Lee v. Mo et al ., 2021 ONSC 8415

COURT FILE NO.: CV-17-567087

DATE: 20211221

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Nam Dek Lee

Plaintiff

– and –

Jin Mo and Edge on Triangle Park Inc.

Defendants

David Wagner and Peter Askew, for the Plaintiff

Jin Mo, self-represented Defendant

HEARD: JUNE 21 - 24, 2021; WRITTEN SUBMISSIONS: JULY 2, 9, 2021

VELLA J.

REASONS FOR JUDGMENT

1In this action, which proceeded by virtual platform, the plaintiff, Nam Dek Lee (“Lee”), seeks damages from his former lawyer, Jin Mo (“Mo”), in negligence and breach of fiduciary duty, as a result of a failed real estate transaction.

2The action proceeded by way of affidavit evidence followed by cross-examinations, with the exception of two witnesses who testified by way of examination at court.

3In short, Lee says that due to Mo’s alleged failures, he lost an opportunity to buy a condominium unit from Edge on Triangle Park Inc (the “Builder”). Lee claims that Mo repeatedly failed to give him timely notice of the original closing date and successive extended closing dates. In the end, Mo acted without instructions when he requested the last extension that resulted in the Builder finally terminating the real estate transaction.

4Mo replies that he was neither negligent nor in breach of fiduciary duty. He says that it was through Lee’s repeated failure to obtain mortgage financing in a timely manner that Lee lost this deal. Mo further says that his retainer was terminated on or about July 2, 2015, when the Builder initially terminated the Agreement of Purchase and Sale. Therefore, when Mo took steps on behalf of Lee after July 2, 2015 he was, to use his words, doing a “personal favour” and acting as Lee’s “former lawyer.” Therefore, Mo states that he did not owe any professional obligations to Lee after the ostensible termination of his retainer on or about July 2, 2015.

5The Builder is no longer a defendant to this action as it declared bankruptcy and obtained a claims procedure order dated December 22, 2016.

6For the reasons that follow, I find that Mo was negligent, and that Lee has suffered damages as a result.

I. ISSUES

Issues

7The issues I must decide are:

(a) What was the scope of Mo’s retainer with Lee?

(b) When was Mo’s retainer terminated?

(c) Was Mo negligent in his representation of Lee?

(d) Did Mo breach any fiduciary duty owed to Lee?

(e) What damages did Lee suffer as a result of Mo’s negligence and/or breach of fiduciary duty?

II. CHRONOLOGY OF THE FAILED REAL ESTATE TRANSACTION

Chronology of the Failed Real Estate Transaction

8The following chronology is largely based on a combination of admissions made by Mo in response to Lee’s Request to Admit or admissions made at trial. It is uncontested, save where I have specifically noted.

9Lee entered into an agreement of purchase and sale with the Builder dated October 9, 2010 (the “APS”) to purchase a pre-construction condominium unit located at 36 Lisgar Street, Unit 608 in Toronto (the “Condominium Unit”). The purchase price was $250,400 and the closing date had yet to be fixed by the Builder.

10Under the APS, Lee paid $50,080 as deposits or part payment to the Builder towards the purchase of the Condominium Unit. These payments were made by Lee as follows:

(a) $12,520 on October 9, 2010;

(b) $12,520 on January 7, 2011;

(c) $12,520 on July 7, 2011; and

(d) $12,520 on October 8, 2014.

11By letter dated April 30, 2015, the Builder’s lawyer, Mark Karoly (“Karoly”) notified Mo that the closing date for the Condominium Unit was scheduled for May 19, 2015 (the “initial closing date”).

12The initial closing date could not be met by Lee for reasons that are disputed and will be discussed later in these reasons.

13On May 14, 2015, Mo called the Korean Credit Union to inquire as to the status of the mortgage and was advised that Lee had yet to make a formal application.

14Mo sent an email to Lee on May 14, 2015, following his call, to advise Lee of this development, and urge Lee to immediately make a mortgage application. Mo further advised that he would be seeking a two-week extension from the Builder. However, Lee instructed Mo to seek an extension of “at least” 20 days.

15Mo sent an email to the Builder’s law firm on May 15, 2015 requesting a 20-day extension on behalf of Lee.

16The Builder agreed to extend the closing date to May 26, 2015 (the “first extension”) and Karoly notified Mo of this extension on May 20, 2015. This extension came with a penalty of a per diem interest rate on the balance due accruing from the initial closing date.

17In or around May 22, 2015, Mo was advised by the Korean Credit Union that it had formally rejected the mortgage application because, in its view, the fact that Lee was going to rent the Condominium Unit was in breach of the APS.

18The transaction did not close on May 26, 2015, and on the same day a default letter was sent from Karoly to Mo.

19By letter dated June 1, 2015, the Builder’s lawyers contacted Mo and wrote that “the vendor has asked for a specific date that this unit can close.”

20Lee met with a mortgage broker, First Financial LP (“First Financial”), in the first week of June 2015 to assist him with obtaining a mortgage. Lee advised First Financial of the urgency of the situation.

21Mo admits he was contacted by First Financial before June 9, 2015 and was aware of its role as Lee’s mortgage broker. He also admits he told First Financial not to communicate with him by email as it would not leave a “paper trail” unless he printed the email correspondence. Mo admitted he told First Financial to only communicate with him by telephone or facsimile transmission. This caused communication problems between Mo and First Financial as will be discussed later in these reasons.

22Between June 9 and June 11, 2015, Mo sent by facsimile transmission the interim statement of adjustment, the statement of adjustment, and the APS to First Financial on behalf of Lee.

23Mo sent an email to the Builder’s law firm stating, “the potential mortgage lender has requested for a closing date and I had given the close tentative closing date of 6/19/15. Their response is still being awaited.” The Builder accepted June 19, 2015 as the second extended closing date (the “second extension”).

24The real estate transaction did not close on June 19, 2015.

25On June 22, 2015, the Builder’s law firm sent an email to Mo because the second extension was not met. The law firm requested an update on the status of the matter.

26In the meantime, First Financial found a mortgage lender, New Haven Mortgage Corp. (the “Lender” or “New Haven”), for Lee.

27On June 22, 2015, First Financial informed Mo that New Haven would be the mortgage lender for this transaction.

