Court File and Parties

Court File No.: DC-22-00000004-0000

Superior Court of Justice

Between:

JIAN HUANG CHENG Plaintiff

v.

YUQIN LI and BAOFU SHI Defendants

Decision on Appeal

Before: The Honourable Justice J.C. Corkery

On: September 25, 2024 at Newmarket, Ontario

Appearances:

J. Li, Counsel for the Plaintiff N. Wan, Counsel for the Defendants

Excerpt of Proceedings

Wednesday, September 25, 2024

Decision on Appeal

CORKERY, J. (Orally)

The appellant, Jian Huang Cheng, appeals the decision of Deputy Judge R. Avinoam rendered on September 8th, 2022. The appellant appeals both the decision in the main claim as defendant and as plaintiff in the third-party claim. The appellant raises issue with respect to the formation of contracts and estoppel in the main claim, and in the third-party claim, whether it should have been dismissed as having awarded part of the claim.

The appellant and the plaintiff in the main claim resided together between 2014 and 2015. They purchased two properties: a condominium and a house. Upon separation, they decided to sell the condominium. Before closing, the plaintiff in the main claim, Shi, made a proposal to the appellant. After presenting some calculations, she proposed that a certain sum be recognized as what she owed to the appellant. If, upon closing, half of the proceeds amounted to more than what was owing – specifically, she proposed, “If 50 percent of the sale is less than this amount, I will refund you. Otherwise, I hope you can refund me.” In the same text, she made a proposal with respect to her purchasing the appellant’s interest in the house.

Mr. Cheng responded to this proposal on the same day. It is agreed that his text response does not represent an acceptance of the proposal by Ms. Shi. 10 days later, the sale of the condo closed. A certified cheque was issued, payable to both Cheng and Shi. Shi asked Cheng to pick up the cheque at the real-estate lawyer’s office. He did so and deposited the cheque into his bank account. In his view, the issue regarding the condo was done and over.

The trial judge found that there was no agreement respecting the condominium sale proceeds. He found that Shi was entitled to half of the proceeds. He also found that Cheng was entitled to half of the rent with respect to the condo that had been paid to Shi, but Shi had not shared it with Cheng. The trial judge granted judgment in the amount of $21,657.56, being the net proceeds less Cheng’s half-share of the rent, which Shi had not paid to him. The third-party claim was dismissed. Cheng was ordered to pay costs in both proceedings. The third-party claim was against the tenants, Shi’s parents, for Cheng’s share of the rent.

The appellant submits that the trial judge erred in failing to find that there was an agreement respecting the sale proceeds of the condo and erred in his consideration of the applicable doctrines of revocation and estoppel. With respect to the third-party claim, the appellant argues that the trial judge erred in dismissing the third-party claim, having granted Cheng part of his claim by way of set-off against the plaintiff in the main action.

Standard of Review

The standard of review was recognized by the Supreme Court of Canada in Houson v. Nikolaisen, 2002 SCC 33. For questions of fact and inferences from such findings, the standard of review is “palpable and overriding error”. The same standard of review applies to questions of mixed fact and law, except for extricable questions of law, which are subject to a correctness standard. And for questions of law, the standard of review is correctness. The standard has been considered in subsequent decisions.

In H.L. v. Canada (Attorney General), 2005 SCC 25, at paragraph 70, the Supreme Court emphasized that an appellant must be able to identify the crucial flaw, fallacy, or mistake made by a trial judge.

In Houson, at paragraph 21, the Supreme Court stated:

[As Read] The standard of review is not to verify that the inference can be reasonably supported by the findings of fact of the trial judge, but whether the trial judge made a palpable and overriding error in coming to a factual conclusion based on accepted facts, which implies a stricter standard.

Further, a palpable error is an error “that is plain and obvious to see”. See paragraph 5.

Such errors might include:

[As Read] Findings made in the complete absence of evidence, findings made in conflict with acceptable evidence, findings based on a misapprehension of evidence, and findings of fact drawn from primary facts that are the result of speculation rather than inference.

