September 5, 2010

How boards should deal with dissenting views of board members

Administrative Law
Professional Regulation

Anyone who has served on a board has likely encountered the situation of a minority of members strongly dissenting over an issue. To navigate such a difficult situation, a board member should review applicable rules to ensure that resolutions made or actions taken are proper, and accord procedural fairness. Failure to take such care may expose a board to a variety of legal actions, including defamation, breach of contract (in the case of an association), and misfeasance of office (for statutory regulators). The case of Wang v. British Columbia Medical Association, recently addressed by the Court of Appeal (2010 BCCA 43) and still before the courts, raises a number of interesting issues for board governance.

In Wang, a director of the board regularly expressed her concerns regarding the board’s methods.  She further voiced her dissension publicly on a professional Internet list-serv.  At a board meeting, members of the board sought to investigate her conduct for breaching confidentiality by way of a special committee formed under the auspices of the Code of Conduct. Dr. Wang was not given notice of the issue of her being investigated being raised, and at the board meeting she was denied an opportunity to be heard on the issue.  Two of the members of the special committee had made negative public remarks about Dr. Wang’s behaviour. Dr. Wang brought a petition seeking to dissolve the special committee.

The B.C. Supreme Court allowed Dr. Wang’s petition (2008 BCSC 1559), noting the Board had contravened its own established process required to form a special committee under the Code such that it was void ab initio.  The Court further found that even if the special committee had been constituted properly, there existed a reasonable apprehension of bias from some of the members on the committee.  Moreover, Dr. Wang’s right to notice and an opportunity to respond had been violated. That decision was overturned, however, by the Court of Appeal (2010 BCCA 43) on the basis the case should have been brought by writ, not by petition, since it concerned a breach of contract between the Association and its member (Wang). Nevertheless, the appellate court did not comment on the merits of the case and stated its decision was without prejudice to Wang bringing further, appropriate proceedings. The chambers judge’s comments, although nullified on a procedural point, are instructive.

The Wang case highlights the need for boards to be aware of and follow their established governance procedures.  Generally speaking, unless otherwise established, members of boards and committees are individually responsible for considering issues brought before them.  A member who holds a dissenting opinion is entitled to express it, and should be encouraged to do so, as diverse views are valuable to all members in their deliberations.  A member who violates a rule of conduct may be subject to discipline or expulsion.  The form and process of the decision to investigate, the investigation, and the adjudication must, however, be conducted in accordance with the rules governing the board, and with procedural fairness.

Notably, prior to decision of the Court of Appeal, Dr. Wang commenced an action in defamation and negligence against the Association and the board members. She also commenced a new action for breach of contract. The B.C. Supreme Court recently ordered both actions consolidated for trial (2010 BCSC 1203).

Wang v. British Columbia Medical Assn., 2008 BCSC 1559: November 14, 2008; 2010 BCCA 43, January 29, 2010; 2010 BCSC 1203, August 26, 2010.