This case involved a claim by a plaintiff who allegedly paid $130,000 for a lobster licence. Since DFO regulations prevented him from holding it himself, he arranged to have it held by a nominee who later sold it and kept the proceeds of sale. In an action against the various parties involved, the court refused to impose a trust over the licence because it had been sold and transferred to a purchaser who had no knowledge of the trust. Although the licence had apparently been purchased by the plaintiff with money obtained from illegal activities (illegal cigarette and alcohol sales), the court was prepared to grant judgement against the party who received the money (but no longer held the licence) because:
In the case at bar, the ‘illegality’ upon which the Defendants would seek to rely refers to the source of Hurley’s funds [the plaintiff], and possibly to his failure to disclose their existence to a relevant authority,in other words, his ‘general depravity’. However, the source of the purchase funds need not be established to prove the existence of the trust relationship arising between the parties in respect of the property purchased. The underlying ‘illegal transaction’, if indeed one exists, is simply not relevant.
Moreover, illegality should only exceptionally lead to such a severe consequence as the forfeiture of a person’s property, especially where that forfeiture would be in favour of a person who was a willing party to the illegality.’