CITATION: Covenoho v. HomeLife Response Realty Inc., 2022 ONSC 5877
COURT FILE NO.: DC 008/22
DATE: 2022 10 19
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
JOSS COVENOHO
Self-Represented
Plaintiff (Appellant)
- and -
HOMELIFE/RESPONSE REALTY INC. and RIGHT AT HOME REALTY INC.
A. Jarvis, for Homelife/Response Realty Inc.
D.E. Heffernan, for Right at Home Realty Inc.
Defendants (Respondents)
HEARD: September 16th, 2022 at Brampton
REASONS FOR JUDGMENT
[On appeal from a Decision of Deputy Judge B. Martel of the Small Claims Court at Brampton delivered December 14th, 2021 and the costs award dated February 2nd, 2022]
LeMay J.
[1] The Appellant, Joss Covenoho is a real estate agent. She was engaged by the Respondent Right at Home Realty Inc. (“Right at Home”) as a real estate agent at the time that the events giving rise to this claim arose in June of 2020. On June 2nd, 2020, the Appellant, on behalf of some clients, made a conditional offer to purchase a property that had been listed by an agent with the Respondent Homelife Response Realty Inc. (“Homelife”). That offer was conditional on, inter alia, the Appellant’s clients obtaining financing.
[2] The offer to purchase the property was never accepted. The Appellant then told management at her brokerage, Right at Home, that she wanted to sue Homelife for payment of the co-operating broker’s commissions because Homelife and its clients ought to have accepted this conditional offer. The Appellant was advised by Right at Home’s in-house counsel that there was no privity of contract between her and/or Right at Home and Homelife and/or Homelife’s clients. Therefore, there was no basis to sue.
[3] The Appellant viewed the decision made by management at Right at Home as a denial of access to justice and a denial of her rights. As a result, on June 24th, 2020 she commenced a small claims action against both Right at Home and Homelife. As a result of this action, her “Independent Salesperson’s Agreement” with Right at Home was terminated with one day’s notice.
[4] The Small Claims Court action was dismissed by Martel D.J. pursuant to Rule 12 of the Small Claims Court Rules. The decision was originally dated October 4th, 2021. However, the decision date was amended to December 14th, 2021 by the Deputy Judge after it was discovered that the decision had not been sent to the Appellant by Court staff.
[5] The Appellant appeals from the decision of Martel D.J. and raises a series of complex and complicated arguments. Those arguments include claims that the conditional offer made by her clients was really an acceptance of an offer made by the vendors, that the brokerages improperly failed to apply the rules governing real estate transactions and that Right at Home is denying her access to justice by not suing Homelife to recover the commissions. The Appellant also raises issues of bias against Martel D.J. because Martel D.J. allegedly did not consider the Appellant’s position. Finally, the Appellant challenges Martel D.J.’s award of costs.
[6] For the reasons that follow, the Appellant’s appeals are dismissed.
Background
a) The Parties and the Offer
[7] The Appellant was a real estate salesperson registered with the Respondent Right at Home. On January 4th, 2019, the Appellant executed an Independent Salesperson’s Agreement and was provided with a salesperson’s manual by Right at Home.
[8] On June 1st, 2020, a property on Milkwood Crescent in Mississauga was listed for sale on the Multiple Listing Service, which is a listing service used by realtors across Ontario. The listing price was $799,800.00, and the Respondent Homelife acted as the listing brokerage. The agreement to list the property was signed by the Respondent Homelife and by the owners of the property.
[9] On June 2nd, 2020, the Appellant presented a conditional offer on behalf of some prospective buyers to purchase the property for the sum of $805,000.00. The offer contained the following conditions:
a) The buyers had to arrange financing;
b) The buyers required the opportunity to conduct a home inspection; and
c) The buyers had to satisfy themselves that they could obtain insurance.
[10] In addition to these conditions, the offer to purchase made by the prospective buyers also required the sellers to provide representations and warranties about the appliances that were being sold with the property. These representations and warranties were not, as I understand it, in the original listing.
