COURT FILE NO.: CV-17-570254-00CP

DATE: 2021/01/26

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

REBECCA LEE BOAL

Plaintiff

• and -

INTERNATIONAL CAPITAL MANAGEMENT INC., JOHN SANCHEZ a.k.a. JOHN PAUL SANCHEZ, JAVIER SANCHEZ a.k.a. JAVIER ANDREAS SANCHEZ, INVOICE PAYMENT SYSTEMS CORP., 1361655 ONTARIO INC., 1634792 ONTARIO INC., THE SAVEL CORPORATION, 2029984 ONTARIO LTD. and 2029986 ONTARIO LTD.

Defendants

David Milosevic, Cameron Fiske and Garth Myers for the Plaintiff

David F. O’Connor and Sean M. Grayson for the Defendants, International Capital Management Inc., John Sanchez, Javier Sanchez, 1634792 Ontario Inc., 1361655 Ontario Inc., 2029984 Ontario Ltd. and 2029986 Ontario Ltd.

Douglas Levitt for the Defendant Invoice Payment System Corporation

Susan Toth for the Defendant The Savel Corporation

Proceeding under the Class Proceedings Act, 1992.

HEARD: December 18 and 21, 2020

PERELL, J.

REASONS FOR DECISION

A. Introduction. 2

B. The Parties and Principal Actors. 4

C. Factual Background. 8

D. Procedural Background. 14

E. Certification: General Principles. 20

F. The Cause of Action Criterion. 22

1. General Principles. 22

2. Breach of Fiduciary Duty. 23

3. Knowing Assistance and Knowing Receipt 29

(a) The Elements of the Causes of Action. 29

(b) IPS. 31

(c) The Savel Corporation. 34

(d) 2029986 Ontario Ltd., 2029984 Ontario Ltd., 1361655 Ontario Inc. and 1634792 Ontario Inc. 35

4. Breach of Contract 36

5. Oppression. 36

G. Identifiable Class Criterion. 37

H. Common Issues Criterion. 38

1. General Principles. 38

2. Breach of Fiduciary Duty. 40

3. Knowing Assistance and Knowing Receipt 40

4. Breach of Contract 40

5. Oppression. 42

6. Piercing the Corporate Veil 42

7. Punitive Damages. 42

8. Constructive Trust, Equitable Lien, Accounting & Disgorgement, and Tracing. 42

I. Preferable Procedure Criterion. 43

1. General Principles. 43

2. Analysis and Discussion. 43

J. Representative Plaintiff Criterion. 44

K. Conclusion. 44

A. Introduction

1This is a contested certification motion in a proposed class action under the Class Proceedings Act, 1992.¹

2The Plaintiff Rebecca Lee Boal sues:

• John Sanchez, his brother, Javier Sanchez, and their corporation, International Capital Management Inc. (“ICM”) for breach of fiduciary duty.

• 1361655 Ontario Inc., 1634792 Ontario Inc., The Savel Corporation, 2029984 Ontario Ltd., and 2029986 Ontario Ltd. for: (a) knowing assistance and (b) knowing receipt.

• Invoice Payment System Corporation (“IPS”) for: (a) knowing assistance; (b) knowing receipt; (c) breach of contract; and (d) oppression pursuant to the Ontario Business Corporations Act. ²

3In this proposed class action, the primary alleged wrongdoing is breach of fiduciary duty. Ms. Boal alleges that the Sanchez brothers, who are investment advisers and who are the principals of ICM, an investment advisor corporation, lied to their clients, (the Class Members), including Ms. Boal, to whom they sold the promissory notes of IPS, which is a corporation controlled by the Sanchez family. The lies included misrepresenting the Sanchez brothers’ and their families’ controlling ownership interest in IPS and misrepresenting the nature of the IPS Promissory Notes.

4The Sanchez brothers, who were members of the Mutual Fund Dealers Association (“MFDA”) and the FP Standards Council, are alleged to have violated their professional obligations to the Class Members. The Sanchez brothers are alleged to have lied about their conflict of interest in recruiting promissory note lenders for IPS, which is an accounts receivable factoring business that the Sanchez family allegedly control. Moreover, the Sanchez brothers are alleged to have lied about some aspects of the IPS Promissory Notes.

5A secondary, albeit significant, alleged wrongdoing is the wrongdoing of IPS. Ms. Boal alleges that the Class Members, who ultimately lost nothing from their investment in the IPS Promissory Notes, were nevertheless the victims of: (a) knowing assistance; (b) knowing receipt; (c) breach of contract; and (d) corporate oppression perpetrated by IPS. Ms. Boal alleges that IPS knew about or was willfully blind to and assisted the Sanchez brothers in their breaches of fiduciary duty.

6Another secondary, albeit significant, alleged wrongdoing is the wrongdoing of 1361655 Ontario Inc., 1634792 Ontario Inc., The Savel Corporation, 2029984 Ontario Ltd., and 2029986 Ontario Ltd. Ms. Boal alleges that the shareholders of these corporations are family or business associates of the Sanchez brothers. Ms. Boal alleges that they are liable for knowing assistance and knowing receipt because they knew about or were willfully blind to and assisted the Sanchez brothers in their breaches of fiduciary duty.

7For the reasons that follow, the motion for certification is dismissed.

8With respect to the Class Members’ action against John and Javier Sanchez and ICM for breach of fiduciary duty, while it was not contested that Ms. Boal satisfies the cause of action criterion for a class action based on breach of fiduciary duty, I do not accept the concession and conclude that the cause of action criterion for this cause of action on a class wide basis was not satisfied. Moreover, for numerous reasons, Ms. Boal’s breach of fiduciary duty cause of action does not satisfy: (a) the common issues criterion, and (b) the preferable procedure criterion. In the circumstances of the immediate case, her breach of fiduciary duty cause of action is not certifiable as class action.

9With the failure of Ms. Boal’s action to be certified as against John and Javier Sanchez and ICM, it follows that the secondary claims for knowing assistance and knowing receipt against IPS are not certifiable. However, in any event, the action against IPS would not have been certifiable for failure to satisfy: (a) the cause of action criterion; (b) the common issues criterion, and (c) the preferable procedure criterion.

10With the failure of the action against John and Javier Sanchez and ICM to be certified, it follows that the secondary claims against 1361655 Ontario Inc., 1634792 Ontario Inc., 2029984 Ontario Ltd., and 2029986 Ontario Ltd. are not certifiable. However, in any event, for somewhat different reasons than those associated with ICM, the action against these defendants would not have been certifiable for failure to satisfy: (a) the cause of action criterion; (b) the common issues criterion, and (c) the preferable procedure criterion.

11With the failure of the action against John and Javier Sanchez and ICM to be certified, it follows that the secondary claims against The Savel Corporation for knowing assistance and knowing receipt is not certifiable. However, in any event, the action against The Savel Corporation would not have been certifiable for failure to satisfy: (a) the cause of action criterion, (b) the common issues criterion, and (c) the preferable procedure criterion.

B. The Parties and Principal Actors

12In 1989, John Sanchez was registered as a mutual fund salesperson (now known as a dealing representative) and a financial planner in Ontario. He was registered with the Mutual Fund Dealers Association (MFDA). He was registered with the Financial Planning Standards Council (“FP Standards Council”). John Sanchez is the President, a director, and the primary directing mind of ICM and since 2002, he was an Approved Person and the Designated Compliance Officer or Chief Compliance Officer of ICM. From December 18, 2009, he was the Ultimate Designated Person of ICM. As a result of proceedings before the MFDA and the FP Standards Council, Mr. Sanchez’s designations have been revoked. John Sanchez’s personal holding company is the Defendant 2029986 Ontario Ltd.

13Javier Sanchez is John Sanchez’s brother. In 1994, Javier Sanchez was registered as a mutual fund salesperson (now known as a dealing representative) in Ontario. In 1996, he was registered with the MFDA and the FP Standards Council. He was registered as an officer of ICM since January 25, 2006. He has been the Vice-President and a director of ICM. In 2002, Javier Sanchez was an Approved Person of ICM, and he was designated as a branch manager and alternative Chief Compliance Officer. As a result of proceedings before the MFDA and the FP Standards Council, Mr. Sanchez’s designations have been revoked. Javier Sanchez’s personal holding company is the Defendant 2029984 Ontario Ltd.

14International Capital Management Inc. (“ICM”) was a mutual fund dealer registered in the provinces of Ontario and Alberta. John Sanchez was the President, a Director, and the Chief Compliance Officer. Javier Sanchez was the Vice-President and Alternate Chief Compliance Officer. John and Javier are the co-owners of ICM. Between September 12, 1995 and October 23, 1996, ICM was registered as a limited market dealer in Ontario. Since October 23, 1996, ICM was registered as a mutual fund dealer and limited market dealer/exempt market dealer with the MFDA. ICM had successfully operated for approximately 20 years. It managed approximately $220 million in assets, consisting of mutual funds, segregated funds, GICs and exempt market products. It managed approximately 2,000 accounts. ICM’s membership as a market dealer was terminated on June 29, 2018.

15Invoice Payment System Corporation (“IPS”) is an Ontario corporation that was incorporated in 2003. It is a factoring company that purchases other businesses’ accounts receivable at a discount. Although privately owned, IPS has had its financial statements audited every year since it commenced its operations. In 2018, IPS was a Toronto finalist in Canada’s leading business awards program entitled “Canada’s Best Managed Companies”, which is administered by Deloitte. German Suarez is the President of IPS. He has been involved in the financial services industry for over four decades. He is not related to the Sanchez family. Maria Sanchez-Keane is the other officer and director of IPS. Ms. Sanchez-Keene has an MBA and is the principal of her own management consulting company that focuses on not-for-profit organizations.

16The shareholders of IPS are: (a) John Sanchez’s Holding Company (2029986 Ontario Ltd.), which holds 25% of the shares; (b) Javier Sanchez’s Holding Company (2029984 Ontario Ltd.), which he owns with his wife Maria Isabela Sanchez, which holds 25% of the shares; (c) U.R. Group Inc., which is owned by Mr. Suarez and his wife, which owns 25% of the shares; and (d) The Savel Corporation, which holds 25% of the shares.

17The Savel Corporation was formerly owned by Juan Pablo Sanchez, the now-deceased father of John and Javier Sanchez. As just noted above, The Savel Corporation owns 25% of the shares of IPS. The Savel Corporation is jointly owned by: (a) Maria Sanchez-Keane; (b) Anne-Marie Sanchez, sister of John and Javier; (c) Maria Conchita Sanchez, the mother of John and Javier, who is a 78-year old widow actively involved in charitable works. Anne-Marie Sanchez is the Operations Manager at the London InterCommunity Health Centre, a not-for-profit health clinic in London, Ontario. The Savel Corporation receives dividends from IPS. The dividends are between $65,000-$100,000 to per year.

18When IPS was formed, the shareholders decided that Mr. Suarez would be responsible for the management and operations of IPS, and that John and Javier Sanchez through ICM would recruit promissory note lenders by referring them to IPS. Although shareholders through their corporations, John and Javier Sanchez were not involved in the operation and management of IPS.

19Some of IPS’s major accounts receivables include those of Amazon, Costco, Loblaws, and Nike.³ It is a leader in the Canadian invoice financing industry. It employs approximately 30 full-time employees. IPS funds its invoice financing business, in part, by issuing Notes to Note Holders who earn a 7 – 9% rate of return annually. IPS borrows money from noteholders and recently from financial institutions and those funds are used only for the purpose of factoring invoices. In 2019, IPS factored $260 million relating to 87,947 invoices for 158 clients across 1,421 account debtors. In 2019, IPS collected approximately $260.2 million relating to 84,084 invoices. Since its inception, IPS has factored over $2 billion worth of invoices.

20IPS has never defaulted on any of its promissory notes or breached any term of any of its promissory notes. It has paid all of the principal and interest owing on all its notes or rolled them into new notes at the election of the noteholder. It has the financial resources to redeem any of the outstanding notes in the normal course of business. If noteholders want to redeem their notes early, IPS would and could honour that redemption request.

211361655 Ontario Inc. is a corporation owned by John Sanchez and Javier Sanchez. It owns the property located at 940 The East Mall, Toronto, Ontario. John Sanchez and Javier Sanchez pay referral fees received from IPS to 1361655 Ontario Inc. and to 1634792 Ontario Inc., another corporation owned by John Sanchez and Javier Sanchez. Between 2005 and 2017, the referral fees totaled approximately $3 million.

22Since 2001, Rebecca Boal has made investments through ICM with John Sanchez as her investment advisor. By 2017, ICM was managing her portfolio of approximately $1.1 million in investments. Ms. Boal has a bachelor’s degree in computer science and mathematics from the University of Western Ontario. She continued her education with courses in Financial Accounting, Management Accounting, Intermediate Accounting, Software Project Management at Carlton University, Ryerson University and the University of Toronto. She attended John Sanchez’s investment and financial planning course which covered, among other things, different kinds of investments, tax implications, mutual fund fees, back-end loading and front-end loading, etc. This course introduced Ms. Boal to John Sanchez.

23Ms. Boal qualifies as an “accredited investor” with net realizable assets exceeding $1.0 million. At various points in her relationship with ICM over the years, she described her risk tolerance as medium to high. She acknowledged that she had investments that were high risk and that she understood that such high-risk investments could involve her losing all of her invested capital. She obtained advice and information from John Sanchez and she made her own investment decisions. There were no discretionary accounts in which the investment decisions were made by Mr. Sanchez. Ms. Boal would make the decisions about each investment and she would give instructions.

24On at least two occasions, Ms. Boal brought investments to John Sanchez in which she eventually invested. She acknowledged that she rejected an investment recommended by ICM in a company called Energentium because she decided based on her personal experience and knowledge that this was risky and was not a good investment. From time to time, she invested in high-risk funds.

