Court File and Parties

COURT FILE NO.: CV-16-561843CP DATE: 20220107 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Valerie Barkley and Ronald Beaupre Plaintiffs – and – Tier 1 Capital Management Inc., Dowarka Persaud, T1CM Principal Secured Mortgages Inc., Preeya Persaud, Patrick W. Jackson, John Lally, John G. Simmonds, J. Paul Fletcher, Fletcher & Crichlow LLP, Olympia Trust Company, KMJ & Associates Ltd., Robert W. Gowdy, Mondville Holdings Ltd., Nicholas Dookhie, Diane Chetram, John Doe and Jane Doe Defendants

Counsel: Kevin D. Sherkin for the Plaintiffs

Proceeding under the Class Proceedings Act, 1992

HEARD: In writing

PERELL, J.

REASONS FOR DECISION

A. Introduction

[1] The Plaintiffs Valerie Barkley and Ronald Beaupre lost their investment in what I shall label the River’s Edge Syndicated Mortgage. On October 6, 2016, pursuant to the Class Proceedings Act, 1992, they sued: John Lally, John G. Simmonds, Tier 1 Capital Management Inc., T1CM Principal Secured Mortgages Inc., Dowarka Persaud, Preeya Persaud, Patrick W. Jackson, J. Paul Fletcher, Fletcher & Crichlow LLP, Olympia Trust Company, KMJ & Associates Ltd., Robert W. Gowdy, Mondville Holdings Ltd., Nicholas Dookhie, Diane Chetram, John Doe, and Jane Doe.

[2] On June 19, 2017, Mr. Dookhie and Ms. Chetram were noted in default.

[3] By Order dated March 26, 2018, I granted certification against all the defendants except Mr. Dookhie, Ms. Chetram, John Doe, Jane Doe, Olympia Trust Company, KMJ & Associates Ltd., and Mr. Gowdy. See Barkley v. Tier 1 Capital Management Inc., 2018 ONSC 1956.

[4] By Order dated May 13, 2019, I certified the action as against Mr. Dookhie and Ms. Chetram for a subclass of 11 Class Members that included Ms. Barkley and Mr. Beaupre.

[5] Ms. Barkley and Mr. Beaupre now bring a motion for a default judgment against Mr. Dookhie and Ms. Chetram. They seek the following relief:

a. A judgment for $434,017.40. b. Pre- and post-judgment interest at the rate of 12% per year for seven of the 11 investors and 9% per year for four of the 11 investors (blended rate is 11.293% per year). c. In the alternative, pre-judgment interest at the rate of 12% per year for seven of the 11 investors and 9% per year for four of the 11 investors (blended rate is 11.293% per year) until the due date of the Syndicated Mortgage on April 8, 2015 and at the rate prescribed by the Courts of Justice Act thereafter and post-judgment interest at the rate prescribed by the Courts of Justice Act. d. In the further alternative, pre- and post-judgment interest at the rate prescribed by the Courts of Justice Act. e. Costs of the motion on a substantial indemnity scale.

[6] For the reasons that follow, the motion is granted. The subclass of 11 Class Members is awarded $434,017.40 with interest to be paid on the judgment: (a) at the rate of 12% for the seven Class Members who invested through Larry Smith; and (b) at the rate of 9% for the four Class Members who invested through Kishor Bhingaradia. The Plaintiffs may submit costs submissions within ten days of the release of these Reasons for Decision.

B. The Parties and Dramatis Personae

[7] Valerie Barkley resides in Athens, Ontario. Through a connection made by Larry Smith, Ms. Barkley invested $43,000 in the River’s Edge Syndicated Mortgage sold by Nicholas Dookhie and Diane Chetram.

[8] Ronald Beaupre resides in Jasper, Ontario. Through a connection made by Larry Smith, Mr. Beaupre invested $63,000 in the River’s Edge Syndicated Mortgage sold by Nicholas Dookhie and Diane Chetram.

