Court File and Parties

COURT FILE NO.: CV15-521096 DATE: 20160714 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

WINDROCK ASSOCIATES LTD. Plaintiff/Respondent

and - LUDOVICO (a.k.a. LUDY) MINICUCCI and 2181860 ONTARIO LIMITED Defendants/Applicants

COUNSEL: Matthew Urback, for the Plaintiff/Respondent Wade Morris for the Defendants/Applicants

HEARD: April 13, 2016

SPIES J.

REASONS FOR DECISION ON MOTION FOR SUMMARY JUDGMENT

Overview

[1] The defendants Ludovico Minicucci (“Ludy”) and 2181860 Ontario Limited ("MinicucciCo") bring this motion for summary judgment and seek a judgment staying or dismissing this action. The plaintiff, Windrock Associates Ltd. (“Windrock”), brought this action under the Simplified Procedure provided in rule 76 of the Rules of Civil Procedure on February 2, 2015, seeking a success fee in the amount of $97, 350 that Windrock alleges is owing pursuant to an agreement entered into with the defendants (“Agreement”). The Statement of Claim was amended to claim that in the alternative Windrock is entitled to compensation pursuant to the doctrines of quantum meruit and unjust enrichment after the Statement of Defence was served which asserted that the Agreement contravened the Real Estate and Business Brokers Act, 2002, S.O. 2002, c.30, Sched. C (“REBBA”). The defendants have not brought a counterclaim for the return of $15,650 paid to Windrock pursuant to the Agreement.

[2] Ludy is the President of MinicucciCo and owns 50% of the shares in that company. His spouse owns the other 50% interest. Windrock engages in advisory services for clients with respect to mergers and acquisitions, corporate finance, restructuring and public listings. The principal of Windrock is Hovig John Khajadourian (“John”). Ludy met John through his son Dan; a friend of John’s. There is a dispute as to whether or not Ludy and John were friends which does not have to be determined to decide this motion.

The Issues

[3] The defendants take the position that the facts necessary to decide this motion are not in dispute. The question of law that they ask this Court to decide is:

Is the plaintiff, which has never been registered under REBBA, entitled to charge compensation in connection with MinicucciCo's purchase of a one-half interest in real property?

[4] The defendants submit that this question must be answered in the negative and that this action must be permanently stayed or dismissed pursuant to s. 9 of REBBA, which entitles the court on motion to stay an action for remuneration for services rendered in connection with a trade in real estate where the action is brought by a person who is not registered under REBBA.

[5] The plaintiff submits that this is not an appropriate case for summary judgment because of alleged significant factual discrepancies. As set out in my review of the facts, I have considered what the plaintiff alleges are important facts in dispute and have found that the facts the plaintiff alleges are in dispute are not in fact important to my determination of the issues raised on this motion. The exception is the nature of the work done by John and in that case, for reasons I will come to, for the purpose of this motion, I have relied only on his evidence and have disregarded the evidence of Ludy that contradicts his evidence. I therefore find that this is an appropriate case for summary judgment.

[6] The plaintiff’s position in the alternative is that the Agreement does not infringe REBBA, that the work that John performed is not contemplated by REBBA, and in any event, the applicability of REBBA is absolutely not clear and beyond doubt. From the outset, Windrock was retained to assist with the resolution of a long standing partnership dispute and Windrock alleges that how that dispute would resolve was an unknown factor. The plaintiff relies on the fact that Windrock did not actively market the property at any time or specifically seek to initiate or effect a purchase or sale of the property; introduce any potential buyers to Ludy nor did Windrock introduce the two partners to each other; or engage in any negotiations on behalf of Ludy, as Ludy conducted all of the negotiations himself. Moreover, it is the position of the plaintiff that even if the defendants' argument regarding the unenforceability of the Agreement is accepted, the plaintiff has a viable claim, in whole or in part, against the defendants notwithstanding, pursuant to the doctrines of quantum meruit and unjust enrichment that requires close scrutiny by a trial judge.

The Facts

Background

[7] On August 15, 2008, MinicucciCo acquired a 50% interest in real property municipally known as 2135 Avenue Road in Toronto (the "Property"). The remaining 50% interest in the Property was held by Ludy's business partner at the time, Dante Rinomato ("Dante"), and 298885 Ontario Ltd. (“RinomatoCo”) which was owned and controlled by members of Dante's family. The Property; a multi-unit building of residential apartments, was held by the owners as tenants in common.

[8] According to the evidence of John, the defendants and the Rinomatos also each held 50% of the shares of a management company known as 2135 Avenue Inc. (“2135”). A copy of this agreement is not in evidence but I presume it dealt with the management of the apartment building. 2135 was not the owner of the Property.

