The corporate plaintiff was ordered to pay $15,000 into court as security for costs.
The sole officer and director paid the amount with his own personal funds.
The defendant later obtained judgment against the plaintiff on its counterclaim and sought an order under the Creditors' Relief Act that the money paid into court be paid out to it as an execution creditor.
The motion judge granted the order.
On appeal, the Divisional Court set aside the order, finding that the funds were impressed with a Quistclose trust in favour of the director who advanced them for a specific purpose.
The funds never belonged to the execution debtor and were not available for distribution to its creditors.