25ICM, John Sanchez, Javier Sanchez, 1634792 Ontario Inc., 1361655 Ontario Inc., 2029984 Ontario Ltd., and 2029986 Ontario Ltd. resisted the certification motion and relied on the evidence of Barbara Casey, Chris Hubbard, Donald Orr, and Roger Wallis all of whom were clients of ICM and all of whom made their own investment decisions to invest in IPS Promissory Notes. They were all cross-examined.

a. Barbara Casey, who was in her fifties when she invested in IPS Notes, has 40 years experience in the business world in supply chain management, purchasing, and logistics. She was proficient in the commodities markets for chemical products and was responsible for budgets and negotiating financial matters. She has two degrees as a Certified Logistics Professional and Professional Logistician and completed half of her course work for a degree in purchasing management. She also completed a course on Fundamentals of Finance and Accounting for Non-Financial Executives. She was actively involved in managing her investments and made her own investment decisions. She understood the nature of the factoring business, and she understood that the IPS Promissory Notes were loans not securities. Ms. Casey was told and she understood that ICM would earn a 2% fee or commission for having recruited an IPS Promissory Note lender. Ms. Casey deposed that John Sanchez advised her that he and his family were involved with IPS, as shareholders which was a benefit to the investors.

b. Chris Hubbard was a client of Javier Sanchez, who was in his fifties when he first invested in IPS Promissory Notes. He was, before his retirement, a facilities and project manager at Ontario Power Generation (“OPG”). He ran multi-million-dollar projects at OPG. He described himself as having an above average understanding of finances and investment and as being proficient in reading annual reports and financial statements. He was active in his investments. He would at times suggest investment opportunities to Javier. He would meet with Javier and conduct his own investigations and research and give instructions. He knew that the IPS Promissory Notes were not securities, and he testified that he was looking for diversification and was prepared to take a more aggressive and risky investment when he gave instructions to lend to IPS. Mr. Hubbard was told and he understood that ICM would earn a 2% fee or commission for having recruited an IPS Promissory Note lender. Mr. Hubbard testified that Javier Sanchez told him that he had a family interest in and connection to IPS.

c. Donald Orr is a retired Chartered Accountant who first invested in IPS Promissory Notes when he was in his fifties. Before his retirement, he was the Secretary-Treasurer and Chief Financial Officer of Wesdome, a public company listed on the TSX, where he was responsible for the finances and financings and financial reporting. He worked with many investment bankers, investment analysts, and financial advisors/consultants. He understood the various types of risks associated with investments and securities, and the relationship between risk and return. He described his investment knowledge and experience as “sophisticated”. He was actively involved in the management and review of his investments. He had other investments of his own with BMO Nesbitt Burns and with an independent stockbroker. Mr. Orr knew about and understood the factoring business. He made his own investment decision to purchase the IPS Promissory Notes, which he understood to be loans, not securities. Mr. Orr was told and he understood that ICM would earn a 2% fee or commission for having recruited an IPS Promissory Note lender. Mr. Orr testified that John Sanchez advised him that he and his family were closely involved with IPS.

d. Roger Wallis, who was in his late sixties when he first invested in IPS notes, is a geologist. He headed many mineral exploration projects that have grossed upwards of $40 billion. He has a Ph.D., a P.Eng. designation, and taught at the University of Cambridge and attended the Banff School of Advanced Management. He managed millions in budgets. He is currently the principal of his own consulting company and has advised many companies. He personally buys and sells high-risk equities on a regular basis. He reviews, researches, and makes his own investment decisions. Mr. Wallis was told and he understood that ICM would earn a 2% fee or commission for having recruited an IPS Promissory Note lender. Mr. Wallis testified that John Sanchez could not have made it clearer that he and his family were involved with IPS and would be benefiting as shareholders from the profits of the business.

C. Factual Background

26The following findings of fact and the additional findings of fact associated with the discussion below of the common issues and preferable procedure criterion are made solely for the purposes of the certification motion where the evidentiary standard is lower than the balance of probabilities standard that is used to decide claims on their merit. The findings below are based on the record for this motion and create no factual estoppels should this action go forward.

27On October 1, 2003, ICM and IPS signed an Independent Distribution Agreement. Under the agreement, IPS would issue promissory notes and ICM, as exclusive independent agent, would distribute the promissory notes. Mr. Suarez, the President of IPS, testified that he never asked any questions about how the IPS Promissory Notes were being marketed and never asked what representations were being made to investors. He did know that the Sanchez brothers were regulated by the MFDA and that ICM would be selling IPS Promissory Notes to its clients. Mr. Suarez’s expectation was that the Sanchez brothers would comply with the law in marketing the IPS Promissory Notes.

28IPS financed its factoring business operations by the IPS Promissory Notes. As shareholders, the Sanchez brothers attended IPS board meetings where IPS’s business operations were discussed. They received monthly business reports regarding IPS and had monthly lunches with Mr. Suarez.

29All IPS Promissory Notes sold to ICM clients were sold at the ICM offices. With respect to the notes sold by the Sanchez brothers, in every case, either John or Javier or someone at ICM described the nature of promissory notes and the nature of IPS’s factoring business to the purchaser. It was only in 2014, that written disclosure, including financial information, was provided to clients. In 2014, IPS, ICM and the Sanchez brothers produced a fact sheet about the IPS Promissory Notes that was then provided to clients.

30As it is relevant to the common issues criterion, discussed below, it should be noted that IPS’s Promissory Notes were also the subject of interactions between ICM clients with two other ICM salespersons, Jeffery Beck and Anna Knight.

31In 2004, the MFDA conducted a compliance examination of ICM. The MFDA raised concerns with the Sanchez Defendants about whether the distribution of the IPS Promissory Notes and certain other promissory notes was compliant with MFDA Rules and applicable securities legislation.

32As a result of the MFDA investigation, ICM and the Sanchez brothers entered into an Agreement and Undertaking with the MFDA on October 11, 2006 in which they agreed that they would: (a) advise all clients that the IPS Promissory Notes are a high-risk investment; (b) ensure that only clients that have an appropriate risk tolerance remain invested in the IPS Promissory Notes; (c) recommend that clients who did not have a high risk tolerance cease to invest in the IPS Promissory Notes; (d) refund the original investment and any accrued interest to all clients who wished to divest the IPS Promissory Notes or for whom continuing investment in the IPS Promissory Notes was unsuitable; (e) produce reports to MFDA outlining implementation of the terms of the Agreement and Undertaking and compliance with the Agreement and Undertaking; (f) ensure that when recommending high-risk investment products, the product was suitable for the clients based on the clients documented KYC (“know your client”) information.

33The Agreement and Undertaking with the MFDA also provided that where the investment was high risk, that ICM would require that clients sign an acknowledgement indicating: (a) that the product is a high-risk investment; (b) the rate of commissions, if any; (c) the amount of commissions (if any) being paid to ICM; (d) the relationship between the issuer of the product and ICM (if any); and (e) the potential conflicts of interest that may arise from the relationship (if any).

34ICM and John and Javier Sanchez admitted that between 2006 and 2016, they did not comply with the terms of the Agreement and Undertaking and did not disclose to the MFDA that they continued to distribute IPS Promissory Notes. In nine annual membership questionnaires that required disclosure of all types of investment products sold to their clients, the Sanchez Defendants did not disclose the sale of IPS Promissory Notes. During in-person compliance interviews conducted by the MFDA with John and Javier Sanchez at the ICM offices in 2009, 2012 and 2015, they were asked if they distributed any products outside ICM and whether they had any referral arrangements for such distributions, but they did not disclose their roles, relationships, or activities with IPS or their efforts to solicit investments by ICM clients in IPS Promissory Notes and they stated that they were not engaged in any outside activities.

35In this class proceeding, the position of John and Javier Sanchez is that any violations of their obligations to the MFDA were technical since IPS Promissory Notes were loans and not securities. In other words, their argument is that when they entered into the Agreement and Undertaking with the MFDA in 2006, they thought that the IPS Promissory Notes were a security instrument. However, they subsequently came to understand that the notes were just an unsecured loan and thus they no longer treated these investments as something within the purview of the MFDA.

36Whatever the understanding of the Sanchez brothers may have been, it is an admitted fact that from 2004 to 2007, the IPS Promissory Notes were sold as a security instrument, which would require to be complaint with MFDA regulations. ICM was paid an annual 2% percent commission paid monthly on the capital raised. It is an admitted fact that from 2007, after which the IPS Promissory Notes were not sold as securities but as a loan, IPS paid ICM a finder’s fee of 2% per annum paid monthly. From 2007, the structure of the promissory note was changed to 1-year term with a minimum loan amount of $50,000 and the clients would apply to IPS to be a lender to IPS. It is an admitted fact that from 2007, ICM did not comply with the terms of the Agreement and Undertaking with the MFDA.

37It is an admitted fact that John and Javier Sanchez deposited their commissions and their referral fees into their personal holding companies.

38In 2014, John Sanchez presented Ms. Boal with an opportunity to invest in a promissory note from IPS. Although IPS Promissory Notes had been marketed since 2003, the Fact Sheet was first created in 2014. The fact sheet for the investment represented that: (a) the funds would be used only to finance current accounts receivables pre-approved by IPS’s underwriting team; (b) the notes are not RSP or TFSA eligible and are only available to accredited investors; (c) the first 7% of revenue generated is reserved and paid to investors; (d) IPS has a reserve account as an allowance for doubtful invoice receivables; (e) IPS has a 10-year history and has executed over $650 million in accounts receivable financing with a total default ratio of less than 0.23%; (f) IPS executed $120 million in accounts receivable financing in its last fiscal year; and (g) IPS has offered promissory notes for over ten years to private investors without a single default in payment.

39On May 20, 2014, Ms. Boal purchased a promissory note from IPS for $101,224.26. Pursuant to the terms of the promissory note, the principal sum would earn interest at a rate of 7% per annum, calculated and payable annually not in advance, both before and after demand, maturity, default and judgment until paid. Ms. Boal’s IPS Promissory Note lists its due date as May 20, 2015, but the terms of the note state that it shall be due and payable as follows: “the entire principal sum, and all interest owed thereon shall be reinvested on May 20, 2015”.

40On December 14, 2016, Ms. Boal had a meeting with John Sanchez. During this meeting, she signed an acknowledgment letter as set out below:

Acknowledgement Letter

Loan details: Company: Invoice Payment System (IPS)

Term: 1 Year.

Interest Rate: 7%

Loan Type: Promissory Note

Please acknowledge the following important information:

(a) There are no costs to you associated with the loan. However, a 2% finder’s fee is paid by IPS to your Financial Advisor upon the issuance of a note.

(b) This loan is considered high risk, but upon maturity you have the option of redeeming or renewing the note.

(c) Invoice Payment System is a related entity of International Capital Management Inc. Financial advisors that are shareholders of Invoice Payment System, including myself, may stand to benefit from the inflow of client money into IPS. Being a shareholder, however, provides advisors like me with input to the management of IPS. This ownership provides a means of supervision and control over how you are treated and how your money is managed.

Invoice Payment System (IPS) - Client Acknowledgement Letter

I/we have been very pleased with our IPS promissory note. We have received our interest on time each year along with renewal notifications. Furthermore, the promissory note is not correlated to the market and has provided stable income. I/we confirm this is a short-term loan (1 Year) that I have provided to IPS.

41There is a dispute between the parties about what Ms. Boal was told about John Sanchez’s remuneration apart from the information contained in the written acknowledgment. John Sanchez’s evidence is that he told Ms. Boal that IPS would pay him a 2% fee for each promissory note and that the fee would not come out of her return but would be paid directly by IPS to him. Ms. Boal acknowledges that John told her of the 2% fee, but she denies or does not remember that John told her that he had an ownership interest as a shareholder of IPS. When during cross-examination, she was challenged with the acknowledgement that she signed and that indicates that IPS is a related entity of ICM, she persisted in denying that John Sanchez told her that his family owned shares in IPS. She said that that information would have caused her concern and she would have hesitated in making any investment in the IPS Promissory Notes.

42In late December 2016, Ms. Boal received a letter from ICM, indicating that ICM was being investigated by the MFDA. She made an internet search, and she reviewed the MFDA Application, which had been posted on the MFDA website. In its Application, the MFDA sought various Orders against John Sanchez, Javier Sanchez, and ICM. The Application indicated that the MFDA was seeking the following relief:

THE APPLICATION IS FOR AN ORDER pursuant to s. 24.3.3 of MFDA By-law No. 1 providing that, effective immediately:

Restrictions on Business Activities

1. Pursuant to s. 24.3.3(b) of MFDA By-law No. 1, commencing on Friday, December 16, 2016, ICM and its Approved Persons (including the Respondents John Sanchez and Javier Sanchez) shall cease to engage in any form of Member business including … and in particular, they shall not directly or indirectly sell or facilitate investments in or loans to:

(a) ICM;

(b) Invoice Payment Systems Corporation (“IPS”) or any affiliated entity;

(c) Energentium Inc. (“Energentium”) or any affiliated entity;

(d) any entity that is related to or affiliated with ICM, IPS, or Energentium;

(e) any Approved Person or former Approved Person of ICM (including John Sanchez and Javier Sanchez), German Suarez, Mark Sanchez, Maria Conchita Sanchez or Maria Sanchez-Keane (the “Principals”);

(f) a spouse or former spouse, parent, child, grandchild, sibling, niece or nephew of any of the Principals (“Related Individuals”);

6. Pursuant to s. 24.3.3(b) of MFDA By-law No. 1 and subject to any further Order of a Hearing Panel, commencing on Friday, December 16, 2016, ICM and its Approved Persons (including the Respondents John Sanchez and Javier Sanchez) shall cease to accept new money from clients in connection with any member business.

43The MFDA Application set out the following grounds for the Orders sought:

THE GROUNDS FOR THE APPLICATION ARE:

1. As particularized in more detail below, the Respondents have:

(a) failed to comply with the By-laws and Rules of the MFDA, by engaging in:

(iii) personal financial dealings or other conduct that gave rise to a conflict of interest and failing to address the conflict by the exercise of responsible business judgment influenced only by the best interests of the clients, contrary to MFDA Rules 2.1.4 and 2.1.1;

(iv) contraventions of the standard of conduct by failing to deal fairly, honestly and in good faith with clients, by failing to observe high standards of ethics and conduct in the transaction of business, and by engaging in business conduct or practices that are detrimental to the public interest, contrary to MFDA Rule 2.1.1;

(v) securities related business without using due diligence to ensure that they learned the essential facts relative to each product that they recommended and relative to each client and to each Order accepted and without ensuring that each Order accepted and recommendation made were suitable for the clients, and without disclosing all risks associated with the recommendations that they made to clients, contrary to MFDA Rules 2.2.1 and 2.1.1; and

(vi) referral arrangements that were not compliant with MFDA Rule 2.4.2; and

(b) disregarded and failed to comply with the terms of an Agreement and Undertaking entered into with Staff in October 2006; and (c) failed to cooperate with examinations and investigations conducted by Staff pursuant to s. 21 of MFDA By-law No. 1 by providing false and/or misleading answers to questions and requests for information from Staff and by deliberately concealing or destroying records relevant to matters under investigation.

Referral Arrangements

27. John Sanchez and Javier Sanchez received referral fees equal to 2% of the total amount invested by clients of ICM, IPS and Energentium.

28. The referral agreement between IPS and John and Javier Sanchez and the referral agreement between Energentium and John and Javier Sanchez was not documented in writing and the referral fees received by John Sanchez and by Javier Sanchez from IPS and from Energentium were not recorded on the books and records of ICM and were not reported to the MFDA, contrary to MFDA Rule 2.4.2(b), 2.4.1(a), 1.1.1(b).

29. In response to direct questioning from Staff, the Respondents falsely denied that they received compensation from IPS in connection with the solicitation of investments in IPS, contrary to Rule 2.1.1 (b) and (c) and s. 22.1 of MFDA By-law No. 1.

30. Neither the distribution of the promissory notes from IPS and Energentium nor the payment of the referral fees to John and Javier Sanchez were carried on for the account of ICM, conducted through the facilities of ICM or recorded on the books and records of ICM.

31. No written disclosure was provided to clients of ICM or to any other investors in IPS or Energentium about:

(a) the risks of investing in IPS or Energentium;

(b) the financial position and operations of IPS or Energentium (including the total number of note holders and the amounts owed to them);

(c) John Sanchez’s role as an officer, director and/or shareholder in the companies and the ownership interests of Javier Sanchez and other family members in the companies; or

(d) fees received by John and Javier Sanchez for soliciting investments in the companies or for referring investors to the companies; contrary to MFDA Rules 2.1.1, 2.4.2 and 1.3.2(e) [formerly 1.2.1(c)(vi) / 1.2.1(d)(vi)].

