CITATION: Raponi v. Olympia Trust Company, 2022 ONSC 4481  
COURT FILE NO.: CV-20-00643593-00CP  
DATE: 20220802  
ONTARIO  
SUPERIOR COURT OF JUSTICE  
)
)
BETWEEN:  
DANIELE RAPONI  
)
)
)
)
)
)
)
)
)
Plaintiff  
Garth Myers, Paul Bates, Serge Kalloghlian,  
and David Milosevic for the Plaintiff  
- and –  
OLYMPIA TRUST COMPANY  
Defendant  
Ryan Morris and Daniel Szirmak for the  
Defendant  
Proceeding under the Class Proceedings  
) HEARD: May 30, 31, and June 1, 2, 2022  
Act, 1992  
PERELL, J.  
REASONS FOR DECISION  
Contents  
A.  
B.  
C.  
D.  
Introduction.......................................................................................................................... 2  
Dramatis Personae .............................................................................................................. 4  
Summary of the Parties’ Case Theories and Substantive Arguments.................................. 6  
Procedural and Evidentiary Background ........................................................................... 10  
E. Related Class Actions............................................................................................................ 14  
F. Preliminary Evidentiary Rulings ........................................................................................... 15  
The Missing Evidence........................................................................................................ 15  
The Disqualification of Mr. Wells as an Expert Witness .................................................. 16  
Should the Court Draw Adverse Inferences from the Testimony of Ms. Revol?.............. 17  
G.  
H.  
Registered Savings Accounts under the Income Tax Act................................................... 19  
Fortress Developments: The Fall of the Pied Piper of Syndicated Mortgages.................. 22  
I. Summary of Syndicated Mortgage Estimated Loan Losses.................................................. 27  
2
J. Olympia Trust’s Role in the Syndicate Mortgages ............................................................... 28  
K.  
Mr. Raponi’s Investment in the Collier Centre Project ..................................................... 37  
L. Class Size............................................................................................................................... 37  
M.  
N.  
Certification: General Principles........................................................................................ 38  
The Cause of Action Criterion (s. 5 (1)(a))........................................................................ 39  
Pleadings Sufficiency and the Plain and Obvious Test ..................................................... 39  
Breach of Fiduciary Duty and of Trust (Statement of Claim, paras.79-92) ...................... 41  
Breach of Contract (Statement of Claim, paras. 93-97)..................................................... 47  
Negligence (Statement of Claim, paras. 98.-103).............................................................. 48  
Summary Cause of Action Criterion.................................................................................. 52  
Identifiable Class Criterion (s. 5 (1)(b)) ............................................................................ 54  
General Principles: Identifiable Class Criterion ................................................................ 54  
Analysis: Identifiable Class Criterion................................................................................ 54  
O.  
P. Common Issues Criterion (s. 5 (1)(c))................................................................................... 55  
General Principles: Common Issues Criterion................................................................... 55  
Analysis: Common Issues.................................................................................................. 57  
Q.  
Preferable Procedure Criterion (s. 5 (1)(d))....................................................................... 59  
General Principles: Preferable Procedure Criterion........................................................... 59  
Analysis: Preferable Procedure Criterion .......................................................................... 59  
Representative Plaintiff Criterion (s. 5 (1)(e))................................................................... 60  
General Principles: Representative Plaintiff Criterion ...................................................... 60  
Analysis: Representative Plaintiff Criterion...................................................................... 60  
R.  
S. Conclusion............................................................................................................................. 61  
Schedule “A” – Excerpts Income Tax Act and Income Tax Regulations...................................... 62  
Schedule “B” – Excerpts Bulletin IT-320R3 and Income Tax Folio S3-F10-C1.......................... 65  
A. Introduction  
[1]  
motion to certify his action against the Defendant Olympia Trust Company as a class proceeding.  
Pursuant to the Class Proceedings Act, 1992,1 the Plaintiff, Daniele Raponi, brings a  
[2] Between 2008 and 2017, Fortress Real Capital Inc. and Fortress Real Developments Inc.  
1 S.O. 1992, c. 6.  
 
3
(“Fortress Developments”) designed, promoted, and marketed syndicated mortgages for real estate  
projects across Canada. A syndicated mortgage is a loan where multiple Lenders fund a loan that  
is secured by a mortgage against the title of the land underlying the mortgage. The mortgage is  
held by a trustee/mortgagee for the Lenders. Each Lender obtains a security interest proportional  
to his or her contribution to the loan.  
[3]  
The immediate proposed class action concerns 54 land development projects and 69  
syndicated mortgage loans marketed by Fortress Developments in the period between 2011 and  
2017. Mr. Raponi was a Lenderfor the Collier Centre, one of the 54 projects. He funded a  
portion of the loan from his self-directed registered savings account that he had arranged with the  
Defendant Olympia Trust.  
[4]  
Fortress Developments was a Pied Piper, and it allegedly lured around 13,000 Lenders into  
funding the syndicated mortgages by false representations. The design of the syndicated mortgages  
was allegedly a sham to line the pockets of Fortress Developments and some of the Borrowers”  
by deceiving the Lenders. Some of the Borrowers were avatars of Fortress Developments and  
participants in the alleged fraud.  
[5]  
The Lenders were provided with promotional material and copious legal documentation.  
The Lenders like Mr. Raponi were unaware that the mortgage brokers and Fortress Developments  
were receiving approximately 35% of the money up front and that much of the mortgage money  
was not being used to build out the projects. The Lenders were unaware that the loan agreements  
had “waterfall” provisions that permitted Borrowers and the owners of the Borrowers to receive a  
return on their investment in the project before the Lenders were repaid and the project built. The  
Lenders were allegedly given false “as is” appraisals or opinions of value for the land that was  
being developed and mortgaged. After the Borrowers defaulted on the loans, the security of the  
syndicated mortgage proved improvident. The Lenders were deceived and suffered losses.  
[6]  
While Fortress Developments is the alleged fraudster in this proposed class action, it is not  
a defendant. Rather, Mr. Raponi, sues Olympia Trust with respect to the Class Members’  
investment in the 69 syndicated mortgage loans. The Class Members are a subset of the larger set  
of Lenders. The larger set of Lenders is comprised of: (a) Lenders who made their investments  
with funds advanced from unregistered accounts, and (b) Lenders who made their investments in  
the 69 syndicated mortgages from funds in savings accounts registered under the Income Tax Act.2  
The trustee/mortgagee/administrator for the Lenders who advanced funds from unregistered  
accounts were mortgage brokers or law firms. The trustee/mortgagee/administrator for the Lenders  
who advanced funds from registered savings accounts was Olympia Trust.  
[7]  
Why is Olympia Trust being sued? The Borrowers, some of whom were avatars of Fortress  
Developments, defaulted on the syndicated mortgages, and Mr. Raponi alleges that Olympia Trust  
breached trust, fiduciary, contractual, and common law duties and is the cause of the putative Class  
Memberslosses because, to quote Mr. Raponi’s factum: “Olympia Trust was a critical gatekeeper  
without which [the Borrower] could not have accessed the capital it needed to finance its failed  
development.”  
[8]  
Mr. Raponi’s principal allegation against Olympia Trust is that it failed to satisfy itself,  
before, at the outset, and throughout the approximately 200 advances of the 69 syndicated  
mortgages for the 54 projects that the syndicated mortgages were “fully secured” and “qualified  
2 R.S.C. 1985, c. 1 (5th Supp.).  
4
investments” under the Income Tax Act and its regulations (Income Tax Regulations).3 More  
precisely, Mr. Raponi submits that before, at the outset, and throughout the approximately 200  
advances made on the 69 syndicated mortgages that Olympia Trust failed to ensure that the amount  
of loan did not exceed the fair market value of the Borrower’s property at the time of the advance.  
[9]  
For the reasons that follow, Mr. Raponi’s motion is dismissed. It is plain and obvious that  
Mr. Raponi has no cause of action against Olympia Trust, which acted in accord with its trust,  
fiduciary, contractual, and common law responsibilities. Olympia Trust was not a gatekeeper. It  
was not a guardian angel. It ought not be made a scapegoat.4 Mr. Raponi’s proposed class action  
fails all of the certification criteria. His action should be dismissed even as an individual action.  
B. Dramatis Personae  
[10] The principal actors in this proposed class action are the following:  
Bates Barristers is Mr. Raponi’s co-lawyer of record and proposed co-Class Counsel.  
Blake, Cassels & Graydon LLP is Counsel for to Olympia Trust Company.  
Building and Development Mortgage Canada Inc. (“BDMC”) (formerly Centro  
Mortgage Inc.) is a mortgage broker that promoted and marketed Fortress Developments’  
syndicated mortgages. BDMC shared premises with Fortress Developments. BDMC was  
the trustee/mortgagee/administrator in 44 of the 69 syndicated mortgages for the 54 land  
development projects for Lenders who did not make their investments with funds from  
registered savings accounts.  
Computershare Trust Company of Canada, (“Computershare), a trust company that  
acted as the trustee/mortgagee/administrator for some of the estimated 2,750 - 3250  
syndicated mortgage Lenders who lent money to 54 Borrowers in the 69 syndicated  
mortgages that are the subject of this proposed class action. Pursuant to the Income Tax  
Act, the mortgage funds were advanced from savings accounts registered by  
Computershare. (Computershare is not a party to this proposed class action.)  
FAAN Mortgages Administrators Inc. (“FAAN”). After some of the 69 syndicated  
mortgages went into default, upon the applications of FSCO and of the Law Society of  
Ontario, FAAN was appointed as trustee and administrator of the 69 syndicated mortgages  
for the 54 development projects.  
FDS Broker Services Inc. (“FDS”) is a mortgage broker that promoted and marketed  
Fortress Developments’ syndicated mortgages. FDS’s principals had formerly been  
associated with BDMC, which promoted and marketed Fortress Developments’ syndicated  
mortgages.  
FFM Capital Inc. (“FFM”), formerly Fortress Financial Management Inc., is a mortgage  
broker that promoted and marketed Fortress Developments’ syndicated mortgages. FFM’s  
principals had formerly been associated with BDMC, which promoted and marketed  
3 C.R.C., c. 945.  
4 Leviticus 16:10: “[T]he goat, on which the lot fell to be the scapegoat, shall be presented alive before the LORD, to  
make an atonement with him, and to let him go for a scapegoat into the wilderness. [The Bible - King James  
Version].  
 
5
Fortress Developments’ syndicated mortgages.  
Pursuant to the Financial Services Commission of Ontario Act, 1997,5 and the Mortgage  
Brokerages, Lenders and Administrators Act, 2006,6 the Financial Services Commission  
of Ontario (“FSCO”) is the regulator of syndicated mortgages.  
FMP Mortgages Investment Inc. (“FMP”) is a mortgage broker that promoted and  
marketed Fortress Developments’ syndicated mortgages. FMP’s principals had formerly  
been associated with BDMC, which promoted and marketed Fortress Developments’  
syndicated mortgages.  
Fortress Real Capital Inc. and Fortress Real Developments Inc., along with their  
associated corporations (collectively “Fortress Developments”) developed, promoted,  
and marketed 69 syndicated mortgages for the 54 land development projects that are the  
subject of this proposed class action. In some instances, Fortress Developments or a  
company owned by Fortress Developments was a Borrower whose project was being  
financed by the syndicated mortgage. The principals of Fortress Developments are  
Vincenzo Petrozza and Jawad Rathore.  
Kalloghlian Myers LLP is Mr. Raponi’s co-lawyer of record and proposed co-Class  
Counsel.  
Milosevic Fiske LLP is Mr. Raponi’s co-lawyer of record and proposed co-Class Counsel.  
Olympia Trust Company is a non-deposit taking trust corporation formed under the  
Alberta Loan and Trust Corporations Act,7 with its head office located in Calgary, Alberta.  
Olympia Trust is a wholly owned subsidiary of Olympia Financial Group Inc., an Alberta  
corporation that is also headquartered in Calgary. Olympia Financial Group Inc. is a  
reporting issuer in British Columbia, Alberta, and Ontario and its common shares are listed  
for trading on the Toronto Stock Exchange. Olympia Trust was a  
trustee/mortgagee/administrator for some of the estimated 2,750 - 3250 syndicated  
mortgage Lenders who lent money to 54 Borrowers in the 69 syndicated mortgages that  
are the subject of this proposed class action. Pursuant to the Income Tax Act, the mortgage  
funds were advanced from registered savings accounts administered by Olympia Trust.  
Raponi, Daniele resides in the Township of King, Ontario. Mr. Raponi invested $95,000  
in a Fortress Developmentssyndicated mortgage for the Collier Centre project, one of the  
54 land development projects.  
Sorrenti, Derek and Sorrenti Law Professional Corporation are a lawyer and his law  
firm. Mr. Sorrenti was the trustee/mortgagee/administrator in 10 of the 69 syndicated  
mortgages for the 54 land development projects for Lenders who did not make their  
investments with funds from registered savings accounts. As Mr. Sorrenti is a lawyer, he  
was qualified to administer mortgages under the exemption in the Mortgage Brokerages,  
Lenders and Administrators Act, 2006. In addition to being a lender and trustee, among  
other things, Mr. Sorrenti and his firm provided legal advice to Lenders of the syndicated  
mortgages.  
5 S.O. 1997, c. 28.  
6 S.O. 2006, c. 29.  
7 R.S.A. 2000, c. L-20, as amended.  
6
C. Summary of the Parties’ Case Theories and Substantive Arguments  
[11] A summary of the parties’ case theories and their substantive arguments follows.  
[12] The background to Mr. Raponi’s case is that Fortress Developments and companies  
associated with Fortress Developments designed, promoted, and marketed syndicated mortgages  
for 54 land development projects across Canada. One of the land development projects was in  
British Columbia, one was in Saskatchewan, one was in Manitoba, seven were in Alberta, and 44  
were located in Ontario. The funds for the syndicated mortgages were advanced in tranches for  
each of 69 syndicated mortgages. It is estimated that there were approximately 200 tranches for  
the 54 projects and that approximately $600 million was raised by Fortress Developments to  
finance the 54 land development projects across the country and across Ontario.  
[13] Fortress Developments represented to Lenders that the 69 syndicated mortgages qualified  
for registered savings accounts (Registered Retirement Savings Plans (“RRSPs”), Registered  
Retirement Income Funds (“RRIFs”), Tax-Free Savings Accounts (“TFSAs”) and Registered  
Education Savings Plans (“RESPs”)) under the Income Tax Act and its regulations.  
[14] Thus, a non-corporate Lender had the choice of making his or her loan in the syndicated  
mortgage using funds from an unregistered account or from a registered savings account. It is  
estimated that there were around 13,000 Lenders. Of these, it is estimated that 2,750 3,250 of the  
Lenders made their loans from funds in a registered savings account.  
[15] Some, but not all, of the Borrowers were land development companies with reputable  
records of successful land development projects; however, some of the Borrowers were  
incarnations of Fortress Developments. In his affidavit for a search warrant, RCMP investigator,  
Constable Williamson noted that Fortress Developments had represented that it had partnered with  
over 25 builders and developers in British Columbia, Alberta, Saskatchewan, Manitoba, and  
Ontario.8 FAAN in its trustee’s report noted that many of the Borrowers were Fortress  
Development entities or otherwise related to Fortress Developments.  
[16] After the 69 syndicated mortgages were placed for the 54 projects, the Borrowers defaulted  
on the primary, secondary, and tertiary mortgages, and they failed to complete the projects. After  
mortgage enforcement proceedings, the Lenders in the syndicated mortgages lost all or  
substantially all of their investment.  
[17] Mr. Raponi’s theory of the case is that Olympia Trust is liable because it failed to satisfy  
itself, before, at the outset, and throughout the approximately 200 advances of the 69 syndicated  
mortgages for the 54 development projects that the syndicated mortgages were “fully secured” and  
“qualified investments” under the Income Tax Act and its regulations (Income Tax Regulations),  
which is to say that it is Mr. Raponi’s theory that Olympia Trust is liable because before and during  
the life of the syndicated mortgage, before advancing funds, it failed to satisfy itself that the value  
of the syndicated mortgage loan plus prior encumbrances did not exceed the fair market value of  
the property at the time of the advance under the syndicated mortgage.  
8 For examples: (a) Fortress Real Developments Inc. was the developer of Capital Pointe and the guarantor of the  
mortgage. (b) Fortress Real Developments Inc. was the developer of the Collier project. (b) Charlotte Adelaide  
Tower was a project by Cityzen Development Group & Fortress Real Developments Inc. operating under the  
corporate entity, Fortress Charlotte 2014 Inc. (c) The developers for Humberstone included Worthington Homes &  
Fortress Real Developments Inc.  
 
