CITATION: Lee v. Kim, 2018 ONSC 7641
COURT FILE NO.: DC-17-0052-00
DATE: 2018 12 21
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
JHAMES LEE
K. Holder, for the Appellant
Appellant
- and -
YUNJAE KIM, MOLLY LEONARD, GABRIELLA DEOKARAN, SAMIR PATEL, AND DPLS LLP
D. Hirbod, for the Respondents
Respondents
HEARD: December 19, 2018
REASONS FOR JUDGMENT
[On appeal from a Decision of Deputy Judge Fellman of the Small Claims Court at Brampton dated May 3rd, 2017]
LeMay J.
[1] This action involves a claim brought by the Appellant, Mr. Jhames Lee, against the Respondents in the small claims court. In that claim, the Appellant asserts that he paid one of the personal Respondents, Mr. Yunjal Kim $2,500.00 and that Mr. Kim did “knowingly by deceit, falsehood or other fraudulent means, defraud” him of that retainer. The remainder of the personal Respondents were Mr. Kim’s law partners at the relevant time, and DPLS LLP was the law firm that they were members of.
[2] The Respondents sought to have the Appellant’s claim dismissed by way of a Rule 12 motion, pursuant to the Rules of the Small Claims Court, O.Reg. 258/98. By way of decision dated May 3rd, 2017, Fellman D.J. granted the motion and dismissed the Appellant’s claim. The Appellant now appeals to this Court, arguing that the Deputy Judge improperly concluded that there was no cause of action disclosed by the Appellant’s Statement of Claim, and that the Deputy Judge did not give due consideration to the fact that the Appellant was self-represented at the time.
[3] For the reasons that follow, the appeal is dismissed.
Background Facts
a) The Transaction
[4] The Appellant became involved in a business arrangement of some type with a Mr. Soundrarajan sometime in the fall of 2013. The details of that business arrangement are not clear on the record before me.
[5] The Appellant knew Mr. Kim, as a lawyer who had done some work for his father. As a result, according to the Appellant’s evidence, he contacted Mr. Kim. The Appellant understood that Mr. Kim was being retained to work on legal issues relating to Mr. Soundrarajan’s business, which was known as Sandwich Box Inc. (“SB Inc”). I understand that the Appellant is asserting, in a Superior Court action, that he has an interest in SB Inc.
[6] In late January of 2014, the Appellant and Mr. Kim met at Mr. Kim’s office. There is some dispute between the parties about what happened at that meeting. However, in considering this appeal, I will use the version of events proffered by the Appellant. In that meeting, therefore, I find that the Appellant provided Mr. Kim with $2,500.00 in cash.
[7] This cash was provided as a retainer to Mr. Kim. Mr. Lee understood that this cash would be used to work on an injunction for SB Inc., as they were having issues with other people using their intellectual property and brand names. The retainer agreement was executed between Mr. Kim and Mr. Soundrarajan. At about the same time as this retainer agreement was executed, Mr. Soundrarajan also executed an authorization to release information to a third party. This gave Mr. Kim the authority to discuss various issues in his file with the Appellant.
[8] On or about May 1st, 2014, Mr. Soundrarajan revoked the authorization that permitted Mr. Kim to talk to the Appellant. Thereafter, the Appellant sought to contact Mr. Kim and was rebuffed. After being rebuffed on a number of occasions, the Appellant demanded the return of the $2,500.00 retainer that he had paid to Mr. Kim’s firm. That money was not returned by Mr. Kim.
b) The Procedural History in the Court Below
[9] On December 6th, 2016, the Appellant started a small claims action against Mr. Kim, his partners, and his law firm. The Limitations Act, 2002 (S.O. 2002, c. 24, Sch. B) issue that could arise on these facts was not considered by the Deputy Judge, so I will not consider it either.
[10] The Appellant’s claim is handwritten, diffuse and alleges a number of issues, including deceit and falsehood. A global reading of that pleading, however, makes it clear that the Appellant is, at a minimum, seeking the return of the monies that he paid to Mr. Kim.
