Flintoft v. Royal Bank of Canada

Flintoft v. Royal Bank of Canada

The written agreement created an express trust in favour of the bank over proceeds of sales of goods covered by its s.88 security and, combined with the statutory rights conferred by ss.88(2) and 86(2) of the Bank Act, the bank owned the claims against the purchasers when they arose; therefore the trustee took subject to that trust and the bank was entitled to the uncollected book debts despite the defective assignment of book debts.

Citation
[1964] SCR 631
Parties
Appellant / Trustee in Bankruptcy: Christopher Henry Flintoft (Trustee in Bankruptcy of Canadian Western Millwork Ltd.); Respondent / Bank: Royal Bank of Canada
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
6 October 1964
Procedural Posture
Appeal / Supreme Court of Canada Judgment on Appeal From the Court of Appeal for Manitoba
Outcome
Appeal dismissed.
Legal Topics
Bank Act S.88 Security, Assignment of Book Debts, Priority in Bankruptcy, Express Trust Over Proceeds, Tracing Proceeds
Source Language
English
Banks and Banking Bankruptcy Property Law Trusts and Equitable Remedies Bank Act S.88 Security Assignment of Book Debts Priority in Bankruptcy Express Trust Over Proceeds +1 more

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Parties

Christopher Henry Flintoft (Trustee in Bankruptcy of Canadian Western Millwork Ltd.)

Appellant / Trustee in Bankruptcy

Royal Bank of Canada

Respondent / Bank

Procedural Posture

Appeal / Supreme Court of Canada Judgment on Appeal From the Court of Appeal for Manitoba

Legal Issues

  1. 1 Whether debts arising from sale of goods subject to a bank's s.88 security belong to the bank despite an invalid assignment of book debts due to defective registration
  2. 2 Whether trustee in bankruptcy can claim book debts avoided under Bankruptcy Act s.63 when an express trust and statutory rights in favour of the bank exist
  3. 3 Whether a written agreement creating a trust over proceeds displaces the need for a valid assignment of book debts

Ratio Decidendi

The written agreement created an express trust in favour of the bank over proceeds of sales of goods covered by its s.88 security and, combined with the statutory rights conferred by ss.88(2) and 86(2) of the Bank Act, the bank owned the claims against the purchasers when they arose; therefore the trustee took subject to that trust and the bank was entitled to the uncollected book debts despite the defective assignment of book debts.

Court Disposition

Appeal dismissed.

Orders

  • Appeal dismissed with costs.
  • Bank entitled to book debts representing proceeds of sales of goods covered by its s.88 security.