[9] Larry Smith is an insurance agent and investment advisor with an office in Smith Falls, Ontario. Mr. Smith gave investment advice to the following Class Members: Valerie Barkley, Ronald Beaupre, Donna Cassell, Joan Cassell, Lynn Cassell, Karen Giles, and Ricky Murphy.

[10] Kishor Bhingaradia is a licensed mortgage agent and was formerly a licensed insurance agent. Mr. Bhingaradia gave investment advice to the following Class Members: Bhupendra Panchal, Chiragkumar Patel, Rachna Patel, and Ujeh Usoegbu.

[11] Carino & Lally Developments, formerly known as Michael Wade Construction Co. Ltd., was an Ontario corporation that was developing lands near the River’s Edge Golf and Country Club in Bancroft, Ontario. Carino & Lally Developments was the borrower in the syndicated mortgage that is the subject of this class action. The defendants John Doe and Jane Doe are placeholders for the shareholders of Carino & Lally Developments before the cancellation of that company’s articles of incorporation.

[12] John Lally and John G. Simmonds were the officers and directors of Carino & Lally Developments. Carino & Lally Developments’ articles of incorporation were cancelled on October 1, 2016.

[13] Michelle Mondville was the current or former girlfriend or spouse of Mr. Lally. She was the sole officer and director of Mondville Holdings Ltd. Mondville Holdings purchased the first mortgage on the River’s Edge Project lands.

[14] Tier 1 Capital Management Inc. (“Tier 1”) and T1CM Principal Secured Mortgages Inc. (“T1CM”) are related companies. They were the promoters for the syndicated mortgage. Tier 1, which is in the business of raising capital for real estate development, is incorporated under the laws of Canada. T1CM, which is a mortgage broker licensed under the Mortgage Brokerages, Lenders and Administrators Act, 2006 was incorporated under the laws of Ontario.

[15] Dowarka Persaud was an officer and director of Tier 1. Preeya Persaud was a director of T1CM, and she and Patrick W. Jackson were its principal brokers.

[16] Nicholas Dookhie and Diane Chetram are husband and wife. They were employees or sales agents of Tier 1 or T1CM. Subsequently, they owned and operated Truevest Financial Inc. in the financial services industry. Truevest Financial was in the business of marketing syndicated mortgages, including the River’s Edge Syndicated Mortgage.

[17] Paul Fletcher is an Ontario lawyer. He was designated, among other things, to be the trustee and administrator of the River’s Edge Syndicated Mortgage. Mr. Fletcher’s practice is in Locust Hill, Ontario. Fletcher & Crichlow LLP is a limited liability partnership operating Mr. Fletcher’s law practice.

[18] KMJ & Associates Ltd. operated a real estate appraisal firm in Newcastle, Ontario. Robert W. Gowdy was a licensed real estate appraiser employed by KMJ & Associates.

[19] Olympia Trust Company is a trust company incorporated under the laws of the Province of Alberta with a head office in Calgary.

[20] Ronald Butler is a licensed mortgage broker who has been active in the mortgage brokerage industry since 1996. In 2011, Mr. Butler started his own mortgage brokerage, Butler Mortgage Inc., that has placed over $7 billion in mortgages. He is knowledgeable about all types of mortgage lending – commercial, residential, private lending and “B” mortgages, where a borrower is not qualified for a regular bank mortgage. He is knowledgeable about the requirements of the Mortgage Brokerages, Lenders and Administrators Act, 2006 and about the standard of care and about the ethical and professional responsibilities of mortgage brokers.

C. Procedural and Evidentiary Background

[21] On October 6, 2016, Ms. Barkley commenced the class action by Notice of Action. She sued: John Lally, John G. Simmonds, Tier 1 Capital Management Inc., T1CM Principal Secured Mortgages Inc., Dowarka Persaud, Preeya Persaud, Patrick W. Jackson, J. Paul Fletcher, Fletcher & Crichlow LLP, Olympia Trust Company, KMJ & Associates Ltd., Robert W. Gowdy, Mondville Holdings Ltd., Nicholas Dookhie, Diane Chetram, John Doe, and Jane Doe.

