Court File and Parties

COURT FILE NO.: CV-19-1475 DATE: 2021 02 10

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Crawford Chondon & Partners LLP Plaintiff (Defendant by Counterclaim) John L. O’Kane, for the Plaintiff, Defendant by Counterclaim

- and -

Karen L. Fields Defendant (Plaintiff by Counterclaim) Ian St. John and Kim Nusbaum, for the Defendant, Plaintiff by Counterclaim

HEARD: January 27th, 2021

REASONS FOR DECISION

LEMAY J

[1] The Defendant, Karen Fields, spent nearly fifteen years as a partner at the Plaintiff law firm, Crawford Chondon. Ms. Fields left in December of 2018 to accept employment as the City Solicitor for the City of Sault Ste. Marie. Crawford Chondon now seeks to enforce various terms of the partnership agreement that Ms. Fields signed, including a liquidated damages clause.

[2] Ms. Fields has counterclaimed for the principal and interest on her working capital account loan that she says Crawford Chondon has not repaid to the Bank of Montreal (“BMO”) on her behalf as well as for her draw for December of 2018 that she says was not paid to her.

[3] The parties both agree that this matter is amenable to summary judgment as it involves the interpretation of a contract, and the underlying facts are not significantly in dispute. Having reviewed the material that has been filed, there are some minor factual disputes. However, I am satisfied that this matter can be disposed of on summary judgment without resorting to my enhanced fact-finding powers under Rule 20 of the Rules of Civil Procedure. It is, in essence, a contractual interpretation case. Further, given the value of the case (less than $250,000.00 in total), it is proportional to grant summary judgment in this case.

[4] For the reasons that follow, the Plaintiff’s claims are dismissed while the Defendant’s counterclaims are allowed in part.

Background Facts

a) The Parties

[5] Crawford Chondon was a law firm established in Brampton in 1998. It is a management side boutique labour law firm originally founded by a husband and wife team, who are the named partners, and are both still partners with the firm. There are approximately a dozen management side labour law firms in Ontario, and Crawford Chondon is one of the smaller ones. However, Crawford Chondon has always marketed itself as a “full service” management side labour law firm.

[6] Crawford Chondon has a presence through offices in Barrie and Sudbury as well as Brampton. The presence in Barrie is maintained through the office of Robert Boswell, who is counsel to the firm, but operates on a referral arrangement. The presence in Sudbury is maintained through an office that is shared with a human resources consultant.

[7] Karen Fields is a member of the Ontario Bar, and was called to the bar in 1993. She was a partner in a different management side labour law firm before joining Crawford Chondon as a partner in 2004.

[8] Ms. Fields practiced as a management side labour lawyer with a specialty in Occupational Health and Safety Act (“OHSA”) prosecutions as well as in other regulatory proceedings of this nature such as Coroners’ Inquests. It is common ground between the parties that this area is highly specialized.

[9] In her time at Crawford Chondon, Ms. Fields conducted the bulk of the firm’s OHSA work. However, Susan Crawford also did some OHSA work throughout Ms. Fields’ time at the firm. Ms. Crawford continues to do some OHSA work, but does not have the time or associate assistance to fully develop and market this area to clients and potential clients.

b) The Partnership Agreement

[10] When Ms. Fields joined Crawford Chondon as a partner in 2004, there was a partnership agreement already in place. She was admitted to the partnership by signing an addendum to the existing partnership agreement. When Ms. Fields joined Crawford Chondon she paid the sum of $60,000.00 to the existing partners as a “buy in” to be admitted to the partnership. This money was distributed to the remaining partners. In addition, Ms. Fields was required to make a capital contribution of $40,000.00 to the partnership upon being admitted, which she did.

[11] There have been a number of partners who have entered and/or left the partnership between 2004 and 2018. One in particular, Laura Williams, left to start her own firm in 2010. She took clients and files with her when she left. When Ms. Williams left the firm, Crawford Chondon moved to enforce the liquidated damages clause against her. I understand that payments were made by Ms. Williams to Crawford Chondon as a result of a consent Order at a summary judgment motion.

