Raponi v. Olympia Trust Company

Raponi v. Olympia Trust Company Collection Decisions of the Court of Appeal Date 2023-06-16 Neutral citation 2023 ONCA 428 Docket numbers COA-22-CV-0052 Judges Trotter, Gary T.; Sossin, Lorne; Copeland, Jill M. Subject Civil Decision Content COURT OF APPEAL FOR ONTARIO CITATION: Raponi v. Olympia Trust Company, 2023 ONCA 428 DATE: 20230616 DOCKET: COA-22-CV-0052 Trotter, Sossin and Copeland JJ.A. BETWEEN Daniele Raponi Plaintiff (Appellant) and Olympia Trust Company Defendant (Respondent) Proceeding under the Class Proceedings Act, 1992 Garth Myers and Paul Bates, for the appellant Ryan Morris, Daniel Szirmak and Imad Alame, for the respondent Heard: May 8, 2023 On appeal from the order of Justice Paul M. Perell of the Superior Court of Justice, dated August 2, 2022, with reasons reported at 2022 ONSC 4481. Sossin J.A.: OVERVIEW [1] Daniele Raponi, the representative plaintiff of a class action and appellant, brought a motion to certify a class action against Olympia Trust Company (“Olympia Trust”). Raponi is one of approximately 13,000 lenders who allege they were induced to invest by Fortress Real Capital Inc. and Fortress Real Developments Inc. (“Fortress Developments”), which designed and promoted a syndicated mortgage loan (“SML”) scheme. Olympia Trust was a trustee for the syndicated mortgages (69 SMLs on 54 projects) for the lenders who advanced funds from their self-directed registered savings accounts. [2] The syndicated mortgage design was allegedly a sham. In 2014, some of the projects began to experience financial difficulties and the syndicated mortgages fell into arrears. The lenders collectively suffered losses on 54 projects and 69 syndicated mortgages upwards of $442.2 million. [3] The class action concerned the projects planned at 54 locations, including the Collier Centre project in which Raponi invested. The motion judge roughly calculated the average loss per class member at $25,000 with a class size of approximately 2,750 to 3,250 lenders who used registered savings accounts with Olympia Trust. [4] Raponi appeals from the motion judge’s dismissal of his certification motion. The motion judge dismissed the motion below because he found that: a) it was plain and obvious that Raponi’s claims for breach of trust, breach of fiduciary duty, breach of contract, and negligence could not succeed and therefore did not disclose a cause of action; b) none of the proposed issues were common to the omnibus class action; c) as a result of these two conclusions, the preferable procedure criterion is also not satisfied; and, d) Raponi is not an adequate representative plaintiff because he only participated as a lender in the Collier Centre project and his litigation plan is wrongly premised on not requiring individual issues trials or subclasses. [5] On appeal, Raponi has narrowed the issues. He seeks the certification of the class action solely on behalf of the lenders for the Collier Centre project and its three syndicated mortgages claiming breach of trust and fiduciary duty. [6] Regarding the other lenders and projects, Raponi asks this court to declare that this cause of action criterion is satisfied and to remand the remaining criteria for certification for the other projects to another class actions judge. [7] For the reasons that follow, I would dismiss the appeal, as the motion judge did not err in dismissing the action. BACKGROUND [8] Between 2008 and 2017, Fortress Developments designed, promoted, and marketed syndicated mortgages for real estate projects across Canada. A syndicated mortgage is a mortgage in which two or more persons participate as lenders in the debt obligation that is secured by the mortgage. The class action concerns 54 land development projects at different sites and 69 SMLs (several projects included more than one mortgage) marketed by Fortress Developments. Fortress Developments allegedly lured about 11,000 to 13,000 lenders into funding the syndicated mortgages. Fortress Developments, without the knowledge of the lenders, received approximately 35 percent of the money up front and much of the mortgage money was not used to build the projects. It was also unknown to the lenders that the loan agreements contained provisions that gave borrowers priority to receive a return on their investment before the lenders. [9] Fortress Developments was licensed under the Mortgage Brokerages, Lenders and Administrators Act, 2006, S.O. 2006, c. 29. Lenders were given materials and documentation prescribed by the Financial Services Commission of Ontario (“FSCO”), the regulator of syndicated mortgages. They attended promotional seminars where they learned about the projects, which included information on the eligibility of the syndicated mortgage as a registered savings account under the Income Tax Act, R.S.C. 1985, 15, c. 1 (“ITA”). Fortress Developments allegedly gave the lenders false appraisals and opinions of value for the land. [10] The putative class members held a registered savings account under the ITA with Olympia