Suitability

32. Prior to soliciting money from clients of ICM for investment in IPS and Energentium, John Sanchez, Javier Sanchez and ICM failed to use adequate due diligence to learn and document the essential facts necessary to know the products that they offered to clients and to ensure that the products were distributed in compliance with applicable securities legislation including whether the products could be distributed pursuant to exemptions from prospectus requirements and if so, the conditions for investors to qualify as eligible to rely on such exemptions.

33. The investments in IPS and Energentium were not distributed pursuant to any securities law exemptions and were not offered exclusively to investors who were eligible to invest in exempt products.

34. When they solicited investments in IPS and Energentium by clients of ICM and distributed promissory notes issued by those companies to investors, the Respondents failed to:

(a) ensure that they had learned and accurately recorded the essential facts relative to each client and to each Order accepted;

(b) ensure that each Order accepted or recommendation made to clients was suitable for the clients and consistent with the investment objectives of the clients;

(c) document what exemptions they intended to rely upon to distribute IPS and Energentium securities or the basis upon which each client who purchased investments in those companies was eligible to do so; and

(d) fully and accurately disclose the risks of the investments in IPS and Energentium that they recommended.

44Ms. Boal deposed that she was disturbed to read the MFDA’s allegations, and she decided to retain a lawyer. On February 23, 2017, she gave instruction to commence her proposed class action.

45Mr. Suarez and Ms. Sanchez-Keane first learned about the misdeeds identified by the MFDA contemporaneously with Ms. Boal. For the purposes of the certification motion, they delivered affidavits and they denied that they or IPS assisted in or even knew that John and Javier and their corporation were carrying on business other than in accordance with their legal and professional obligations. IPS was not involved in the creation of the fact sheet and itself made no representations about its business or its promissory notes. Mr. Suarez and Ms. Sanchez-Keane were cross-examined, and their evidence was not shaken. No evidence was advanced to show that Mr. Suarez, Ms. Sanchez-Keane or IPS had actual knowledge or a role in the unlawful activities of the Sanchez brothers in recruiting lenders for the IPS Promissory Notes.

46On June 29, 2018, ICM, John and Javier Sanchez entered into a Settlement Agreement with the MFDA, admitting to all the allegations that had been made by the MFDA against them in the Notice of Hearing dated May 30, 2017. The admissions, however, were made solely for the purposes of the Settlement Agreement, and John and Javier Sanchez deposed that they would not have agreed to the settlement unless the following language was included in the Settlement Agreement:

Staff and the Respondents agree with the facts set out in Part IV herein for the purposes of this Settlement Agreement only and further agree that this agreement of facts is without prejudice to the Respondents or Staff in any other proceeding of any kind including, but without limiting the generality of the foregoing, any proceedings brought by the MFDA (subject to Part IX) or any civil or other proceedings which may be brought by any other person or agency, whether or not this Settlement Agreement is accepted by the Hearing Panel

47John and Javier Sanchez did understand that the Settlement Agreement would be made public. In the Settlement Agreement, among other things, the Sanchez Defendants admitted that between 2006 and 2016, they sold or facilitating the sale of at least $25.8 million of investments in IPS, a non-arm’s length company, to at least 170 ICM clients, thereby engaging in conduct that gave rise to conflicts of interest which they failed to address by the exercise of responsible business judgment influenced only by the best interests of the clients.

48In the Settlement Agreement, the Sanchez Defendants admitted that after October 2006, they did not comply with the terms of the Agreement and Undertaking they entered with the MFDA. The Sanchez Defendants also admitted that between 2008 and December 2016, they failed to cooperate with MFDA investigations into their conduct by providing inaccurate or misleading information and statements and withholding information about some of their business activities in response to questioning by MFDA compliance staff and by MFDA enforcement staff during investigations of their conduct. They admitted that they attempted to remove evidence of their activities.

49As a result of the MFDA Proceedings and the Settlement Agreement, ICM’s membership in the MFDA was terminated, and John and Javier Sanchez were barred from conducting securities related business while in the employ of or associated with any member of the MFDA. The Sanchez brothers were also ordered to pay in excess of $175,000 to the MFDA in fines and they paid $25,000 for costs. John Sanchez stopped practising as a certified financial planner with FP Canada Standards Council in 2017, and later allowed his certification to lapse. On September 11, 2019, John Sanchez was ordered permanently banned by the FP Canada Standards Council.

50In 2019, IPS Noteholders redeemed $7,109,431 worth of IPS Notes, nearly a third of the IPS Notes outstanding, after the MFDA sanctioned the Sanchez Defendants and ordered their client accounts transferred to a new fund manager.

51Ms. Boal, however, did not redeem her IPS Promissory Note and has renewed it. The note remains in good standing and Ms. Boal has received all the promised interest payments.

D. Procedural Background

52On February 23, 2017, Ms. Boal commenced this proposed class action. At the time of the commencement of the action, Ms. Boal believed that the putative Class Members would lose their investments and suffer damages. This belief has turned out to be a mistaken belief.

53On March 30, 2017, without notice, Ms. Boal obtained a Norwich Order (requiring financial disclosure from third parties about the Defendants’ assets), a Mareva Injunction (freezing the Defendants’ disposition of their assets), and a certificate of pending litigation over a property municipally known as 940 The East Mall.

54On November 20, 2017, Ms. Boal delivered a Second Fresh as Amended Statement of Claim.

55In March of 2018, John Sanchez, Javier Sanchez, and 1361655 Ontario Inc. moved for an Order discharging the certificate of pending litigation and for damages for the registration of the certificate of pending litigation. On March 19, 2018, upon the return of the motion to discharge the certificate of pending litigation, I reserved judgment, but I made an interim Order lifting the certificate of pending litigation on terms. On April 12, 2018, I released my Reasons for Decision.⁴ I vacated the certificate of pending litigation.

56On September 25, 2019, Ms. Boal delivered the Third Fresh as Amended Statement of Claim.

57On December 16, 2019, Ms. Boal commenced her motion for certification.

58The proposed class consists of purchasers from ICM (and the Sanchez brothers) of IPS Promissory Notes. The class size is approximately 170 persons. The class definition is:

All persons and entities that, during the period from and including January 1, 2004 to the present purchased promissory notes issued by Invoice Payment Systems Corp. while they were clients of International Capital Management Inc.

59In her Statement of Claim, Ms. Boal advances ten causes of action; namely: (a) breach of contract; (b) breach of trust: (c) breach of fiduciary duty; (d) conspiracy; (e) conversion; (f) deceit; (g) fraudulent misrepresentation; (h) negligence; (i) negligent misrepresentation; and (j) an oppression remedy pursuant to the Ontario Business Corporations Act. For the purposes of the certification motion, because it appears that the Class Members have not suffered damages but may be entitled to an equitable or restitutionary remedy, she abandoned five causes of action and she advances five causes of action; namely: (1) breach of fiduciary duty; (2) knowing assistance; (3) knowing receipt; (4) breach of contract; and (5) oppression under the Ontario Business Corporations Act. Ms. Boal also seeks to pierce the corporate veil with respect to the various corporate defendants.

60Ms. Boal’s claim for breach of fiduciary duty is set out in paragraphs 53 to 59 of her Third Fresh as Amended Statement of Claim as follows:

Breach of Fiduciary Duty

53. The plaintiff pleads breach of fiduciary duty against the ICM Defendants.

54. The Class Members were clients of the ICM Defendants, who were subject to the rules, regulations, and bylaws of the MFDA. The MFDA Rules required the ICM Defendants to, among other things,

(a) deal fairly, honestly, and in good faith with its clients;

(b) observe high standards of ethics and conduct in the transaction of business;

(c) not engage in any business conduct or practice which is unbecoming or detrimental to the public interest; and

(d) immediately disclose any conflict or potential conflict of interest to its clients.

55. The ICM Defendants undertook to act with loyalty and in the best interests of the Class Members when providing advice or recommending investments. The Class Members trusted the ICM Defendants to be honest, transparent, and to put the Class Members’ interests ahead of their own when making recommendations providing investment advice. This trust made the Class Members vulnerable to the ICM Defendants’ exercise of control or discretion. That discretionary power affected the legal and substantial practical interests of the Class Members. [my emphasis added]

56. The ICM Defendants owed to the Class Members the following duties:

(a) a duty of loyalty, which required the ICM Defendants to avoid putting themselves in positions where the Class Members’ best interests may be compromised due to their own self-interest or their relationship with a third party;

(b) a duty of honesty and good faith;

(c) a duty to disclose any conflict of interest, and all material facts relevant to a transaction;

(d) a duty to exercise tasks with prudence, care and skill, and in accordance with their professional obligations, including undertaking and fulfilling suitability obligations to determine whether the investment products its recommended were suitable for the Class Members, including:

(i) determining whether IPS Notes were eligible for sale without a prospectus and if so, what exemptions were available;

(ii) ensuring evidence was obtained from each client to whom the IPS Notes were offered to demonstrate their eligibility for any exemptions relied upon;

(iii) document criteria or limitations with respect to the types of clients to whom the investments should be offered having regard to the relevant “know your client” information such as risk tolerance, time horizon, investment objects, net worth, income, and investment knowledge;

(e) a duty to comply with MFDA Rules and the Agreement and Undertaking, including with respect to disclosures to be made to clients in connection with the IPS Notes;

(f) a duty to provide written disclosure about the amount of compensation they were obtaining from soliciting money for IPS.

57. The ICM Defendants breached their fiduciary duties to the Class Members by the conduct described above, including

(a) Failing to disclose to them the non-arms’ length relationship between John, Javier, and IPS, and the commissions that would accrue to them as a result of inducing Class Members to purchase the IPS Notes;

(b) failing to require the Class Members to sign an acknowledgment indicating (i) that the IPS Notes are a high-risk investment; (ii) the rate and amount of commissions being paid to ICM and/or the Individual Defendants; and (iii) the relationship between IPS and ICM and the potential conflicts of interest that may arise from the relationship;

(c) making the misrepresentations in the Fact Sheet and describing the IPS Notes as “secured investments”;

(d) Advising Class Members to purchase the IPS Notes;

(e) failing to undertake sufficient due diligence regarding suitability of the IPS Notes including

(i) the IPS Notes’ eligibility for exempt distributions;

(ii) whether Class Members were eligible for exemptions; and

(iii) the suitability of the IPS Notes as investments for the Class Members;

(f) failing to disclose that the IPS Notes were high-risk investments, the manner in which the money would be used by IPS, or the financial position and performance of IPS;

(g) Advising the Class Members to accept rates of return on the IPS Notes that were 2-3% lower than rates offered by IPS to other investors;

(h) failing to provide any written or financial disclosure to Class Members about IPS;

(i) failing to disclose the risk associated with IPS’s substantial liability to noteholders as well as the risk attributable to the fact that IPS may be unable to collect on all of its outstanding accounts receivable; and

(j) failing to disclose that IPS extended unsecured loans and advances to related parties including a substantial amount due from a company owned by John and Javier.

58. As a result of the ICM Defendants’ breach of fiduciary duties, the Class Members have suffered loss and damage equal to the amount of their investments in the IPS Notes, plus the amount of interest they would have obtained on those notes had they been offered a rate of return of 10% (“Class Investment”).

59. In addition, the ICM Defendants’ breach of fiduciary obligations to the Class allowed John and Javier to profit by

(a) taking commissions of more than $3 million from the sale of IPS Notes to Class Members, which were paid to them and/or deposited into one or more of the Holding Companies (“Commissions”); and

(b) collecting, through the Holding Companies, the profits of IPS which were financed by the Class Members’ investments in the IPS Notes (“IPS Profits”).

61Ms. Boal’s claims for knowing receipt and knowing assistance are set out in paragraphs 67 to 70 of her Third Fresh as Amended Statement of Claim, as follows:

Knowing Assistance and Receipt

67. The Class Members plead the doctrine of knowing assistance as against the Holding Companies in respect of the Commissions. The Holding Companies knew that the Class Members were the beneficiaries of a fiduciary relationship with the ICM Defendants, and the ICM Defendants dishonestly breached their equitable duties and/or made fraudulent misrepresentations to the Class Members in order to earn the Commissions. The Holding Companies participated in this dishonest design and benefitted by obtaining the Commissions.

68. The Class Members plead the doctrine of knowing receipt as against the Holding Companies in respect of the Commissions. These defendants knew that the Class Members were the beneficiaries of a fiduciary relationship with the ICM Defendants. The Commissions were transferred to the Holding Companies, and the Holding Companies knew that the Commissions were transferred in breach of ICM Defendants’ fiduciary duties and/or by making fraudulent misrepresentations to the Class Members.

69. The Class Members plead the doctrine of knowing assistance as against IPS and the Holding Companies in respect of the Class Investment and the IPS Profits. IPS knew that the Class Members were the beneficiaries of a fiduciary relationship with the ICM Defendants, and the ICM Defendants dishonestly breached their equitable duties and/or made fraudulent misrepresentations to the Class Members in order to cause them to purchase the IPS Notes. IPS and the Holding Companies participated in this dishonest design, and benefitted by obtaining the Class Investment, which they used to generate the IPS Profits.

70. The Class Members plead the doctrine of knowing receipt as against IPS and the Holding Companies in respect of the Class Investment and the IPS Profits. IPS and the Holding Companies knew that the Class Members were the beneficiaries of a fiduciary relationship with the ICM Defendants and that the Class Investment, which was used to generate the IPS Profits, was transferred in breach of those fiduciary duties and/or as a result of the fraudulent misrepresentations made to the Class Members.

62Ms. Boal’s claim for oppression is set out in paragraphs 93 to 98 of her Third Fresh as Amended Statement of Claim, as follows:

Oppression

93. The plaintiff seeks relief pursuant to the oppression remedy provisions of the OBCA. The Class Members are complainants within the meaning of section 248 of the OBCA.

94. The Class Members had reasonable expectations about the manner in which the business and affairs of IPS would be conducted. Those reasonable expectations arose from, among other things, the representations made to the Class Members about the IPS Notes, IPS’s business, and standard, commercially reasonable business practice.

95. The reasonable expectations of the Class Members included the following:

(a) that the IPS Notes would be secured by collateral;

(b) Proceeds from the IPS Notes would be held by IPS in a segregated account and would only be used to finance current account receivable pre-approved by IPS’s underwriting team;

(c) The first 7% of revenue generated by IPS is reserved and paid to investors; and

(d) IPS would have a reserve account as an allowance for doubtful invoice receivables.

96. IPS acted in a manner contrary to those reasonable expectations by committing the acts and omission described herein, including:

(a) failing to secure the IPS Notes against collateral;

(b) failing to hold the proceeds of the IPS Notes in segregated account, using the proceeds for purposes other than financing current accounts receivable, and advancing unsecured loans to related parties including a substantial amount to a company owned by John and Javier;

(c) failing to pay the first 7% of revenue generated to investors; and

(d) failing to maintain a reserve account as an allowance for doubtful receivables.

97. IPS’s acts and omissions caused the Class Members to lose their investments in IPS Notes.

98. The conduct of IPS described herein was oppressive, unfairly prejudicial, and unfairly disregarded the interests of the plaintiff and other Class Members. The Class Members are therefore entitled to an order under s 248 (3) of the OBCA for the immediate sale of IPS and the distribution of the net sale proceeds to the Class Members.

