Simon's Megalomaniacal Legal Resources

Partnerships - Expulsion of a Partner

In Tim Ludwig Professional Corporation v. BDO Canada LLP (Ont CA, 2017) the Court of Appeal discusses the situation of an expelled partner in light of both the common law and the Partnerships Act:

(a) The relevant legislative and common law framework

[32] The Ontario Partnerships Act, R.S.O. 1990, c. P.5, sets out the requirements for the expulsion of a partner. The relevant provisions of the Partnerships Act are:

• Section 25: “No majority of the partners can expel any partner unless a power to do so has been conferred by express agreement between the partners.”

• Section 28: “Partners are bound to render true accounts and full information of all things affecting the partnership to any partner or the partner’s legal representatives.”

• Section 45: “The rules of equity and of common law applicable to partnership continue in force, except so far as they are inconsistent with the express provisions of this Act.”

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[38] In summary, Article 17.4 of the Partnership Agreement must be interpreted in light of the partners’ duty of utmost good faith towards each other. The expropriatory nature of expulsion and the loss of profits that it entails requires that the provision be construed strictly in favour of the expelled partner.