[9] Dante passed away in January 2012. After his death, his heirs; the Rinomato family, became involved in the management of the Property. Various disputes developed between Ludy and the Rinomato family; most significantly whether to hire an independent manager for the Property. Ludy objected to this as he had been performing this role before to keep costs down. He and the Rinomato family were unable to resolve the disputes between them.

[10] Ludy knew that John had some knowledge about how to deal with partnership disputes. In or around August of 2014, Ludy asked Dan if John could help him negotiate with the Rinomato family. John agreed to try and help Ludy.

[11] John has extensive knowledge about the real estate business. John has stated in his Amended Statement of Claim that he has several years of experience in negotiating, structuring and executing real estate transactions through his many years of work in real estate development. He is also an adjunct professor and instructor of real estate courses at the Ivey School of Business at the University of Western Ontario as well as the Real Property Association of Canada where he has taught several courses to industry professionals. Despite this extensive knowledge of the real estate business, John deposed that before he began work on behalf of the defendants, he was not familiar with the REBBA. It is admitted by Windrock that neither Windrock nor John were licensed under REBBA at any material time.

[12] On September 18, 2014, Ludy sent John copies of letters that had been exchanged with the Rinomato family so that John would have an idea of what the disputes were about. This correspondence makes it clear that any relationship between Ludy and Rinomato family had broken down; that the Rinomatos were not prepared to sell their interest and that they wanted Ludy to propose what price he wanted to be bought out of the partnership.

[13] On September 22, 2014, John and Ludy exchanged emails about the scope of work for Windrock's involvement. John has deposed that the scope of work had to be broad because at the time no one had any idea as to what form a resolution of the ongoing partnership dispute would take and that Windrock had to develop “a number of creative solutions which were discussed over the course of a number of meetings”. John deposed that initially, his proposal was that the shares of one or both of the holding companies could be sold in addition to the shares of the management company.

[14] I find that John’s evidence that a number of creative solutions were discussed is an exaggeration as it clear from John’s email on September 2, 2014 to Ludy, well before the Agreement was signed, that the “final solution” in his mind would be either a sale of Ludy’s position or a sale of the whole Property. This is also clear from various emails John sent on September 25, 2014 to various real estate agents at Royal LePage where he stated that he had "a client who has a building with a partner and is looking to sell." In addition the services to be provided pursuant to the Agreement mention only the shares of 2135, the management company. No reference is made to the shares of the holding companies that were on title. Furthermore, although I presume the ultimate transaction could theoretically have been structured as a sale of MinicucciCo’s or RinomatoCo’s shares, there is no documentation to suggest that this was ever seriously considered. The only question seems to be which partner would be the one buying out the other or whether the Property would be sold to a third party. Certainly, given the nature of the dispute between the partners as evidence by the correspondence, it would have been obvious that trying to work out a way for the parties to continue operating the apartment building together would be futile and there is no evidence that this was ever considered.

[15] On September 23, 2014 John met with Ludy and Oren Steinman, a real estate agent from Shorn Realty Inc. that Ludy knew. According to John, Oren proposed a fee of $100,000 plus HST or 1.5-2% of the total property value if the Rinomatos agreed to sell their share. Oren told John and Ludy that he had a buyer willing to purchase MinicucciCo’s 50% interest in the Property or buy the whole Property. Mr. Steinman’s services were not retained at that time or at any time thereafter.

[16] John deposed that he wanted to understand the nature of the partnership, the history of the disputes, the financial performance and possible value range and the positions of the partners and that he spent a considerable amount of time reviewing various documents that he has attached to his affidavit. Those documents included a draft co-tenancy agreement, several years’ worth of financial statement, various rent rolls, a third party property management proposal, articles of incorporation, bylaws, board resolutions, contracts with third party providers, insurance documents and valuations/appraisals. I accept that this was a considerable amount of material to digest. At Ludy’s suggestion, John also met with the partnership’s accountant on September 26, 2014.

The Terms of the Agreement

[17] On September 29, 2014, John sent Ludy a draft version of the Agreement setting out the proposed terms of Windrock's engagement. On September 30, 2014, Ludy and Dan went to John's house and Ludy and John signed the Agreement in Dan’s presence. Ludy then provided Windrock with a cheque in the amount of $5,000.00; the initial fee contemplated in the Agreement.

[18] Ludy has given some evidence about his background, that he did not negotiate the fee, obtain independent legal advice about the terms of the Agreement, that he did not read the Agreement before he signed it and that he trusted John as a friend and so on. John on the other hand takes the position that Ludy did negotiate the fee with him, that he is a sophisticated businessman and no stranger to professional contracts. In my view, the alleged “major factual issues in dispute” set out at sub-paragraphs 55 (a) to (e) of Windrock’s factum that deal with this issue do not need to be resolved because these factual differences are not relevant. Although the defendants have pleaded non est factum as a defence, Mr. Morris did not raise that as a defence in support of his motion. Accordingly I have ignored this evidence as it is irrelevant to the legal issues raised on this motion. The fact the parties differ factually on these issues is therefore not important. I have assumed that the Agreement is enforceable subject to my finding with respect to REBBA.

