ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
UNITED ASSOCIATES REALTY INC. O/A ROYAL LEPAGE UNITED REALTY INC.
Julia Toso, for the Plaintiff/ Respondent
Plaintiff/Respondent
- and -
SHIKHA LAWRENCE and KEVIN LAWRENCE
Adam Lefler, for the Defendants/ Appellants
Defendants/Appellants
HEARD: December 4, 2020, via video conference
REASONS FOR JUDGMENT
[On appeal from a Decision of Deputy Judge McNulty of the Small Claims Court at Brampton dated July 24, 2019]
ANDRÉ J.
1The Appellants, Kevin Lawrence and Shikha Lawrence, appeal the judgment of Deputy Judge Brian McNulty on July 24, 2019, in favour of the Respondent, United Associates Realty Inc. o/a Royal LePage United Realty Inc. (“RLU”), in which he found the Appellants liable for damages in the amount of $25,000 plus costs in the amount of $6,253.86. The Appellants submit that Deputy Judge McNulty committed a number of factual and legal errors and that his judgment should therefore be reversed.
SUMMARY OF THE TRIAL EVIDENCE
2Ms. Renu Dhir is a real estate agent licensed by the Real Estate Council of Ontario (“RECO”). She has been a full-time real estate agent for approximately fourteen years. The Lawrences filed a complaint with RECO almost two years after their relationship with Ms. Dhir ended, and following the commencement of RLU’s Small Claims Court action.
3The Lawrences are young professionals, both possessing post-secondary degrees. Mrs. Lawrence is an Oncology Pharmacist at Sunnybrook Hospital and Mr. Lawrence is a computer programmer. Mrs. Lawrence testified that she is a detail-oriented and inquisitive woman who reads all documents before signing them since she understands that she is bound to whatever documents she executes.
4Ms. Dhir has known Mrs. Lawrence’s family for over twenty years. She was retained by Mrs. Lawrence’s mother in 2013 to assist her in buying a condominium. Mrs. Lawrence participated to some extent in the selection and offer process, since her mother was not computer savvy and was fairly busy with running her own business. In 2013, Mrs. Lawrence’s mother ultimately approached the seller of a property directly in order to purchase her property, excluding Ms. Dhir from the transaction. Although there was a Buyers’ Representation Agreement (“BRA”) executed between Mrs. Lawrence’s mother and the brokerage, Ms. Dhir did not seek to enforce the terms of that agreement out of sympathy for Mrs. Lawrence’s mother, who, at the time, was downsizing because she recently lost her husband.
5In 2015, Mrs. Lawrence mentioned to Mrs. Dhir that she may be purchasing a residential property in the near future. In response, Mrs. Dhir registered Mrs. Lawrence for automatic email updates of properties that may interest her.
6On November 28, 2016, at Mrs. Lawrence’s request, Ms. Dhir attended an offer presentation at a real estate brokerage to assist the Lawrences in submitting an offer. Ms. Dhir prepared and printed a set of standard form documents ahead of time.
7While at the brokerage, Ms. Dhir provided the Lawrences with three documents: an Agreement of Purchase and Sale for a property located at 579 Oakwood Avenue, Toronto (the “Oakwood Property”); a BRA; and a Co-Operation Agreement.
8The Lawrences examined the three documents. Mr. Lawrence inquired about the BRA, since he had identified that this document contained a date range. Ms. Dhir explained the nature of the document to the Lawrences, specifically that it would solidify their working relationship and ensure that Ms. Dhir receives a commission for properties purchased during that date range.
9Since the Lawrences had just begun searching for properties, and also hoped that they would be successful in purchasing the Oakwood Property, they did not want to execute the BRA at that time. However, Mrs. Lawrence assured Mrs. Dhir that she would execute it before submitting any further offers. Based on this assurance, Ms. Dhir removed the BRA from the paperwork.
