COURT OF APPEAL FOR ONTARIO Corporation, 2020 ONCA 109

DATE: 20200212 DOCKET: C65935

Judges: van Rensburg, Benotto and Harvison Young JJ.A.

BETWEEN:

Hurst Real Estate Services Inc. and DTZ Canada Inc., a UGL Company Plaintiffs (Respondents)

AND:

Great Lands Corporation, Great Lands (Halton Hills) Industrial Park Corp. and Sam Sadr Defendants (Appellants)

Counsel: David A. Weisman, for the appellants Peter Manderville and Lindsay Moffatt, for the respondents

Heard: December 11, 2019

On appeal from the judgment of Justice Bernadette Dietrich of the Superior Court of Justice dated September 5, 2018, with reasons reported at 2018 ONSC 4824.

REASONS FOR DECISION

I. Overview

[1] The respondents brought a claim against the appellants alleging the non-payment of a commission in relation to a sale of industrial real estate. The trial judge found the appellants jointly and severally liable to the respondents for breach of contract. For the reasons below, we dismiss the appeal.

II. Background

[2] Appellant Sam Sadr is a real estate developer and the sole shareholder, director and officer of the two other appellants, Great Lands Corporation (“GLC”) and Great Land (Halton Hills) Industrial Park Corp. (“GLHH”). [1] In March 2012, a real estate agent, David Hurst, then the principal of Hurst Real Estate Services Inc. (“Hurst Real Estate”), made inquiries into a plot of land owned by GLHH (a single purpose corporation) on behalf of a client. Ron Stein, an employee of GLC, advised that the property was not listed for sale, but a sale was possible if the right offer was made. Between March and October 2012, Hurst introduced prospective purchasers to the property.

[3] GLHH and Hurst Real Estate eventually entered into a listing agreement for the land covering the period of November 2, 2012 to February 28, 2013. The agreement provided that a commission would be paid if an offer made prior to August 27, 2013, was accepted and was made by a prospective purchaser introduced by Hurst Real Estate to GLHH during the listing period. The listing agreement expired and was not renewed. No purchase was made entitling Hurst Real Estate to a commission under this listing agreement.

[4] Hurst engaged in discussions with Sadr and Stein, an employee of GLC, following the expiration of the listing period. The result of these discussions is disputed on this appeal, but the trial judge found that a binding contract was formed requiring the appellants to pay a commission of one half of the sale price over $10.3 million, capped at 5% of sale proceeds, should an offer procured by Hurst be accepted by them.

[5] Hurst engaged in discussions with the ultimate purchaser Triovest Realty Advisors Inc. (“Triovest”) about purchasing the property. In October 2013, Triovest reached out directly to GLC and discussions took place without Hurst. Triovest purchased the property for $10.8 million. The sale proceeds were paid to GLHH, the owner of the property, but were transferred to other corporations controlled by Sadr after the sale. The appellants refused to pay a commission to the respondents. At the time when the sale closed, Hurst was working for respondent DTZ Canada Inc. (“DTZ”).

[6] The trial judge granted judgment for the respondents in the amount of $540,000 plus HST. The quantum is not at issue on appeal. She found that a binding contract had formed and that the respondents were not barred from bringing action by the Real Estate and Business Brokers Act, 2002, S.O. 2002, c. 30, Sch. C. Further, the trial judge found that the appellants were jointly and severally liable for the commission. In particular, the individual Sadr was liable for the commission both because he had induced the corporation he wholly controlled to breach the contract, and because he was a party to the contract personally.

III. Issues

[7] The appellants raise the following three issues:

1. Did the trial judge err in finding that a binding contract had formed for the payment of commission in relation to the sale?
2. Did the trial judge err in finding that the action was not barred by the Real Estate and Business Brokers Act, 2002 (the “Act”)?
3. Did the trial judge err in finding both GLC and Sadr liable for the commission?

IV. Analysis

[8] The appellants have failed to establish the existence of a reversible error on the part of the trial judge. It was open to her to find that a binding contract was formed, and we agree with her that this contract was not barred by the Act. Her conclusion that Sadr and GLC were liable for the commission as parties to the contract is supported by the record.

(1) Contractual Entitlement to a Commission

[9] The appellants argue that the trial judge erred in finding that a contract had formed that required them to pay a commission on this sale. First, they argue that Hurst did not unequivocally accept the offer. Second, they argue that even if a contract was formed, that it was conditional on the execution of a formal commission agreement. Third, they say that even if the contract was not conditional on a formal agreement, Hurst was not an instrumental cause of the sale and is therefore not entitled to commission under that contract.

[10] We disagree. These arguments challenge the trial judge’s findings of fact, which are entitled to deference and disclose no reversible error.

[11] The trial judge found that during a meeting on April 30, 2013, between Hurst, Stein and Sadr, Sadr personally offered that if Hurst brought him an offer to buy the property that was accepted, he would split any amount over $10.3 million 50/50. The trial judge then found that this offer was confirmed and modified by an email sent the following day by Stein, using a GLC email signature. Stein clarified that the amount payable under the agreement would be capped at 5% of the sale price. The trial judge found that on May 2, 2013, Hurst, by reply email, accepted this offer. The appellants concede that this was a finding open to her on the record. We see no basis to interfere with this finding.

