The Receiver of two insolvent real estate brokerages (TRP and TRP Realty) sought the court's advice and direction on whether approximately $3.7 million in commissions owed to the brokerages' agents were held in trust for the agents or formed part of the general assets available to secured creditors.
The court applied the "three certainties" test for a valid trust, focusing on certainty of intention.
Despite some ambiguous indicators like bank account names and standard form documents, the court found that the agents' contracts and the brokerages' audited financial statements did not objectively demonstrate an intention to create a trust.
Consequently, the commissions were deemed unsecured debts, not trust funds, and thus available to the secured creditors.