[11] This claim proceeded to a settlement conference before Deputy Judge Barycky on March 7th, 2017. At that time, Barycky D.J. adjourned the settlement conference to May 1, 2017. He also made a number of orders, including a direction that the Appellant could amend his Statement of Claim by March 21st, 2017, and that the Respondents were at liberty to bring a Rule 12 motion at any time after March 21st, 2017.
[12] The Appellant did not amend his Statement of Claim. The Respondents brought a Rule 12 motion, which was heard by Fellman D.J. on April 26th, 2017. By way of a written endorsement on May 3rd, 2017, the motion was granted and the claim dismissed.
Issues
[13] The notice of appeal lists a number of different issues. It was not prepared by counsel for the Appellant, who narrowed the issues for resolution in this case to the following:
a) What is the appropriate Standard of Review in this case?
b) Whether there is a cause of action within the Statement of Claim as it was framed?
c) If there was a cause of action, did the Deputy Judge act appropriately in proceeding with the Rule 12 hearing rather than granting an adjournment?
[14] In addition, counsel for the Appellant conceded that she was only proceeding with this appeal against Mr. Kim and DPLS LLP. As the Appellant is not proceeding against the other Respondents, I will not consider their positions further.
[15] I will address each of these issues in turn.
Issue #1- The Standard of Review
[16] The standard of review on an appeal is governed by the Supreme Court’s decision in Housen v. Nikolaisen (2002 SCC 33, [2002] 2 S.C.R. 235). For questions of law, the standard of review is correctness. For questions of fact, a trier of fact’s conclusions will not be reversed unless there is “palpable and overriding” error. Where the question is one of mixed fact and law, the standard for reversing a decision on appeal is more stringent than for questions of pure law.
[17] Counsel for the Appellant argues that the standard of review on this appeal is correctness. She advances this argument on the basis that factual errors were made by the Deputy Judge in this case.
[18] Counsel for the Respondent argues that the standard on this case is reasonableness, because it involves reviewing matters of mixed law and fact that are not readily extricable.
[19] I do not, quite, share either party’s view of the standard to be applied in this case. If the Deputy Judge acted within his jurisdiction to grant the motion for summary judgment, then the standard is reasonableness. If the Deputy Judge exceeded his jurisdiction, then that would be an error of law, and his decision would not be entitled to deference.
[20] I have framed the analysis in this manner because of the nature of a Rule 12 motion. As the Court of Appeal has noted in Van De Vrande v. Butkowsky (2010 ONCA 230), a Rule 12 motion lies somewhere between a Rule 21 motion and a Rule 20 motion. Rule 12 is not intended to replicate the summary judgment proceedings that are available in Superior Court. As a result, if the Deputy Judge correctly applied the framework that exists for Rule 12 motions, then his decision is entitled to deference.
[21] I am of the view that he did correctly apply this framework. I am also of the view that the decision is reasonable and should not be reversed.
Issue #2- Is There a Cause of Action?
[22] The Deputy Judge found that the Appellant’s claim had no meaningful chance of success, and dismissed it pursuant to Rule 12 of the Rules of the Small Claims Court.
[23] Counsel for the Appellant argues that the cause of action in this case flows from the interaction between the Appellant and Mr. Kim. In her submission, it is possible that Mr. Kim did not clearly tell the Appellant that Mr. S. could cease providing the Appellant with information regardless of the fact that the Appellant paid the retainer. The Appellant submits that it was incumbent upon Mr. Kim to advise him of this fact.
[24] The Appellant argues that the claim against Mr. Kim and his firm could sound in contract, or that Mr. Kim might have owed either a fiduciary duty or a duty of care to the Appellant. I reject all of these arguments.
[25] I start with the contractual claim. In order for there to be a contract, there must be an offer, acceptance and consideration. In this case, there was arguably a contract between Mr. Soundrarajan and the Appellant regarding the $2,500.00 retainer. However, there is no contract between Mr. Kim and the Appellant, and no evidence from which the existence of a contract could be inferred.
[26] It is clear, and ultimately undisputed by the Appellant, that the retainer money was provided by him on behalf of Mr. Soundrarajan. It is quite possible that the Appellant thought that he was providing the money on behalf of Mr. Soundrarajan for SB Inc., and it is also possible that the Appellant thought that he had an interest in SB Inc. These possibilities, however, are irrelevant to what Mr. Kim would have seen, which is that the money was being provided on behalf of Mr. Soundrarajan, and that the Appellant was acting as Mr. Soundrarajan’s agent. The formation of a contract requires a mutual understanding, and it is not present here. The claim cannot succeed in contract.