7
[18] Mr. Raponi’s submits that Olympia Trust is liable because it has trust, fiduciary,  
contractual, and common law duties owed to the Class Members. The alleged duties are: (a) to  
ensure that the 69 syndicated mortgage loans were fully secured; and (b) to warn the Class  
Members that some or all of the syndicated mortgage loans appeared to be or would likely become  
non-qualified investments under the Income Tax Act. Further, Mr. Raponi submits that Olympia  
Trust’s breach of trust, fiduciary, contractual, and common law duties is the cause of the Class  
Members’ losses because to quote Mr. Raponi’s factum: “Olympia Trust was a critical gatekeeper  
without which [the borrower] could not have accessed the capital it needed to finance its failed  
developments.”  
[19] Mr. Raponi argues that the standard of care of a reasonable trustee/mortgage of a  
syndicated mortgage charged with ensuring that the mortgage is compliant for a registered savings  
account, entails the following eleven duties, promises, and obligations that:  
(1) Before agreeing to act, Olympia Trust must review the syndicator’s marketing material  
to make sure the promotional material is not misleading, and Olympia Trust must refuse to  
act as trustee if the syndicator’s marketing materials contains misrepresentations.  
(2) Before agreeing to act, Olympia Trust must identify risks to Lenders including the risk  
that the syndicated mortgage can be subordinated after its execution, and Olympia Trust  
must refuse to act as trustee in those circumstances.  
(3) Olympia Trust must review the use to be made of the funds to be advanced to ensure that  
the use of the funds is exclusively to develop the property and not for other purposes such  
as consulting fees, marketing costs expenses, and sales commission, and Olympia Trust must  
refuse to act as trustee if the use of the mortgage’s funds is for such purposes.  
(4) Olympia Trust must review the loan agreement to ensure that it was permitted to fulfill  
its obligation to communicate with and report to the Class Members.  
(5) Olympia Trust must obtain appraisals and not use opinions of value to determine the fair  
market value of the mortgaged lands.  
(6) Olympia Trust must determine if a proper appraisal of the mortgaged property uses an  
appropriate valuation method and must not advance funds for the mortgage relying on an  
appraisal based on the “residual method of valuation” or an appraisal based on future  
hypothetical assumptions.  
(7) Olympia Trust must refuse to act as trustee if the value of the syndicated mortgage plus  
prior encumbrances exceeds the appraised fair market value of the mortgaged land.  
(8) Olympia Trust must refuse to act as trustee for any of the 69 syndicated mortgages if it  
knows or ought to know that the value of the syndicated mortgage plus prior encumbrances  
on any one of the syndicated mortgages plus prior encumbrances exceeds the appraised fair  
market value of the land mortgaged in that syndicated mortgage. This duty is an aspect of  
Mr. Raponi’s proposition that since Fortress Developments has been involved in prior  
syndicated mortgage loans, then a prudent trustee should review the history of each prior  
8
syndicated mortgage loan to determine whether the loan remained a qualified investment  
throughout its term.  
(9) Olympia Trust must determine whether Fortress Developments was ever involved in  
syndicated mortgages where during the life of the loan, the amount of the loan plus the prior  
encumbrances exceeded the fair market value of the mortgaged lands and, if so, Olympia  
Trust should refuse to be trustee. This duty is an aspect of Mr. Raponi’s proposition that  
since Fortress Developments has been involved in prior syndicated mortgage loans, then a  
prudent trustee should review the history of each prior syndicated mortgage loan to  
determine whether the loan remained a qualified investment throughout its term.  
(10) During the life of the syndicated loan, Olympia Trust must conduct an annual review of  
each and every syndicated mortgage loan, to determine whether the fair market value of the  
land exceeds the value of the loan plus prior encumbrances and whether the borrower is in  
good standing in making its mortgage payments, and if the syndicated mortgage is non-  
compliant, Olympia Trust must inform the Canada Revenue Agency (“CRA”) of the non-  
compliance. This duty is an aspect of Mr. Raponi’s proposition that since Fortress  
Developments has been involved in prior syndicated mortgage loans, then a prudent trustee  
should review the history of each prior syndicated mortgage loan to determine whether the  
loan remained a qualified investment throughout its term.  
(11) Before and during the life of the syndicated mortgage, Olympia Trust must advise Class  
Members if the syndicated mortgage was at risk of being or of having become one in which  
the value of the syndicated mortgage and prior encumbrances exceeded the fair market value  
of the mortgaged land.  
[20] It is a critical component of Mr. Raponi’s proposed class action that the providence of all  
69 syndicated mortgages be adjudicated in one class action. Mr. Raponi advances what I shall label  
the “Omnibus Class Action Argument.The argument is that Olympia Trust’s duties must be  
adjudicated “as a whole because the status of prior Fortress Development Properties ought to  
have impacted its responsibility and decision making for funding later Development Properties.”  
[21] At the heart of Mr. Raponi’s case is the proposition that since Fortress Developments  
Fortress) has been involved in prior syndicated mortgage loans, then a prudent trustee should  
review the history of each prior syndicated mortgage loan to determine whether the loan remained  
a qualified investment throughout its term. Mr. Raponi says that it is an absolute necessity to have  
an Omnibus Class Action. Because of the professed critical importance and necessity of having an  
Omnibus Class Action, I set out his argument as it is found in paragraphs 33-36 of Mr. Raponi’s  
certification factum (The argument is repeated numerous times in the factum):  
33. Olympia Trust’s duties and obligations applied for each Fortress Development Property.  
34. At the same time, Olympia Trust’s duties and obligations also applied across the Fortress  
Development Properties as a whole. A reasonably prudent Registered Plan trustee in the position of  
Olympia Trust ought to have relied on information about existing Fortress Development Properties  
(including whether each existing Fortress Development Properties was a qualified investment) in  
determining whether it should act as trustee and make advances for each subsequent Fortress  
Development Property syndicated mortgage loans.  
9
35. Put another way, a reasonably prudent Registered Plan trustee should not consider each project  
in isolation, because the status of prior Fortress Development Properties ought to have impacted its  
responsibility and decision making for funding later Development Properties.  
36. The significance of this interrelationship between the Fortress Development Properties is that a  
class action and common issues trial determining Olympia Trust’s liability individually for each  
Fortress Development Property (i.e., 54 separate class actions and 54 separate common issues trials)  
is inappropriate. Instead, one common issues trial considering all the Fortress Development  
Properties is necessary to adjudicate Olympia Trust’s liability.  
[22] In its defence, Olympia Trust’s case theory and counterargument is that while it had duties:  
(a) it owed no duties to ensure that the 69 syndicated mortgage loans were fully secured; (b) it  
owed no duties to warn the Class Members that some or all of the syndicated mortgage loans  
appeared to be or would likely become non-qualified investments; and (c) it owed no duties to  
satisfy the enumerated duties and standard of care alleged by Mr. Raponi. Olympia Trust submits  
that it is not the gatekeeper or guardian angel of the Class Members and ought not to be made the  
scapegoat because the alleged duties do not exist in the circumstances of the 69 syndicated  
mortgage loans.  
[23] As the factual underpinning for its defence, Olympia Trust says that it did not design,  
promote, or market the syndicated mortgages. Rather, after a Lender (a putative Class Member)  
had received promotional and appraisal information about the project and about the syndicated  
mortgage, and after he or she had received warnings about the risk of the investment and  
recommendations to obtain investment, and after he or she received legal and business advice from  
the mortgage broker and others, and after the Lender had received copious amounts of contractual  
documents from and with the syndicator, broker, and Borrower, and after the Lender  
acknowledged receiving advice and after he or she had already decided to participate in the  
syndicated  
mortgage,  
Olympia  
Trust  
made  
itself  
available  
to  
be  
the  
trustee/mortgagee/administrator of a registered savings account for the syndicated mortgage loan.  
[24] Olympia Trust says that after the putative Class Member applied to Olympia Trust,  
Olympia Trust applied to the Canada Revenue Agency (“CRA”) for registration of the registered  
savings account for the Class Member and the Class Member signed (a) an “Account Application”,  
(b) a “Self-Directed Savings Plan Declaration of Trust”, (c) a “Lender Acknowledgment and  
Consent Agreement” and (d) a “Mortgage Investment Direction and Indemnity Agreement”.  
Olympia Trust submits that the terms of its agreements with the Class Members define and  
preclude Olympia Trust having the alleged fiduciary, contractual, and common law duties with  
their attendant standards of care.  
[25] In its defence, Olympia Trust submits that the alleged duties and the alleged standards of  
care do not exist and are a fabrication of Mr. Raponi looking for someone to atone for the deceits  
of Fortress Developments.  
[26] Further still, Olympia Trust submits that it is not the cause of the Class Members’ losses;  
rather the syndicators, the mortgage brokers, the appraisers, and the 54 defaulting Borrowers are  
the cause of the Class Members’ losses along with the attendant risks of development projects and  
the economy. Olympia Trust submits that the die was cast before Olympia Trust became involved  
and before each and every of the 200 advances of mortgage funds for the 69 syndicated mortgages.  
In short, Olympia Trust submits that the Class Members may have claims against others, but they  
do not have sustainable claims against Olympia Trust.  
10  
[27] Olympia Trust’s denial of responsibility is disputed by Mr. Raponi who, amongst other  
things, submits that both as a matter of interpreting and applying the direct agreements between  
the Class Members and Olympia Trust and also as a matter of overarching fiduciary, contractual,  
and common law principles, the alleged duties exist and that Olympia Trust is the cause of the  
Class Members’ losses because Olympia Trust could have and should have stopped the Class  
Memberslosses from happening by not accepting the retainer as trustee/mortgage and by refusing  
to advance mortgage funds to the Borrowers who ultimately defaulted and whose development  
projects were not completed. Mr. Raponi submits that situated as it was, Olympia Trust ought not  
to have agreed to act as the trustee for the registered savings accounts and having wrongfully taken  
on that position it had a duty to warn, which it breached, before making any advances from the  
registered savings accounts.  
D. Procedural and Evidentiary Background  
[28] On July 8, 2020, Mr. Raponi commences his proposed class action by Notice of Action.  
[29] On August 7, 2020, Mr. Raponi files the Statement of Claim.  
[30] On April 30, 2021, Mr. Raponi files a Fresh as Amended Statement of Claim.  
[31] On April 30, 2021, Mr. Raponi brings a motion for certification of his action.  
[32] On September 29, 2021, Olympia Trust delivers its Statement of Defence.  
[33] In 2020-21, Olympia Trust delivers 143 Third Party Claims against Fortress Developments  
as well as against the mortgage brokers, mortgage administrators, project developers, Borrowers,  
valuators, lawyers, law firms, and investment advisors associated with the 69 syndicated  
mortgages.  
[34] On December 24, 2021, Mr. Raponi delivers an amended Notice of Motion for  
Certification.  
[35] Mr. Raponi proposes the following class definition:  
All persons wherever they may reside or be domiciled, who invested in a syndicated mortgage loan  
investment through a registered retirement savings plan, registered retirement income fund, tax-free  
savings accounts, registered education savings plan and/or other registered plan accounts under  
Division G of the Income Tax Act, R.S.C. 1985, c 1 (5th Supp) held in trust by Olympia Trust  
Company that was secured by the land of any of the Development Properties (as defined in the  
Statement of Claim).  
[36] Mr. Raponi proposes the following 34 common issues:9  
Breach of Trust  
1. Did Olympia Trust Company owe duties as a Registered Plan trustee to the Class Members to:  
(a) exercise the care, diligence and skill of a reasonably prudent person to minimize the  
possibility that the Class Members’ Registered Plans held non-qualified investments?  
9 These common issues were submitted on the third day of the certification motion. At my request, the original list  
of sixteen questions was amended to particularize the allegations against Olympia Trust.  
 