[22] On November 3, 2016, Ms. Barkley filed her Statement of Claim.

[23] On June 19, 2017, Mr. Dookhie and Ms. Chetram were noted in default.

[24] On June 29, 2017, Ms. Barkley and Mr. Beaupre filed an Amended Statement of Claim to, among other things, add Mr. Beaupre as a Plaintiff.

[25] By Order dated March 26, 2018, I granted certification against all the defendants except Mr. Dookhie, Ms. Chetram, John Doe, Jane Doe, Olympia Trust Company, KMJ & Associates Ltd., and Mr. Gowdy. The Class was comprised of 43 investors in the River’s Edge Syndicated Mortgage. See Barkley v. Tier 1 Capital Management Inc., 2018 ONSC 1956.

[26] The class action settled against Mr. Fletcher and his law firm. These defendants paid $937,000, which was the limit of Fletcher’s professional indemnity insurance policy. After payment of legal fees, the settlement proceeds were distributed among the 43 Class Members.

[27] On May 13, 2019, the action was certified against Mr. Dookhie and Ms. Chetram.

[28] The certified common issues against Mr. Dookhie and Ms. Chetram are:

a. Did Dookhie and Chetram owe the Clients a duty of care? b. Did Dookhie and Chetram owe a fiduciary duty to the Clients? c. If Dookhie and Chetram owed the Clients a duty of care, did they meet the standard of care in selling mortgage investments to the Clients? d. Did the breach of the standard of care cause the clients to suffer damages? e. If Dookhie and Chetram owed the Clients a duty of care, did they make any misrepresentations to the Clients? f. Did the Clients reasonably rely upon these misrepresentations? g. Did these misrepresentations cause the Clients to suffer damages? h. If Dookhie and Chetram owed the Clients a fiduciary duty, did they breach that fiduciary duty in recommending the SMI to the Clients for investment? i. What damages did the Clients suffer? j. What is the appropriate rate of pre-judgment and post-judgment interest?

[29] In 2021, the Plaintiffs brought this motion for a default judgment. The motion was supported by:

• the affidavits of Valerie Barkley dated June 5, 2017 and March 5, 2021;
• the affidavits of Ronald Beaupre dated June 19, 2017 and March 5, 2021;
• the affidavit of Larry Smith dated March 5, 2021;
• the affidavit of Chirag Kumar Patel dated March 3, 2021;
• the affidavit of Kishor Bhingaradia dated March 4, 2021; and
• the affidavit of Ronald Butler dated March 3, 2021.

D. The Syndicated Mortgage Transaction

[30] In the early 2000s, Michael Wade Construction Co. Ltd. owned a development site near the River’s Edge Golf and Country Club in Bancroft, Ontario. In early 2011, Mr. Lally purchased the shares of Michael Wade Construction Co. Ltd., and he subsequently changed its name to Carino & Lally Developments.

[31] Carino & Lally Developments planned to develop the lands as a residential development known as the River’s Edge Project. The plan was to build 240 homes on 50-foot lots on lands beside the golf course.

[32] Mr. Lally approached Tier 1, which is in the business of raising capital for real estate developments, and T1CM, which is a mortgage broker, to raise financing for the River’s Edge Project.

[33] Tier 1, T1CM and Carino & Lally agreed that Tier 1 and T1CM would raise funds by way of a syndicated mortgage to be used to finance the development of the River’s Edge property.

[34] In early 2013, Tier 1 and T1CM prepared a marketing brochure with the following representations: (a) Mr. Lally brought years of experience to the project; (b) the borrower was to be Carino & Lally, the developer of the project; (c) a Bare Trustee (Lawyer) would be the formal lender to Carino & Lally and hold the syndicated mortgage in trust for all investors; (d) $1,575,000 was to be raised; (e) the term of the mortgage was two years; (f) interest rate was 9% per year (subsequently increased to 12% for some investors); (g) appraised current value of the land was $5.5 million; (h) independent legal advice was to be offered to investors at no additional cost; (i) investments were RRSP eligible (and eligible for other registered plans); (j) site plan approval had been obtained; (k) the mortgage would be a second mortgage; (l) the loan to appraised value (“LTV”) of the land was 65%; (m) due diligence had been performed by Tier 1; (n) the loan would be monitored by Tier 1 and The Glynn Group; and (o) Tier 1 makes it possible for investors’ capital to be secure while producing substantially above average returns.