10The Lawrences were not successful in purchasing the Oakwood Property. During the months of December 2016 and January 2017, Ms. Dhir and the Lawrences viewed other properties. During the viewings, Ms. Dhir continued to remind the Lawrences that they would need to formalize their relationship with Ms. Dhir by executing a BRA. The Lawrences assured her that they would do so before submitting a second offer.
11On February 1, 2017, the Lawrences requested that Ms. Dhir attend a property located at 4 Krieger Crescent, in the City of Toronto (the “Krieger Property”). This Krieger Property was an estate sale. The terms of the Agreement of Purchase and Sale included a provision regarding the status of probate.
12The parties attended the Krieger Property at 5:30 p.m. Ms. Dhir attended with the same three documents that she presented to the Lawrences on November 28, 2016: An Agreement of Purchase and Sale; a BRA; and a Co-Operation Agreement. Ms. Dhir had filled out certain portions of these documents on her computer, but left pertinent areas of the document blank to discuss with the Lawrences before filling them out. On the Agreement of Purchase and Sale, she left the price blank and on the BRA she left the commission portion blank, since it was her regular practice to fill out these areas in front of her clients in order to draw their attention to these portions.
13At first, the Lawrences decided that they would not be putting an offer on the Krieger Property and the parties parted ways. However, on her way home, Ms. Dhir received a call from the Lawrences indicating that they had changed their mind and would like to proceed with submitting an offer. Ms. Dhir immediately returned and met the Lawrences in their vehicle to get all three documents signed in order to submit their offer on time.
14The parties met for about thirty minutes in the Lawrences’ vehicle. They discussed the documents that the Lawrences would be signing. The Lawrences looked up information on their iPhone to understand the issue of probate. Ultimately, the Lawrences submitted an offer on the Krieger Property.
15Ms. Dhir briefly reminded the Lawrences about the nature of the BRA. Ms. Dhir had this document executed first. Mrs. Lawrence signed the BRA, and Mr. Lawrence also executed the portion of the BRA that indicated that they received a copy of the document. All of the documents signed on February 1, 2017 were signed in duplicate and given to the Lawrences. The BRA was in effect for 180 days from the date of signing.
16The Lawrences were not successful in purchasing the Krieger Property. During the months of February and March 2017, they continued to use Ms. Dhir’s services. Ms. Dhir submitted four additional offers on their behalf during this period.
17Ms. Dhir continued to show the Lawrences properties, provide advice, and submit offers on their behalf.
18Ms. Dhir submitted an offer on a property for the Lawrences on March 24, 2017. The following day, Mrs. Lawrence contacted Ms. Dhir to discuss a property located at 12 Iondale Cres., Toronto (“12 Iondale”). At Mrs. Lawrence’s request, Ms. Dhir sent over information about similar properties that sold in the area and participated in a lengthy telephone call with Mrs. Lawrence about 12 Iondale.
19On March 26, 2017, without notifying Ms. Dhir, Mrs. Lawrence contacted the listing agent of 12 Iondale. She made an offer to purchase this property, advising the listing agent that she was unrepresented. She signed a BRA with the seller’s agent for “nil” or “zero” commission, and purchased the 12 Iondale for under asking price. She paid approximately $1,000,000 for the property. She testified that she did not know what a BRA was until the selling agent for the Iondale Property explained it.
20After the Lawrences purchased 12 Iondale, Ms. Dhir and Mrs. Lawrence continued to communicate with one another. As Ms. Dhir had no knowledge of the Lawrences’ purchase of 12 Iondale, she continued to send Mrs. Lawrence properties of interest, and Mrs. Lawrence continued to ask Ms. Dhir opinions about various properties. Despite these communications, Mrs. Lawrence did not advise Ms. Dhir that they had purchased 12 Iondale.