[19] The Agreement begins by confirming that Windrock has been engaged to render “advisory services in connection with the sale of or purchase and / or financing of the shares or assets of 2135 Avenue Inc. and / or the land, multi-residential apartment building and all related assets located at 2135 Avenue Road in Toronto”. On his examination for discovery John characterized his role in the transaction as “essentially to advise and assist.”

[20] The services to be provided by Windrock are listed and in my view they all relate to assisting with a sale or purchase of the Rinomato’s interest in the partnership. The list of services includes negotiations for the possible purchase or sale of the other partners’ interest in the property, drafting letters and responses to the partners, assisting in determining property values, engaging the assistance of others such as real estate agents and lawyers, assisting in executing and closing any purchase or sale transaction, and assisting with mortgage financing should Ludy acquire his partners’ position in the property and/or corporation. The list of services also includes determining possible solutions to the impasse with the partners and advising “on options for continued ownership, day to day operations and/or exit of ownership” but when Ludy asked John what he meant by this John responded in his email of September 22, 2014 that this meant to help Ludy with how to approach the current situation in the interim until a final solution was found “either sale of your position, or the whole building etc.”

[21] John deposed that his assistance might also have included mediating a solution to continue the partnership but that is contrary to his response to Ludy’s query about what he meant in the draft Agreement that he would assist with options for continued ownership that I have just referred to. John was involved in some correspondence as set out below in an effort to resolve some operational issues but this was to address issues that needed to be resolved pending the negotiations that were largely over how the parties would go their separate ways with respect to the Property.

[22] The compensation structure set out in the Agreement provides as follows:

a) An initial payment of $5,000 to Windrock upon the execution of this Agreement; plus

For any sale or acquisition of any shares or assets in 2135 Avenue Inc. and / or the building, land and all related assets located at 2135 Avenue Road in Toronto, Ontario:

b) A "success fee" (“Success Fee”) payable on the date of the first closing via a wire transfer direction of funds, of the gross value (“Gross Value”) of the sum of all transactions.

[23] The Agreement states that the Success Fee will be 2% of the sum of the "Gross Value of all Transactions and financing commitments”, or, 1% of the sum of the "Gross Value of all Transactions”, if a fee is paid to any real estate broker in excess of $50,000 … in connection with a sale or purchase of the assets or shares of 2135 and the building, land and all related assets located at the Property; plus 2% for any financing commitments for any financing arrangements. John deposed that the reduced fee in the event a real estate broker was retained was requested by Ludy during the negotiations of the Agreement. The Agreement goes on to state that Windrock has been retained to act solely as an advisor and not as an agent or broker and this provision makes that clear. There is no dispute that Ludy knew that John and Windrock was not an agent or broker. John denies the evidence of Ludy that he did not get a copy of the executed Agreement until January 2015 and has produced a letter that he sent to Dan on October 7, 2014 with the executed Agreement for his father’s records. I accept this evidence.

Resolution of the Partnership Dispute

[24] John deposed that that after Windrock was engaged he had hundreds of fact-to-face meetings, emails, faxes, conference calls, letters and text messages with Ludy to discuss possible resolutions to the partnership dispute. He attached “some” of them to his affidavit. I have already referred to some of these communications. As I continue to review the chronology of events, I will set out the highlights of the specific things that John has deposed that he did after the execution of the Agreement in the lead up to the sale of the Property. I have assumed that since the law is clear that on a motion for summary judgment a party must put his best foot forward that John has included what is important in his affidavit.

[25] John spoke to the lawyer who acted for the parties in August 2008 when MinicucciCo purchased its interest in the Property on October 7, 2014. I presume this was also to obtain background information.

[26] Ludy admits that he asked John to meet with members of the Rinomato family to talk to them about what their position was and to see if he could work out some kind of deal with them. On October 10, 2014, John met with Mrs. Rinomato, Dante’s widow and her two sons. According to John’s evidence the Rinomatos advised him that they had several years of ongoing issues with Ludy since the death of their father / husband, that they did not want to sell their interest in the Property, but that they might be interested in purchasing MinicucciCo's stake in the partnership and assets as they had discussed with him several times in the past, but wanted Ludy to offer a price.

[27] John deposed that at this time he was building a financial model to help understand a range of value of the Property and the partnership shares and assets. He states that during the course of his investigations, he came to believe that the Rinomatos were dependent on the cash flow from the frequent distributions out of the partnership, whether for tax reasons or otherwise, whereas Ludy did not need the cash flow. In light of this John deposed that he advised Ludy to stop agreeing to distributions from the partnership until all the various partnership issues were resolved, as a means to put pressure on the Rinomatos to negotiate a dissolution of the partnership.