Trust. The motion judge found that Olympia Trust generally did not have contact with the lenders before they decided to invest. [11] In 2014, some of the projects began to experience financial difficulties and the mortgages fell into arrears. Some projects were sold under power of sale and others sought protection under creditors’ legislation. Following an RCMP investigation and attempts by the FSCO to manage the situation, the FSCO and the Law Society of Ontario applied for a court order to appoint FAAN Mortgages Administrators Inc. (“FAAN”) as trustee of the defaulted syndicated mortgages. FAAN was given broad authority to enforce the securities associated with the defaulted mortgages and recovered approximately $175 million. However, deficiencies in recovery remain as the lenders lost more than $442.2 million for all the projects combined. Raponi retained Olympia Trust for a $95,000 investment in one of the Collier Centre projects that he lost completely. [12] In order to hold a syndicated mortgage in a registered savings account under the ITA, the lenders had to open an account with a custodial trustee, such as Olympia Trust. Olympia Trust’s role was to register the lenders’ self-directed accounts with the Canada Revenue Agency (“CRA”) and to execute their instructions to receive funds, hold funds, and advance funds from the self-directed accounts. Olympia Trust charged fees for its services to the holders of the registered savings accounts, but did not charge investment management fees and it was not a participant in the investments or the Fortress Developments projects. Throughout the process, from the first investment and during subsequent advances, Olympia Trust received and relied on appraisals or valuations for each syndicated mortgage and employed a review officer to consider the propriety of the opinions or appraisals to determine whether to advance funds from a registered savings account. The nature and content of the valuation varied by project; sometimes Olympia Trust was provided with formal appraisals and other times with opinions of value, which made various assumptions about the nature of the project, stage of development, and other factors. [13] When entering into their relationship with Olympia Trust, lenders signed the following documents: an Account Application; a Declaration of Trust; a Mortgage Investment Direction and an Indemnity Agreement. Lenders who obtained an account with Olympia Trust before November 2013, also signed a Lender Acknowledgment and Consent Form. [14] For a lender to hold a syndicated mortgage investment in a registered savings account under the ITA, they must open the account with a custodial trustee or approved financial institution. Registered savings accounts permit investors to defer tax on invested funds and/or gains on investments until funds are withdrawn. To obtain this benefit, the investment must be a “qualified investment” per s. 146(1) of the ITA. For a debt obligation (such as a syndicated mortgage) to qualify, it must meet requirements set out at s. 4900(1)(j) of the Income Tax Regulations, C.R.C., c. 945. Guidance on those requirements is set out in Income Tax Folio S3-F10-C1, Qualified Investments (“Folio”). In this case, the debt obligation had to be fully secured by the mortgage, or would be fully secured were it not for a decline in the fair market value of the property after the debt obligation was issued. The motion judge’s decision [15] The motion judge considered whether Raponi had met the threshold set out in the Class Proceedings Act, 1992, S.O. 1992, c. 6 (“CPA”) to certify his action against Olympia Trust as a class proceeding. The motion judge set out the elements of the test on a certification motion under s. 5 of the CPA as follows: (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. [16] The motion judge recognized that 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, based on a purposive and generous application of the certification criteria, citing Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158, at paras. 15-16. [17] The motion judge found that Raponi’s claims for breach of trust and fiduciary duty did not disclose a cause of action against Olympia Trust because it is plain and obvious that they will not succeed. On this basis, he dismissed the class action. [18] In reaching this conclusion, the motion judge found that the scope of a trustee’s or fiduciary’s duties must be determined on a case-by-case basis, contrary to Raponi’s assertion that they are immutable and cannot be restricted or nullified. The motion judge noted that the scope of a trustee’s duties requires the court to “analyze the trust and contract terms as well as the circumstances and nature of the relationship”. Further, the motion judge noted that Raponi’s essential allegation against Olympia Trust is that the trustee should not have obeyed the lenders’ instructions to invest and advance funds on the SML. He highlighted that this alleged misconduct is not “the sort of misconduct that would typically support a viable action