



COURT OF APPEAL FOR ONTARIO

CITATION: AIG Insurance Company of Canada v. Priyance
    Hospitality Inc., 2017 ONCA 595

DATE: 20170710

DOCKET: C63207

MacPherson, Cronk and Benotto JJ.A.

BETWEEN

Owen Rogers, Trustee

Applicant (Respondent in Appeal)

and

Priyance Hospitality Inc.

Respondent

Reid Lester, for the appellant, AIG Insurance Company of
    Canada

David S. Ward and Erin Craddock, for the respondent,
    Owen Rogers, Trustee

Heard: July 7, 2017

On appeal from the judgment of Justice Ruth E. Mesbur of
    the Superior Court of Justice, dated December 14, 2016.

REASONS FOR DECISION

[1]

The appellant, AIG Insurance Company of Canada, appeals from the
    judgment of Mesbur J. of the Superior Court of Justice dismissing AIGs motion
    for the recovery of $600,000 which has been held back from distribution by the
    Receiver in the underlying proceeding. In support of its position, the
    appellant advances arguments grounded in mistake of fact, lack of consideration,
    unjust enrichment, equitable subrogation and constructive trust.

[2]

We do not accept the appellants submissions on these issues. We agree
    with the motion judges conclusion. The funds in question were paid to the
    respondent trustee to reduce a legitimate outstanding debt. It is accepted that
    the trustee, who had no knowledge about the fraud and was not positioned to
    discover it, was lawfully entitled to receive the funds. Further, in good
    consideration of the payment, the trustee altered its position by agreeing to
    defer its receivership application for an additional two weeks even though, in
    addition to all the debtors other problems, the bailiff had taken seizure
    actions to collect outstanding municipal taxes. In the context of these facts,
    the appellant did not establish the defence of mistake of fact.

[3]

The appeal is dismissed. The respondent is entitled to its costs of the
    appeal fixed at $17,500, inclusive of disbursements and HST.

J.C. MacPherson J.A.

E.A. Cronk J.A.

M.L. Benotto J.A.


