CITATION: Akhtar v. Realty Canada Inc., 2015 ONSC 1218
DIVISIONAL COURT FILE NO.: 272/14 DATE: 20150305
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
BETWEEN:
Shoiab Akhtar, Shamila Mateen and Gurdeep Singh Sandhu
Appellant
– and –
Realty Canada Inc.
Respondent
James Chester, for the Appellant, Gurdeep Singh Sandhu
Jerome H. Stanleigh, for the Respondent
HEARD at Toronto: February 18, 2015
Lederman J.
NATURE OF PROCEEDING
[1] This is an appeal by Gurdeep Singh Sandhu (“Sandhu”) from the decision of Deputy Judge Mungovan of the Toronto Small Claims Court, wherein he granted judgment in favour of the respondent, Realty Canada Inc. (“Realty”) against Sandhu for $7,192.50 plus pre-judgment interest and costs.
[2] The appellant, Sandhu, owns Remax Realty Specialists Inc. (“Remax”) which was the listing brokerage for the sale of a shopping plaza including the gas station and convenience store in question. Realty alleged that it, through its agent, Balwinder Kaur (“Kaur”) represented Shoiab Akhtar (“Akhtar”) and Shamila Mateen (“Mateen”) in the transaction and sued Sandhu for unjust enrichment in the form of a co-operating brokerage’s commission which Sandhu received on the sale of the gas station.
[3] After the transaction closed, Remax (and Sandhu) received a commission of 10% of the selling price of $137,000. The trial judge found that Realty performed services that benefitted the listing brokerage and accordingly Sandhu was obliged to share that commission with Realty as a co-operating broker on the basis that, Sandhu, the principal of the listing broker, was unjustly enriched at the expense of Realty who had worked diligently for Akhtar and Mateen whom Kaur had thought were her clients.
[4] The trial judge found that the three elements of unjust enrichment had been satisfied:
(a) There was an enrichment of Sandhu and Remax as they enjoyed the entire commission being 10% of the sale price and had appropriated to themselves the value earned by the labour of Kaur. The enrichment consisted of the 5% commission that was supposed to be a co-operating brokerage’s share;
(b) There was a corresponding deprivation since Realty received no part of that commission even though it had performed work on behalf of its clients;
(c) There was no reason in law that would justify Remax or its owner Sandhu in retaining this enrichment, namely, the entire commission.
ISSUES ON APPEAL
[5] Sandhu submits that the trial judge misapprehended the evidence and made palpable and overriding errors in his findings of fact and findings of mixed fact and law.
[6] Specifically, he submits that the facts do not give rise to a conclusion that the elements of unjust enrichment have been met.
BACKGROUND FACTS
[7] Realty is a real estate brokerage company represented by Kaur. Kaur first came in contact with Akhtar on April 1, 2010 when Akhtar inquired about a gas station for sale that he saw in an advertisement that Realty had placed in the Business Exchange magazine. (There was some issue as to whether Realty could advertise this property as it did not have the permission from the listing agent). In any event, in a telephone conversation, Kaur advised Akhtar that there was in fact a gas station for sale which she knew of because the owner of that gas station had previously purchased it through her and her husband. Kaur told Akhtar the address of the gas station during that first telephone call even though Akhtar had not signed a Buyer Representation Agreement.
[8] Kaur testified that she had come to an oral agreement with Akhtar. She could represent him as the buyer’s agent and that he would not be responsible for commissions.
[9] Akhtar visited the gas station site, and made further inquiries of Kaur with respect to the corner store located in the same plaza.
[10] By way of email, information concerning the store, the plaza and the gas station, were provided by Kaur to Akhtar.
[11] Kaur contacted Sandhu, the listing agent, and made inquiries about the plaza income and expenses. Sandhu provided that information to Kaur which she then forwarded to Akhtar.
[12] Akhtar proceeded to deal directly with the owner of the gas station and confirmed that the sale price was $149,900. Akhtar was suggesting he would offer to buy the gas station for $100,000 while Kaur suggested a price of $120,000 as being more realistic.
[13] On or about April 6, 2010, Kaur prepared an Agreement of Purchase and Sale together with a Buyer Representation Agreement which she asked Akhtar to sign. However, he informed her that he had already put in his own offer to purchase the gas station. She reminded him that she was his agent.
[14] Akhtar told Kaur that he met the owner of the gas station and introduced him to Sandhu who asked him to come to his office the following day.
