Liorti v. Menzies

Liorti v. Menzies

Because the respondent's mortgage was collateral and secondary, the loan proceeds were advanced to the primary borrower (LDC); therefore the law firm held the funds in trust for LDC and properly paid them out on LDC's instructions, so there was no breach of trust and the trial judgment was set aside.

Citation
C44571
Parties
Plaintiff/respondent: Laura Liorti; Defendant/appellant: J. Alexander Menzies; Defendant/appellant: Menzies & Von Bogen
Court
Court of Appeal for Ontario
Jurisdiction
Canada
Judgment Date
8 December 2006
Procedural Posture
Civil / Appeal
Outcome
Appeal allowed; trial judgment set aside; respondent's action dismissed.
Legal Topics
Breach of Trust, Trust Account, Mortgage (secondary/collateral), Authorization for Payments From Trust Account, Costs
Source Language
English
Trusts Property Law Civil Procedure Professional Liability Breach of Trust Trust Account Mortgage (secondary/collateral) Authorization for Payments From Trust Account +1 more

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Parties

Laura Liorti

Plaintiff/respondent

J. Alexander Menzies

Defendant/appellant

Menzies & Von Bogen

Defendant/appellant

Procedural Posture

Civil / Appeal

Legal Issues

  1. 1 Whether the law firm held the loan proceeds in trust for both the mortgagor (respondent) and the primary borrower (LDC)
  2. 2 Whether payments from the firm's trust account without the respondent's authorization constituted a breach of trust
  3. 3 Whether a mortgage characterized as collateral/secondary means the loan proceeds were advanced to the primary borrower

Ratio Decidendi

Because the respondent's mortgage was collateral and secondary, the loan proceeds were advanced to the primary borrower (LDC); therefore the law firm held the funds in trust for LDC and properly paid them out on LDC's instructions, so there was no breach of trust and the trial judgment was set aside.

Court Disposition

Appeal allowed; trial judgment set aside; respondent's action dismissed.

Orders

  • Trial judgment set aside and replaced with order dismissing the respondent's action.
  • Cross-appeal for increased pre-judgment interest dismissed.