21In May 2017, Mrs. Lawrence finally notified Ms. Dhir of the purchase. The Lawrences attended Ms. Dhir’s open house to advise her that they had purchased 12 Iondale and to offer her compensation for her work as their agent based on their own calculation of the hours Ms. Dhir had spent working with them. She offered Ms. Dhir approximately $2,500. Ms. Dhir refused the offer and advised the Lawrences that she would be enforcing the terms of the BRA. In response, Mrs. Lawrence indicated for the first time that she was dissatisfied with Ms. Dhir’s services. Ms. Dhir made attempts to resolve this dispute amicably, including engaging Mrs. Lawrence’s mother to assist with resolution, an action of which Mrs. Lawrence characterized to RECO as a threat.
22RLU commenced litigation against the Lawrences to enforce the terms of the BRA. Mrs. Lawrence told Ms. Dhir to drop the litigation, otherwise she would take this matter to the media and file a complaint with RECO. RLU did not withdraw its action. Following the settlement conference, the Lawrences submitted a complaint to RECO regarding Ms. Dhir’s service, alleging, amongst other things, that the signature on the BRA did not belong to them, a fact that was contradicted at trial. A tribunal dismissed the RECO complaint.
TRIAL JUDGE’S DECISION
23The trial judge found that the Lawrences were not credible witnesses and accepted the evidence of Ms. Dhir that she had explained the nature of the BRA to them. He found that Mrs. Lawrence had deliberately not advised Ms. Dhir about her intention to purchase the Iondale property to avoid paying her the 2.5% commission. The trial judge also found the post-transaction conduct of the Lawrences to have been egregious and imposed costs in excess of the amount stipulated in s. 29 of the Courts of Justice Act, R.S.O. 1990, c. C.43.
LEGAL ISSUES
24The issues raised in this appeal are as follows:.
(1) What is the appropriate legal standard of review?
(2) Did the learned Deputy Judge err by finding that the BRA was enforceable against the Appellants?
(3) Did the learned Deputy Judge err when he took judicial note that the Appellants gained a benefit by omitting Ms. Dhir from the purchase of the Iondale property?
(4) Did the learned Deputy Judge err in finding that the Appellants received legal advice in drafting their defence?
(5) Did the learned Deputy Judge err in finding that Mrs. Lawrence was not a credible witness?
(6) Did the learned Deputy Judge err in finding that Mr. Lawrence engaged in legal deceit when he signed the BRA?
(7) Did the learned Deputy Judge err in awarding additional costs against the Appellants?
ISSUE ONE: What is the appropriate legal standard of review?
25The standard of review to apply to a decision of the Small Claims Court is determined by the principles outlined by the Supreme Court of Canada in Housen v. Nikolaisen, [2002] 2 S.C.R. 235, 2002 SCC 33.
26On pure questions of law, the standard of review is correctness. Findings of fact or mixed law and fact, including inferences drawn by the learned trial judge based on the facts before them, are reviewable only for “palpable and overriding errors”. A “palpable and overriding error” is one that is clear to the mind or plain to see”. The error must be “so obvious that it can easily be seen or known”: Housen, at para. 5.
27It is trite law that the appellate courts must treat a trial judge’s findings of fact with great deference. The purpose of the appellate level courts is to provide a litigant with the ability to have an arguable ground of appeal reviewed. The appellate court is prohibited “from reviewing a trial judge’s decision if there was some evidence upon which he or she could have relied to reach that conclusion”: Housen, at para. 1.
ISSUE TWO: Did the learned Deputy Judge err by finding that the BRA was enforceable against the Appellants?
28The trial judge found that Mrs. Lawrence read the BRA and understood what she signed.
