Appeal from an application decision concerning the effect of dissolution of a two-person accounting partnership on a restrictive covenant in the partnership agreement.
The application judge held that the appellant had withdrawn, thereby triggering a capital-account reduction tied to clients transferring to the departing partner, and directed a trial on damages.
The Court of Appeal held that, on a general dissolution of a two-member firm, the firm ceased to exist and absent an express surviving contractual restraint, the parties were free to pursue their own practices.
The finding that the appellant had withdrawn so as to trigger the covenant was set aside, the impugned paragraphs of the judgment were deleted, and the cross-appeal was unnecessary to decide.
