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The Court of Appeal upheld an award of expectation and aggravated damages for a partner wrongfully expelled from an accounting firm in bad faith.
A partner in a national accounting firm was called into a meeting and told to retire after 22 years of partnership.
The firm later invoked a partnership agreement provision allowing the policy board to request a partner's resignation if it unanimously determined it was in the partnership's best interest.
The partner sued for breach of the partnership agreement.
The motion judge granted summary judgment, finding that the firm breached the agreement because the policy board did not make an independent determination based on evidence, and the decision was predetermined by the CEO.
The court awarded expectation damages for lost profits and retirement benefits, plus aggravated damages for reputational harm.
The firm appealed, but the appeal was dismissed.
Partnership expulsion ruled invalid as policy board rubber-stamped CEO's predetermined decision without good faith.
The plaintiff, a partner at the defendant accounting firm, was forced to retire after the firm's CEO decided to reduce the number of partners due to an economic downturn.
The firm's policy board subsequently voted to compel his resignation under a provision of the partnership agreement allowing expulsion in the best interests of the partnership.
The plaintiff sued for breach of contract.
The court granted summary judgment for the plaintiff, finding that the policy board did not genuinely determine the issue but merely rubber-stamped the CEO's predetermined decision.
The court held that the expulsion was invalid and awarded the plaintiff compensatory damages for lost profits and retirement benefits, as well as aggravated damages for reputational harm.