28On June 23, 2015, Mo proposed June 26, 2015 as a further extended closing date (the “third extension”). The Builder agreed to this third extension on the same day.

29Mo testified that he telephoned someone at First Financial on June 23^rd^ who told him regarding the mortgage financing that “maybe it would be by or before June 26^th^ provided that the lender’s requirements are all met, or words to that effect.”

30Mo then claims that he telephoned Lee on June 23, sometime after receiving an email from the Builder’s law firm at 4:03 p.m., to tell Lee that the Builder agreed to extend the closing to June 26, 2015.

31According to Lee, Mo agreed to extend the closing date to June 26, 2015 without notifying him, First Financial, or New Haven of the proposed closing date. Lee disputes having received a telephone call from Mo on or about June 23, 2015.

32On June 24, 2015, Lee and New Haven signed a mortgage loan commitment agreement for $188,000 (the “mortgage commitment agreement”). According to the mortgage commitment agreement, the mortgage funds of $188,000 would be available on or before June 22, 2015 provided all conditions and terms of the mortgage commitment were met.

33On June 24, 2015, Mo provided First Financial with a Status Certificate.

34By email sent June 26, 2015, Mo reported the third extension date to Lee.

35On June 27, 2015, Lee paid $4,610 as a deposit for his mortgage application and pursuant to the mortgage commitment agreement.

36The closing did not occur on June 26, 2015.

37By letter dated July 2, 2015, the Builder’s lawyers notified Mo that the Builder was terminating the APS and retaining lease deposits as liquidated damages as a result of Lee’s failure to close. Mo forwarded this letter to Lee on July 4, 2015.

38Both parties agree, however, that on July 10, 2015, Lee and Mo met in person to discuss the Builder’s July 2, 2015 letter. Lee asked Mo to try to obtain a further extension in order to reinstate the transaction, and Mo agreed.

39On July 10, 2015, Mo emailed the Builder’s lawyer, Karoly. In his email, Mo relayed Lee’s request to extend the closing date to July 24, 2015, and stated that, “it is my client’s pledge that he will have the mortgage lender meet the new date no matter what” (the “final extension”).

40Karoly responded to Mo by email dated July 20, 2015. In his July 20, 2015 email, Karoly wrote that he had spoken to the Builder who wanted to know if Lee was still in a position to close on July 24, 2015.

41On July 21, 2015, Mo responded to Karoly that Lee would not be able to close on July 24 and wished to have a further 10-day extension.

42On July 23, 2015, in response to Mo’s request for a further 10-day extension, Karoly wrote that “my client [the Builder] has advised that it is not interested in reinstating the agreement of purchase and sale”.

43This transaction was never completed.

III. ANALYSIS

i. What was the scope of Mo’s retainer with Lee?

Analysis

44Mo admitted that he was retained by Lee to represent him as his lawyer with respect to the purchase of the Condominium Unit.

45Mo also admitted that Lee specifically retained him because Lee wanted a lawyer who was fluent in both Korean and English and who had expertise in real estate law. Furthermore, Mo admitted that at his initial meeting with Lee he held himself out as a lawyer with expertise in real estate law.

46Mo did not prepare a written retainer agreement setting out the scope of his representation of Lee, nor did he reflect the terms of his retainer in writing.

47Mo also admitted that he did not keep proper notes of telephone calls and produced no such notes at trial.

48Lee’s evidence is that he retained Mo to advise him with respect to the scope of his APS, notwithstanding the fact that he signed the APS four years earlier and had a real estate agent at the time. Lee further claims that he retained Mo in order to close this transaction; this included communicating with Lee’s mortgage broker, lender, and the Builder in a timely manner. In addition, Mo was to communicate with Lee in a timely manner and to seek his instructions and follow them.

49In the absence of a written retainer, the court is left examining what the lawyer actually did for the client and determining what the client’s reasonable expectations of the lawyer were against that factual matrix. Any doubt as to the scope of the retainer must be resolved in favour of the client as it is the responsibility of the lawyer to ensure there is no ambiguity. Lawyers are trained to document the terms of their engagement in writing in the form of a retainer agreement.

50It is undisputed that Lee paid a monetary retainer to Mo to act as his lawyer when he met with Mo on October 2, 2014.

51In cross-examination, it was put to Mo that he was retained at least two weeks earlier, as evidenced by a Vendor’s Direction dated September 15, 2014 that was addressed to both Lee and Mo. Mo acknowledged receiving the Vendor’s Direction bearing his name as Lee’s lawyer. Accordingly, I find that Mo commenced acting as Lee’s lawyer as of September 15, 2014, and in any event by no later than October 2, 2014.

52In this case, the evidence is clear that Mo was advising Lee with respect to the steps Lee needed to take to close this real estate transaction. This advice, in part, focused on the urgency of Lee obtaining timely mortgage financing. Mo’s retainer included assisting Lee with all steps related to closing the real estate transaction. It was not Mo’s responsibility to obtain mortgage financing on behalf of Lee, but it was his job to take the steps required of him as a lawyer to fulfil the lender’s requirements in a timely manner. Mortgage financing was fundamental to Lee’s ability to close the transaction.

53For example, in Mo’s email correspondence to Lee sent at 6:58 p.m. on May 14, 2015, Mo advises Lee that he called Lee’s proposed lender, at that time the Korean Credit Union, and found out that Lee had not yet made a formal mortgage application. Mo advised Lee that an application would typically take two weeks to process. As the initial closing date was to be the next day, Mo advised Lee that he would seek a two-week extension from the Builder. Mo also urges Lee, in this email, to immediately make an application for mortgage financing, whether it be from the Korean Credit Union or another financial institution.

54Mo testified that since Lee had a real estate agent to advise him about the scope of the APS in 2010 when he entered into it, Lee did not rely on Mo for advice concerning the terms of the APS. However, the fact that Lee had a real estate agent in 2010 is not inconsistent with Lee receiving legal advice about the APS from Mo in and around 2015 as this transaction was being scheduled to close. It is a reasonable expectation of a client in Lee’s position that the lawyer he hired to help him close a real estate transaction would be alert to the terms of the APS and provide advice at least insofar as necessary to enable the client to close the transaction successfully.

