Frozen out of partnership

Oral agreement to split management fees was a contract of employment, not a commercial contract
|Canadian Employment Law Today

In 1991 Steve Pollock, Jonathon Coleman and Greg Belzberg formed a partnership and decided to acquire a permanent establishment with a liquor licence in order to carry on their business. Mr. Coleman found a company, Spattz Beanery, that had a liquor licence and lease that was for sale. The three partners incorporated a company in March 1992 called Bar None Enterprises Ltd.

An investment proposal was created which provided that Bar None would, as one of its expenses, have a management cost starting at $90,000 per year. It was agreed amongst the three partners that they would share equally the management fee. The three partners then incorporated BCP Management Ltd. in May 1992 with each partner being an equal shareholder.

A management agreement was entered into between Bar None and BCP in June 1992. The management agreement provided that BCP was to be solely responsible for the costs of on-site management and would receive $90,000 per year adjusted for the cost of living. It was determined in the agreement that BCP would provide its services exclusively to Bar None and would ensure that Mr. Belzberg, Mr. Pollock and Mr. Coleman would devote significant time and effort to the business.