Wurth v. 1135096 Alberta Ltd., (2014) 596 A.R. 1 (QB)

• Judge: Strekaf, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: July 23, 2014
• Citations: (2014), 596 A.R. 1 (QB);2014 ABQB 520

Wurth v. 1135096 Alta. Ltd. (2014), 596 A.R. 1 (QB)

MLB headnote and full text

Temp. Cite: [2014] A.R. TBEd. SE.018

Larry Wurth (applicant) v. MNP Ltd., Trustee of the Estate of 1135096 Alberta Ltd. (respondent)

(BK01 094159; 2014 ABQB 520)

Indexed As: Wurth v. 1135096 Alberta Ltd.

Alberta Court of Queen's Bench

Judicial District of Calgary

Strekaf, J.

August 20, 2014.

Summary:

The Trustee in Bankruptcy of 1135096 Alberta Ltd. ("113") disallowed the proof of claim filed by Wurth in relation to a proprietary interest in $154,404 of the funds remaining in the bankrupt's estate. Wurth appealed. He claimed that monies were paid to 113 by a related company in breach of trust, that 113 acquired the monies with knowledge of the breach of trust, and that as a result he was entitled to a form of tracing remedy or constructive trust with respect to those funds.

The Alberta Court of Queen's Bench dismissed the appeal.

Bankruptcy - Topic 488

Property of bankrupt - Exemptions or exclusions - Trust property - The Trustee in Bankruptcy of company "113" disallowed the proof of claim filed by Wurth in relation to a proprietary interest over $154,404 of any remaining funds in the bankrupt's estate - Wurth appealed - He claimed that monies were paid to 113 by a related company ("126") in breach of trust, that 113 acquired the monies with knowledge of the breach of trust, and that as a result he was entitled to a form of tracing remedy or constructive trust - The Alberta Court of Queen's Bench dismissed the appeal - No tracing remedy was available as the monies paid in breach of trust could not be traced to any specific assets acquired by 113 - Wurth's claim to a constructive trust based on "knowing receipt" and unjust enrichment also failed, as he could not identify specific property which was the subject of the enrichment - There was no unjust enrichment in the circumstances where there was a juristic reason for the deprivation due to the operation of the Bankruptcy and Insolvency Act - The claim was brought too late - If Wurth was given a constructive trust, then 113's other creditors would be detrimentally affected - To the extent that credit had already been given for the full amount of Wurth's claim as part of the claim of 126, there was no longer any remaining benefit retained by 113 that could support a claim for unjust enrichment.

Bankruptcy - Topic 3636

Creditors - General - Claims - General - Equitable claims - [See Bankruptcy - Topic 488 ].

Bankruptcy - Topic 3724

Creditors - General - Claim to fund held in trust - Requirement of tracing of funds - [See Bankruptcy - Topic 488 ].

Equity - Topic 1007

Equitable relief - General - Tracing - [See Bankruptcy - Topic 488 ].

Restitution - Topic 123

Unjust enrichment - Remedies - Constructive trust - [See Bankruptcy - Topic 488 ].

Trusts - Topic 931

Trust property - Doctrine of tracing - General - [See Bankruptcy - Topic 488 ].

Trusts - Topic 2310

Constructive trusts - General principles - Circumstances when not imposed - [See Bankruptcy - Topic 488 ].

Trusts - Topic 2346

Constructive trusts - Basis for imposition - Unjust enrichment - [See Bankruptcy - Topic 488 ].

Cases Noticed:

Citadel General Assurance Co. et al. v. Lloyds Bank of Canada et al., [1997] 3 S.C.R. 805; 219 N.R. 323; 206 A.R. 321; 156 W.A.C. 321, refd to. [para. 18].

Barnabe v. Touhey (1995), 26 O.R.(3d) 477 (C.A.), refd to. [para. 20].

Bassano Growers Ltd. et al. v. Diamond S Produce Ltd. (Bankrupt) (1997), 214 A.R. 380 (Q.B.), affd. (1998), 216 A.R. 328; 175 W.A.C. 328; 1998 ABCA 198, refd to. [para. 21].

Statutes Noticed:

Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, sect. 67(1)(a) [para. 17]; sect. 81 [para. 16].

Authors and Works Noticed:

Houlden, Lloyd W., Morawetz, Geoffrey B., and Sarra, Janis P., Bankruptcy and Insolvency Law of Canada (4th Ed.) (Looseleaf), vol. 2, p. 3-41 [para. 19].

Counsel:

Peter R.S. Leveque, for the applicant;

Peter Jull, Q.C., for the Trustee.

This appeal was heard on July 23, 2014, before Strekaf, J., of the Alberta Court of Queen's Bench, who delivered the following judgment and reasons, dated at Calgary, Alberta, on August 20, 2014.