55In this case, Lee’s initial proposed mortgage lender, the Korean Credit Union, rejected Lee’s application because of its view that the APS prevented Lee from leasing the Condominium Unit. Mo’s view at trial was that the occupation provision in the APS did not preclude Lee from leasing out the Condominium Unit. However, as Lee found another mortgage lender in advance of the final extended closing it is not necessary that I make this determination.

56Furthermore, the negligence and fiduciary duty allegations are not based in an alleged misinterpretation of the APS by Mo.

57It is apparent from the correspondences from Mo to Lee, Lee’s mortgage broker (First Financial), and the law firm representing the Builder that the scope of Mo’s retainer extended to providing legal services to Lee regarding the implementation of the APS. This included providing advice concerning the scope of the APS, at least insofar as necessary to advise Lee what steps were necessary to close this transaction and assisting with discharging the lawyer’s role in fulfilling those steps and closing the transaction.

58It is evident from Mo’s own conduct and interactions with Lee, Lee’s mortgage broker and the Builder’s lawyer that Mo’s retainer included advising Lee on the steps necessary to conclude the transaction, including the financing aspects. Furthermore, it is obvious that Mo had a duty to communicate with Lee in a timely manner, to seek instructions, and to not act without, or contrary to, those instructions.

ii. When was Mo’s retainer with Lee terminated?

When was Mo’s retainer with Lee terminated?

59By letter addressed to Lee dated July 10, 2015, Mo purported to terminate his retainer with Lee. Lee denies having received this letter. Mo testified that, in his view, his retainer was terminated on July 2, 2015 because the APS was initially terminated on that date by the Builder and therefore there were no further legal services that could be provided under his retainer. Mo testified that while he extended his services to obtain a further extension from the Builder, he did so as a “personal favour” extended to his “former” client, Lee.

60However, Mo clearly continued to act on behalf of Lee as a lawyer and to provide legal services after the date of this termination letter. He effectively held himself out as Lee’s lawyer to the Builder’s lawyer, Karoly, when he indicated that Lee wanted a further extension to July 24, 2015 (the “final extension”), and then again when Mo asked for a further 10 day extension beyond the final extension. Indeed, in Mo’s email sent at 2:53 p.m. on July 21, 2015 in response to Karoly’s inquiry as to whether Lee could still close on July 24, Mo stated “No, my client cannot close by then, obviously.” Later in that email, Mo corrects the reference to “my client” with “actually, my former client – since my retainer with him terminated on 7/2 as well as the consequence of the termination of the contract same day” (emphasis in original).

61Karoly was entitled to rely on Mo’s representation that Lee could not close on July 24 and therefore wished for a further extension beyond July 24, 2015, as binding on Lee, notwithstanding that Mo described Lee as his “former client”. It was reasonable for Karoly to rely on this representation given the history of this matter, in which Mo had requested and secured past extensions on behalf of Lee and was requesting yet another extension on behalf of Lee. Mo does not say in this email, for example, that he lacks authority to request a further extension on behalf of Lee or that he would seek Lee’s instructions. Furthermore, Lee is not copied on this email.

62I do not accept Mo’s position that from July 2, 2015 he was acting in a personal, non-lawyer capacity as Lee’s “friend.” His actions contradict that position. There was no suggestion to Karoly when Mo requested the final extension that Mo was no longer Lee’s lawyer.

63In any event, irrespective of whether or not Mo intended to act in a personal, non-lawyer position, his actions to the outer world, including Lee, First Financial, and the Builder’s law firm, represented that he was still acting as Lee’s lawyer in continuing to seek extensions of the closing date. Accordingly, I find as a fact that Mo continued to act as Lee’s lawyer, until Lee terminated his retainer with Mo after the Builder terminated the real estate transaction on July 23, 2015.

iii. Was Mo Negligent in his Representation of Lee?

Credibility and Reliability Assessment

Was Mo Negligent in his Representation of Lee?

64As a trier of fact, I can accept all, some, or none of the evidence of a witness. Furthermore, the evidence of a witness must be assessed according to many factors, including whether the witness’s evidence is consistent with the evidence as a whole, the witness’s demeanor when testifying, and the reliability of the witness’s recollection of material events. Reliability refers to the ability of the witness to recount historical facts accurately as distinct from assessing whether the witness is being honest and forthright.

65In the oft quoted case of Faryna v. Chorny, 1951 CanLII 252 (BC CA), [1952] 2 D.L.R. 354 (B.C.C.A.), at p. 357, the court described the assessment of a witness’s credibility as follows:

the real test of the truth of the story of a witness … must be its harmony with the preponderance of the probabilities which a practical and informed person would readily recognize as reasonable in that place and in those conditions.

66While much of the evidentiary foundation in this case was documentary in nature, there were some material facts that require a finding of credibility as between Mo, on one hand, and Lee and Sook Lim (who had direct involvement on behalf of First Financial with respect to Lee’s transaction and who testified at trial) on the other hand.

67For example, Mo denied having received certain telephone messages from Lee and Lim. At other times, Mo claimed to have had telephone conversations with Lee that Lee denies (these various telephone messages and communications will be referred to collectively as the “disputed telephone communications”).

68Mo was unable to produce any record of either the fact or the content of the disputed telephone conversations with Lee and others upon which he is relying, thereby casting doubt on Mo’s claims. The lack of documented communications in Mo’s file leads me to conclude that he was not always a reliable witness and was re-constructing events after the fact.

69At times, I found Mo to be combative or evasive in his testimony under cross-examination. For example, often when he was confronted with an impeachment through his examination for discovery transcript, he would not concede whether he made a mistake or not, and he would not acknowledge the inconsistency.

70Furthermore, Mo chose not to cross-examine Karoly on his affidavit, or cross-examine Lo (the employee of New Haven who had direct involvement in the mortgage financing) at trial, and hence their evidence is accepted as unchallenged.

71In considering the respective testimony of Mo and Lee, I am aware of the jurisprudence in which courts are instructed not to automatically accept the evidence of the client over the lawyer, in the absence of documentation to support the lawyer’s version of events. However, there must be compelling reasons to accept the lawyer’s version of events in the absence of documentation one would expect to have been created by a reasonably prudent and careful lawyer.