[12] There have also been a number of other changes to the partnership and its administration. For example, the partnership signed a ten-year lease on its premises in Brampton, with the lease commencing on April 1st, 2013. In addition, the partnership increased the value of the “key person” insurance that it maintained on all of its partners from $250,000.00 to $500,000.00. Finally, there were changes to the disability insurance that was paid.

[13] Based on these events, the remaining partners (including Ms. Fields) amended the partnership agreement. These amendments were agreed to unanimously by the partnership. The amendments were agreed to in 2015, but were effective on January 31st, 2014. The only amendments that have been made since that time were two Addendums that admitted two further equity partners, one on January 1, 2017 and one on January 1, 2018.

[14] The relevant terms of the partnership agreement for the purposes of this motion are in Articles 21 and 22. Those provisions deal with withdrawals from the partnerships and retirements from the partnership respectively. I will return to the most relevant provisions of these Articles below.

[15] When Ms. Fields joined the partnership in 2004, the partnership agreement contained a “liquidated damages” clause similar to Article 21 of the current partnership agreement. However, at the time that Ms. Fields joined the partnership, the clause required the payment of liquidated damages in the amount of $100,000.00. The value of the liquidated damages was increased to $200,000.00 in the 2014 Partnership Agreement.

[16] In addition, the firm required partners to maintain a certain capital account. Originally, as set out at paragraph [10], the capital account was $40,000.00. It had been increased to $60,000.00 at some point after Ms. Fields had joined the firm. However, as part of the January 31st, 2014 amendments to the partnership agreement, this capital account was increased to $100,000.00. Ms. Fields financed her capital account through a loan from the Bank of Montreal (“BMO”). At the time of the refinancing, there was an excess in Ms. Fields’ capital account. This excess money was returned to Ms. Fields over a period of time.

[17] The BMO loan was secured through an assignment agreement. Under that agreement, BMO had a security interest in Ms. Fields’ capital and interests in the firm. Crawford Chondon takes the position that the assignment agreement with BMO precludes them from returning any of the money in her capital account directly to Ms. Fields.

[18] At the end of 2017, Ms. Fields’ working capital account had fallen below $100,000.00. At the time of her departure, Ms. Fields only had a balance of $84,140.00 in her capital account, which left a deficit of $15,860.00. The parties have a dispute over how these amounts should be handled.

[19] In addition, Ms. Fields has claimed that she did not receive her draw for December of 2018. It is undisputed that Ms. Fields was not paid this amount. The question is whether Crawford Chondon was required to pay these amounts to her. Ms. Fields has brought a counterclaim seeking an additional $10,000.00 on account of this amount as well as a return of the money in her capital account.

c) Ms. Fields’ Departure from Crawford Chondon

[20] In the summer of 2018, the City of Sault Ste. Marie posted the position of City Solicitor. Ms. Fields’ current partner is from Sault Ste. Marie and she grew up in Northern Ontario. As a result, she decided to apply for this job at the end of August, 2018. She interviewed for the position, but did not advise Crawford Chondon of the interview or of her interest in the position.

[21] In October of 2018, Ms. Fields received a conditional offer from the City of Sault Ste. Marie. Ms. Fields believes that she received the offer on October 23rd or 24th, 2018. All of the conditions, except approval of Ms. Fields’ hiring by City Council, had been completed by November 18th, 2018. Ms. Fields advised the partnership of her intention to leave the partnership on November 18th, 2018. In her e-mail advising her partners of her impending departure, Ms. Fields stated “please accept this email as written notice that I will be voluntarily withdrawing from the partnership effective December 31, 2018.”

[22] Ms. Fields’ role as City Solicitor in Sault Ste. Marie requires her to oversee the City’s legal department, which provides a range of services including litigation work, tribunal work, including the Human Rights Tribunal of Ontario, and the drafting and negotiation of employment contracts. The City of Sault Ste. Marie was not a client of Crawford Chondon’s and the firm did not lose out on work from the City as a result of Ms. Fields’ hiring.

[23] Between November 18th, 2018 and December 31st, 2018, Ms. Fields worked on transitioning her clients and files to other members of the firm. At the time that Ms. Fields gave notice, she had a five-day Provincial Offences Act trial booked for a Fire Code prosecution as well as a two-day OHSA appeal. Both were scheduled for January of 2019.

