ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CV-13-1321-00SR

DATE: 20150903

BETWEEN:

FIRST CONTACT REALTY LTD. c.o.b as ROYAL LEPAGE FIRST CONTACT REALTY

Plaintiff

– and –

PRIME REAL ESTATE HOLDINGS CORPORATION

Defendant

E. Gionet, for the Plaintiff

R. Quance, for the Defendant

HEARD: July 31, 2015

HEALEY J.

Nature of the Motion and Issues

[1] The plaintiff moves for summary judgment on the claim. The plaintiff’s position is that there is no genuine issue for trial as to whether it is entitled to damages in the amount of $91,875 plus HST, arising from breach of contract. There are no issues between the parties as to whether the agreement alleged to have been breached, being a Buyer Representation Agreement entered into by the parties on July 13, 2012, was validly executed.

[2] The defendant asserts that there is a genuine issue for trial in respect of two issues:

1. Whether there was a termination by oral agreement of the Buyer Representation Agreement; and

2. Whether the plaintiff, through its agent Walter Doret, failed to perform its obligation under the Buyer Representation Agreement to assist the defendant buyer in completing an agreement of purchase and sale.

[3] There is no dispute that, if neither of the above questions are answered in favour of the defendant, that the terms of the Buyer Representation Agreement will govern and the plaintiff shall be entitled to judgment in the amount of $91,875 plus HST.

The Facts

[4] The disputed issue concerns the contractual relationship between a real estate broker, the plaintiff, and their client, the defendant. Walter Doret is a real estate broker with the plaintiff corporation (hereafter “Royal LePage”). Chris Hinn is the principal of the defendant corporation (hereafter “Prime”).

[5] Doret first became acquainted with Hinn in or around October, 2010 when Hinn engaged him to act as his real estate agent. Doret had acted as Hinn’s realtor with respect to several real estate transactions in the past, and they had reviewed several properties together throughout the time they knew one another. In addition, Hinn, either in his personal capacity or through various corporate entities with which he is or was involved, had purchased two properties with Doret acting as his realtor, not including the transaction at issue in this action. Hinn and Doret entered into several Buyer Representation Agreements over the course of their relationship, each entitling Doret to real estate commissions payable.

[6] This action pertains to vacant land known municipally as 1 Big Bay Point Road in Barrie, Ontario (“the subject property”). The subject property previously housed the former Molson Brewery plant, which became a substantial commercial marijuana grow operation while owned by its former owner, Fercan Developments Inc. (“Fercan”).

[7] Fercan purchased the subject property in 2001 for $8,000,000. In 2003, Fercan arranged a mortgage with First Ontario Credit Union Ltd. (“First Ontario”) for $3,000,000. The First Ontario mortgage is relevant because First Ontario would later sell the subject property to Prime under the power of sale provisions contained in its charge.

[8] In or around June, 2010, the subject property was listed for sale on the multiple listing service by Sutton Group Incentive Realty Inc. In or around October, 2011, Hinn, on behalf of Prime, asked Doret to act as his realtor with respect to his intention to purchase the subject property. It is agreed by Doret that he did not introduce the subject property to Hinn. Hinn contacted Doret because he had a pre-existing relationship with him and was looking for assistance.

[9] It is important to note that because of the criminal proceedings arising from criminal acts carried out on the subject property, the Attorney General of Canada became involved. On September 21, 2010, Madam Justice Ferguson placed a restraint order against the subject property made pursuant to the Controlled Drugs and Substances Act (the “restraint order”). The restraint order prevented Fercan from disposing or dealing with the subject property except with the written consent of counsel for the Attorney General of Canada. The restraint order was registered on title on October 13, 2010.

[10] Throughout the period of their involvement, the plaintiff and the defendant entered into three Buyer Representation Agreements with respect to the subject property, each covering subsequent timeframes. Although each contained similar terms, except for their effective periods, it is the third Buyer Representation Agreement which was in effect at the time of the ultimate purchase of the subject property by the defendant, giving rise to the commission at issue in this proceeding. Pursuant to the terms of the third Buyer Representation Agreement, Prime agreed to pay Royal LePage a commission of 1.25% of the purchase price of the subject property or as per MLS Listing, whichever was greater, if Prime purchased the subject property between July 9, 2012 and July 31, 2013. Clause 2 of the Buyer Representation Agreement provides:

