application judge’s finding was contrary to the scheme of the LPA
and the underlying nature of limited partnerships.
[ 4] In 1985, Canadian Home Publishers was formed as a limited
partnership, with Canadian Home Publishers Inc., a corporation
wholly owned by Lynda Reeves, as the sole general partner, and
David Colville-Reeves as the sole limited partner. Lynda and David
were married at the time. They became interested in acquiring
Canadian House and Home, a magazine, so that Lynda could run it
as her own business and David could make use of its tax losses.
[ 5] There was no written limited partnership agreement. While
drafts of a limited partnership agreement were prepared, a written agreement was never executed by both parties. The structuring of the acquisition of the magazine, and the structure of its
business as a limited partnership, were handled entirely by David
and his team of legal and financial advisors, with a view to maximizing the tax benefits to David. Lynda did not receive any independent legal or financial advice regarding the acquisition of the
magazine, or the structuring of the business as a limited partnership. David invested $1.8 million to acquire the magazine. Lynda
did not make any capital contribution to the partnership or to the
acquisition of the magazine.
[ 6] It was understood between Lynda and David that they
would share equally in the profits of the magazine. There was,
however, no agreement, written or oral, as to what would happen
on David’s death.
[ 7] Lynda and David divorced in 1991. Various disputes arose
between the two. In 1993, David brought an application seeking,
amongst other relief, an order ( i) removing Canadian Home
Publishers Inc. as general partner; ( ii) authorizing David to
remove his capital from the partnership; and ( iii) declaring that
David was entitled to compensation for the interest paid on loans
that he took to make his capital contribution to the partnership.
[ 8] That application was heard, and ultimately dismissed, by
Lane J.: Colville-Reeves v. Canadian Home Publishers,  O.J.
No. 3367 (Gen. Div.), affd  O.J. No. 3675 (C.A.). In the
course of his reasons, Lane J. said, at para. 7:
I am satisfied on the evidence that the parties came to an oral agreement the
essential particulars of which were as follows.
1. They would acquire the magazine jointly in a transaction structured in the manner most beneficial to David from a tax viewpoint.
2. They would, after the third party investor dropped out, be equal