[11] The vendors did not accept the conditional offer made by the Appellant’s clients. As a result, of this failure to accept her clients’ conditional offer, the Appellant made a demand to Homelife to pay her the cooperating brokers’ portion of the real estate fees.
[12] If the property had been sold to the Appellant’s clients, she would have been entitled to a portion of the sales commission because she would have been the cooperating broker. Since there was no sale to the Appellant’s clients, Homelife took the position that it was not required to pay her any commissions.
[13] The Appellant wanted to commence a lawsuit against Homelife for the commissions. However, on June 18th, 2020 she was advised by the Vice President of Legal for Right at Home that she did not have the standing to bring the lawsuit and that she was required to withdraw it. Further, she was advised that Right at Home took the view that they did not have any claim as against Homelife for any unpaid commissions either.
[14] In spite of the direction that the Appellant received from Right at Home’s Vice-President of Legal, on June 24th, 2020, she commenced a lawsuit for the commissions. Shortly thereafter, the Appellant’s Independent Salesperson’s Agreement was terminated with one day’s notice in accordance with the terms of the agreement.
b) The Claim
[15] The Appellant has raised new issues on the appeal, including issues around the status of her Independent Salesperson’s Agreement. As a result, it is important to set out the claim and the relief originally sought under it.
[16] The claim was commenced on June 24th, 2020. The original claim sought the full commission payable on the basis of a price of $805,000.00 from Homelife as well as liquidated and punitive damages for negligence and the termination of the Independent Salespersons’ Agreement.
[17] The Appellant amended her pleading on several occasions. Both of the Respondents brought motions to have the Appellant’s claim dismissed or struck out pursuant to Rule 12.02 of the Rules of the Small Claims Court. This motion was to be heard before Deputy Judge Martel on July 15th, 2021. At that time, the Deputy Judge did not have all of the materials before her and the motion was adjourned.
[18] In addition to adjourning the hearing, the Deputy Judge made an order permitting the Appellant to serve and file a Fresh As Amended Plaintiff’s Claim. This claim was dated July 23rd, 2021 and was served in early August. It is that claim that was before the Deputy Judge. The key points in that claim are as follows:
a) The Plaintiff held herself out as an independent contractor for Right at Home.
b) The Appellant’s demand for the payment of commissions was supported by her assertion that the “sellers offer to pay for valid offers was an unconditional offer.”
c) Right at Home was negligent by refusing permission for the Appellant to sue Homelife.
d) The Plaintiff claimed damages as a result of having to establish her own brokerage.
[19] The Rule 12.02 motion was heard by the Deputy Judge on September 27th, 2021. In written reasons dated December 14th, 2021, the Deputy Judge ordered the dismissal of the Appellant’s claims as against both Respondents. On February 2nd, 2022, the Deputy Judge ordered the Appellant to pay costs to the Respondent Right at Home in the sum of $1,984.05 and to the Respondent Homelife in the sum of $2,481.93. These amounts were inclusive of disbursements and HST.
[20] The Appellant appeals both the decision dismissing her action and the costs determination to this Court.
The Positions of the Parties
[21] The parties both provided factums. The Appellant’s factum outlines a series of arguments. In addition, I explored the Appellant’s arguments in detail with her during the course of oral argument. Based on both the written and oral argument, I understand the Appellant’s arguments to be as follows:
a) That Right at Home acted negligently and violated its contract with the Appellant by not suing Homelife and the sellers for commissions on the listed property.
b) That Homelife owed the Appellant commissions on the listed property and failed to pay those commissions.
c) That both Respondents are denying access to justice and lying to the Court about the rules that apply to agents and brokerages in these transactions.
d) That the Deputy Judge erred and was biased by not accepting the Appellant’s arguments.
e) That the conditional offer she provided to the Homelife agent was really an interim acceptance of the sellers offer to sell and was therefore a valid interim agreement.
f) That realtors have been deceptive about the rules on offers and have failed to follow them for decades. The buyer is falsely identified as the offeror and it is the seller who is truly making an offer which is accepted by the buyer.
g) That, although the Independent Salespersons Agreement labels the Appellant as an Independent Salesperson, she was really an employee and the agreement was wrongfully terminated.
h) That the costs award of the Deputy Judge was improperly high because of the usual limits on costs in the Small Claims Court and the fact that counsel should have known about her claim when it was brought.