11  
(b) exercise the care, diligence and skill of a reasonably prudent person to determine the  
current fair market value of the security for the Fortress Development Property syndicated  
mortgage loans?  
(c) advance Registered Plan funds to Borrowers only after satisfying itself based on  
appropriate care, diligence and skill that the debt obligation secured by the mortgage was  
fully secured and a qualified investment?  
(d) advise, warn or notify the Class Members that some or all of the Fortress Development  
Property syndicated mortgage loans appeared to be or would likely become non-qualified  
investments?  
(e) report to the Class Members if their Registered Plans ceased to hold qualified  
investments?  
(f) decline to act as Registered Plan trustee for some or all the Fortress Development  
Property Registered Plan syndicated mortgage loans?  
2. If so, did Olympia Trust Company breach some or all these duties?  
Breach of Fiduciary Duty  
3. Did Olympia Trust Company owe fiduciary duties to the Class Members to:  
(a) exercise the care, diligence and skill of a reasonably prudent person to minimize the  
possibility that the Class Members’ Registered Plans held non-qualified investments?  
(b) exercise the care, diligence and skill of a reasonably prudent person to determine the  
current fair market value of the security for the Fortress Development Property syndicated  
mortgage loans?  
(c) advance Registered Plan funds to Borrowers only after satisfying itself based on  
appropriate care, diligence and skill that the debt obligation secured by the mortgage was  
fully secured and a qualified investment?  
(d) advise, warn or notify the Class Members that some or all of the Fortress Development  
Property syndicated mortgage loans appeared to be or would likely become non-qualified  
investments?  
(e) report to the Class Members if their Registered Plans ceased to hold qualified  
investments?  
(f) decline to act as Registered Plan trustee for some or all the Fortress Development  
Property Registered Plan syndicated mortgage loans?  
4. If so, did Olympia Trust Company breach some or all these duties?  
Breach of Contract  
5. Did Olympia Trust Company have contractual obligations to Class Members to:  
(a) exercise the care, diligence and skill of a reasonably prudent person to minimize the  
possibility that the Class Members’ Registered Plans held non-qualified investments?  
(b) exercise the care, diligence and skill of a reasonably prudent person to determine the  
current fair market value of the security for the Fortress Development Property syndicated  
mortgage loans?  
12  
(c) advance Registered Plan funds to Borrowers only after satisfying itself based on  
appropriate care, diligence and skill that the debt obligation secured by the mortgage was  
fully secured and a qualified investment?  
(d) advise, warn or notify the Class Members that some or all of the Fortress Development  
Property syndicated mortgage loans appeared to be or would likely become non-qualified  
investments?  
(e) report to the Class Members if their Registered Plans ceased to hold qualified  
investments?  
(f) decline to act as Registered Plan trustee for some or all the Fortress Development  
Property Registered Plan syndicated mortgage loans?  
6. If so, did Olympia Trust Company breach some or all these contractual obligations?  
Negligence  
7. Did Olympia Trust Company owe the Class Members a duty of care to:  
(a) exercise the care, diligence and skill of a reasonably prudent person to minimize the  
possibility that the Class Members’ Registered Plans held non-qualified investments?  
(b) exercise the care, diligence and skill of a reasonably prudent person to determine the  
current fair market value of the security for the Fortress Development Property syndicated  
mortgage loans?  
(c) advance Registered Plan funds to Borrowers only after satisfying itself based on  
appropriate care, diligence and skill that the debt obligation secured by the mortgage was  
fully secured and a qualified investment?  
(d) advise, warn or notify the Class Members that some or all of the Fortress Development  
Property syndicated mortgage loans appeared to be or would likely become non-qualified  
investments?  
(e) report to the Class Members if their Registered Plans ceased to hold qualified  
investments?  
(f) decline to act as Registered Plan trustee for some or all the Fortress Development  
Property Registered Plan syndicated mortgage loans?  
8. If so, what was the standard of care applicable to Olympia Trust Company?  
9. Did Olympia Trust Company breach the standard of care?  
Causation  
10. Did Olympia Trust Company's breach of breach of trust, breach of fiduciary duty, breach of  
contract and/or the standard of care cause damages to the Class Members?  
Remedies  
11. What remedies are available to the Class Members?  
12. If damages, equitable compensation and/or disgorgement are available to the Class Members,  
how should they be calculated?  
13. If an accounting is available to the Class Members, what is the amount of funds that the trustee  
must return to each trust?  
13  
14. Does Olympia Trust Company’s conduct justify an award for punitive damages? If so, in what  
amount?  
[37] Mr. Raponi’s Litigation Plan does not envision individual issues trials. The plan is  
structured on the resolution of the common issues followed by an individual claims process based  
on documents filed by each Class Member. The Litigation Plan’s details for the resolution of the  
common issues are as follows:  
TRIAL OR SUMMARY JUDGMENT ON THE COMMON ISSUES  
If appropriate, the Plaintiff may seek summary judgment on one or more of the common issues. If  
the Plaintiff does not seek summary judgment on common issues, or if any common issues remain  
following a motion for summary judgment, the Plaintiff will seek the early appointment of the  
common issues trial judge. The Plaintiff will address issues of trial management in advance of the  
trial to ensure the orderly and efficient determination of any remaining common issues. The Plaintiff  
will ask the Court to hold the hearing on the merits (whether a motion for summary judgment or  
common issues trial) no later than one (1) year after the completion of the examinations for  
discovery and the production of information required by the undertaking and any motions.  
[38] Mr. Raponi supports his motion for certification with the following evidence:  
a.  
Affidavits dated December 24, 2021 and February 3, 2022 of Serge Kalloghlian.  
Mr. Kalloghlian is a partner of Kalloghlian Myers LLP, co-Class Counsel.  
b. Affidavit dated April 28, 2021 of Daniele Raponi. Mr. Raponi is the Plaintiff and  
the proposed Representative Plaintiff.  
c. Affidavits dated April 29, 2021 and February 7, 2022 of Edward G. Wells. Mr.  
Wells is a business consultant who formerly was a business development manager for  
Community Trust Company, one the few trust companies that like Olympia Trust, offered  
services as a trustee/mortgagee for registered savings account syndicated mortgages.  
d.  
Excerpts from a redacted affidavit, circa April 2018, of Constable Martin  
Williamson for the RCMP Integrated Market Enforcement Team in support of a request  
for search warrant in respect of the premises of Fortress Developments, BDMC, FDS,  
FFM, and FMP.  
e.  
Affidavit dated April 19, 2018 of Brendan Forbes in support of an application by  
FSCO for a court order seizing the assets of BDMC, the major broker used by Fortress  
Developments to market its syndicated mortgages. Mr. Forbes is a legal counsel of the  
Ministry of the Attorney General assigned to the FSCO Branch of the Civil Law Division  
to, among other things, prosecute regulatory proceedings under the Financial Services  
Commission of Ontario Act, 1997.  
f.  
Affidavit without exhibits dated September 30, 2019 of Nadia Musclow in support  
of an application by the Law Society of Ontario for a court order to seize the ten  
syndicated mortgages administered by Mr. Sorrenti and his law firm. Ms. Musclow is the  
Manager, Trustee Services of the Law Society of Ontario.  
[39] Olympia Trust resisted the certification motion with the affidavits dated January 7, 2021  
and March 2, 2022 of Kelly Revol. Ms. Revol is the Executive Vice President, Investment Account  
Services, of Olympia Trust. She began her career at Olympia Trust in 2002 and had a succession  
of increasingly senior roles at Olympia Trust in mortgages, operations and client services relating  
to registered savings accounts, including RRSPs, RRIFs, and TFSAs.  
14  
[40] On March 3, 2022, Mr. Kalloghlian is cross-examined. (608 questions, 168 pages)  
[41] On March 4, 2022, Mr. Raponi is cross-examined. (213 questions, 54 pages)  
[42] On March 8, 2022, Ms. Revol is cross-examined. (208 questions, 56 pages)  
[43] On March 11, 2022, Mr. Wells is cross-examined. (874 questions, 215 pages)  
[44] On March 30, 2022, Olympia Trust brings a motion to strike the evidence of Mr. Wells.  
[45] In April 2022, Mr. Raponi delivers his Factum (121 pages).  
[46] Mr. Raponi’s Motion Record is 8,409 pages and his Books of Authorities is 4,380 pages.  
[47] On April 29, 2022, Olympia Trust delivers its Factum (83 pages). Olympia Trust’s Motion  
Record is 6,439 pages and its Book of Authorities is 1,620 pages.  
[48] In May 2022, Mr. Raponi delivers his Reply Factum (102 pages).  
[49] On May 3, 2022, Olympia Trust delivers its Factum (38 pages) for a motion to strike the  
evidence of Mr. Wells.  
[50] In May 2022, Mr. Raponi delivers his Responding Factum to Olympia Trust’s motion to  
strike the evidence of Mr. Wells. (40 pages)  
[51] The motion materials comprised approximately 23,000 pages.10  
E. Related Class Actions  
[52] Before the commencement of this action, five proposed class proceedings were brought  
against Fortress Developments, and the Borrowers, mortgage brokers, investment advisors,  
appraisers, and lawyers in relation to the syndicated mortgages pertaining to projects known as:  
(a) Collier Centre, (b) Progress, (c) Sutton, (d) Harmony-Village and (e) Orchard, an Alberta  
property. At one time, Olympia Trust was a party defendant to those actions.  
[53] In 2017, I struck out the pleadings in the Collier Centre, Progress, Sutton, and Harmony  
Village actions against Olympia Trust, with leave to amend.11 No amendments were made, and  
the actions as against Olympia Trust were subsequently discontinued in July 2021, after the  
commencement of Mr. Raponi’s action. The action against Olympia Trust with respect to Orchard  
was also discontinued.  
[54] The class actions with respect to these four properties continue against the other  
defendants, on behalf of all Lenders who invested in the syndicated mortgages.  
10 The motion materials were abysmally curated. For example, Justice Hainey made a 16-page Order appointing  
FAAN trustee on April 20, 2018. Mr. Raponi’s motion record contains twenty-seven copies of Justice Hainey’s  
Order.  
11 Madryga v. Fortress Real Capital Inc., 2017 ONSC 4792; Martino v. Fortress Real Capital Inc., 2017 ONSC  
4790; McDowell v. Fortress Real Capital Inc., 2017 ONSC 4789; McDowell and Aversa v. Fortress Real Capital  
Inc., 2017 ONSC 4791.  
 
15  
F. Preliminary Evidentiary Rulings  
The Missing Evidence  
[55] Notwithstanding that there was a voluminous motion record and Class Counsel had two  
years to prepare for the certification motion, there were many significant gaps in the evidentiary  
record for this certification motion.  
[56] A less than comprehensive evidentiary foundation for a certification motion is an expected  
and acceptable phenomenon for a certification motion, which occurs before documentary  
production and which is a procedural, non-merits motion, with a low evidentiary standard.  
However, in the immediate case, there was evidence that was feasible to produce and whose  
absence raised serious issues about the class definition, common issues, and preferable procedure  
criteria.  
[57] For example, neither party filed the syndicated mortgage documents for any of the 69  
syndicated mortgages until, during the course of the hearing, I asked Olympia Trust to file a sample  
of the registered mortgage documentation, and Olympia Trust provided a copy of the  
charge/mortgage and a copy of the transfer of charge for five of the development projects. Mr.  
Raponi did not object to the admission of the additional documentary material, which added 109  
more documents and another 1,000 pages to the motion record. The admission of the actual  
syndicated mortgage instruments disclosed problems of commonality and about the class  
definition.  
[58] As revealed below, there is quite a bit of evidence and analysis from Mr. Raponi about the  
common bad outcome of the 54 development projects and the common bad prospects of recovery  
for the Class Members who invested in the syndicated mortgages. However, my review of the  
evidence and the additional evidence revealed that there were some major uncommonalities;  
visualize: (a) some - and I do not know precisely how many - of the 54 Borrowers were  
incarnations of Fortress Developments; and (b) some - and I do not know how many - of the 54  
Borrowers may have been independent land developers and some of these and I do not know  
how many may have had proven track records as successful land developers. Further, I do not  
know how many of the 69 syndicated mortgages involved Olympia Trust as opposed to  
Computershare.  
[59] In this last regard, Mr. Raponi’s motion record noted that he only had copies of 41 loan  
agreements up to September 2016; he did not have copies of the remaining 28 loan agreements.  
The parties seem to have argued the certification motion on the basis that Olympia Trust was  
involved in all 69 syndicated mortgages. However, Mr. Raponi proffered the affidavit of Brendan  
Forbes, whose affidavit was filed in support of the appointment of FAAN to administer the  
liquidation of the syndicated mortgages. In his affidavit, Mr. Forbes notes that as of August 2017,  
Olympia Trust announced that it would no longer accept new business from Ontario Lenders and  
that after that date, Computershare Trust Company of Canada facilitated the investments in the  
syndicated mortgages for Lenders who wished to invest funds held in registered savings accounts.  
[60] Mr. Forbesevidence casts some doubt on whether Olympia Trust was the  
trustee/mortgagee/administrator for all 69 of the syndicated mortgages as is alleged, and most  
emphatically alleged in support of Mr. Raponi’s assertion that there must be an Omnibus Class  
Action.  
   
16  
[61] For another example of evidence that could have feasibly been forthcoming for the  
certification motion, is the appraisal evidence. The appraisals are the focus of the allegation that  
Olympia Trust breached its standard of care. What was required from Mr. Raponi, but was not  
made available, was an expert appraiser qualified to say that there was some basis in fact that the  
appraisals for a particular project or for some or for all of the projects was not an “as is” evaluation  
of the security or was an improper “as is” appraisal – at the time that the syndicated mortgage’s  
funds were advanced.  
[62] Rather than proffering what would have been helpful evidence, the evidence from Mr.  
Raponi about the appraisals used for the syndicated mortgages was very poor. The appraisal  
evidence was largely of two types. The first type of appraisal evidence was double or triple or who  
knows the degree of hearsay evidence from persons who are not qualified to give appraisal  
evidence. Mr. Wells is an example of a person unqualified to give appraisal evidence and his  
informants and the qualifications of them are unknown.  
[63] Another example of this poor quality of evidence was RCMP Investigator Constable  
Williamson whose search warrant affidavit stated that there were “as is” appraisals, but that they  
were inflated “as is” appraisals. Constable Williamson, who is no appraiser, was relying on who-  
knows-whom, who may have been relying on who-knows-whom for information about the  
adequacy of the appraisals. Moreover, so far as it went, Constable Williamson’s evidence  
somewhat contradicts Mr. Raponi’s position that the appraisals were not “as is” appraisals at all.  
[64] The second type of poor appraisal evidence was some sort of res ipsa loquitur double or  
triple or who knows the degree of circumstantial evidence that inferred from the deficient ultimate  
recovery made in enforcement or settlement of the mortgage indebtedness, that the appraisals of  
the syndicated mortgages were palpably and patently deficient from the outset. In Fontaine v.  
British Columbia (Official Administrator),12 the Supreme Court of Canada debunked the use of  
res ipsa loquitur as a basis to infer negligence. In the immediate case, however, this circumstantial  
evidence was very weak because there was no one with expertise and as Alexander Pope noted a  
little learning is a dangerous thing.  
[65] Nevertheless, despite these deficiencies, as discussed later, the appraisal evidence is  
sufficient for Mr. Raponi to scale the knoll of the some-basis-in-fact evidentiary standard to prove  
that a problem with the appraisals may exist.  
The Disqualification of Mr. Wells as an Expert Witness  
[66] As noted above, Olympia Trust brought a motion to strike the evidence of Mr. Wells.  
[67] Mr. Wells is the former Business Development Manager of Community Trust one of four  
financial institutions that offer services as a trustee/mortgagee for registered savings accounts with  
syndicated mortgage investments. Mr. Wells was proffered by Mr. Raponi as an expert witness to  
provide evidence on the duties and the standard of care of trustees of registered savings accounts  
that invest in syndicated mortgages.  
[68] As explained in separately released Reasons for Decision, I do not admit Mr. Wells’  
evidence for this certification motion.13  
12 [1998] 1 S.C.R. 424.  
13 Raponi v. Olympia Trust Company 2022 ONSC 4480.  
 
17  
[69] However, as it happens, very little turns on the rejection of Mr. Wells’ evidence because  
very much of it was legal opinion and argument or hearsay or hearsay upon hearsay about the  
appraisal evidence for which Mr. Wells was just a mouthpiece for Class Counsel. At the hearing  
of the certification motion, relying on the voluminous materials put on the record by both parties,  
Class Counsel made the same arguments relying on the same documentation, statutory material,  
and hearsay, as Mr. Wells did.  
Should the Court Draw Adverse Inferences from the Testimony of Ms. Revol?  
[70] Mr. Raponi submits that pursuant to rule 34.15 (1) of the Rules of Civil Procedure,14 this  
court should draw adverse inferences against Olympia Trust. The requested adverse inferences  
come in three tranches of questions.  
[71] For the first tranche of three adverse inferences, Mr. Raponi relies on Ms. Revol’s refusal  
to answer the following six questions.  
1. Does Olympia Trust have a procedures manual that describes what is to be done and not done by  
mortgages services when deciding to advance funding under a syndicated mortgage loan?  
2. What was Olympia Trust’s review officer supposed to determine from opinions of value?  
3. To provide information about Fortress’s business acceptance practices.  
4. Is there a record in Olympia’s possession of what it will accept as evidence of value?  
5. To produce Olympia Trust’s record of syndicated mortgage acceptance criteria.  
6. Did Olympia Trust treat the residual method of valuation as satisfactory for purposes of funding  
a syndicated mortgage loan?  
[72] From Ms. Revol’s refusal to answer these six questions, Mr. Raponi asks the court to draw  
the following three adverse inferences:  
1. Olympia Trust did not have adequate business acceptance practices to act as a Registered Plan  
trustee or, if it did, it did not meet its business acceptance practices for the Registered Plan Fortress  
Development Property syndicated mortgage loan investments.  
2. Olympia Trust did not meet its internal funding requirements for the Registered Plan Fortress  
Development Property syndicated mortgage loan investments.  
3. Olympia Trust treated the “residual method” of property valuation as a sufficient basis to advance  
Registered Plan funds for the Fortress Development Property syndicated mortgage loan investments.  
[73] For the second tranche of two adverse inferences, Mr. Raponi relies on Ms. Revol’s refusal  
to answer the following three questions.  
1. Did Olympia Trust assess the Fortress business model in any way?  
2. What was Olympia Trust’s understanding of the level of risk involved in the Fortress syndicated  
mortgage loan investments?  
3. Describe the risks in the Fortress syndicated mortgage loan investments.  
[74] From Ms. Revol’s refusal to answer these three questions, Mr. Raponi asks the court to  
14 R.R.O. 1990, Reg. 194.  
 
