currently use similar language to define the pre-requisites to be a director.

The revisions to the Income Tax Act have added stricter provisions for NSOs that are also RCAAAs. In essence, they are being held to the same high standards of all charities. For example, RCAAAs must now have the promotion of amateur athletics in Canada on a nationwide basis as their exclusive purpose and function, and must devote all of their resources to that purpose and function. Previously, it was sufficient for a RCAAA to have amateur sport as its primary, rather than exclusive purpose.

The Income Tax Act revisions also set a clearer standard for the conditions that could lead to revocation of charitable status (note that in recent years a handful of NSOs have had their charitable status revoked – we wrote about this in 2008). The Income Tax Act states that the Minister may revoke the registration of a RCAAA for, among other things, having an “ineligible individual” as a director, trustee, officer, or like official of the organization, or who is in a position of controlling or managing the association, directly or indirectly, in any manner whatsoever.

The interesting provision here, and a new one for sport organizations, relates to this eligibility requirement of directors. Under the Income Tax Act, an “ineligible individual” is:

• Someone who has been convicted of a ‘relevant criminal offense’
• Someone who has been convicted of a ‘relevant offense’ in the past five years
• Someone who has been a director, trustee, officer, or held a similar position with a charity or RCAAA that in the past five years either, a) engaged in conduct that breached the requirements for RCAAA registration, or b) had its registration revoked
• Someone who has managed or controlled, directly or indirectly, a charity or RCAAA that in the past five years either, a) engaged in conduct that breached the requirements for RCAAA registration, or b) had its registration revoked
• Someone who has promoted a tax shelter that involved a charity or RCAAA

A ‘relevant criminal offense’ and ‘relevant offense’ are defined as crimes and offenses that would be relevant to the operation of the organization (such as fraud, tax evasion, theft, and financial dishonesty).  These offenses do not necessarily need to have involved the sport organization – they can be offences that are particular to the individual in his or her personal capacity or his or her professional and business pursuits outside of the sport domain.

This is a critical new requirement for board members of NSOs/RCAAAs. Under not-for-profit legislation, it is only necessary that a director not be underage, legally incapable, or bankrupt. It would be readily apparent to most casual observers if a director was any of these things. It is quite a different matter to know whether a director’s previous business or personal dealings may have rendered him or her “ineligible” to be a director of a RCAAA under these new requirements. The NSO assumes a significant risk of having charitable status revoked if it does not take reasonable steps to ensure its directors are not ineligible.

Our recommendation to NSOs that are RCAAAs is to make sure you know the history of your board members. A prudent approach is to advise all potential directors of these requirements and to seek a declaration as to their eligibility prior to their election, and consider having them make an annual declaration stating that they continue to remain eligible to be a director of the organization. Such a statement could even be combined with the directors adhering to a more comprehensive conflict of interest policy. The organization would be entitled to rely upon the representations made by a director as to their eligibility, and getting this in writing would help the NSOs to make its case that it was diligent in screening directors.

Such declarations might appear onerous, but since the NSO’s status as a registered charity is at stake, these are measures definitely worth taking!

Traditionally, re-publication had been seen as another instance of defamation. That is to say, every publication of defamation is a new publication and the re-publisher can be subject to a defamation suit, just like the original publisher.

The original case came about when Jon Newton, an internet blogger, wrote a post on his political blog that allegedly defamed Wayne Crookes, a business owner and former executive with the federal Green Party.  Newton’s post did not contain defamatory content but did include two hyperlinks – a “soft-link” that connects to a general search about the term – and a “hard-link” which was a direct hyperlink to another page.  The two external hyperlinks contained allegedly defamatory information and Crookes claimed that, by creating the hyperlinks and/or by refusing to remove them when told that they connected to allegedly defamatory remarks, Newton became a re-publisher of the articles and, therefore, a publisher of the allegedly defamatory information.

For example, this hyperlink here connects to a list of articles that I have written on this website. This is a “soft-link” – which means that the user still has to do some work exploring those writings and looking for any references to anyone I have defamed in my writing.  The “soft-link” in the Crookes case linked to an external website with ten listed articles, three of which Crookes alleged contained defamatory material.

This hyperlink here is a “hard-link” – which means it connects directly to an article I wrote.  The “hard-link” in the Crookes case linked to one article on a different external website, which Crookes alleged contained defamatory material.