72I have considered Mo and Lee’s respective evidence in the context of all of the evidence as a whole (including the documentary record and the evidence of the other witnesses), and Mo and Lee’s respective demeanor as witnesses. I find that Lee’s narrative is more credible and reliable than Mo’s narrative. Where Mo’s evidence contradicts that of Lee’s, I favour Lee’s evidence, which is more consistent with the preponderance of evidence as a whole. For the same reason, I also favour Lim’s evidence where in conflict with Mo’s, even though I found Lim to be a defensive witness at times. Overall, Lim’s narrative is consistent with the preponderance of evidence as a whole. Additionally, there was no suggestion made to Lim during cross-examination that she had any motive to lie.

Negligence Analysis

73The trial focused on two areas of alleged negligence. The first area was the adequacy and timeliness of Mo’s communications with Lee concerning the various closing dates. Lee alleges that Mo failed to give him timely notice of the initial closing date and of the subsequent extended closing dates (save for the final extension) and this prevented him from obtaining timely mortgage financing.

74The second area of alleged negligence concerned Mo’s failure to obtain instructions from Lee to retract the July 24, 2015 (final) extension date and then ask for a further 10 day extension from the Builder when he was asked to confirm whether Lee was still able to close the transaction on July 24, 2015.

75Mo’s position throughout was as follows. First, he denies that he failed to give timely notice of the various closing dates to Lee and, in any event, he told Lee from the outset to get mortgage financing in place as an urgent priority.

76This part of Mo’s defence is in part centered on his contention that it was not his job, as a lawyer, to secure mortgage financing. That is the job of the client. Furthermore, Mo testified that Lee’s general tardiness in securing and finalizing a mortgage frustrated Mo’s ability to carry out his professional duties.

77In the alternative, Mo submits that because the Builder advised by letter dated July 2, 2015 that Lee was in default and the deal was terminated, anything Mo did subsequent to that date did not engage any professional duties on his behalf as a lawyer. At the latest, Mo submits that his retainer was terminated on July 10, 2015 when Mo met with Lee and secured instructions to obtain a further extension (the final extension).

78Finally, Mo relies on a document signed by Lee entitled an “Acknowledgment and Receipt” dated August 31, 2015, which purports to absolve Mo of any legal liability for the failed real estate transaction.

79Under the negligence analysis, I must determine whether Mo’s conduct fell below the standards of a reasonably prudent/competent lawyer, with a practice that focusses on real estate law.

80The seminal case setting out the standard of care for lawyers is the Supreme Court of Canada’s decision rendered in Central Trust Co. v. Rafuse et al, 1986 CanLII 29 (SCC), [1986] 2 S.C.R. 147. The Supreme Court, at p. 208, articulated the standard of care:

A solicitor is required to bring reasonable care, skill and knowledge to the performance of the professional service which he has undertaken. See Hett v Pun Pong (1890), 1890 CanLII 35 (SCC), 18 S.C.R. 290 at p. 292. The requisite standard of care has been variously referred to as that of the reasonably competent solicitor, the ordinary competent solicitor and the ordinary prudent solicitor. See Mahoney, “Lawyers — Negligence — Standard of Care” (1985), 63 Can. Bar Rev. 221. Hallett J., in referring to the standard of care as that of the “ordinary reasonably competent” solicitor, stressed the distinction between the standard of care required of the reasonably competent general practitioner and that which may be expected of the specialist. It was on the basis of this distinction that he disregarded the evidence of one of the expert witnesses concerning the practice in real estate transactions involving corporations.

See also McCullough v. Riffert, 2010 ONSC 3891 and Zink v. Adrian, 2005 BCCA 93, 37 B.C.L.R. (4th) 389 for more expansive descriptions of a lawyer’s standard of care.

81The plaintiff adduced no expert evidence regarding the standard of care expected of a reasonably prudent lawyer in these circumstances.

82The jurisprudence is clear that generally speaking, in cases of professional negligence, the plaintiff must adduce expert evidence on the standard of care. Such expert evidence is generally required to assist the court in forming the parameters and scope of any such duty.

83In Krawchuk v. Scherbak, 2011 ONCA 352, 106 O.R. (3d) 598, at para. 130, the Ontario Court of Appeal observed that the “jurisprudence indicates that, in general, it is inappropriate for a trial court to determine the standard of care in a professional negligence case in the absence of expert evidence.”

84However, the court in Krawchuk also noted that there are exceptions to this general principle. One such exception is where the actions of the defendant are so “egregious” that the impugned conduct obviously falls short of the standard of care. This exception “involves circumstances where negligence can be determined without first identifying the parameters of the standard of care rather than identifying a standard of care without the assistance of expert evidence”: Krawchuk, at para. 135.

85In Katzman v. Zucker, 2003 CarswellOnt 4479 (S.C.), at para. 14 and 18, Lax J. applied this exception to a lawyer’s negligence action, finding that no expert evidence was required where the issue to be resolved was whether or not the lawyer followed the client’s instructions:

14Here, the plaintiffs did not call expert evidence, but as the principal issue is whether Mr. Zucker failed to comply with the express written instructions of the plaintiffs, I do not require expert evidence to resolve this…. He [Mr. Zucker] does not dispute that a solicitor is required to follow the instructions of a client.

18…The evidence satisfies me that Mr. Zucker’s instructions on March 10 were to obtain releases on behalf of the entire Katzman family. It was his obligation to follow these instructions or to explain to the plaintiffs that he could not do this. In that event, he was required to seek further instructions and to reduce those instructions to writing, which he did not do. I conclude that Mr. Zucker’s conduct falls below the standard of care that is expected of a solicitor in these circumstances.

See also King Lofts Toronto I Ltd. v. Emmons, 2013 ONSC 6113, at paras. 64, 74–77.

86In this case, Mo held himself out as having particular expertise in real estate law. This latter consideration is relevant and can enhance the standard of care. However, for the reasons that follow, I find Mo’s conduct fell below the standard of care of a reasonably prudent/competent lawyer, irrespective of his professed area of expertise, because in retracting the final closing date and then seeking to extend the final closing date, Mo acted without, and indeed contrary to, the instructions of Lee. The fact that Mo acted contrary to Lee’s instructions is evident from Lee’s prior instructions that he would close the transaction on July 24, 2015 “no matter what”.

87Mo does not dispute the proposition that a lawyer must obtain and then follow the instructions of their client, provided those instructions are lawfully capable of being carried out. Mo’s position is that he was not acting in a professional capacity when he sought the last two extensions in July 2015.