29The Appellants submit that this finding cannot stand because of the following:
a) Ms. Dhir confirmed that they only had approximately thirty minutes in a small car on a dark and cold February evening on the night they made an offer for the Krieger property. Ms. Dhir testified that a thorough explanation of the BRA would take 30 to 40 minutes. Therefore, “it was virtually impossible for Renu to have thoroughly explained the BRA on the night of February 1, 2017”.
b) Ms. Dhir made the following misstatements while testifying and was therefore not a credible witness:
a) That a signed buyer representation agreement was required for the Appellants to become a “client”;
b) That one of the differences between a customer and a client in real estate is that the former is trying to buy and the latter is ready to buy;
c) That Ms. Dhir could only share the Appellants’ information with the seller, broker and seller’s agent if they became clients by signing a buyer representation agreement, such information including, but not limited to, the client’s price limit;
d) That it was not legal to show properties without a buyer representation agreement in place;
e) That a buyer representation agreement is a mandatory document required by law;
f) That a signed buyer representation agreement is required when a purchaser wants any information about a property as per the Real Estate and Business Brokers Act, 2002, S.O. 2002, c. 30, Sched. C; and
g) That Ms. Dhir owes a different fiduciary duty to someone who signs a buyer representation agreement than someone who merely has a verbal agency relationship.
30I find that the learned deputy judge did not err in finding that the BRA was enforceable against the Lawrences for the following reasons.
31First, the test for enforceability of the BRA does not require the agent to explain it to the Lawrences; all it required was that the agent not misrepresent the nature of the document. As a result, the test did not relieve the Lawrences from exercising due diligence before signing the document: see Marvco Color Research Ltd. v. Harris, 1982 63 (SCC), [1982] 2 S.C.R. 774.
32Ms. Dhir advised the Appellants that the document ensured that she was compensated for her work in finding them a house to purchase and presenting their offers to vendors. It established an exclusive relationship between the parties as well as the duration of this relationship.
33Second, there was ample evidence, both direct and circumstantial, to find that the Appellants understood the nature of the BRA. They decided not to sign it on November 28, 2016. Mr. Lawrence initialled the BRA on February 1, 2017 but decided not to sign it. Furthermore, Mrs. Lawrence signed the BRA presented by the vendor’s agent on February 1, 2017, which did not require her to pay any commission to the agent. Additionally, Mrs. Lawrence had some involvement in a real estate transaction in 2013 when Ms. Dhir assisted her mother in the purchase of a residence. Additionally, Ms. Dhir testified that she explained the significance of the BRA on four occasions in 2013, 2015, November 28, 2016 and on February 1, 2017.
34There is also evidence which raised an inference that Mrs. Lawrence clearly understood the significance of the BRA. She obtained listings for various properties from Ms. Dhir, including the Iondale property, on the day prior to the day she made an offer to purchase this property. She then signed a BRA indicating zero commission payable by her to the vendor’s agent. Additionally, Mrs. Lawrence waited two months after the transaction before telling Ms. Dhir about the transaction and then offered Ms. Dhir an amount significantly less than she was obligated to pay to Ms. Dhir under the terms of the BRA.
35In my view, these facts raise an inference that the Lawrences clearly understood the nature and significance of the BRA. To that extent, the trial judge did not err in concluding that the BRA was enforceable against the Lawrences.
ISSUE THREE: Did the learned Deputy Judge err when he took judicial note that the Appellants gained a benefit by omitting Renu Dhir from the purchase of the Iondale property?
36In my view, there was circumstantial evidence which supports this conclusion. The Appellants are educated and sophisticated. By their own actions, they understood the significance of the BRA. They purchased the Iondale residence with no assistance from Ms. Dhir. They negotiated a BRA with the vendor’s agent wherein they had no commission to pay the agent. They paid over $1,000,000 for the Iondale residence. Under the BRA, they were obligated to pay Ms. Dhir over $25,000. They only paid her $2,500 for the work she had done on their behalf. There was ample evidence to support the trial judge’s conclusion that they derived a benefit by not honouring the BRA they signed with Ms. Dhir. To that extent, this ground of appeal must be dismissed.
ISSUE FOUR: Did the learned Deputy Judge err in finding that the Appellants received legal advice in drafting their defence?
37There was some evidence in the trial to support this conclusion. This evidence included the contents of the pleadings filed by the Appellants. It contained legal terminology and was faxed from a lawyer’s office with the name of the law firm and fax number affixed to the top of the document.