[24] The parties do not entirely agree on whether Ms. Fields’ decision to leave the firm came as a surprise to the rest of the partnership. The evidence before me makes it clear that Ms. Fields, who was over 55, had general discussions with her partners about the possibility of retiring, but that nothing specific had been discussed or determined prior to Ms. Fields’ announcement that she was leaving to accept the position in Sault Ste. Marie. It was not unreasonable for the other partners to believe that Ms. Fields would be around for a few years longer than she actually was.

[25] In support of that conclusion, I note that the firm engaged a consultant in 2016 to provide a report on the admission of new equity partners to the firm. As part of the preparation of that report, the consultant stated that Ms. Fields “is interested in continuing to work without any modification in responsibilities or effort over the next five or so years.”

d) Subsequent Events

[26] Crawford Chondon claims that they had to refer the POA Fire Code prosecution to external counsel and lost in excess of $30,000.00 in fees. In addition, Crawford Chondon advises that they had to write off almost $7,000.00 in billings related to the OHSA appeal for work allegedly not done by Ms. Fields.

[27] There is some evidence on the record about the lost fees from the POA prosecution, but it is limited and tangential. In terms of the OHSA appeal, it is my view that I could only determine that the work was justifiably written off by conducting a review of the work done by Ms. Crawford and Ms. Fields. The record before me does not permit that review because of client confidentiality issues. Further, these lost fees arguments also do not account for the fact that, if Ms. Fields had remained at Crawford Chondon, her earnings would have to have been paid as well and would presumably have been paid out of the fees earned from this work.

[28] In addition, there was a Coroner’s Inquest that Crawford Chondon was asked to do in the summer of 2019. They referred this file to Mr. Boswell. There is no evidence on how much this file would have produced in billings if Ms. Fields had still been a partner and had been able to perform the work. However, the referral does demonstrate that there was a loss of capacity for this type of work in the firm.

[29] Regardless of any factual findings, Crawford Chondon’s claim for fees billed by Ms. Fields that were subsequently written off and/or for lost work are claims that would be encompassed in the liquidated damages claim. I do not see a basis in the partnership agreement to permit a separate claim for fees that Crawford Chondon unilaterally decided to write off after Ms. Fields left.

[30] Finally, even if Crawford Chondon could demonstrate the losses they have claimed, these losses would not be recoverable in any event given the interpretation of the partnership agreement that I have adopted.

Issues

[31] Based on the foregoing, the issues to be determined in this case are as follows:

a) Is this case appropriate for summary judgment? b) Did Ms. Fields withdraw from the partnership under Article 21 or 22 of the agreement? c) If the withdrawal was under Article 21, is the liquidated damages provision of Article 21 enforceable? If so, how should Article 21 be interpreted and applied in this case? d) What should be done with the money in Ms. Fields’ capital account? Should Crawford Chondon be required to pay interest on that money for the time period that it has been held? e) Is Ms. Fields entitled to be paid her draw of $10,000.00 for the month of December, 2018?

[32] I will deal with each issue in turn.

Issue #1 – Summary Judgment

[33] The parties both agree that summary judgment is the appropriate way to address the issues in this case.

[34] Having reviewed the record, I agree with the parties for the following reasons:

a) The issues in this case turn on the interpretation of the partnership agreement. This is a legal question. b) The parties agree on most of the facts in this case. Further, where there are disagreements about the facts, they are on the more peripheral issues of the files that Ms. Fields left behind. c) Disposing of this matter by way of summary judgment is, in the words of Hryniak v. Mauldin 2014 SCC 7 (at para 4) “a proportionate, more expeditious and less expensive means to achieve a just result.” Given my observations in point (a) and (b), I agree with the parties that summary judgment can achieve a just result in this case.

[35] As a result, I will consider the remaining issues identified above and will proceed to render judgment in this case.

Issue #2 – Under Which Provision Did Ms. Fields Withdraw from the Partnership?

