The defendants sought authorization to release additional funds held in trust to pay legal fees incurred in defending litigation involving multiple defendants.
The funds originated from encumbrances placed on residential properties pursuant to a prior consent order permitting borrowing to finance the legal defence of two defendants.
The court was required to determine the proper allocation of legal fees where work performed by counsel benefitted both those defendants and a co‑defendant who was not entitled to access the encumbered property funds.
Applying principles governing payment of legal fees from assets subject to proprietary injunctions, the court concluded that only part of the joint defence work could properly be charged to the trust funds.
The court ordered that the two defendants were entitled to recover 50% of the total legal fees, taxes, and disbursements from the trust account.