2019 QCCQ 803, 2019 QCCQ 803

Gowling WLG (Canada) c. Li 2019 QCCQ 803 COURT OF QUEBEC CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL CIVIL DIVISION No: 500-22-237166-171 DATE : January 17, 2019 ______________________________________________________________________ PRESIDED BY THE HONORABLE CATHERINE PILON, J.C.Q. ______________________________________________________________________ GOWLING WLG (CANADA) LLP Plaintiff/Cross-Defendant v.

JUN LI Defendant/Cross-Plaintiff ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] Gowling WLG (Canada) LLP (« Gowling ») claims $50,393.25 from Jun Li for unpaid legal fees in relation to an appeal brought on his behalf, as well as work in relation to a franchise dispute. It also claims $7,500 as damages for the trouble and inconvenience it has suffered from having been forced to undertake legal proceedings to collect its invoices. It further alleges that Mr.

Li’s refusal to pay the fees is abusive. [ 2 ] Mr. Li contests the claim on the grounds that the services which form part of the claim were not rendered, unnecessary, tardy, unauthorized, or contrary to his interests. [ 3 ] He also filed a Cross-Demand for $22,000 representing the additional indemnity pursuant to

article 1619 of the Civil Code of Quebec (“ CCQ ”) which he blames Gowling for not having claimed in the course of the appeal. Further to an amendment during trial, Mr. Li argued additionally that a settlement transaction occurred with Gowling in respect of the fees in dispute. He also amended at trial to add $7,500 to his Cross-Demand arguing that Gowling’s claim is abusive. Questions at issue A. Did a transaction occur between the parties concerning the disputed fees? B. Were the fees charged by Gowling to Mr. Li fair and reasonable? C.

Was Gowling negligent in failing to claim the additional indemnity as part of the appeal? D. Are the parties justified to claim $7,500 from each other for abuse of proceedings? Context [ 4 ] Mr. Li contacted the Ottawa office of Gowling in October 2014 for a referral to a litigation lawyer who could assist him appealing a judgment rendered by the Superior Court in Gatineau (550-17-005774-110) on October 9, 2014. He was not represented by an attorney for the purpose of this trial. [ 5 ] Mr. Li was referred to Mtre François L’Heureux of the Montreal office of Gowling.

A first meeting took place later in October, in the presence of Mr. Li, Mtre L’Heureux, and Mtre Charles Daviault, a litigation associate admitted to the Quebec Bar in 2011. Mr. Li wanted to discuss with them the opportunity of appealing the trial judgment. I. The Trial Judgment [ 6 ] The circumstances which led to the trial judgment are as follows. [ 7 ] Mr. Li was the majority shareholder of 6375011 Canada inc., which operated a motel-bar-restaurant under the franchise Patio Vidal , and 6734995 Canada inc., owner of the premises where this business was operated. Mr.

Li purchased the shares of his co- shareholder in these companies in March 2010 to become their sole shareholder. He then sold 55% of his shares in both companies to Zhao Hui Wang.

[ 8 ] According to the trial judgment, Mr. Li intended to continue managing the business while Mr. Wang’s involvement would be limited to bookkeeping. Mr. Wang rather felt that he should be involved in all aspects to learn the ropes of the business. [ 9 ] These diverging views led to a dispute between Mr. Li and Mr. Wang and an application by Mr. Li before the Superior Court for an oppression remedy under the

Canada Business Corporations Act . Mr. Li sought an order forcing Mr. Wang to purchase his shares for $560,000 and damages of $880,000, including lost salary. He did not claim interest or the additional indemnity. [ 10 ] Mr. Wang brought a cross-demand of $250,000 for moral damages. [ 11 ] In a judgment rendered on October 7, 2014, the trial judge determined that the value of Mr. Li’s shares was to be based on the $822,000 value of a building which she considered the sole asset of the companies. Given that Mr.

Li owned 45% of the shares, she decided that their value was to be established proportionately at $369,900. She dismissed the remainder of Mr. Li’s claim. [ 12 ] The trial judge granted in part the cross-demand and awarded Mr. Wang $50,000 in damages. She compensated both awards and condemned Mr. Wang to pay Mr. Li $319,900. She also ordered Mr. Li to reimburse 6375011 Canada inc. the provision for costs of $17,500. [ 13 ] It is noteworthy that the trial judge commented harshly on the behavior of Mr. Li in the context which gave rise to the proceedings.