[35] In short, the marketing brochure represented the investment in the River’s Edge Syndicated Mortgage as a remunerative low-risk investment in real estate.

[36] Mr. Fletcher, as trustee, entered into a loan agreement with Carino & Lally dated April 8, 2013 for $1,850,000. The term of the Agreement was two years. The Agreement was amended on June 10, 2013 whereby Carino & Lally agreed to increase the rate of interest to be paid to some of the investors from 9% to 12% per annum.

[37] The syndicated mortgage was registered on title to the lands on April 8, 2013. It was a second mortgage ranking behind the $4,750,000 first mortgage held by Mondville Holdings.

[38] $1,850,000 was raised from 43 different investors, many of whom invested funds from their Registered Retirement Savings Plans or other registered plans. In the case of RRSP investors and investors using other registered plans, Olympia acted as a trustee.

[39] Of the 43 different investors, 11 investors dealt with Mr. Dookhie and Ms. Chetram.

[40] Of the 11 investors that dealt with Mr. Dookhie and Ms. Chetram, four investors were referred by Kishor Bhingaradia, who only provided them with the information he had received from Mr. Dookhie and Ms. Chetram.

a. In 2013, after seeing an advertisement placed by Tier 1, Mr. Bhingaradia contacted Tier I, and he was connected to Ms. Chetram. She told him she sold Tier 1 investments through Truevest Financial. Mr. Bhingaradia was unaware that Mr. Dookhie and Ms. Chetram had been terminated by Tier 1. b. Ms. Chetram told Mr. Bhingaradia that he could refer clients to Truevest Financial for investment in a syndicated mortgage earning a strong 9% rate of interest plus a bonus and he would receive a referral commission for the introduction to Truevest. c. Mr. Bhingaradia met with Mr. Dookhie and Ms. Chetram. The three discussed syndicated mortgages and Mr. Dookhie and Ms. Chetram asked Mr. Bhingaradia to set up meetings with his clients to present them with syndicated mortgage investment opportunities. d. Mr. Bhingaradia understood that Mr. Dookhie and Ms. Chetram were licensed mortgage brokers or agents in Ontario. e. Mr. Bhingaradia signed a Referral Agreement with Truevest Financial dated July 31, 2013. f. Mr. Dookhie and Ms. Chetram provided Mr. Bhingaradia with the brochure for the River’s Edge Syndicated Mortgage. g. Mr. Dookhie and Ms. Chetram told Mr. Bhingaradia that the River’s Edge property was already under construction and was expected to be complete within two years. h. Based on their discussions, Mr. Bhingaradia concluded that the River’s Edge Syndicated Mortgage was an investment that would be of interest to his clients, who were looking for safe investments without the risk of the stock market. i. Mr. Bhingaradia introduced clients to the River’s Edge Syndicated Mortgage. He told them that if they were interested, he would introduce them to the experts, Mr. Dookhie and Ms. Chetram, who could provide more information. Mr. Bhingaradia provided the clients with a copy of the marketing brochure. j. If the client wished to proceed, Mr. Bhingaradia sent their contact information to Mr. Dookhie and Ms. Chetram. k. At one meeting, Mr. Bhingaradia and Bhupendra Panchal met with Mr. Dookhie and Ms. Chetram. l. At another meeting Mr. Bhingaradia and Chirag and Rachna Patel met with Mr. Dookhie and Ms. Chetram. m. During the course of these meetings, Mr. Dookhie and Ms. Chetram would telephone Mr. Fletcher, who would provide Mr. Bhingaradia’s clients with independent legal advice. During the course of these meetings, the documents to participate in the River’s Edge Syndicated Mortgage were signed. If the investment was to be made through a registered plan, an account was opened with Olympia Trust with funds to be transferred from the Client’s current registered plan to a plan at Olympia Trust. n. Mr. Bhingaradia was not present at the meeting between Ujeh Usoegbu, and Mr. Dookhie and Ms. Chetram but Mr. Bhingaradia was told by Ms. Chetram that it was identical to the previous meetings. o. Collectively, Bhupendra Panchal, Chirag Patel, Rachna Patel and Ujeh Usoegbu invested $207,200 in the River’s Edge Syndicated Mortgage. p. None of Mr. Bhingaradia’s clients were ever asked to provide a KYC (know your client) form. There were no discussions about their respective investment risk tolerance. None of the clients was given the Investor/Lender Disclosure form mandated by the Financial Services Commission of Ontario (“FSCO”) pursuant to the Mortgage Brokerages, Lenders and Administrators Act, 2006. q. None of Mr. Bhingaradia’s clients would have made their investment in the River’s Edge Syndicated Mortgage but for the information provided to them from Mr. Dookhie and Ms. Chetram. r. By mid-2014, Mr. Smith learned that the interest payments on the syndicated mortgage had stopped. He contacted Mr. Dookhie and Ms. Chetram and was told that the accruing interest would be paid on the maturity of the loan.