18  
draw the following two adverse inferences:  
1. Olympia Trust did not assess the Fortress Development Property business model in any way.  
2. Olympia Trust had undisclosed knowledge of risks associated with the Fortress Development  
Property syndicated mortgage loan investments.  
[75] For the third tranche for one adverse inference, Mr. Raponi relies on Ms. Revol’s refusal  
to answer the following question.  
1. Did Olympia Trust have any dealings with FSCO in connection with their investigations into  
Fortress?  
[76] Olympia Trust refused to have Ms. Revol answer these three tranches of questions on the  
grounds that the questions were not proper questions. More precisely, Olympia Trust’s position  
was that the questions were merits questions not material and not relevant to the certification  
motion criteria, which are procedural and not merits based measurements.  
[77] Rule 34.15 (1) states:  
Sanctions for Default or Misconduct by Person to be Examined  
34.15 (1) Where a person fails to attend at the time and place fixed for an examination in the notice  
of examination or summons to witness or at the time and place agreed on by the parties, or refuses  
to take an oath or make an affirmation, to answer any proper question, to produce a document or  
thing that he or she is required to produce or to comply with an order under rule 34.14, the court  
may,  
(a) where an objection to a question is held to be improper, order or permit the person being  
examined to reattend at his or her own expense and answer the question, in which case the  
person shall also answer any proper questions arising from the answer;  
(b) where the person is a party or, on an examination for discovery, a person examined on  
behalf or in place of a party, dismiss the party’s proceeding or strike out the party’s defence;  
(c) strike out all or part of the person’s evidence, including any affidavit made by the  
person; and  
(d) make such other order as is just.  
[78] Relying on Snelgrove v. Steinberg,15 and 236523 Ontario Inc. v. Nowack,16 Mr. Raponi  
submits that notwithstanding that a party has not brought a preliminary refusals motion, a court  
may draw an adverse inference against the opposing party because of his or her refusal to answer  
a proper question on his or her examination.  
[79] I agree with Olympia Trust’s position that the questions Ms. Revol refused to answer were  
not proper questions for this certification motion and, therefore, I shall not draw any adverse  
inferences from Ms. Revol’s refusals.  
[80] Moreover, some of the questions posed to Ms. Revol were justifiably refused on grounds  
of proportionality or unanswerability (vague, unclear, inconsistent, unintelligible, redundant,  
superfluous, repetitious, overreaching, fishing, beyond the scope of the examination, speculative,  
15 1995 1526 (ON CA).  
16 2013 ONSC 7479.  
19  
unfair, oppressive, or a matter of rhetoric or argument).17  
[81] Further still, and more to the point, even if the questions were proper and Ms. Revol’s  
refusals unjustified, the adverse inferences requested do not logically follow from the refusal and  
are merits determinations that should be determined on a full evidentiary record and not on the  
basis of the miniscule some-basis-in-fact standard used for a certification motion.  
[82] In the discussion of the facts below, I may draw inferences, but those inferences will not  
be based on Ms. Revol’s refusals to answer the three tranches of questions.  
[83] Much like the situation with Mr. Raponi or Mr. Wells’ absent evidence, very little turns on  
the absence of additional evidence from Ms. Revol in determining whether or not Mr. Raponi’s  
case was certifiable.  
G. Registered Savings Accounts under the Income Tax Act  
[84] Fundamental background information for Mr. Raponi’s proposed class action, is the matter  
of the regulation of registered savings accounts under the Income Tax Act and the Income Tax  
Regulations. The relevant excerpts of the Income Tax Act and the Income Tax Regulations are set  
out in Schedule “A” to these Reasons for Decision.  
[85] The CRA provides guidance to trustees and administrators of registered savings accounts  
through tax bulletins and tax folios. Pertinent to the immediate case are: (a) Bulletin IT-320R3 and  
(b) Income Tax Folio S3-F10-C1, which updated and replaced the tax bulletin. The relevant  
provisions of these guidelines are set out in Schedule “B” to these Reasons for Decision.  
[86] Olympia Trust provides its clients with self-directed savings accounts, including RRSPs,  
RRIFs, TFSAs, Locked-in Retirement Accounts (LIRAs) and Life Income Funds (LIFs). In the  
immediate case, these accounts were made available for the Lenders in the Fortress Developments  
syndicated mortgages. (It appears that Computershare also provided registered savings accounts  
to some Lenders.) The nature and operation of these registered accounts is at the heart of all of Mr.  
Raponi’s substantive arguments about his various causes of action against Olympia Trust.  
[87] Part XI.01 of the Income Tax Act specifies the tax treatment of registered savings accounts.  
Under the Income Tax Act, registered savings account plans permit investors to defer tax on  
invested funds and/or gains on investments until funds are withdrawn from their registered savings  
account. Investing through a registered savings account provides investors with tax advantages in  
respect of the gains on their investments but exposes them to potential adverse tax consequences  
if the investment does not meet the requirements of the Income Tax Act and its regulations.  
[88] For a Lender to hold a syndicated mortgage investment in a registered savings account  
under the Income Tax Act, he or she must open a registered account with a custodial trustee or an  
approved financial institution. The trustee will register the investor’s account with the Canada  
Revenue Agency (“CRA”).  
[89] Olympia Trust was the custodial trustee for some of the 69 syndicated mortgages for the  
54 development projects. The certification motion was argued on the basis that Olympia Trust was  
the trustee/mortgagee/administrator for all of the syndicated mortgages for Lenders who advanced  
funds from a registered savings account.  
17 Ontario v. Rothmans Inc., 2011 ONSC 2504 (S.C.J.), leave to appeal refused 2011 ONSC 3685 (Div. Ct.).  
 
20  
[90] Pursuant to sections 146(1), 146.1(1), 146.2(6), and 146.3(1) of the Income Tax Act,  
investments that meet the definition of a “qualified investment” may be held in a registered savings  
account. Sections 146(1) and 204 of the Income Tax Act provide the definition of a “qualified  
investment” for a trust governed by an RRSP and similar definitions are provided for RRIFs,  
TFSAs, and RESPs.  
[91] Regulation 4000 (1)(j) of the Income Tax Regulations, set out in Schedule “A” to these  
Reasons for Decision, prescribes that a debt obligation (such as a syndicated mortgage), is a  
qualified investment for registered savings accounts if it is “fully secured by a mortgage … in  
respect of real … property situated in Canada, or would be fully secured were it not for a decline  
in the fair market value of the property after the debt obligation was issued …”  
[92] The Income Tax Act and its regulations do not define “fully secured,” but s. 1.33 of the  
Income Tax Folio S3-F10-C1 provides that:  
In general, a debt obligation would be considered to be fully secured if the value of the real or  
immovable property pledged by the borrower to the lender in the event of default is sufficient to  
cover the full amount of the principal and interest outstanding on the loan. For this purpose, any  
decline in the fair market value of the property after the debt obligation was issued can be ignored.  
[93] The Income Tax Act and its regulations do not define “fair market value,” but s. 1.96 of the  
Income Tax Folio S3-F10-C1 states:  
[…] While the term fair market value is not defined in the Act, it generally is considered to mean  
the highest price expressed in terms of money that can be obtained in an open and unrestricted  
market between informed and prudent parties, who are dealing at arm's length and under no  
compulsion to buy or sell. The determination of fair market value is a question of fact.  
[94] Thus, to be eligible as an investment in a registered savings account, a syndicated mortgage  
had to be a “qualified investment” under paragraph 4900(1)(j) of the Income Tax Regulations,  
meaning that it had to be “fully secured” by a mortgage or would be fully secured were it not for  
a decline in the fair market value of the property after the debt obligation was issued.  
[95] Section 207.01 (5) of the Income Tax Act, set out in Schedule “A”, requires that the trustee  
of a registered plan “shall exercise the care, diligence and skill of a reasonably prudent person to  
minimize the possibility that a trust governed by the registered plan holds a non-qualified  
investment.Mr. Raponi says that s. 207.01(5) is critical to his case because it is “the foundation  
of Olympia Trust’s duties and obligations to Class Members.”  
[96] At the heart of s. 207.01(5) is the notion of minimizing the possibility of the secured savings  
account holding a non-qualified investment. How the trustee is to minimize the possibility that the  
registered savings accounts might hold a non-qualified investment is not spelled out in the Income  
Tax Act or the Income Tax Regulations. However, sections 1.92-1.98 of Folio S3-F10-C1 provide  
guidance with respect to the obligations of the registered savings accounts trustee as follows:  
Obligations of registered plan trustees  
1.92 Responsibility for compliance with the qualified investment rules generally lies with the trustee  
of the registered plan. […] In some cases, the trustee may require the plan’s controlling individual  
[in the immediate case the Class Member/Lender] to provide the trustee with evidence for the  
purpose of determining qualified investment status. In these cases, the trustee must exercise due  
diligence in satisfying itself that the documentation provided is sufficient. The CRA may ask the  
trustee to demonstrate how it determined that a particular property was a qualified investment.  
21  
1.93 Subsection 207.01(5) requires the trustee of an RRSP, RRIF, RDSP, or TFSA, or the promoter  
of an RESP, to exercise the care, diligence and skill of a reasonably prudent person to minimize the  
possibility of the plan holding a non-qualified investment. If a trustee […] fails to comply with this  
obligation, the trustee […] is liable to a penalty under subsection 162 (7).  
[…]  
1.95 The trustee of an RRSP, RRIF, RDSP, or TFSA, […], is also required to report information to  
the CRA and the controlling individual of the plan [in the immediate case, the Class  
Member/Lender] if the plan begins or ceases to hold a non-qualified investment in a year. For  
information on these reporting obligations, refer to: […]  
1.96 The Act requires that all contributions, acquisitions and dispositions of property, distributions,  
and any other transactions involving a registered plan occur at fair market value. Otherwise, adverse  
tax consequences will arise. While the term fair market value is not defined in the Act, it generally  
is considered to mean the highest price expressed in terms of money that can be obtained in an open  
and unrestricted market between informed and prudent parties, who are dealing at arm's length and  
under no compulsion to buy or sell. The determination of fair market value is a question of fact.  
1.97 It is the responsibility of the registered plan trustee to determine the fair market value of  
property involved in a transaction. […] In some cases, the trustee may require the controlling  
individual of the registered plan [in the immediate case, the Class Member/Lender] to provide  
evidence to determine the property’s fair market value. In these cases, the trustee must exercise due  
diligence in satisfying itself that the documentation provided is sufficient. The CRA may ask the  
trustee to demonstrate how the fair market value of a particular property was determined.  
1.98 Except for RESPs, it is common for registered plan trustees to have an agreement with an agent  
or mandatary, such as an investment broker, that allows the agent or mandatary to provide the trustee  
with certain administrative and investment functions. However, the ultimate responsibility for  
ensuring that a registered plan complies with the qualified investment rules always remains with the  
trustee.  
[97] Pausing here - and this is crucial to Mr. Raponi’s theory of why Olympia Trust is liable for  
the Class Members’ losses – Mr. Raponi submits that s. 207.01(5) of the Income Tax Act’s directive  
that Olympia Trust be reasonably prudent to minimize the holding of a non-qualified investment  
along with the guideline provisions of Income Tax Folio S3-F10-C1 are the source of and  
establishes Olympia Trust’s trust, fiduciary, and contractual duties.  
[98] In other words, it is Mr. Raponi’s argument that these provisions are in effect read into the  
various agreements between the Lender and Olympia Trust with the result that Olympia Trust is  
obliged to determine the current fair market value of the security for the syndicated mortgage and  
to advance funds only if the syndicated mortgage is fully secured. Further, it is Mr. Raponi’s thesis  
that Olympia Trust is obliged to warn the Class Members if some or all of the syndicated mortgage  
loans appeared to be or would likely become not fully secured. Moreover, it is Mr. Raponi’s critical  
submission that Olympia Trust has trust, fiduciary, and contractual duties to decline to act as  
trustee if it ought to have determined that any of the syndicated mortgage loans were not fully  
secured.  
[99] I will discuss the merits of Mr. Raponi’s critical argument below, but I foreshadow to say  
that I shall show that it is plain and obvious that Olympia Trust does not have the alleged trust,  
fiduciary, and contractual duties based on s. 207.01(5) of the Income Tax Act.  
[100] I shall end this discussion of the regulation of registered savings accounts under the Income  
Tax Act and its regulations by what is entailed by the Income Tax Act if a trustee does not comply  
22  
with its obligations under s. 207.01(5) of the Act.  
[101] If an investment in a registered savings account is not a qualified investment, then pursuant  
to sections 162 (7) and 207 of the Income Tax Act, set out in Schedule “A”, there are penalties  
imposed on the trustee. If an investment ceased to be “fully secured,the custodial trustee must  
report to the Canada Revenue Agency and the investment would become disqualified for  
preferential tax treatment. If the custodial trustee failed to report, it could be subject to a penalty  
“of the greater of $100 and the product obtained when $25 is multiplied by the number of days,  
not exceeding 100, during which the failure continues;” i.e., the trustee would be subject to a  
minimum penalty of $100 to a maximum penalty of $2,500.  
H. Fortress Developments: The Fall of the Pied Piper of Syndicated Mortgages  
[102] Between 2008 and 2017, Fortress Developments designed, promoted, advertised, and  
marketed syndicated mortgages for residential and commercial real estate projects across Canada.  
It was a Pied Piper of syndicated mortgages. The immediate case concerns 54 land development  
projects and 69 syndicated mortgage loans (eight projects have more than one syndicated mortgage  
loan). Fortress Developments raised over $600 million from these mortgages, and it allegedly lined  
its own pockets. Fortress Developments lured approximately 13,000 Lenders into funding the  
mortgages by false promises of the rewards of investing in what was essentially a scam.  
[103] To be fair and to avoid confusion and because it is relevant to the analysis of commonality  
of the facts discussed later in these Reasons, it should be noted that Fortress Developments was  
involved in more than 54 land development projects across Canada. I cannot say precisely how  
many, but some of projects and mortgages apparently were successful and the Lenders received  
their anticipated returns.  
[104] To finance the 54 land development projects, the Borrowers, many of whom were  
emanations of Fortress Developments, arranged first mortgages from financial institutions, and  
then they raised money through syndicated mortgage loans that were secondary or tertiary to the  
prior encumbrances. The loan funds were typically to be advanced in tranches.  
[105] Some of the Lenders in the Fortress Developments syndicated mortgages made their  
investment through an investment account that was not registered under the Income Tax Act. In  
contrast, the putative Class Members in the immediate case invested through registered savings  
accounts under the Income Tax Act.  
[106] Fortress Developments and the parties responsible for brokering and administering the  
syndicated mortgages were required to be licensed under the Mortgage Brokerages, Lenders and  
Administrators Act, 2006 and they were subject to regulatory oversight by FSCO. Among other  
things, FSCO required the licensees to provide accurate representations and adequate disclosures  
to Lenders regarding the projects and syndicated mortgages and to take reasonable steps to ensure  
the suitability of these investments.  
[107] Brokers of the Syndicated Mortgages were required to provide detailed disclosure  
statements to Lenders in a form prescribed under the Mortgage Brokerages, Lenders and  
Administrators Act, 2006 that detailed, among other things, the costs and terms of the syndicated  
mortgages, the appraised value of the project’s land based on a valuation obtained by the broker,  
and the amounts of any other mortgages registered on title to the property.  
[108] FSCO required Fortress Developments to encourage Lenders to obtain independent legal  
 
