Departing partner not liable for future goodwill payments contingent on continued partnership membership.
A former law firm partner brought an application disputing liability for goodwill payments and accounting fees following his withdrawal from the partnership.
The central issue was whether the goodwill buy‑in constituted a fixed obligation payable over five years or annual payments contingent on continued partnership membership.
The court held that the parties had not expressly addressed early departure and that the available documentation and surrounding circumstances supported the interpretation that goodwill payments were contingent on partnership earnings during each year.
As the applicant left the partnership after two years, he was not liable for the remaining goodwill payments.
The court also held that accounting services incurred to resolve disputes regarding the firm's records were firm expenses, not the applicant’s personal liability.
Djurdjevac v. Deacon, Spears, Fedson & Montizambert LLP, 2013 ONSC 7052