Executive Summary: Key Legal and Evidentiary Issues

• The appellant challenged the validity of a mutual release agreement signed during settlement discussions.

• Allegations were raised that pro bono counsel acted without proper authority and misled the appellant.

• The appellant sought to admit fresh evidence regarding mental health issues affecting her consent.

• The court assessed whether ostensible authority and proper legal procedures were followed.

• Claims of duress, unconscionability, and mutual mistake were dismissed due to lack of supporting evidence.

• The appeal and the application to admit new evidence were both denied, with ordinary costs awarded to the respondent.

Facts and outcome of the case

Diamant Cleaning Vancouver Inc. initially sued Kindred Construction Ltd. for $34,865.17, claiming unpaid amounts under a construction cleaning contract. Kindred acknowledged a portion of the debt and paid funds into court to discharge a lien, but Diamant’s claim for extras was dismissed by the Supreme Court of British Columbia on July 19, 2023. Diamant appealed that decision.

During the appellate process, Ms. Isabel Martinez, principal of Diamant, retained pro bono legal counsel, Mr. Li, who negotiated a settlement with Kindred. The terms included Kindred waiving its claims for legal costs and paying $1, while Diamant would abandon the appeal and sign a mutual release. Ms. Martinez signed both the mutual release and the notice of abandonment.

Months later, Ms. Martinez sought to set aside the mutual release, alleging that Mr. Li had acted without her full authority, misled her, and was improperly influenced by Kindred. She also claimed she suffered from health conditions that impaired her judgment during the agreement. Her application to set aside the release was dismissed by Justice Thomas of the B.C. Supreme Court on December 11, 2024. He found that Mr. Li had ostensible authority to act on behalf of Diamant and that the release was binding and valid. The court also found no basis for claims of duress, unconscionability, or mutual mistake.

Ms. Martinez appealed again, attempting to introduce new evidence about her health. The Court of Appeal found that the proposed fresh evidence did not meet the Palmer test for admissibility—it was available earlier and did not materially affect the issues. The appellate court agreed with the lower court that there was no legal basis to void the release agreement.

The appeal and the application to adduce fresh evidence were dismissed on June 12, 2025. Ordinary costs were awarded to Kindred, while special costs were denied due to Ms. Martinez’s personal challenges and the unresolved nature of her separate claim against Mr. Li. The case between Diamant and Kindred is now closed, although litigation between Diamant and its former counsel continues.