2010 ONCA 884

DATE: 20101221

DOCKET: C51557

COURT OF APPEAL FOR ONTARIO

Goudge, Cronk and Epstein JJ.A.

BETWEEN

Forest Hill Real Estate Inc. and Linda Reitapple

Plaintiffs (Respondents)

and

Harvey Kalles Real Estate Limited and Carol Anne Warrington

Defendants (Appellants)

Milton A. Davis, for the appellants

Micheal Simaan, for the respondents

Heard: December 14, 2010

On appeal from the judgment of Justice Elizabeth M. Stewart of the Superior Court of Justice, dated December 24, 2009.

ENDORSEMENT

[1] This appeal arises out of a dispute between the appellants and the respondents over real estate commissions generated by the sale of two properties. The respondents, Forest Hill Real Estate Inc. and one of its agents, Linda Reitapple, claim that they are entitled to share in the commissions earned by the appellants, Harvey Kalles Real Estate Limited and one of its agents, Carol Anne Warrington.

[2] In early 2006, the owner of 8 Cluny Avenue, in the City of Toronto, decided to sell his home. He retained the parties as co-listing agents.

[3] To this end, the parties signed two agreements. The first agreement provided that the listing portion of the commission for the sale of the Cluny property would be shared on a 70/30 basis (with the respondents being entitled to 70% and the appellants to 30%). The second agreement set out terms regarding advertising expenses and other commission issues.

[4] The particular clause in dispute is found in the second agreement. It provides that "[a]ny clients from open houses will be shared". This clause is followed by two clauses relevant to this analysis: "[a]ny clients of Linda's are hers (previous clients or new clients from personal advertising)"; and, "[a]ny clients of Carol Anne's are hers".

[5] Ms. Rosetta Raso, a woman not previously known to either Reitapple or Warrington, came to an open house they had organized for the Cluny property and met both women. Raso was not interested in purchasing the Cluny home, but she formed a relationship with Warrington as a result of which she ultimately purchased two properties in the Yorkville area of Toronto. These transactions generated a total of approximately $325,000 in commissions – the ones in issue on this appeal.

[6] In relation to the first property that Raso purchased, Warrington offered Reitapple a $30,000 "gratuity" upon closing, while taking the position that under the second agreement, she believed she had no responsibility to do so.

[7] Upon learning of the first Raso transaction, the respondents brought this action for a declaration that they were entitled to a share of the appellants' commissions from all clients introduced to them at a Cluny property open house and an accounting of all such commissions.

[8] The trial judge granted judgment in favour of the respondents, declaring that they were entitled to half the commissions earned on the sale of properties to Raso. She found the disputed clause in the second agreement to be unambiguous in the context of the commercial arrangement between the parties. In her view, its clear wording provides that the parties are to share any commissions earned by either agent through a real estate transaction, other than the sale of the Cluny property, arising as a result of the introduction of a previously-unknown client through an open house for the Cluny property. In the alternative, if there is any ambiguity in the clause at issue that would justify looking to extrinsic evidence, the trial judge held that she preferred Reitapple's evidence that supported this conclusion.

[9] On appeal, the appellants challenge this conclusion, arguing that the disputed clause creates no contractual obligation as it is vague and equivocal. The appellants offer no explanation as to what the parties may have intended by this clause.

[10] The law is clear that when interpreting the provisions of a contract, the court first looks at the language used to express the intention of the parties. If the language is not ambiguous, then the interpretive process ends there. No extrinsic evidence is admissible to interpret clear terms in a contract. That is not to suggest that meaning is attached to each word in isolation from the rest of the contract. Context can be used to assist in revealing the meaning of the words. This context may come from other parts of the agreement. It may also come from the relationship created by the agreement: see Glimmer Resources Inc. V. Exall Resources Ltd. (1999), 1999 CanLII 1102 (ON CA), 119 O.A.C. 78, at para. 17.

[11] Like the trial judge, we find no ambiguity in the language of the disputed clause. It plainly requires that the agents share any clients introduced to them through a Cluny property open house. Implicitly, this sharing of clients contemplates a sharing of commissions from such clients. In the context of the agreement as a whole, all possible scenarios are covered.

[12] The agreements between the parties provide that if the Cluny property is sold to a contact of either of the two agents, the listing commission is split 70/30 and the selling commission belongs to the agent with the contact. If the Cluny property is sold to a person previously unconnected to either agent, there are two possibilities. If the stranger is represented by another agent, that agent may be entitled to a portion of the commission and, what remains, is divided by the parties on a 70/30 basis. If the stranger is not represented by a real estate agent, the entire commission is split between the parties 70/30. This deals exhaustively with the sale of the Cluny property.

[13] The disputed clause covers another situation – the circumstance where someone is introduced to the agents through a Cluny property open house and later uses the assistance of one or both of the agents to lease, sell or purchase another property. In such a case, any commission earned by either is shared. Shared is normally understood to mean 50/50. The fact that there is no time limit to the agreement does not detract from its clarity or its commercial effectiveness given that the court, in contract interpretation, often implies a reasonable time period for a contract to be in force.

[14] In the light of our conclusion that the language of the relevant provision, considered in the context of the second agreement as a whole and the relationship between the parties reveals an unambiguous meaning, there is no need to look to extrinsic evidence or expert opinion in order to interpret the agreement.

[15] For these reasons, the appeal is dismissed. The respondents are entitled to their costs of this appeal fixed, as agreed by the parties, in the amount of $7,500, including disbursements and applicable taxes. If the parties are unable to agree on a resolution of the trial costs, this Panel may be spoken to, by contacting the Registrar of this court.

"Stephen Goudge J.A."

"E.A. Cronk J.A."

"G.J. Epstein J.A."