Communications and the Failure to Obtain Instructions

88Lee deposed (and maintained under cross-examination) that he was not told of the initial closing date of May 19, 2015 by Mo until he had a telephone conversation with Mo on May 14, 2015. Lee received an email from Mo confirming this telephone conversation of the same date. Lee states that by the time he received notice from Mo it was too late to obtain mortgage financing.

89Mo admits he was notified by the Builder of the May 19 initial closing date by letter dated April 30, 2015. He admits that he did not send a copy of this letter to Lee. He claims that he told Lee of this initial closing date during the course of a telephone call on April 30, 2015, which Lee disputes. However, unlike the email of May 14, which confirmed his telephone call of that date with Lee, Mo produced no record of the fact of or content of a telephone call with Lee purportedly held on or around April 30, 2015.

90I find that Mo did not tell Lee of the May 19 initial closing date until May 14, 2015.

91However, Lee has not satisfied me that, had he been told of the initial closing date sooner, he would have been able to secure a mortgage by May 19, 2015. Mo told him at the outset of their lawyer/client relationship to secure a mortgage immediately. Mo reiterated that advice in writing. Lee had in fact approached Korean Credit Union for a mortgage. However, as of May 14, 2015 he had not made a formal application for a mortgage. No explanation was given at trial for Lee’s failure to make an application for mortgage as of May 14, 2015, notwithstanding the advice he received from Mo concerning the urgency of obtaining a mortgage on or about October 2, 2014.

92In any event, Mo secured an extension of the initial closing date for Lee.

93Lee also takes the position that had he been given timely notice of the consecutive extensions of time obtained by Mo on his behalf, he would have been able to get the requisite mortgage financing in place.

94However, as stated, Lee was told at the outset by Mo that he had to get mortgage financing in place as soon as possible. Once Lee was in default of the APS by failing to close on the initial closing date, Mo reiterated this advice in writing. Mo characterized this step as urgent and warned Lee in writing of the potential financial consequences of defaulting under the APS. I am not persuaded that it is more likely than not that had Mo advised Lee in a timelier way of the first and second extensions that Lee would have been able to meet the extended dates for closing.

Third Extension

95Lee finally engaged a mortgage broker, First Financial, in early June 2015 to help him locate a mortgage lender.

96Sook Lim was called as a witness at trial by Lee. She was employed at First Financial from 2014 – 2020 and assisted directly with respect to locating a mortgage lender on behalf of Lee. Lim’s evidence is that First Financial did not receive the requisite information necessary to secure mortgage financing in a timely manner from Mo, despite repeated requests. According to Lim, Mo never provided First Financial with notice of the final extended closing date of July 24, 2021.

97Lim testified that she called Mo “many times” to ask him for the requisite information, and most importantly, for the new closing date. She testified that Mo would not allow First Financial to communicate with him by way of email, which slowed down communications and was, in her experience, unusual for lawyers who typically communicated with her by email. Rather, Mo would only communicate by way of telephone or facsimile transmission.

98At the request of Lee, Lim prepared a communication log, documenting the steps taken by First Financial to secure information and a mortgage for Lee shortly after the APS was finally terminated by the Builder.

99Lim testified that she made “several” telephone calls to Mo between approximately June 5 and June 12, 2015 requesting various information that was necessary to secure mortgage financing for Lee. She testified that Mo did not return her telephone calls.

100Mo denies that First Financial attempted to call him “many times” or that he neglected to return First Financials’ telephone calls. He testified under cross examination that First Financial called him once or twice during this time frame. Once again, however, Mo was unable to produce a record of any of the telephone conversations he did have with representatives of First Financial, including Lim.

101Mo cross-examined Lim on the communication log extensively. Lim admitted that she did not have records of the unreturned telephone messages she claimed to have left for Mo.

102Lim also admitted that Lee was also slow to provide the requisite documents required of him; notably, his income and employment documents to verify his annual income.

103However, Lim testified that the documents required from Lee verifying his income were less urgent than the documents she required from Mo; notably, the APS, interim and final statement of adjustments, and the Final Closing Notice. The latter document, which provides a fixed closing date, was critical to the mortgage and was critical for triggering release of the mortgage funds to the purchaser’s lawyer. She testified that Mo never did provide the Final Closing Notice reflecting an extended (final) closing date of July 24, 2015.

104Lim explained that the process First Financial uses to find potential mortgage lenders for its clients is to post information electronically on a platform called File Logics. Prospective mortgagees will review the information and contact First Financial if interested in financing a particular transaction.

105In this case, New Haven responded and indicated that it was potentially interested in providing mortgage financing for Lee. New Haven’s affirmative response was shown on the File Logics platform and confirmed in testimony at trial by Jackie Lo (“Lo”). Lo handled this transaction on behalf of New Haven.

106Critically, New Haven provided a Mortgage Loan Commitment Agreement dated June 22, 2015 setting out the terms of the proposed mortgage financing. On June 22, 2015, New Haven, as lender, approved Lee’s mortgage application for $188,000. This was done in the absence of a firm closing date having been set, as was typical.

107On June 24, 2015, the Mortgage Loan Commitment Agreement was fully executed by New Haven and Lee. In other words, Lee had a pre-approved mortgage. This was confirmed by Lim and Lo, and not seriously challenged by Mo. The mortgage funding date was listed as on or before July 22, 2015 for the funds to be delivered, pending satisfaction of the conditions and terms of this agreement.

108Mo also admitted that he knew that Lee had secured a mortgage loan commitment as of June 22, 2015.

109On or about July 6, 2015, Mo informed First Financial that the Builder was terminating the deal, but that Mo would try to save the deal. First Financial informed New Haven that the Builder had terminated the APS but asked New Haven to put the mortgage on hold as Mo was attempting to have the APS reinstated. New Haven agreed to put the mortgage commitment on hold.

110Under cross-examination, Lim agreed that Mo had sent some of the required documents within a few days of her request. Furthermore, the last document required from Mo (other than the closing date notice) was sent on June 11, 2015. This was prior to Lee sending in the documents that First Financial required of him. Lee’s own documents and cheque were sent to First Financial on June 15th.

