Libfeld v Libfeld: Crafting Justice in a Breakdown of a Hybrid Business Enterprise

Abstract

This case commentary presents one of the thorny problems that judicial officers often face in their fact-finding role of wading through a highly complex web of business arrangements checkered by disputes, suspicions, distrust, inability to cooperate, and emotion-laden allegations. Out of the morass, they must identify the main legal issue or issues and pin them to applicable laws before crafting an appropriate remedy that does justice for the parties. The case of Libfeld v. Libfeld, a trial decision of the Ontario Superior Court of Justice, is a particularly thorny case of this nature given the involvement of parties who are all members of the same family in a valuable, decades-old business started by their late patriarch. The four Libfeld brothers could no longer cooperate or work together in the business because their relationships had broken down irretrievably. The task for the Court was the determination of the most just, fair, and workable solution under the law for untangling their affairs so that they could go their separate ways.

Generally, the concept of a partnership being wound up is not significantly different from that of a corporation, although “winding-up” as a term is more commonly used for corporations. In an unusual situation, as in this case, where a complex set of business arrangements has the attributes of a partnership with assets in the form of a large number of corporate holdings and special-purpose entities, a similarly unusual approach may be adopted in dealing with the issues that it presents. With this in mind, the judge in the Libfeld case looked to the jurisdictions of both the Ontario Partnerships Act (OPA) and the Ontario Business Corporations Act (OBCA) to effect the winding-up. This commentary explores the merit of the decision. It also provides thoughts on its regulatory and socio-economic ramifications at both the institutional and personal levels. But the factual background, issues, and ruling will be reviewed first.