[41] However, by the fall of 2014, it was apparent that River’s Edge was in serious financial difficulty. The first mortgage had gone into default.

[42] Of the 11 investors that dealt with Mr. Dookhie and Ms. Chetram, seven investors were referred by Larry Smith, who only provided the investors with the information he had received from Mr. Dookhie and Ms. Chetram.

a. Mr. Smith met Mr. Dookhie in 2012 and was introduced to the River’s Edge Syndicated Mortgage investment. Mr. Smith believed that Mr. Dookhie and Ms. Chetram were licensed to do business as mortgage brokers under the Mortgage Brokerages, Lenders and Administrators Act, 2006. b. Mr. Dookhie reviewed the marketing brochure with Mr. Smith. c. Mr. Smith told some of his clients about the syndicated mortgage, and he provided them copies of the marketing brochure. d. If the client was interested in proceeding with the investment, then a meeting was arranged between the client and Mr. Fletcher’s at his law office, where the documentation for the investment was signed. Mr. Smith attended the meetings. e. Seven of Mr. Smith’s clients were interested in the investment. They were promised 12% interest on their investments. f. Collectively, Ms. Barkley, Mr. Beaupre, Donna Cassell, Joan Cassell, Lynn Cassell, Karen Giles and Rick Murphy invested $672,000. g. None of Mr. Smith’s clients ever met with or spoke to Mr. Dookhie or Ms. Chetram. None were ever asked to provide a KYC (know your client) form. There were no discussions about their respective investment risk tolerance. None of the clients was given the Investor/Lender Disclosure form mandated by the Financial Services Commission of Ontario (“FSCO”) pursuant to the Mortgage Brokerages, Lenders and Administrators Act, 2006. h. None of Mr. Smith’s clients would have made their investment in the River’s Edge Syndicated Mortgage but for the information provided to them from Mr. Dookhie and Ms. Chetram. i. By mid-2014, Mr. Smith learned that the interest payments on the syndicated mortgage had stopped. He contacted Mr. Dookhie and Ms. Chetram and was told that the accruing interest would be paid on the maturity of the loan. j. However, by the fall of 2014, it was apparent that River’s Edge was in serious financial difficulty. The first mortgage had gone into default.

[43] In September 2014, the first mortgage on the River’s Edge project lands went into default and notice of sale proceedings were commenced in October 2014.

[44] On October 8, 2014, the Syndicated Mortgage went into default. No payments have been received since that date.

[45] The following chart summarizes the investments, amounts recovered and amounts still owing to the 11 class members who received investment advice from Mr. Smith and Mr. Bhingaradia and made investments through Mr. Dookhie and Ms. Chetram.

