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178(1)(d) of BIA and Breach of Trust

Posted on March 11, 2015 | Posted in Bankruptcy, Five Liners

Abraham v. McBean 2015 SCJ

Paralegal held liable because she allowed a mortgage transaction to be completed after the proposed mortgagor had sold the property to a numbered company. The trial judge determined that, after advancing funds in her trust account without notifying the mortgagee of the change in the ownership of the property, the paralegal breached her trust obligations and disregarded the interests of the party she was retained to protect.

On application to release the bankrupt paralegal from her subsequent bankruptcy, the bankruptcy judge held that section 178 (1) (d) of the Bankruptcy and Insolvency Act did not apply. It did not apply to every breach of trust, but only a breach akin to misappropriation or defalcation. Since there was no finding by the trial judge of bad faith or dishonesty against the bankrupt paralegal, the section did not apply.


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