[28] Ludy requested John’s help in finalizing a letter he had drafted to the Mrs. Rinomato and a number of emails with proposed changes were exchanged between him and John. The letter was finalized on October 20, 2014. In addition to rebutting a number of allegations made against Ludy about the operation of the partnership, the letter informed Mrs. Rinomato that there would be no distribution of funds until the dispute was resolve and that he had hired an advisor who could be contacted if she had any questions. The letter does not deal with the terms of any proposed sale.

[29] John deposed that in this time frame he also had several exchanges with various members of the Rinomato family on an ongoing basis. There are no documents with respect to this and in particular no emails to Ludy reporting on these exchanges or any notes made by John during meetings save for his notes for the October 10th meeting. I can only assume these exchanges were not significant as the email communication between John and Ludy is otherwise extensive.

[30] On October 20, 2014, John advised Mr. Steinman that Ludy wanted to formally notify his partners of his intention to sell prior to engaging with his buyer. He also arranged a meeting with a broker from Cushman Wakefield for October 23, 2014 and arranged for a financing proposal from ScotiaMcLeod received on the same day. Also in October 2014, John received a valuation and marketing proposal for the Property from the real estate agent he had contacted at Royal LePage, which he forwarded to Ludy.

[31] On October 26, 2014, John drafted a letter for Ludy to send to Mrs. Rinomato to provide notice of his intention to sell his ownership interest in the Property (“Draft Letter”). Ludy asked John for the name of a lawyer who "was a litigator too.” On October 29, 2014, John emailed David Mills of Mills & Mills, Windrock’s corporate counsel. John gave Mr. Mills a little information about the dispute and where matters stood and asked for his advice on the Draft Letter to the Rinomato family and what it would cost for him to review the letter as he thought it might end up in court. Ludy agreed to retain Mr. Mills. In consultation and discussions with Mr. Mills, Ludy decided that he would make a written offer to purchase the Rinomato's interest in the Property for $4,500,000.00 and threaten pursuing a remedy via the Partition Act should the Rinomatos not engage in negotiations.

[32] It was Mr. Mills who proposed that the parties look at a Partition Act sale and he suggested that Ludy make an offer to purchase the Rinomato’s interest in the Property. John admits that he had never heard of the Partition Act before this. John deposed that he advised Ludy that this avenue was a viable fallback option, but cautioned that it would take time and money to pursue a sale under the Partition Act and that it could result in a less than desirable outcome for one or both or the parties. John also deposed however, that he did think it would be a good negotiating tactic as Anthony Rinomato had suggested he did not want to go to court when he met with him on October 10, 2014.

[33] The Draft Letter signed by Ludy was finalized with input from Mr. Mills and John and delivered to Mrs. Rinomato on November 3, 2014. The letter, in part, states as follows:

If I do not receive confirmation that you are willing to sell your ownership interests to me at this price, please be aware that I intend to ensure that I obtain maximum value for my interest in the property by way of sale of all owners' interests on the open market. This will be accomplished by way of an application to the Court for an Order for the sale of 100% of the property under the Partition Act.

[34] Mrs. Rinomato responded on November 6, 2014 inviting Ludy to draft a written offer with all of the terms he proposed for their consideration. According to John, this was the turning point in the resolution of the partnership dispute. That appears to be the case; in my view this was more likely due to the threat of resorting to the Partition Act which was Mr. Mill’s idea as the threat of stopping distributions was not repeated in this letter.

[35] There is no dispute that after this letter, Ludy negotiated the purchase of the Rinomato family's interest in the Property directly. Ludy deposed that he did so without using John or any real estate agents or brokers but that he had the assistance of Mr. Mills. Although that may be true in terms of face to face negotiations, from the email exchange produced by the parties it appears that John was the go between between Ludy and Mr. Shing, a real estate lawyer with Mills and Mills, and that John was also providing advice to Ludy and when necessary communicating with Mr. Mills.

[36] In particular John gave advice to Ludy as to what he thought should be in the offer and reviewed and commented on the draft Agreement of Purchase and Sale that Mr. Shing prepared setting out MinicucciCo’s initial offer to purchase the Rinomato’s 50% interest in the Property dated November 10, 2014 for $4.5 million.

[37] On November 19, 2014, when Ludy had not heard back from the Rinomato family with respect to this offer, he asked John to instruct Mr. Mills to proceed with a Partition Act application. That was put on hold because on the next day, a counter offer at $5 million was received by Ludy from the Rinomato family dated November 20, 2014. Ludy and John met to discuss the price.

[38] On November 28, 2014, John was contacted by email by Mr. Brogantz, a commercial real estate analyst, who had obtained John’s contact information from Ludy. John responded to the email on December 1, 2014 and was advised by an email from Mr. Brogantz on December 3rd that he had an offer to present. John forwarded this exchange of emails to Ludy on December 3, 2014.

