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PARTNERSHIPS - Person liable by holding out

Thursday, April 29, 2021 @ 6:19 AM  


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Appeal by the plaintiffs in two actions from summary judgments dismissing their actions as against the defendant law firm. The plaintiffs were numbered companies who alleged that they advanced funds to their lawyer that were not repaid. They alleged that the defendant law firm was liable for the indebtedness, as the lawyer was dealing as, or was held out to be, a partner of the defendant firm. A motion judge granted summary judgment in favour of the plaintiffs as against the lawyer, but also granted summary judgment dismissing their actions as against the firm. The judge found that the lawyer was not a partner of the firm, and that the businesses of the lawyer and the firm were distinct from one another in the manner that they were conducted. The lawyer and the firm shared space in the same building but maintained separate offices and trust accounts and did not carry on business in common. At no time did the firm hold out the lawyer as one of its partners. The plaintiffs appealed.

HELD: Appeal dismissed. The motion judge committed no palpable and overriding error in her identification and application of the test as to whether the lawyer was a partner of the firm. Her finding that the lawyer and the firm were not carrying on a business in common was one of mixed fact and law and thus entitled to deference. There was no basis for interference with the motion judge’s rejection of the plaintiffs’ evidence that they relied upon the lawyer’s partnership in the firm as a basis for advancing funds. Despite the absence of a cross-motion by the firm seeking summary judgment, the motion judge had authority to grant summary judgment in the firm’s favour. There was no basis to interfere with the costs awarded.

1062484 Ontario Inc. v. Williams McEnery, [2021] O.J. No. 1011, Ontario Court of Appeal, L.B. Roberts, B. Zarnett and L. Sossin JJ.A., March 2, 2021. Digest No. TLD-April262021007