[15] Kaur indicated that she did not want to interfere with the transaction but advised Akhtar that she had a contract with him and that he would be responsible for commission if she could not get it from Sandhu.
[16] On or about April 6, 2010, Akhtar contacted Sandhu asking for detailed information about the property. Sandhu specifically asked Akhtar whether he was being represented by real estate agent. Akhtar informed Sandhu that he was not represented by any real estate agent, that he and his wife, Mateen, had recently moved to Canada from U.S.A. and that they wanted Sandhu to represent them in the transaction.
[17] Akhtar and Mateen visited Sandhu at his office and Sandhu provided them with all the information regarding the property. Akhtar and Mateen signed the Buyers Representation Agreement so that they could be represented by Sandhu.
[18] Upon the execution of the Buyers Representation Agreement by Akhtar and Mateen, Sandhu prepared the offer which was accepted and the transaction was closed on April 30, 2010.
[19] Sandhu thereby represented both the buyer and the seller in the transaction.
[20] Some two months after the closing of the transaction, on or about June, 2010, Kaur contacted Sandhu and indicated that she was representing Akhtar and Mateen for the transaction. Kaur, however, did not have a Buyers Representation Agreement executed by them.
ANALYSIS
[21] When Sandhu was approached by Akhtar and Mateen, he quite properly asked them if they had already had a real estate agent. They told him that they did not have one and wished to retain Sandhu as their real estate agent. Relying on that representation, Sandhu had them sign a Buyers Representation Agreement and he then performed the kind of services that a co-operating broker should do. He proceeded to discuss terms with the seller, prepared the offer, negotiated the price and negotiated the closing date. Sandhu carried out due diligence work with Akhtar and Mateen, took them around the gas station and showed them all the invoices and sale records for the gas station business.
[22] The trial judge did not refer to the services performed by Sandhu for Akhtar and Mateen. In doing so, Sandhu had performed the work of a co-operating broker and was thereby entitled to the commission that a co-operating broker would normally receive.
[23] Apart from making general enquiries about the plaza, Kaur did introduce Akhtar and Mateen to the property as a result of the ad that she had placed in the magazine and also providing them with the address of the property. She neglected, however, to obtain a signed Buyers Representation Agreement from them. Nor did she advise Sandhu prior to the closing of the transaction, that she was acting for the purchasers.
[24] Sandhu asked Akhtar and Mateen the right questions and did not know that there was another agent ostensibly acting for them. He had them sign a Buyers Representation Agreement and performed services for them as agent for the purchasers.
[25] Whatever claim Kaur may have, as against Akhtar and Mateen, it cannot be said that her services to them enriched Sandhu in any way. Sandhu earned his co-operating broker’s share of the commission because of his own work independent of Kaur.
[26] The trial judge thereby made a palpable and overriding error in concluding that Sandhu was enriched at the expense of Realty.
[27] One of the elements that has to be met to satisfy a claim for unjust enrichment is that there is no valid juristic reason in law that would justify Remax or its owner, Sandhu, in retaining the entire commission. There, in fact, was a legal reason for keeping the entire commission. The commission was paid by the vendor with the understanding that part of it might be shared with a co-operating broker. In this case, Sandhu was also the co-operating broker having inquired of Akhtar and Mateen that no other agent was acting for them and they signed a Buyers Representation Agreement. Accordingly, there was legal justification for Sandhu to keep the entire commission. The finding by the trial judge that there was not a good and valid reason for retaining the full commission amounted to a palpable and overriding error.
[28] In the end, the elements of unjust enrichment have not been satisfied and there should not have been judgment allowing for a sharing of the commission with Kaur.
[29] The appeal is therefore allowed and the trial judgment is set aside and the action as against Sandhu is dismissed.
[30] Counsel have agreed that the costs of this appeal be fixed in the amount of $5,000, inclusive of fees, disbursements and applicable taxes. Accordingly, Realty is to pay that amount to Sandhu within 30 days.
___________________________ Lederman J.
Released: March 5, 2015
CITATION: Akhtar v. Realty Canada Inc., 2015 ONSC 1218
DIVISIONAL COURT FILE NO.: 272/14 DATE: 20150305
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
Shoiab Akhtar, Shamila Mateen and Gurdeep Singh Sandhu
Appellant
– and –
Realty Canada Inc.
Respondent
REASONS FOR JUDGMENT
Lederman J.
Released: March 5, 2015