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Partnerships - Definition of PartnershipThe definition of a partnership is set out s.2 of the Partnerships Act:2 Partnership is the relation that subsists between persons carrying on a business in common with a view to profit, but the relation between the members of a company or association that is incorporated by or under the authority of any special or general Act in force in Ontario or elsewhere, or registered as a corporation under any such Act, is not a partnership within the meaning of this Act. . Mahendran v. Singh et al.
In Mahendran v. Singh et al. (Div Court, 2022) the Divisional Court considered the test for partnership:[22] In Cohen v. Brin, the case Edwards RSJ cited, Master Albert described the test for partnership at paras. 14 and 15:The Partnership Act, R.S.O. 1990, c. P5, provides:2.Partnership is the relation that subsists between persons carrying on business in common with a view to profit.
3.The receipt by a person of a share of the profits of a business is proof, in the absence of evidence to the contrary, that the person is a partner in the business ...(b) a contract for the remuneration of a servant or agent or a person engaged in a business by a share of the profits of the business does not of itself make the servant or agent a partner in the business or liable as such. The existence of a partnership depends on the facts and circumstances of each case and the intention of the parties. There are three essential ingredients: (1) a business, (2) carried on in common, and (3) with a view to profit. (See: Continental Bank of Canada v R, 1998 CanLII 794 (SCC), [1998] 2 S.C.R. 298, 1998 CarswellNat 1496 (S.C.C.) at paras. 22 and 23). The indicia of partnership include the contribution by the parties of money, property, effort, knowledge, skill or other assets to a common undertaking, a joint property interest and the sharing of profits or losses (supra at para 24). [23] The governing words of the Partnership Act remain the same today as they were when Cohen v. Brin was decided. Further, Continental Bank of Canada remains binding jurisprudence: see 1062484 Ontario Inc. v. Williams McEnery, [2021] O.J. No. 1011 (Ont. C.A.) at para. 24. In Continental Bank, the majority stated at para. 22 that:Section 2 of the Partnerships Act defines partnership as "the relation that subsists between persons carrying on a business in common with a view to profit". This wording, which is common to the majority of partnership statutes in the common law world, discloses three essential ingredients: (1) a business, (2) carried on in common, (3) with a view to profit. I will examine each of the ingredients in turn.
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