Crookes claimed that Newton met the criteria for defamation (which we have written about in the past) which include:

• there must be a “publication”
• the publication must impart a defamatory meaning
• the publication must be about another person

Crookes’ legal actions were not limited to Jon Newton.  According to one post back in 2007, Crookes also sued Wikipedia, Google, and Yahoo for similar alleged offenses. Michael Geist, who is the Canada Research Chair of Internet and E-commerce Law at the University of Ottawa, was also reportedly sued by Crookes for content existing on Geist’s blogroll (an application on some blogsites that lists links to related blogs).  In response, Geist wrote: “In other words, I’m reportedly being sued for maintaining a blogroll that links to a site that links to a site that contains some allegedly defamatory third party comments.”

In dismissing the lawsuit against Newton, the Court decided that way the links were presented on Newton’s post was not a re-publication of the material. Specifically the Court wrote that “making reference to the existence and/or location of content, by hyperlink or otherwise, without more, is not publication of that content“. The Court also recognized that the document you are hyperlinking to can be changed – which means that the ‘safe’ webpage you link to can suddenly contain content that is defamatory. To this end, the Court considered that hyperlinks are essentially content-neutral references, instead of republication.

There are some exceptions. If additional commentary in the original post could be considered “adoption or endorsement of the content of the hyperlinked text” then publication of a defamatory statement could be found.  Further, if Newton wrote that he agreed with the content then he could be liable for that defamatory content. Essentially, by promoting and supporting defamatory comments you can become a publisher of the defamatory comments.

In a blogpost that we wrote last month about the permanency of social media, we made a deliberate choice to avoid linking to the webpage with the possible defamatory comments about the NSO leader, or to the website about the Alberta Soccer Association, or to the blogsite describing the possible criminal activity of a CJHL hockey player. However, even if we did link to those sites, this new Supreme Court of Canada case explains that we would likely not be considered a publisher of any potentially defamatory information on those sites.

So why is this new case important to sport leaders? Most of our readers are affiliated with local, regional, provincial, or national sport organizations; the vast majority of which maintain their own websites and publish their own content. Plus, a growing number of sport organizations are establishing a social media presence through Facebook pages, blogs, and Twitter accounts. It is important to be aware of the law of defamation, and to manage your online activities and publications so that the risk of posting defamatory materials is minimized.

Sport Law & Strategy Group Newsletter

vol 8(1) – March 2012

Our quarterly newsletter has brought you important content in the following areas: legal updates, new legislation and case law, governance tips, risk management and values management practices, social media, communications strategies, as well as all kinds of other planning and strategic advice. We published our last newsletter in November 2011.

This edition of our newsletter highlights additional updates about the federal Not-For-Profit Corporations Act (which affects all NSOs and MSOs) and explains why Provincial Sport Organizations (PSOs) should be paying attention to the changes at the national level. The provincial Ontario Not-for-Profit Corporations Act is also on the way and British Columbia has started a review of its Societies Act. Not sure what these NFP Acts are all about? Check out our website:  Federal Act.  Ontario Act.  BC Act.

We send our newsletter every three or four months.  The content will include summaries and links to new material we post on our website – plus updates on current events and other news.  You can also join our Facebook page and get immediate updates.  If you don’t want to receive the newsletter – no problem – just choose to unsubscribe at the bottom of this message.

Why the Federal NFP Act is important to PSOs

We have written extensively about the Federal NFP Act and it’s rewarding to see that about a quarter of National Sport Organizations (NSOs) have already begun important governance reviews as part of complying with the Act.  But Provincial Sport Organizations (PSOs) cannot ignore what’s happening with their NSO. For example, if you represent Alberta Alpine (a PSO) – and Alpine Canada Alpin (the NSO) is undergoing a governance review – then you need to be aware of possible changes that will trickle down and affect your provincial organization. Since every NSO will undergo some degree of change to comply with the Act, every PSO should be aware of changes that will affect them. Read more in our blogpost.

Financial Impacts of the NFP Act

Organizations that are also Registered Canadian Amateur Athletic Associations (RCAAAs) will face additional challenges when they comply with the new Federal NFP Act. The Income Tax Act has been revised and RCAAAs that previously enjoyed special status as charities will now face the same disclosure and reporting rules as everyone else. Plus RCAAAs that operate commercial ventures will need to make even more changes. This may sound complex but we’re written about it clearly on our website and you can contact Rachel Corbett (rmc@sportlaw.ca) if you have questions.

