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The case noted by Lionel seems reasonable enough in its result, but could the same result not have been reached by a more direct route (not having read the case, these comments are purely speculative). Could it not have been argued that the presumption of the passing of property on delivery was rebutted by the absence of an effective contract under which the property in the goods passed?; ie, since the contract was subject to an unfulfilled condition precedent, the basis on which property was to pass had also not been fulfilled and thus Hallmark still had good (legal) title to the goods. Hence, there would not have been a need to resort to a constructive trust.

Or am I missing something?

Joachim Dietrich
Faculty of Law, ANU
Australia

On 29/09 Lionel wrote:

In Ellingsen (Trustee in Bankruptcy) v. Hallmark Ford Sales Ltd., 18 August 2000, British Columbia CA, Ellingsen wanted to buy a car from the defendant but there was difficulty arranging the financing. He was allowed to take the truck away, financing to be arranged later. The written agreement said "subject to credit approval." He went bankrupt and the defendant had not made any filing in the Personal Property Registry. The trustee in bankruptcy sought an order that under the terms of the Personal Property Security Act, the truck vested in the trustee clear of any rights of the defendant. The defendant sought a remedial constructive trust. The court held, 2-1, that such a trust was appropriate, as the sale contract was subject to an unfulfilled condition precedent and thus Hallmark had not taken a credit risk. (I am not so sure of this.)

This is one of only two Canadian cases of which I am aware in which a CT actually alters insolvency priorities.