McFarland v. London & Lancashire Guarantee & Accident Co. of Canada

McFarland v. London & Lancashire Guarantee & Accident Co. of Canada

The court held that the contested sums were received by the liquidator as personal agent of a secured creditor under a power of attorney, never constituted company funds nor were the company accountable for them, therefore they fell outside the guarantee bond's condition and the misfeasance order insofar as it purported to cover them was without jurisdiction; consequently the guarantor was not liable and interest was disallowed in the absence of any order for interest.

Citation
[1928] SCR 57
Parties
Appellant Official Liquidator: Joseph Walter McFarland, Official Liquidator of D. E. Brown, Hope & Macaulay Limited; Respondent Guarantor/surety: London & Lancashire Guarantee & Accident Company of Canada
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
20 April 1927
Procedural Posture
Appeal (guarantee Bond in Winding Up Proceedings) / Final Judgment by Supreme Court of Canada on Appeal From Court of Appeal for British Columbia
Outcome
Appeal dismissed with costs; judgment of the Court of Appeal for British Columbia affirmed.
Legal Topics
Guarantee Bond Interpretation, Misfeasance Under Winding Up Statutes, Power of Attorney Transactions, Secured Creditor Rights, Claim for Interest Under Bond
Source Language
English
Guarantee and Suretyship Insolvency/winding Up Trusts and Fiduciary Duties Agency Law Guarantee Bond Interpretation Misfeasance Under Winding Up Statutes Power of Attorney Transactions Secured Creditor Rights +1 more

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Legal principles 3 Authorities cited 3 Party arguments 2 Amounts and remedies 3
Sign in to unlock

Parties

Joseph Walter McFarland, Official Liquidator of D. E. Brown, Hope & Macaulay Limited

Appellant Official Liquidator

London & Lancashire Guarantee & Accident Company of Canada

Respondent Guarantor/surety

Procedural Posture

Appeal (guarantee Bond in Winding Up Proceedings) / Final Judgment by Supreme Court of Canada on Appeal From Court of Appeal for British Columbia

Legal Issues

  1. 1 Whether guarantor liable under bond for sums received by liquidator as personal agent of a secured creditor
  2. 2 Whether those sums were company funds or funds for which the company was accountable
  3. 3 Whether a misfeasance order under s.123 Winding-Up Act could properly relate to those sums

Ratio Decidendi

The court held that the contested sums were received by the liquidator as personal agent of a secured creditor under a power of attorney, never constituted company funds nor were the company accountable for them, therefore they fell outside the guarantee bond's condition and the misfeasance order insofar as it purported to cover them was without jurisdiction; consequently the guarantor was not liable and interest was disallowed in the absence of any order for interest.

Court Disposition

Appeal dismissed with costs; judgment of the Court of Appeal for British Columbia affirmed.

Orders

  • Appeal dismissed with costs.
  • Respondent not liable under its guarantee for the contested sums received by the liquidator as agent of a secured creditor.