COURT OF APPEAL FOR ONTARIO
CITATION: Gu v. Huang, 2024 ONCA 129
DATE: 20240221
DOCKET: COA-23-CV-0020
Simmons, Thorburn and Favreau JJ.A.
BETWEEN
Yue Gu, Bo Shao and 2438866 Ontario Inc.
Plaintiffs (Appellants)
and
Rebecca Huang a.k.a. Yunfeng Huang and Fogler, Rubinoff LLP
Defendants (Respondents)
Ran He, for the appellants
Michael Kestenberg, for the respondents
Heard: February 12, 2024
On appeal from the judgment of Justice P. Tamara Sugunasiri of the Superior Court of Justice, dated December 28, 2022, with reasons reported at 2022 ONSC 7150.
REASONS FOR DECISION
[1] Following the oral hearing, we dismissed this appeal for reasons to follow. These are our reasons.
[2] The appellants sued Ms. Huang and her law firm for negligence, breach of fiduciary duty and breach of contract in connection with legal services she provided to them between December 2016 and early August 2017. Although Ms. Huang was successful in her conduct of litigation on behalf of the appellants, they claimed that she breached her contract with them by failing to proceed promptly with necessary motions. Further, they say she incurred unnecessary costs and failed to obtain adequate costs awards or an adequate order for security for costs that would have offset or avoided the fees the appellants had to pay her. Finally, they claim that the manner in which she terminated her retainer was unprofessional and prejudiced their interests.
[3] The trial judge dismissed the appellants’ action.
Background
[4] In July 2016, the appellants discovered that a certificate of pending litigation (“CPL”) had been registered against a property owned by 2438866 Ontario Inc. (the “Ballantyne property”), a company controlled by Ms. Shao. The appellants also discovered that they had been sued by two Chinese companies in relation to activities in China. The Chinese companies noted the appellants in default on April 19, 2016.
[5] The appellants originally retained another lawyer to bring motions to set aside the noting in default and the CPL registration. However, that lawyer was unable to obtain that relief prior to a scheduled closing date for the sale of the Ballantyne property. On December 15, 2016, the appellants retained Ms. Huang to proceed with the motions and also bring a motion for security for costs. At the time Ms. Huang was retained, a motion to set aside the noting in default and the registration of the CPL was scheduled for January 17, 2017.
[6] In late December 2016, the appellants provided Ms. Huang with further materials they had received from the Chinese companies in which the Chinese companies sought a Mareva injunction and leave to register a CPL against a second property owned by the appellants (the “Tiny property”). Ms. Huang attended practice court before Firestone J. on January 16, 2017, at which time a March 1, 2017 hearing date was set for those motions.
[7] Ms. Huang attended before Mullins J. on January 17, 2017 to proceed with the appellants’ motions to set aside the noting in default and the CPL registration on the Ballantyne property. At the request of the Chinese companies, Mullins J. adjourned the motions. Upon hearing the amount of time that had been set aside for March 1, 2017 and that the appellants also intended to bring a motion for security for costs, Mullins J. directed that the various motions should be heard in the following order: 1. the appellants’ motion to set aside the noting of default; 2. the appellants’ motion to set aside the CPL registration on the Ballantyne property; 3. The Chinese companies’ motion for leave to register a CPL against the Tiny Property; 4. the Chinese companies’ motion for a Mareva injunction; and 5. the appellants’ motion for security for costs. Mullins J. directed that motions 1 and 2 be heard on March 1, 2017. At the request of Ms. Huang, she also confirmed that motion 5 could be heard together with motions 3 and 4.
[8] Subsequently, at a practice court attendance on January 27, 2017, McEwen J. ordered that the three pending motions that fell within the jurisdiction of an associate judge (the motion to set aside noting in default and the two CPL motions) had to be heard by an associate judge. Accordingly, he vacated the March 1, 2017 hearing date and set the hearing date for the Mareva injunction for May 23, 2017.
