UNJUST ENRICHMENT - Elements - Absence of juristic reason

Law360 Canada (November 10, 2022, 6:28 AM EST) -- Appeal by the defendants from the trial judge’s decisions. Cross-appeal by the Trustee in Bankruptcy from the dismissal of its claims. Golden Oaks Enterprises, founded by Lacasse, was a Ponzi scheme operating in Ottawa between 2009 and 2013. It was promoted to certain individuals as a way to turn a quick profit by advancing funds for short periods of time in exchange for high-interest promissory notes. Early investors earned commissions for persuading new investors to make loans. The company’s financial situation worsened, and it began issuing notes with interest rates in excess of 60 per cent, which was considered usurious and criminal. Eventually, money from new investors was being used to pay existing investors. The scheme collapsed in July 2013. Golden Oaks and Lacasse went into receivership and made assignments in bankruptcy. The Trustee in Bankruptcy began over 80 separate legal actions against creditors, 17 of which were brought against individuals and companies who received payments from Golden Oaks in 2012 and 2013, including commission payments and interest on promissory notes. The theory of those 17 actions was that Golden Oaks was by definition insolvent, it never had enough money to pay what it owed to legitimate creditors, and the commission payments and usurious interest payments to the defendants deprived those creditors of their share of the company’s remaining equity. The 17 actions were heard together in a summary trial. The appellant Scott appealed on a separate issue from the other appellants. The trial judge granted a claim under section 95(1)(b) of the Bankruptcy and Insolvency Act (BIA) against Scott for repayment of $72,575 in preferences, while dismissing other claims against him (Scott Action). With respect to the other investor appellants, the trial judge granted claims for repayment of interest in varying amounts (Usurious Interest Action). The trial judge found that the appellant investors in the Usurious Interest Action knew or ought to have known that the returns promised on their investments were too good to be true. The appellants took the position that the trial judge erred in a number of ways. The Trustee took the position that the trial judge erred in dismissing its claims....
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