23  
advice before deciding to invest in a syndicated mortgage.  
[109] Lenders learned about Fortress Developments’ syndicated mortgages through promotional  
materials prepared for Fortress Developments or through their own investment advisors or  
mortgage brokers. Many of the eventual Lenders, like Mr. Raponi, attended promotional seminars.  
While the nature and content of the promotional materials varied across projects, the marketing  
material typically included: (a) a description of the project, (b) the total value and term of the loan,  
(c) the purpose of the loan, (d) the status of the project, and (e) the eligibility of the syndicated  
mortgage as a registered savings account under the Income Tax Act.  
[110] The Lenders were given the materials prescribed by FSCO, and eventually the Lenders  
signed numerous contracts with the participants in the syndicated mortgage.  
[111] Olympia Trust is not a licensed mortgage administrator or broker under the Mortgage  
Brokerages, Lenders and Administrators Act, 2006. Olympia Trust was not involved in the  
structuring, operation, promotion, or sales of the syndicated mortgages. Olympia Trust typically  
had no contact with Lenders before their decision to invest.  
[112] To elucidate the run up to participating in a syndicated mortgage, before entering into a  
syndicated mortgage loan investment, a Lender including the Class Members would receive  
and they would sign a “Form 1 – Investor/Lender Disclosure Statement for Brokered  
Transactions.This is a form issued by FSCO pursuant to the Mortgage Brokerages, Lenders and  
Administrators Act, 2006.  
[113] For present purposes, the following provisions of Form 1 are pertinent to understanding  
the respective obligations and duties of the Class Member and Olympia Trust.  
FORM 1 INVESTOR/LENDER DISCLOSURE STATEMENT FOR BROKERED  
TRANSACTIONS  
Important Disclosure Duties  
In this Investor/Lender Disclosure Statement For Brokered Transactions (“Disclosure  
Statement”), mortgage brokerages are required to provide you with the completed Disclosure  
Statement that contains important information in connection with this transaction.  
A brokerage must:  
[…]  
5. Disclose material risks about the transaction that you should consider.  
[…]  
7. Take reasonable steps to ensure that any mortgage investment the brokerage presents  
to you is suitable having regard to your needs and circumstances.  
[…]  
You must receive these disclosures in writing and acknowledge receipt of them. You should  
keep a copy for your records  
Important: This form is required by law and will provide the prospective investor/lender with  
important information to assist you in making a decision about whether to invest/lend.  
24  
[…]  
[…]  
Section 1 - Caution 1.  
2. All mortgage investments carry a risk. There is a relationship between risk and return. In general,  
the higher the rate of return, the higher the risk of the investment. You should very carefully assess  
the risk of the mortgage transaction described in this Disclosure Statement, the Addendum (Form  
1.2) if applicable and in the supporting documentation before making a commitment.  
3. Syndicated mortgages (defined as more than one investor/lender) may carry additional risks  
pertaining not only to the risk of default but also to the risks associated with participating in a  
syndication and the financing of real estate transactions.  
4. Inexperienced investors are not advised to enter into mortgage investments.  
[…]  
7. You are strongly advised to obtain independent legal advice before committing to invest.  
8. This mortgage investment cannot be guaranteed by the mortgage brokerage. If you are not  
prepared to risk a loss, you should not consider mortgage investments.  
9. If this investment is for a mortgage to fund a development, construction or commercial project,  
the repayment of this investment may depend on the successful completion of the project, and its  
successful leasing or sale.  
10. If you are one of several investors in a syndicated mortgage, you may not be able to enforce  
repayment of your investment on your own if the borrower defaults.  
11. You should ensure you have sufficient documentation to support the property valuation quoted  
in this Disclosure Statement. The property value may decrease over time, including the period  
between the date of the most recent appraisal and the date you complete the transaction. A decline  
in property value may also affect the return and/or value on your investment in the event of a default  
in payments under this mortgage.  
12. You should satisfy yourself as to the borrower’s ability to meet the payments required under the  
terms of this mortgage investment.  
[…]  
16. This Disclosure Statement, the Addendum (Form 1.2) if applicable and the attached documents  
are not intended to provide a comprehensive list of factors to consider in making a decision  
concerning this investment. By law, the mortgage brokerage must disclose in writing the material  
risks of the mortgage investment. There may be additional risks to the investment. You should  
satisfy yourself regarding all factors relevant to this investment before you commit to invest.  
[…]  
SECTION 3 INFORMATION DISCLOSURE SUMMARY  
Part A. Property/Security to be Mortgaged  
[…]  
3. Purchase Price:  
(a) Purchase Prices of Property $XXX  
(b) Date of Purchase  
25  
[…]  
7. Appraisal  
An appraisal has not been done on the property within the past 12 months OR  
□ An appraisal has been done within the past 12 months. For all properties, appraised “as is” value  
$XXX.  
If the appraisal was addressed to someone other than the investor/lender or record, provide a  
transmittal letter.  
Date of appraisal:  
Name and address of appraiser: {…}  
[114] If a person decided to invest in a syndicated mortgage, he or she would enter into a loan  
agreement with Fortress Developments and with the mortgage administrator. The loan agreements  
would specify the principal amount of the loan, the interest rate, the term of the loan, the priority  
of the security with respect to other financing. The loan agreements would specify the syndicated  
mortgage as the security for the loan.  
[115] The syndicated mortgage typically began as a second-ranking or third-ranking mortgage  
registered behind other mortgages. The syndicated mortgage could be further subordinated as a  
result of the postponement and subordination provisions contained in the loan agreement and  
syndicated mortgage granted by the Borrower.  
[116] Although it would not have been readily apparent, under the loan agreements, Fortress  
Developments and or the mortgage brokers were receiving approximately 35% of the money up  
front and much of the mortgage money was not being used to build out the projects. The Lenders  
were also deceived because many of the loan agreements had “waterfall” provisions that permitted  
Borrowers and owners of the Borrowers receiving some of their investment in the project before  
the Lenders and before the project was completed.  
[117] More precisely, to proceed with an investment in a syndicated Fortress Developments  
mortgage, the Lender would receive some or all of and sign some of the following documents: (a)  
a letter from Fortress Real Capital and Building & Development Mortgages Canada Inc.; (b)  
Investor/Lender Disclosure Statement for Brokered Transactions; (c) Attestation; (d) Investment  
Authority Form 9D; (e) Mortgage Commitment; (f) the Loan Agreement; (g) Memorandum of  
Understanding; (h) Lender Acknowledgement and Consent Agreement; (i) Mortgage Investment  
Direction and Indemnity Agreement; (j) Solicitor’s Certificate of Disclosure & Undertaking  
Regarding Arms-Length Mortgages; (k) Client Suitability Form; (l) Confirmation of Lender’s  
Interest; and (m) an opinion of land value.  
[118] Where the Lender was investing funds from his or her registered savings account made  
available by Olympia Trust as discussed below, the Lender would sign: (a) an Account  
Application, (b) a Self-Directed Savings Plan Declaration of Trust, (c) a Lender Acknowledgment  
and Consent Agreement and (d) Mortgage Investment Direction and Indemnity Agreement. (These  
documents are discussed later in these Reasons for Decision.)  
[119] In 2014, some of Fortress Developmentsprojects began to experience financial  
difficulties. The Borrowers failed to make interest payments on some of its prior mortgages and  
the syndicated mortgages began to fall into arrears.  
26  
[120] With the mortgage defaults, some of the projects were sold under power of sale and some  
Fortress Developments entities sought protection under the CompaniesCreditors Arrangement  
Act.18  
[121] Many Lenders complained to FSCO about the syndicated mortgages, and in December  
2015, FSCO began an investigation of Fortress Developments and of BDMC, the primary  
mortgage broker of the syndicated mortgages, because of concerns about the syndicated  
mortgages.  
[122] In October 2016, the RCMP received a complaint about the Collier Centre syndicated  
mortgages. The RCMP opened an investigation with respect to the alleged fraudulent activities of  
Fortress Developments and BDMC.  
[123] In February 2018, FSCO and BDMC entered into a settlement agreement pursuant to  
which FAAN would assume the responsibility to administer 44 syndicated mortgages that had  
been administered by BDMC. Under the settlement agreement, various mortgage brokers agreed  
to be suspended.  
[124] On April 13, 2018, the RCMP executed a search warrant on the offices of Fortress  
Developments, BDMC, FFM, FDS, and FMP.  
[125] In a short time after the execution of the search warrant, the agreement between FSCO and  
BDMC was found to be dysfunctional and inadequate, and the Superintendent of Financial  
Services made an application for a court order pursuant to s. 37 of the Mortgage Brokerages,  
Lenders and Administrators Act, 2006, to have FAAN permanently appointed as trustee of the 44  
syndicated mortgages that had been administered by BDMC.  
[126] On April 20, 2018, the late Justice Hainey officially appointed FAAN to be trustee of the  
44 syndicated mortgages that BDMC was administering for 11,000 Lenders, some of whom had  
invested in registered savings accounts and some of whom had invested through non-registered  
savings accounts.  
[127] On June 26, 2018, Justice Hainey appointed Chaitons LLP as representative counsel for  
the Lenders in the 44 syndicated mortgages that had previously been administered by BDMC.  
[128] Meanwhile, the Law Society of Ontario had for some time been receiving complaints about  
the Fortress Developments syndicated mortgages that were being administered by Mr. Sorrenti  
and his law firm. Mr. Sorrenti was outside the regulation of FSCO, and he was not adequately  
responding to FAAN’s inquiries.  
[129] On September 30, 2019, pursuant to an application by the Law Society of Ontario, FAAN  
was appointed trustee of the assets of Derek Sorrenti. These assets included ten Fortress  
Developments syndicated mortgages that Sorrenti and his law firm were administering for 2,900  
Lenders, some of whom had invested in registered savings accounts and some of whom had  
invested through non-registered savings accounts. On September 30, 2019, Justice Hainey  
appointed Chaitons as representative counsel for the syndicated mortgages that had been  
administered by Mr. Sorrenti and his law firm.  
[130] Under the Court Orders, FAAN was given broad authority to enforce the securities  
associated with the syndicated mortgages and to prosecute proceedings with respect to the  
18 R.S.C. 1985, c. C-36, as amended.  
27  
development projects. To date, FAAN has recovered in excess of $175 million, but there will be  
deficiencies in the recoveries for Lenders in the syndicated mortgages.  
I. Summary of Syndicated Mortgage Estimated Loan Losses  
[131] In the motion material for the certification motion, there are 28 reports to the court made  
by FAAN. The following chart provided by Class Counsel sets out what Class Counsel submits  
represent the Lenders’ losses on the 54 projects and 69 syndicated mortgages.  
Development Project (69  
mortgages)  
No. of  
Syndicated Mortgage Loan Losses  
Lenders (Estimate Based on Trustee Reports)  
1. Gotham, ON  
2. Kingridge Square ON  
3. Bauhaus ON  
4. White Cedar Estates ON  
5. The Wade (Victoria Medical) BC  
(2 mtgs)  
145  
45  
110  
42  
$0.2 million  
$0.4 million  
$0.7 million  
$1.2 million  
$1.3 million  
118  
6. Jasper House AB  
163  
504  
130  
162  
139  
94  
53  
82  
166  
$1.3 million  
$1.9 million  
$1.9 million  
$2.0 million  
$2.0 million  
$2.2 - $3.0 million  
$2.4 million  
$3.6 million  
$3.7 million  
7.Residences of Bayview ON  
8. The Woodsworth (The James) ON  
9. The Greenwood ON  
10. Wellington House ON  
11. Humberstone ON  
12. Prescott Homes AB  
13. Mississauga Meadows 2 ON  
14.Crestview (Manors of Mineola)  
ON  
15. Solterra ON  
16. Port Place Condos Phase 2 ON  
17. Bowmanville ON  
18. Mississauga Meadows 1 ON  
19. The Harlowe ON  
20. Nobleton South ON  
21. Treehouse ON  
22. Eden ON  
23. Braestone ON  
24. Estates of Nobleton North ON  
25.Wismer3-Mark Condos/Mount Joy  
ON  
362  
67  
$4.2 million  
$4.4 million  
$4.7 million  
$5.2 million  
$5.2 million  
$5.3 million  
$5.4 million  
$5.9 million  
$6.0 million  
$6.5 million  
$6.6 million  
103  
130  
303  
137  
115  
129  
250  
353  
108  
26. North Condominiums AB  
27.Mapleview (Julien Ct) ON  
28. Harmony Village ON  
29. Bradford Bond Head ON  
30. Pivot AB  
152  
155  
542  
186  
176  
154  
301  
241  
453  
612  
282  
306  
$6.8 million  
$8.1 million  
$8.2 million  
$8.3 million  
$8.6 million  
$9.1 million  
$10.5 million  
$10.9 million  
$11.4 million  
$12.2 million  
$12.3 million  
$14.4 million  
31. Lake & East ON  
32. Charlotte Adelaide Tower ON  
33. Old Market Lane ON (3 mtgs.)  
34. Castlemore ON  
35. Peter & Richmond ON  
36. Victoria Park Place ON  
37. Glens of Halton Hills ON  
 
28  
38. Whitby Commercial Park ON  
39. Triple Creek AB  
40. The Kemp (Harmony Village) ON  
41. The Orchard AB (2 mortgages)  
42.Union Waterfront (Port Place  
Phase 1) ON  
257  
280  
360  
382  
353  
$15.1 million  
$15.4 million  
$15.8 million  
$16.1 million  
$16.8 million  
43. The South Shore ON (3 mtgs.)  
44. SkyCity Centre MB (5 mortgages)  
45. Capital Pointe SK (3 mortgages)  
46. Collier Center ON (3 mortgages)  
47.The Sutton (Condos+Towns) ON  
48. Highlands of York Region ON  
49.Unionvillas ON  
50. Soba ON (2 mortgages)  
51. Progress Manor (Ten88) ON  
52. 6th and Tenth Condo AB  
53. Brookdale on Avenue Rd ON  
54. King Square ON  
639  
649  
728  
949  
456  
59  
145  
188  
364  
207  
491  
176  
14,253  
$27.4 million  
$32.3 million  
$33.3 million  
$52.9 million  
[?]  
$2.5 million  
[?]  
[?]  
[?]  
$8.8 million  
[?]  
[?]  
Total  
$442.2 + ? million  
J. Olympia Trust’s Role in the Syndicate Mortgages  
[132] As noted above, for a Lender to hold the Fortress Developments syndicated mortgage in a  
registered savings account under the Income Tax Act, he or she needed to open a registered account  
with a custodial trustee or another approved financial institution which would register the account  
with the Canada Revenue Agency. It is alleged that Olympia Trust was the custodial trustee for  
the syndicated mortgages for the 54 development projects. With respect to the Fortress  
Developments’ syndicated loans, Olympia Trust’s role was to register the Lender’s self-directed  
accounts with the Canada Revenue Agency and to execute the Lender’s instructions to receive  
funds, hold funds, and advance funds from the self-directed accounts and to report to the Lender.  
[133] Olympia Trust charged fees for its services to the Class Members, i.e., the holders of the  
self-directed registered savings accounts during the relevant period. Olympia Trust charged a $100  
purchase fee, plus monthly fees of $10 to $12 for most projects or an annual fee of $60 for certain  
Fortress Development projects. For each syndicated mortgage, Olympia Trust received a one-time  
set up fee of $1,000 from Fortress Developments. Olympia Trust did not charge any investment  
management fee. It was not a participant in the investments or in the Fortress Development  
projects.  
[134] For a Class Member to obtain a registered savings account with Olympia Trust for the 69  
syndicated mortgages that are the subject of this proposed class action:  
a.  
Before November 2013, the Class Member signed: (a) an Account Application, (b)  
a Self-Directed Savings Plan Declaration of Trust, (c) a Lender Acknowledgment and  
Consent Agreement and (d) Mortgage Investment Direction and Indemnity Agreement.  
b.  
After November 2013, the Class Member signed: (a) an Account Application, (b)  
a Self-Directed Savings Plan Declaration of Trust, and (c) Mortgage Investment Direction  
and Indemnity Agreement.  
[135] As it appears, before November 2013, the Class Member signed four documents and after  
November 2013, the Class Member signed three documents. Nothing turns on these circumstances  
 