[27] This brings me to the claim that Mr. Kim owed the Appellant either a fiduciary duty, or a duty of care. These claims can be dealt with together. There is no assertion in the Statement of Claim that Mr. Kim and the Appellant formed a solicitor-client relationship in this case and, even if that claim had been made, there is no evidence to support such a claim.
[28] As a result, the relationship between Mr. Kim and the Appellant is akin to a third party relationship. The law has been clear that lawyers typically do not owe third parties a duty of care. In Budrewicz v. Stojanowski ((1998) 1998 14688 (ON SC), 41 O.R. (3d) 78), Webber J. stated (at paragraph 72):
- This issue has been dealt with extensively in Kamahap Enterprises Ltd. V. Chu’s Central Market Ltd. (1989), 1989 242 (BC CA), 64 D.L.R (4th) 167 (B.C. C.A.) by Taylor J.A. in the British Columbia Court of Appeal. He identifies several reasons why there should no liability on a solicitor to a non-client who does not reasonably rely upon him. First, a solicitor would be responsible to someone who neither retains nor pays him. Second, it is illogical to impose upon a solicitor who is merely an agent for his own client a duty to a third party which his client, himself, does not have. Third, it is impossible to disclaim or limit liability to the third party as was done in Hedley Byrne itself. Last, and more importantly, to find such a duty to a third party potentially or actually places a solicitor in conflict with the interest of his own client. At page 293 of his judgment, he comments as follows:
[29] In this case, the Appellant had acted as an agent for Mr. Soundrarajan. He was not entitled to be treated as a client by Mr. Kim, and was not owed any duties, fiduciary or otherwise, by Mr. Kim. To put it another way, when Mr. Kim was advised that the money was being provided on behalf of Mr. Soundrarajan, Mr. Kim was entitled to accept that explanation at face value. He was not required to explain that Mr. Soundrarajan could use the funds as he saw fit. Mr. Kim would not have been aware of any arrangements between Mr. Soundrarajan and the Appellant and was not obligated to take them into account.
[30] As a result, the appeal is dismissed. For completeness, however, I will briefly consider the remaining issue raised by the Appellant.
Issue #3- Did the Court Consider the Appellant’s Circumstances?
[31] Counsel argues that the Court did not properly consider the fact that the Appellant was self-represented, and was not familiar with the legal system. I also reject this argument.
[32] On the facts, the Deputy Judge ascertained that the Appellant understood what the purpose of the Rule 12 motion was. In addition, the Deputy Judge offered the Appellant the opportunity to have the motion adjourned, on terms so that the Appellant could amend his pleading. The term was that the Appellant was required to pay $750.00 in costs, for the time thrown away. As a result, from a factual perspective, the Deputy Judge clearly took into consideration the Appellant’s unfamiliarity with the legal system.
[33] Counsel for the Appellant argues that this was not sufficient, and that the Deputy Judge should have stayed the motion, and taken other steps, rather than doing what he did here. I disagree. As a question of law, Deputy Judges have the jurisdiction to deal with procedural orders. The procedural order made in this case was within the Deputy Judge’s authority to control the proceedings before him, and this Court should not interfere with his exercise of his authority.
Conclusion
[34] For the foregoing reasons, the appeal is dismissed.
[35] During the hearing, the parties agreed that costs should be payable by the unsuccessful party to the successful party in the sum of $3,500.00. That amount, inclusive of HST and disbursements, is to be paid by the Appellant to the Respondent within thirty (30) days of today’s date.
LeMay J.
Released: December 21, 2018
CITATION: Lee v. Kim, 2018 ONSC 7641
COURT FILE NO.: DC-17-0052-00
DATE: 2018 12 21
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
JHAMES LEE
Appellant
- and –
YUNJAE KIM, MOLLY LEONARD, GABRIELLA DEOKARAN, SAMIR PATEL, AND DPLS LLP
Respondents
REASONS FOR JUDGMENT
LeMay J.
Released: December 21, 2018