She blamed him for having been malicious, unduly stubborn, and generally having made life difficult for Mr. Wang. [ 14 ] On October 9, 2104, the trial judge rectified her judgment to indicate that she had inadvertently omitted to take into account and subtract a $1,143,578 long-term debt of the companies to the value of the building. Seeing that she attributed a value of $822,000 to the building, she reached the conclusion that Mr. Li’s shares had no value and ordered that they be sold to Mr. Wang without any return. [ 15 ] The end result of the trial judgement was that Mr.

Li was forced to hand over his shares to Mr. Wang for “free”, while nevertheless having to pay him $50,000 in damages and reimburse the provision for costs. II. The Appeal [ 16 ] Before meeting Mr. Li, Mtre L’Heureux was provided with a copy of the judgment which he reviewed preliminarily. He then wrote Mr. Li on October 22, 2014, to advise that the fees for the appeal, without having yet analyzed the matter thoroughly, could easily reach $15,000 to $20,000, plus disbursements.

He warned him that the journey would be costly and that he would need to have the financial means to support it. [ 17 ] In the course of their first meeting with Mr. Li, a few days after the October 22 email, Mtres L’Heureux and Daviault explained to him that an appeal was not a second trial, and that issues which were not raised during trial could not be argued in appeal. They also explained that the judge commented negatively on Mr.

Li’s behavior which affected his credibility as a witness, and that the Court of Appeal usually hesitates to modify a trial judge’s findings in this respect. [ 18 ] They further advised that they would have to act quickly to inscribe the appeal within 30 days of the judgment. Notwithstanding the hurdles which they identified and explained to Mr. Li, they felt that there were valid grounds of appeal, which they would confirm once they listened to the audio of the four-day hearing before the Superior Court. [ 19 ] The meeting included a discussion about fees. Mr.

Li was advised that the current hourly rates for Mtres L’Heureux and Daviault were respectively $450 and $270. According to Mr. Li, he was asked to sign a written retainer letter. Mtre Daviault testified that it was customary for Gowling to send clients engagement letters, but that he could not locate the one signed by Mr. Li, so that it was not filed at Court. [ 20 ] As agreed with Mr.

Li, Mtre Daviault listened to the entirety of the trial in the days following their meeting. [ 21 ] Mtre L’Heureux and Mtre Daviault were then in a position to recommend a strategy for the appeal and elaborated grounds of appeal which they submitted to Mr. Li: • The trial judge had no authority to rectify her judgment proprio motu ; • The trial judge was biased against Mr. Li and did not allow him to adduce evidence of Mr. Wang’s own wrongdoings; • The trial judge improperly evaluated the shares which she should have established at $560,000; • In the initial version of his defence and cross-demand, Mr.

Wang had offered to purchase Mr. Li’s shares for $428,571.43, but later amended, close to trial, to withdraw this allegation from his proceedings. The trial judge should have considered that the initial offer amounted to an admission by Mr. Wang. This admission could not be revoked by an amendment without proving an error of fact. [ 22 ] Mr. Li agreed with this strategy and the appeal was prepared accordingly. Drafting the factum was arduous at times since Mr. Li would request that the attorneys include in the factum arguments which were not raised at trial, for instance that Mr. Wang had acted fraudulently. Mr.

Li nevertheless wrote to Mtres L’Heureux and Daviault on March 23, 2015 to express that “I respect your professional opinion” in response to their comments about his demands to include new arguments. [ 23 ] The factum was eventually filed and the appeal was heard on the merits on March 17, 2016. Mtre Daviault argued the appeal on behalf of Mr. Li. [ 24 ] Mr. Wang waived his $50,000 award at the hearing at the Court of Appeal so that the Court did not have to address the issue of the trial judge’s alleged bias against Mr. Li.

The Court focused on the issues related to the evaluation of the shares. [ 25 ] A unanimous judgment from the Court of Appeal was rendered on April 12, 2016.

[ 26 ] The Court of Appeal ruled that the trial judge’s rectification of her judgment was not simply a correction of a calculation error, but rather a modification of her calculation method itself. The Court considered that this rectification was an error. [ 27 ] The Court then proceeded to evaluate the value of the shares based on the criterion elaborated by case law under oppression remedies. This criterion requires courts to assess a fair and equitable value. The Court considered that the offer contained in Mr.