[22] Counsel for the Respondent Right at Home argued that the issues set out in subparagraphs e, f, and g of the previous paragraph were all new issues, and that the Appellant should not be permitted to raise them on appeal. Respondent’s counsel also argued that the Deputy Judge’s interpretation of the offer to purchase and the underlying factual matrix was correct (or reasonable) and that the decision should be upheld. Counsel also argued that the Deputy Judge had not engaged in any conduct that would demonstrate bias. Finally, counsel argued that the Deputy Judge’s costs award was also reasonable and supported by both the Small Claims Rules and the facts of this case. As a result, Counsel for Right at Home requested that the appeal be dismissed.
[23] Counsel for the Respondent Homelife made no submissions on the merits of the case. He had what was, in essence, a watching brief.
Issues
[24] Based on the foregoing, I intend to divide my analysis into the following issues:
a) What is the standard of review that should be applied in this appeal?
b) Is the Appellant raising new issues on appeal? Should those issues be considered by this Court?
c) Was the Deputy Judge’s decision to dismiss the Plaintiff’s action under Rule 12 of the Small Claims Rules correct?
d) Did the Deputy Judge demonstrate any bias?
e) Should the costs order be set aside?
[25] I will deal with each issue in turn.
Issue #1- Standard of Review
[26] Counsel for Right at Home has referenced the principles for appellate review as set out in Housen v. Nikolaisen 2002 SCC 33. On a question of law, the standard of review is correctness. On questions of fact, the standard of review is palpable and overriding error. Finally, on questions of mixed fact and law, the standard of review lies upon a spectrum.
[27] The Deputy Judge was required to interpret an offer to purchase in light of the specific factual matrix that existed in this case, including the Appellant’s Independent Salesperson’s Agreement. This is, at most, a contractual interpretation case. The standard of review to be adopted in reviewing the interpretation of a contract was set out by the Supreme Court of Canada in Saatva Capital v. Creston Moly 2014 SCC 53, [2014] 2 S.C.R. 633. In that decision, Rothstein J. concluded (at para. 50) that contractual interpretation involved issues of mixed fact and law. Rothstein J. went on to observe (at para. 53) that it might be possible to identify an extricable question of law in interpreting a contract. However, those types of extricable questions will be rare.
[28] In this case, the Deputy Judge’s decision on the interpretation of the effect of the offer to settle appears to lie somewhere along the spectrum. It might be possible to identify different portions of the Deputy Judge’s decision that required this Court to apply different standards of review. There is also an interesting issue about the standard of review that should be applied on a Rule 12.02 motion as those motions permit the Deputy Judge to make findings of fact but are not a full trial. As noted in Van de Vrande v. Butkowsky 2010 ONCA 230, a Rule 12 motion is situated between a Rule 20 and a Rule 21 motion under the Rules of Civil Procedure.
[29] Determining those questions is not necessary, however, as I have concluded that the Deputy Judge’s decision is correct and that the appeal is devoid of any merit in all respects.
Issue #2- Are There New Issues?
[30] Counsel for Right at Home argues that the Appellant is raising new issues on the appeal that were not raised previously. Although there are three issues that arguably fall into the “new issue” category (see paragraph 21 (e), (f) and (g)), they actually relate to two different topics, as follows:
a) The issue of whether the Independent Salesperson’s Agreement is actually an independent contractors agreement.
b) Issues related to the interpretation of the offer to purchase and the surrounding factual matrix.
[31] The general rule is that appellate courts will not entertain entirely new issues on appeal. The rule is based on the principle that it is unfair to spring a new argument on a party when they might have been able to lead evidence about that argument at trial. Kaiman v. Graham 2009 ONCA 77 at para. 18.