63Ms. Boal’s claim for breach of contract is set out in paragraphs 102 to 105 of her Third Fresh as Amended Statement of Claim, as follows:

102. As against IPS, the plaintiff pleads breach of contract.

103. Each Class Member acquired their IPS Notes pursuant to a contract with IPS. Each contract contained the following express and/or implied terms among others:

(a) that the IPS Notes would be secured by collateral;

(b) Proceeds from the IPS Notes would be held by IPS in a segregated account and would only be used to finance current account receivable pre-approved by IPS’s underwriting team;

(c) The first 7% of revenue generated by IPS is reserved and paid to investors; and

(d) IPS would have a reserve account as an allowance for doubtful invoice receivables.

104. IPS breached the contract by, among other things:

(a) failing to secure the IPS Notes against collateral;

(b) failing to hold the proceeds of the IPS Notes in segregated account, using the proceeds for purposes other than financing current accounts receivable, and advancing unsecured loans to related parties including a substantial amount to a company owned by John and Javier;

(c) failing to pay the first 7% of revenue generated to investors; and

(d) failing to maintain a reserve account as an allowance for doubtful receivables.

105. As a result of IPS’ breach of contract, the Class Members have suffered damages equal to the Class Investment.

64Ms. Boal’s plea to pierce the corporate veil is set out is set out in paragraph 106 of her Third Fresh as Amended Statement of Claim, as follows:

Corporate Veil

106. As a result of the conduct of the Defendants pleaded herein, it is appropriate to lift the corporate veil and hold the Individual Defendants liable for the acts of ICM, IPS, and the Holding Companies (“Corporate Defendants”), and to hold each of the Corporate Defendants liable for the acts of each other because, among other things:

(a) The Corporate Defendants were completely dominated and controlled by the Individual Defendants, and were being used as a shield for improper conduct;

(b) the Individual Defendants expressly directed a wrongful thing (i.e. the fraudulent investment scheme) to be done by the Corporate Defendants;

(c) The Corporate Defendants were agents of the Individual Defendants, and the each of ICM, IPS, and the Holdings Companies were agents of each other;

(d) To not lift the corporate veil would yield a result too flagrantly opposed to justice, convenience, or the interests of fiscal authorities.

(e) the Corporate Defendants were used as shams to perpetuate the fraudulent investment scheme and conspiracy described herein; and

(f) The Corporate Defendants were incorporated for a fraudulent and/or improper purpose.

65Ms. Boal seeks certification of the following 18 common issues grouped under seven headings titles.

I. Breach of Fiduciary Duty

1. Did any of International Capital Management Inc. (“ICM”), John Sanchez or Javier Sanchez (the “ICM Defendants”) owe a fiduciary duty to the Class Members?

2. For those ICM Defendants found to owe a fiduciary duty, what was the nature of that fiduciary duty?

3. Did any of the ICM Defendants found to owe a fiduciary duty breach that fiduciary duty?

4. If the answer to (3) is yes, did the fiduciary breaches cause loss or damages to the Class Members?

5. If the answer to (3) is yes, did the ICM Defendants, or any of them, obtain any monies or other benefits as result of those fiduciary breaches?

6. If the answer to (4) or (5) is yes, can the amounts of loss, damages, restitution, monies, or other benefits be assessed in whole or part on an aggregate basis, and if so, what is the quantum?

II. Knowing Assistance and Receipt

7. Did Invoice Payments Systems Corp. (“IPS”) or 1361655 Ontario Inc., 1634792 Ontario Inc., The Savel Corporation, 2029984 Ontario Ltd., or 2029986 Ontario Ltd. (the “Holding Companies”) (or any of them) engage in conduct which amounted to knowing assistance of the ICM Defendants with respect to their breach of fiduciary duties to the Class Members?

8. Did IPS or the Holding Companies (or any of them) engage in conduct which amounted to a knowing receipt of monies from the ICM Defendants that were Obtained as a result of their breach of fiduciary duties to the Class Members?

9. If the answer to (7) or (8) is yes, can the amount of damages or restitution payable by such Defendants be assessed in whole or part on an aggregate basis, and if so, what is the quantum?

III. Breach of Contract

10. Did the Class Members acquire their IPS Notes pursuant to a contract with IPS, and if so, did IPS breach any of the express or implied terms of that contract?

11. If the answer to (10) is yes, can the quantum of damages as a result of such breaches be assessed on an aggregate basis, and if so, what is the quantum?

IV. Constructive Trust, Equitable Lien, Accounting & Disgorgement, and Tracing

12. For each of issues (5), (8) and (10):

(a) are the Class Members entitled to a tracing order to determine the present location of those monies or other benefits?

(b) were the monies or other benefits subject to a constructive trust, and if so, should the Defendants, or any of them, be declared constructive trustee(s) for the Class Members of those monies or other benefits?

(c) are the Class Members entitled to an equitable lien over any property that has been mixed with those monies or other benefits?

(d) are the Class Members entitled to an accounting and disgorgement of those monies or other benefits?

V. Oppression

13. Did any act or omission of IPS or any of its affiliates effect a result, or were the business or affairs of IPS or any of its affiliates carried on or conducted in a manner, or were the powers of the directors of IPS or any of its affiliates exercised in a manner that was oppressive or unfairly prejudicial to or that unfairly disregarded the interests of the Class Members within the meaning of section 248 of the OBCA?

14. If the answer to (14) is yes, should the court make an order that the Defendants, or any one or more of them, compensate the Class Members pursuant to section 248(3) of the OBCA?

15. If the answer to (15) is yes, on what basis should the amount of compensation payable to the Class Members be determined?

16. If the answer to (16) is yes, are there other remedies that should be ordered by the Court pursuant to section 248 of the OBCA to rectify the harm caused by IPS or the other Defendants, or any of them, to the Class Members as a result of the conduct of those Defendants, or any of them, which was oppressive or unfairly prejudicial to or that unfairly disregarded the interests of the Class Members?

VI. Corporate Veil

17. Is it appropriate to lift the corporate veil and hold the Individual Defendants liable for the acts of ICM, IPS, and the Holding Companies (together, the "Corporate Defendants") and holding each of the Corporate Defendants liable for the acts of each other?

VII. Punitive Damages

18. Should any of the Defendants pay punitive damages, and if so, which Defendants and in what amount?

E. Certification: General Principles

66The 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.

67For an action to be certified as a class proceeding, there must be a cause of action shared by an identifiable class from which common issues arise that can be resolved in a fair, efficient, and manageable way that will advance the proceeding and achieve access to justice, judicial economy, and the modification of behaviour of wrongdoers.⁵ On a certification motion, the question is not whether the plaintiff's claims are likely to succeed on the merits, but whether the claims can appropriately be prosecuted as a class proceeding.⁶ 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.⁷

68The representative plaintiff must come forward with sufficient evidence to support certification, and the opposing party may respond with evidence of its own to challenge certification.⁸ Certification will be denied if there is an insufficient evidentiary basis for the facts on which the claims of the class members depend.⁹ The certification motion is not a merits-based screening of the action, but it is a meaningful screening device. In Pro-Sys Consultants Ltd. v. Microsoft Corporation,¹⁰ the Supreme Court of Canada stated:

103. [I]t is worth reaffirming the importance of certification as a meaningful screening device. The standard for assessing evidence at certification does not give rise to “a determination of the merits of the proceeding” (CPA, s. 5(7)); nor does it involve such a superficial level of analysis into the sufficiency of the evidence that it would amount to nothing more than symbolic scrutiny.

69For 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.¹¹

70On a certification motion, evidence directed at the merits may be admissible if it also bears on the requirements for certification but, in such cases, the issues are not decided on the basis of a balance of probabilities, but rather on the much less stringent test of some basis in fact.¹² The evidence on a motion for certification must meet the usual standards for admissibility.¹³ While evidence on a certification motion must meet the usual standards for admissibility, the weighing and testing of the evidence is not meant to be extensive, and if the expert evidence is admissible, the scrutiny of it is modest.¹⁴

71The 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 opine on the strengths of the plaintiff’s case.¹⁵ In particular, there must be a basis in the evidence to establish the existence of common issues.¹⁶ 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.¹⁷

72The 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.¹⁸

F. The Cause of Action Criterion

1. General Principles

73The first criterion for certification is that the plaintiff's pleading discloses a cause of action. The "plain and obvious" test for disclosing a cause of action from Hunt v. Carey Canada,¹⁹ 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.

74The 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.²⁰

75To 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.²¹

76Matters 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,²² and the court's power to strike a claim is exercised only in the clearest cases.²³ The law must be allowed to evolve, and the novelty of a claim will not militate against a plaintiff.²⁴ However, a novel claim must have some elements of a cause of action recognized in law and be a reasonably logical and arguable extension of established law.²⁵

77In R. v. Imperial Tobacco Canada Ltd.,²⁶ 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.

78In a proposed class proceeding, in determining whether the pleading discloses a cause of action, no evidence is admissible, and the material facts pleaded are accepted as true, unless patently ridiculous or incapable of proof. The pleading is read generously, and it will be unsatisfactory only if it is plain, obvious, and beyond a reasonable doubt that the plaintiff cannot succeed.²⁷

79Bare 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 motion to determine whether a legally viable cause of action has been pleaded.²⁸

2. Breach of Fiduciary Duty

80The elements of a claim for breach of fiduciary duty are: (1) a fiduciary relationship: (2) a fiduciary duty; and (3) breach of the fiduciary duty.²⁹

81John and Javier Sanchez and ICM do not dispute that the cause of action criterion is satisfied with respect to the breach of fiduciary duty claim. They, however, submit that the breach of fiduciary duty cause of action in the immediate case is not certifiable because it fails to satisfy the common issues criterion and the preferable procedural criterion. The other Defendants adopt the argument of John and Javier Sanchez and ICM with respect to the breach of fiduciary duty claim.

82Although the Defendants concede that Ms. Boal’s breach of fiduciary duty claim satisfies the cause of action criterion, I cannot certify a class action based on the consent of the parties, and I am obliged to satisfy myself that the action satisfies the certification criteria.³⁰ In the immediate case, I am not satisfied that the cause of action for breach of fiduciary duty is certifiable. The claim does not have a reasonable chance of success on a class wide basis.

83An analysis reveals that the cause of action criterion for a breach of fiduciary duty is not satisfied. In the immediate case, the existential predicate of a common fiduciary duty for the class is the allegation in paragraph 55 of Ms. Boal’s Statement of Claim that the ICM Defendants undertook to act with loyalty and in the best interests of the Class Members when providing advice or recommending investments, and this fiduciary duty made all the Class Members vulnerable to the ICM Defendants’ exercise of control or discretion.

84That allegation, however, turns the law of fiduciary duties for investment advisors backwards, upside down, and inside out, because an undertaking of loyalty and the presence of vulnerability are indicia, among others, of a fiduciary relationship, and Ms. Boal, instead of treating the undertaking of loyalty and the presence of vulnerability as preconditions to the formation of a fiduciary relationship to be proven to genuinely exist, instead make these indicia presumptive based simply on advice being given. For example, in oral argument, in response to my inquiry, I was told that if the Sanchez brothers had sold billionaire financial mogul Warren Buffett an IPS promissory note, a fiduciary relationship would have been established because of the undertaking of loyalty demanded by the MFDA and from Mr. Warren’s vulnerability in purchasing a misrepresented financial instrument. This example shows how Ms. Boal has misunderstood the law of fiduciary duties of investments advisors.

85I begin the detailed analysis by making six general observations about the law of fiduciary duties and a seventh specific observation about the law of fiduciary duties insofar as it applies to investment advisers. I will elucidate these observations below. The observations about the law of fiduciary duties are:

a. First, the test for the existence of a duty of care relationship and the test for the existence of a fiduciary relationship are different.

b. Second, the law of fiduciary duties imposes higher standards of conduct and a greater and more powerful array of legal remedies than does tort or contract law.

c. Third, misconduct by itself does not impose a duty of care or a fiduciary duty. In other words, it is an error in the analysis of either tort liability or fiduciary liability to reason backwards and find a duty of care relationship or a fiduciary relationship from the circumstance that the defendant’s conduct caused harm to the plaintiff.

d. Fourth, when there is a relationship between a plaintiff and a defendant, the defendant may in some circumstances have both a duty of care relationship giving rise to tort liability and also a fiduciary duty relationship giving rise to liability in equity; however, the tort and the fiduciary liabilities are distinct and one liability does not entail the other. In other words, a breach of a duty of care and a breach of fiduciary duty are distinct phenomena, although in a given case one, the other, or both may occur.

e. Fifth the contemporary approach to the recognition of fiduciary relationships is that certain relationships are categorically fiduciary relationships, but other relationships may qualify as an ad hoc fiduciary relationship.

f. Sixth, a determination that a person is a fiduciary is necessary but not necessarily sufficient to impose a particular fiduciary duty on that person. The extent of a particular fiduciary’s duties is not predetermined, and a beneficiary of a fiduciary duty may waive the duty.

g. Seventh, the law of fiduciary duties insofar as it applies to investment advisers is that the relationship between an investment adviser and his or her client is not categorically a fiduciary relationship, but an ad hoc fiduciary relationship that may arise in the circumstances of a particular case.³¹ A fiduciary relationship can arise between an investment adviser and his or her client, but it is a question of fact to be determined on a case-by-case basis and a fiduciary relationship, does not arise simply because investment advice is given.³² In Hodgkinson v. Simms,³³ Justice La Forest stated:

The relationship of broker and client is not per se a fiduciary relationship. Where the elements of trust and confidence and reliance on skill and knowledge and advice are present, the relationship is fiduciary and the obligations that attach are fiduciary. On the other hand, if those elements are not present, the fiduciary relationship does not exist. The circumstances can cover the whole spectrum from total reliance to total independence. Where a fiduciary duty is claimed in the context of a financial advisory relationship, it is at all events a question of fact as to whether the parties' relationship was such as to give rise to a fiduciary duty on the part of the advisor.

86By way of elucidation of the observations, there is a reason why the law rigorously investigates whether a relationship qualifies as a fiduciary relationship. As Justice Cardozo noted in a famous passage from the well-known American case of Meinhard v. Salmon,³⁴ which is frequently quoted in Canadian cases and legal literature:

Many forms of conduct permissible in a workaday world for those acting at arm’s length are forbidden to those bound by fiduciary ties. A trustee is held to something stricter than the morals of the marketplace. Not honesty alone, but the punctilio of an honour the most sensitive, is then the standard of behaviour.

87A fiduciary relationship imposes obligations that are stricter than the morals of the marketplace and of the workaday world and a higher standard of behaviour, and when there is a breach of a fiduciary duty, courts mete out more powerful remedies, including the constructive trust, tracing, an accounting of profits, and disgorgement of gains. The law, therefore, is very careful in determining whether a particular relationship qualifies as a fiduciary relationship with the attendant fiduciary obligations.

88Although they may sometimes overlap with other legal obligations, fiduciary obligations are a discrete and independent legal phenomenon with their own quality and characteristics. A breach of fiduciary duty may coincidentally also be negligence, a breach of contract, or a breach of confidence, and then there will be concurrent liability.³⁵ However, the presence of a claim in tort, contract, or for breach of confidence does not, by itself, entail nor does it rule out the claim for breach of fiduciary duty. Breach of fiduciary duty remains an independent claim with its own unique characteristics and sterner quality.³⁶

89Justice Bora Laskin in Canadian Aero Services Ltd. v. O’Malley,³⁷ said that cases about alleged breaches of fiduciary duty involved four issues:³⁸ (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.

