Law Society of British Columbia v. Brito

Law Society of British Columbia v. Brito

The chamber judge did not commit a palpable and overriding error in concluding the documented arrangements were loans rather than trusts: promissory notes described the advances as loans with interest, funds were deposited into the law corporation's general account (commingled), and no objective evidence required...

Source-derived case information.

Citation
2018 BCCA 407
Parties
Respondent (petitioner): Law Society of British Columbia; Appellant (respondent): Carlos Brito; Respondent (respondent): Canadian Imperial Bank of Commerce
Court
British Columbia Court of Appeal
Jurisdiction
Canada
Judgment Date
24 October 2018
Procedural Posture
Appeal From Supreme Court of British Columbia Order on Application for Directions (custodian of a Law Practice) / Final Disposition on Appeal (oral Reasons)
Outcome
Appeal dismissed.
Legal Topics
Creation of Trust, Solicitor's Undertaking, Priority of Security Interests, PPSA Priority, Constructive Trust
Source Language
english
Trusts and Equity Secured Transactions Professional Regulation Civil Procedure Insolvency/receivership Creation of Trust Solicitor's Undertaking Priority of Security Interests +2 more

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Parties

Law Society of British Columbia

Respondent (petitioner)

Carlos Brito

Appellant (respondent)

Canadian Imperial Bank of Commerce

Respondent (respondent)

Procedural Posture

Appeal From Supreme Court of British Columbia Order on Application for Directions (custodian of a Law Practice) / Final Disposition on Appeal (oral Reasons)

Legal Issues

  1. 1 Whether funds advanced by Brito to Napora constituted a trust or a loan
  2. 2 Whether CIBC's perfected security interest under the PPSA has priority over Brito
  3. 3 Whether the solicitor's undertaking created a trust or equitable interest

Ratio Decidendi

The chamber judge did not commit a palpable and overriding error in concluding the documented arrangements were loans rather than trusts: promissory notes described the advances as loans with interest, funds were deposited into the law corporation's general account (commingled), and no objective evidence required segregation or expressed intention to create a trust; accordingly CIBC's perfected PPSA security interest has priority over Brito as an unsecured creditor.

Court Disposition

Appeal dismissed.

Orders

  • Custodian hold back $5,000.00 from the funds it holds on behalf of the Terry L. Napora Law Corporation to later pay all or part of this amount to any taxation authorities for amounts they, or the Custodian, later determine remain owed to them by the law practice
  • From the funds remaining after the $5,000.00 holdback, the Custodian is directed to pay the funds that it has or may collect to the Canadian Imperial Bank of Commerce, up to the amount determined by the Honourable Mr. Justice Gaul in his Order made on December 8, 2017 in this Honourable Court, Vancouver Registry No....