And that is from Allcock v. Larsen, 2013 ONSC 2591, at paragraph 20.

Issues on Appeal

The appellant argues three issues. First, the trial judge failed to apply the correct legal test for the acceptance of the offer; second, the trial judge failed to conduct an objective analysis of the facts; and third, the trial judge ignored material evidence and gave improper weight to other evidence.

Analysis

Acceptance of Offer

First, with respect to whether the trial judge applied the test regarding acceptance of an offer correctly, the trial judge, in his Reasons, stated:

[As Read] The defendant’s submission that there was a ‘de facto agreement’ between the plaintiff and defendant, to allow the defendant to retain one hundred percent of the net sale proceeds, in my view, is not demonstrated by the evidence.

After analyzing the evidence before him, the trial judge concludes, “The defendant never asserted any form of acceptance. There was simply no agreement made”.

The appellant suggests that the trial judge ignored the fact that the appellant, in keeping the whole amount of the proceeds of the sale, depositing the whole amount of the cheque into his account, was evidence of acceptance. This action, the appellant argues, is consistent with acceptance that was recognized by the Supreme Court of Canada in Saint John Tug Boat Co. Ltd. v. Irving Refining Ltd, [1964] SCR 614, at page 621.

In my view, there is not reason to believe that the trial judge was incorrect in his understanding or application of the law. He was well aware that the deposit was made, nevertheless concluded that there was no agreement made. It is not necessary for a trial judge, particularly in the small claims court, to set out a detailed summary of the applicable law. His conclusion that no agreement was made is consistent with the law and the facts that were before him. It is not necessarily the case that the deposit of the funds by the appellant represents an acceptance. It may be one possible interpretation. In my view, it is a difficult interpretation on these facts, even recognizing the possibility that depositing the funds may have constituted acceptance. To do so would mean that the offer by Ms. Shi remained even after closing, even after the amount of proceeds was known. In my view, her proposal was not intended to exist as an open-ended offer that would survive the closing of the transaction. In any event, I am not convinced that the trial judge was incorrect in his understanding or application of the law. He did not apply an incorrect legal test for acceptance of the offer.

Objective Analysis and Evidence Weight

With respect to the trial judge conducting an objective analysis of the facts and ignoring material evidence, or giving proper weight to evidence, there is simply no palpable and overriding error in this respect. The trial judge’s findings were wholly consistent with the evidence before him. His conclusions were not clearly wrong, unreasonable, or unsupported by the evidence. The trial judge made no error in finding that there was no agreement between the parties and his decision is entitled to deference.

Revocation and Estoppel

I am not prepared to consider the issues of revocation and estoppel. These are entirely new issues that were not raised in pleadings or during the trial, or in the closing submissions. See: Zhang v. Dell Canada, 2020 ONSC 48, at paragraph 12, where this court refused to consider grounds of appeal that were not raised before the trial judge.

Third-Party Claim

Turning then to the second appeal with respect to the third-party claim, this appeal concerns unpaid rent, that is to say, rent that was not paid to the appellant. The trial judge dismissed this claim but recognized that rent that was received by Shi had not been shared with Cheng, and as such, allowed a set-off claim in the amount of $6,887.50, being Cheng’s share of the rent, one-half of nine-and-a-half months’ rent.

In my view, it was wholly appropriate on the evidence before him and it was not an error to dismiss the third-party claim against Shi’s parents, the defendants in the third-party claim. There was evidence on which the trial judge could rely to conclude that the rent was paid by the parents, to their daughter. The dismissal of the third-party claim is in no way inconsistent with recognizing Cheng’s interest in one-half of the rent, payable by Shi. The cost award on the dismissal of the third-party claim was reasonable and appropriate, and within the trial judge’s discretion. The third-party parents were entitled to their costs, the claim against them having been dismissed.

Conclusion

Accordingly, both appeals are dismissed. The respondents are entitled to their costs. I understand that the counsel have agreed upon the costs with respect to the third-party claim. I’ll hear submissions with respect to the main claim.

End of Excerpt of Proceedings