for breach of fiduciary duty”. [19] According to the motion judge, the ITA – read in conjunction with s. 1.95 of the Folio – imposes a modest obligation on trustees to report the non-qualified investment and a modest penalty between $100 to $2,500 for failure to report. It does not penalize the failure to minimize the possibility that lenders may hold non-qualified investments in registered plans. The CRA did not seek or obtain a penalty from Olympia Trust in the immediate case. [20] The motion judge held that the requirements set out in the Folio and s. 207.01(5) of the ITA do not give rise to the duties identified by Raponi. Further, the ITA and the Regulations do not preclude the court from examining the loan agreements the lenders entered into with Fortress Developments before their relationship with Olympia Trust began, or the agreements between the trustee and the lenders. There is no indication that the agreements cannot differ from what is laid out in the ITA scheme as it pertains to the relationship between trustee and lender. [21] The motion judge noted that the agreements between the lenders and Olympia Trust confirm that the latter’s responsibilities are limited and compliant with the trustee’s obligations imposed by the ITA. He noted that the duties under the ITA “are humble and modest and do not extrapolate to require extensive gatekeeping responsibilities”. Further, Olympia Trust expressly disavowed responsibilities to lenders to confirm the tax status of their investment. [22] Finally, the motion judge rejected Raponi’s argument that the registered plan provisions of the ITA are consumer protection legislation meant to protect taxpayers from improper investments in their registered savings accounts, nor is it legislation that regulates financial markets. The latter responsibility belongs to the FSCO, not the CRA. [23] The motion judge clarified that the trustee has the powers (not duties) to refuse to advance funds if the mortgage did not qualify as a qualified investment under the ITA or to refuse to apply for a registered savings account. These powers were contracted for so that Olympia Trust could perform its modest obligations under the ITA; they were not capable of grounding the various duties alleged by Raponi. [24] Having determined that it was plain and obvious that the causes of action based on the ITA could not succeed, the motion judge nonetheless considered the other statutory criteria for a class action under s. 5(1)(a) of the CPA, namely, whether the class had common issues, whether a class action was a preferable procedure and whether Raponi was an appropriate representative plaintiff. He found that the motion did not satisfy these criteria, but noted that Raponi would be a suitable representative plaintiff only for the three Collier Centre syndicated mortgages. ANALYSIS [25] Raponi has narrowed the scope of the appeal by focusing whether there should have been certification of the class action solely on behalf of the lenders who opened a registered savings account with Olympia Trust to invest in the three Collier Centre projects. Raponi limits the action to claims for breach of trust and fiduciary duty. He no longer pursues his claims in contract and negligence. [26] While there remains some dispute as to the extent to which further adjudication is required on the other criteria under s. 5(1)(a) of the CPA for purposes of certification, the parties agree that the appeal rises or falls on the issue of whether the motion judge erred in determining that it is plain and obvious that the class action cannot succeed on the duties alleged to be owed by Olympia Trust to Raponi whether under the ITA or its overarching “watchdog” duty to warn. [27] There are several aspects to this finding by the motion judge that are challenged: (1) first, that s. 207.01(5) of the ITA, combined with corresponding sections from the Regulations and the Folio, does not impose the duties pleaded by Raponi; (2) second, that the Declaration of Trust did not include the duties pleaded by Raponi; (3) third, that Olympia Trust’s “watchdog” duty to warn was within the scope of its engagement; and (4) fourth, that the motion judge exceeded his proper role in applying the “plain and obvious” test by performing a merits-based analysis. [28] It is common ground between the parties that the standard of review as to whether there is a cause of action for purposes of the CPA is correctness: Bowman v. Ontario, 2022 ONCA 477, 162 O.R. (3d) 561, at para. 26. (1) The motion judge did not err in finding that the ITA, the Regulations and the Folio do not impose the duties pleaded by Raponi [29] Raponi alleges that Olympia Trust did not exercise appropriate due diligence or scrutiny on the opinions of value which were the basis on which Olympia Trust advanced funds for the Collier SMLs. In other words, according to Raponi, Olympia did not take steps to ensure that the Collier SMLs were a “qualified investment” within the meaning of the ITA. [30] Raponi argues that the ITA itself is the source of the duty