Catherine MacInnis

Following a judgment awarding the respondents their costs of the appeal on a partial indemnity scale, the court reviewed the parties' written submissions.

The court fixed the respondents' costs of the appeal at $45,000, inclusive of disbursements and all applicable taxes.

The respondent, a former equity partner of the appellant accounting firm, withdrew from the partnership to join a competitor.

The partnership agreement required a withdrawing partner to pay liquidated damages equal to two times their 'Permanent Capital'.

The appellants argued the permanent capital should be based on the partner's 'Anchor Capital' which included shareholder loans, while the respondent argued it was limited to the $10,000 fixed in his capital account following a capital conversion.

The trial judge agreed with the respondent, fixing liquidated damages at $20,000 and ordering the appellants to repay the respondent's shareholder loan and other entitlements.

The Court of Appeal upheld the trial judge's interpretation of the partnership agreement, finding no palpable and overriding error, but allowed the appeal in part to set aside a small award for management fees that lacked evidentiary support.

The plaintiffs sought a Mareva injunction freezing assets of an individual defendant alleged to have received fraudulent transfers from a corporate defendant.

The court accepted that the plaintiffs had established a strong prima facie case that certain transfers constituted fraudulent conveyances and that judgment in related U.S. proceedings was likely.

However, the evidence failed to demonstrate the existence of assets in Ontario or a current risk of dissipation within the jurisdiction.

The court concluded that a Mareva injunction cannot be used as a tool to investigate whether assets exist.

Because the applicants could not satisfy the jurisdictional asset and dissipation requirements, the motion was dismissed.

The plaintiffs sought a Mareva injunction against the assets of the defendants, specifically a biodiesel plant owned by Great Lakes Biodiesel Inc., alleging that funds were fraudulently conveyed by Verdeo Inc. to the defendants to fund the plant's construction.

In the alternative, the plaintiffs sought interim relief under the oppression provisions of the Business Corporations Act or a certificate of pending litigation.

The court dismissed the motions, finding that the plaintiffs failed to establish a strong prima facie case of a fraudulent conveyance from the intermediary corporations to Great Lakes Biodiesel Inc., and that the balance of convenience did not favour a certificate of pending litigation.

The moving defendants sought to lift restrictions imposed by an earlier order preventing them from disposing of or encumbering property and related equipment pending a motion for a Mareva injunction.

The court characterized the prior order as a consent order reflecting an agreement between the parties, with undertakings that had expired but were subject to extension pending further order.

Applying the RJR‑MacDonald test for injunctive relief, the court found that the plaintiffs had established a serious issue to be tried regarding alleged fraudulent conveyances under the Fraudulent Conveyances Act.

The court also found a real possibility of irreparable harm if the property were encumbered to secure existing liabilities.

The balance of convenience favoured maintaining the restrictions, subject to a limited exception permitting encumbrances for bona fide new financing used in the ordinary course of business.