29  
because substantively the three post-November 2013 documents have the same substantive content  
as the four pre-November 2013 documents. For present purposes, I shall describe the pre-  
November 2013 documents.  
[136] For present purposes, the following provisions of the Account Application are pertinent:  
ACCOUNT APPLICATION  
1. Annuitant Information  
[…]  
7. Plan Holder Authorization and Acceptance  
(i) I acknowledge that this is a request for Olympia Trust Company to apply for registration of the  
Olympia Trust Company Self-Directed Retirement Savings Plan, or Olympia Trust Company Self-  
Directed Retirement Income Fund, under the Income Tax Act (Canada) and if applicable, under the  
Taxation Act (Quebec) as: (a) a Registered Retirement Savings Plan if I have selected RSP, Spousal  
RSP, or locked-in RSP/LIRA, as my plan type; or (b) a Registered Retirement Income Fund if I  
have selected RIF, Spousal RIF, Prescribed RIF, LRIF, RLSP, LIF/RLIF or New LIF as my plan  
type. I certify that the information contained in this Plan Application is true and correct, and that I  
have read and am bound by the attached Declaration of Trust that governs my Plan and any  
applicable Locking-in Supplements. I understand that it is my responsibility to arrange for the  
transfer of assets to my Plan from any predecessor retirement plan or other permitted source.  
(ii) I acknowledge and agree that I am solely responsible for all investments in my Account and all  
investment decisions relating thereto. Olympia is not in the business of providing investment advice  
and does not provide direction or advice with respect to the purchase of any securities or other form  
of investment. Olympia strongly recommends that you should: (i) conduct extensive due diligence  
on any investment prior to purchasing and obtain extensive information on the investment, the risk  
associated with the investment and the ability to recover your investment; (ii) review the investment  
objectives of any investment you have chosen to ensure that it meets your financial needs; and (iii)  
if you invest in exempt market securities and/or publicly traded shares or bonds, obtain a prospectus,  
offering memorandum or other prescribed documentation describing the investment prior to or at  
the time you make your investment. You understand that if you have any questions or doubts about  
a particular investment, it is your sole responsibility to obtain independent advice from a qualified  
professional. Olympia will execute any order it receives from you without making any inquiries in  
connection with the suitability of the investment.  
(iii) I understand that Olympia Trust Company has the right to reject an order if the proper  
documentation is not in place or if the investment is not eligible.  
[…]  
(vi) I understand that it is my responsibility to notify Olympia Trust Company in writing of any  
errors or omissions within the time limits specified on the statements or other notices.  
(vii) I acknowledge that I will advise Olympia Trust Company of any changes to my account.  
[…]  
(ix) I understand that I may be liable for certain tax consequences arising in connection with a non-  
compliant qualifying arrangement.  
[…]  
[137] For present purposes, the following provisions of the Declaration of Trust are pertinent:  
30  
OLYMPIA TRUST COMPANY SELF-DIRECTED RETIREMENT SAVINGS PLAN  
DECLARATION OF TRUST  
Olympia Trust Company ("the Trustee"), a trust company incorporated under the laws of Alberta,  
hereby declares that it agrees to act as trustee under the Olympia Trust Company Self-Directed  
Retirement Savings Plan ("your Plan") for you, the annuitant, as defined in the Income Tax Act,  
named in the Self-Directed Application Form ("your Application") which accompanies this  
declaration on the following terms and conditions:  
1. Registration: The Trustee will apply for registration of your Plan under the Income Tax Act  
(Canada) ("the Act"). If you live in Quebec as indicated by your address on your Application, the  
Trustee will also apply for registration of your Plan under the Taxation Act (Quebec).  
2. Compliance: It is intended that, at all times, your Plan will comply with all relevant provisions of  
the Act and, if applicable, the Taxation Act (Quebec) with respect to a retirement savings plan  
("RSP"). You will be bound by the terms and conditions imposed on your Plan by all applicable  
legislation.  
[…]  
4. No Financial Advice: I acknowledge and agree that I am solely responsible for all investments in  
my Account and all investment decisions relating thereto. Olympia is not in the business of  
providing investment advice and does not provide direction or advice with respect to the purchase  
of any securities or other form of investment. Olympia strongly recommends that you should: (i)  
conduct extensive due diligence on any investment prior to purchasing and obtain extensive  
information on the investment, the risks associated with the investment and the ability to recover  
your investment; (ii) review the investment objectives of any investment you have chosen to ensure  
that it meets your financial needs; and (iii) if you invest in exempt market securities and/or publicly  
traded shares or bonds, obtain a prospectus, offering memorandum or other prescribed  
documentation describing the investment prior to or at the time you make your investment. You  
understand that if you have any questions or doubts about a particular investment, it is your sole  
responsibility to obtain independent advice from a qualified professional. Olympia will execute any  
order it receives form you without making any inquiries in connection with the suitability of the  
investment.  
[…]  
6. Investments: Contributions and transfers to your Plan will be invested and reinvested from time  
to time in accordance with investment instructions unless the proposed investment does not comply  
with requirements imposed by the Trustee in its sole discretion. Before the Trustee will act on your  
investment instructions, the instructions must be in a form acceptable to the Trustee and be  
accompanied by related documentation as required by the Trustee in its sole discretion. The Trustee  
may accept and act on any investment instructions which it believes in good faith to be given by  
you. The Trustee will endeavor to execute any purchase or sale of an investment within 5 business  
days after receipt of cash and your investment instructions at the market or sale price in effect on  
the day the transaction is executed. Any loss or gain resulting from errors made by the Trustee, its  
officers, employees or agents in the execution of investment instructions from your Plan will be for  
the Trustee's account.  
7. Annuitant's Responsibility: You are responsible for ensuring that: (i) contributions to your Plan  
do not exceed the maximum limits permitted by the Act; (ii) the investments held in your Plan are  
qualified investments for your Plan under the Act. You acknowledge and accept responsibility for  
the above-mentioned matters.  
8. Non-Qualified Investments: If your Plan becomes liable for tax, interest or penalties under the Act  
or similar provincial legislation, the Trustee is authorized to realize sufficient investments of your  
31  
Plan (unless prohibited from the Act), selected in its sole discretion, to pay the liability and the  
Trustee will not be liable for any resulting loss.  
[…]  
16. Accounting and Reporting: The Trustee will maintain an account in your name reflecting, with  
appropriate dates: (i) contributions to your Plan; (ii) the name, number and cost of investments  
purchased or sold by your Plan; (iii) dividends, interest and other distributions received by your  
Plan; (iv) cash; (v) withdrawals, transfers and expenses paid from your Plan; and (vi) the balance of  
your account. The Trustee will send you an annual statement of your account. Before April of each  
year, the Trustee will provide any applicable tax reporting required to be refiled with your or your  
spouse's personal income tax return relating to contributions to or withdrawals from your Plan in  
respect of the previous year.  
[…]  
20. Delegation of Duties: Without detracting in any way from the responsibility of the Trustee, the  
Trustee may appoint agents and may delegate to its agents the performance of clerical,  
administrative and other duties under this declaration. The Trustee may employ or engage  
accountants, brokers, lawyers or others and may rely on their advice and services. The Trustee will  
not be liable for the acts or omissions of any of its advisors or agents. The Trustee may pay to any  
advisor or agent all or part of the fees received by it under the provisions of this declaration.  
Notwithstanding any other provision in this declaration, the Trustee acknowledges that it is  
ultimately responsible for the administration of your Plan.  
[…]  
23. Fees and Expenses: The Trustee may charge you or your Plan fees for its services under this  
declaration as set out from time to time in the Olympia Trust Company fee schedule. The Trustee  
will give you at least 30 days' notice of any change in its fees. Unless prohibited from the Act, the  
Trustee is entitled to reimbursement from your Plan for disbursements and expenses (including  
taxes, interest and penalties) reasonably incurred by the Trustee in connection with your Plan. The  
Trustee is entitled to deduct its unpaid fees, disbursements and expenses (unless prohibited by the  
Act) from the assets of your Plan and for this purpose you authorize the Trustee to realize sufficient  
assets of your Plan selected in its sole discretion. The Trustee will not be responsible for any  
resulting loss. You agree to pay Olympia annual fees and transaction fees in exchange for providing  
services in connection with your self-directed account. The annual fee is charged immediately upon  
opening an account and is prorated to half price for accounts opened August 1st or later each year.  
The full annual fee will then be charged on January 1st of each year thereafter. All other fees are  
charged when the transaction is processed. Please review the Olympia Trust Company Fee Schedule  
for a full list of fees that may apply to your account.  
[…]  
25. Liability of the Trustee: The Trustee and its officers, employees and agents are indemnified by  
you and your Plan from and against all expenses, liabilities, claims and demands arising out of the  
holding of the assets of your Plan; the dealing with the assets of your Plan in accordance with  
investment instruction which the Trustee, its officers, employees or agents believe in good faith to  
be given by you or your properly authorized agent; and the delivery of release of assets of your Plan  
in accordance with this declaration, provided that: (i) the Trustee exercises the same degree of care  
with the assets of your Plan as it would with its own assets to minimize the fact that the Plan hold  
any non-qualified investments; and (ii) the Trustee complies with applicable laws, regulations and  
orders now or later in force that purport to impose a duty on the holder of assets of your Plan to take  
or refrain from taking any action in connection with any asset of your Plan. Notwithstanding any  
other provision of this declaration, the Trustee will not be liable for any loss or penalty suffered as  
a result of any act done by it in reasonable reliance of your authority or the authority of your properly  
authorized agent or legal representatives.  
32  
[…]  
29. Governing Laws: This declaration will be governed, construed and enforced in accordance with  
the laws of Alberta and Canada except that the word "spouse" and “common law partner” as used  
in this declaration will have the same meaning as for the purposes of the Act.  
30. Arms’ Length Mortgages: I hereby acknowledge and agree that where arms’ length mortgages  
are held under this plan, whether syndicated or otherwise, they must be registered in the name of  
Olympia Trust Company, as Trustee. The ranking of said mortgages may be either first, second or  
third.  
[…]  
[138] For present purposes, the following provisions of the Lender Acknowledgment and  
Consent Agreement are pertinent:  
LENDER ACKNOWLEDGEMENT AND CONSENT AGREEMENT  
This Agreement made and effective as of the xxx.  
BETWEEN:  
FORTRESS REAL CAPITAL INC., a corporation incorporated under the laws of the Province of  
Ontario (hereinafter called "Fortress")  
- and –  
CENTRO MORTGAGE INC., a corporation incorporated under the laws of the Province of Ontario  
(hereinafter called "Centro")  
- and –  
OLYMPIA TRUST COMPANY, a corporation incorporated under the laws of the Province of  
Alberta (hereinafter called "Olympia" or the Trustee")  
- and -  
DEREK SORRENTI, a Banister and Solicitor licensed to practice law in the Province of Ontario  
(hereinafter called "Sorrenti")  
- and -  
The undersigned individual Lender that has advanced funds to the Borrower and has agreed to be a  
party hereto (hereinafter called the "Lender")  
WHEREAS XXX (the "Borrower") is borrowing up to XXX from the undersigned Lender pursuant  
to certain loan agreements (collectively referred to herein as the “Loan Agreements");  
AND WHEREAS the loan from the Lender to the Borrower ranks pari passu with other borrowings  
by the Borrower pursuant to similar Loan Agreements with other individual Lenders (collectively  
referred to herein with the Lender as the "Junior Secured Lenders ") and such loans are collectively  
secured by a mortgage (the "Mortgage") on the Borrower's lands described as XXX (the "Lands");  
AND WHEREAS the Lender and the Junior Secured Lenders have agreed to postpone their loans  
to one or more construction loans obtained by the Borrower up to XXX (the "First Priority  
33  
Construction Loans"), whereby the collective indebtedness of the Junior Secured Lenders would  
rank junior to the First Priority Construction Loans;  
AND WHEREAS the Lender is lending the Borrower funds from his or her registered savings plan  
accounts ("RRSP Account") and is holding the mortgage granted by the Borrower in such account  
as security for payment;  
AND WHEREAS the RRSP Account is administered by Olympia pursuant to a trust account  
agreement with the Lenders;  
AND WHEREAS the RRSP Account is subject to the requirements of the Income Tax Act (Canada)  
and the regulations thereunder;  
AND WHEREAS the Lender is a client of Fortress and/or Centro and has been introduced to the  
Borrower by either Fortress or Centro;  
AND WHEREAS the Borrower has delivered Olympia a legal opinion confirming that the Mortgage  
granted by the Borrower to the Lender is eligible for investment by the RRSP Account provided the  
amount of the First Priority Construction Loans and the Mortgage granted to all of the Junior  
Secured Lenders do not exceed the fair market value of the Lands;  
AND WHEREAS the above representations are being made by Fortress, Centro and the Lender and  
not by Olympia or Sorrenti;  
NOW THEREFORE, IN CONSIDERATION OF the premises and mutual covenants herein  
contained, the sufficiency of which is hereby acknowledged and confirmed, do hereby covenant and  
agree as follows:  
1. The Lender acknowledges and confirms that he or she has leaned the Borrower XXX pursuant  
to the Loan Agreement, whereby his or her participating share in the Mortgage as at the date  
hereof is XXX (based on the aggregate loans made by the Junior Secured Lenders being XXX.  
2. The Lender hereby acknowledges and confirms that prior to entering into the Loan  
Agreement that he or she was aware that: (i) certain provisions in the Loan Agreement allow  
for the postponement of the Mortgage in favour of additional construction and/or mezzanine or  
related mortgage financing to a maximum of XXX (the "Maximum Priority Financing Amount"  
or "MITA"); and (ii) the Lender is required to the postponement of his or her interest in the  
Mortgage in favour of certain development agreements between the Borrower and certain  
governmental authorities (including but not limited to: city site plan, development plans,  
Planning Act requirements, mezzanine financing and/or insurance on deposits, and/or  
Condominium Act registrations), as such requirements are more particularly described in the  
Loan Agreement, in order to facilitate the development of the Lands.  
3. The Lender confirms that he or she fully understands the effect of the terms of the Loan  
Agreement and that the Lender hereby reconfirms his or her instructions to proceed with the loan  
pursuant to the terms and conditions outlined in the Loan Agreement.  
4. The Lender hereby agrees to postpone the Mortgage to an amount not to exceed the MPFA and/or  
to any required development agreements between the Borrower and the applicable government  
authority(ies) in order to facilitate the development of the Lands.  
5. The Lender acknowledges that the MPFA may be advanced to the Borrower in multiple stages  
based on the achievement of certain construction milestones and may be advanced by various parties  
and/or secured via multiple registrations on the Lands.  
6. The Lender hereby acknowledges that he or she was advised that the face value of the Mortgage  
could be amended periodically during the term to increase the face value of the Mortgage to a  
34  
maximum of XXX. The Lender hereby confirms that he or she fully understands the effect of this  
term of the Loan Agreement and that the Lender re-confirms his or her instructions to proceed with  
the investment.  
7. The Lender understands that, as at the date hereof, pursuant to the Loan Agreement, the Mortgage  
securing the loan ranks subsequent to other registered mortgages against the Lands in the amount of  
XXX Further, the Lender understands that prior to further advances under the Mortgage the  
Borrower shall be required to provide an updated valuation of the Lands to Sorrenti for the purpose  
of confirming that the combined value of all registered mortgage security on the Lands does not  
exceed the most recent valuation of the Lands (which currently indicates an estimated value of XXX  
for the Lands authored by XXX and is in accordance with the terms and provisions of the Loan  
Agreement).  
[…]  
13. The Lender hereby indemnifies and saves harmless Sorrenti and Olympia and each of their  
directors, officers, employees, shareholders and agents for, and hold. such persons harmless against,  
any loss, liability, damage, judgment, fine, penalty, claim, demand, suit, settlement, cost or expense  
(including, without limitation, the fees and expenses of legal counsel), incurred without gross  
negligence, willful misconduct or fraud on the part of the indemnified person (each as determined  
by a final, non-appealable judgment of a court of competent jurisdiction), for any action taken,  
suffered or omitted to be taken by such indemnified person in connection with the exercise or  
performance of its duties hereunder, including without limitation, the costs and expenses of  
defending against any claim of liability hereunder, directly or indirectly. All indemnities, all  
limitations of liability and all other provisions for the protection of Sorrenti and Olympia and the  
other indemnified persons provided for in this Agreement shall survive the termination of this  
Agreement.  
14. All parties hereto (including the Lender) have obtained independent legal advice (and if  
necessary independent tax advice) with regard to the Loan Agreement, the Mortgage and this  
Agreement.  
15. Fortress, Centro and the Lender each acknowledge and agree that Olympia may be required to  
issue T4 slips to the Lender pursuant to the Income Tax Act (Canada) in the event that it is concluded  
that the First Priority Construction Loans and the mortgage granted to all of the Junior Secured  
Lenders exceeds the fair market value of the Lands. Further, the parties also acknowledge that  
Olympia may be required to issue T4 slips to the Lender pursuant to the Income Tax Act (Canada)  
in the event that the Borrower fails to provide Olympia with the requisite confirmation as to the  
value of the Lands as set out above. Fortress, Centro and the Lender acknowledge and agree that the  
Lender will suffer adverse tax consequences in the event that Olympia is required to issue them T4  
tax slips in accordance with the Income Tax Act (Canada) and each of Fortress and Centro agrees  
to use its commercially reasonable efforts to take such actions to avoid such result.  
16. The parties hereto agree that this agreement shall be construed and enforced in accordance with  
the laws of the Province of Alberta.  
[139] For present purposes, the following provisions of the Mortgage Investment Direction and  
Indemnity Agreement are pertinent:  
MORTGAGE INVESTMENT DIRECTION AND INDEMNITY AGREEMENT  
The undersigned and Olympia Trust Company (“Olympia”) are parties to a Declaration of Trust (the  
“Trust Agreement”) which governs my Plan (as identified above). In consideration of Olympia  
accepting the above mortgage (the “Mortgage”) as an asset of my Plan, I hereby agree to the  
following terms and conditions and I acknowledge that this Agreement shall constitute an addendum  
to the Trust Agreement as if the following terms and conditions were set out therein:  
35  
1. I hereby confirm that I am fully aware of the nature of the Mortgage and its terms and conditions.  
2. I acknowledge that I have been advised to seek independent legal, tax, or other professional advice  
before deciding to invest funds held in my Plan in the Mortgage and before signing this Agreement.  
3. I hereby authorize and direct Olympia to invest funds held by my Plan in the Mortgage as  
described above.  
4. I understand and acknowledge that it is my sole and entire responsibility to verify that:  
a. the Mortgage is an “Arms-Length” transaction as defined in the Income Tax Act  
(Canada) (the “Tax Act”);  
b. the Mortgage is a “qualified investment” and is not a “prohibited investment” (as such  
terms are defined in the Tax Act);  
c. the Mortgage is a proper charge against the Land (as specified in the Mortgage) and is  
fully secured;  
d. all payments due on the Mortgage are to be made on the dates specified in the Mortgage  
and all Mortgage payments are to be paid directly to Olympia; and  
e. there is adequate fire / property insurance in place for the Lands specified in the  
Mortgage.  
5. I acknowledge that I do not rely and have not relied upon any representation made by Olympia  
in deciding to invest Plan funds in the Mortgage. Without limiting the generality of the foregoing,  
I also specifically agree and represent to Olympia that I have not, cannot and will not look to  
Olympia or any of its employees for advice as to:  
a. whether an interest in the Mortgage constitutes a “qualified investment” for my Plan;  
b. whether the Lands securing the Mortgage are adequate or will be adequate security; and  
c. whether the interest in the Mortgage otherwise constitutes a suitable investment for my  
Plan.  
[…]  
7. In addition to all indemnities and other provisions benefiting Olympia that I have agreed to in the  
Trust Agreement, I agree to indemnify and save harmless Olympia and their respective officers,  
directors, and employees from and against all claims, demands, actions, suits, or other proceedings  
by whomsoever brought, and from all losses, costs, fines, levies, damages, expenses (including any  
legal fees and disbursements on a solicitor and client basis and any costs incurred in connection with  
the enforcement of this indemnity), taxes, penalties, and other liabilities whatsoever, directly or  
indirectly arising from or in connection with: (i) Olympia acting in accordance with the instructions  
set out herein; (ii) the investment of funds from my Plan in the Mortgage; or (iii) any breach of any  
representation, warranty or covenant made by me in the Trust Agreement or this Agreement. This  
indemnity shall survive the termination of or transfer out of my Plan; the termination of the  
investment in the Mortgage; and the resignation or revocation of the trusteeship of my Plan by  
Olympia.  
8. Olympia’s obligation to me is limited to accounting to me from time to time for the actual amounts  
received by Olympia in respect of the Mortgage. I agree that for each and every payment remitted  
to Olympia by the mortgagor which is not honoured for any reason, a charge (in accordance with  
the current fee schedule) shall be payable by me.  
36  
9. I have received a copy of Olympia’s current fee schedule and I acknowledge that the mortgage  
fees charged by Olympia are not pro-rated and are not based on the amount of activity, value, quality  
or standing of a mortgage.  
10. I am NOT a non-resident of Canada for the purposes of the Tax Act or any treaty or convention  
that Canada may have with another country. Further, I undertake to immediately advise Olympia if  
my status as a Canadian taxpayer and resident changes.  
11. I acknowledge that I have sought and obtained independent financial, investment, tax, and legal  
advice and carried out such due diligence and made other such enquiries to the extent that I deem  
necessary and appropriate in making this investment for my Plan to determine the suitability of the  
investment in light of my personal circumstances.  
12. I will provide at my expense, at any time as Olympia may require, such independent information  
or opinions as deemed necessary by Olympia with respect to the continued status of the Mortgage  
as a “qualified investment” and as not being a “prohibited investment” (as such terms are defined in  
the Tax Act). In the event that I fail to satisfy any of the requirements set forth above, Olympia is  
fully entitled to deem that the Mortgage is not a “qualified investment”, or is a “prohibited  
investment”, and to effect whatever actions and reporting is, in Olympia’s opinion, required for the  
purposes of the Tax Act. I understand and agree that in such event, adverse tax consequences may  
be suffered and I confirm that I will assume full responsibility for such tax consequences.  
In accordance with the above and the Trust Agreement, I hereby direct Olympia to advance $xxx to  
the specified Lawyer in accordance with this Agreement in order to facilitate my investment in the  
Mortgage.  
[140] Also relevant to the relationship between the Class Members and Olympia Trust is the  
application form that Olympia Trust submitted to the CRA. In the immediate case, Olympia Trust  
applied for registration of the Fortress Developments’ syndicated mortgages for registered savings  
accounts. It did so using form T550 E(16), a form authorized by the Minister of National Revenue.  
Mr. Raponi relies on the form as an aspect of determining Olympia Trust’s duties to the Class  
Members. For present purposes, the pertinent parts of the form are set out below:  
APPLICATION FOR REGISTRATION OF:  
• retirement savings plans (RSPs)  
• education savings plans (ESPs)  
retirement income funds (RIFs)  
• Use this form if you are an RSP issuer as described in subsection 146(1) of the Income  
Tax Act (the Act), an ESP promoter as described in subsection 146.1(1) of the Act, or a RIF  
carrier as described in subsection 146.3(1) of the Act.  
[…]  
I request that the contracts or arrangements on the attached paper list (ESPs only) or CD-ROM or  
DVD-ROM be registered under the Income Tax Act.  
Certification  
I, [Print name of authorized official] of [Business address] certify that:  
1. the owners of the contracts or arrangements identified on the CD-ROM, DVD-ROM, or paper list (ESPs  
only) have requested that I apply to register their contracts or arrangements;  
37  
2. the contracts or arrangements on the CD-ROM, DVD-ROM, or paper list (ESPs only) comply with the  
applicable sections of the Income Tax Act;  
3. the contracts or arrangements and the application conform in all respects to the documents constituting the  
specimen plan or fund identified above, as approved by the Minister of National Revenue; and  
4. the information given in this application and in any document attached is, to the best of my knowledge,  
correct and complete.  
[141] When Olympia Trust’s accountholders first invested in a syndicated mortgage and as  
subsequent advances were made under the syndicated mortgage, Olympia Trust received and relied  
on appraisals or valuations for each syndicated mortgage. On cross-examination, Ms. Revol  
confirmed that Olympia Trust employed a review officer to consider the propriety of the opinions  
of value. The review officer’s job was to determine whether Olympia Trust should advance funds  
from a registered savings account.  
[142] The nature and content of these valuations varied across projects. Sometimes Olympia  
Trust was provided with formal appraisals from appraisers accredited by the Appraisal Institute of  
Canada. Other times, Olympia Trust was provided “opinions of value” from real estate valuators.  
Depending on the circumstances of a given project, different approaches and methodologies were  
used to assess the fair market value of the underlying property. The appraisals or valuations also  
made varying assumptions about the existing and future use and characteristics of the property,  
depending on the nature of the project, the stage of development, the financing and permitting that  
was in place, and other factors.  
K. Mr. Raponi’s Investment in the Collier Centre Project  
[143] Daniele Raponi is 45 years old. He lives in King City, Ontario. He is employed as a radio  
station mix show coordinator.  
[144] Mr. Raponi retained Olympia Trust to be his registered savings account trustee for a  
$95,000 investment in a $16.9 million syndicated mortgage loan for the Collier Centre project.  
[145] The Collier Centre developers purchased the property for $4 million.  
[146] After some development of the property, in 2018, the Collier Centre defaulted on its loans.  
Following a sales process, the property was sold for $18.5 million.  
[147] The Lenders in the Collier Centre syndicated mortgage loans, including Mr. Raponi,  
suffered a complete loss of their investments.  
L. Class Size  
[148] Although s. 5 (3) of the Class Proceedings Act, 1992 directs that: “Each party to a motion  
for certification shall, in an affidavit filed for use on the motion, provide the party’s best  
information on the number of members in the class,in the immediate case neither party filed an  
affidavit as to class size.  
[149] It might have been possible for either party to provide more precise information had they  
thought to analyze the 69 syndicated mortgage documents that were registered against title, but  
neither party thought to include the syndicated mortgages in the thousands of pages of documents.  
At my request, during the course of the hearing, the samples of the syndicated mortgage loan  
documentation for five projects were added to the documentary record for the certification motion;  
   