111Mo denies knowing that New Haven had agreed to put the mortgage commitment on hold, notwithstanding that he had communications with First Financial where he told it that he was trying to salvage the deal. Mo assumed that the mortgage commitment had been cancelled. However, he did not take any steps to inquire of either First Financial, New Haven or his client, Lee, as to the status of the mortgage commitment by New Haven.

Final Extension and Termination of the Transaction

112On July 10, 2015, Mo, on instructions from Lee, sent an email to Karoly asking whether the Builder would extend the closing date for the Condominium Unit to July 24, 2015. Mo added that Lee would close on that date “no matter what”. Lee and Mo advised First Financial that Mo was attempting to salvage the deal and to put the New Haven mortgage commitment on hold.

113Lim testified that by email communications with New Haven, she asked New Haven to put the mortgage transaction on hold while Lee and Mo attempted to salvage the deal, and that New Haven agreed. Lo confirmed this evidence, and the email communications were produced supporting this testimony.

114By email dated July 20, 2015, Karoly responded to Mo. He wrote, “My client just responded. Is your client still in a position to close on July 24^th^?”

115Mo responded by email dated July 21, 2015 that Lee was unable to close on July 24 and requested a further 10-day extension on behalf of Lee.

116Karoly deposed that as a result of Mo’s request for a further extension, he was instructed by the Builder on July 22, 2015 to advise Mo that it was “not interested in reinstating the agreement of purchase and sale.” Karoly relayed this advice to Mo by email dated July 23, 2015.

117Karoly further deposed “To be clear, on July 20, 2015, the Builder was willing to reinstate the agreement of purchase and sale and extend the closing date until July 24, 2015, but on July 22, 2015 it was not willing to grant a further extension of another 10 days as requested by Mr. Mo on July 21, 2015.”

118It is fundamental to a lawyer’s duty owed to their client that the lawyer seek and follow instructions. If instructions become untenable or ambiguous for some reason, then the lawyer must go back to the client, provide advice, and seek further instructions or clarify their existing instructions.

119In Ferreira v. St. Mary’s General Hospital, 2018 ONCA 247, at paras. 30-31, the Court of Appeal explained the fundamental importance of a lawyer acting always on their client’s instructions:

30Ms. Masgras [the lawyer] fundamentally misunderstands the principles enunciated in that case [Federation of Law Societies of Canada v. Canada (Attorney General), 2015 SCC 7]. That decision does not support Ms. Masgras’ proposition that a lawyer is entitled to take whatever step s/he wishes in furtherance of what the lawyer thinks is the client’s “cause”. What Ms. Masgras appears not to understand is the fundamental principle that lawyers must act in accordance with the instructions of their clients. Lawyers do not have a carte blanche to take steps of their own volition under the guise of furthering the client’s perceived cause. In particular, lawyers do not have the right to institute proceedings without being armed with instructions from their clients to do so.

31Simply put, Ms. Masgras had no authority to take the steps that she did. In doing so, Ms. Masgras breached the basic principles that apply to the conduct of lawyers, particularly their duty to act honourably.

See also Victoria & Grey Trust Co. v. Apple, 1984 CarswellOnt 584 (S.C.), at para. 34.

120The evidence is uncontroverted that Mo did not seek Lee’s instructions before requesting the final, failed extension. Furthermore, Mo did not undertake any inquiries of either First Financial, New Haven, or his client, to determine the status of the mortgage commitment, or whether it would be feasible to obtain the requisite mortgage financing from New Haven in time for a July 24, 2015 closing date as at July 20, 2015.

121Under cross-examination, Mo testified that he did not contact Lee to see if he could still close the transaction on July 24 because in his view “the matter was out of Mr. Lee’s hand”. Furthermore, he did not contact First Financial or New Haven to see if the mortgage funds could be ready by July 24 because he decided “to wait first [to see] what the Builder’s lawyer’s response was”. Mo added that until he had Karoly’s response “it would have been a waste of time” to check with the mortgage broker.

122Mo further testified under cross-examination that he did not have instructions from Lee to propose a further extension beyond July 24, confirming that “It was my judgment, my own judgment. It was not Mr. Lee. Mr. Lee had nothing to do with it.” And further, “It was not a matter of giving instructions. His [Lee’s] instructions would have meant, wouldn’t have meant anything by that point. What could Mr. Lee himself do at that point?” He affirmed that he did not need to ask Lee for instructions.

123Against this factual matrix is the fact that New Haven had, in fact, agreed to put the mortgage financing on hold, Lee had been pre-approved for the requisite mortgage financing to Mo’s knowledge already, and the unchallenged evidence of Jackie Lo that the mortgage commitment had not been withdrawn and financing would have been put in place in time for a July 24, 2015 closing. All of the requisite mortgage application information and the mortgage application fee had been received by New Haven by the end of June, the file had been sent to its lawyer for processing, and the only outstanding piece of information was the actual closing date to trigger the transfer of funds to its lawyer for release to Mo. While time would have been short, Lo testified that New Haven was used to turning around funds quickly.

124It was Mo’s obligation, as Lee’s lawyer, to provide the closing date to First Financial and/or New Haven as soon as he was instructed to propose it to the Builder. Mo failed to advise First Financial of the proposed closing date of July 24. Once Mo received Karoly’s July 20, 2015 letter, a reasonably prudent lawyer acting on the closing of a real estate transaction would have immediately contacted the mortgage broker or lender, confirmed July 24 as a realistic closing date, and then contacted Karoly to confirm the July 24closing date. Mo already had Lee’s instructions to seek the extension to July 24, 2015.

125Instead, Mo, without instructions from Lee, retracted the July 24 date, and requested a further extension because Mo assumed, erroneously, that Lee could not have closed the transaction on July 24. The evidence is uncontroverted that but for Mo’s retraction of the July 24 date, the Builder was willing and ready to reinstate the real estate transaction with a closing date of July 24, 2015 as of July 20, 2015.

126I am further satisfied on the evidence as a whole that Lee had the means to finance the balance of the purchase price from the mortgage funds of $188,000 and to make up the small shortfall from his personal savings. In that regard, Lee produced his statements from his bank accounts (unchallenged), which showed that he had more than enough personal savings to make up the shortfall of approximately $12,000.00.

127While I find that Mo was at least partly to blame for Lee’s inability to close the transaction on the earlier June 26, 2015 extended closing date by reason of his late notice to Lee, it is clear that Mo’s unauthorized actions in retracting the July 24 date and requesting a further 10 day extension is entirely responsible for the Builder’s final decision to terminate the APS and keep Lee’s deposits.

