(A couple of goofs in my delivery of this one this week - apologies!)  

R and 7 As were in partnership operating various diagnostic medical imaging businesses pursuant to a partnership agreement. R and 5 of the As were “full” partners each entitled to 1/7; 2 As were “half” partners entitled to 1/14 each: [3], [31]  

The As entered into an agreement with a purchaser to sell the partnership’s assets, with R to receive $3m as part of the purchase: [4]  

Clause 32 of the Partnership Agreement dealt with the voting process granting a special majority power to approve on acquisition of the partnership assets by a purchaser (including that a partner who didn’t vote on an acquisition was taken to vote against): [5], [43]  

An external offer was made to acquire the partnership’s business. The As passed a resolution causing the partnership to accept it (R didn’t vote and was taken to vote against: Cl 32) and the As agreed to work for the purchaser for a number of years with a non-compete: [7], [58]  

R was to receive $3m from the offer, with each of the other 1/7th As to receive ~$6.7m plus shares worth $2.4m: [8]  

R sued, claiming an entitlement to 1/7th of the net sale proceeds saying they had not varied their partnership interests, and the purchase payment was partnership property: [9], [33]  

The As resisted; arguing that the amounts to be paid were pursuant to resolution that had passed, and that the shares were consideration for the As continuing to work for the purchaser: [10]  

The As failed, and appealed.  The CoA accepted that, in order for it to have any commercial utility, Cl 32 granted a special majority power to bind all partners to a transaction: [12]  

The question was then: did that clause have the power to bind all partners to the *distribution of funds* following that transaction?  The CoA found it did not: [14]  

The persons bound by any Cl 32 resolution to go ahead with the transaction were “the partnership”, the firm itself rather than constituent partners. The partners’ rights and obligations between themselves were undisturbed: [15] - [17], [24]  

The sale proceeds were partnership property to be allocated between the partners in proportion absent any other agreement between the partners: [19], [51]  

The character of these rights and obligations justified the Court’s reluctance to find the partners varied them in Cl32: [25], [105]  

This left a remaining question: did the As’ continuing service to the purchaser justify them receiving their additional consideration?: [27], [95]  

No, the CoA found. This was based on the consideration being described in the purchase documents as payment for “the transfer of assets and the assumption of… liabilities” I.e. the money was for partnership stuff and not, the Court found, for the employment and non-competes of the As: [28], [110]  

The appeal was dismissed with costs: [30], [112]  

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