Ryan Christopher Hauk

A former equity partner withdrew from an accounting partnership and joined a competing firm, triggering a liquidated damages clause requiring payment equal to two times the partner’s “permanent capital.” The dispute concerned whether shareholder loans made through a related corporation formed part of “permanent capital” under the partnership agreement.

The court interpreted the agreement according to its plain language and held that permanent capital was equivalent to the partner’s capital account in the partnership, which had been equalized to $10,000 and did not include shareholder loans.

The plaintiff was therefore liable for $20,000 in liquidated damages but was entitled to repayment of capital, profit share, shareholder loan amounts, and related payments.

Allegations of fiduciary misconduct and various counterclaims by the partnership, including claims for suppressed work‑in‑progress and loss of opportunity damages, were rejected.

The plaintiffs commenced an action in Ontario against Russian defendants and attempted to serve them in Russia pursuant to the Hague Service Convention.

The Russian Ministry of Justice refused to facilitate service, citing sovereignty or security concerns under Article 13 of the Convention.

The plaintiffs obtained an order from a Master validating service under Rule 16.08 of the Rules of Civil Procedure.

The defendants appealed.

The Superior Court of Justice allowed the appeal, holding that Rule 17.05(3) implements the Convention's exclusive methods for service in a contracting state, precluding the application of Rules 16.04 and 16.08 to substitute or validate service.