[9] The remaining three pending motions were scheduled for May 4, 2017. On that date, Associate Judge Jolley determined that insufficient time had been booked for those motions and directed that they be adjourned to June 23, 2017. However, on consent of the Chinese companies, she ordered that the noting in default be set aside. Ms. Huang subsequently served the appellants’ statement of defence and motion for security for costs, claiming approximately $200,000 on account of security for costs.
[10] At a subsequent practice court date on May 9, 2017, Lederer J. ordered that the two pending CPL motions be heard with the Mareva injunction motion. Pollak J. heard all three motions on May 23, 2017 and reserved her decision.
[11] Associate Judge Jolley heard the appellants’ motion for security for costs on July 11, 2017. She ordered that the Chinese companies pay $19,255 into court by August 25, 2017, plus a further $12,780 in advance of any mediation. Prior to the security for costs motion, the Chinese companies had offered to settle it either by paying $100,000 into court in equal instalments before each of the major litigation steps in the action, or, in the alternative, by paying $24,000 into court in two instalments before each of the next two major litigation steps in the action, with the balance of the security for costs motion to be adjourned to a subsequent day. This offer was rejected.
[12] On July 27, 2017, Pollak J. released her decision dismissing the Mareva injunction motion and the motion for leave to register a CPL on the Tiny property and setting aside the CPL registration on the Ballantyne property. She also ordered the Chinese companies to pay the appellants costs of $74,180.68 within 30 days.
[13] The Chinese companies subsequently moved for a stay of the order of Pollak J. Ms. Huang moved to remove her firm from the record based on a breakdown in the solicitor client relationship on the same day as the stay motion was returnable. The stay motion was eventually dismissed on September 20, 2017.
[14] On August 3, 2018, the Chinese companies’ action against the appellants was dismissed on account of their failure to pay costs.
[15] Ms. Huang’s law firm rendered invoices to the appellants totaling $240,291.55.
The trial judge’s reasons
[16] The trial judge rejected the appellants’ claims that Ms. Huang was negligent in her handling of the CPL, set aside, security for costs and Mareva injunction motions.
[17] While the trial judge acknowledged that Ms. Huang delivered her factum for the January 17, 2017 hearing somewhat late, she concluded that Mullins J.’s reference to that fact was a side observation that had little or nothing to do with granting the Chinese companies’ request for an adjournment, which was grounded in the need for cross-examinations.
[18] The trial judge also rejected the appellants’ assertion that Ms. Huang had scheduled motions in the wrong court. The January 17, 2017 motion had been scheduled by Ms. Huang’s predecessor. The fact that different judges took different approaches to where the motions should be heard was not a matter that Ms. Huang could be faulted for. Ultimately, Ms. Huang obtained an order to set aside the noting in default on consent and the CPL motions were heard by a judge, not a master.
[19] The trial judge also rejected the appellants’ claim that Ms. Huang acted negligently by obtaining an inadequate costs award from Pollak J. Ms. Huang sought an amount that was well in excess of the quantum requested by the Chinese companies. There was nothing in Pollak J.’s decision to suggest any real likelihood of obtaining a larger award.
[20] The trial judge also rejected the appellants’ claim that delay on the part of Ms. Huang somehow delayed the security for costs motion, leaving the appellants in a weaker position vis-à-vis the Chinese companies. It was the court, not Ms. Huang that determined the order in which the motions would be heard. In any event, the appellants’ claims that they would have been in a better position had the security for costs motion been heard sooner was speculative.
[21] The trial judge declined to entertain the appellants’ argument that Ms. Huang was negligent in advising them in relation to the $100,000 offer to settle the security for costs motion, as the appellants had led no expert evidence concerning the standard of care. Nor did she accept that failing to provide an affidavit in relation to the security for costs motion was conduct that could be categorized as clearly wrong or egregious. Associate Judge Jolley left it open to Ms. Huang to bring a further motion for security for costs in relation to trial preparation. The absence of an affidavit concerning the number of documents to be translated had little to do with the amount Associate Judge Jolley ultimately awarded and she had adequate information before her to make the discretionary decisions she made.
