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TRUSTS - Statutory trusts

Thursday, September 12, 2019 @ 6:27 AM  

Lexis Advance® Quicklaw®
Appeal by the plaintiffs from the dismissal of their claim for breach of statutory trust against the respondent law firm. The appellants purchased strata units in a development and subscribed for bonds in the development. They paid the bond subscription funds to the respondent. Pursuant to the bond subscription agreement, the bond subscription funds were to be used to pay off the developer’s existing debt and to fund ongoing construction. Redemption funds were to be used as credit against the purchase price of the units. The development project failed before bond redemption occurred and the funds were lost. The trial judge found the funds paid to the respondent were not deposits within the meaning of the Real Estate Development Marketing Act and further found the respondent had not breached a statutory trust created by s. 18 of the Act by releasing the funds to the developer.

HELD: Appeal dismissed. The bond investment and the real estate purchases were separate transactions. The link between the two transactions was insufficient to transform the bond investment into something it was not. The bond subscription funds were not deposits for the purchase of real estate. The trial judge made no error in his interpretation of the statutory provisions or the contract documents. The Real Estate Development Marketing Act could not be used to overcome the plain language of the contract the appellants entered. The Act did not apply to the transaction. The plain meaning of the language of the subscription agreement did not describe a real estate purchase but rather a risky investment in a bond offering, the underlying security for which was an already encumbered, struggling real estate development.

Bison Properties Ltd. (Re), [2019] B.C.J. No. 1384, British Columbia Court of Appeal, M.E. Saunders, N.J. Garson and B. Fisher JJ.A., July 26, 2019. Digest No. TLD-September92019010