The appellant insurance companies used an agent to collect premiums.
The agent deposited the premiums into a general bank account with the respondent bank.
The bank subsequently transferred funds from this account to the agent's parent company's account to reduce an overdraft, leaving the agent unable to remit the premiums to the appellants.
The appellants sued the bank for breach of trust.
The Supreme Court of Canada held that the bank was liable as a constructive trustee under the 'knowing receipt' head of liability, as it received trust property for its own benefit and had constructive knowledge of the breach of trust.