2. COMMISSION: In consideration of the Brokerage undertaking to assist the Buyer, the Buyer agrees to pay commission to the Brokerage as follows: If, during the currency of the Agreement, the Buyer enters into an agreement to purchase or lease any property of the general description indicated above, the Buyer agrees that the Brokerage is entitled to be paid a commission of 1.25% of the sale price of the property or as per the MLS Listing (whichever is greater).[^1]

[11] Pursuant to clause 2 of the Buyer Representation Agreement, Prime also agreed to pay Royal LePage the commission in the event that Royal LePage was not to be paid any commission by a listing brokerage or seller. Clause 2 continues:

The Buyer agrees to pay directly to the Brokerage any deficiency between this amount and the amount, if any, to be paid to the Brokerage by a listing brokerage or by the seller. The Buyer understands that if the Brokerage is not to be paid any commission by a listing brokerage or by the seller, the Buyer will pay the Brokerage the full amount of commission indicated above.

The Buyer agrees to pay the Brokerage such commission if the Buyer enters into an agreement within 90 days after the expiration of this Agreement (Holdover Period) to purchase or lease any real property shown or introduced to the Buyer from any source whatsoever during the term of this Agreement, provided, however, that if the Buyer enters into a new buyer representation agreement with another registered real estate brokerage after the expiration of this Agreement the Buyer’s liability to pay commission to the Brokerage shall be reduced by the amount paid to the other brokerage under the new agreement.

All amounts set out are to be paid plus applicable taxes on such commission.

[12] Further, pursuant to clause 4 of the third Buyer Representation Agreement, Prime agreed that, during the currency of the agreement (between July 9, 2012 and July 13, 2013) it would act in good faith, work exclusively with Royal LePage for the purchase of the subject property, and submit all offers to purchase the subject property (or any other real property) through Royal LePage. Clause 4 of the third Buyer Representation Agreement reads:

4. REFERRAL OF PROPERTIES: The Buyer agrees that during the currency of this Buyer Representation Agreement the Buyer will act in good faith and work exclusively with the Brokerage for the purchase or lease of a real property of the general description indicated above. The Buyer agrees, that during the currency of this Agreement, the Buyer shall advise the Brokerage immediately of any property of interest to the Buyer that came to Buyer’s attention from any source whatsoever, and all offers to purchase or lease submitted by the Buyer shall be submitted through the Brokerage to the seller.

If the Buyer arranges a valid agreement to purchase or lease any property of the general description indicated above that came to the attention of the Buyer during the currency of this Agreement and the Buyer arranges said agreement during the currency of this Agreement or within the Holdover Period after expiration of this Agreement, the Buyer agrees to pay the Brokerage the amount of commission set out above in Paragraph 2 or this Agreement, payable within (5) days following the Brokerage’s written demand therefor.

[13] On November 16, 2011, Doret prepared an agreement of purchase and sale on Prime’s behalf, pursuant to which Prime offered to purchase the subject property from Fercan for the purchase price of $7,350,000. Royal LePage was listed as the buyer brokerage within the agreement of purchase and sale. The initial closing date was February 11, 2012. Prime’s offer to purchase the subject property from Fercan was conditional upon Fercan obtaining a variation of the restraint order placed on the subject property by the Crown. In March, 2012, Fercan brought an application for a variation of the restraint order, so as to allow for the sale for the subject property. The Attorney General opposed the application and it was later dismissed.

[14] The issues pertaining to the restraint order caused significant delays to Prime’s intended purchase of the subject property. As a result, the agreement of purchase and sale was amended on fifteen separate occasions between November 16, 2011 and July 13, 2012, each of which was prepared by Doret in an effort to keep the agreement of purchase and sale alive. The last amendment was prepared on July 13, 2012 and contemplated a final closing date of September 10, 2012.

[15] The deal fell apart. The agreement of purchase and sale was terminated on or about September 10, 2012 when Fercan, Prime and their respective brokerages executed a mutual release with respect to the agreement of purchase and sale. Both parties agree that this mutual release has no effect on the third Buyer Representation Agreement. The release is only significant in that Hinn alleges that on or about September 10, 2012, the same day that the release was signed, a verbal agreement was entered into between Doret, Hinn, Royal LePage and Prime to terminate their relationship. He alleges it was understood and agreed that Royal LePage would no longer be acting for or assisting Prime with respect to the purchase of the subject property, and that Prime would have no further obligation to Royal LePage.

