The appellant purchased stock in bulk from a company in financial difficulty but failed to comply with the Bulk Sales Act.
The seller applied the proceeds of the sale against its debts owed to its two highest-ranking secured creditors.
The respondent, an unsecured creditor, commenced proceedings against the appellant seeking an accounting under s. 16(2) of the Act.
The Supreme Court of Canada allowed the appeal, holding that the buyer's duty to account must be interpreted purposively.
Since the proceeds were paid to priority-ranking creditors and the respondent was not deprived of any money it would have received on a ratable distribution, the appellant was not liable to account to the respondent.