38  
namely: (a) the Residence of Bayview, (b) Capital Pointe, (c) Harmony Village, (d) Simcoe Kemp,  
and (e) Soba.  
[150] I used that evidence, the guesses of the parties in their factums and during argument, and  
the massive amounts of other evidence to make a guestimate of class size.  
[151] Assuming that some Lenders invested in more than one project, it seems that there were  
between 11,000 to 13,000 Lenders in the syndicated mortgages. Some of these Lenders were  
corporate investors, which do not save for retirement and are not eligible for registered savings  
accounts.  
[152] Based on what evidence might be gathered from the documented five projects of (a) the  
Residence of Bayview, (b) Capital Pointe, (c) Harmony Village, (d) Simcoe Kemp, and (e) Soba,  
it would appear that approximately 25% of the Lenders used registered savings accounts from  
either Computershare Trust or Olympia Trust. If that is correct, then a guestimate of the class size  
is between 2,750 to 3,250 Class Members had registered savings accounts with Olympia Trust or  
Computershare.  
[153] My guestimate from sampling some of the projects for which information was available is  
that the average investment per Class Member was approximately $25,000.  
M. Certification: General Principles  
[154] The court has no discretion and is required to certify an action as a class proceeding when  
the following five-part test in s. 5 of the Class Proceedings Act, 1992 is met: (1) the pleadings  
disclose a cause of action; (2) there is an identifiable class of two or more persons that would  
be represented by the representative plaintiff; (3) the claims of the class members raise  
common issues; (4) a class proceeding would be the preferable procedure for the resolution of  
the common issues; and (5) there is a representative plaintiff who: (a) would fairly and  
adequately represent the interests of the class; (b) has produced a plan for the proceeding that  
sets out a workable method of advancing the proceeding on behalf of the class and of notifying  
class members of the proceeding, and (c) does not have, on the common issues for the class, an  
interest in conflict with the interests of other class members.  
[155] On a certification motion, the question is not whether the plaintiffs claims are likely to  
succeed on the merits, but whether the claims can appropriately be prosecuted as a class  
proceeding.19 The test for certification is to be applied in a purposive and generous manner, to give  
effect to the goals of class actions; namely: (1) to provide access to justice for litigants; (2) to  
encourage behaviour modification; and (3) to promote the efficient use of judicial resources.20  
[156] For certification, the plaintiff in a proposed class proceeding must show “some basis in  
fact” for each of the certification requirements, other than the requirement that the pleading  
discloses a cause of action.21 The some-basis-in-fact standard sets a low evidentiary standard for  
plaintiffs, and a court should not resolve conflicting facts and evidence at the certification stage or  
19 Hollick v. Toronto (City), 2001 SCC 68 at para. 16.  
20 Hollick v. Toronto (City), 2001 SCC 68 at paras. 15 and 16; Western Canadian Shopping Centres Inc. v. Dutton,  
2001 SCC 46 at paras. 26 to 29.  
21 Hollick v. Toronto (City), [2001] 3 S.C.R. 158 at para. 25; Pro-Sys Consultants Ltd. v. Microsoft Corporation,  
2013 SCC 57 at paras. 99-105; Taub v. Manufacturers Life Insurance Co., (1998) 40 O.R. (3d) 379 (Gen. Div.),  
aff’d (1999), 42 O.R. (3d) 576 (Div. Ct.).  
 