[22] The trial judge concluded that the appellants’ remaining complaints related to professional conduct matters, none of which materially affected Ms. Huang’s delivery of services or caused them any damages in breach of contract or negligence.
Discussion
[23] On appeal, the appellants contend that the trial judge fundamentally misconstrued the nature of their action as being nothing more than a fee dispute. In addition, they submit that the trial judge erred in failing to find that Ms. Huang breached her contract with them to proceed with the motions, especially the security for costs motion, in a timely manner; and that Ms. Huang was negligent in handling their motions. The appellants also assert that the trial judge erred in determining that expert evidence was necessary to address the standard of care in relation to Ms. Huang’s handling of the offer to settle concerning the security for costs motion and in holding that she had no jurisdiction to decide violations of the Rules of Professional Conduct. Finally, they say the trial judge erred in awarding the respondents costs in the amount of $80,000.
[24] We did not accept these submissions. As we have said, Ms. Huang was successful in her conduct of the litigation on behalf of the appellants. Although the trial judge commented that “[t]his action [was] a fee dispute cloaked as a negligence action”, we are satisfied that she fully and fairly considered all of the appellants’ arguments. The foregoing chronology and the trial judge’s reasons demonstrate that she carefully and accurately reviewed the events that led to the various motions being adjourned and eventually determined. We see no palpable and overriding error or error in principle in the trial judge’s findings.
[25] In particular, we see no basis for interfering with the trial judge’s conclusion that Ms. Huang was not at fault for the delay that occurred in determining the appellants’ motions that were originally scheduled for January 17, 2017. The presiding judge on that day accepted that cross-examinations were required and took charge of determining the order in which the additional motions would be heard. Further, we agree with the trial judge that Ms. Huang cannot be faulted for the fact that different judges subsequently took different views of who should hear the various motions. We note as well that it was not possible for Ms. Huang to serve the security for costs motion until after the noting in default had been set aside. She moved promptly to do so once that order was obtained. We are not persuaded that Ms. Huang contributed to any delay in that motion being heard.
[26] We also agree with the trial judge’s conclusion that there is nothing to indicate that Pollak J. would likely have made a larger costs award in connection with the motions she determined had Ms. Huang sought an increased amount. The amount Pollak J. awarded to the appellants was substantially more than the Chinese companies were seeking had they been successful. Moreover, we fail to see any damages the appellants have suffered as a result of the quantum of the costs award. Although the Chinese companies paid the $19,255 initial order for security for costs, which enabled them to pursue the stay motion, they have not paid any additional costs.
[27] We see no error in the trial judge’s conclusion that expert evidence was required to determine the standard of care in relation to the appellants’ claims about the Chinese companies’ offer to settle the security for costs motion. In any event, the record reveals little about what amount would have been due and owing by the time the action was dismissed for failure to pay costs had the offer been accepted. The appellants’ position that accepting the offer for security for costs would have put them in a better position than the award Ms. Huang ultimately obtained is speculative in the circumstances.
[28] Further, we are not persuaded that the trial judge made any error in concluding that failing to provide an affidavit in relation to the security for costs motion could be categorized as conduct that was clearly wrong or egregious. As the trial judge said, the absence of an affidavit concerning the number of documents to be translated had little to do with the amount Associate Judge Jolley ultimately awarded. She had adequate information before her to make the discretionary decisions she made.
[29] The trial judge concluded that the appellants’ remaining complaints related to professional conduct matters, none of which materially affected Ms. Huang’s delivery of services or caused them any damages in breach of contract or negligence. The appellant has not demonstrated any error in that conclusion.
[30] The appellants did not seek leave to appeal costs and are therefore not entitled to challenge the costs award at trial.
Disposition
[31] We dismissed the appeal for the foregoing reasons. Costs of the appeal are to the respondents on a partial indemnity scale in the agreed upon amount of $20,000.
“Janet Simmons J.A.”
“Thorburn J.A.”
“L. Favreau J.A.”