



COURT
    OF APPEAL FOR ONTARIO

CITATION: Lee v. Lalu Canada Inc., 2019 ONCA
    750

DATE: 20190925

DOCKET: C66578

Huscroft, Paciocco and Nordheimer
    JJ.A.

BETWEEN

Gerard
    Lee and
2505805 Ontario Inc.

Plaintiffs (
Appellant
)

and

Lalu
    Canada Inc., 2504637 Ontario Inc., 2504805 Ontario Inc., 2504639 Ontario Inc.,
    HZC Capital Inc., Yanfeng (Kevin) Fan, Lei (Eric) Guo and Cheng (Chenny)
    Ming

Defendants (Respondents)

John OSullivan, for the appellant

Patricia Virc and M. Michael Title, for
    the respondents

Heard and released orally: September
    24, 2019

On appeal from the order of Justice Andra
    Pollak of the Superior Court of Justice, dated January 9, 2019 with reasons
    reported at 2019 ONSC 154 and the costs award dated March 14, 2019 with reasons
    reported at 2019 ONSC 792.

REASONS FOR DECISION

[1]

The appellant appeals from the order granted by
    the motion judge that dismissed the appellants motion for a declaration that, pursuant
    to a consulting agreement between the appellant and some of the respondents,
    the appellant was entitled to be indemnified for all reasonable legal fees and
    expenses incurred" with respect to this action.

[2]

A preliminary issue arises as to whether the
    order in question is a final or an interlocutory order.  It is only if the
    order is a final one that an appeal lies to this court. Both the appellant and
    the respondents contend that the order is final because it finally determines
    the appellants entitlement to advance payment of its legal fees and expenses.
    We disagree.

[3]

In order for an order to be a final order for
    the purpose of appellate jurisdiction that order must deal with the
    substantive merits as opposed to mere procedural rights, no matter how
    important the procedural rights may be, see
Sun Life Assurance Co. v. York
    Ridge Developments Ltd.
(1998), 116 O.A.C. 103 at para. 13.

[4]

The substantive merits were not addressed by the
    decision on the motion. The plaintiffs plead that the respondents have breached
    the consulting agreement. They seek damages for those breaches.  One of those
    breaches, expressly pleaded in the statement of claim, is that the defendants
    are required to pay all reasonable legal fees arising out of a dispute with
    respect to the consulting agreement. The defendants plead that they have not
    breached the consulting agreement because the conduct of the plaintiffs
    disentitle them to any payment under the consulting agreement.

[5]

The motion judge did not determine that
    substantive issue. Rather, she dismissed the motion for interim relief on the
    basis that it was inappropriate to determine any right to payment of legal fees
    apart from a determination of the alleged breaches of the consulting agreement
    as a whole. The motion judge treated the motion for interim relief as a motion
    for partial summary judgment.

[6]

Regardless of whether that characterization of
    the motion was correct or not, the fact remains that the issues between the
    parties remain to be determined, including whether the consulting agreement
    requires advance payment of legal fees and, if it does, whether there has been
    a breach of that contractual obligation in the factual circumstances of this
    case. The denial of interim relief, without any corresponding determination of whether
    the appellant is, or is not, entitled to advance funding, does not finally
    determine any issue. The resulting order is, therefore, clearly an
    interlocutory one.

[7]

If the appellant considers the motion judge to
    have erred because her decision appears to deny the appellant the right to
    payment of its legal expenses now, as opposed to at the end of the action, it
    can seek leave to appeal to the Divisional Court from the order. Alternatively,
    it may still be open to the appellant to bring a separate application for the
    interpretation of the agreement regarding its entitlement to advance funding.
    We would note that this was the route utilized in
Cytrynbaum v. Look
    Communications Inc
., 2013 ONCA 455, 116 O.R. (3d) 241 where a similar
    issue was raised.

[8]

For these reasons, the appeal is quashed.  Given
    the position taken by the parties, we would make no order as to costs.


Grant Huscroft J.A.


David M.
    Paciocco J.A.

I.V.B. Nordheimer J.A.