which was breached by Olympia Trust. Specifically, Raponi relies on s. 207.01(5) of the ITA as placing a “duty to minimize” on the Registered Plan trustee. This section states: “The issuer, carrier or promoter of a registered plan shall exercise the care, diligence and skill of a reasonably prudent person to minimize the possibility that a trust governed by the registered plan holds a non-qualified investment.” [31] While it is not disputed that a trustee’s duties may arise by statute, the question is whether this provision of the ITA creates such a duty, and if so, to whom such a duty is owed. [32] The ITA provisions at issue permit investors to use registered retirement fund savings for purposes of investing in SMLs where the subject property is a “qualified investment” as defined by the Act. Section 4900(1)(j) of the Regulations explains that an SML is a “qualified investment” only when it is “fully secured” or “would be fully secured were it not for a decline in the fair market value of the property after the debt obligation was issued”. [33] Raponi alleges that this provision gave rise to five specific duties owed by Olympia Trust to the lenders: 1) to reasonably determine the fair market value of the Collier Centre property; 2) to satisfy itself that the Collier Centre SMLs plus priority encumbrances were for an amount that was less than the value of the Collier Centre property; 3) to advise investors if the SMLs were or would likely become “non-qualified”; 4) to report to investors if their Registered Plans stopped holding “qualified investments”; and, 5) to decline to act as Registered Plan trustee for “non-qualified investments”. [34] Raponi argues the existence of these statutory duties to investors is bolstered by the language of the Folio, a technical interpretation guideline issued by the CRA. For example, Raponi points to s. 1.98 of the Folio, which states that “the ultimate responsibility for ensuring that a registered plan complies with the qualified investment rules always remains with the trustee.” Raponi also points to s. 1.95 of the Folio, which states that “[t]he trustee … is required to report information to the CRA and the controlling individual of the plan if the plan begins or ceases to hold a non-qualified investment…”. [35] Olympia Trust submits that the motion judge correctly held that s. 207.01(5) merely codifies a tax-related obligation on the part of trustees to the CRA. According to Olympia Trust, s. 207.01(5) of the ITA, and Part XI.01 more broadly (titled “Taxes in Respect of Registered Plans”), have an anti-tax avoidance purpose. In this context, Olympia Trust asserts that s. 207.01(5) is a mechanism through which trustees assist the CRA in properly governing accounts that benefit from the taxation scheme applicable to Registered Plans. [36] The motion judge set out the law with respect to the fiduciary duties of trustees and correctly emphasized that such duties are to be determined on a case-by-case basis. He explained the basis for his finding that s. 207.01(5) of the ITA did not give rise to duties as between trustees and investors: [182] It should immediately be observed how humble and unimposing is the duty on the trustee entailed by the Income Tax Act. A robust obligation would be an absolute duty on the trustee to not apply for non-qualified investments. But the Income Tax Act imposes no such categorical duty to eliminate non-qualified investments. Rather, it imposes a much more modest obligation of reporting the non-qualified investment and the modest penalty of between $100 to $2,500 of the failure to report. [183] There actually is no penalty on Olympia Trust for failing to minimize the possibility that the Class Member held a non-qualified investment. The penalty is for failing to report a non-qualified investment. (I parenthetically note that in the immediate case, the CRA has never sought or obtained any penalty from Olympia Trust in respect of the syndicated mortgages.) [184] It should next be observed that s. 207.01(5) the Income Tax Act, the foundational building block of Mr. Raponi’s breach of trust and breach of fiduciary duty thesis, does not impose any obligation on the trustee to comply with the qualified investment rules. It is the CRA in Income Tax Folio S3-F10-C1 that suggests compliance, but even that suggestion is attenuated because while the ultimate compliance responsibility is said to rest with the trustee, the trustee may require the “controlling individual of the registered plan” i.e., in the immediate case the Class Member/Lender “to provide evidence to determine the property’s fair market value” and “the trustee must exercise due diligence in satisfying itself that the documentation provided is sufficient.” [37] In my view, the motion judge’s reasoning and conclusion reveals no error. While there may be differing views on the scope of a “duty to minimize” the possibility of investments from the registered savings plans in non-qualifying properties, the text, context and purpose of this provision makes clear that it