NEWMARKET COURT FILE NO.: DC-13-627-00
ONTARIO
DIVISIONAL COURT
SUPERIOR COURT OF JUSTICE
BETWEEN:
RONGFA FENG and SIEW FUI LEE
Plaintiffs (Respondents)
– and –
ESTELITA MAK
Defendant (Appellant)
Jean-Pierre Ung, for the Respondents
Artis Tiltins, for the Appellant
HEARD: July 17, 2015
On Appeal of the Decision of Deputy Judge B.N. DiGregorio on November 25, 2013
VALLEE J.
Background
1The appellant (defendant at trial) appeals the decision of B.N. DiGregorio, deputy judge of the Small Claims court dated November 25, 2013 in which he ordered the defendant to pay $10,000 to the plaintiff Feng and $9,000 to the plaintiff Lee as well as double costs in the amount of $5,700.
2This matter concerns four individuals who wished to set up a company that would operate a restaurant. The plaintiffs gave money to the defendant to purchase shares in the proposed corporation. The corporation was never incorporated. The plaintiffs asked to have their money returned. The trial judge held that Mr. Feng was entitled to $10,000 and Ms. Lee was entitled to $9,000. The appellant requests that the deputy judge’s decision be set aside and a new trial ordered.
Grounds of Appeal
3The appellant sets out the following grounds of appeal:
The trial judge misinterpreted the evidence.
The trial judge failed to give adequate reasons as to why he preferred the plaintiffs’ evidence over the defendant’s evidence.
The costs awarded by the trial judge were excessive.
The trial judge did not allow the defendant to fully present her evidence. This resulted in an unfair trial.
Standard of Review
4The standard of review for decisions in Small Claims court is determined by the principles outlined in Housen v. Nikolaisen, 2002 SCC 33, 2002 S.C.C. 33. On pure question of law, the standard of review is correctness. Findings of fact or mixed fact in law are reviewable only for palpable and overriding error.
Analysis
Did the trial judge misinterpret the evidence?
The Appellant’s Position
5The appellant states that the trial judge commented on the Business Corporations Act and issues with respect to shares when there was no evidence of this before him. The trial judge stated that the defendant received $15,000 from Mr. Feng and $15,000 from Ms. Lee. He ought to have stated that the defendant received $30,000 from Ms. Hawkins, another investor, who paid it on behalf of Mr. Feng and Ms. Lee, if the trial judge accepted the plaintiffs’ evidence.
6The defendant stated that she had expenses so she was not going to pay back the full amount. She gave no details of the expenses but rather said that Ms. Hawkins had calculated them. This was uncontroverted evidence. Nevertheless the trial judge required the defendant to pay back the full amount. There was no suggestion that the defendant did not incur expenses.
7The trial judge ought to have focused on the expenses but instead gave disproportionate weight to the issues regarding shares.
8There is no legal authority that states that a person cannot gather up funds for proposed corporation.
9The trial judge carried out no analysis of the agency principle. Ms. Hawkins provided to the defendant Ms. Lee and Mr. Feng’s personal money in the amount of $15,000 each together with another $15,000, which was a loan from Ms. Hawkins to Ms. Lee and Mr. Feng. Ms. Lee and Mr. Feng never paid any of their money directly to the defendant.
Analysis
10I read the trial judge’s comments on the Business Corporations Act as simply saying that there was no corporation; therefore, no shares were ever sold. This is consistent with the defendant’s evidence that she never sold anything.
11I read the trial judge’s comments that the defendant received $15,000 from each of Mr. Feng and Ms. Lee as saying that she received $15,000 of their personal funds which she in fact did. It is irrelevant that the trial judge did not state the defendant received those funds through Ms. Hawkins.
12The plaintiffs never raised any issues with respect to Ms. Hawkins being an agent. Therefore, the trial judge was not required to consider agency principles.
13The trial judge found that the defendant met with Mr. Feng and Ms. Lee to discuss repayment of the money. At that time, she paid each of them $5,000 together with a series of post-dated cheques. The trial judge appropriately found that the defendant had agreed to pay back the money. There was sufficient evidence before the trial judge for him to make these findings of fact.