[39] From an exchange of emails on December 1, 2014 it appears that Ludy decided to counter the Rinomato offer with a clean offer at $4.7 million. John agreed to advise Mr. Mills of this but commented in an email to Ludy that it might be a waste of time and money. John also sought instructions from Ludy on whether or not to follow up with the broker who had approached him and had an offer to present; presumably a reference to Mr. Brogantz.

[40] On December 2, 2014 Mr. Shing sent the new offer to Ludy and John for review. After it was finalized and delivered to the Rinomato family, Ludy became concerned that they were taking a long time to respond to this offer. He advised John, who then advised Mr. Shing, that the delay might be due to concerns around the HST.

[41] On December 11, 2014, John asked Mr. Shing to contact the Rinomato’s lawyer to find out what the holdup was and a number of emails were exchanged between him and Mr. Shing on that date. It turned out that there was in fact a concern about the HST and the Rinomatos intended to seek a CRA ruling on whether the sale would be subject to HST. John asked Mr. Shing whether the issue could be dealt with by way of an undertaking and advised him that Ludy would not wait until January 2015. Mr. Shing responded that an undertaking would not help and he suggested other options to John. Another issue that arose was a demand by the Rinomato family that Ludy agree to an immediate distribution to them of $70,000. John suggested that Mr. Mills be consulted about this issue to ensure there was no concern that Ludy’s agreement to a distribution only after he received a signed offer could be seen as an inducement.

[42] According to John, there were other issues that arose as well once the Rinomato family countered with an offer on December 16, 2014 for $4.75 million, which was open for acceptance until December 18, 2014. John deposed that he came up with various creative suggestions and options to deal with these issues, including the HST issue but as I have stated, on that issue at least his suggestion was not accepted. There is no doubt however, from the material filed, that Ludy and John exchanged multiple emails about issues relating to the text of the final sale agreement in the period from December 16 to 17, 2014 and that John was communicating with Mr. Shing as well.

[43] MinicuccoCo’s final counter offer was presented on December 17, 2014. There were still a few issues that were resolved between Mr. Shin and counsel for the Rinomatos and John was involved in the discussions concerning these issues. The further amendments were agreed to and the final form of the Agreement of Purchase and Sale was executed by the parties on December 18, 2014 with a closing date set for January 28, 2015.

[44] Prior to the closing, the title of the Property was changed so that the 50% interest held by the Rinomato family was held only by RinomatoCo. The deal closed as scheduled and on January 28, 2015 RinomatoCo transferred its 50% interest in the Property to MinicucciCo.

Payments Made by the Defendants to the Plaintiff

[45] On or about September 29, 2014, Minicucci paid Windrock the initial fee of $5,000.00, but did not remit the HST upon that figure. Minicucci did pay a further $650.00, representing the HST, to Windrock in October, 2014.

[46] On November 9, 2014, Ludy deposed that he asked John if he could give him some money for his services to date as he did not want to build up a big bill. They met on November 10th and Ludy gave John $5,000 in cash. According to Ludy, John did not say anything about a payment being due yet. According to John this money was unsolicited and Ludy’s justification for this payment was that he anticipated that a transaction would be completed shortly, he was happy with the job that Windrock was doing thus far and that he was paying in cash because he had undeclared income and wanted to avoid paying any taxes. Whatever was intended by this payment neither Ludy nor John suggest that any amendment to the Agreement was reached at this time. This factual dispute is therefore not relevant to the issues that I have been asked to decide.

Negotiations Concerning Outstanding Fees Payable by the Defendants to the Plaintiff

[47] On December 31, 2014, Ludy and John met at a bakery. According to Ludy he asked John to meet for the purpose of discussing a reasonable amount of money to pay him for his services. He told John he would be bringing money for him to the meeting. According to John, when Ludy requested this meeting he did not tell him the purpose of the meeting. John has deposed that at this meeting, Ludy expressed his pleasure at the outcome of the negotiations, thanked John for his efforts in assisting to resolve the partnership dispute, and provided a Christmas card and gifts. Ludy and John then discussed several operational, financial and tax issues related to MinicucciCo and Ludy’s other business ventures.

[48] Ludy has deposed that at the meeting he asked John to present a number that would be “fair” and that John told him that he owed him 2% of $4.75 million which is $95,000 which Ludy said was too much. According to John, Ludy advised that he wanted Windrock to reduce the fee previously agreed to for the following reasons: (a) the speed of success in bringing the Rinomato family to the negotiating table; (b) the quick resolution of the partnership dispute; and (c) because the transaction did not require the use of outside real estate brokers, or extensive legal fees in taking the matter through a Partition Act application. John has deposed that Ludy further stated that he often renegotiated his fees, that he never intended to pay the fee as agreed to in the Agreement and that he suggested that he could pay Windrock an hourly fee instead based on a rate set by Ludy himself and asked John to provide him an account of hours. According to John, when he objected, and asked why Ludy never requested or discussed a different fee structure prior to agreeing to the fee structure set out in the Agreement, Ludy stated that even though he had already negotiated the fee prior to signing the Agreement, he only signed the Agreement because he wanted John to start work right away.