Wang’s defence and cross-demand was an admission and could not be revoked without proof of an error of fact. On this basis, the Court found that this offer established a fair and equitable value for the shares, and consequently ordered Mr. Wang to pay $428,571.43 for Mr. Li’s shares in the two companies, including interest at the legal rate since February 18, 2011. [ 28 ] As a result of the appeal, Mr. Li saw the value of his shares go from zero to $428,571.43, while Mr. Wang waived the $50,000 award for moral damages in his favor.

The other conclusions of the trial judgment were maintained, including the $17,500 award against Mr. Li for the provision for costs. The Court of Appeal judgment was, for all intents and purposes, quite advantageous for Mr. Li and a success. [ 29 ] Mr. Li wrote Mtres L’Heureux and Daviault on April 13, 2016, to thank them for their “excellent job in my case”. He also provided information on the assets owned by Mr. Wang for the purpose of enforcing the judgment. [ 30 ] From the outset of the matter in October 2014 to the judgment of the Court of Appeal in April 2016, Mr.

Li paid Gowling $80,478.50 in fees, for a total of $114,098.23 with disbursements and taxes. Mr. Li paid all invoices to that point without questioning their legitimacy, including the yearly increase of the hourly rates of the attorneys who worked on his appeal. III. The Execution of the Court of Appeal Judgment [ 31 ] On April 22, 2016, Gowling seized bank accounts and a property in Gatineau which belonged to Mr. Wang. [ 32 ] On May 17, 2016, Mr. Wang brought an application to quash the seizures. Mtre Daviault argued against this application which was dismissed by the Superior Court on May 19, 2016. [ 33 ] Mr.

Li began delaying payment of his legal fees in May 2016. He exchanged emails with Mtre L’Heureux on May 20 where he assured him that Gowling should not worry about payment, and that he would pay them directly from amounts received from Mr. Wang. [ 34 ] On June 13, 2016, Mr. Wang applied to the Court of Appeal to suspend the execution of its judgment pending his appeal to the Supreme Court of Canada. Mtre Daviault once again contested this application on behalf of Mr. Li.

The Court of Appeal granted the application and suspended the execution until 45 days after the judgment of the Supreme Court on leave to appeal or, if leave was granted, until final judgment on the merits. [ 35 ] In the course of the 2016 summer, Mtre Daviault began to fear difficulties executing the judgment given that Mr. Wang only had a few assets and could potentially file for bankruptcy. Settlement discussions were undertaken with Mr. Wang’s attorneys. He offered $175,000 to settle the matter and purchase the shares, but Mr.

Li instructed Gowling to refuse this offer. [ 36 ] Discussions continued between Mtre Daviault and Mr. Wang’s attorneys to allow Mr. Wang to satisfy the Court of Appeal judgment and purchase Mr. Li’s shares. There were also talks of Mr. Wang obtaining a loan, but his attorneys eventually informed Mtre Daviault that they had advised their client that it did not make sense from a financial point of view to borrow to pay for the shares. [ 37 ] On October 27, 2016, the Supreme Court of Canada denied Mr. Wang leave to appeal.

However, given the Court of Appeal judgment on the application to suspend the execution of the judgment, no other steps to enforce the judgment could be undertaken before the expiry of a 45-day delay from the Supreme Court judgment. [ 38 ] Mr. Li was in the meantime becoming increasingly nervous seeing that there was a distinct possibility that he would not get paid for his shares. [ 39 ] Concurrently, Gowling undertook new work for Mr. Li in a dispute for royalties with the Patio Vidal franchisor. The fees in relation to this work also form part of the claim. [ 40 ] On November 27, 2016, Mr.

Li wrote Gowling to express his frustration with the necessity to wait for the expiry of the 45-day delay, which would end on December 12, 2016. Mtre Daviault responded the next day explaining in detail why they could not act until the 45-day delay expired, what were the effects of a bankruptcy, and what were the options open to Mr. Li. [ 41 ] Mr. Wang finally obtained a loan and, on January 19, 2017, paid Mr. Li the full amount of the Court of Appeal judgment for his shares, as well as court costs of $13,000. [ 42 ] Mr. Li retained the services of a notary in Gatineau to draft the share purchase agreement.

