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.