90Because the stern nature of fiduciary duties, including duties of loyalty and of keeping confidences are well understood and long established, the modern case law has focused on determining the indicia of a fiduciary relationship and when these obligations ought to be imposed.

91The law historically recognized certain relationships as categorically fiduciary in nature. Trustee-beneficiary, lawyer and client, and principle and agent are the main examples. An advantage of a categorical treatment is that it automatically regulates the ethical and professional standards of these relationships. The modern law has examined whether relationships outside the recognized classes could be fiduciary and asks whether a fiduciary relationship is a closed or an open class of relationships.

92The case law developed to recognize that the classes of fiduciary relationships are open, and the focus of attention turned to what are the indicia or qualifications for membership. A series of Supreme Court of Canada decisions debated the issue.³⁹ The juridical outcome of the debate in the Supreme Court case law, is that courts have recognized indicia that need to be present before the court will classify a particular relationship as an ad hoc fiduciary relationship with attendant fiduciary obligations.

93The indicia, which are not a comprehensive code, but rather guidance to a court in analyzing the legal classification of a relationship are: (1) the alleged fiduciary has scope for the exercise of some discretion or power; (2) the alleged fiduciary can unilaterally exercise that power or discretion so as to affect the beneficiary's legal interest ; (3) the alleged beneficiary is peculiarly vulnerable to or at the mercy of the fiduciary holding the discretion or power. (4) the alleged fiduciary either implicitly or expressly has undertaken or accepted a responsibility to act in the best interest of the alleged beneficiary and to act in accordance with a duty of loyalty.

94In Alberta v. Elder Advocates of Alberta Society,⁴⁰ Chief Justice McLachlin stated:

36. In summary, for an ad hoc fiduciary duty to arise, the claimant must show, in addition to the vulnerability arising from the relationship as described by Wilson J. in Frame: (l) an undertaking by the alleged fiduciary to act in the best interests of the alleged beneficiary or beneficiaries; (2) a defined person or class of persons vulnerable to a fiduciary's control (the beneficiary or beneficiaries); and (3) a legal or substantial practical interest of the beneficiary or beneficiaries that stands to be adversely affected by the alleged fiduciary's exercise of discretion or control.

95Misconduct by a person who is a fiduciary does not necessarily mean that there has been a breach of fiduciary duty; rather, for there to be a breach of fiduciary duty, the misconduct must involve the particular duties that the law imposes on the particular fiduciary. As Justice Southin observed in Girardet v. Crease & Co.:⁴¹

The word ‘fiduciary’ is flung around now as if it applied to all breaches of duties by solicitors, directors of companies and so forth. But ‘fiduciary’ comes from the Latin ‘fiducia’ meaning ‘trust’. Thus, the adjective “fiduciary” means of or pertaining to a trustee or trusteeship.

96It is fallacious in determining fiduciary status and fiduciary duty by reasoning from misbehaviour or from remedy to duty. This result-driven reasoning process begs the question of whether a person has fiduciary status by moving from the breach of a duty or the desired remedy to a finding that the person had a duty. It is an analytical error for a plaintiff to reason from an alleged breach of a fiduciary duty to the conclusion that there is a fiduciary relationship. This fallacy was noted long ago in Tito v. Waddell (No. 2),⁴² where Megarry, V.C. stated:

If there is a fiduciary duty, the equitable rules about self-dealing apply: but self-dealing does not impose the duty. Equity bases its rules about self-dealing upon some pre-existing fiduciary duty: it is a disregard of this pre-existing duty that subjects the self-dealer to the consequences of the self-dealing rules. I do not think that one can take a person who is subject to no pre-existing fiduciary duty and then say that because he self-deals he is thereupon subjected to a fiduciary duty.

97For example, and this example is particularly pertinent to the immediate case, a finding that a person was disloyal and that harm was caused may have the tendency to lead to the fallacious conclusion that the person had a fiduciary’s duty to be loyal. Although they disagreed about the nature of fiduciary status, both Justice La Forest and Justices Sopinka warned against this kind of reasoning in Lac Minerals Ltd. v. International Corona Resources Ltd.,⁴³ where Justice La Forest said that using the term “fiduciary” as a conclusion to justify a result “reads equity backwards” ⁴⁴ and Justice Sopinka said:⁴⁵ [T]he presence of conduct that incurs the censure of a court of equity in the context of a fiduciary duty cannot itself create the duty.”⁴⁶

98In the immediate case, it is undisputed, and it is undisputable, that the Sanchez brothers and ICM had a professional relationship and a duty of care relationship with all the Class Members, and, in the immediate case, there is undoubtedly some basis in fact for the allegations that the Sanchez brothers breached the professional standards of the MFDA and of the FP Standards Council and that they misrepresented information and were negligent in the performance of their professional obligations.

99However, it does not follow, as Ms. Boal’s argument attempts to do, that there was a common fiduciary relationship with all or even any of the putative Class Members. “Ad hoc” means “for this specific purpose” which is to say an ad hoc fiduciary relationship involves an individual case-by-case analysis of the individual Class Member’s financial circumstances, net worth, sophistication, expertise, experience, tolerance for risk, dependency, and vulnerability.

100It does not follow that there was a common fiduciary duty because a breach of a duty of care by a fiduciary is not the same thing as a breach of fiduciary duty.

101And, in the circumstances of the immediate case, it does not follow that if there was a fiduciary relationship, and a fiduciary duty owed to each and every putative class member, that there is some basis in fact for concluding that there was a common breach of the fiduciary duty.

102In short, in the circumstances of the immediate case, in each individual case, it is contestable whether the relationship with the investor was a fiduciary relationship, and in each individual case the breach of any fiduciary duty is idiosyncratic and not common. On a class wide basis, the elements of the cause of action for breach of fiduciary duty are not made out in common.

103Ms. Boal goes so far to say that although the Sanchez brothers may have disclosed that they had an ownership interest in IPS and that they were receiving fees or commissions for the sale of the IPS Promissory Notes and something about the risk associated with lending money to IPS and something about how IPS would use the fund, the disclosure was so inadequate and the breach of fiduciary duty was so egregious that the IPS Promissory Notes “should not have been offered to any investor, regardless of their individual personal circumstances.” In her factum for the certification motion, Ms. Boal stated:

Finally, the Sanchez Defendants breached their fiduciary duty simply by distributing the IPS Notes. Put another way, no matter what the Sanchez Defendants disclosed, the IPS Notes were not suitable for any investors. By selling notes unsuitable for anyone, the Sanchez Defendants breached their fiduciary duty.

104With respect, this is a nonsensical submission that is belied by Ms. Boal keeping – even up to today – her investment in the promissory notes and by the fact that, – even up to today – no investor has lost any money and all Class Members enjoyed the promised return on their investments. The IPS Promissory Notes were not unsuitable for everyone and the evidence of Ms. Casey, Mr. Hubbard, Mr. Orr, Mr. Wallis, and even Ms. Boal, reveals that while the disclosure about the notes and about the Sanchez brothers’ relationship to the borrower may not have been as comprehensive as it might have been, it was adequate for the investors to make an independent decision about whether the risk of purchase was worth lending money to IPS.

105Ms. Boal is entitled to frame her allegations in a manner that is amenable to certification, but she had not done so, and a pleading that upends the law of fiduciary duties and presupposes a common fiduciary relationship regardless of the individual circumstances of each Class Member does not work to satisfy the cause of action or the common issues criteria for certification.

106I wish to be clear that in concluding that Ms. Boal’s cause of action for breach of fiduciary duty does not satisfy the cause of action criterion, I am not deciding that Ms. Boal in her individual capacity or that any of the putative Class Members in their individual capacities do not have a cause of action of breach of fiduciary duty. Ms. Boal is entitled to continue her action in her individual capacity if so inclined. My conclusion is just that a cause of action based on an alleged breach of fiduciary duty to all the Class Members is doomed to failure.

107I need only add that Ms. Boal’s reliance on Justice Lauwers’ decision in Ivany v. Financiere Telco Inc.,⁴⁷ is not helpful to her. The Class Members in that case were tempted by an investment adviser to invest in an RRSP (Registered Retirement Savings Plan) scam in which they borrowed money against the security of their own self-registered RRSPs, which were controlled at the discretion of the investment adviser who purported to invest in companies suitable for the RRSPs. The design of the scheme was a failed attempt to withdraw tax free RRSP funds, needed by the Class Members. The design of the RRSP scam failed, but more to the point the 670 Class Members lost the value of their RRSPs and the losses exceeded $17 million. The plaintiff brought a class action against the investment adviser and the investment firms for which he was a salesperson. The defendants resisted certification on a variety of grounds, including the argument that there were no common issues because the individual circumstances of the investors needed to be examined. Justice Lauwers rejected this argument and certified the action as a class action.

108I do not doubt the correctness of Justice Lauwers’ decision in Ivany v. Financiere. He was able to find sufficient commonality to certify the action. The immediate case is vastly different. Amongst other differences, in the immediate case, the Class Members suffered no losses, which takes out the negligence claims upon which Justice Lauwers found commonality and congruity with a breach of fiduciary duty claim. In the immediate case, there is no common illegal scheme; a promissory note is not an RRSP scam that would place each Class Member into an illegal transaction in addition to being a failed one. In the immediate case, as already noted above, no Class Member was harmed by his or her investment in the promissory notes. Further, the investment adviser in Ivany v. Financiere was empowered with considerable discretion in deciding the composition of the Class Members’ self-registered RRSP which is different than the Sanchez brothers in the immediate case who had no discretionary decision-making authority at all. In the immediate case, the Class Members made their own individual decisions about whether to lend money to IPS. In Ivany v. Financiere, there was greater commonality of vulnerability amongst the Class Members who were enticed into thinking they could circumvent the RRSP tax rules and who were looking for a way to release needed cash from the RRSPs. I could go on, but, in short, Ivany v. Financiere is distinguishable from the case at bar.

109I also wish to be clear that in concluding that Ms. Boal’s cause of action for breach of fiduciary duty does not satisfy the cause of action criterion, I am not deciding that breach of fiduciary duty claims are generally not certifiable in class proceedings. There may and have been cases where breach of fiduciary duty has been certified. The immediate case, however, is different.

G. Knowing Assistance and Knowing Receipt

(a) The Elements of the Causes of Action

110Ms. Boal sues 1361655 Ontario Inc., 1634792 Ontario Inc., The Savel Corporation, 2029984 Ontario Ltd., and 2029986 Ontario Ltd. for knowing assistance and knowing receipt, and these claims are pleaded in paragraphs 67 to 70 of her Third Fresh as Amended Statement of Claim, as set out above.

111As will be discussed further below, because of differences in proximity to the Class Members, the knowing assistance and knowing receipt causes of action need to be analyzed separately for: (a) IPS, (b) The Savel Corporation, and (c) 2029986 Ontario Ltd., 2029984 Ontario Ltd., 1361655 Ontario Inc. and 1634792 Ontario Inc., the corporations owned by John and Javier Sanchez.

112The elements of a claim for knowing assistance are: (1) the plaintiff is the beneficiary of a trust or fiduciary relationship; (2) the trustee or fiduciary fraudulently or dishonestly breaches his or her equitable duty; (3) the defendant has actual knowledge of the fiduciary relationship and the fiduciary’s misconduct; and, (4) the defendant actively assists in the fraudulent or dishonest conduct.⁴⁸ The remedy for knowing assistance is measured by the plaintiff's injury consequent to the fiduciary’s or trustee's misconduct.⁴⁹

113In Air Canada v. M&L Travel Ltd.,⁵⁰ Justice Iacobucci, stated: “The knowledge requirement for this type of liability is actual knowledge, recklessness or willful blindness will also suffice.” Justice Iacobucci. explained that for liability for knowing assistance, the defendant had to have actual knowledge, willful blindness, or recklessness about both the existence of the fiduciary relationship and about the dishonest and fraudulent scheme.

114For liability for knowing assistance, the defendant must be shown to have actual knowledge, including willful blindness or recklessness of the fiduciary relationship and of the fiduciary's fraudulent and dishonest conduct.⁵¹ In other words, for liability for knowing assistance, the defendant must be shown to have a personal, subjective mental state of knowing, being willfully blind, or being reckless about the existence of a fiduciary relationship and about dishonest conduct relating to that relationship. Willful blindness is a subjective standard of fault that depends on the defendant's actual state of mind and is distinguishable from objective standards of fault based on what the defendant ought to have known.⁵²

115As for the requirement of knowledge of a dishonest and fraudulent scheme, which was a point of controversy and divergence in the case law, Justice Iacobucci held that for knowing assistance, the quality of the breach of equitable duty made a difference and equity’s imposition of liability upon the defendant was justified only if the predicate conduct was dishonest and fraudulent in the sense of being morally reprehensible.⁵³

116In Air Canada v. M&L Travel Ltd.,⁵⁴ Justice Iacobucci held that constructive knowledge, that is, knowledge of circumstances that would put an honest person on inquiry, was insufficient for liability for knowing assistance. This degree of knowledge was insufficient because constructive notice did not amount to the want of probity that would attract equity’s interest as a court of conscience. In other words, for liability for knowing assistance an objective mental state (non-personal, non-subjective mental state) of what a person ought to have known is insufficient to ground liability for knowing assistance.

117The elements of a claim of knowing receipt are: (1) the plaintiff is the beneficiary of a trust or fiduciary relationship; (2) the defendant receives property from the trust or fiduciary in his or her personal capacity; and (3) the defendant has actual or constructive knowledge that the property was transferred to him or her in breach of trust or fiduciary duty.⁵⁵ Unlike knowing assistance, which is a fault based wrongdoing, knowing receipt is based on notions of an objective state of knowledge and notions of unjust enrichment, where regardless of fault, it is unjust that the defendant receive and keep an enrichment. Thus, the remedy for knowing receipt is measured by the defendant’s ill-gotten gain.⁵⁶

118In terms of what the plaintiff must prove, knowing receipt sets a lower standard for its knowledge component than does knowing assistance. It is lower because it is easier to prove objectively what a person ought to know in the circumstances of a particular case, than it is to prove: (a) what the defendant actually knew; (b) whether the defendant was willfully blind; or (c) whether the defendant was reckless.

119Reflecting its connection to the notions of unjust enrichment, the rationale for liability for knowing receipt at a lower standard than for knowing assistance is that if the defendant seeks to obtain a personal advantage in circumstances that a reasonable person would be alert to the possible claims of a beneficiary, then it is fair for a court of conscience to require the defendant to ensure himself or herself of the propriety of the transaction. In Citadel General Assurance Co. v. Lloyds Bank Canada,⁵⁷ Justice La Forest stated:

In “knowing receipt” cases, relief flows from the breach of a legally recognized duty of inquiry. More specifically, relief will be granted where a stranger to the trust, having received trust property for his or her own benefit and having knowledge of facts which would put a reasonable person on inquiry, actually fails to inquire as to the possible misapplication of trust property. It is this lack of inquiry that renders the recipient’s enrichment unjust.