[32] In Ontario Energy Savings LP v. 767269 Ontario Ltd. 2008 ONCA 350, the Court of Appeal stated (at para. 3):
[3] In Ross v. Ross (1999), 1999 NSCA 162, 181 N.S.R. (2d) 22, the Nova Scotia Court of Appeal set out the test concerning receiving arguments for the first time on appeal. The court said that such an argument, “should only be entertained if the court of appeal is persuaded that all of the facts necessary to address the point are before the court as fully as if the issue had been raised at trial”. The rationale for the principle is that it is unfair to permit a new argument on appeal in relation to which evidence might have been led at trial had it been known the issue would be raised.
[33] I start with the question of the Independent Salesperson’s Agreement. The Appellant has made a series of allegations about this agreement in her factum. They include the fact that the agreement was unconscionable and void, and should be set aside. At paragraph 158 of her factum, the Appellant states:
The company has full control of the agent and the bank account but bars the agents tort claims even when the brokerage is the one doing wrong. It is self serving. It is neither smart, nor clever. It is unconscionable and resembles human trafficking. (emphasis in original)
[34] The language in this paragraph is inflammatory. However, it illustrates both the significance of the issue that the Appellant has raised and the fact that considerable evidence about the contract’s formation and structure could have been led by Right at Home in response to the Appellant’s claims. It is also a very significant claim that would have substantially changed the litigation if it had been made when the Rule 12 motion was heard by the Deputy Judge. Indeed, one of the statements in the Deputy Judge’s decision is that the Plaintiff “was an independent contractor and not an employee.” (see para. 4).
[35] The Appellant had numerous opportunities to amend her claim to advance all the issues she wanted to advance. She even had an opportunity to amend her claim after she knew the basis for the Rule 12 motion that the Respondents were bringing. The Respondents relied on the manner in which the Appellant framed her claim in conducting the litigation. It would be prejudicial to force Right at Home to address this claim at this late stage. In any event, this Court does not have the evidence necessary to properly consider the claim. In short, this is a new claim that the Court should not be inquiring into and I decline to consider it further.
[36] The other issues that the Appellant has raised about the interpretation are new arguments that were not made before the Deputy Judge. I am reluctant to consider these new arguments. However, they are intertwined with the remainder of the arguments that the Appellant has made about the facts before the Deputy Judge and they are arguments based on the application of those facts. They are also all meritless. As a result, I will address them as I deal with the remainder of the issues.
Issue #3- Was the Deputy Judge’s Decision to Dismiss This Claim Under Rule 12.02 correct?
[37] Yes.
[38] In answering this question, it is helpful to start with an understanding of what took place in this case from a legal perspective. A contract requires offer, acceptance and consideration. In this case, there was never any contract between the vendor and the prospective buyers because there was no meeting of the minds on the terms of the contract.
[39] For parties to be ad idem, or in accord, on the terms of the contract they must have reached the same understanding as to the essential terms of the agreement. In this case, the vendors had listed their property for sale. Contrary to the Appellant’s position, listing the property was not an “offer to sell”. It was, at most, an expression of interest in selling the property and a solicitation of offers.
[40] Further, the Appellant’s assertion that her clients’ conditional offer to purchase the agreement was an “interim acceptance” of the vendor’s offer to sell is contrary to the well-understood principles of contract law in Canada. Whether a contract has been formed is an objective question. It requires the Court to determine whether a reasonable person would consider that each side was intending to enter into a contract. Owners, Strata Plan LMS 3905 v. Crystal Square Parking Corp. 2020 SCC 29, (2020) 450 D.L.R. (4th) 105 at para. 29.
[41] There is no reasonable basis at law to find that a conditional offer actually creates a valid contract. The offer in this case was conditional on certain events or conditions coming to pass. It is possible that those things would never have come to pass and the offer would then never be completed. For example, in this case, if the prospective buyers had never been able to obtain financing, they would never have been either obligated or permitted to complete the transaction as they likely wouldn’t have been able to pay for the property. It is unreasonable to assume that a conditional offer was an actual contract on the facts of this case. It is also unreasonable to expect that the vendor will simply wait for the buyer to complete the conditions and not continue to look for other offers. If the vendor had received an offer without conditions, at a higher or lower price, the vendor would have been at liberty to accept that other offer instead.