Mtre Daviault requested that the purchase price be deposited in Gowling’s trust account so that the outstanding could be paid from the trust funds. Mr. Li refused, but assured him that Gowling would get paid. [ 43 ] Mtres L’Heureux and Daviault met with Mr. Li on February 13, 2017, at their offices, to discuss payment of their fees. Mtre L’Heureux inquired about payment of the fees. Mr. Li laughed and blamed them for having made professional errors in their carriage of the appeal.

In particular, he blamed them for not having raised some arguments which he had requested to be included in the factum. [ 44 ] In the course of this meeting, Mr. Li handed a $20,224.36 cheque to pay his fees. He testified that Mtre L’Heureux himself wrote “for full and final payment” on the cheque and that they shook hands on what he considered an agreement to settle the outstanding fees.

[ 45 ] However, according to Mtre Daviault, there was never any agreement to settle the outstanding fees for $20,224.36, nor did Mtre L’Heureux write “for full and final payment”. This was written by Mr. Li himself. He was told that the cheque would be submitted to the management of Gowling, and that it would be their decision to accept it or not in final payment. [ 46 ] As a result of the meeting with Mr. Li, Gowling decided to withdraw from his matters.

Since a court appearance for the adjudication of objections was scheduled the next day in the Patio Vidal matter, Gowling could not withdraw immediately without prejudice to Mr. Li. Mtre Daviault thus attended the hearing and argued successfully on Mr. Li’s behalf. The time expended on this court appearance is the last time entry on the unpaid invoices. [ 47 ] On February 17, 2017, Gowling wrote Mr. Li to inform him that his $20,224.36 offer to settle his unpaid accounts was refused, and to claim full payment of the outstanding invoices of $50,393.25, for fees, disbursements, and taxes. Analysis A.

Did a transaction occur between the parties concerning the disputed fees? [ 48 ] Mr. Li argues that Gowling’s right to claim its fees is extinguished due to a settlement of his accounts for $20,224.36. He offered to pay this sum once again at trial. Gowling denies that there was an agreement to settle, as well as the facts which are raised by Mr. Li to prove the existence of such a settlement or transaction. [ 49 ] Mr. Li only raised this argument at trial through a verbal request to amend his defence. [ 50 ] Pursuant to

article 2803 CCQ, Mr. Li had the burden of proof to establish that a settlement had intervened with Gowling in respect of the outstanding fees: 2803 . A person seeking to assert a right shall prove the facts on which his claim is based. A person who claims that a right is null, has been modified or is extinguished shall prove the facts on which he bases his claim . (Emphasis from the Court) [ 51 ] Additionally,

article 2804 CCQ provides that the burden of proof is satisfied if a fact is proven with a balance of probability: 2804 . Evidence is sufficient if it renders the existence of a fact more probable than its non-existence, unless the law requires more convincing proof. [ 52 ] Given the two contradictory versions in relation to the existence of a settlement, Mr. Li had the burden of proof to show that it is more likely than not that a settlement occurred. [ 53 ] Mr. Li testified that Mtre L’Heureux wrote “for full and final payment” on the $20,224.36 cheque and that they shook hands on it.

Mtre Daviault testified that he made it unequivocally clear to Mr. Li during the meeting that it was unacceptable that the fees would be reduced to anything other than the full amount. He also testified that he saw Mr. Li add the condition to the cheque, and not Mtre L’Heureux. [ 54 ] The Court is confronted with two opposite versions of the facts and finds that Mtre Daviault’s version is more likely: • The overall attitude of Gowling concerning its fees in this matter does not make it believable that it would have settled its invoices for less than half the due amount; • Mr.

Li could not provide a satisfactory and believable explanation at trial of the calculations which would lead to such a precise amount as $20,224.36; • Neither Mtre L’Heureux nor Mtre Daviault had authority to bind Gowling by accepting less than the billed amounts. This decision rested with management; • Gowling clearly indicated in its letter of February 17, 2017, that it did not accept to settle its accounts for $20,224.36 and returned the cheque; and • Mr.