[36] This is a contract interpretation case. As a result, my analysis begins with determining what type of contract it is. During the course of argument, I asked counsel whether this was an employment contract or a commercial contract. After a brief adjournment, we determined that the governing authority on this issue was the Supreme Court of Canada’s decision in McCormick v. Fasken Martineau Dumoulin 2014 SCC 39 (at paras. 44 to 46) and that the contract was a commercial contract.

[37] In this case, Ms. Fields was always a partner of Crawford Chondon. She joined the partnership in 2004, and received independent legal advice before signing the partnership agreement. In addition, she was one of the people who was involved in the redesign of the partnership agreement in 2014 after Ms. Williams had left the firm. It is difficult to see how this partnership agreement, negotiated under these facts, would fall into any exception that might possibly exist to the general rule that law firm partnership agreements are commercial contracts (see para. 46 of McCormick, supra). The partnership agreement is a commercial contract, and not an employment agreement.

[38] Similarly, the facts I have outlined above do not support setting the partnership agreement aside on the basis of unconscionability. As noted in Graham v. Impark 2010 ONSC 4982 at para. 116, unconscionability requires both a pronounced inequality of bargaining power and a substantially improvident or unfair bargain. In this case, there is no inequality of bargaining power that I see. Given my interpretation of the agreement, it is not necessary for me to address in detail the issue of whether the bargain is improvident or unfair. I simply note that it does not appear to be either.

[39] The principles applicable to the interpretation of a commercial contract are summarized in the Ontario Court of Appeal’s decision in Ventas Inc. v. Sunrise Senior Living Real Estate Investment Trust 2007 ONCA 205 at para 24:

(a) as a whole, in a manner that gives meaning to all of its terms and avoids an interpretation that would render one or more of its terms ineffective; [See Note 1 below] (b) by determining the intention of the parties in accordance with the language they have used in the written document and based upon the "cardinal presumption" that they have intended what they have said; [See Note 2 below] (c) with regard to objective evidence of the factual matrix underlying the negotiation of the contract, but without reference to the subjective intention of the parties; [See Note 3 below] and (to the extent there is any ambiguity in the contract), (d) in a fashion that accords with sound commercial principles and good business sense, and that avoid a commercial absurdity.

[40] With these principles in mind, I now turn to the interpretation exercise. Article 21 of the partnership agreement sets out the terms for a straight, or regular, withdrawal from the partnership. Article 22 sets out the terms under which a partner may be permitted to retire. It is clear that Article 22 only applies in limited circumstances. In all other circumstances except death (Article 23), incapacity (Article 24) or expulsion (Article 25), Article 21 applies as long as the partnership continues to operate.

[41] Article 22 (a) states as follows:

22 RETIREMENT (a) In the year in which a partner attains the age of fifty-five (55) years, that partner may withdraw from the Partnership, effective December 31 of that year, or any subsequent year for purposes of retirement. Upon the agreement of the Partners and the withdrawing partner, the withdrawing partner may assume the position of Counsel, and whereupon the withdrawing partner shall continue to practice law according to the terms and conditions to be reviewed annually or at such time or times as the remaining partners consider appropriate. This provision shall not apply in circumstances where the purpose of the withdrawal is to join a competing law firm (defined as any firm that practices management labour and employment law), to open a competing law firm or where paragraph 21(g) does not apply. In such circumstances the withdrawing partner shall be bound by the obligations in paragraph 21(f).

[42] This clause starts by setting out that a partner may withdraw from the partnership for the purposes of retirement in any year where the partner attains the age of fifty-five or is older than fifty-five. Ms. Fields meets the age requirement of the clause. Therefore, the first question to answer is whether Ms. Fields retired.

[43] Neither counsel provided me with any case-law on the question of what is meant by the term “retirement”. My own research, prior to the hearing, did not reveal any clear definitions of this term in the case-law either. Counsel for Crawford Chondon directs my attention to the definition of retirement from the Lexico Online Dictionary as “the action or fact of leaving one’s job and ceasing to work.”

