Greymac Trust Co. v. Ontario (Ontario Securities Commission), [1988] 2 SCR 172

greymac trust co. v. ontario (o.s.c.), [1988] 2 S.C.R. 172

Greymac Trust Company, Crown Trust Company and Seaway Trust Company                                                          Appellants

v.

Ontario Securities Commission                                                         Respondent

and

Greymac Credit Corporation                                                            Respondent

and

Chorny Mortgage Investor Participants                                          Respondent

indexed as: greymac trust co. v. ontario (ontario securities commission)

File No.: 20146.

1988: October 13.

Present: Dickson C.J. and McIntyre, Lamer, Wilson, La Forest, L'Heureux‑Dubé and Sopinka JJ.

on appeal from the court of appeal for ontario

                   Trusts and trustees ‑‑ Breach of trust ‑‑ Mingled bank account ‑‑ Trustee making unauthorized disbursement from account ‑‑ Insufficient funds to reimburse beneficiaries in full ‑‑ Allocation of losses between beneficiaries ‑‑ Whether Court of Appeal correct in not applying "first in, first out" rule in Clayton's Case.

Cases Cited

                   Referred to: Devaynes v. Noble; Clayton's Case (1816), 1 Mer. 572, 35 E.R. 781.

                   APPEAL from a judgment of the Ontario Court of Appeal (1986), 55 O.R. (2d) 673, 39 D.L.R. (4th) 1, dismissing an appeal from a judgment of Parker A.C.J.H.C. (1985), 51 O.R. (2d) 212, 19 D.L.R. (4th) 470, 19 E.T.R. 157. Appeal dismissed.

                   William V. Sasso, for the appellants.

                   No one appeared for respondent Ontario Securities Commission.

                   No one appeared for respondent Greymac Credit Corporation.

                   C. C. Lax, Q.C., and Perry Hancock, for the respondent Chorny Mortgage Investor Participants.

                   The judgment of the Court was delivered orally by

1.                The Chief Justice‑‑It will not be necessary to call upon you Mr. Lax. The issue in this appeal is whether the Ontario Court of Appeal erred in failing to apply the "first‑in, first‑out" rule in Clayton's Case, Devaynes v. Noble; Clayton's Case (1816), 1 Mer. 572, 35 E.R. 781, in the allocation of losses between beneficiaries where a trustee has made unauthorized disbursements from an active bank account into which the beneficiaries' funds have been placed and insufficient funds remain to reimburse each of the beneficiaries in full.

2.                       We are not persuaded by the appellants' argument that the Ontario Court of Appeal so erred. On the contrary, we agree with the conclusion of the Court of Appeal and we adopt the reasons therefore delivered by Morden J.A. on behalf of the Court.

3.                       The appeal is accordingly dismissed with costs.

                          Judgment accordingly.

                          Solicitors for the appellants: McMillan, Binch, Toronto.

                          Solicitors for the respondent Chorny Mortgage Investor Participants: Goodman & Goodman, Toronto.