Li never raised the existence of a settlement before the hearing of the trial which is, at the very least, peculiar if he was under the impression that the issue had been subject to a transaction. [ 55 ] The Court cannot come the conclusion that the existence of the settlement is more probable than not. Mr. Li has as a result failed to meet his burden of proof in this regard. Gowling is therefore in a position to claim its fees. B. Were the fees charged by Gowling to Mr. Li fair and reasonable? [ 56 ] To allow Gowling’s claim, the Court must determine pursuant to

section 102 the Code of Professional Conduct of Lawyers [1] (the “Code”) whether the fees charged to Mr. Li were fair and reasonable: 102 . The fees are fair and reasonable if they are warranted by the circumstances and proportionate to the professional services rendered. In determining his fees, the lawyer must in particular take the following factors into account: (1) experience; (2) the time and effort required and devoted to the matter ;

(3) the difficulty of the matter ; (4) the importance of the matter to the client ; (5) the responsibility assumed; (6) the performance of unusual professional services or professional services requiring special skills or exceptional speed; (7) the result obtained ; (8) the fees prescribed by statute or regulation; and (9) the disbursements, fees, commissions, rebates, costs or other benefits that are or will be paid by a third party with respect to the mandate the client gave him. (Emphasis from the Court) [ 57 ] The fees claimed by Gowling cover two matters, the appeal in the dispute with Mr.

Wang, and the Patio Vidal litigation. The fees for both matters, excluding disbursements and taxes, total $127,821.50. The bulk of the fees is for the appeal and its execution. [ 58 ] Subparagraphs 2, 3, 4, and 7 of

section 102 of the Code justify together a number of comments concerning the work performed by Gowling. [ 59 ] In respect of subparagraph 3, the matter submitted to Gowling for the appeal faced several difficulties. Mr. Li was not represented by Gowling or any other attorneys at trial, so that the evidence that he presented was incomplete and disorganized, and Mtres L’Heureux and Daviault had to deal with the matter as it was constituted at trial. [ 60 ] The judge also made harsh comments concerning Mr. Li’s behavior with Mr. Wang, thus affecting his credibility.

Findings on questions of credibility by a trial judge are rarely overturned by an appellate court which added a difficulty to the appeal. [ 61 ] Concerning subparagraph 2, Mtre Daviault only had a limited time to get acquainted with the matter and elaborate an appeal strategy with Mtre L’Heureux. Not having been the attorney of record at trial forced Mtre Daviault to listen to the entirety of the 4-day hearing. The matter required significant time and effort. [ 62 ] In accordance with subparagraph 4, the Court notes that the matter was of significant importance to Mr.

Li since the result of the trial judgment was to force him to give away his shares to Mr. Wang without any compensation, while having to pay him $50,000 in damages. [ 63 ] In consideration of subparagraph 7, the appeal was a success. Mr. Li was awarded $428,571.43 for his shares and Mr. Wang waived the $50,000 award in his favor. [ 64 ] The Court will now address the complaints expressed by Mr. Li that the services were not rendered, unnecessary, tardy, unauthorized, or contrary to his interests, and more particularly the context in which these complaints were expressed. [ 65 ] When Mr.

Li began having difficulty paying his invoices in the summer of 2016, he never raised any issue with the quality of the work performed by Gowling. On the opposite, he assured them that he would pay as soon as possible. [ 66 ] While it is understandable that Mr. Li became nervous about Mr. Wang’s financial capacity to purchase his shares pursuant to the Court of Appeal judgment, this situation can in no way be blamed on Gowling. Moreover, they advised him correctly of the consequences of a bankruptcy.

Their advice to settle, if possible, was appropriate given the circumstances and the risk of insolvency. [ 67 ] Mr. Li further blames Gowling for not having undertaken any other execution proceedings in the fall of 2016, when negotiations with Mr. Wang’s attorneys for the purchase of the shares came to a stop. Again, this cannot be blamed on Gowling.

It was clearly explained that given the Court of Appeal judgment staying the execution, it could not be pursued until the 45-day delay from the judgment for leave to appeal to the Supreme Court had expired on December 12, 2016. [ 68 ] Notwithstanding his promise when he requested the indulgence of Gowling for payment of its fees in the summer of 2016, Mr. Li failed to pay Gowling from the proceeds of the loan eventually contracted by Mr. Wang to purchase the shares in January 2017. Once an agreement was reached, Mr.

Li was careful to avoid the funds transiting through Gowling’s trust account so that they could not compensate the outstanding fees. Again, he falsely assured them that he would pay the outstanding invoices at a later date. [ 69 ] It is only in February 2017, when Gowling requested payment once again, that Mr. Li raised any issue with the quality of Gowling’s work. This complaint came when he had received payment for his shares from Mr. Wang and no longer needed its services.