Screening +

Rachel Corbett reflects on Penn State, Scouts Canada, and Graham James in this blogpost. Most organizations have a screening policy or require volunteers to acquire police checks before interacting with minors. But sometimes, very rarely, a bad person can slip through. Laws, policies, screening systems, and police checks will not always protect vulnerable people from harm. People need to help too.

Harassment in Sport: What’s changed since 1994?

In 1994, Rachel Corbett wrote a handbook titled ‘Harassment in Sport’ that was distributed to NSOs and other organizations around the country. As part of our 20th anniversary of service, we wanted to revisit that handbook and see what has changed in ‘harassment in sport’ since 1994. Perhaps the most compelling evolution is that Rachel recommends that organizations should no longer have a dedicated ‘Harassment Policy’ – this is outdated! Instead, organizations should have a comprehensive ‘Member Conduct Policy’ coupled with sensible discipline mechanisms. On our website, we’ve added a blogpost that includes the old handbook and a mock interview with Rachel where she also discusses changes in law, hazing, myths of harassment, and possible new policy trends.

Authentic Leadership – The leader you want to be

Dina Bell-Laroche (the newest True Sport Fellow!) has written a shortlist of tips for becoming an authentic leader. Authentic leadership is a form of leadership that transforms people, organizations, communities, and the world. Dina writes about the benefit of being an authentic leader in your organization and details five qualities of authentic leaders.

The Permanency of Social Media

Once we post this newsletter on our website, it will never go away. It will live somewhere, on the internet, for ever and ever. The same thing happens with your picture on Facebook, your tweets, and your blogposts. The permanency of social media could be a challenge for some organizations. What if a problem-causing member blogged something defamatory about a senior executive? Members (or future employers) googling the executive’s name would be directed to that nasty blog – with no context for the situation or the commentary. The quick solution – google yourself frequently. But the long-term solutions involve proactive maintenance of your online identity. On our website, we’ve written about the permanency of social media. You don’t need to read it right now – it will be available for you to read forever.

The Ottawa Rapidz case: Contracts that help and contracts that don’t

Appeals Management

It’s an Olympic Year! Again! Many NSOs will be faced with very important selection decisions. Of course, selection decisions occur every year for Major Games events – but their significance is always heightened in an Olympic Year (as we wrote about back in 2008). At the Sport Law & Strategy Group, we offer appeals management services to many NSOs. We currently manage appeals on a continuing basis with Squash, CanoeKayak, Freestyle Skiing, Snowboard, Synchro, Athletics, Cycling, Volleyball, Karate, and the Canada Games – and we’ve assisted many other NSOs, MSOs, and PSOs on an as-needed basis. In the role of an appeals administrator we:

• Act as an independent third party able to assist all participants in the process
• Collect and distribute submissions from the Appellant, Respondent, and any Affected Parties
• Help the parties understand the process and manage preliminary and procedural issues
• Find and appoint the adjudicator or panel
• Coordinate all aspects of the appeal including the hearing
• Provide advice and support to the adjudicator or panel, as required
• Do all the above in a timely, professional, and confidential fashion

Nearly every NSO has an internal appeals process that requires the services of an independent and professional neutral party – and this internal process has many benefits. NSOs that use our services for appeals management ‘get it right’ and decisions that we’ve managed are seldom taken further up the dispute resolution chain. If you have questions about your own Appeals Policy or would like to chat about our services in appeals management please feel free to contact Rachel Corbett at rmc@sportlaw.ca.

Introduction

An interesting sport case has been playing itself out in the Supreme Court of Canada. The case highlights the importance of seemingly innocuous contract clauses which, in this case, can leave several parties vulnerable to a number of lawsuits. But the astute use of the same clauses saved another party from the same fate.

In many contracts, ‘innocuous’ clauses (also known as as “boilerplate clauses”[1] ) address how disputes will be resolved, and under what law the contracts will be interpreted. These clauses are commonly thrown into contracts with little attention given to their meaning or effect.

Another important aspect of this Supreme Court case speaks to how multiple contracts inter-relate and how an organization’s bylaws can become an important part of a contract.  For example, in promoting an event, an organization may enter into a leasing agreement, multiple sponsorship agreements and a management agreement, among others. All of these agreements must work together, overlapping where necessary in a seamless way, without conflicts or duplication. This takes careful attention to detail.