[42] Put another way, a conditional offer is not a valid offer. Re/Max Welland Realty Ltd. v. Canada (Minister of Transport) [1999] O.J. No. 2612. In that case, the Court was considering the sale of a property by the St. Lawrence Seaway. The Seaway had originally agreed to sell the property to Quarry Holdings. However, the Seaway then went and negotiated with the City of Welland and ultimately ended up selling the property to the City. The agent who had listed the property for the Seaway and brokered the deal with Quarry Holdings sued for his commission.
[43] In considering the case, the Court stated (at para. 9):
It is clear in law that had a valid condition been inserted into the agreement of purchase and sale that this condition would have made the entire agreement only conditional. A truly conditional agreement is not a valid offer to sell but is subject to being resiled at the request of the party in whose favour the condition was inserted.
[44] Having determined a conditional offer is not valid, there was no obligation on the part of the vendors to accept the offer made by the Appellant’s clients. In addition, for a valid contract to exist there must be offer and acceptance and the acceptance must be communicated to the offering party. The Law of Contracts (Sixth Edition) S.M. Waddams at paras. 92 and 93. None of these conditions exist in this case. Therefore, on these grounds alone, the Appellant’s claim was properly dismissed by the Deputy Judge.
[45] However, the Appellant has raised a number of other arguments that I will address briefly. First, she claims that Right at Home was negligent in not suing Homelife to obtain her commission from Homelife. I reject that argument. Even if, under the listing agreement, the vendors had an obligation to accept an offer such as the one tendered by the Appellant’s clients, the only party that could enforce that obligation was Homelife. The listing agreement was a contract between Homelife and the vendors. The Appellant and Right at Home had no rights under that agreement. Further, I see nothing in any of the rules, regulations or policies that the Appellant referred to that would impose a legal obligation on the vendors to accept the Appellant’s offer.
[46] The comments in the previous paragraph also address the Appellant’s reliance on the decisions in TL Willaert Realty Ltd. v. Fody 2013 ONSC 7533 and Lamba Realty Group Inc. v. Popova 2198 99159. Both of those decisions can be distinguished on the basis that they involved claims made against a vendor by that vendor’s real estate agent. That is not the case here.
[47] Second, there is the Appellant’s assertion that she is being “denied access to justice” because her claim against Homelife was not pursued by Right at Home. There are two problems with this argument. First, a person who does not have a valid claim is not being denied access to justice simply because a third party refuses to advance that claim on their behalf. The decision that Right at Home made not to advance the Appellant’s claim was well founded on both the facts and the law. Second, in any event, the Appellant has had her claim adjudicated at both the trial and the appellate level. She has had access to justice.
[48] I also note that the Appellant’s agreement with Right at Home permitted Right at Home to terminate the Appellant’s contract on one days’ notice, as she was an independent contractor. This termination could be “without cause”. However, the Appellant pursued a claim in the name of Right at Home even after she had been instructed not to bring the claim by her superiors. As a result, the Deputy Judge correctly concluded that the Appellant had breached her agreement with Right at Home and that the agreement was properly terminated. I see no reason to interfere with this determination, especially given my conclusion that the Appellant’s status as an independent operator cannot be challenged on appeal.
[49] Finally, there is the Appellant’s argument that the real estate agents are being “deceptive” about the rules on offers and have failed to follow them for decades. I reject that argument. I do not intend to review every provision of the various real estate regulations and other policies that the Appellant has cited. It is clear from the sequence of events in this case and the principles of law that I have set out above that the rules on offers and acceptances are in accordance with the law of Ontario.
[50] The Deputy Judge was correct in her conclusions that this action had no reasonable prospect of success.
Issue #4- Was the Deputy Judge Biased?
[51] No.
[52] The Appellant asserts that the Deputy Judge was biased because she did not consider all of the Appellant’s arguments and evidence. Counsel for the Right at Home argues that the Appellant is simply projecting her dissatisfaction with the outcome of the case onto the Deputy Judge. I accept that submission.
