Partnership

Partners in Psychiatry v. Canadian Psychiatric Association, 2011 ONCA 109, released today online, has a helpful review of the definition of a partnership:

[2] The parties agree that the definition of a legal partnership is a (i) business, (ii) carried on in common, (iii) with a view to a profit: see the Partnerships Act, s. 2; Backman v. Canada, [2001] 1 S.C.R. 367, at para. 18; Continental Bank Leasing Corp. v. Canada, [1998] 2 S.C.R. 298, at para. 22. The parties concede that the project was a business. There was no dispute that they intended that revenue exceed expenses. At issue in the application was whether the business was conducted in common and with a view to sharing profits.

[3] As the Supreme Court of Canada stated in Backman, at para. 25: "[T]o ascertain the existence of a partnership the courts must inquire into whether the objective, documentary evidence and the surrounding facts, including what the parties actually did, are consistent with a subjective intention to carry on business in common with a view to profit."

[4] The application judge referred to the leading cases for the proposition that he was required to consider the express language of the partnership agreement in the context of all of the circumstances. However, he did not advert to the legal definition of partnership and he did not analyze the provisions of the agreements and the circumstances in relation to the legal elements of the test for partnership. By failing to do so, he erred in law.