is a duty owed by trustees to the CRA, not to investors. [38] The non-binding guidance set out in the Folio cannot itself be the source of a legally binding duty. In any event, the Folio provisions highlighted by Raponi do not give rise to the alleged duties. Section 1.98 states that the trustee has ultimate responsibility for ensuring the investment qualifies under s. 207.01(5). There is no indication that this responsibility extends beyond meeting the trustee’s obligation to hold only qualified investments under the taxation scheme for registered plans. Additionally, s. 1.95 of the Folio merely reinforces that the trustee has a modest reporting responsibility; as the motion judge noted, it does not establish extensive gatekeeping duties. Read as a whole, the Folio confirms that the scheme is aimed at regulating tax avoidance, not protecting investors. [39] It is appropriate to consider the novelty of a claim in determining whether it gives rise to a cause of action. As this court recently affirmed in Leroux v. Ontario, 2023 ONCA 314, at para. 86, claims that may incrementally develop the law should be allowed to proceed. In this case, however, the motion judge was alive to this very concern, observing, “However, novelty by itself is not a reason to allow a cause of action to proceed to trial and a novel claim must also be arguable, have some elements of a cause of action recognized in law, be a reasonable and arguable incremental extension of established law and have a reasonable prospect of success.” [40] In my view, the motion judge committed no error in his analysis, and I would dismiss this ground of appeal. (2) The motion judge did not err in finding that the Declaration of Trust did not impose the duties pleaded by Raponi [41] The motion judge confirmed that, beyond the possibility of a statutory duty under the ITA, it is also open to the court to consider the agreements between investors in the SMLs and Olympia Trust in order to determine if the trustee owes potential class members any duties. [42] Raponi argues that the pleaded trust and fiduciary duties do not depend on the terms of the agreements between Raponi and Olympia Trust (that is, the court could grant this appeal based on the statutory duty argument alone), but that a review of the agreements between the parties reveals that they align with these trust duties. [43] Raponi relies on Olympia Trust’s power to countermand instructions in these agreements. While discretionary, Raponi submits that Olympia Trust’s discretion had to be exercised in a way that is in the best interests of the beneficiaries and consistent with the trustee’s “duty of loyalty”. [44] In particular, Raponi highlights the following provision in the Declaration of Trust: 25. Liability of the Trustee: The Trustee and its officers, employees and agents are indemnified by you and your Plan from and against all expenses, liabilities, claims and demands arising out of the holding of the assets of your Plan; the dealing with the assets of your Plan in accordance with investment instructions which the Trustee, its officers, employees or agents believe in good faith to be given by you or your properly authorized agent; and the delivery of release of assets of your Plan in accordance with this declaration, provided that: (i) the Trustee exercises the same degree of care with the assets of your Plan as it would with its own assets to minimize the fact that the Plan hold any non-qualified investments; and (ii) the Trustee complies with applicable laws, regulations and orders now or later in force that purport to impose a duty on the holder of assets of your Plan to take or refrain from taking any action in connection with any asset of your Plan. [Underlining added.] [45] According to Raponi, the trustee’s limitation of liability expressly depends on its compliance with the duty to minimize the possibility of the plan holding any non-qualified investments. [46] The motion judge found Raponi’s argument conflated the powers of the trustee with its duties. In other words, while the agreements confer on the trustee the power to decline to complete investment transactions, the agreements do not impose duties on the trustee to ensure SML investments are in qualified properties. The motion judge concluded, at paras. 188-89: [188] When one does examine the agreements between the Lenders and Olympia, the plain language reveals that while Olympia Trust does have responsibilities, those responsibilities are both limited and also compliant with Olympia Trust’s actual obligations imposed by the Income Tax Act. [189] There are no express gatekeeper duties imposed on Olympia Trust. Under the various agreements, Olympia Trust expressly disavowed responsibilities to Lenders to confirm the tax status of their investments. The duties imposed on Olympia Trust by s. 207.01(5) of the Income Tax Act are humble and modest and do not extrapolate to require extensive gatekeeping responsibilities. Moreover, the limited duties undertaken by Olympia Trust under the trust agreements do not