He then argued that Gowling had not included all the arguments in the factum, although it had been explained to him on several occasions that the appeal was not a second trial. Given that Mr. Li had complimented Gowling more than once for their work on the appeal, this reproach is not credible and constitutes an unjustified excuse not to pay after the fact. [ 70 ] Mr. Li also argued that Gowling was often late in responding to his inquiries.

The emails exchanged between the parties and filed in the Court record do not show any undue delay from Gowling’s attorneys in their responses. [ 71 ] In respect of the time spent on the Patio Vidal , matter Mr. Li could not give any valid reason why he would not pay, other than to say that he had already paid for the work. This statement is inaccurate. The invoices show that the Patio Vidal work began in November 2016 when Mr. Li had already stopped paying for Gowling’s work for a number of months. [ 72 ] Finally, Mr.

Li raised that Gowling had evaluated the fees for the appeal at $15,000 to $20,000, a maximum to which they were bound. The Court does not find that this was a firm evaluation of the fees which could be generated by the appeal, much less a fixed price. The evaluation was very preliminary and included reserves. In addition, Mr. Li’s supposed belief that the fees were capped at

$20,000 is not supported by his behavior considering that he paid fees well above this amount without ever raising this initial evaluation. [ 73 ] A careful review of the invoices which form part of the claim does not show that any time entries were unreasonable, but instead that they were warranted by the circumstances and proportionate to the professional services rendered. The fees were fair and reasonable in consideration of

section 102 of the Code. Gowling is entitled to its claim of $50,393.25 against Mr. Li. C. Was Gowling negligent in failing to claim the additional indemnity as part of the appeal? [ 74 ] Mr. Li has brought a $22,000 cross-demand against Gowling. This amount represents the additional indemnity to which he felt entitled at trial, and that Gowling did not claim in appeal. It is important to note in this regard that Mr. Li did not request the additional indemnity before the Superior Court. [ 75 ] Gowling argues that it cannot be blamed for not having claimed the additional indemnity in the appeal since Mr.

Li did not himself claim it at trial. [ 76 ] Judgments of the Court of Appeal cited by Gowling are clear that the additional indemnity cannot be granted by a trial judge if it has not been requested. [2] As a result, the trial judge could not grant the additional indemnity to Mr. Li because he had not requested it. Inversely, interest at the legal rate is automatic, whether claimed or not. [3] [ 77 ] The Court of Appeal notes in these judgments that a party may not blame a trial judge for not having granted the additional indemnity if it was not requested.

However, this case law is not in the context of a permission to amend in appeal to claim the additional indemnity. It is not entirely sufficient to resolve the issue raised by Mr. Li. [ 78 ] In Hamel v. Brunelle [4] , the Supreme Court of Canada ruled that an amendment may be sought in appeal if it is necessary and useful to decide the dispute, and not contrary to the interests of justice. This amendment must also be supported by the facts and the evidence already presented at trial.

If these conditions are met, the amendment will be authorized. [ 79 ] More particularly, in the case the additional indemnity, the Supreme Court in Houle v. Banque canadienne nationale, contemplated the specific issue of an amendment in appeal to claim the additional indemnity.

The Court thus allowed an amendment to claim the additional indemnity although it had not been requested at Superior Court and Court of Appeal levels: T he trial judge and the Court of Appeal having not directly exercised their discretion on this issue, it is open to this Court to do so since the issue was fully debated before it. [ … ] It has been consistently held by the Quebec Court of Appeal that while the granting of such indemnity is discretionary, the indemnity should be allowed unless there are specific reasons why it should not. [5] [ 80 ] In light of the above, it is more than likely that the Court of Appeal would have granted an amendment to claim the additional indemnity on behalf of Mr.

Li, in particular since it did not require any additional evidence and was an accessory to the principal claim. Contrary to Gowling’s assertion, requesting the additional indemnity at the appeal level would not have amounted to trying a new issue in an attempt at a second trial. [ 81 ] Gowling argues further that Mr. Li never instructed them to claim the additional indemnity before the Court of Appeal. [ 82 ] Lawyers owe a number of duties to their clients, including a duty to advise. This duty must be exercised with reasonable competence.

A lawyer undertakes not only to follow and execute the instructions given by the client pursuant to the mandate, but also to fulfill a more general duty to advise the client of the proper measures required to protect its rights. The duty to advise is not limited by the specific nature of the mandate. It contains informing clients of the various options which may be opened to them. [6] [ 83 ] A review of the Superior Court judgment, as well as Mr.

