The defendants, a lawyer and his law firm, brought an interpleader motion seeking to pay disputed funds held in their trust account into court.
The funds arose from the sale of a property by the plaintiff corporation, 2823373 Ontario Inc., whose director, Diane Salman, was also a plaintiff.
A dispute arose among the corporation's shareholders regarding the release of these funds.
The plaintiffs opposed the interpleader motion, arguing the funds should be released to the corporation.
The court found that Ms. Salman, on behalf of the corporation, had initially instructed the defendants to hold the funds in trust, but later instructed their release.
The court denied the interpleader motion, concluding that the defendants were not neutral stakeholders and had a beneficial interest in the funds due to the lawyer's involvement as a director of the majority shareholder and the source of investment funds.
The court also declined to invoke its inherent jurisdiction to order the funds into court.
Consequently, the defendants were ordered to release the disputed funds to 2823373 Ontario Inc.