Name:	Investment:	Settlement:	Balance Owing:
Barkley, Valerie	43,000.00	21,773.03	21,226.97
Beaupre, Ronald	63,000.00	31,900.03	31,099.97
Cassell, Donna	$60,000.00	30,380.98	29,619.02
Cassell, Joan	$200,000.00	$101,269.93	$98,730.07
Cassell, Lynn	136,000.00	68,863.55	67,136.45
Giles, Karen	120,000.00	60,761.96	59,238.04
Murphy, Ricky	50,000.00	25,317.48	24,682.52
Panchal, Bhupendrakumar	80,000.00	40,507.97	39,492.03
Patel, Chiragkumar	25,100.00	12,709.38	12,390.62
Patel, Rachna	27,000.00	13,671.44	13,328.56
Usoegbu, Ujeh	50,000.00	25,317.48	24,682.52
Totals	$879,200.00	$445,182.60	$434,017.40

[46] The chart does not include any interest, fees charged by Olympia Trust, or legal fees.

E. The Expert Evidence of Ronald Butler

[47] Mr. Butler was proffered as an expert witness to opine about the marketplace of syndicated mortgage investments and to provide an expert opinion about the standard of care and professional responsibilities of mortgage brokers.

[48] Mr. Butler deposed that although syndicated mortgages are marketed as safe and secure investments paying high interest rates of 8% or more, anyone with basic knowledge of the mortgage industry would know that they are not safe and secure but involve a considerable investment risk.

[49] Mr. Butler deposed that the sale of syndicated mortgages was very remunerative for the sales agents who earned high commissions. He said starting around 2009, as the sale of syndicated mortgages grew exponentially, many non-licensed entities and individuals began promoting the sale of these mortgages contrary to the provisions of the Mortgage Brokerages, Lenders and Administrators Act, 2006.

[50] It is not clear from the evidence whether Mr. Dookhie and Ms. Chetram were licensed mortgage brokers. Based on the facts in this action, it was Mr. Butler’s opinion that, in any event, Mr. Dookhie and Ms. Chetram did not meet the standard of care to be expected of an individual selling mortgage investments in Ontario.

a. Mr. Butler opined that if Mr. Dookhie and Ms. Chetram were licensed mortgage brokers or agents, they had a legal obligation to sell mortgages to members of the public in accordance with the provisions of the Mortgage Brokerages, Lenders and Administrators Act, 2006 and its regulations. b. Mr. Butler opined that if Mr. Dookhie and Ms. Chetram were not licensed by FSCO, they were limited by the Act in what they could do with respect to syndicated mortgages. While the Act does allow persons to refer investors to licensed parties, a referring party may not do more – they may not sell the mortgage to the investor without being licensed under the Act. c. Mr. Butler opined that since Mr. Dookhie and Ms. Chetram were marketing and promoting the purchase of syndicated mortgages they were trading/dealing with mortgages and had to be licensed by FSCO. d. Mr. Butler opined that mortgage brokers have a duty to understand the mortgage investments they are selling to understand its attributes and risks and they must carry out due diligence before promoting an investment. e. Mr. Butler opined that mortgage brokers have a duty to understand the clients’ financial situation to offer proper advice on investments including understanding the client’s risk tolerance and must ensure that any investment in a mortgage is suitable for the investor having regards to his or her individual circumstances. f. Mr. Butler opined that a mortgage broker must make significant disclosure to the investors in mortgages setting out the material risks and other important information. He said the investor must acknowledge in writing that they received this information. g. It was Mr. Butler’s opinion that Mr. Dookhie and Ms. Chetram failed to meet their duties as mortgage brokers or agents because: i. they did not perform due diligence with respect to the River’s Edge Syndicated Mortgage; ii. had they performed due diligence, they would have had to conclude that the River’s Edge Syndicated Mortgage was a risky investment not suitable for Mr. Smith’s and Mr. Bhingaradia’s clients; iii. they did not give the investors the required disclosure including information about material risks as required by the Mortgage Brokerages, Lenders and Administrators Act, 2006 and its regulations; iv. they misrepresented the River’s Edge Syndicated Mortgage as a safe and secure investment; and v. they did not have the investors complete any KYC forms or make any inquiries to inform themselves about the investor’s financial circumstances, objectives, and tolerance for risk. h. It was Mr. Butler’s opinion that had Mr. Dookhie and Ms. Chetram met the standard of care required of a mortgage broker, Mr. Smith’s and Mr. Bhingaradia’s clients would not have invested in the River’s Edge Syndicated Mortgage.