[44] The definition proffered by counsel is the normal definition of retirement. However, Article 22 of this agreement envisions a partner being able to work after they “retire” pursuant to this Article. A partner can continue to work even after they have “retired” by being counsel to the firm, as specifically set out in Article 22. Therefore, the definition of retirement under this agreement is narrower than the usual meaning of the word would suggest.

[45] Article 22 (a) goes on to define three circumstances in which the Article will not apply as follows: joining a competing law firm; opening a competing law firm; or where paragraph 21(g) does not apply. I note that a competing law firm is defined as “any firm that practices management labour and employment law”.

[46] The parties agree that Ms. Fields does not fall within the first two of these exceptions. The question is therefore whether she falls within the meaning of Article 21(g). If that article applies to her, then Ms. Fields has retired within the meaning of Article 22. Article 21 (g) states:

One of the purposes of paragraph (f) above is to protect against a withdrawing partner providing competing services as a lawyer or in another capacity, as well as to cover the loss of expertise and additional administrative and management expenses associated with a partner’s departure. However, in the event of a withdrawal where the withdrawing partner has no intention of continuing to provide any similar services, legal or otherwise, for a period of not less than two (2) years and assists with the transition of client relationships to other lawyers within the firm, the application of paragraph (f) is to be modified accordingly, on agreement of the Partnership.

[47] The evidence makes it clear that Ms. Fields assisted with the transition of her client files. She was also prepared to provide further assistance after she left Crawford Chondon on December 31st, 2018. As a result, the question is whether the work as City Solicitor for the City of Sault Ste. Marie is “similar services” within the meaning of Article 21(g).

[48] I find that the City Solicitor’s position is not “similar services”. The term “similar services” needs to be interpreted in the context of the rest of Article 21(g) and the agreement as a whole. Article 21(g) begins by stating that one of the purposes of paragraph 21(f) is to protect against a partner providing competing services as a lawyer or in another capacity. Similar services must be read in that context.

[49] Indeed, the words “similar services” are followed by the words “legal or otherwise”. These words suggest something broader than a partner merely going to a competing law firm or establishing a competing law firm. This broader interpretation of similar services is supported by the fact that going to or establishing a competing law firm has already been covered off by separate language. For example, the “or otherwise” could mean a partner joining a human resources consulting firm or an occupational health and safety consulting firm.

[50] There is also a difference between the words “competing” and “similar”. Since they are different words, the parties must have intended a different meaning for them. I accept that “similar” is, in the context of Article 21(g), broader than competing. However, similar cannot be stretched beyond its ordinary meaning. Similar means something that resembles something else without being identical to it.

[51] This brings me to the argument advanced by Crawford Chondon that any legal services would amount to “similar services”. This interpretation would lead to an absurdity. As counsel for Ms. Fields points out in their factum, the interpretation offered by Crawford Chondon would mean that Ms. Fields would be required to pay the full amount under the liquidated damages clause if she went to work as a law clerk in Vancouver. To further illustrate the absurdity, it would also apply if Ms. Fields decided that she wanted to be a real estate law clerk in Vancouver or work in a legal clinic providing landlord and tenant services to low income families anywhere, including in Brampton.

[52] The liquidated damages clause was not intended to cover these types of services. Being a real estate law clerk in Vancouver would not be offering “similar” services as the ones Ms. Fields was offering at Crawford Chondon. Similarly, working in a legal clinic performing landlord and tenant services would not be providing “similar” services.

[53] I acknowledge that the work of a City Solicitor is closer to the work that Ms. Fields was doing at Crawford Chondon than these two examples, but it is not similar within the meaning of the partnership agreement for the following reasons:

a) Ms. Fields’ work as the City Solicitor does not compete with the services that Crawford Chondon offers and generally does not occupy the same space as Crawford Chondon’s services. b) Ms. Fields advises only City Council and other City staff and does not have clients or work in private practice. As a result, she is not offering “services” to the general public. c) The work Ms. Fields is performing may overlap to some extent with the work that Crawford Chondon does, but Ms. Fields is performing different work such as land use planning and providing Planning Act advice. d) Sault Ste. Marie is a long way from Brampton, approximately 700 kilometers on the evidence I have. This geographical separation also militates against a finding that the services currently being offered by Ms. Fields are similar.