120The constructive notice capable of satisfying the knowledge element of knowing receipt is still a high standard of knowledge because it entails a level of moral culpability that would justify a court of conscience imposing liability. The willful blindness that will constitute constructive notice sufficient for liability arises when a party is aware of the need for inquiry but deliberately declines to inquire.⁵⁸

(b) IPS

121IPS submits that Ms. Boal’s knowing assistance and knowing receipt causes of action do not satisfy the cause of action criterion, the common issues criterion, and the preferable procedure criterion.

122Insofar as the knowing assistance claim is concerned, IPS submits that while Ms. Boal has baldly pleaded that it had actual knowledge of John’s and Javier’s dishonest design and that it assisted in that dishonest design, there are no materials facts pleaded that would support those bald pleadings of knowledge and of aiding and abetting (i.e., of assisting) in the breach of fiduciary duty.

123Insofar as the pleaded facts, which are assumed to be true for the purposes of the cause of action is concerned, I agree with IPS’s argument. IPS had no direct interaction with Ms. Boal and the other Class Members. IPS was not in a fiduciary relationship with Ms. Boal and the other Class Members. From a factual and a legal perspective, IPS and Ms. Boal had an arm’s-length debtor and creditor relationship. IPS was connected to the putative Class Members only contractually by a promissory note contract. Since for the reasons discussed above about the idiosyncratic nature of ad hoc fiduciary relationships, it cannot be said that IPS had actual knowledge, including willful blindness and recklessness, that every Class Member was the beneficiary of a fiduciary relationship.

124While it would be a proper inference that IPS knew that John and Javier Sanchez had a professional relationship with each and every putative Class Member giving rise to a duty of care not to be professionally negligent and to abide by the rules and regulations of the MFDA and the FP Standards Council, it does not follow that it can be inferred that the duty of care relationship between John and Javier and their clients was elevated to the higher standard of a fiduciary relationship, and, in turn, it cannot be inferred that the material facts for the first constituent element of a cause of action of knowing assistance have been pleaded.

125Indeed, there is no material fact pleaded in the Statement of Claim and no basis in fact proffered in evidence on this certification motion that could provide a material fact that Mr. Suarez or Ms. Sanchez-Keane had actual knowledge, including willful blindness or recklessness, that Ms. Beal was in a fiduciary relationship with Mr. John Sanchez. As the discussion above notes, there is no categorical fiduciary relationship between an individual and his or her investment adviser. An ad hoc fiduciary relationship may arise on a case-by-case basis, but there is no material fact pleaded from which it could be inferred that the principals and operating minds of IPS knew that John and Javier Sanchez had a fiduciary relationship with each and every one of their clients.

126It is worth mentioning that it would be an error to apply a constructive knowledge standard in the guise of finding willful blindness or recklessness that would constitute the subjective mental state of actual knowledge.⁵⁹

127Further, there is no material fact pleaded in the Statement of Claim and no basis in fact proffered in evidence on this certification motion that could provide a material fact that IPS did anything to assist in the alleged wrongdoings of the Sanchez brothers.

128Ms. Boal pleads that IPS assisted by acting in common with the Sanchez brothers to conceal their conflict of interest and their breach of fiduciary duty. That is a just a bald tautological pleading that IPS assisted by assisting. Apart from knowing that John and Javier and ICM were finding lenders for IPS’s Promissory Notes, there is no material fact pleaded in the Statement of Claim and no basis in fact proffered in evidence on this certification motion that could provide a material fact that Mr. Suarez or Ms. Sanchez-Keane, the officers and directors of IPS, had actual knowledge that John and Javier Sanchez were acting other than in accordance with professional standards and there is nothing to substantiate the allegation that IPS assisted John and Javier in breaching their professional duties. IPS had little to nothing to do with how its promissory notes and its business were represented by the employees of ICM. As noted above, the evidence is that Mr. Suarez or Ms. Sanchez-Keane learned about the misdeeds identified by the MFDA contemporaneously with Ms. Boal.

129It is worth emphasizing, as Justice Iacobucci noted in Air Canada v. M&L Travel Ltd., that the quality of the breach of equitable duty makes a difference and equity’s imposition of liability upon the defendant is justified only if the predicate conduct was dishonest and fraudulent in the sense of being morally reprehensible. A misrepresentation that is not fraudulent, a breach of professional obligations, or a breach of a professional’s duty of care do not ipso facto make the misconduct morally reprehensible.

130In summary, based on the pleadings and based on the evidence presented on the certification motion, it cannot be shown that: (1) all the putative Class Members were the beneficiary of a fiduciary relationship; (2) all the putative Class Members were the victims of the fraudulent or dishonest breaches of fiduciary obligations; (3) IPS has actual knowledge, including willful blindness and recklessness, of the misconduct; and, (4) IPS assisted in the fraudulent or dishonest design. It follows that it is plain and obvious that a knowing assistance claim on a class wide basis is doomed to failure.

131Moreover, the knowing assistance cause of action is doomed to fail because assuming that all of the constituent elements of the claim were satisfied, it is now conceded that no Class Member suffered an injury consequent to the alleged fiduciary’s misconduct. In Christine DeJong Medicine Professional Corp. v. DBDC Spadina Ltd.,⁶⁰ Justice Blair stated at paragraph 127:

127. […] That is because liability for knowing assistance is fault based and is measured by the loss flowing from the fault. As Perell summarized it in the article cited earlier in these reasons, at p. 113:

One very significant difference arising from the different rationales is that the beneficiary's recovery from knowing receipt may be less than the recovery from knowing assistance. This follows because, under the doctrine of knowing receipt, the defendant's liability is measured by his unjust enrichment while, under the doctrine of knowing assistance. the defendant's liability is measured by the plaintiff's injury consequent to the trustee's misconduct. The plaintiff's injury may exceed the defendant's benefit. [Emphasis added in the original.]

132In her judgment in Christine DeJong Medicine Professional Corp. v. DBDC Spadina Ltd Justice van Rensburg stated at paragraph 239:

Under the doctrine of knowing assistance, "the defendants' liability is measured by the plaintiff's injury consequent to the trustee's misconduct": see the P. Perell article, cited by my colleague at paras. 119 and 127. This is because the wrong is in acting as an accessory to the principal breach, and the accessory is liable jointly and severally with the principal wrongdoer.

133I conclude that insofar as IPS is concerned the cause of action criterion is not satisfied for knowing assistance.

134Much the same thing can be said with respect to Ms. Boal’s claim for knowing receipt against IPS which claim is, with respect, a legal leap combined with a Hail Mary legal prayer. While constructive knowledge of wrongdoing is available for a claim for knowing receipt, there is no material facts pleaded and no basis in fact proffered on this certification motion, to support the bare allegation of constructive knowledge in the circumstances of the immediate case. There was nothing to put IPS under a moral duty to inquire about how the employees of ICM were treating the lenders to IPS who as far as IPS was concerned were being well treated in earning 7 or 8 % percent interest and being repaid the principal of the loan.

135Moreover, for the claim of knowing receipt to be legally viable, IPS would have had to have received Ms. Boal’s property.⁶¹ However, IPS did not receive Ms. Boal’s trust property. IPS received a loan from Ms. Boal and the other Class Members. Unlike some cases of knowing receipt, there was no misappropriation of property. IPS was entitled to receive this money, and it has performed its contractual obligations with respect to the IPS Promissory Notes by paying interest and by repaying the principal of the loan when demanded to do so. Knowing receipt is a restitutionary cause of action based on an unjust enrichment at the expense of the plaintiff. In the immediate, there was no enrichment at the expense of the Class Members whose loan was repaid along with interest.

136Notwithstanding Ms. Boal’s argument that by virtue of a constructive trust remedy for the wrongdoings of the Sanchez brothers, the Class Members should have a property right in moneys lent to a borrower (who is innocent of those misdeeds), it is plain and obvious that no money was transferred subject to a proprietary interest. The Class Members had a right to be re-paid their loans. They did not have a proprietary interest in the loan funds and there is no basis for a restitutionary or a disgorgement remedy for knowing receipt in the circumstances of the immediate case.⁶² When the loan is repaid, there is no money to trace.

137I, therefore, conclude that Ms. Boal has not satisfied the cause of action criterion with respect to its knowing assistance and knowing receipt claims against IPS.

138I also conclude that assuming the cause of action criterion was satisfied, there are no attendant common issues that are certifiable. This follows because if there was a fiduciary duty, a breach of that fiduciary duty, and the elements of knowing assistance or knowing receipt were satisfied, all of this would by individualized to the unique circumstances of the investor who purchased the IPS Promissory Notes.

(c) The Savel Corporation

139Turning to Ms. Boal’s claims for knowing assistance and knowing receipt against The Savel Corporation, analytically the proximity amongst Ms. Boal and the other Class Members and The Savel Corporation is further removed than the relationship amongst Ms. Boal, the other Class Members and IPS.

140The Savel Corporation is just a minority shareholder of IPS, which for the reasons set out above has succeeded in demonstrating that it is plain and obvious that there is no knowing assistance or knowing receipt claim on a class wide basis. The proximity of The Savel Corporation is different but not much different than that of U.R. Group Inc., which is owned by Mr. Suarez and his wife, all of whom were not sued for knowing assistance or knowing receipt.

141It appears that The Savel Corporation for which Ms. Boal devotes a single paragraph in her in her 30-page affidavit in support of this certification motion has been brought into this proposed class action because its principals are the mother and sisters of the Sanchez brothers. Unless one pierces several corporate veils, which itself is not an easy thing to do, The Savel Corporation had no relationship whatsoever with Ms. Boal or any of the putative Class Members.

142In the absence of any material facts pleaded to support the allegations against The Savel Corporation that the matriarch and the sister siblings of the Sanchez family, three independent women of untarnished reputations, assisted the brothers in their alleged breaches of fiduciary duty, this is no more than being presumed guilty because of family association with villains.

143It is not sufficient for a Statement of Claim to simply name a cause of action; it must plead the material facts of the essential elements of the cause of action, and where the allegations are simply conjecture, assumptions or speculation unsupported by material facts, the claim will be found to be legally insufficient.⁶³

144If one moves beyond the pleadings and applies the some-basis-in-fact test to the commonality of the proposed common issues for action against The Savel Corporation, it had no direct dealings with ICM, and no knowledge of any of the financial dealings of ICM nor its day-to-day operations. ICM and the Sanchez brothers had no involvement in The Savel Corporation. Even if the corporate veil were lifted, there is no overlap in directors, officers or shareholders of ICM and The Savel Corporation. The Sanchez brothers are not employees, directors or shareholders of The Savel Corporation or subject to supervision by their mother or sisters.

145I, therefore, conclude that Ms. Boal has not satisfied the cause of action criterion with respect to its knowing assistance and knowing receipt causes of action against The Savel Corporation. And there are no common issues for this cause of action even if it satisfied the cause of action criterion.

(d) 2029986 Ontario Ltd., 2029984 Ontario Ltd., 1361655 Ontario Inc. and 1634792 Ontario Inc.

146Turning to Ms. Boal’s causes of action for knowing assistance and knowing receipt against 2029986 Ontario Ltd., 2029984 Ontario Ltd., 1361655 Ontario Inc. and 1634792 Ontario Inc., I conclude that for different reasons than those set out above, Ms. Boal does not satisfy the cause of action criterion for either cause of action.

147Save for the matter of damages, it is not plain and obvious that Ms. Boal does not have a legally tenable cause of action for knowing assistance against the corporations owned by John and Javier Sanchez (2029986 Ontario Ltd., 2029984 Ontario Ltd., 1361655 Ontario Inc. and 1634792 Ontario Inc.).

148In other words, save for the matter of damages the analysis above that was applied for IPS and The Savel Corporation about knowledge and about participation is different for the corporations owned by John and Javier Sanchez. However, what is the same for these defendants from the above analysis is that it is conceded as a fact that no Class Member suffered damages. As noted above, knowing assistance is not a restitutionary claim but requires the plaintiff to suffer a loss. It is, therefore, plain and obvious that Ms. Boal’s claim for knowing assistance even against the corporations owned by John and Javier Sanchez cannot succeed.

149Turning to the wrongful receipt claim, it is plain and obvious for the reasons already expressed above, that Ms. Boal does not satisfy the cause of action criterion for the cause of action of knowing receipt because there was no transfer of the Class Member’s trust property. The Class Members made a loan which has been repaid or voluntarily renewed by the Class Members.

150In short, the knowing assistance and knowing receipt causes of action do not satisfy the cause of action criterion and the common issues criterion against any of the defendants.

1. Breach of Contract

151Ms. Boal’s claim for breach of contract is set out in paragraphs 102 to 105 of her Third Fresh as Amended Statement of Claim.

152The elements of a cause of action for breach of contract, which is actionable without proof of damages, are: (1) the plaintiff and the defendant are parties to a validly formed contract; and, (2) the defendant fails to perform his or her obligations under the contract.⁶⁴

153From a pleadings’ perspective, I am satisfied that Ms. Boal’s breach of contract claim satisfies the cause of action criterion for certification. I, however, foreshadow to say that the breach of contract claim does not satisfy the common issues and the preferable procedure criteria.

2. Oppression

154Ms. Boal’s claim for oppression is set out in paragraphs 93 to 98 of her Third Fresh as Amended Statement of Claim,

155The oppression remedy is an equitable remedy that gives the court a broad jurisdiction to enforce not just what is legal but what is fair. In assessing a claim for oppression, a court must answer two questions: (1) Does the evidence support the reasonable expectation the claimant asserts? and (2) Does the evidence establish that the reasonable expectation was violated by conduct falling within the terms "oppression", "unfair prejudice" or "unfair disregard" of a relevant interest?

156In determining whether a reasonable expectation exists, the court may consider, among other things: general commercial practice; the nature of the corporation; the relationship between the parties; past practice; steps the claimant could have taken to protect itself; representations and agreements; and the fair resolution of conflicting interests between corporate stakeholders. "Oppressive conduct" is that which is burdensome, harsh and wrongful and is a fact-specific inquiry. Conduct is "unfairly prejudicial" if the conduct prejudices rights or disregards interests unfairly and it is not necessary that there be an element of mala fides. Unfair prejudice and disregarding of interests are less rigorous grounds than oppression and bad faith or want of probity are not a requirement.⁶⁵

157From a pleadings’ perspective, I am satisfied that Ms. Boal’s oppression claim satisfies the cause of action criterion for certification. I, however, foreshadow to say that the breach of contract claim does not satisfy the common issues and the preferable procedure criteria.

H. Identifiable Class Criterion

158The second certification criterion is the identifiable class criterion. The definition of an identifiable class serves three purposes: (1) it identifies the persons who have a potential claim against the defendant; (2) it defines the parameters of the lawsuit so as to identify those persons bound by the result of the action; and (3) it describes who is entitled to notice.⁶⁶

159In Western Canadian Shopping Centres v. Dutton,⁶⁷ the Supreme Court of Canada explained the importance of and rationale for the requirement that there be an identifiable class:

First, the class must be capable of clear definition. Class definition is critical because it identifies the individuals entitled to notice, entitled to relief (if relief is awarded), and bound by the judgment. It is essential, therefore, that the class be defined clearly at the outset of the litigation. The definition should state objective criteria by which members of the class can be identified. While the criteria should bear a rational relationship to the common issues asserted by all class members, the criteria should not depend on the outcome of the litigation. It is not necessary that every class member be named or known. It is necessary, however, that any particular person’s claim to membership in the class be determinable by stated, objective criteria.

