An Ontario court has ruled in favour of allowing a lawyer and his professional corporation to pursue claims against both a law firm and its individual partners in a dispute over an employment relationship, dismissing a motion that sought to remove several defendants from the action.
The case involves Z.B. and his professional corporation, who worked at Diamond & Diamond from 2015 until his termination in 2024. He alleges breach of contract, wrongful dismissal and other torts against the firm and its partners.
The defendants had attempted to have everyone except the limited liability partnership removed from the case, arguing that the plaintiff must choose between suing either the partnership or its partners, but not both.
Partnership status disputed
According to court documents, Z.B. worked as a plaintiff-side personal injury lawyer at the defendant law firm for approximately nine years. The central dispute revolves around his employment status and the interpretation of a “Partnership Agreement (Non-Equity)” that became effective January 1, 2019.
While the defendants claim Z.B.’s professional corporation became a partner in the firm as of that date, the plaintiffs maintain that “one or both of the plaintiffs were employees and not partners.”
The agreement in question was signed by Z.B. both personally and on behalf of his professional corporation, as well as by the three individual defendants and the law firm itself.
Motion to remove defendants
The defendants brought a motion under Rule 5 of the Rules of Civil Procedure, asking the court to delete or remove all defendants except the law firm, or alternatively, to stay the action against those defendants.
They argued that although the individual defendants signed the agreement, it “imposes no specific contractual obligations on any of the individual defendants or the professional corporation defendants.” They contended that only the law firm had obligations under the agreement.
The defendants further asserted that the plaintiffs must choose whether to commence proceedings against the partnership or the individual partners, citing the established principle that both cannot be sued for the same cause of action.
Court’s analysis
The associate justice hearing the motion noted that this was not a summary judgment motion or a trial, stating: “It is not my role to interpret the Agreement.”
The court acknowledged the plaintiffs’ reliance on Rule 5.02(2)(c), which permits joinder of defendants when “there is doubt as to the person or persons from whom the plaintiff or applicant is entitled to relief.”
The plaintiffs argued that while clients with claims against a firm normally must choose between suing the partnership or its partners, this rule doesn’t apply when individual partners undertake certain liabilities to the plaintiff. They alleged that under the agreement, “the individuals defendants, along with [the firm], directly contracted with the plaintiffs to pay the plaintiffs for their work.”
The court distinguished this case from a precedent involving the same law firm (Tataryn v 2398968 Ontario Inc.), where a judge had stayed claims against all defendants except the partnership. In that case, the court had found the statement of claim provided no basis for personal claims against the individual lawyers.
By contrast, the associate justice noted: “the Claim in this case provides a basis for the claim against the individual defendants. They are, each on their own behalf, signatories to the Agreement.”
With respect to the professional corporations, the court found a basis for claims against them “by virtue of the enurement clause in the Agreement.”
Prejudice considerations
The individual defendants claimed that naming them and their professional corporations was prejudicial and harmed their professional reputations. However, the court stated: “It is hard to see how being named as defendants in a lawsuit can be said to be prejudicial to the individual defendants who signed the Agreement.”
The court noted the potential prejudice to the plaintiffs if the relief were granted and a trial judge later interpreted the agreement to find that “the individual defendants or their professional corporations had independent obligations to the plaintiffs that [the firm] did not share.”
The defendants also argued that removing the additional defendants would streamline the litigation process, but the court found they “did not provide a cogent basis for this argument,” observing that the number of parties to be examined for discovery would likely remain the same regardless.
Outcome
The court dismissed the defendants’ motion, allowing the case to proceed with all named defendants. The defendants were ordered to pay costs of $10,000 to the plaintiffs.
This case highlights the complex interplay between employment relationships and partnership agreements in professional service firms, and the circumstances under which individual partners may be liable alongside the partnership entity.
For more information, see Bergman v Diamond & Diamond Lawyers LLP, 2025 ONSC 2209 (CanLII).
