Court of Appeal for Ontario

Date: 2017-07-10 Docket: C63207 Panel: MacPherson, Cronk and Benotto JJ.A.

Parties

Between

Owen Rogers, Trustee Applicant (Respondent in Appeal)

and

Priyance Hospitality Inc. Respondent

Counsel

Reid Lester, for the appellant, AIG Insurance Company of Canada

David S. Ward and Erin Craddock, for the respondent, Owen Rogers, Trustee

Hearing and Lower Court

Heard: July 7, 2017

On appeal from: the judgment of Justice Ruth E. Mesbur of the Superior Court of Justice, dated December 14, 2016.

Reasons for Decision

[1] The appellant, AIG Insurance Company of Canada, appeals from the judgment of Mesbur J. of the Superior Court of Justice dismissing AIG's motion for the recovery of $600,000 which has been held back from distribution by the Receiver in the underlying proceeding. In support of its position, the appellant advances arguments grounded in mistake of fact, lack of consideration, unjust enrichment, equitable subrogation and constructive trust.

[2] We do not accept the appellant's submissions on these issues. We agree with the motion judge's conclusion. The funds in question were paid to the respondent trustee to reduce a legitimate outstanding debt. It is accepted that the trustee, who had no knowledge about the fraud and was not positioned to discover it, was lawfully entitled to receive the funds. Further, in good consideration of the payment, the trustee altered its position by agreeing to defer its receivership application for an additional two weeks even though, in addition to all the debtor's other problems, the bailiff had taken seizure actions to collect outstanding municipal taxes. In the context of these facts, the appellant did not establish the defence of mistake of fact.

[3] The appeal is dismissed. The respondent is entitled to its costs of the appeal fixed at $17,500, inclusive of disbursements and HST.

J.C. MacPherson J.A. E.A. Cronk J.A. M.L. Benotto J.A.