128In these circumstances, Mo was obliged to contact Lee to seek further instructions before retracting the July 24,2015 final closing date and requesting a further extension. See for example, Ferreira, at para. 30, and Zink, at para. 23.

129I do not require an expert witness on the standards of a reasonably prudent/competent lawyer to make this finding. It is fundamental to the lawyer-client relationship, and a lawyer’s professional obligations to his client, that they seek and follow instructions. Lee did not revoke his instructions that led to Mo seeking the extension to July 24, 2015, nor did Lee instruct Mo to retract the proposed July 24^th^ closing date or seek a further extension.

130Accordingly, Mo breached his standard of care as a reasonably prudent/competent lawyer owed to Lee when he acted, without instructions and in the face of Lee’s prior instructions, when he retracted the July 24, 2015 proposed closing date and requested a further 10 day extension in response to Karoly’s email of July 20, 2015.

131Furthermore, as a result of this breach, Mo caused the Builder to decline to reinstate the real estate transaction, which otherwise would have closed on July 24, 2015. Lee has satisfied me on a balance of probabilities that he had the requisite financing in place, including partial funding from his personal savings, to close this transaction on July 24, 2015.

Does Lee’s Signed Receipt and Acknowledgement Absolve Mo of Liability?

132Mo drafted a document dated August 31, 2015, entitled “Acknowledgment and Receipt”, for Lee’s signature (the “Acknowledgment”). Mo relies on this document as an admission by Lee absolving Mo from all liability.

133The Acknowledgement reads in part,

I, NAM DEK LEE, acknowledge that the Vendor had terminated the above-referenced agreement of purchase and sale as of July 2, 2015, on account of my breach of paragraph 1(c) of same agreement, per which I was required to pay the Vendor the balance of the purchase price. It was due to my inability to obtain a mortgage, despite several postponements of the final closing through your [Mo’s] efforts on behalf of me. I acknowledge you have done your best and did all you could do in your duty as my real estate lawyer.”

134Lee signed this Acknowledgement.

135Mo relies on this document to absolve himself of liability, separate and apart from his claim that he owed no further professional duties to Lee on and after July 2, 2015. In this document, Mo purports to place the blame on Lee for the fact that the transaction was not closed on July 2, 2015. This notwithstanding the fact that before August 31, 2015 Mo had successfully secured the final extension to July 24, 2015 keeping this transaction viable.

136Lee testified, and I find as a fact, that when he signed this document, he had not been made aware by Mo of the fact that Mo had told the Builder that Lee could not close on July 24. He was also not aware that Mo had asked for a further extension of the closing date beyond July 24, 2015 or that the Builder had terminated the transaction on July 23 because of that unauthorized request.

137In any event, this type of self-serving document is not to be countenanced by the court. The document ignores the fact that the real estate transaction had been revived after July 2, 2015, it does not reflect any recommendation by Mo that Lee should obtain independent legal advice, it was produced without giving Lee full disclosure of the July 20 – 23, 2015 events (including Mo’s exchange of emails with Karoly), and it is clearly a self-serving document prepared by Mo that would feasibly discourage Lee from considering whether Mo had potentially engaged in actionable conduct. It also gives rise to a reasonable inference that Mo had some concerns that he might have been, in some measure, responsible for the ultimate termination of the real estate transaction by the Builder.

138The court will not countenance this type of legal maneuver by a lawyer against a former client.

139For these reasons, the Acknowledgement is not legally effective and does not absolve Mo of any liability.

140I reject Mo’s position that he was absolved of liability after Lee initially went into default of the earlier closing dates of May and June 2015 or because Mo purported to terminate his retainer prior to the securing of the final extension, or because he received the Acknowledgement from Lee. These positions reflect a fundamental misunderstanding of the lawyer-client relationship and the duty of a lawyer to seek and act on the instructions of their client.

iv. Did Mo Breach his Fiduciary Duty owed to Lee?

141Lee also asks that this court find Mo to have breached his fiduciary duty to him.

142It is trite law that lawyers stand in a fiduciary relationship with their clients.

143However, it is also trite law that not every breach of a duty of care results in a breach of fiduciary duty: Hodgkinson v. Simms, 1994 CanLII 70 (SCC), [1994] 3 S.C.R. 377, at p. 405.

144In Varcoe v. Sterling, 1992 CanLII 7730 (ON CA), 1992 CarswellOnt 888 (Gen. Div.), at para. 100 (affirmed (1992), 10 O.R. (3d) 574 (C.A.), leave to appeal refused [1992] S.C.C.A. No. 440), the court stated:

It is that element of trust reposed in the fiduciary together with a power or discretion over the beneficiary’s interests which labels the relationship “fiduciary”. An act of the fiduciary which betrays that trust, whether or not the fiduciary gains a benefit, is a breach of fiduciary duty. An act of “betrayal” is one which shows disloyalty and has the “stench of dishonesty”, not simply carelessness or negligence.

145In Girardet v. Crease & Co. (1987), 1987 CanLII 160 (BC SC), 11 BCLR (2d) 361 (S.C.), at p. 362, in a passage quoted with approval by the Supreme Court of Canada in Hodgkinson v. Simms, the court observed that in order to establish a breach of a fiduciary duty by a lawyer the character of the misconduct must be in the nature of dishonesty, deceit, or constructive fraud. Again, it is not enough to demonstrate that there has been a breach of a common law duty of care by the lawyer owed to their client.

146In this case, I find that in retracting the July 24 date and requesting a further extension, Mo did not intend to cause the Builder to terminate the real estate transaction. In seeking the further extension, even without instructions, Mo acted erroneously, in what he believed was the best interests of his client. Mo assumed, again erroneously, that Lee would not have been able to close the transaction on July 24, 2015 based on the fact that the Builder only relayed its willingness to close on July 24 four days earlier. To that point in time, the Builder had already extended the closing date multiple times. Mo was seeking to give Lee some additional time in case the mortgage financing could not be in place by July 24. It turns out that intention was misguided in these circumstances as Lee could have closed on July 24, 2015.