160In defining the persons who have a potential claim against the defendant, there must be a rational relationship between the class, the cause of action, and the common issues, and the class must not be unnecessarily broad or over-inclusive.⁶⁸ An over-inclusive class definition binds persons who ought not to be bound by judgment or by settlement, be that judgment or settlement favourable or unfavorable.⁶⁹ The rationale for avoiding over-inclusiveness is to ensure that litigation is confined to the parties joined by the claims and the common issues that arise.⁷⁰ The class should not be defined wider than necessary, and where the class could be defined more narrowly, the court should either disallow certification or allow certification on condition that the definition of the class be amended.⁷¹ A proposed class definition, however, is not overbroad because it may include persons who ultimately will not have a successful claim against the defendants.⁷²

161The Sanchez Defendants submitted that the class definition in the immediate case was overbroad. First, they submitted that the class should be limited to those who did not a receive a letter in 2004 that disclosed the Sanchez’s interests in IPS. Second, they submitted that any class definition should be narrowed by virtue of the application of the appropriate limitation period in Ontario. They submit that since class members were advised orally of the Sanchezes’ interests in IPS when they invested, that is the date of the commencement of the running of the limitation period, and thus the class should be limited to those who first invested in the IPS Promissory Notes on or after February 23, 2015, which is two years before Ms. Boal commenced her proposed class action.

162In some cases, but not this one, it is possible to apply limitation periods in determining what is an appropriate class definition. In the immediate case, it is not clear when the cause of action for breach of fiduciary duty, knowing assistance, knowing receipt, oppression and breach of contract commenced. It appears to me, that in the immediate case, the matter of limitation period defences would and could be addressed, if at all, at individual issues determinations if the action had otherwise been certifiable. As noted above, a proposed class definition is not overbroad because it may include persons who ultimately will not have a successful claim against the defendants.

163I conclude that Ms. Boal’s action satisfies the identifiable class criterion.

I. Common Issues Criterion

1. General Principles

164The third criterion for certification is the common issues criterion. For an issue to be a common issue, it must be a substantial ingredient of each class member's claim and its resolution must be necessary to the resolution of each class member's claim.⁷³ The underlying foundation of a common issue is whether its resolution will avoid duplication of fact-finding or legal analysis of an issue that is a substantial ingredient of each class member’s claim and thereby facilitate judicial economy and access to justice.⁷⁴ In Pro-Sys Consultants Ltd. v. Microsoft Corporation,⁷⁵ the Supreme Court of Canada describes the commonality requirement as the central notion of a class proceeding which is that individuals who have litigation concerns in common ought to be able to resolve those common concerns in one central proceeding rather than through an inefficient multitude of repetitive proceedings.

165All members of the class must benefit from the successful prosecution of the action, although not necessarily to the same extent. The answer to a question raised by a common issue for the plaintiff must be capable of extrapolation, in the same manner, to each member of the class.⁷⁶

166An issue is not a common issue if its resolution is dependent upon individual findings of fact that would have to be made for each class member.⁷⁷ Common issues cannot be dependent upon findings which will have to be made at individual trials, nor can they be based on assumptions that circumvent the necessity for individual inquiries.⁷⁸

167Commonality is a substantive fact that exists on the evidentiary record or it does not, and commonality is not to be semantically manufactured by overgeneralizing; i.e., by framing the issue in general terms that will ultimately break down into issues to be resolved by individual inquiries for each class member.⁷⁹ In Rumley v. British Columbia,⁸⁰ Chief Justice McLachlin stated that an issue would not satisfy the common issues test if it was framed in overly broad terms; she stated:

[….] It would not serve the ends of either fairness or efficiency to certify an action on the basis of issues that are common only when stated in the most general terms. Inevitably such an action would ultimately break down into individual proceedings. That the suit had initially been certified as a class action could only make the proceeding less fair and less efficient.

168However, the commonality requirement does not mean that an identical answer is necessary for all the members of the class, or even that the answer must benefit each of them to the same extent; it is enough that the answer to the question does not give rise to conflicting interests among the members; success for one member must not result in failure for another.⁸¹

169The common issue criterion presents a low bar.⁸² An issue can be a common issue even if it makes up a very limited aspect of the liability question and even though many individual issues remain to be decided after its resolution.⁸³ Even a significant level of individuality does not preclude a finding of commonality.⁸⁴A common issue need not dispose of the litigation; it is sufficient if it is an issue of fact or law common to all claims and its resolution will advance the litigation.⁸⁵

2. Breach of Fiduciary Duty

170For the reasons expressed above in the discussion of the cause of action criterion, Ms. Boal’s action based on breach of fiduciary duty does not present any common issues and does not satisfy the common issues criterion.

3. Knowing Assistance and Knowing Receipt

171For the reasons expressed above in the discussion of the cause of action criterion, Ms. Boal’s action based on knowing assistance and knowing receipt do not present any common issues and do not satisfy the common issues criterion.

172Further and in any event, the proposed knowing assistance and knowing receipt causes of action against all the Defendants are ancillary or secondary to the breach of fiduciary common issues against the Sanchez brothers and ICM and since those common issues want for commonality, so to do the proposed knowing assistance and knowing receipt causes of action want for commonality.

173Further, as discussed above in the context of the cause of action criterion there is no basis in fact proffered in evidence on this certification motion that:

a. IPS or The Savel Corporation had actual knowledge, including willful blindness or recklessness, that all the putative Class Members were the beneficiaries of a fiduciary relationship or that all the Class Members were the victims of misconduct; and

b. IPS or The Savel Corporation did anything to assist in the alleged wrongdoings of the Sanchez brothers.

174In other words, in addition to a want of commonality, there is no basis in fact for concluding that the proposed common issues exist. I appreciate that the no-basis-in-fact test sets a much lower standard than proof on the balance of probabilities, and I appreciate that a certification motion is not a merits determination, but there still must be a factual basis and as was the case with respect to the existence of a class wide fiduciary duty, Ms. Boal’s argument is misconceived by reasoning backward from a desired result to a factual premise.

175The subjective knowledge required to be proven for knowing assistance and the objective knowledge required to be proven for knowing receipt cannot be inferred from facts that because the defendants could have made inquiries about the existence of a fiduciary relationship and about misconduct of the fiduciary, the defendants should have made inquiries. This “could-should” inference is to read both a fault based wrong and also a wrong in equity backwards. In the immediate case, for IPS and The Savel Corporation there is no pleaded or proven material fact that put these defendants on notice that would make it legally or morally wrong to not make inquiries.

176I, therefore, conclude that the knowing assistance and knowing receipt causes of action do not satisfy the common issues criterion.

4. Breach of Contract

177Above, I concluded that from a pleadings’ perspective, Ms. Boal’s breach of contract claim satisfies the cause of action and I foreshadowed my conclusion that the claim, however, does not satisfy the common issues criterion and the preferable procedure criterion.

178The explanation begins by observing that from the perspective of the certification criteria, Ms. Boal’s breach of contract claim is both challenging and problematic. Her breach of contract claim is based on the breach of four alleged implied terms of the IPS Promissory Notes. In turn, the alleged implied terms are based on oral and written statements allegedly made by the Sanchez brothers and other ICM representatives.

179From a class actions’ perspective this pleading of breach of contract is both challenging and also problematic because what individual Class Members were told is not a common phenomenon. While there are exceptions where implied terms can be found to be common across a class, common issues relating to implied terms generally are not appropriate for certification where the existence of an implied term depends on an examination of the circumstances of the individual contract made with each Class Member.⁸⁶

180In the immediate case, the want of commonality and preferability is heightened and extreme in the immediate case because:

a. it would be an individual issue and not a common issue as to what was said to each putative Class Member about the IPS Promissory Notes or about IPS’s business,

b. it would be an individual and not a common issue as to whether the statement made to the putative Class Member was a misrepresentation (i.e., not a promise of contractual weight), giving rise to a claim for damages or a statement with contractual weight, giving rise to a claim for damages for breach of contract,

c. regardless of the classification of the statements as representations or as implied contract terms, it would be an individual issue and not a common issue as to whether the parol evidence rule stood in the way of advancing a claim,

d. it is conceded that no damages were suffered by any Class Members, then

i. if the statement is classified as a misrepresentation that survived the parol evidence rule, no purpose would be served by an individual issues trial because damages are a constituent element of the cause of action and there are no damages in the immediate case, or

ii. if the individual statement is classified as a breach of contract term, little purpose would be served by an individual issues trial for nominal damages, which, in any event, would be an odd claim to advance given that the fundamental promises of the promissory note had been performed, and

e. whether a representation or a promise, a determination of liability in the immediate case would require individual issues trials, and there would be no basis for aggregate damages to be a common issue.⁸⁷

181In short, I conclude that Ms. Boal’s breach of contract claim does not satisfy the common issues or the preferable procedure criteria.

5. Oppression

182Above, I concluded that from a pleadings’ perspective, Ms. Boal’s oppression claim satisfies the cause of action and I foreshadowed my conclusion that the claim, however, does not satisfy the common issues criterion and the preferable procedure criterion.

183The analysis and explanation here can be very brief by noting two aspects of the oppression claim.

a. First, Ms. Boal pleaded that “IPS’s acts and omissions caused the Class Members to lose their investments in IPS Notes.” It is now known that there is no basis in fact for that allegation and the truth is that the opposite is true.

b. Second, as pleaded, Ms. Boal’s oppression remedy claim is entirely derivative and is a progeny of her claim of a breach of implied terms, just discussed in these Reasons for Decision.

184Thus, the plight of the oppression remedy claim is no better and perhaps worse than that of the breach of contract claim. Thus, for similar reasons, I conclude that the oppression remedy claim does not satisfy the common issues and the preferable procedure criteria.

6. Piercing the Corporate Veil

185Given the above conclusions, it is not necessary to address whether the proposed common issues associated with piercing the corporate veil are certifiable. Standing alone, they would not in any event justify a class proceeding.

7. Punitive Damages

186Given the above conclusions, it is not necessary to address whether the proposed common issues associated with punitive damages are certifiable. Standing alone, they would not in any event justify a class proceeding.

8. Constructive Trust, Equitable Lien, Accounting & Disgorgement, and Tracing

187Given the above conclusions, it is not necessary to address whether the proposed common issues associated with constructive trust, equitable lien, accounting and disgorgement and tracing are certifiable. Standing alone, they would not in any event justify a class proceeding.

J. Preferable Procedure Criterion

1. General Principles

188Under the Class Proceedings Act, 1992, the fourth criterion for certification is the preferable procedure criterion. Preferability captures the ideas of: (a) whether a class proceeding would be an appropriate method of advancing the claims of the class members; and (b) whether a class proceeding would be better than other methods such as joinder, test cases, consolidation, and any other means of resolving the dispute.⁸⁸

189In AIC Limited v. Fischer,⁸⁹ the Supreme Court of Canada emphasized that the preferability analysis must be conducted through the lens of judicial economy, behaviour modification, and access to justice. Justice Cromwell stated that access to justice has both a procedural and substantive dimension. The procedural aspect focuses on whether the claimants have a fair process to resolve their claims. The substantive aspect focuses on the results to be obtained and is concerned with whether the claimants will receive a just and effective remedy for their claims if established.

190Thus, for a class proceeding to be the preferable procedure for the resolution of the claims of a given class, it must represent a fair, efficient, and manageable procedure that is preferable to any alternative method of resolving the claims.⁹⁰ Whether a class proceeding is the preferable procedure is judged by reference to the purposes of access to justice, behaviour modification, and judicial economy and by taking into account the importance of the common issues to the claims as a whole, including the individual issues.⁹¹

191To satisfy the preferable procedure criterion, the proposed representative plaintiff must show some basis in fact that the proposed class action would: (a) be a fair, efficient and manageable method of advancing the claim; (b) be preferable to any other reasonably available means of resolving the class members' claims; and (c) facilitate the three principal goals of class proceedings; namely: judicial economy, behaviour modification, and access to justice.⁹²

2. Analysis and Discussion

192The absence of productive common issues entails that the proposed class action is not fair, efficient, and manageable nor useful. It is axiomatic that if there are no common issues, then there is no basis-in-fact for a class action satisfying the preferable procedure criterion.⁹³ The preferable procedure criterion is not satisfied in the case at bar.

K. Representative Plaintiff Criterion

193The fifth and final criterion for certification as a class action is that there is a representative plaintiff who would adequately represent the interests of the class without conflict of interest and who has produced a workable litigation plan. The representative plaintiff must be a member of the class asserting claims against the defendant, which is to say that the representative plaintiff must have a claim that is a genuine representation of the claims of the members of the class to be represented or that the representative plaintiff must be capable of asserting a claim on behalf of all of the class members as against the defendant.⁹⁴

194Had the other certification criterion been satisfied, I would have found Ms. Boal to have satisfied the Representative Plaintiff criterion.

L. Conclusion

195For the above reasons, the certification motion is dismissed.

196If the parties cannot agree about the matter of costs, they may make submissions in writing beginning with the Defendants’ submissions within twenty days from the release of these Reasons for Decision, followed by Ms. Boal’s submissions within a further twenty days.

Perell, J.