conflict with the modest and humble duties imposed by s. 207.01(5) of the Income Tax Act. [47] Olympia Trust further points to the clear language in the Declaration of Trust that the SML investors have the responsibility to ensure that “(i) contributions to [their] Plan do not exceed the maximum contribution limits permitted by the Act; (ii) the investments held in [their] Plan are qualified investments for [their] Plan under the Act.” [48] Acknowledging the discretion retained by the trustee to decline to complete a transaction, Olympia Trust argues that this discretion allowed it to perform its obligations to the CRA, without incurring liability to registered plan holders (i.e., the lenders). This power cannot be transformed into a gatekeeping duty, nor does it lend support to the view that the ITA creates such a duty, as suggested by Raponi. [49] The provision of the agreement highlighted above requiring that “the Trustee will exercise the same degree of care with the assets of your Plan as it would with its own assets to minimize the fact that the Plan hold any non-qualified investments” similarly reflects a promise on the part of the trustee to meet its obligation under the ITA and to the CRA, not a promise to protect investors. [50] Again, I see no error with the motion judge’s conclusion that the agreements between Olympia Trust and Raponi did not establish or reinforce any gatekeeping duties. I would dismiss this ground of appeal. (3) The motion judge did not err in finding that Olympia Trust’s “watchdog” duty did not arise in its relationship with investors [51] Raponi argues that the motion judge made a legal error in holding that it was “plain and obvious” that Olympia Trust did not have an overriding “watchdog” duty to warn its beneficiaries of the undersecurity of the Collier Centre SMLs. [52] As Raponi frames this ground of appeal, the key question that the court must answer is not, as the motion judge asked, whether a “super-added” duty to warn arises from the terms of contractual arrangement. Instead, Raponi argues that the court must look beyond the four corners of the agreement to determine if an independent duty to warn arises “within the scope of the trustee’s engagement”. [53] Raponi submits that even where the express terms of trust agreements do not give rise to a “watchdog” duty, courts may impose on trustees a duty to warn as part of a larger, general duty of prudence respecting the trust (relying on Froese v. Montreal Trust Company of Canada (1996), 137 D.L.R. (4th) 725 (B.C.C.A.), at para. 46, and D.W.M. Waters, Waters’ Law of Trusts in Canada, 2nd ed. (Toronto: Carswell, 1984), at p. 104). [54] According to Raponi, in overlooking that Olympia Trust’s duty to warn could arise from the scope of its engagement rather than the four corners of the Declaration of Trust, the motion judge made a legal error. Raponi argues that cases such as Froese establish that, despite express trust terms to the contrary, a trustee will be liable for breach of trust if it fails to respond to discharge its obligations as a watchdog with a duty to warn. As McEachern C.J.B.C. stated in Froese, at para. 46: The real question in this case, in my judgment, is whether a prudent, alert pension administrator must respond not just to ordinary administrative matters, but also to unusual events within its cognizance that puts the beneficiaries at risk. Thus, in my view, the responsibility of a custodial or administrative trustee in particular circumstances should include at least the function of a watchdog. [Emphasis added.] [55] In light of Froese, in Ivany et al. v. Financiere Telco Inc., et al., 2013 ONSC 6347, at para. 58, Lauwers J. (as he then was), found it was not plain and obvious that a trustee owed no “duty to warn” and therefore found a cause of action under s. 5(1)(a) of the CPA had been made out. In Ivany, the trustee confirmed in the trust instrument that the trustee was not responsible in any way for the investment. Additionally, the investor had represented to the trustee that he conducted his own due diligence, and that he released the trustee from any liability arising from the investment. [56] Olympia Trust argues that these (and other cases relied on by Raponi) should be distinguished, as Olympia Trust acted as a trustee under a tax statute not as a pension plan trustee, had no discretionary authority to select investments, and had a direct contractual relationship with investors expressly setting out the limited scope of its engagement. [57] Additionally, in Froese and Ivany, the trustee was alleged to have specific knowledge of fraudulent activity, where in this case, Raponi argues the trustee should have exercised due diligence to obtain such knowledge. [58] The motion judge emphasized the contextual nature of the analysis with respect to the scope of trusts duties. He stated: It is plain and obvious that Mr. Raponi’s breach of trust and breach of fiduciary duty thesis does not establish a reasonable cause of action. The existence of trust and fiduciary duties requires