Lee v. Chang, 2025 ONCA 632: Loans, Investments, or Family Support?
Introduction
In Lee v. Chang[1], 2025 ONCA 632, the Ontario Court of Appeal upheld the dismissal of a claim brought by South Korean appellants who alleged that funds transferred to relatives in Canada were loans and investments, not outright payments. The case highlights the evidentiary and legal hurdles in proving such claims where financial dealings are informal, expectations diverge, and years have passed before litigation begins.
Background
The appellants, Kyoung Hwa Lee (“Ms. Lee”) and Young Sea Guak, reside in Seoul, South Korea. They met the respondents, Myoung Ja and Kwang Eui Chang (“Ms. Chang”), in 1998. When the respondents immigrated to Canada in 2000, the appellants’ daughter joined them and lived in their home for over a decade while attending Canadian schools.[2]
Between 1999 and 2008, the appellants wired about $183,000 to the respondents, followed by $30,000 in 2010 toward repayment of a Hyundai credit card loan.[3] The appellants claimed these were loans and investments, including a $100,000 contribution toward the purchase of a residential home known as the “Cummer House,” later sold for $2.34 million.[4] The respondents denied this, saying the funds covered the daughter’s room, board, and educational expenses.[5]
At trial, the appellants sought more than half a million dollars in damages under a broad range of legal theories, including contract, unjust enrichment, misrepresentation, fiduciary duty, and constructive trust.[6] The trial judge dismissed the action in full and ordered the appellants to pay costs of $177,123.68.[7]
Issues on Appeal
- Whether the trial judge erred by excluding an important transcript of a recording;
- Whether the trial judge erred in dismissing their claim in unjust enrichment;
- Whether the trial judge erred in her application of the Limitations Act, 2002, O. 2002, c. 24, Sched. B.[8]
Analysis
Exclusion of Transcript
The appellants’ first argument centered on a surreptitiously recorded conversation in 2017 between Ms. Lee and Ms. Chang, in which Ms. Chang allegedly admitted an obligation to repay the debt tied to the Cummer House.[9] The conversation, conducted in Korean, was presented at trial through a translated transcript. The trial judge found the translation unreliable, noting the absence of evidence that the translator was accredited or had listened to the recording.[10]
The appellants contended that this amounted to an error in excluding crucial evidence. The Court of Appeal disagreed. It emphasized that trial judges are entitled to assess the reliability and weight of evidence. In this case, the judge did not exclude the transcript altogether but determined that its content was ambiguous and did not amount to an admission of debt.[11] The Court found no error in that approach.
Unjust Enrichment
The appellants’ second submission was that the trial judge wrongly dismissed their unjust enrichment claim. They argued that once the court determined no contract existed, the absence of a juristic reason for the enrichment was established, entitling them to recovery.[12]
The Court of Appeal rejected this argument. Reviewing the decision as a whole, the Court noted that the trial judge did not find a lack of contractual arrangement but rather concluded that the payments were part of an agreement for the daughter’s homestay expenses.[13] Although the precise terms could not be identified, the existence of such an arrangement meant there was a juristic reason for the transfers.[14] The appellants had not demonstrated either an enrichment of the respondents or the absence of juristic reason required under the test in Garland v. Consumers Gas Co.[15], 2004 SCC 25.
Limitations Issues
The appellants also challenged the trial judge’s application of the Limitations Act, 2002. The trial judge held that the appellants had knowledge, or ought reasonably to have had knowledge, of the facts underlying their claims by February 2011, or at the latest December 2015.[16] Yet, they did not commence their action until January 2018. The appellants argued that acknowledgements of debt in various emails and text messages restarted the limitation period under s. 13 of the Limitations Act, 2002.[17]
The Court of Appeal again upheld the trial judge’s reasoning. She had considered the communications in detail but found that none of them amounted to clear and unambiguous acknowledgements of the alleged debts.[18] The appellants also argued that a forbearance agreement had suspended the running of time, but the trial judge rejected this claim.[19] Given the appellants’ failure to exercise due diligence in pursuing repayment, their claims were statute-barred.
Costs
The Court refused leave to appeal the trial judge’s costs order as the appellants made no submissions on this ground. The Court awarded the respondents an additional $12,000 for the appeal.[20]
Final Thoughts
Lee v. Chang underscores the risks of relying on informal family arrangements to govern significant financial transfers. As further evidenced by my recent blog post on Di Turi v. Di Turi-Seemann[21], 2025 ONSC 5000, it is clearly common for family members or close friends to exchange substantial sums without documenting their intentions. When disputes arise, courts are left to sift through unreliable or ambiguous evidence. The decision in Lee v. Chang also highlights the strict approach to both evidence and limitation periods: questionable translations will not carry the day, and stale claims cannot be revived through equivocal communications.
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[1] Lee v. Chang, 2025 ONCA 632.
[2] Ibid at para 4.
[3] Ibid at para 5.
[4] Ibid at para 6.
[5] Ibid at para 7.
[6] Ibid at para 8.
[7] Ibid at para 9.
[8] Limitations Act, 2002, S.O. 2002, c. 24, Sched. B [“Limitations Act, 2002”].
[9] Ibid at para 14.
[10] Ibid at para 15.
[11] Ibid at para 16.
[12] Ibid at para 17.
[13] Ibid at para 18.
[14] Ibid.
[15] Garland v. Consumers’ Gas Co., 2004 SCC 25 (CanLII), [2004] 1 SCR 629.
[16] Ibid at para 19.
[17] Ibid at para 21.
[18] Ibid at para 22.
[19] Ibid at para 21.
[20] Ibid at para 24.