If you don’t want to follow the details of the Ottawa Rapidz case, just jump to the section “Lessons to be Learned”.

Contractual Trail of the Case

The Ottawa Rapidz was were a baseball team created to bring baseball back to Ottawa after the loss of the Ottawa Lynx triple “A” baseball team in 2007. The team was owned by Momentous.ca – a company created specifically for this purpose. The team entered the Can-Am League for the 2008 season, and to do this, Momentous.ca had to enter into two agreements with the Can-Am League: first, an agreement to demonstrate that they had a facility lease and thus a place to play,  and second, a league affiliation agreement.

To execute the first agreement with the League, to show that they had secured a facility,  Momentous.ca had to enter into an agreement with the City of Ottawa, which actually owned the baseball stadium where the games would be played.  Then they entered into the agreement with the League committing confirming a the 2-year lease on the City-owned stadium, a $200,000 letter of credit (which is essentially a guarantee to pay up to $200,000 to the League for any default by Momentous.ca), and an agreement to go to arbitration in the event of any dispute arising between the parties (that is, Momentous.ca agreed not to go to court in the event of a dispute with the League, but rather to go to private arbitration). This last, seemingly small detail is very important to this case.

The second agreement with the League, the affiliation agreement, specified that upon any “unsanctioned withdrawal” of the team from the League, Momentous.ca would forfeit the $200,000 guaranteed by the letter of credit in the first agreement (this is how the contracts inter-related) and also contained a mandatory arbitration clause with a waiver of legal action outside of the League’s bylaws.

The bylaws of the Can-Am League (with which Momentous.ca agreed to comply when it affiliated with the League) contained two clauses: one stating that disputes would be heard in the jurisdiction of the state of South Carolina and a second stating that they would be heard by arbitration in accordance with the League’s bylaws.

Finally, the $200,000 line of credit of Momentous.ca was guaranteed by Miles Wolff, Commissioner of the Cam-Am League. In other words, Wolff would be on the hook if Momentous.ca could not honour its line of credit.

A Litany of Lawsuits

The Ottawa Rapidz failed as a business venture. Team management applied for a voluntary withdrawal from the League for financial reasons, which the League’s bylaws allowed. The League, however, refused to allow such a voluntary withdrawal and, in refusing, triggered the clause requiring Momentous.ca to forfeit the $200,000 because its withdrawal from the League was now an unsanctioned withdrawal.

A messy  situation ensued – the very thing all parties had wanted to avoid by the terms of their various contracts. But the drafting of the contracts is exactly what brought the parties to litigation. A number of claims were filed with the Ottawa courts:

• Momentous.ca sued the Can-Am League for illegally terminating the membership of the Ottawa Rapidz in the League and thereby improperly drawing down the $200,000 letter of credit;
• Momentous.ca sued the City of Ottawa under the lease agreement between the two parties;
• Miles Wolff, guarantor of the letter of credit, sued Momentous.ca; and
• Momentous.ca counter-sued Miles Wolff.

The Legal Outcome

Faced with the Momentous.ca lawsuit, the Can-Am League was able to rely upon the two contracts it had signed with Momentous.ca,  and its bylaws, to have the case dismissed. The League had carefully drafted its contracts from a risk management perspective and had ensured that the contracts and its own bylaws were consistent and worked in concert for the benefit of the League.

The Trial Court (Ontario Superior Court) dismissed all of Momentous.ca’s claims. It dismissed Momentous.ca’s claim against the League based primarily on the two ‘innocuous’ clauses discussed previously: the choice of legal jurisdiction clause and the arbitration clause.

Momentous.ca appealed the decision. The Court of Appeal agreed with the Trial Judge in dismissing the claim against the League.

The Appeal judge also addressed  Momentous.ca’s claims against Wolff and the City of Ottawa. This is where things got even messier. The Appeal judge said that theoretically, because Wolff had sued Rapidz in Ontario in order to get back the money from the line of credit, Momentous.ca would be able to maintain its lawsuit against him in Ontario. And, theoretically, because the City of Ottawa allegedly reneged on its long term lease agreement with Momentous.ca, Momentous.ca would be able to maintain its lawsuit against the City in Ontario. However …  because Momentous.ca did not raise these jurisdictional issues in its filing of documents for the appeal, the Court dismissed its actions against both Wolff and the City of Ottawa.