[49] The nature and circumstances of this meeting and what was said at the meeting is another area where the plaintiff alleges that there are important factual disputes requiring a trial. I disagree. I have accepted John’s version of what Ludy said only because it supports his position that Ludy has taken advantage of him and Windrock. For the reasons I will come to, whether that is in fact true or not is not material to the issues I have been asked to decide.

[50] Later on December 31st, Ludy sent an email to John (“December 31, 2014 Email”) which reads as follows:

Hey John – sorry for the misunderstanding on my part I took it as a friend that’s why I didn’t even read the contract. I understand I’m not paying the real stat [sic] but I feel like 1% is ok. It wasn’t a lot of negotiation and we did not go to partition act or court and spend [sic] a lot of time. I want to finalize this. Please send me an invoice for the balance so I know how much I have to pay. Thank you.

[51] The defendants submit that this email is subject to settlement privilege and is not admissible. For the reasons I will come to I have found that this email is admissible. Although this email might be characterized as an admission relevant to the quantum meruit or unjust enrichment claim it has no impact on the issue of whether or not the Agreement offends REBBA.

[52] During his examination for discovery, Ludy testified that: "I asked John to send me his final bill and I was hoping that he was gonna work a bill as a friendly basis and get paid for what he's done." This evidence can also be considered an admission that from Ludy’s perspective the work that John had done was worth more than the amount he had already been paid. Again it is only relevant to the quantum meruit and unjust enrichment claims.

[53] On January 2, 2015, Windrock issued an account to Ludy and MinicucciCo for “advisory services” in the amount of $95,000 plus HST, less deductions for the amounts already paid, leaving a balance owing of $91,700. Ludy declined to pay Windrock's invoice.

[54] John alleges that Ludy later agreed to pay Windrock as per the Agreement. John received an email from Mr. Shing dated January 5, 2015 which stated that Ludy had provided Mr. Shing with a copy of Windrock’s invoice and instructions to pay it from the closing of the purchase of the Property. Ludy has deposed that he agreed to this because he was concerned that John could jeopardize the deal as it had not yet closed. As I will come to the plaintiff has objected to this evidence. In any event the plaintiff has not argued that this letter from Mr. Shing is binding on the plaintiff.

[55] John requested that Ludy sign a Direction confirming his instructions. Mr. Shing told him that he would have this done as part of the other closing documents and that he was not in a position to advocate for more or less on behalf of either of them. Ludy decided that he wanted independent legal advice before signing the Direction and retained independent legal counsel for that purpose. His counsel wrote to Mills and Mills by letter dated January 20, 2015, with a copy to Windrock, advising that she had advised him not to sign the Direction and that there were issues with respect to Windrock’s entitlement to the 2% Success Fee and the validity of the Agreement. Ludy’s lawyer also advised that as a sign of good faith Ludy had deposited the $91,700 in her firm’s trust account to secure the claim.

The Action

[56] Windrock sent a demand letter to Ludy dated January 22, 2014 and then commenced this action.

[57] The Amended Statement of Claim reads at paragraph 1 that the plaintiff is claiming $97,350 which represents 2% of the gross transaction value success fee on the closing date of January 28, 2015 when MinicucciCo acquired the interest of the Rinomato family in the Property for $4,750,000.

Evidentiary Issues

[58] At the outset of the hearing of the motion counsel argued several evidentiary issues that they each raised with respect to the evidence relied upon by the other. They had both provided supplementary facta and so the oral submissions were brief. I have mentioned a couple of these issues and will deal with each of these issues now, before proceeding to my analysis.

The December 31, 2014 Email

[59] Ludy deposed the following evidence in his affidavit at paragraph 45:

On December 31, 2014, after John and I had met at the bakery, I communicated by email with John for the purpose of trying to settle the dispute between he and I over his fees. I presented a proposal to John to settle the dispute over his fees. However, John would not accept my proposal to settle the dispute.

[60] As already stated, Windrock’s materials include a copy of the December 31, 2014 Email. The defendants assert that this email is inadmissible on the basis of settlement privilege.

[61] It is trite law that subject to waiver, any negotiations undertaken with the purpose of settling a dispute are inadmissible. It is Windrock's position that the December 31, 2014 Email does not attract the protection of settlement privilege and is admissible. The plaintiff relies on the fact that John was not aware of the purpose of the meeting, requested by Minicucci, on December 31, 2014 until arriving and that it was only towards the end of the meeting that Ludy raised the issue of the fees owing; the introduction of which caught John off guard. In my view even if John’s evidence was not disputed his evidence is immaterial to my decision on this issue.

