ONTARIO SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 08-CV-350772CP
DATE: 20120815

PROCEEDING UNDER the Class Action Proceedings Act, 1992 , S.O. 1992, C. 6

BETWEEN:

inayet kherani Plaintiff – and – Bank of montreal Defendant

Maurice J. Neirinck and Michael McQuade , for the Plaintiff
Irving Marks and Barbara Green , for the Defendant

HEARD: August 8, 2012

c. hORKINS J.

Supplemental Reasons

[ 1 ] The certification motion in this proceeding was heard in January 2012. In reasons delivered on April 12, 2012, I found that the plaintiff had satisfied the criteria in s. 5 of the Class Proceedings Act , 1992 , S.O. 1992, c. 6 (" CPA ") with the exception of the criterion in s. 5(1) (e)(ii). The Litigation Plan was deficient. I adjourned the certification motion to provide the plaintiff an opportunity to provide a better Litigation Plan that complied with s. 5(1)(e)(ii). The defendant (“BMO”) was given an opportunity to respond.

[ 2 ] The plaintiff filed a revised Litigation Plan and this certification motion continued on August 8, 2012. For the following reasons, I conclude that the criterion in s. 5(1)(e)(ii) has now been satisfied and the motion to certify this proceeding as a class action is granted.

The Jury Notice Issue

[ 3 ] The Litigation Plan recognizes that there is a jury notice filed in this proceeding and that BMO may bring a motion in the future to strike it. Equitable claims cannot be tried by a jury pursuant to s .108(2) of the Courts of Justice Act , R.S.O. 1990, c. C.43. However the common issue dealing with negligence can be tried by a jury. It is premature to decide now if the jury notice should be struck. The Litigation Plan recognizes the existence of the issue and fairly proposes that it be resolved at a later date in the action.

Communication with Class Members

[ 4 ] Class counsel now has a clear proposal for communicating with the class members. The website and database of 3,747 class members, previously controlled by Mr. Jethwani (dvgnews.com) has been transferred to class counsel for their use. This website will serve as the main tool to communicate with class members. Class counsel has retained someone to assist in the further design of the website. This list of 3,747 putative class members contains names and contact information as well as particulars about the money each person gave to Damji. The list will be updated as further people are identified.

[ 5 ] The evidence confirms that the Ismaili community in Ontario, particularly in Toronto, is a tight knit group. Once certification is granted, this community will assist in spreading the word about the class action.

[ 6 ] The Litigation Plan provides for a motion to obtain the records of the Receiver. It is expected that these records will reveal further names of investors and evidence about their losses.

Managing the Damages

[ 7 ] The Litigation Plan now clearly addresses how damages will be managed and confirms that any punitive damage recovery will shared on a pro rata basis. Evidence about a class member’s damage claim will be collected through a form that class members will complete. Copies of supporting documents will be provided and scanned into a database. Class counsel will provide BMO with this evidence.

Common Issues

[ 8 ] I approved the common issues with some revisions in my April reasons. Counsel have brought to my attention that the wording of common issue # 4 needs to be revised to reflect the correct BMO bank accounts.

[ 9 ] The list of approved common issues is set out below. This incorporates the change to common issue #4 (now numbered #3) and the changes that I required in my April reasons.

Approved Common Issues

(1) Did BMO engage in conduct between January 1, 2000, and March 31, 2002, which amounted to a knowing assistance of Salim Damji with respect to a breach of trust owed to the Class Members?

(2) Did BMO engage in conduct between January 1, 2000, and March 31, 2002, which amounted to a knowing receipt of monies being defrauded by Salim Damji from the Class Members including trust monies?

(3) Should BMO be declared a constructive trustee for the Class Members of all monies deposited into the bank accounts of Salim Damji at BMO’s bank branches located at Lakeshore Road and Parklawn and at Ellesmere Road in the City of Toronto between January 1, 2000, and March 31, 2002?

(4) Did BMO owe a duty of care to the Class Members with respect (i) to monies deposited into the bank accounts of Damji at BMO's bank branches located at Lakeshore Road and Parklawn and Ellesmere Road in the City of Toronto, between August 1, 2000, and March 31, 2002, and (ii) to BMO's dealings with Damji?

(5) If the answer to issue (4) above is yes, did BMO breach the said duty of care owed to the Class Members?

(6) Have the Class Members suffered loss or damage as a result of any of the conduct referred to in issues (1), (2), (3), (4) and (5) above? If so, what is the appropriate measure or amount of such loss or damages?

(7) Should BMO pay punitive damages to the Class Members? If so, what is the amount of such damages?

conclusion

[ 10 ] The plaintiff has satisfied the criteria under s. 5 of the CPA . I certify this proceeding as a class action.

[ 11 ] In summary, I make the following orders:

(1) This action is certified as a class proceeding pursuant to the CPA.

(2) I approve the common issues set out in my reasons.

(3) The class is defined as follows:

All persons (i) who reside in Canada, (ii) who gave monies to or for Salim Damji ("Damji') on account of a fraudulent Damji tooth whitening process promotion variously known as STS Instant White and other related STS names, (iii) whose said monies were directly or indirectly deposited into bank accounts of Damji located at the Bank of Montreal's Lakeshore and Parklawn and Ellesmere Road bank branches in the City of Toronto, between August 1, 2000, and March 31, 2002, and (iv) who have not recovered all of their said monies.

(4) Inayet Kherani is appointed the representative plaintiff for the class.

(5) Notice of certification will be given to the class in a manner approved by the court. Costs of the notice to be determined by the court.

[ 12 ] Counsel shall prepare an order that incorporates my conclusions and complies with s. 8 of the CPA .

[ 13 ] If the parties cannot agree on costs, they must deliver written submissions to the court by September 24, 2012, in accordance with a schedule to be agreed upon by counsel. This schedule must allow for a brief reply from the plaintiff.

___________________________ C. Horkins J.

Released: August 15, 2012

COURT FILE NO.: 08-CV-350772CP

DATE: 20120814

ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN:

inayet kherani Plaintiff – and – Bank of montreal Defendant

SUPPLEMENTAL REASONS FOR JUDGMENT

C. Horkins J.

Released: August 15, 2012