ONTARIO–LIMITED PARTNERSHIPS – Limited partners have protection from the liabilities of a limited partnership; in return, they are entitled to payment of their share of the limited partnership’s profit upon dissolution. They do not have a right to distributions until the dissolution.

Anthony v Binscarth Holdings GP Inc.
2025 ONCA 130 (ONCA)
Ontario Court of Appeal (Nordheimer, Madsen and Pomerance J.JA)

This case summary relates to our earlier case summary known as Case #0128D. In this appeal, the Appellants (Glen Anthony, Glen Anthony, 2309138 Ontario Inc., Anne Anthony, John Anthony and Gary Anthony.) appeal an order of the application judge that dismissed their application in which they sought a declaration that they are entitled to receive from Binscarth Holdings LP (“Partnership”) payment of 100% of their share of the net income of the Partnership on an annual basis by way of cash distribution, retroactive to January 2016. The appeal was dismissed.(para.1)

Background

The Appellants are each limited partners of the Partnership and the children of Frank Anthony and Jine Anthony (“Parents”).The Parents created the limited Partnership many years ago to hold real estate. There are 19 entities with interests in the Partnership. (para. 3)

The General Partner is Binscarth Holdings GP Inc. (“Binscarth Inc.”) All of the shares of Binscarth Inc. are owned by the Anthony Control Trust (‘the Trust”). The Beneficiaries of the Trust are the nine children of Frank and Jine. (para. 4) Initially there were three trustees – the two Parents and Grant Anthony. Since the death of the last parent in 2018, Grant Anthony has been sole trustee. (para. 6)

The Partnership holds real estate acquired by the Parents with significant value. The Partnership is governed by the Limited Partnership Agreement (“LPA”) dated December 2011 and then amended with the last amendment in September 2020. Each of the appellants received independent legal advice before entering into the LPA (para,7)

The Partnership is governed by a Limited Partnership Agreement (“LPA). (para. 7) Pursuant to section 8.1(a) of the LPA, “The General Partner may cause the Partnership to make distributions of cash, assets and securities to the Limited Partners on an annual basis at any time and from time to time in the General Partner’s sole discretion.” (para. 9)

The Appellants submit that the General Partner( Binscarth Inc.) is required to distribute the net income of the Partnership to the limited partners pursuant to s. 11(1) of the Limited Partnerships Act or s. 1(1) of the Accumulations Act. (para. 10)

Section 11(1) of the Limited Partnerships Act, states,

“A limited partner has, subject to this Act, the right,

• To a share of the profits or other compensation by way of income; and
• To have the limited partner’s contribution to the limited partnership returned.”

The ONCA did not agree with the Appellants that the case Canadian Home Publishers (General Partner of) v. Colville-Reeves Estate 2019 ONCA 314 supported their position. (para. 12)

In Canadian Home Publishers, the ONCA held: “A limited partner enjoys the protection from liabilities of the limited partnership, unlike a partner in an ordinary partnership. In return for that protection, the limited partner is restricted to the receipt of two things under the LPA: one is their share of the profits, and the other is the share of their contribution.” (para. 12)

The ONCA held that there was nothing in the above quotation or in the plain reading of the quotation that supported the Appellants’ position that as limited partners they are entitled to a payment of their share of the profit.(para. 13) The ONCA held that a limited partner is ultimately entitled to receive that share on dissolution of the limited partnership pursuant to s. 24 of the LPA, but there is no statutory obligation to make any distribution. (para. 13)

The ONCA held that if the Legislature had intended that there must be regular distributions of profit to limited partners, it could easily have said so in the Act and that imposing such an obligation would be fundamentally at odds with the generally recognized purpose of a limited partnership. (para. 14)

Further, the ONCA held that the Appellants’ interpretation was in direct contrast to the provisions of the Act that give the general partner the sole discretion to make distributions. To interpret the Act in the manner the Appellants suggested would lead to a result fundamentally inconsistent with the provisions of the LPA into which the parties willing entered. (para. 15)

The ONCA held that the Accumulations Act that prohibits accumulation of income from the distribution of real or personal property had no application to this case.(para.17)

As the ONCA held that there was no error on the part of the application judge, the appeal was dismissed.