[62] Windrock relies on a passage from Sopinka, Lederman and Bryant in The Law of Evidence in Canada referred to in Losenno v. Ontario Human Rights Commission (2005), 2005 ONCA 36441, 78 O.R. (3d) 161 (C.A.), at para. 21, which sets out the conditions for the recognition of settlement privilege. Windrock made a number of submission as to why it is its position that none of these conditions are met by the December 31, 2014 Email. I do not need to decide the issue on this basis because in my view, although not argued by the parties, it can be said that there was an implied waiver even if settlement privilege were found with respect to this Email since the Email was referred to in Ludy’s affidavit. Although Ludy did not refer to the details in the Email, the reference in his affidavit appears to have been made in order to put John in a bad light because he “would not” accept the settlement proposal. On that basis I find the Email is admissible. I have not found it necessary to consider it however in deciding this motion.

Hearsay Evidence

[63] The defendants also object to certain evidence contained in John’s affidavit which they say contains hearsay and other objectionable evidence which ought to be excluded or given no weight. A table is set out in the defendants’ supplementary factum which sets out the evidence complained of.

[64] The evidence objected to includes John’s belief as to the nature of the dispute between Ludy and the Rinomato family which is clearly hearsay. John has not set out the source of his information save that some unspecified aspects came from Dan. In my view this evidence is not of any assistance on this motion and so there is no need to consider this issue. It is enough to know that there was a dispute and that Windrock was retained to assist. At its highest the nature of the dispute impacts the amount of work done by John and on that point I have accepted his evidence for the most part. The nature of the dispute does not assist me in deciding if the Agreement is caught by REBBA.

[65] As for the objections to John’s evidence about what Dan told John, that evidence is hearsay but the source is stated. Rule 20.02 permits hearsay evidence on a summary judgment motion. Certainly Ludy could have filed an affidavit from Dan to challenge anything attributed to him if he had an issue with it. As for what the Rinomatos said, this evidence is not hearsay as it is admissible on the basis that these statements were made by the Rinomato family. As for the remainder of the evidence objected to in the chart, I need go no further as I have not found any of it material to what I must decide.

Evidence which was refused on John’s Discovery but provided in his affidavit affirmed February 23, 2016.

[66] On his examination for discovery on June 3, 2015, John characterized his role in the transaction as "essentially to advise and assist". When asked to provide a specific account of what John alleges that he did that was instrumental in making this deal close, Mr. Urback took the position that this was not a proper question but that John could be asked about something specific.

[67] On John's continued examination for discovery on October 9, 2015, when asked again what it was that John did to make the deal happen, Mr. Urback responded that the answer was going to be evidenced by the previous examination, and that the documents also spoke to the work that John did. John then added:

I did everything I was asked to do and then some. I did everything I agreed to do. And Mr. Minicucci was successful in what he tried to do. He negotiated a deal.

[68] Despite John's refusals to answer these questions on his examinations for discovery, he has tendered evidence to answer these very questions in his affidavit, some of which I have already reviewed. The defendants object to this and state that since such evidence could not be led at trial without leave, this information cannot be introduced on this motion without leave.

[69] It is Mr. Urback’s position that Windrock's position throughout this proceeding has been that it performed many tasks, and undertook a significant amount of work in connection with its retainer with the defendants. He submits that when Mr. Morris asked for a "specific account" of what Windrock performed that that was an overbroad and disproportionate question that fundamentally mischaracterized Windrock's role, and could not properly be answered at an examination for discovery as it would have necessitated a review, and walk-through of each and every document produced, all the way from Windrock's initial study of the partnership dispute, to its advice provided in regards to the deal ultimately reached that would have extended far beyond the afforded two hours of examination for discovery as Windrock has produced hundreds of pages of evidence. Accordingly, it is Mr. Urback’s position that he took the proper course by advising Mr. Morris that he could ask a more particularized question about any of the tasks completed, or make reference to any document.

[70] In my view Mr. Urback should not have objected to these questions given the nature of the claim and in particular the quantum meruit claim. It was not a proper answer to state that what John and Windrock did is “reflected in the documents.” I accept that it would have taken too long to answer the question at a time limited discovery but Mr. Urback could have provided an undertaking and presumably the answer would have been what I have now in the affidavit filed by John.

[71] Mr. Morris is correct in his position. Rule 31.07 provides that if a party fails to answer a question the party may not introduce the evidence at the trial except with leave of the trial judge. Rule 53.08(1) provides that leave shall be granted unless to do so will cause prejudice to the opposite party or will cause undue delay in the conduct of the trial. In my view this rule applies by analogy to the hearing of the evidence on this motion. Mr. Morris did not argue any specific prejudice and when I referred to this rule, he confirmed that even though he did not have an opportunity to cross-examine John on his affidavit that he was content that if I ruled this evidence admissible, that I consider it in coming to a decision on this motion.