Footnotes

1. 1S.O. 1992, c. 6.
2. 2R.S.O. 1990, c. B 16.
3. 3IPS accepts clients pursuant to stringent underwriting and due diligence criteria. Typically, IPS advances to the client 90% of the face value of the invoices and then charges a fee of 0.10% per day until the invoice is paid by the account receivable debtor. Any balance remaining after the invoice is paid is remitted back to the client. IPS registers a security interest in all assigned invoices under the PPSA It obtains a personal guarantee from a manager of the client. IPS registers a security interest in all assigned invoices under the PPSA It obtains a personal guarantee from a manager of the client.
4. 4Boal v. International Capital Management Inc., 2018 ONSC 2275. Boal v. International Capital Management Inc., 2018 ONSC 3646 (costs decision).
5. 5Sauer v. Canada (Attorney General), 2008 CanLII 43774 (ON SC), [2008] O.J. No. 3419 at para. 14 (S.C.J.), leave to appeal to Div. Ct. refused, 2009 CanLII 2924 (ON SCDC), [2009] O.J. No. 402 (Div. Ct.).
6. 6Hollick v. Toronto (City), 2001 SCC 68 at para. 16.
7. 7Hollick 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.
8. 8Hollick v. Toronto (City), 2001 SCC 68 at para. 22.
9. 9Williams v. Canon Canada Inc., 2011 ONSC 6571, aff’d 2012 ONSC 3992 (Div. Ct.); Ernewein v. General Motors of Canada Ltd., 2005 BCCA 540 (C.A.), leave to appeal to S.C.C. ref’d, [2005] S.C.C.A. No. 545; Chadha v. Bayer Inc.(2003), 2003 CanLII 35843 (ON CA), 63 O.R. (3d) 22 (C.A.), leave to appeal to S.C.C. ref’d [2003] S.C.C.A. No. 106; Taub v. Manufacturers Life Insurance Co., 1998 CanLII 14853 (ON SC), 40 O.R. (3d) 379 (Gen. Div.), aff’d (1999), 1999 CanLII 19922 (ON SC), 42 O.R. (3d) 576 (Div. Ct.).
10. 102013 SCC 57 at para. 103. See also Batten v. Boehringer Ingelheim (Canada) Ltd., 2017 ONSC 6098 at para. 19 (Div. Ct.).
11. 11Hollick v. Toronto (City), 2001 SCC 68, [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) 1998 CanLII 14853 (ON SC), 40 O.R. (3d) 379 (Gen. Div.), aff’d (1999), 1999 CanLII 19922 (ON SC), 42 O.R. (3d) 576 (Div. Ct.).
12. 12Cloud v. Canada (2004), 2004 CanLII 45444 (ON CA), 73 O.R. (3d) 401 at para. 50 (C.A.), leave to appeal to the S.C.C. ref'd, [2005] S.C.C.A. No. 50, rev'g (2003), 2003 CanLII 72353 (ON SCDC), 65 O.R. (3d) 492 (Div. Ct.); Hollick v. Toronto (City), 2001 SCC 68 at paras. 16-26.
13. 13Martin v. Astrazeneca Pharmaceuticals PLC, 2012 ONSC 2744; Williams v. Canon Canada Inc., 2011 ONSC 6571, aff’d 2012 ONSC 3992 (Div. Ct.); Schick v. Boehringer Ingelheim (Canada) Ltd., 2011 ONSC 63 at para.13; Ernewein v. General Motors of Canada Ltd. 2005 BCCA 540 (C.A.), leave to appeal to S.C.C. ref’d, [2005] S.C.C.A. No. 545.
14. 14Griffin v. Dell Canada Inc., 2009 CanLII 3557 (ON SC), [2009] O.J. No. 418 at para. 76 (S.C.J.).
15. 15Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2013 SCC 57; McCracken v. CNR Co., 2012 ONCA 445.
16. 16Singer v. Schering-Plough Canada Inc., 2010 ONSC 42 at para. 140; Fresco v. Canadian Imperial Bank of Commerce, 2009 CanLII 31177 (ON SC), [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.).
17. 17Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2013 SCC 57 at para. 110.
18. 18Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2013 SCC 57 at para. 102.
19. 191990 CanLII 90 (SCC), [1990] 2 S.C.R. 959.
20. 202106701 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 (S.C.J.); Dawson v. Rexcraft Storage & Warehouse Inc., 1998 CanLII 4831 (ON CA), [1998] O.J. No. 3240 at para. 10 (C.A.).
21. 21176560 Ontario Ltd. v. Great Atlantic & Pacific Co. of Canada Ltd. (2002), 2002 CanLII 6199 (ON SC), 62 O.R. (3d) 535 at para. 19 (S.C.J.), leave to appeal granted, 2003 CanLII 36393 (ON SCDC), 64 O.R. (3d) 42 (S.C.J.), aff'd (2004), 2004 CanLII 16620 (ON SCDC), 70 O.R. (3d) 182 (Div. Ct.); Anderson v. Wilson (1999), 1999 CanLII 3753 (ON CA), 44 O.R. (3d) 673 at p. 679 (C.A.), leave to appeal to S.C.C. ref'd, [1999] S.C.C.A. No. 476.
22. 22Dawson v. Rexcraft Storage & Warehouse Inc. (1998), 1998 CanLII 4831 (ON CA), 164 D.L.R. (4th) 257 (Ont. C.A.).
23. 23Temelini v. Ontario Provincial Police (Commissioner) (1990), 1990 CanLII 7000 (ON CA), 73 O.R. (2d) 664 (C.A.).
24. 24Johnson v. Adamson (1981), 1981 CanLII 1667 (ON CA), 34 O.R. (2d) 236 (C.A.), leave to appeal to the S.C.C. refused (1982), 35 O.R. (2d) 64n.
25. 25Silver v. Imax Corp., 2009 CanLII 72334 (ON SC), [2009] O.J. No. 5585 (S.C.J.) at para. 20; Silver v. DDJ Canadian High Yield Fund, 2006 CanLII 21058 (ON SC), [2006] O.J. No. 2503 (S.C.J.).
26. 262011 SCC 42 at paras. 17-25.
27. 27Cloud v. Canada (Attorney General) (2004), 2004 CanLII 45444 (ON CA), 73 O.R. (3d) 401 at para. 41 (C.A.), leave to appeal to the S.C.C. refused, [2005] S.C.C.A. No. 50, rev'g, (2003), 2003 CanLII 72353 (ON SCDC), 65 O.R. (3d) 492 (Div. Ct.); Hollick v. Toronto (City), 2001 SCC 68 at para. 25; Abdool v. Anaheim Management Ltd. (1995), 1995 CanLII 5597 (ON SCDC), 21 O.R. (3d) 453 at p. 469 (Div. Ct.).
28. 28Deluca v. Canada (AG), 2016 ONSC 3865; Losier v. Mackay, Mackay & Peters Ltd., 2009 CanLII 43651 (ON SC), [2009] O.J. No. 3463 at paras. 39-40 (S.C.J.), aff’d 2010 ONCA 613, leave to appeal ref’d [2010] SCCA 438; Grenon v. Canada Revenue Agency, 2016 ABQB 260 at para. 32; Merchant Law Group v. Canada Revenue Agency, 2010 FCA 184 at para. 34.
29. 29Galambos v. Perez, 2009 SCC 48 at para. 37; Hodgkinson v. Simms, 1994 CanLII 70 (SCC), [1994] 3 S.C.R. 377; Lac Minerals Ltd. v. International Corona Resources Ltd., 1989 CanLII 34 (SCC), [1989] 2 S.C.R. 574; Frame v. Smith, 1987 CanLII 74 (SCC), [1987] 2 S.C.R. 99; Canadian Aero Services Ltd. v. O'Malley, 1973 CanLII 23 (SCC), [1974] S.C.R. 592 at p. 616.
30. 30Baxter v. Canada (Attorney General) (2006), 2006 CanLII 41673 (ON SC), 83 O.R. (3d) 481 at para. 22 (S.C.J.).
31. 31Hunt v. TD Securities Inc., 2003 CanLII 3649 (ON CA), [2003] O.J. No. 3245 (C.A.); Chesebrough v. Willson, 2002 CanLII 7499 (ON CA), [2002] O.J. No. 4299 (C.A.)
32. 32Ridel v. Cassin, 2013 ONSC 2279, affd. 2014 ONCA 763; Junko v. Canaccord Capital, Toles, 2012 ONSC 6966; 820823 Ontario Ltd. v. Kagan, [2003] O.J. No. 3425 (S.C.J.); Zraik v. Levesque Securities Inc. 2001 CanLII 21223 (ON CA), [2001] O.J. No. 5083 (C.A.).
33. 331994 CanLII 70 (SCC), [1994] 3 S.C.R. 377 at p. 381.
34. 34(1928), 164 N.E. 545 at p. 546 (N.Y.C.A.).
35. 35On the question of concurrent liability, see: Cadbury Schweppes Inc. v. FBI Foods Ltd., 1999 CanLII 705 (SCC), [1999] 1 S.C.R. 142; Hodgkinson v. Simms, 1994 CanLII 70 (SCC), [1994] 3 S.C.R. 377; Luscar Ltd. v. Pembina Resources Ltd. (1994), 1994 ABCA 356, 24 Alta. L.R. (3d) 305 (Alta. C.A.), leave to appeal to S.C.C. refused [1995] S.C.C.A. No. 6; Canson Enterprises Ltd. v. Broughton & Co., [1991] 3 S.C.R. 129.
36. 36Hub Financial Inc. v. Molinaro (2002), 2002 CanLII 49621 (ON SC), 26 B.L.R. (3d) 295 (Ont. S.C.J.); Wallace Welding Supplies Ltd. v. Wallace (1986), 1986 CanLII 7626 (ON SC), 8 C.P.C. (2d) 157 (Ont. H.C.J.); Investors Syndicate Ltd. v. Versatile Investments Inc. (1983), 1983 CanLII 1908 (ON CA), 42 O.R. (2d) 397 (C.A.); Bee Chemical Co. v. Plastic Paint & Finish Specialties Ltd. (1978), 1978 CanLII 4103 (ON SC), 41 C.P.R. (2d) 175; affd. 1979 CanLII 4551 (ON CA), 47 C.P.R. (2d) 133, leave to appeal to S.C.C. refused 30 N.R. 356n.
37. 371973 CanLII 23 (SCC), [1974] S.C.R. 592 at p. 616. See also Investors Syndicate Ltd. v. Versatile Investments Inc. (1983), 1983 CanLII 1908 (ON CA), 42 O.R. (2d) 397 (C.A.).
38. 381973 CanLII 23 (SCC), [1974] S.C.R. 592 at p. 605.
39. 39Frame v. Smith, 1987 CanLII 74 (SCC), [1987] 2 S.C.R. 99; Lac Minerals Ltd. v. International Corona Resources Ltd., 1989 CanLII 34 (SCC), [1989] 2 S.C.R. 574; Hodgkinson v. Simms, 1994 CanLII 70 (SCC), [1994] 3 S.C.R. 377; Galambos v. Perez, 2009 SCC 48; Alberta v. Elder Advocates of Alberta Society, 2011 SCC 24; Professional Institute of the Public Service of Canada v. Canada (Attorney General), 2012 SCC 71.
40. 402011 SCC 24 at para. 36.
41. 41(1987), 1987 CanLII 160 (BC SC), 11 B.C.L.R. (2d) 361 (S.C.) at p. 362. See also Jostens Canada Ltd. v. Gibsons Studio Ltd., 1997 CanLII 4056 (BC CA), [1998] 5 W.W.R. 403 (B.C.C.A.) at p. 412.
42. 42[1977] 3 All E.R. 129 at p. 230.
43. 431989 CanLII 34 (SCC), [1989] 2 S.C.R. 574.
44. 441989 CanLII 34 (SCC), [1989] 2 S.C.R. 574 at pp. 561–62. La Forest, J. notes that this logical fallacy was noted by Professor E.J. Weinrib in “The Fiduciary Obligation” (1975), 25 U.T.L.J. 1 at p. 5 and by Megarry, V-C. in Tito v. Waddell (No. 2), [1977] 3 All E.R. 129 at p. 232.
45. 451989 CanLII 34 (SCC), [1989] 2 S.C.R. 574 at p. 581.
46. 46See also Justices Sopinka and McLachlin, as she then was, in Hodgkinson v. Simms, 1994 CanLII 70 (SCC), [1994] 3 S.C.R. 377 at p. 463.
47. 472013 ONSC 6347.
48. 48Caja Paraguaya de Jubilaciones y Pensiones del Personal de Itaipu Binacional v. Obregon 2020 ONCA 412, revg. 2018 ONSC 5379; Caja Paraguaya de Jubilaciones y Pensiones del Personal de Itaipu Binacional v. Garcia, 2020 ONCA 124.; Christine DeJong Medicine Professional Corp. v. DBDC Spadina Ltd., 2019 SCC 30, adopting the dissenting reasons of Justice van Rensburg, 2018 ONCA 60; Paton Estate v. Ontario Lottery and Gaming Corporation (Fallsview Casino Resort and OLG Casino Brantford), 2016 ONCA 458; Bikur Cholim Jewish Volunteer Services v. Penna Estate, 2009 ONCA 196; Harris v. Leikin Group Inc., 2011 ONCA 790; Citadel General Assurance Co. v. Lloyds Bank Canada, 1997 CanLII 334 (SCC), [1997] 3 S.C.R. 805; Gold v. Rosenberg, 1997 CanLII 333 (SCC), [1997] 3 S.C.R. 767.
49. 49Christine DeJong Medicine Professional Corp. v. DBDC Spadina Ltd., 2018 ONCA 60 at para. 239, affd. 2019 SCC 30. P.M. Perell, "lntermeddlers or Strangers to the Breach of Trust or Fiduciary Duty" (1998) 21 Adv. Q 94.
50. 501993 CanLII 33 (SCC), [1993] 3 S.C.R. 787 at p. 608.
51. 51Caja Paraguaya de Jubilaciones y Pensiones del Personal de Itaipu Binacional v. Obregon 2020 ONCA 412 at para. 33; Christine DeJong Medicine Professional Corp. v. DBDC Spadina Ltd., 2018 ONCA 60 at para. 211, affd. 2019 SCC 30; Harris v. Leikin Group Inc., 2011 ONCA 790 at para. 8.
52. 52Caja Paraguaya de Jubilaciones y Pensiones del Personal de Itaipu Binacional v. Obregon 2020 ONCA 412 at para. 37-38; Bikur Cholim Jewish Volunteer Services v. Penna Estate, 2009 ONCA 196 at para. 43; Sansregret v. The Queen, 1985 CanLII 79 (SCC), [1985] 1 S.C.R. 570, at pp. 581-82, 584.
53. 53Belmont Finance Corp. Ltd. v. Williams Furniture Ltd., [1979] Ch. 250 (C.A.); Transamerica Life Insurance Co. v. Canada Life Assurance Co. (1996), 1996 CanLII 7979 (ON SC), 28 O.R. (3d) 423 (Ont. Gen. Div.).
54. 541993 CanLII 33 (SCC), [1993] 3 S.C.R. 787 at p. 608.
55. 55Caja Paraguaya de Jubilaciones y Pensiones del Personal de Itaipu Binacional v. Obregon 2020 ONCA 412, revg. 2018 ONSC 5379; Paton Estate v. Ontario Lottery and Gaming Corporation (Fallsview Casino Resort and OLG Casino Brantford), 2016 ONCA 458; Citadel General Assurance Co. v. Lloyds Bank of Canada, 1997 CanLII 334 (SCC), [1997] 3 S.C.R. 805; Canadian Pacific Airlines Ltd. v. Canadian Imperial Bank of Commerce (1987), 1987 CanLII 4146 (ON SC), 61 O.R. (2d) 233 (H.C.J.), aff’d (1990), 1990 CanLII 149 (SCC), 71 O.R. (2d) 63n (C.A.).
56. 56Caja Paraguaya de Jubilaciones y Pensiones del Personal de Itaipu Binacional v. Obregon 2020 ONCA 412 at para. 58, revg. 2018 ONSC 5379; Citadel General Assurance Co. v. Lloyds Bank of Canada, 1997 CanLII 334 (SCC), [1997] 3 S.C.R. 805 at para. 30; Air Canada v. British Columbia, 1989 CanLII 95 (SCC), [1989] 1 S.C.R. 1161, at pp. 1202-03.
57. 571997 CanLII 334 (SCC), [1997] 3 S.C.R. 805 at p. 434.
58. 581169822 Ontario Ltd. v. The Toronto-Dominion Bank, 2018 ONSC 1631 at paras. 132-138; Big X Holdings Inc. v. Royal Bank of Canada, 2015 NSSC 184 at para. 89; R. v. Sansregret, 1985 CanLII 79 (SCC), [1985] 1 S.C.R. 570 at para. 22.
59. 59Caja Paraguaya de Jubilaciones y Pensiones del Personal de Itaipu Binacional v. Obregon 2020 ONCA 412, revg. 2018 ONSC 5379.
60. 602018 ONCA 60 reversed 2019 SCC 30 but not on this point which was affirmed by the Supreme Court approving the dissenting judgment of Justice Van Rensburg
61. 61Stenzler v. TD Asset Management Inc. Inc., 2020 ONSC 111, leave to appeal to the Div. Ct., refd. 2020 ONSC 5987 (Div. Ct.).
62. 62In Commercial Union Life Assurance Co. of Canada v. John Ingle Insurance Group Inc. (2002), 2002 CanLII 45028 (ON CA), 61 O.