[54] As a result, Article 21(g) does apply to Ms. Fields’ withdrawal from the partnership. This brings me to Crawford Chondon’s arguments about Article 21 of the Partnership Agreement which I will analyze in the discussion of the next issue.

Issue #3 – The Interpretation of Article 21

[55] Given my interpretation of Article 22 and Article 21(g) as discussed above, I do not need to address all of the issues raised by the parties. The one issue that needs to be addressed is Crawford Chondon’s argument that, even if Article 22 applies to Ms. Fields’ withdrawal, she would still be required to pay the liquidated damages provision.

[56] That argument is not supported by the plain wording of Article 22. Article 22 lists the three circumstances in which Article 22 does not apply. To repeat, Article 22(a) does not apply where a partner joins a competing law firm or sets up a competing law firm. The third circumstance where Article 22(a) does not apply is if the withdrawal by the partner is otherwise not covered by Article 21(g).

[57] To put it a different way, Article 22(a) is applicable to a withdrawal when the withdrawal from the partnership is done by a partner 55 or older, the other two exceptions are not triggered by the withdrawing partner and Article 21 (g) applies to the withdrawing partner because they are not going to provide similar services within the meaning of Article 21(g). Having found that Article 21(g) applies to Ms. Fields, it follows that her withdrawal took place under Article 22(a).

[58] Article 22(a) sets out the consequences if the article does not apply as follows: “In such circumstances, the withdrawing partner shall be bound by the obligations in Article 21(f).” This sentence clearly sets out the circumstances in which Article 21(f) will apply. Because of the language used (“in such circumstances”), the list of circumstances is limited and exhaustive. By necessary implication, Article 21(f) will not apply to a withdrawing partner if the withdrawal of that partner took place under Article 22(a).

[59] Having found that the circumstances of Ms. Fields withdrawal fit within Article 22 (a), it follows that her departure does not fall within the meaning of “in such circumstances” at the end of Article 22(a). As a result, Article 21(f) does not apply to Ms. Fields, and she is not obligated to pay the liquidated damages to Crawford Chondon.

[60] I would also note that my interpretation of Article 22 is also consistent with a full reading of Article 21. Article 21 envisions that the obligations of a partner who is withdrawing and not offering competing or similar services will be less than those of a partner who is withdrawing to compete or offer similar services.

[61] In other words, even if Article 21 was applicable to Ms. Fields’ departure, the provisions of Article 21 (g) would still require the partnership to have agreed on a modification of the liquidated damages provisions.

[62] This interplay supports the interpretation that I have adopted of Article 22. The liquidated damages clauses in Article 21 are chiefly concerned with partners who leave to compete, in some way, with Crawford Chondon. Article 21 would apply to a partner under the age of 55 who left to do something other than compete or provide a “similar service”, but Article 21(g) would provide that departing partner with some of the protections afforded to a partner who was retiring.

[63] The differences in the interpretations of the agreement for partners who are 55 and over versus partners who are under 55 are also commercially reasonable, as they allow a partner who is 55 or over more flexibility to leave private practice without triggering their commitments to the other partners. Conversely, it is reasonable for partners who are under 55 to have more significant obligations to their fellow partners.

[64] As a result, the liquidated damages provision, and the other provisions of Article 21(f) do not apply to Ms. Fields.

Issue #4 – The Monies in Ms. Fields’ Capital Account

[65] During the course of argument, I confirmed that both parties acknowledged that, one way or the other, the monies in Ms. Fields’ capital account would have to be paid back to BMO. The most logical way to effect that payment was to order that Crawford Chondon repay the amount in the capital account directly to BMO forthwith and I advised the parties that I was making that Order. I hereby confirm that Order.

[66] For the purposes of calculation, I note that there was an LTD premium that was paid on Ms. Fields’ behalf by the firm after her departure in the sum of $1,326.06. This amount is to be deducted from the capital account. The remainder of the capital account balance held by Crawford Chondon (which I believe is $82,813.94) is to be paid directly to BMO in partial satisfaction of the $100,000.00 loan. The remainder of the loan is to be repaid by Ms. Fields within thirty (30) days of the release of these reasons.