[21] Di Turi v. Di Turi-Seemann, 2025 ONSC 5000; See my blog post at https://welpartners.com/blog/2025/09/gifts-investments-and-resulting-trusts-di-turi-v-di-turi-seemann/
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Written by: Emily Caza
Posted on: October 3, 2025
Categories: Commentary
Introduction
In Lee v. Chang[1], 2025 ONCA 632, the Ontario Court of Appeal upheld the dismissal of a claim brought by South Korean appellants who alleged that funds transferred to relatives in Canada were loans and investments, not outright payments. The case highlights the evidentiary and legal hurdles in proving such claims where financial dealings are informal, expectations diverge, and years have passed before litigation begins.
Background
The appellants, Kyoung Hwa Lee (“Ms. Lee”) and Young Sea Guak, reside in Seoul, South Korea. They met the respondents, Myoung Ja and Kwang Eui Chang (“Ms. Chang”), in 1998. When the respondents immigrated to Canada in 2000, the appellants’ daughter joined them and lived in their home for over a decade while attending Canadian schools.[2]
Between 1999 and 2008, the appellants wired about $183,000 to the respondents, followed by $30,000 in 2010 toward repayment of a Hyundai credit card loan.[3] The appellants claimed these were loans and investments, including a $100,000 contribution toward the purchase of a residential home known as the “Cummer House,” later sold for $2.34 million.[4] The respondents denied this, saying the funds covered the daughter’s room, board, and educational expenses.[5]
At trial, the appellants sought more than half a million dollars in damages under a broad range of legal theories, including contract, unjust enrichment, misrepresentation, fiduciary duty, and constructive trust.[6] The trial judge dismissed the action in full and ordered the appellants to pay costs of $177,123.68.[7]
Issues on Appeal
Analysis
Exclusion of Transcript
The appellants’ first argument centered on a surreptitiously recorded conversation in 2017 between Ms. Lee and Ms. Chang, in which Ms. Chang allegedly admitted an obligation to repay the debt tied to the Cummer House.[9] The conversation, conducted in Korean, was presented at trial through a translated transcript. The trial judge found the translation unreliable, noting the absence of evidence that the translator was accredited or had listened to the recording.[10]
The appellants contended that this amounted to an error in excluding crucial evidence. The Court of Appeal disagreed. It emphasized that trial judges are entitled to assess the reliability and weight of evidence. In this case, the judge did not exclude the transcript altogether but determined that its content was ambiguous and did not amount to an admission of debt.[11] The Court found no error in that approach.
Unjust Enrichment
The appellants’ second submission was that the trial judge wrongly dismissed their unjust enrichment claim. They argued that once the court determined no contract existed, the absence of a juristic reason for the enrichment was established, entitling them to recovery.[12]
The Court of Appeal rejected this argument. Reviewing the decision as a whole, the Court noted that the trial judge did not find a lack of contractual arrangement but rather concluded that the payments were part of an agreement for the daughter’s homestay expenses.[13] Although the precise terms could not be identified, the existence of such an arrangement meant there was a juristic reason for the transfers.[14] The appellants had not demonstrated either an enrichment of the respondents or the absence of juristic reason required under the test in Garland v. Consumers Gas Co.[15], 2004 SCC 25.
Limitations Issues
The appellants also challenged the trial judge’s application of the Limitations Act, 2002. The trial judge held that the appellants had knowledge, or ought reasonably to have had knowledge, of the facts underlying their claims by February 2011, or at the latest December 2015.[16] Yet, they did not commence their action until January 2018. The appellants argued that acknowledgements of debt in various emails and text messages restarted the limitation period under s. 13 of the Limitations Act, 2002.[17]
The Court of Appeal again upheld the trial judge’s reasoning. She had considered the communications in detail but found that none of them amounted to clear and unambiguous acknowledgements of the alleged debts.[18] The appellants also argued that a forbearance agreement had suspended the running of time, but the trial judge rejected this claim.[19] Given the appellants’ failure to exercise due diligence in pursuing repayment, their claims were statute-barred.
Costs
The Court refused leave to appeal the trial judge’s costs order as the appellants made no submissions on this ground. The Court awarded the respondents an additional $12,000 for the appeal.[20]
Final Thoughts
Lee v. Chang underscores the risks of relying on informal family arrangements to govern significant financial transfers. As further evidenced by my recent blog post on Di Turi v. Di Turi-Seemann[21], 2025 ONSC 5000, it is clearly common for family members or close friends to exchange substantial sums without documenting their intentions. When disputes arise, courts are left to sift through unreliable or ambiguous evidence. The decision in Lee v. Chang also highlights the strict approach to both evidence and limitation periods: questionable translations will not carry the day, and stale claims cannot be revived through equivocal communications.
—
[1] Lee v. Chang, 2025 ONCA 632.
[2] Ibid at para 4.
[3] Ibid at para 5.
[4] Ibid at para 6.
[5] Ibid at para 7.
[6] Ibid at para 8.
[7] Ibid at para 9.
[8] Limitations Act, 2002, S.O. 2002, c. 24, Sched. B [“Limitations Act, 2002”].
[9] Ibid at para 14.
[10] Ibid at para 15.
[11] Ibid at para 16.
[12] Ibid at para 17.
[13] Ibid at para 18.
[14] Ibid.
[15] Garland v. Consumers’ Gas Co., 2004 SCC 25 (CanLII), [2004] 1 SCR 629.
[16] Ibid at para 19.
[17] Ibid at para 21.
[18] Ibid at para 22.
[19] Ibid at para 21.
[20] Ibid at para 24.
[21] Di Turi v. Di Turi-Seemann, 2025 ONSC 5000; See my blog post at https://welpartners.com/blog/2025/09/gifts-investments-and-resulting-trusts-di-turi-v-di-turi-seemann/
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