39  
opine on the strengths of the plaintiff’s case.22 In particular, there must be a basis in the evidence  
to establish the existence of common issues.23 To establish commonality, evidence that the alleged  
misconduct actually occurred is not required; rather, the necessary evidence goes only to  
establishing whether the questions are common to all the class members.24  
[157] The some-basis-in-fact standard does not require evidence on a balance of probabilities and  
does not require that the court resolve conflicting facts and evidence at the certification stage and  
rather reflects the fact that at the certification stage the court is ill-equipped to resolve conflicts in  
the evidence or to engage in the finely calibrated assessments of evidentiary weight and that the  
certification stage does not involve an assessment of the merits of the claim and is not intended to  
be a pronouncement on the viability or strength of the action.25  
N. The Cause of Action Criterion (s. 5 (1)(a))  
Pleadings Sufficiency and the Plain and Obvious Test  
[158] The first criterion for certification is that the plaintiffs pleading discloses a cause of action.  
The "plain and obvious" test from Rule 21 of the Rules of Civil Procedure for disclosing a cause  
of action from Hunt v. Carey Canada,26 is used to determine whether a proposed class proceeding  
discloses a cause of action for the purposes of s. 5(1)(a) of the Class Proceedings Act, 1992. To  
satisfy the first criterion for certification, a claim will be satisfactory, unless it has a radical defect,  
or it is plain and obvious that it could not succeed.27  
[159] The failure to establish a cause of action usually arises in one of two ways: (1) the  
allegations in the statement of claim do not plead all the elements necessary for a recognized cause  
of action; or (2) the allegations in the statement of claim do not come within a recognized cause  
of action.28  
[160] Matters of law that are not fully settled should not be disposed of on a motion to strike an  
action for not disclosing a reasonable cause of action,29 and the courts power to strike a claim is  
exercised only in the clearest cases.30 The case law establishes that issues that are novel, complex,  
and important should normally be decided on a full factual record after trial.31 However, novelty  
by itself is not a reason to allow a cause of action to proceed to trial and a novel claim must also  
22 Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2013 SCC 57; McCracken v. CNR Co., 2012 ONCA 445.  
23 Singer v. Schering-Plough Canada Inc., 2010 ONSC 42 at para. 140; Fresco v. Canadian Imperial Bank of  
Commerce, [2009] O.J. No. 2531 at para. 21 (S.C.J.); Dumoulin v. Ontario, [2005] O.J. No. 3961 at para. 25  
(S.C.J.).  
24 Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2013 SCC 57 at para. 110.  
25 Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2013 SCC 57 at para. 102.  
26 [1990] 2 S.C.R. 959.  
27 176560 Ontario Ltd. v. Great Atlantic & Pacific Co. of Canada Ltd. (2002), 62 O.R. (3d) 535 at para. 19 (SCJ),  
leave to appeal granted, 64 O.R. (3d) 42 (S.C.J.), aff'd (2004), 70 O.R. (3d) 182 (Div. Ct.); Anderson v. Wilson  
(1999), 44 O.R. (3d) 673 at p. 679 (CA), leave to appeal to S.C.C. ref'd, [1999] S.C.C.A. No. 476.  
282106701 Ontario Inc. (c.o.b. Novajet) v. 2288450 Ontario Ltd., 2016 ONSC 2673 at para. 42; Aristocrat  
Restaurants Ltd. v. Ontario, [2004] O.J. No. 5164 (SCJ); Dawson v. Rexcraft Storage & Warehouse Inc., [1998]  
O.J. No. 3240 at para. 10 (CA).  
29 Dawson v. Rexcraft Storage & Warehouse Inc. (1998), 164 D.L.R. (4th) 257 (Ont. CA).  
30 Temelini v. Ontario Provincial Police (Commissioner) (1990), 73 O.R. (2d) 664 (CA).  
31 Sells v. Manulife Securities Inc., 2014 ONSC 715; Leek v. Vaidyanathan, [2011] O.J. No. 200 at para. 3 (CA);  
PDC 3 Limited Partnership v. Bregman + Hamann Architects, [2001] O.J. No. 422 paras. 712 (CA).  
   
40  
be arguable, have some elements of a cause of action recognized in law, be a reasonable and  
arguable incremental extension of established law and have a reasonable prospect of success.32 In  
Atlantic Lottery Corp. Inc. v. Babstock,33 the majority of the Supreme Court stated:  
[A] claim will not survive an application to strike simply because it is novel. It is beneficial, and  
indeed critical to the viability of civil justice and public access thereto that claims, including novel  
claims, which are doomed to fail be disposed of at an early stage in the proceedings. This is because  
such claims present “no legal justification for a protracted and expensive trial”. If a court would not  
recognize a novel claim when the facts as pleaded are taken to be true, the claim is plainly doomed  
to fail and should be struck. [citation omitted]  
[161] In the Ontario Court of Appeal’s decision in Darmar Farms Inc. v. Syngenta Canada Inc.,34  
Justice Zarnett stated:  
51. The fact that a claim is novel is not a sufficient reason to strike it. But the fact that a claim is  
novel is also not a sufficient reason to allow it to proceed; a novel claim must also be arguable.  
There must be a reasonable prospect that the claim will succeed.  
[162] In R. v. Imperial Tobacco Canada Ltd.,35 the Supreme Court of Canada noted that although  
the tool of a motion to strike for failure to disclose a reasonable cause of action must be used with  
considerable care, it is a valuable tool because it promotes judicial efficiency by removing claims  
that have no reasonable prospect of success and it promotes correct results by allowing judges to  
focus their attention on claims with a reasonable chance of success.  
[163] On a pleadings motion, the court accepts the pleaded allegations of material fact as proven,  
unless they are patently ridiculous or incapable of proof.36 Bare allegations and conclusory legal  
statements based on assumption or speculation are not material facts; they are incapable of proof  
and, therefore, they are not assumed to be true for the purposes of a pleadings motion.37 In making  
findings of fact and in applying the law to those facts the court is not obliged to accept as  
necessarily true allegations of fact that are rhetorical conclusions or that are inconsistent with the  
documents incorporated by reference.38 Documents referred to in a pleading are incorporated by  
reference into the pleading, and on a motion to determine whether the plaintiff has pleaded a legally  
viable cause of action, the court is entitled to consider any documents specifically referred to and  
relied on in a pleading.39  
32 Atlantic Lottery Corp. Inc. v. Babstock, 2020 SCC 19 at para. 19; Darmar Farms Inc. v. Syngenta Canada Inc.,  
2019 ONCA 789 at para. 51; Das v. George Weston Ltd., 2017 ONSC 4129 aff’d 2018 ONCA 1053, leave to appeal  
refused [2019] S.C.C.A. No. 69.  
33 2020 SCC 19 at para. 19.  
34 2019 ONCA 789 at para. 51.  
35 2011 SCC 42 at paras. 17-25.  
36 Arora v. Whirlpool Canada LP, 2012 ONSC 4642 at para 12, aff’d aff’d 2013 ONCA 657, leave to appeal ref’d  
[2013] S.C.C.A. No. 498; R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42 at para. 22; Folland v. Ontario (2003),  
64 O.R. (3d) 89 (CA); Nash v. Ontario (1995), 27 O.R. (3d) 1 (CA); Canada v. Operation Dismantle Inc., [1985] 1  
S.C.R. 441; A-G. Canada v. Inuit Tapirisat of Canada, [1980] 2 S.C.R. 735.  
37 Price v. Smith & Wesson Corp., 2021 ONSC 1114 at para 51; Das v. George Weston Ltd., 2017 ONSC 4129 at  
paras. 14–29, aff’d 2018 ONCA 1053, leave to appeal refused [2019] S.C.C.A. No. 69; Losier v. Mackay, Mackay &  
Peters Ltd., [2009] O.J. No. 3463 at paras. 39–40 (SCJ), aff’d 2010 ONCA 613, leave to appeal refused [2010]  
S.C.C.A. No. 438.  
38 Das v. George Weston Limited, 2017 ONSC 4129 at paras. 27, 79-80, aff’d 2018 ONCA 1053.  
39 Das v. George Weston Limited, 2018 ONCA 1053 at paras. 31, 71, 74 and 78; McCreight v. Canada (Attorney  
General), 2013 ONCA 483 at para. 32; Tender Choice Foods Inc. v. Versacold Logistics Canada Inc., 2013 ONSC  
80 at para. 31, aff’d 2013 ONCA 474; Martin v. Astrazeneca Pharmaceuticals PLC, 2012 ONSC 2744 at paras. 160-  
41  
Breach of Fiduciary Duty and of Trust (Statement of Claim, paras.79-92)  
[164] It is Mr. Raponi’s thesis that s. 207.01(5) of the Income Tax Act, which states that a  
custodial trustee ought to “exercise the care, diligence and skill of a reasonably prudent person to  
minimize the possibility that a trust governed by the registered plan holds a non-qualified  
investment” is a term of the trust that has been breached by the trustee Olympia Trust. Mr. Raponi  
fashions eleven gatekeeper and warning obligations, set out above, from s. 207.01(5) of the Income  
Tax Act and from the guidelines of Income Tax Folio S3-F10-C1. Mr. Raponi submits that these  
duties were breached by Olympia Trust. Mr. Raponi asserts that these duties were designed by the  
Federal Government to protect Lenders in syndicated mortgages from sustaining investment losses  
and to avoid Lenders taking undue risk in investing funds being saved for the Lender’s retirement  
years. He submits that these trust and fiduciary duties are immutable and cannot be changed by  
the trust and contract instruments signed by the Lenders and Olympia Trust.  
[165] It is plain and obvious that Mr. Raponi’s breach of trust and breach of fiduciary duty thesis  
does not establish a reasonable cause of action. The existence of trust and fiduciary duties requires  
a case-by-case analysis and the court will analyze the trust and contract terms as well as the  
circumstances and nature of the relationship.40 The scope of a trustee’s or a fiduciary’s duty arises  
within the scope of the engagement and the functions assumed by the trustee or fiduciary in a given  
case.41  
[166] Mr. Raponi relies on the statement of Justice Corthorn in Cahill v. Cahill:42 “Whenever a  
trustee fails to carry out her obligations under the trust instrument, at common law, or statute, that  
failure amounts to a breach of trust” and on the statement of Justice Gillese, writing extra-  
judicially, in The Law of Trusts,43 where she states:  
Trusteeship is an extremely onerous position. Trustees are subject to the specific duties created by  
the trust instrument and by legislation. In addition, they have a great many duties placed upon them  
by equity. […] Because of the dependency relationship and the fact that the trustee controls the  
beneficiary’s property, the trustee is held to the most exacting standards of all fiduciaries.  
[167] There is no doubt about the correctness of these statements, but they beg the question of  
what are the duties of a person who is a fiduciary or a trustee.  
[168] It is a major doctrinal premise that underlies Mr. Raponi’s causes of action based on breach  
of trust and breach of fiduciary duty that fiduciary and trust duties are immutable and cannot be  
restricted or nullified. This premise is false, and the truth is that the scope of a trustee’s and a  
fiduciary’s duties are a matter to be determined on a case-by-case basis.  
[169] In addition to Mr. Raponi’s argument’s false premise, there are three more doctrinal  
162, aff’d 2013 ONSC 1169 (Div. Ct.); Web Offset Publications Ltd. v. Vickery (1999), 43 O.R. (3d) 802 (CA),  
leave to appeal dismissed, [1999] S.C.C.A. No. 460.  
40 Weldon v. Teck Metals Ltd., 2012 BCSC 1386; Bohemier v. Centra Gas Manitoba Inc., [1999] 7 W.W.R. 507  
(MB CA)  
41 K.L.B. v. British Columbia, 2003 SCC 51; Froese v. Montreal Trust Co. of Canada, [1996] 8 W.W.R. 35 at para.  
46 (BCCA); Hodginson v. Simms, [1994] 3 S.C.R. 377; McInerney v. MacDonald, [1992] 2 S.C.R. 415; M. (K.) v.  
M. (H.), [1992] 3 S.C.R. 3; Canson Enterprises Ltd. v. Boughton & Co., [1991] 3 S.C.R. 534; Lac Minerals Ltd. v.  
International Corona Resources Ltd., [1989] 2 S.C.R. 574; Canadian Aero Services Ltd. v. O’Malley, [1974] S.C.R.  
592; Re Coomber [1911] 1 Ch. 723 (CA).  
42 2016 ONSC 1385 at para. 57, aff’d 2016 ONCA 962.  
43 Eileen E. Gillese, The Law of Trusts, 3d ed. (+2014), pp. 154-55  
 
42  
mistakes that underly Mr. Raponi’s causes of action based on breach of trust and breach of  
fiduciary duty. The first doctrinal mistake is to conflate breach of fiduciary duties with the breach  
of a professional trustee’s duty of care. The second doctrinal mistake is to reason backward from  
a trust or a fiduciary relationship and from harm suffered by the beneficiary of the trust or fiduciary  
relationship to conclude that there has been a breach of trust or of fiduciary duty. The third  
doctrinal mistake is to conflate powers with duties.  
[170] Because of the false premise and or because of the three doctrinal mistakes, it is plain and  
obvious that Mr. Raponi’s causes of action for breach of fiduciary duty and for breach of trust are  
legally unsound and are bound to fail. These causes of action and also his causes of action based  
on breach of contract or common law negligence have no reasonable prospect of success.  
[171] The essential allegation against Olympia Trust in all of the causes of action is that Olympia  
Trust should not have obeyed the Class Members instruction to invest in a syndicated mortgage  
and Olympia Trust should not have obeyed the Class Members instructions to advance funds on  
a syndicated mortgage because Olympia Trust ought to have known that the security for the loans  
was improvident. It should immediately be observed that Olympia Trust’s alleged misconduct does  
not involve any dishonesty, misappropriation, disloyalty, deceit, conflict of interest, self-dealing,  
or gaining a benefit beyond the agreed remuneration for acting as trustee. In other words, Olympia  
Trust’s alleged misdeeds are not the sort of misconduct that would typically support a viable action  
for breach of fiduciary duty.  
[172] Fiduciary duties are not fixed or immutable. In Canadian Aero Services Ltd. v. O’Malley,44  
which is still the leading case about the cause of action for breach of fiduciary duty, Justice Laskin,  
as he then was, said that cases about alleged breaches of fiduciary duty involved four issues: (1)  
the determination of whether the relationship is fiduciary; (2) the determination of the duties that  
arise from the particular relationship; (3) the determination of whether a particular duty has been  
breached; and (4) the determination of the extent of liability for the breach of the particular  
fiduciary duty. The extent or scope of a fiduciary’s duty is not fixed or immutable but rather must  
be determined on a case-by-case basis.  
[173] The doctrine that there is a special quality to a fiduciary obligation and that the extent of a  
fiduciary’s obligation is a variable and not a constant is supported by the following much quoted  
passage from the 1911 judgment of Fletcher Moulton, L.J. in Re Coomber.45 The passage advances  
the propositions that fiduciary responsibilities depend upon the facts of the particular relationship  
and that once a fiduciary relationship is established, it does not follow that in a given circumstance  
any fiduciary obligations are imposed:  
Fiduciary relations are of many different types; they extend from the relation of myself to an errand  
boy who is bound to bring me back my change up to the most intimate and confidential relations  
which can possibly exist between one party and another where the one is wholly in the hands of the  
other because of his infinite trust in him. All these are cases of fiduciary relations, and the Courts  
have again and again, in cases where there has been a fiduciary relation, interfered and set aside acts  
which, between persons in a wholly independent position, would have been perfectly valid.  
Thereupon in some minds there arises the idea that if there is any fiduciary relation whatever any of  
these types of interference is warranted by it. They conclude that every kind of fiduciary relation  
justifies every kind of interference. Of course, that is absurd. The nature of the fiduciary relation  
must be such that it justifies the interference. There is no class of case in which one ought more  
44 [1974] S.C.R. 592 at p. 605.  
45 [1911] 1 Ch. 723 (CA) at p. 728. This passage was quoted by Justice La Forest, J. in Lac Minerals Ltd. v.  
International Corona Resources Ltd., [1989] 2 S.C.R. 574 at pp. 67071.