CITATION: Ellerforth Investments Limited v. Typhon Group Ltd., 2010 ONCA 275
DATE: 20100414
DOCKET: C51087
COURT OF APPEAL FOR ONTARIO
Doherty, Feldman and Cronk JJ.A.
BETWEEN
Ellerforth Investments Limited
Applicant (Respondent)
and
The Typhon Group Ltd.
Respondent (Appellant)
Arie Gaertner, for the appellant
Adrian C. Lang and Mel Hogg, for the respondent
Heard and released orally: April 8, 2010
On appeal from the judgment of Justice K. E. Swinton of the Superior Court of Justice, dated September 9, 2009.
ENDORSEMENT
[1] The application judge concluded that it was just and equitable to order the dissolution of the partnership under s. 35 (f) of the Partnerships Act, R.S.O. 1990, c. P.5 (the “Act”) on two main grounds. First, she held that the parties have very different views as to the future of the partnership. Second, she found that the partners no longer have the mutual trust and confidence necessary to continue the partnership.
[2] Both of these key findings were open to the application judge on this record. With respect to the partners’ conflicting visions of the partnership’s future, the application judge accepted that the primary purpose of the partnership was “to provide premises for a medical clinic and related uses”. In the application judge’s view, that purpose was essentially frustrated by a material change of circumstances following the formation of the partnership. In particular, the Albany Clinic, with which the partnership had been associated for about 50 years, decided not to renew its lease with the partnership. Further, the advice received by the Managing Partner of the partnership indicated that locating an alternate medical clinic tenant would be extremely difficult, if not impossible, without a substantial capital investment in the building, an investment that the respondent – as the majority partner – was not prepared to make.
[3] Nonetheless, the appellant made it clear that it wished to hold the partnership property indefinitely into the future. In contrast, the respondent wished to dispose of the property and was not prepared to spend the considerable funds necessary to renovate the building to render it potentially attractive to a first class medical clinic tenant.
[4] We agree with the application judge that these conflicting views reflect dramatically different visions of the future of the partnership. They indicate that the partners are in fundamental disagreement regarding the continued achievability of the original objects of the partnership. On the trial judge’s findings, it is a mischaracter-ization to describe this state of affairs as merely a dispute about the proposed sale of the building owned by the partnership.
[5] The application judge’s conclusion that the partners no longer possess the requisite mutual trust and confidence to support the continuation of the partnership was also amply supported by the evidence.
[6] The record indicates that: (i) the appellant has accused the president of the respondent of breach of fiduciary duty; (ii) the appellant has also alleged that the respondent was responsible for the critical loss of the Albany Clinic as a tenant and that its efforts to find new tenants were inadequate; and (iii) in the course of the ensuing litigation between the parties, Mr. Mulls, on behalf of the appellant, alleged that the respondent misled the court in its evidence in the proceeding.
[7] These serious allegations are antithetical to the requisite mutual trust and confidence owed by partners to each other.
[8] In combination, therefore, the trial judge’s findings amply justified a court-ordered dissolution of the partnership under s. 35(f) of the Act.
[9] Accordingly, the appeal is dismissed. The respondent is entitled to its costs of the appeal fixed on a partial indemnity basis in the amount of $15,000, inclusive of disbursements and G.S.T.
“Doherty J.A.”
“K. Feldman J.A.”
“E.A. Cronk J.A.”