a case-by-case analysis and the court will analyze the trust and contract terms as well as the circumstances and nature of the relationship. The scope of a trustee’s or a fiduciary’s duty arises within the scope of the engagement and the functions assumed by the trustee or fiduciary in a given case. … It is a major doctrinal premise that underlies Mr. Raponi’s causes of action based on breach of trust and breach of fiduciary duty that fiduciary and trust duties are immutable and cannot be restricted or nullified. This premise is false, and the truth is that the scope of a trustee’s and a fiduciary’s duties are a matter to be determined on a case-by-case basis. [Footnotes omitted.] [59] The motion judge reviewed the criteria for the formation of trust and fiduciary duties in detail. He considered and rejected the existence of such duties within Olympia Trust’s scope of engagement in this case. I see no basis for appellate intervention with this finding. [60] Alternatively, Raponi raises the possibility that the Declaration of Trust, to the extent it purports to displace this “watchdog” role for Olympia Trust, may be rendered invalid as contrary to public policy. [61] The motion judge reviewed the authorities cited by Raponi for this proposition and rejected them on the basis that they arose from an analysis of the trust duties in those particular factual settings, all of which could be distinguished from the facts of this case. [62] Olympia Trust urges the court to reject the notion that it should impose duties that are inconsistent with the trust agreements on the basis of a general “watchdog” duty. Olympia Trust highlights that Raponi’s contention rests on the assumption that the ITA imposes statutory duties on trustees, which the provisions insulating trustees from liability in the Declaration of Trust contradict. According to Olympia Trust, as set out by the motion judge, neither assumption is correct. [63] I agree. Whatever the scope of a court’s discretion might be where terms of a trust agreement are inconsistent with a trustee’s statutory duties, that scenario does not arise in this case. [64] I would dismiss this ground of appeal. (4) The motion judge did not exceed the scope of s. 5(1)(a) of the CPA in finding it was plain and obvious that the claims for breach of trust and breach of fiduciary obligation could not succeed [65] In the alternative, Raponi argues that in holding that the breach of trust and fiduciary duty claims did not disclose a cause of action, the motion judge exceeded the proper limits of the inquiry permitted by s. 5(1)(a) of the CPA. [66] There is no dispute that the s. 5(1)(a) jurisprudence requires the certification judge to accept the facts pleaded as true. According to Raponi, the motion judge impermissibly went beyond the pleaded facts to reconcile the ITA, the Declaration of Trust and other agreements in a merits-based analysis. [67] The motion judge held that the documents referred to in a pleading are incorporated by reference into the pleading, and on a motion to determine whether the plaintiff has pleaded a legally viable cause of action, those documents will be considered. [68] Olympia Trust submits that the motion judge correctly applied the guidance from this court on that question (citing Das v. George Weston Limited, 2018 ONCA 1053, 43 E.T.R. (4th) 173, at para. 74, leave to appeal refused, [2019] S.C.C.A. No. 69; and McCreight v. Canada (Attorney General), 2013 ONCA 483, 116 O.R. (3d) 429, at para. 32). [69] In my view, the motion judge did not stray into a merits or contractual interpretation analysis beyond what was required to consider whether Raponi had a cause of action pursuant to s. 5 of the CPA. (5) The motion judge’s finding with respect to the remaining certification criteria [70] The parties take differing positions on whether, apart from his finding that it was plain and obvious Raponi’s claim did not disclose a cause of action, the remaining certification criteria have been met. Raponi points to the motion judge’s language on the question of whether the class has common issues, whether the class proceeding is the preferable procedure, and whether Raponi is a satisfactory representative plaintiff and argues, in light of the limited class involving the Collier SMLs, the motion judge effectively concluded those criteria have been met. Olympia Trust argues the motion judge found the other criteria had not been met (albeit on the basis of the broader class) and that those aspects of the motion judge’s findings have not been appealed. [71] Having found the motion judge made no error in concluding that Raponi’s claim does not give rise to a cause of action, it is unnecessary to address the status of the remaining criteria under s. 5 of the CPA and I decline to do so. DISPOSITION [72] For these reasons, the appeal is dismissed. [73] Olympia Trust is entitled to costs from Raponi in the agreed upon amount of $35,000, all-inclusive. Released: June 16, 2023 “G.T.T.” “L. Sossin J.A.” “I agree. Gary Trotter J.A.” “I agree. Copeland J.A.”