Executive Summary: Key Legal and Evidentiary Issues

• Diamant Cleaning Vancouver Inc. sued its former pro bono lawyer, Ouran Li, for solicitor's negligence, alleging he acted outside his retainer and failed to adequately advise on a settlement.

• Central to the dispute was whether Ms. Martinez's execution of a mutual release and notice of abandonment was fully informed and voluntary.

• Scope of retainer was contested — Diamant argued Mr. Li had no authority to negotiate a settlement, but evidence from both parties confirmed he received explicit instructions to settle.

• No evidence supported the allegation that Mr. Li made false statements or acted in Kindred's interests rather than Diamant's.

• The Court applied a deferential standard of review — palpable and overriding error — to findings of fact, which Diamant failed to meet.

• Diamant's claimed losses for interest and opportunity losses were found to be legally unrecoverable, further undermining the negligence claim.

Background: A cleaning company's contract dispute spirals into a negligence claim

Diamant Cleaning Vancouver Inc. ("Diamant"), a cleaning company owned and operated by Isabel Martinez, entered into a fixed-price cleaning contract with Kindred Construction Ltd. ("Kindred"). When Kindred failed to pay the full amount owed — including amounts for extra cleaning work and other losses — Diamant commenced a civil action against Kindred on June 8, 2023. To remove a lien filed by Diamant, Kindred paid the full contract and extras amounts into court.

The initial court ruling and Diamant's appeal

On July 19, 2023, Justice Fitzpatrick dismissed Diamant's action on summary determination, directed that roughly $22,000 (the undisputed amounts) be paid to Diamant, ordered the balance of roughly $14,000 to be paid out of court to Kindred, and required Diamant to pay Kindred's costs at Scale B. Diamant, dissatisfied with the outcome, filed a notice of appeal on August 8, 2023.

Entry of pro bono counsel and settlement negotiations

In response to the appeal, Kindred applied for security for costs. On September 22, 2023, Mr. Ouran Li accepted a referral through the Access Pro Bono Society of British Columbia to represent Diamant on a pro bono basis — specifically to defend the security for costs application and provide advice regarding the appeal. On October 18, 2023, Mr. Li successfully had Kindred's security for costs application dismissed before Justice Griffin, who found there was merit to aspects of Diamant's appeal and encouraged the parties to settle.

Following that hearing, Kindred offered a "walk away" settlement — Diamant would abandon its appeal, and neither party would seek trial or appeal costs against the other, with both parties executing a mutual release. Mr. Li explained the offer to Ms. Martinez, received her instructions to accept, and showed her the draft acceptance email before sending it to Kindred's counsel. Ms. Martinez signed the mutual release on October 23, 2023, and filed the notice of abandonment on November 14, 2023.

Diamant's attempt to unwind the settlement and the negligence claim

Ms. Martinez subsequently had second thoughts and, on December 27, 2023, Diamant filed a notice of application in its appeal seeking dismissal of the mutual release. Justice Newbury dismissed that application without prejudice to Diamant's ability to reinstate its appeal should it obtain an order in the Supreme Court setting aside the mutual release. On March 13, 2024, Diamant filed a notice of civil claim against Kindred, naming Mr. Li as a "third party" and alleging misrepresentation and negligence against both. Competing summary trial applications were filed and heard, and on December 11, 2024, Justice Thomas dismissed Diamant's action against Kindred, finding that the settlement and mutual release were valid. On October 9, 2025, the summary trial judge dismissed Diamant's claim against Mr. Li with costs at Scale B payable by Diamant to Mr. Li, concluding there was no reasonable basis to find that Mr. Li breached the duty of care he owed Diamant.

Diamant's arguments on appeal and the Court's analysis

On appeal to the British Columbia Court of Appeal, Ms. Martinez argued, among other things, that: Mr. Li's retainer did not extend to settlement negotiations; he was acting in Kindred's interests rather than Diamant's; she struggled with English, was experiencing mental health issues, and was economically vulnerable when she signed the release; and Mr. Li made false statements to induce her to settle. The Court of Appeal rejected these arguments. It found that Mr. Li had explicit instructions from Ms. Martinez to settle, that there was no evidence of false statements or divided loyalty, and that the judge below had thoroughly reviewed all of the evidence — including Ms. Martinez's own emails and cross-examination testimony.

The Court also addressed the apparent inconsistency between Mr. Li arguing Diamant's appeal had some merit (before Justice Griffin on the security for costs application) and later opining that the appeal lacked merit. The Court explained that lawyers frequently advance arguments in court that do not align with the views on the merits they express to their clients, and that Griffin J.A.'s assessment at the security for costs stage was not a final determination on the merits, as she did not have access to the full record or the benefit of full argument. The Court found Mr. Li's opinion that Diamant's appeal lacked merit was reasonable, given: the high risk on the extras claim due to a lack of written approval documents; a very modest interest claim; no viable opportunity loss claim; and Kindred's near-certain entitlement to costs.

Ruling and outcome

The British Columbia Court of Appeal dismissed Diamant's appeal. The Court found that Diamant, with the benefit of competent legal advice, had entered a final and binding settlement by which it gave up a viable but uncertain appeal in return for the guarantee of not having to pay any legal costs to Kindred. Ms. Martinez failed to establish any palpable and overriding error in the summary trial judge's findings of fact, and there was no legal basis for the solicitor's negligence claim against Mr. Li. The successful party was Mr. Ouran Li (the Respondent). The summary trial judge had ordered costs at Scale B payable by Diamant to Mr. Li; no specific quantum of those costs was stated in the decision.