Richard W. Schwartz

The Ministry of Training, Colleges and Universities granted funds to a First Nations limited partnership to provide skills training.

The partnership applied to dissolve and an interim receiver was appointed.

The application judge found that the unspent grant moneys were subject to a Quistclose trust for the Ministry's benefit and ordered the receiver to return them.

The Court of Appeal allowed the receiver's appeal, finding that the funding agreement characterized unused funds as a debt, not a trust, and gave the partnership significant discretion to spend the funds.

Therefore, the requirements for a Quistclose trust were not met and the funds were available for distribution in the receivership.

The applicant sought declarations that funds advanced under a provincial training funding agreement were held in trust and should be returned following the insolvency of the recipient limited partnership.

The court considered whether the funds were impressed with a Quistclose trust and whether a receiver’s charging order nonetheless had priority over those funds.

Applying authorities including Quistclose and Twinsectra, the court held that the agreement restricted the use of funds to a specific training project and required repayment of unspent funds, demonstrating the necessary intention to create a trust.

The court found the remaining funds held by the receiver were impressed with a trust in favour of the applicant but concluded they were subject to the receiver’s previously granted charging order.

The funding agreement was declared terminated.

The appellant was induced to leave secure employment and worked for the respondent for 14 years before being summarily discharged without explanation.

The employer maintained allegations of cause until the start of the trial.

The appellant, an undischarged bankrupt, sued for wrongful dismissal.

The Supreme Court of Canada held that an undischarged bankrupt can maintain an action for wrongful dismissal because damages in lieu of notice constitute exempt 'salary, wages or other remuneration' under the Bankruptcy Act.

The Court also held that while there is no separate tort of 'bad faith discharge', employers have an obligation of good faith and fair dealing in the manner of dismissal.

Breach of this obligation, as occurred here, justifies an extension of the reasonable notice period.

The trial judge's award of 24 months' notice was restored.

The appellant mortgage company agreed to lend money to a client of the respondent lawyers, on the condition that the mortgage would be a first charge.

The respondents acted for both the borrower and the appellant but failed to advise the appellant of outstanding judgments against the borrower or to obtain postponements.

The Supreme Court of Canada restored the trial judge's finding that the respondents were retained by the appellant, owed a duty of care, and were negligent in failing to secure a first charge or advise the appellant of the risks.

The respondents were held liable for damages, including the costs of lawsuits brought by the appellant to maintain priority.