147Furthermore, there was no evidence to suggest that Mo acted in a conflict of interest with Lee’s interests, concealed something from Lee, misused Lee’s confidential information, preferred another client’s interest over Lee’s, or that Mo had some ulterior or improper motive in seeking the further, albeit fatal, extension.

148In order to find that a breach of a duty (and standard) of care is elevated to a breach of fiduciary duty there must be a finding of disloyalty or dishonesty on the part of the fiduciary as defined in the jurisprudence.

149I do not accept Lee’s submission that the Ontario Court of Appeal’s decision in Martin v. Goldfarb, 1998 CanLII 4150, does away with the elements of disloyalty or dishonesty as a requisite element of establishing a breach of fiduciary duty.

150While Mo breached his lawyer-client common law duty of care owed to Lee, that breach is not elevated to a breach of fiduciary duty in this case. In declining to recognize a breach of fiduciary duty, I find that the policy behind fiduciary duty — as an equitable tool for regulating power-dependency relationships to prevent an abuse of power by the fiduciary — is not offended in these circumstances.

151I am not satisfied that Lee has proven, on a balance of probabilities, the requisite element of disloyalty or dishonesty on the part of Mo. Accordingly, I decline to find that Mo breached his fiduciary duty owed to Lee when he acted without instructions on July 21, 2015 in repudiating Lee’s willingness to close on July 24 and by asking for a further extension.

152Further, and in any event, a finding of breach of fiduciary duty would not have affected the outcome in terms of an assessment of damages as will be explained in the next section.

IV. DAMAGES

Liquidated Damages

Damages

153Lee is entitled to damages caused by Mo’s negligence.

154Lee advanced the following sums as liquidated damages:

a) $50,080.00 as the forfeited deposit;

b) $4,221.96 as additional forfeited payments made to the Builder;

c) $ 4,610.00 paid by Lee to New Haven as the mortgage commitment fee;

d) $2,450.00 as legal fees paid to Mo;

e) $649.75 as the inspection cost incurred by Lee for the Condominium Unit.

155Mo did not challenge these sums at trial and there is no reason to reduce these damages. Mo did not plead contributory negligence against Lee. In any event, I do not find on the evidence that Lee was contributorily negligent. Mo was wholly responsible for the Builder terminating the real estate transaction. While Lee may have been slow to take the requisite steps to secure the mortgage financing, in the end he had secured the requisite funding in time to meet the July 24, 2015 closing date.

156Lee adduced proof of payment of each of the sums claimed as liquidated damages, and I accept that unchallenged evidence.

157I also accept that, in these circumstances, Lee is entitled to a full refund of the fees he paid to Mo, since due to Mo’s negligence, Lee did not receive the service he ought to have received.

158Accordingly, I am fixing Lee’s liquidated damages in the sum of $62,739.71.

Loss of Opportunity (Increased Value of the Unit)

Loss of Opportunity (Increased Value of the Unit)

159Lee claims the increased value of the Condominium Unit from the date of the failed transaction to November 4, 2019 in the sum of $219,600. This heading of damages is based on the report of Jim Parthenis, who appraised the Condominium Unit’s market value at November 4, 2019 at $470,000. The original purchase price in the APS was $250,400.

160Lee submits that he should receive damages calculated as at November 4, 2019 on the basis that Mo is liable to pay damages that were reasonably foreseeable consequence of Mo’s negligence. Lee relies on Semelhago v. Paramadevan, 1996 CanLII 209 (SCC), [1996] 2 S.C.R. 415, at p. 424 – 426. Lee also relies on Rankin v. Menzies, 2002 CarswellOnt 50 (S.C.), at para. 43 which states in part:

The negligent solicitor is responsible for all reasonably foreseeable damages caused by his or her negligence.

161Lee submits that the court should approach the assessment of damages in this case in the same manner as it would in assessing damages in lieu of specific performance. The rationale is that had Lee been able to compel performance of the APS in 2015, he would have benefitted from the increase in its fair market value. He was deprived of the opportunity to purchase a replacement property because his deposit was forfeited due to Mo’s negligence, and therefore he could not afford to buy another property, thus rendering the Condominium Unit unique to him.

162However, the appraisal report was not tendered through Mr. Parthenis by way of expert evidence; i.e., through an affidavit or by calling Mr. Parthenis as an expert at trial. Lee’s lawyers advised that this was due to an oversight. However, Lee’s lawyers did not seek leave to adduce expert evidence beyond the timeline set out by the Rules. Lee’s lawyers contended that Mo admitted the increased value of the Condominium Unit in his response to Lee’s Request to Admit. I have examined Mo’s response to Lee’s Request to Admit and do not agree. Mo’s response expressly states that he refuses to admit the truth of the alleged appraisal price, albeit on the basis that he lacks personal knowledge of the value. This is not an admission of truth of the requested fact.

163Furthermore, neither the appraisal report nor Mr. Parthenis’ opinion as to the fair market value of the Condominium Unit as at November 4, 2019 in the sum of $470,000 were put to Mo in cross-examination.

164Accordingly, this portion of the claim for damages must fail. Lee did not prove the loss of increased value of the Condominium Unit (see Accurate Fasteners Ltd. v. Gray, 2005 CarswellOnt 4770 (S.C.), at paras. 6 and 8, where the court rejected a similar claim due to lack of expert evidence as to fair market value of a property in a lawyer’s negligence action).

V. DISPOSITION AND COSTS

165Accordingly, judgment is granted to Lee in the sum of $62,739.71.

166Lee shall also have prejudgment and post judgment interest in accordance with the Courts of Justice Act, R.S.O. 1990, c. C.43. If Lee and Mo cannot agree as to the appropriate rates of interest, and/or commencement dates, I will receive brief written submissions from each party as further detailed below.

167I have reviewed the respective cost outlines of Lee and Mo.

168I invite written submissions as to the appropriate scale of costs, including whether any offers to settle were delivered and whether rule 76.13 is engaged. As well, I would benefit from submissions concerning whether costs should be ordered payable by Mo with respect to the failed motion for summary judgment brought by Lee. The cost outlines do not provide me with sufficient information.

169With respect to the written submissions I have requested, Lee will provide his within 10 days from the release of these reasons. Mo will then have 10 days in which to deliver responding submissions. The total number of pages, addressing both the applicable interest rate and costs, shall not exceed 5 pages double spaced from each party and will be delivered by email communication to my judicial assistant.