[53] The test for establishing a reasonable apprehension of bias is high. It is whether a reasonable person, properly informed and viewing the matter realistically and practically, would conclude that the decision maker could not decide the case fairly. Committee for Justice and Liberty v. National Energy Board 1976 2 (SCC), [1978] 1 S.C.R. 369 at 394 Yukon Francophone School Board, Education Area No. 23 v. Yukon Territory (Attorney General) 2015 SCC 25, [2015] 2 S.C.R. 282 at para. 20. The onus to establish bias lies on the Appellant.
[54] In this case, the Appellant has not pointed to anything other than the fact that the case was decided against her in order to support her allegations of bias. The Appellant argues that, as a potential homeowner, the Deputy Judge would not want to prevent homeowners from being able to receive competing offers. This submission is not supported by the record. The Deputy Judge simply interpreted the principles of contract law and the law of negligence in accordance with long-standing case-law.
The Appellant also claims that the Deputy Judge did not consider the Appellant’s evidence. I reject that claim for two reasons. First, the Deputy Judge clearly states in her reasons that she did consider the Appellant’s evidence and arguments. Second, it is not necessary for the Deputy Judge to reference every piece of evidence led by the Appellant or every argument she makes. The claim of bias advanced by the Appellant is unsustainable.
Issue #5- Was the Costs Award Excessive?
[55] The Deputy Judge awarded costs of $2481.93 to Homelife and $1,984.05 to Right at Home. Those costs were inclusive of HST and disbursements.
[56] The Appellant argues that the costs for each of these parties should have remained at $100.00 for the motion and there was no justification for a higher award of costs. She relies on Rule 15.07 of the Small Claims Rules to support her position. I disagree.
[57] The Deputy Judge has a discretion to award costs that exceed the $100.00 standard costs award set out in Rule 15.07 where there are special circumstances. Riddell v. Huhyn 2021 ONSC 7112. In this case, the Deputy Judge explained the reasons why she exercised her discretion to award higher costs.
[58] Further the Deputy Judge did not simply award what the Respondents had sought on the motion. In both cases, she moderated the costs sought by the Respondents but determined that costs awards well in excess of the standard amount set out in Rule 15.07 were appropriate. She made this decision based both on the offers to settle that had been tendered and the complexity and volume of the materials that had been filed. I see no reason to interfere in that exercise of discretion.
[59] The Appellant’s appeal of the costs orders is also dismissed.
Conclusion and Costs
[60] For the foregoing reasons, the Appellant’s appeal of the Deputy Judge’s decision dated December 14th, 2021 dismissing her claim is dismissed. The Appellant’s appeal of the Deputy Judge’s costs order dated February 2nd, 2022 is also dismissed. Any stay preventing the Respondents from collecting their costs from the Appellant is lifted.
[61] The parties are encouraged to agree on costs for this appeal. Failing agreement, costs submissions will be made on the following timetable:
a) All parties will serve and file submissions of no more than three (3) single-spaced pages, exclusive of bills of costs, offers to settle and case-law within fourteen (14) calendar days of today’s date.
b) Any party wishing to provide a response to costs submissions of another party may serve and file that response within seven (7) calendar days thereafter. Those responses are to be no more than two (2) single-spaced pages, exclusive of case-law.
[62] All costs submissions must be uploaded to case-lines and provided to my judicial assistant at zoe.chen@ontario.ca There are to be NO other communications of any sort to Ms. Chen from any party.
LeMay J.
Released: October 19, 2022
CITATION: Covenoho v. HomeLife Response Realty Inc., 2022 ONSC 5877
COURT FILE NO.: DC 008/22
DATE: 2022 10 19
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
JOSS COVENOHO
Plaintiff (Appellant)
- and –
HOMELIFE/RESPONSE REALTY INC. and RIGHT AT HOME REALTY INC.
Defendants (Respondents)
REASONS FOR JUDGMENT
LeMay J.
Released: October 19, 2022