Momentous.ca has appealed to the Supreme Court of Canada and we are awaiting that decision.

Lessons to be Learned

Regardless of the outcome of the Supreme Court, there are some lessons to be learned here. First, contracts, and particularly situations involving multiple parties and multiple contracts, need to be crafted very carefully. The Can-Am League protected itself very well by carefully including choice of law and arbitration clauses in its contracts and making sure that they were consistent with its bylaws, and those bylaws had been drafted quite carefully to support exactly this sort of contract construction.

It is important to think ahead as to how and where potential disputes will be handled and ensure an integrated mechanism is established. This means making sure various policies and contracts all work together: for example, the athletes’ agreement, selection policies, discipline policies and appeal policies must all be consistent as to how disputes will be handled.

The second lesson here relates to the position in which the City of Ottawa and Miles Wolff found themselves. By remaining outside the lease and league affiliation agreements, both parties left themselves vulnerable to legal claims. It is important for parties to look to the whole scheme of a deal and not necessarily to be a “lone dove” (or “lone wolf”!). At the same time, of course, organizations need to be sensitive to the contractual risk management measures they undertake, whether alone or as part of a group.

Remember that the Sport Law & Strategy Group is well positioned to review your contracts or help you manage your contractual relations, to avoid messes like the one described here.

Most amateur sports are governed, at the top, by a national body that oversees the provision of that sport in the entire country. Soccer Canada, CanoeCayak Canada, Canada Basketball, etc. Each of these NSOs has a membership structure that usually includes provincial governing bodies in each province. Baseball Manitoba, Hockey New Brunswick, Rowing BC, etc.

The PSOs have a defined relationship with their NSO – which tends to differ by the sport. In Baseball, each PSO is an “Active Member” of Baseball Canada and has one vote, and each PSO sends a representative Director to sit on Baseball Canada’s Board of Directors. Contrast that arrangement to Swimming Natation Canada, which has nine classes of membership (including athletes and coaches) and does not allow elected members of PSOs to serve on the national Board of Directors.

Though NSOs have different operating structures, they are all incorporated (currently) under Part-II of the Canada Corporations Act. This has now changed, and NSOs are required to transition to incorporation under the new Canada Not-for Profit Corporations Act.

Parts of the new legislation describe standard governance principles that all NSOs must now adopt – and your relationship with your NSO will soon change.

As NSOs work to comply with this new legislation, they may need to alter their relationship with you. At your next AGM, they may ask you to vote on any of the following things:

• new governance structures and Board composition
• new processes for voting
• new (fewer) membership classes
• new procedures to elect directors
• new ways/dates to hold an AGM or special meeting
• new financial record keeping

Many NSOs are (quite rightly) setting up governance subcommittees to handle the transition and educate PSOs and members about the necessity of the changes. Some NSOs are taking this opportunity to overhaul their entire relationship with their membership. Other NSOs may (with great risk, we feel) choose to simply edit their bylaws to try and become compliant with the new legislation. PSOs cannot ignore the process happening at the National level. The changes will likely take place at your AGM this year and if not, definitely at next year’s AGM. The deadlines are approaching quickly.

Even though PSOs are not incorporated under the same legislation, comparisons can be made between the operation of the NSO and the PSO.  In many cases, depending on the sport, PSOs operate with a similar membership structure (local clubs make up the voting members) or similar governance.  What works at the National level may not always work at the Provincial level – but good governance principles can certainly trickle down.

Lastly, PSOs in Ontario and BC will soon be undergoing the exact same transitionary phase as NSOs at the National level.  In Ontario, PSOs (and even some large local clubs) are incorporated under the Ontario Corporations Act and will soon (within three or four years) be required to become compliant with the new Ontario Not-for-Profit Corporations Act.  In BC, the provincial government is currently receiving comments on its own proposed changes for its Societies Act, with the intention of updating the legislation.

The changes at the provincial level may not be exactly the same as the changes at the National level (i.e., it is unlikely that smaller organizations will require major overhauls) but they will be significant enough to require educating your membership and passing changes at your Provincial AGM.

Observing, and participating in, the process at the National level can only serve to help your Provincial organization when it comes time to make your own required transition.