Court of Appeal for Ontario

Docket: C66578

Judges: Huscroft, Paciocco and Nordheimer JJ.A.

Parties

Between

Gerard Lee and 2505805 Ontario Inc. Plaintiffs (Appellant)

and

Lalu Canada Inc., 2504637 Ontario Inc., 2504805 Ontario Inc., 2504639 Ontario Inc., HZC Capital Inc., Yanfeng ("Kevin") Fan, Lei ("Eric") Guo and Cheng ("Chenny") Ming Defendants (Respondents)

Counsel

John O'Sullivan, for the appellant

Patricia Virc and M. Michael Title, for the respondents

Hearing

Heard and released orally: September 24, 2019

On appeal from: the order of Justice Andra Pollak of the Superior Court of Justice, dated January 9, 2019 with reasons reported at 2019 ONSC 154 and the costs award dated March 14, 2019 with reasons reported at 2019 ONSC 792.

Reasons for Decision

[1] The appellant appeals from the order granted by the motion judge that dismissed the appellant's motion for a declaration that, pursuant to a consulting agreement between the appellant and some of the respondents, the appellant was entitled to be indemnified for "all reasonable legal fees and expenses incurred" with respect to this action.

[2] A preliminary issue arises as to whether the order in question is a final or an interlocutory order. It is only if the order is a final one that an appeal lies to this court. Both the appellant and the respondents contend that the order is final because it finally determines the appellant's entitlement to advance payment of its legal fees and expenses. We disagree.

[3] In order for an order to be a final order for the purpose of appellate jurisdiction that order "must deal with the substantive merits as opposed to mere procedural rights, no matter how important the procedural rights may be", see Sun Life Assurance Co. v. York Ridge Developments Ltd. (1998), 116 O.A.C. 103 at para. 13.

[4] The substantive merits were not addressed by the decision on the motion. The plaintiffs plead that the respondents have breached the consulting agreement. They seek damages for those breaches. One of those breaches, expressly pleaded in the statement of claim, is that the defendants are required to pay all reasonable legal fees arising out of a dispute with respect to the consulting agreement. The defendants plead that they have not breached the consulting agreement because the conduct of the plaintiffs disentitle them to any payment under the consulting agreement.

[5] The motion judge did not determine that substantive issue. Rather, she dismissed the motion for interim relief on the basis that it was inappropriate to determine any right to payment of legal fees apart from a determination of the alleged breaches of the consulting agreement as a whole. The motion judge treated the motion for interim relief as a motion for partial summary judgment.

[6] Regardless of whether that characterization of the motion was correct or not, the fact remains that the issues between the parties remain to be determined, including whether the consulting agreement requires advance payment of legal fees and, if it does, whether there has been a breach of that contractual obligation in the factual circumstances of this case. The denial of interim relief, without any corresponding determination of whether the appellant is, or is not, entitled to advance funding, does not finally determine any issue. The resulting order is, therefore, clearly an interlocutory one.

[7] If the appellant considers the motion judge to have erred because her decision appears to deny the appellant the right to payment of its legal expenses now, as opposed to at the end of the action, it can seek leave to appeal to the Divisional Court from the order. Alternatively, it may still be open to the appellant to bring a separate application for the interpretation of the agreement regarding its entitlement to advance funding. We would note that this was the route utilized in Cytrynbaum v. Look Communications Inc., 2013 ONCA 455, 116 O.R. (3d) 241 where a similar issue was raised.

[8] For these reasons, the appeal is quashed. Given the position taken by the parties, we would make no order as to costs.

"Grant Huscroft J.A." "David M. Paciocco J.A." "I.V.B. Nordheimer J.A."