F. Discussion and Analysis

[51] Under rule 19.02(1)(a), a defendant who has been noted in default is deemed to admit the truth of all allegations made in the statement of claim. However, a plaintiff is not entitled to judgment merely because the facts are deemed to be admitted; the pleaded facts must entitle the plaintiff to the judgment sought. Because the defendant is deemed to have admitted the allegations of fact made in the statement of claim, if the deemed admissions are sufficient to establish liability, it is not proper for the court to enter into an inquiry about liability; the judge should confine himself or herself to determining the quantum of damages. See Nikore v. Jarmain Investment Management Inc., 2009 ONSC 46655, at paras. 4-20; Salimijazi v. Pakjou, 2009 ONSC 17354, at paras. 9-17; Umlauf v. Umlauf, 2001 ONCA 24068.

[52] The causes of action alleged against Mr. Dookhie and Ms. Chetram are grounded in negligence, Transamerica Life Insurance Co. of Canada v. Hutton, [2000] O.J. No. 2240 (S.C.J.); St. Louis v. CIBC Mortgages Inc., 2004 ONSC 34441, negligent misrepresentation and breach of fiduciary duty. St. Louis v. CIBC Mortgages Inc., 2004 ONSC 34441.

[53] Based on the statement of claim and on the evidentiary record, I would answer the common issues questions as follows:

a. Did Dookhie and Chetram owe the Clients a duty of care? - yes b. Did Dookhie and Chetram owe a fiduciary duty to the Clients? - yes c. If Dookhie and Chetram owed the Clients a duty of care, did they meet the standard of care in selling mortgage investments to the Clients? - no d. Did the breach of the standard of care cause the clients to suffer damages? - yes e. If Dookhie and Chetram owed the Clients a duty of care, did they make any misrepresentations to the Clients? - yes f. Did the Clients reasonably rely upon these misrepresentations? - yes g. Did these misrepresentations cause the Clients to suffer damages? - yes h. If Dookhie and Chetram owed the Clients a fiduciary duty, did they breach that fiduciary duty in recommending the SMI to the Clients for investment? - yes i. What damages did the Clients suffer? - $434,017.40 j. What is the appropriate rate of pre-judgment and post-judgment interest? - 12% per year for seven of the 11 investors and 9% per year for four of the 11 investors (blended rate is 11.293% per year)

[54] In circumstances such as the case at bar, absent exceptional circumstances, the loan interest rate should be determinative of the interest rate to be applied for pre-judgment and post-judgment interest. See Bank of America Canada v. Mutual Trust Co., 2002 SCC 43; Coppo & Co. v. L. Leone Pharmacy Ltd., [2005] O.J. No. 5222 (S.C.J.); Pizzey Estate Ltd. v. Crestwood Lake Ltd., 2004 ONCA 34441.

[55] The date of default for the River’s Edge Syndicated Mortgage was July 1, 2014. The interest due for the quarter ended September 30, 2014 was never paid. Interest should be calculated accordingly taking into account the partial recovery from the Fletcher settlement.

G. Conclusion

[56] For the above reasons, the motion is granted. The subclass of 11 Class Members is awarded $434,017.40 with interest to be paid on the judgment: (a) at the rate of 12% for the seven Class Members who invested through Larry Smith; and (b) at the rate of 9% for the four Class Members who invested through Kishor Bhingaradia. The Plaintiffs may submit costs submissions within ten days of the release of these Reasons for Decision.

Perell, J. Released: January 7, 2022