[16] Shortly after the termination of the agreement of purchase and sale and the return of the deposit to the defendant pursuant to the mutual release, discussions and negotiations were ongoing between Prime, First Ontario, and the Attorney General of Ontario, as Prime still wished to purchase the subject property. Prime entered into a second agreement of purchase and sale to purchase the subject property on or about October 29, 2012. This date is within the effective dates outlined in the third Buyer Representation Agreement. The purchase price, the subject property and the buyer were identical to those particulars contained within the first agreement of purchase and sale; only the vendor had changed. This time the vender was First Ontario, the mortgagee, under power of sale provisions contained in its charge. The second agreement of purchase and sale contained a contemplated closing date of February, 2013. That transaction ultimately closed on September 19, 2013, and Prime purchased the subject property for $7,350,000. The purchase price generated the commission owing to Royal LePage under the Buyer Representation Agreement in the amount of $91,875, plus HST, being 1.25% of the purchase price. To date, Royal LePage has not been paid the commission arising from Prime’s purchase of the subject property in September, 2013.

The Law and Analysis

[17] In Hryniak v. Mauldin, 2014 SCC 7 [“Hryniak”], the Supreme Court of Canada considered when summary judgment can be granted on the basis that there is “no genuine issue requiring a trial”, in accordance with rule 20.04(2)(a). The Court also considered when it is against the interest of justice for the new fact finding powers in rule 20.04(2.1) to be used on a summary judgment motion.

[18] With respect to the issue of when summary judgment can be granted, the Court stated, at para. 49 of Hryniak, as follows:

[49] There will be no genuine issue requiring trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.

[19] The powers available under rules 20.04(2.1) and (2.2) are presumptively available: Hryniak, supra, at para. 67. They only become unavailable where it is in the interest of justice for such powers to be exercised only at trial. At para. 56 of Hryniak the Court noted: “the interest of justice cannot be limited to the advantageous features of a conventional trial, and must account for proportionality, timeliness and affordability. Otherwise, the adjudication permitted with the new powers – and the purpose of the amendments – would be frustrated.”

[20] In terms of the approach to a motion for summary judgment, Hryniak directs at para. 66 that the judge should first determine if there is a genuine issue requiring a trial based only on the evidence before her, without using the new fact-finding powers. If there appears to be a genuine issue requiring a trial, she should then decide if the need for a trial can be avoided by using the new powers under rules 20.04(2.1) and (2.2). These powers may be used by the motion judge in her discretion provided that their use is not against the interest of justice. Their use will not be against the interest of justice if they will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.

[21] In this case, having considered the evidence filed on this motion and the submissions of counsel, I conclude that this is an appropriate case for summary judgment, as such approach will provide a fair and just adjudication. On the evidence filed I am able to reach the necessary findings of fact, and apply the law to those facts, in order to reach a determination on the merits. There is no need for trial to resolve any of the issues in this case.

Issue No. 1: Is there a genuine issue requiring a trial arising from Prime’s allegation that a verbal agreement was entered into by the parties, which terminated the Buyer Representation Agreement?

[22] The first issue to be decided is whether there is a genuine issue requiring a trial on the defendant’s allegation that an oral agreement was entered into by the parties which terminated the third Buyer Representation Agreement, which would otherwise have been in effect at the time that the second agreement of purchase and sale was entered into.

[23] Prime’s evidence is that there was an agreement, never reduced to writing, which mutually ended the parties’ obligations under the Buyer Representation Agreement. The plaintiff denies such agreement.

[24] Hinn’s best evidence about the particulars of this alleged termination was provided on his cross-examination. The transcript at questions 34 to 40 reads as follows:

Q. I understand you wanted your deposit back and you were frustrated about not being able to close the deal. But help me to understand. You say it was the stated intention to release each other from the Buyer Representation Agreement which is another way of saying ending your relationship with Mr. Doret or Royal LePage?

A. That’s correct.

Q. Where was that stated intention to end that relationship?

A. I’m not familiar with all of these forms but I figured we got the cheque back and everything is over. These guys had no control of selling me the property and so there is no relationship.

Q. Okay. Did you have a specific conversation with Mr. Doret about the idea that you’re going to end your relationship with him?