38The trial judge committed no error in his conclusion. Accordingly, this ground of appeal must fail.
ISSUE FIVE: Did the learned Deputy Judge err in finding that Mrs. Lawrence was not a credible witness?
39Mrs. Lawrence testified that she did not know the nature and significance of the BRA. The trial judge found otherwise, based on some of the evidence called during the trial.
40For example, Mrs. Lawrence, who is a pharmacist at a major Toronto hospital, testified that she understood that she would be bound by the terms of a contract she signs. She also testified that she was detail oriented and never signed a contract she had not reviewed. Additionally, Mrs. Lawrence presented an offer to purchase the Iondale property without Ms. Dhir’s assistance and negotiated a zero commission agreement with the vendor’s agent. Furthermore, the trial evidence indicates that Ms. Lawrence communicated with other realtors and in so doing, demonstrated more than a passing acquaintance with real estate transactions. In my view, the trial judge was entitled to rely on this evidence to conclude that Mrs. Lawrence was a sophisticated person who would have known and appreciated the nature and significance of the BRA.
ISSUE SIX: Did the learned Deputy Judge err in finding that Mr. Lawrence engage in legal deceit when he signed the BRA?
41Mr. Lawrence testified that he did not know that he was signing a BRA on February 1, 2017. However, he testified that he initialed the document but did not affix his signature to it.
42The trial judge had the discretion to disregard this part of Mr. Lawrence’s testimony or any other part. Mr. Lawrence testified that his failure to sign the BRA was simply an oversight. However, by not signing the BRA, Mr. Lawrence was not bound by its terms. It was not enforceable against him, as the trial judge concluded.
43Again, it was open to the trial judge to reject this part of Mr. Lawrence’s testimony. He had a financial motive not to be bound by the BRA and chose not to sign it. The trial judge did not err in disbelieving Mr. Lawrence’s testimony that his failure to sign the BRA was simply an oversight. To that extent, that ground of appeal must fail.
ISSUE SEVEN: Did the learned Deputy Judge err in awarding additional costs against the Appellants?
44The trial judge relied on the following statement of the Ontario Court of Appeal in Serra v. Serra, 2009 ONCA 395, 66 R.F.L. (6th) 40, at para. 8, in his decision regarding the quantum of costs:
Modern costs rules are designed to foster three fundamental purposes: (1) to partially indemnify successful litigants for the cost of litigation; (2) to encourage settlement; and (3) to discourage and sanction inappropriate behaviour by litigants. [Citations omitted.]
45Deputy Judge McNulty concluded that the Lawrences had acted unreasonably in their dealings with Ms. Dhir and had even initiated a bogus complaint against them in a cynical attempt to stop her from initiating a claim against them. He found that Ms. Lawrence had threatened Ms. Dhir that they would expose her to the media if she did not withdraw her statement against them. He also found that they had intentionally misled the court. As a result, he concluded that the Appellants’ actions warranted an award of costs that exceeded 15% of the amount claimed.
46There is no error in the trial judge’s decision to do so. Accordingly, this ground of appeal is dismissed.
CONCLUSION
47The appeal is dismissed.
COSTS
48The parties have agreed that if either party is successful, costs fixed at $3,000 inclusive will be awarded against the losing party.
49Accordingly, the Appellants will pay costs fixed in the amount of $3,000 inclusive to the Respondent within ninety (90) days of today’s date.
André J.
Released: January 12, 2021
CITATION: United Associates Realty Inc. v. Lawrence, 2021 ONSC 279
COURT FILE NO.: DC-19-90-00
DATE: 20210112
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
UNITED ASSOCIATES REALTY INC. O/A ROYAL LEPAGE UNITED REALTY INC.
Plaintiff/Respondent
- and –
SHIKHA LAWRENCE and KEVIN LAWRENCE
Defendant/Appellant
REASONS FOR JUDGMENT
ANDRÉ J.
Released: January 12, 2021