The respondent sued the appellant lawyer and law firm for breach of trust, alleging they paid loan funds out of their trust account without her authorization.
The respondent had provided a collateral mortgage on her home as secondary security for a loan to a company owned by her children.
The trial judge found the appellants liable for breach of trust.
On appeal, the Court of Appeal reversed the decision, holding that because the respondent's mortgage was collateral and secondary, the loan funds were advanced to the primary borrower.
The law firm properly held the funds in trust for the primary borrower and paid them out on its instructions.
The appeal was allowed and the action dismissed.