A. On this property, correct.

Q. Okay. So tell me about that?

A. We said we wanted our cheque back and we were frustrated, and I don’t think they had the authority to sell me the property because it happened twice with the same -- with this property and another property owned by the same vendor. We gave deposits for both properties and both properties didn’t close. So they had either no right to sell the properties or they had ---

Q. No ability to?

A. No ability to close the deals.

Q. Okay. Did you use the words and I don’t want to put words into your mouth but did you use words like, “Walter, we’re ending our relationship. You and I are done.” Words to that effect?

A. I don’t remember.

Q. Okay.

A. But I told him to keep a lookout for other stuff. All the time I always keep the door open between me and my clients.

[25] This evidence is insufficient to establish the essential elements of an agreement, as it lacks any specificity with respect to the terms of such agreement, as well as failing to outline the consideration for entering into such an agreement. Hinn provides no details in his affidavit, or elsewhere, of the particulars of such an exchange of ideas leading to the parties forming an intention to terminate the Buyer Representation Agreement. The details are lacking of when, where, how and why such alleged discussions took place.

[26] Also, there are several pieces of evidence which are inconsistent with an intention to terminate the Buyer Representation Agreement. One is that Doret remained involved after September 10, 2012, the date of the alleged agreement to terminate the Buyer Representation Agreement. In September, 2012 he was involved in forwarding the signed release to counsel with respect to the first agreement of purchase and sale, and in arranging for certification and delivery of the deposit cheque to Prime. In October, 2012 he followed up with Hinn and his lawyer and asked “[a]re negotiations with the mortgagee still ongoing as per previous discussions”. No one told Doret that his inquiry was unfounded or that he was to have no further involvement. He was sent a copy of correspondence between Prime’s and Fercan’s lawyers with respect to the negotiations in November, 2012. Toward the end of November, the parties had this email exchange:

Thursday 22 November 2012 1:51:46

Hi Chris,

Just doing a little follow up, has First Ontario/Fercan Developments responded to your lawyer’s letter and/or ultimatum? I’m optimistic that communication between the parties is continuing process.

Best regards and thank you for keeping me appraised.

Walter Doret

November 21, 2012 10:03 p.m.

Yes moven [sic] forward March next year.

[27] The next day Doret received a copy of the new agreement of purchase and sale from Hinn, and ensured that the MLS listing was removed. Doret followed up with Hinn again in December, 2012, inquiring as to whether a buyer’s condition in the agreement was fulfilled or waived. In his one word response of the same date, Hinn advised that the condition was waived. Again, he gave no indication that Doret should consider himself as no longer being involved.

[28] Also important is a letter dated November 2, 2012 from Prime’s counsel to the lawyer acting for Fercan, which underscores the characterization of the second agreement of purchase and sale as being almost an identical iteration of the first agreement of purchase and sale, with a different vendor only. The last paragraph of that letter reads:

Furthermore, Mr. DeRosa indicated to our client that he would not object to a sale directly to First Ontario on the same terms and purchase price. It was based upon Mr. DeRosa’s representations and our discussions with your office that my client agreed to terminate its agreement with Fercan and proceed with the First Ontario purchase. Should your client’s position not change by Tuesday of next week, we will have no option but to proceed to take such further steps to protect our client’s interest; including, but not limited to notifying your client’s regulators.

[29] Prime’s counsel argued that Doret’s lack of objection to the fact that someone other than Royal LePage had submitted Prime’s offer to purchase to a vendor, contrary to paragraph 4 of the Buyer Representation Agreement, is evidence that the Agreement was no longer in effect. Yet there is an alternative, legitimate explanation for this: this was an offer that was negotiated and submitted by lawyers and their clients in the context of a power of sale proceeding. Doret did not prepare the second agreement of purchase and sale, not because Royal LePage’s contractual relationship with Prime had ended, but rather because of the complication of the restraint order, which is referenced at length in Schedule A to the agreement of purchase and sale. Accordingly, there is a rational explanation for why Royal LePage would not have submitted Prime’s offer to First Ontario and this fact cannot, therefore, be viewed as evidence that Royal LePage was no longer operating under the terms of the Buyer Representation Agreement.

[30] Prime’s final piece of evidence on this point is an email from Hinn to Doret dated November 23, 2012 at 15:45 p.m. which reads:

IF DEAL GOES THRUGHT [sic] IN FEB I WILL SET ASIDE 30K FOR YOURSELF PLEASE HAVE HER REMOVE THE LISTING OUR DEAL IS NOW FIRM

It was to this email that Doret sent a response asking for a copy of the accepted agreement, and advising Hinn that he would ask that the listing be removed from MLS. When asked on cross-examination why he did not address the comment about the $30,000, Doret’s evidence was:

Q. And, sir, you were aware that Mr. Hinn was making a proposal to pay you some money in consideration of your dealings but was not suggesting he was going to be paying you any commission on this deal, correct?

