Morgan V Jesani Distribution of Property Sale Proceeds and Breach of Trust
Ashmead Law was recently successful in obtaining a well-deserved award for their clients, the plaintiffs. In Morgan v Jesani, 2026 BCSC 139, the courts grappled with issues of breach of trust and the division of proceeds following a sale of a seven-acre property in Malahat.
The property originally belonged to the plaintiffs. The defendant bought into the property as an investor. Since 2003, the parties were to own and manage the seven-acre property together, operating a Bed and Breakfast on the property. In 2019, the defendant decided to sell the property for $2,660,000. At this time, the plaintiffs owned 27% of the property. The plaintiffs sought the proceeds to which they were entitled. The defendant however claimed he was first owed various loans and interest on loans.
As part of buying into the property as an investor, the defendant was meant to hold the plaintiffs’ portion of the property in trust, and to their benefit, to obtain more funding in relation to the property and the Bed and Breakfast. This is not what happened. The courts found that the defendant had breached his obligations as a trustee in some of the following ways:
- Using the plaintiffs’ property to obtain funding through mortgages without the plaintiffs’ consent and largely without their knowledge.
- Using said funding for the defendant’s own personal gain, including to pay off personal credit card expenses and make further investments without the plaintiff’s knowledge or consent. In particular, using the funding to invest in what later was found out to be a Ponzi Scheme.
- Failing to account to the plaintiffs his use of their property.
What is more, the defendant claimed that plaintiffs then owed him money on various grounds relating to the funding he unilaterally obtained, plus interest. As well, when the Ponzi Scheme came to light, the defendant was sued. The defendant unilaterally settled that Ponzi Scheme action but then said that the plaintiffs owed him the money he paid for settlement.
Meanwhile, Mrs. Morgan ran the Bed and Breakfast to the best of her abilities; sometimes without any pay at all, despite the agreement that she would be paid for her work.
Audrey Yen submitted their arguments in the context of this complex web of facts spanning over two decades were argued before the court. Given various agreements between the parties and the breach of trust, the court found that the plaintiffs were owed $1,229,740 + interest. The defendant’s counterclaim was dismissed.
This case illustrates how important it is to retain counsel who can present the facts of the case cogently, for you to obtain your best possible result. If you are looking for a lawyer to represent you, contact Ashmead Law to see how they may help you.