[12] Similarly, there is no reason to interfere with the trial judge’s conclusion that the payment of commission under the terms of this contract was not conditional on the execution of a formal commission agreement. The May 1, 2013, email from Stein to Hurst contains a statement that a “co-op agreement” would need to be signed. It is common ground that this refers to a formal commission agreement. The trial judge considered this statement and concluded that rather than being a condition of the contract, this was merely a reference to “further papering”. Again, these findings were open to her on the record and we see no basis to interfere.

[13] Finally, with respect to Hurst’s role in the sale of the property, the trial judge found that Hurst had introduced the purchaser Triovest to the appellants on September 30, 2013. The appellants were not aware of Triovest before this introduction was made. She further found that the sale occurred as a consequence of this introduction and that the transaction proceeded on terms that were identical to those that Hurst had forwarded to the appellants in respect of an earlier offer. It is on the basis of these findings, which the appellants have failed to establish were made in error, that the trial judge concluded that a commission was payable under the contract as a result of this sale.

[14] In summary, we find no basis to interfere with the trial judge’s conclusion that a binding contract was formed under which the respondents were entitled to a commission for this sale. This finding is grounded in the record and the appellants have failed to demonstrate that it was made in error.

(2) The Real Estate and Business Brokers Act, 2002

[15] The appellants renew their argument made at trial that the respondent Hurst Real Estate is barred by s. 9 of the Act from bringing this action. A person bringing an action for real estate commission must have been registered under the Act or exempt from registration under the Act, at the time when the services were rendered. The appellants argue that because Hurst Real Estate was de-registered at the time of the sale, it cannot bring this action.

[16] We disagree. The services were rendered by Hurst, first on behalf of Hurst Real Estate and later on behalf of DTZ. At the time when services were rendered by Hurst through Hurst Real Estate it was duly registered. The fact that it was de-registered later is of no consequence to this action.

[17] The appellants also say that the contract violates s. 36(3) of the Act. This section prohibits an arrangement for the payment of commission based on the difference between the list price and the sale price. We agree with the trial judge that this submission does not assist the appellants, as the property was not listed when the contract was formed, nor was it listed at the time of sale.

[18] The appellants further argue that the respondents cannot collect a commission because there is no signed agreement as required by the general regulation, O. Reg. 567/05, s. 23(1)(a), made under the Act. As discussed above, the trial judge found that the contract at issue was formed when Hurst replied by email to Stein’s May 1 email. This email correspondence included typed versions of each sender’s name, title and organization. The trial judge concluded that this email exchange was a signed agreement for the purpose of s. 23(1)(a) because the respective emails ended with a typed version of the sender’s name, title and organization. The trial judge was entitled to find, in the circumstances, that this correspondence was sufficient to constitute a signed agreement. We decline to disturb this finding.

(3) Joint and Several Liability

[19] The appellants argue that the trial judge erred in concluding that GLC and Sadr were jointly and severally liable, along with GLHH, for the commission. We disagree.

[20] First, it was open to the trial judge to find that GLC was a party to the commission agreement. The May 1 offer sent by Stein, which formed the basis of the contract, identified him as acting on behalf of GLC given his email signature, as did all of his communications with Hurst and with the purchaser Triovest. Further, in the text of the email itself Stein refers to the fact that the proceeds over $10.3 million were to be split between Hurst and “Great Lands.” Read in context, given the use of GLC logo and email signature, this appears to refer to GLC. GLHH, by contrast, is mentioned nowhere in the email. These facts are sufficient to ground the trial judge’s finding that GLC was a party to the contract.

[21] The remaining and central issue was whether the trial judge erred in finding that Sadr was also personally liable and thus erred in imposing joint and several liability. The trial judge’s conclusions that Sadr was a party to this contract and participated in its breach are fully supported by the evidence.

[22] The issue is the proper characterization of the commitment made by Sadr through Stein. The factual findings of the trial judge provide support for the existence of a covenant that binds Sadr. The trial judge found that Sadr personally extended the original offer for an enhanced commission agreement at his April 30, 2013, meeting with Hurst. Though it was Stein who emailed the next day, to confirm and alter this arrangement, Stein testified that this offer was conveyed on behalf of Sadr. This is reflected in the language used in this email which references Sadr’s intention in addition to references to the corporate entity. There was therefore a basis to ground the trial judge’s conclusion that Sadr was personally a party to the commitment.

[23] The evidence demonstrates that Sadr effectively covenanted, in the meeting of April 30, 2013, that he would cause the enhanced commission to be paid to Hurst if Hurst met the conditions for payment. Sadr made the commitment personally, as the sole shareholder of GLC, and ultimately as the beneficiary of any sale of the subject lands by GLHH. As Sadr was in a position to cause or to withhold payment of the commission to Hurst, his decision not to pay the commission, and his steps to avoid payment by GLC/GLHH rendered him liable personally for the amount of the promised commission as damages for the breach.

[24] Given that Sadr is liable for breach of contract as a party to the agreement, it is not necessary to consider whether he could also have been held liable in tort for inducing GLC to breach its contract with Hurst.

[25] This ground of appeal therefore fails.

V. Conclusion

[26] The appeal is dismissed.

[27] The respondents are entitled to their costs in the agreed upon amount of $22,600 inclusive of disbursements and HST.

K. van Rensburg J.A. M.L. Benotto J.A. A. Harvison Young J.A.

[1] Despite the title of proceedings, it is common ground that the correct name of this corporation is Great Land (Halton Hills) Industrial Park Corp.