14The defendant had no proof of any of the expenses that she incurred. Accordingly, the trial judge correctly found that she was unjustly enriched.
Were the trial judge’s reasons insufficient?
The Appellant’s Position
15The trial judge stated that where the evidence of the plaintiffs and defendant conflicted, he preferred the plaintiffs’ evidence. He did not give any reasons for this.
16The trial judge rejected the alleged expenses but did not explain why he did so. This was uncontested evidence.
Analysis
17The trial judge did say that the defendant’s evidence was contradictory. He found that the defendant’s agreement to repay Ms. Lee and Mr. Feng was inconsistent with her position at trial that she owed them nothing more. The trial judge made a finding of credibility. The trial judge could have said more about why he preferred the plaintiffs’ evidence but he did give some reasons. His failure to give a fuller explanation is not a reason to set aside the judgment.
18The defendant testified that initially the funds represented a loan from Ms. Lee to herself. She subsequently testified that the loan was in fact from her to Ms. Lee. Then, she stated that the funds she gave to the plaintiffs were for wages. The defendant’s evidence changed several times. Accordingly, there was sufficient evidence before the trial judge to make a credibility finding.
Was the trial unfair?
The Appellant’s Position
19The appellant states that the trial judge made inappropriate comments. He intimidated the defendant’s paralegal who represented her. There was power imbalance and an apprehension of bias.
20Mr. Feng and Ms. Lee had counsel at trial. The trial judge unreasonably preferred counsel to the paralegal.
Analysis
21The appellant set out three comments which were made by the trial judge; however, the appellant did not include the context in which those comments were made. The comments are as follows:
a. We have just wasted ten minutes of court time.
b. Are we going to play games all trial long?
c. When you become a judge you can give him instructions.
22The context for these comments is as follows:
a. The paralegal was taking issue with documents that were included in the plaintiffs’ exhibit book. The paralegal requested a recess to locate the documents. When court resumed, the paralegal stated that the documents were attached to his client’s statement of defence.
b. The trial judge made this comment after the paralegal objected to the plaintiffs’ use of a document and stated that he did not have it. In fact, it was in his own materials.
c. The paralegal was taking issue with how the interpreter was carrying out her duties. The paralegal was providing instructions to the interpreter as to what she had to do. The trial judge could have been more tempered in his comments however; the comments do not meet the test for bias.
23According to A.T. Kearney Ltd. v. Harrison, 2003 32908 (ONSC) at para. 7, the court stated,
The threshold for a finding of real or perceived bias is a high one since it calls into question both the personal integrity of the adjudicator and the integrity of the administration of justice. The grounds must be substantial and the onus is on the party to seek disqualify to bring forward evidence to satisfy the test.
24While it is evident from the trial judge’s comments that he was frustrated by the paralegal’s lack of organization and unfamiliarity with his own documents, I find that the respondent has not shown substantial grounds nor has she met the onus to satisfy the test set out in A.T. Kearney.
Did the trial judge award costs in an excessive amount?
25Prior to trial the plaintiffs made an offer to settle. The result at trial was better than the plaintiffs’ offer. The Rules of the Small Claims Court permit costs to be awarded in the amount of 15 per cent of the claim in the ordinary course. A trial judge can double this amount if the result was better than an offer. The result was better than the offer. The trial judge appropriately ordered double costs.
Conclusion
26For the reasons noted above, the appeal is dismissed.
Costs
27If the parties cannot agree on costs, I will receive written submissions, limited to three pages using 1.5 line spacing, together with costs outlines and any relevant offers. The plaintiffs shall serve and file submissions within 15 days of the release date of these reasons. The defendant shall serve and file responding submissions within a further 10 days following which the plaintiffs may serve and file reply submissions within a further 10 days. These submissions shall be filed with the trial co-ordinator in Barrie to the attention my assistant, Nicole Anderson.
VALLEE J.
Released: September 14, 2015