[67] This brings me to the question of interest on the loan, which Ms. Fields has been paying since she left the firm at the end of 2018. As I understand it, Crawford Chondon took the position that it could not pay the money out at all because the capital account remained in a deficit. Ms. Fields, on the other hand, took the position that the money should be paid to BMO in part satisfaction of the loan.

[68] I am of the view that Crawford Chondon should be obligated to pay a portion of the interest costs on this loan for the following reasons:

a) Crawford Chondon had the benefit of the loan money as part of its operating account. b) Crawford Chondon had the option of repaying a portion of the loan at any time prior to the motion. It is clear that Ms. Fields would have consented to this repayment. c) Crawford Chondon originally claimed the money in the capital account as an offset against the liquidated damages claim. However, as I have found above, the liquidated damages clause does not apply to the withdrawal in this case. Therefore, Crawford Chondon had no right to withhold the money.

[69] However, Crawford Chondon should only pay interest on that portion of the loan that they are actually repaying. This amount is the $82,813.94 described above. Ms. Fields is responsible for the interest on the remainder of the loan.

[70] Finally, if there are any calculation issues with respect to this loan or the interest thereon, I may be spoken to.

Issue #5 – Is Ms. Fields Entitled to be Paid her December, 2018 Draw?

[71] No.

[72] I accept the evidence of Mr. Chondon that, in 2018 each partner was entitled to a draw of $10,000.00 per month, but that only $96,000.00 in drawings were guaranteed to each partner.

[73] I also accept Mr. Chondon’s evidence that Ms. Fields’ working capital account had fallen below the minimum of $100,000.00, and that she had received a lower draw than the other partners in order to rebalance her capital account. As a result, Ms. Fields had received $100,000.00 in draws by the end of November, 2018, which was over the minimum that she had been guaranteed. There is no other basis on the records before me to pay Ms. Fields any further monies out of partnership profits for 2018.

[74] In light of the fact that Ms. Fields’ capital account was in deficit and that she had received more than the minimum guaranteed draw for the year, she was not entitled to a further draw for December of 2018, and her claim in this regard fails.

Conclusion

[75] A final matter that was not addressed in oral argument but was raised by the parties’ factums is Ms. Fields’ status as a corporate director of the firm’s management company and her status as a partner. Given the conclusions I have set out above, I view Ms. Fields’ retirement from the firm as having been effective on December 31st, 2018. Therefore, Ms. Fields is to be removed from the partnership and as a director of Crawford Chondon’s management company nunc pro tunc. If there is an issue as to the costs of these steps, I may be spoken to.

[76] Therefore, for the foregoing reasons, I am ordering as follows:

a) The Crawford Chondon claim is dismissed. b) Crawford Chondon is to pay the interest on the proportion of Ms. Fields’ capital loan from BMO that it holds from January 1, 2019 to the point where it pays the funds back to BMO. c) Ms. Fields is to be removed as a partner and from the corporate structure in accordance with the previous paragraph. d) The remainder of Ms. Fields’ counterclaim is dismissed.

[77] The parties are strongly encouraged to agree on the costs of this motion and the underlying action.

[78] While success was divided on this motion, it appears that Ms. Fields was more successful than Crawford Chondon. As a result, if the parties cannot agree on costs, then Ms. Fields is to provide her costs submissions within fourteen (14) calendar days of the release of these reasons. Those submissions are to be no more than three (3) single-spaced pages, exclusive of bills of costs, offers to settle and case-law.

[79] Crawford Chondon is to provide their submissions on costs within fourteen (14) days thereafter. Again, those submissions are to be no more than three (3) single-spaced pages, exclusive of bills of costs, offers to settle and case-law.

[80] There are to be no reply submissions on costs without my leave.

[81] Costs submissions are to be provided to the Registrar’s office through the electronic portal. A copy is to be provided to my judicial assistant by e-mail. Extensions to the deadline for costs submissions are not permitted, even on consent, without my leave. If costs submissions, or a request for an extension are not received in accordance with the timetable set out above, then there will be no order as to costs.

LEMAY J Released: February 10, 2021