A. I – you know, to be quite honest with you, I didn’t know what to expect when I got these emails out the blue. We – as far as I was concerned, we had a BRA agreement in place and being in place, there was nothing for me to do. Out of the blue, Mr. Hinn offers – started off with $50,000 if you want to know the truth – there’s email to that effect. Then shortly after it went down to 30, then it went down to 25. Where these numbers came from, I have no idea and I just did not do anything with them because I knew we had a BRA in place at that particular time. So if there was a question there, I don’t know if I answered it or not but –

[31] In May, 2013, there was an exchange of emails between Doret and Hinn which, in my view, run contrary to Prime’s assertion that their obligations under the Buyer Representation Agreement had terminated by mutual agreement the previous September. In particular are emails from Hinn to Doret at 2:48 p.m. and 3:55 p.m. on May 13, 2013 which read:

2:48 p.m.

because our deal is dead and now we are dealing with issues with courts and lawyers

I wana keep a relationship with you since you worked on the two deals with me and both failed

I would like to give you 25k commission – fee or what ever you wana call it

since you worked hard tryeing to get done with vince

its a fee out of respect and originally was goen to give 50k but now we are into huge cost with lawyers [sic]

3:55 p.m.

at this time unless your in agreement with the 25 k commission I don’t want to complicate matters more

[32] There would be no reason to seek Doret’s agreement if Hinn truly believed that this was intended to be a gratuitous payment to maintain a business relationship. The evidence in my view leads to the fair conclusion that Prime had incurred unforeseen and mounting legal costs, and was looking to find savings wherever possible. Royal LePage’s commission was where it sought to “shave off” some expense.

[33] None of Prime’s evidence supports a finding that the parties had reached a deal in September, 2012 to terminate the Buyer Representation Agreement, and accordingly this allegation cannot be maintained to defeat the plaintiff’s claim.

Issue No. 2: Did Royal LePage fail to fulfill its obligation under the Buyer Representation Agreement, thereby relieving Prime from its obligation to pay commission?

[34] Although Hinn deposed in his affidavit that Doret and Royal LePage had no further dealings with himself or Prime with respect to his efforts to acquire the subject property, the exchange of correspondence reviewed in the preceding section shows that this statement is false.

[35] In his email of May 13, 2013 at 2:48 p.m., Hinn acknowledged that Doret had “worked on two deals with me”.

[36] Doret’s evidence on cross-examination was that he stayed in the “background” after September 10, 2012, and could not point to any work that he did with respect to the sale to Prime, although he was kept advised of Prime’s continuing efforts to purchase the subject property. Prime argues that this evidence should be viewed as Doret doing nothing to earn its commission with respect to the eventual purchase.

[37] Royal LePage’s obligation under the Buyer Representation Agreement was to undertake to assist the buyer. Doret did this by frequently checking in with Hinn and offering his assistance where he could provide it. But given that this second deal was being handled through legal counsel, there was very little of a practical nature that Doret could do. However, viewing the entire history of the interaction, Doret worked diligently to prepare, and attempt to keep alive, the first agreement of purchase and sale. The agreement which eventually took effect largely “piggy-backed” on those efforts.

[38] Accordingly, I find that this second ground being advanced by Prime to seek to avoid its obligation to pay commission under the Buyer Representation Agreement is also unsupported on the evidence.

Result

[39] In the result there is no genuine issue requiring a trial as to whether the amount due and owing under the Buyer Representation Agreement should be paid to the plaintiff.

[40] This Court orders that the motion is granted and costs are awarded to the plaintiff in an amount to be fixed by the court failing agreement between the parties.

[41] If the parties are unable to reach an agreement on costs, they may each make brief submissions in writing, no longer than 3 single-spaced pages, plus any offers to settle, case law authorities and costs outline on which they seek to rely. The plaintiff’s submissions are due by September 11, 2015, the defendant’s by September 18, 2015 and any reply by September 25, 2015 All submissions are to be directed to the office of the judicial assistants in Barrie, to my attention.

HEALEY J.

Released: September 3, 2015

[^1]: “Brokerage” is Royal LePage; “Buyer” is Prime.