Li’s application for an oppression remedy, particularly in a context where he was not represented by a lawyer, should have alerted Gowling’s attorneys that the additional indemnity had not been claimed. They should have advised Mr. Li in this regard, and informed him of the possibility to claim it at the Court of Appeal following an amendment. By failing to do so, they did not advise Mr. Li properly in accordance with a standard of reasonable competence. [ 84 ] This being said, the finding that Gowling was negligent is not sufficient to conclude that it is liable to Mr.

Li, and does not systematically lead to an award in his favor. The Court must also analyze if there was a reasonable probability that the Court of Appeal would have granted the additional indemnity had it been claimed. [7] [ 85 ] There are two different lines of case law from the Court of Appeal in respect of the additional indemnity, and particularly whether its award is the rule and its denial is limited to exceptional circumstances. [ 86 ] According to one such line of case law, awarding the additional indemnity, if requested, is the rule.

Other than to reduce it to acknowledge undue delays in the carriage of a matter, it must be granted. In the absence of extraordinary circumstances, a judge only has a very limited discretion to refuse it. [8] The Houle c. Banque canadienne nationale judgment of the Supreme Court is part of this line of case law. [ 87 ] Pursuant to a second line of jurisprudence from the Court of Appeal, a trial judge has broad discretionary authority in granting the additional indemnity.

When circumstances justify it, the judge can dismiss it. [9] [ 88 ] Although both lines of jurisprudence appear to be opposite, they nevertheless acknowledge that there must be circumstances which would justify not granting the additional indemnity. [ 89 ] In this particular case, given the overall result of the Court of Appeal judgment, the Court finds that there was a reasonable

probability that the additional indemnity would have been granted. Even following the line of jurisprudence which considers that a judge has a discretionary authority in awarding this indemnity, the Court can see no reason or particular circumstances why the Court of Appeal would have exercised its discretion, and not granted it. [ 90 ] Seeing that Mr. Wang eventually fully satisfied Court of Appeal judgment, it is also reasonably probable that the additional indemnity would have been recovered. [ 91 ] Mr.

Li is entitled to recover $22,000 namely the prejudice he has suffered as a result of Gowling’s negligence in its duty to advise him of the possibility to claim the additional indemnity through an amendment at the appeal level. [ 92 ] The amount of $22,000 is justified if calculated on the basis of the $428,571.43 award for the shares, to which the additional indemnity is applied for a period ranging from February 18, 2011, when the action was commenced, to January 19, 2017, when the judgment was satisfied by Mr. Wang. [ 93 ] Mr.

Li did not request interest at the legal rate nor the additional indemnity in his Cross-Demand of March 28, 2017. Seeing the case law cited above [10] , the Court will only grant interest at the legal rate. D. Are the parties justified to claim $7,500 from each other for abuse of proceedings? [ 94 ] The fact that both parties’ claims are founded shows that their positions were not unreasonable, and that the proceedings were not abusive. This in itself is sufficient to dismiss this part of their claim against one another.

FOR THESE REASONS, THE COURT: GRANTS in part the Originating Demand of the Plaintiff/Cross-Defendant against the Defendant/Cross-Plaintiff; CONDEMNS the Defendant/Cross-Plaintiff to pay the Plaintiff/Cross-Defendant $50,393.25 with interest at the legal rate and the additional indemnity provided at

article 1619 of the Civil Code of Quebec from February 17, 2017; THE WHOLE with court costs against the Defendant/Cross-Plaintiff on the Originating Demand; GRANTS in part the Cross-Demand of the Defendant/Cross-Plaintiff against the Plaintiff/Cross-Defendant; CONDEMNS the Plaintiff/Cross-Defendant to pay the Defendant/Cross-Plaintiff to pay $22,000 with interest at the legal rate from March 28, 2017; THE WHOLE with court costs against the Plaintiff/Cross-Defendant on the Cross-Demand. __________________________________ CATHERINE PILON, J.C.Q.

Jun Li Plaintiff For himself Me Rafaël Primeau-Ferraro GOWLING WLG (CANADA) LLP Attorneys for the Defendant Gowling WLG (Canada) LLP Hearing dates: June 13, 14, 2018 [1] Act respecting the Barreau du Québec ,

chapter B-1, s. 4 ,

chapter B-1 , r. 3.1