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Mandatory Retirement for Law Firm Partners Upheld

Partners of limited liability partnerships are partners, not employees of the firm, the BC Court of Appeal ruled on July 19. Provisions in human rights legislation prohibiting discrimination in relation to employment because of age (and presumably other grounds) do not apply to partners and partnerships. Thus the BC Human Rights Tribunal did not have jurisdiction to hear a complaint by Fasken Martineau DuMoulin LLP partner John McCormick that his firm’s mandatory retirement policy violated human rights legislation.

Levine J.A., writing for a unanimous panel, summarized her views as follows:

[2] The British Columbia Human Rights Tribunal and a Supreme Court chambers judge on judicial review decided that for the purposes of human rights legislation, a partnership may be treated as a separate legal entity from its partners and as the employer of a partner, with the result that the Tribunal has jurisdiction to hear a complaint by a partner of discrimination in his employment.  The partnership appealed, claiming the Tribunal does not have jurisdiction to hear the complaint, because in law a partnership is not a separate entity from its partners, and cannot in law employ a partner.

[3] In my opinion, the principles of interpretation of the Human Rights Code, R.S.B.C. 1996, c. 210, which mandate a broad, liberal approach consistent with its remedial purposes, do not change underlying legal relationships to the extent found by the Tribunal and the chambers judge.  In particular, they do not extend to overriding the fundamental and well-established principle of law that a partnership is not, in law, a separate entity from, but is a collective of, its partners, and as such, cannot, in law, be an employer of a partner.

[4] In my opinion, the Tribunal does not have jurisdiction to hear the complaint.  It follows that I would allow the appeal.

The court emphasized that partnerships are not separate legal entities from their partners, unlike corporations, which are distinct legal persons. This extends to every aspect of the firm’s commercial relationships.

A BC Supreme Court judge on judicial review had found that legislation allowing for limited liability partnerships had “significantly erode[d] the common law concept of partnership as merely a collective of partners without a separate identity” and that the commercial reality was that there was a distinction between Faskens and its partners.

Levine J.A. disagreed:

[45]  In my opinion, the chambers judge’s rationale for treating the firm as an entity separate from Mr. McCormick is legally unsupportable.  There can be no doubt that in Canadian law, a partnership is not a separate entity from its partners, and a partner cannot be an employee of, or employed by, a partnership of which he is a member.

She also disagreed that BC’s Human Rights Code overrode this principle, saying:

[59] There is no distinction between “commercial reality” and the legal nature of a partnership.  The interpretation of the Code, like all statutes, is a legal exercise, where well-established fundamental principles of law apply.  If the result of that exercise is that there are gaps in the legislation, it is the task of the legislature to remedy them.

This decision is undoubtedly correct. But it does lead to the inevitable conclusion that partnerships can discriminate based on, for example, sex, race, religion, or sexual orientation.

Read the decision: Fasken Martineau DuMoulin LLP v. British Columbia (Human Rights Tribunal), 2012 BCCA 313.

W. Michael G. Osborne
Affleck Greene McMurtry LLP

W. Michael G. Osborne

Michael Osborne is a former Partner of Affleck Greene McMurtry LLP

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