Case information

Trusts — Resulting trust — Corporation and director — Court of Appeal affirming decision of motion judge dismissing motion resisting garnishment order on basis settlement proceeds held in trust pursuant to express or resulting trust — Settlement proceeds ordered to be paid to Pezzack Financial Services Inc. — Whether lower courts erred in reasoning and decision — Is presumption of resulting trust rebutted by lack of evidence of intention to create a trust, even in absence of evidence to make a gift — Whether express trust can be declared a sham based almost solely on a finding that its existence remained undisclosed until such time as its existence was relevant to determining rights of parties to beneficial ownership of property — Whether personal debts of director are sufficient juristic reason for director’s personal creditors to be allowed to seize and be enriched by property purchased using corporate funds to which director had no entitlement?

Case summaries are prepared by the Office of the Registrar of the Supreme Court of Canada (Law Branch). Please note that summaries are not provided to the Judges of the Court. They are placed on the Court file and website for information purposes only.

Mr. Raso owes the respondent, Pezzack Financial Services Inc. money. Pezzack served Mr. Colacci with a notice of garnishment calling on Mr. Colacci to pay Pezzack any money that Mr. Colacci owes Mr. Raso. Mr. Raso had sued Mr. Colacci on a mortgage and the action was settled for $790, 000.

The applicants, Chanel Holdings Ltd., and 1598356 Ontario Ltd., brought a motion resisting garnishment on the basis that Raso held the mortgage in trust for 1598356 pursuant to an express or a resulting trust. They claimed the money should be paid out to them instead of to Pezzack. The sum of $790, 000 was ordered to be paid into the court pending disposition of the motion and any appeals arising from it.

The motion judge found that there was no trust and dismissed the motion. The Court of Appeal upheld that decision and dismissed the appeal. Pezzack was entitled to the proceeds of the settlement of the mortgage action.