[72] In my view, given the absence of prejudice, the fact no adjournment of the motion was sought and given the mandatory language of rule 53.08(1), this evidence is admissible on this motion. In fact if I were to decide not to consider it then I would likely have to dismiss the defendants’ motion since the nature of the work done is important to the analysis.

[73] Ludy in his affidavit deposed that John did some “limited work” and he lists a few items. Based on the documentation this is a significant understatement and it is disputed by John. For the purpose of this motion, for the most part I have presumed John’s evidence about what he did to be true, particularly where it is supported by documentation. However, in a few respects, as already stated, I found it to be somewhat exaggerated, not because of the evidence of Ludy but rather based on my review of the documentation produced. For these reasons the factual dispute as to the work done by John on behalf of Windrock does not prevent me from deciding the legal question before me.

[74] The defendants also object to the fact that the plaintiff’s position as to how it calculates its quantum meruit claim changed from answers given on discovery. For reasons I will come to I have not had to consider that evidence and so that issue is moot.

Objections to Evidence in Ludy’s Affidavit

[75] It is the position of the plaintiff that Ludy’s affidavit contains hearsay and other improper evidence that the defendants should not be able to rely upon. Again much of the evidence objected to is not relevant to the legal question I must decide. There are two exceptions. The first is the reference to Ludy’s daughter-in-law advising him that John charged $250 per hour and that he was very expensive. This is hearsay evidence and is clearly being tendered for its truth. It is not admissible and I have ignored it. The second is the statement by Ludy that: "I was concerned that John may take steps to jeopardize the deal if I didn't agree to pay more." There is no foundation to this claim which is explicitly denied in paragraph 63 of John's affidavit. This unsubstantiated statement is, furthermore, extremely prejudicial, as it undermines Windrock's integrity. Although I have found this evidence is not admissible, had I considered it, it would not have made a difference to my decision on the motion.

[76] The plaintiff also objects to the defendants entering into evidence a letter from John to Ludy dated January 22, 2015 on the basis that it is subject to settlement privilege. The letter is marked Without Prejudice. The letter however does not set out any offer of compromise and threatens litigation if the amount claimed is not paid. It is the defendants’ position that because this letter was referred to in paragraph 26 of the Statement of Claim and at paragraph 29 of the Amended Statement of Claim no privilege can attach to the letter. In the Claim the purpose of the letter is summarized.

[77] In my view, like the December 31, 2014 Email, any settlement privilege in this letter was waived when it was referred to in the plaintiff’s pleadings. However I have not found it necessary to consider this letter in order to decide this motion. Although it presumably sets out John’s position on various points I prefer to rely on his evidence and the documents produced to make my findings of fact.

The Law – Summary Judgment

[78] The law that I must apply on deciding whether or not summary judgment is appropriate in this case is well settled. Rule 20.04 (2) (a) provides that this Court must be satisfied that there is no genuine issue requiring a trial with respect to the plaintiff’s claim before granting summary judgment as requested by the defendants. In this case that analysis must be done with respect to the claim under the Agreement and the claims in quantum meruit and unjust enrichment. If the defendants have satisfied me that the only genuine issue is a question of law, this Court may determine the question and grant judgment accordingly; rule 20.04(4).

[79] There will be no genuine issue requiring a trial when the written record (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; see Trotter Estate, 2014 ONCA 841, para. 72 citing Hryniak v. Mauldin, 2014 SCC 7, para. 49. The responding party cannot rely solely on allegations or denials in its pleadings but must set out, through admissible evidence, specific facts requiring a trial. Both parties are expected to put their best foot forward. The party resisting summary judgment must "lead trump or risk losing". There is no reason to infer that better evidence would be available at trial; Nine-North Logistics Inc. v. Atkinson, 2014 ONSC 7243, para. 41, aff’d 2015 ONCA 913.

[80] If I find there is a genuine issue requiring a trial, then I may, at my discretion, move to step two of Hryniak and consider whether a trial can be avoided by using the powers granted under rules 20.04 (2.1) and (2.2) which provide that I may weigh the evidence, evaluate the credibility of a deponent and draw any reasonable inference from the evidence unless it is in the interest of justice for such powers to be exercised only at a trial and order a mini-trial to hear oral evidence.

The Law - REBBA

[81] The defendants rely on s. 9 of REBBA. The entire section reads, with underlining used to indicate words that are defined in s. 1(1) of REBBA, as follows:

No action shall be brought for commission or other remuneration for services in connection with a trade in real estate unless at the time of rendering the services the person bringing the action was registered or exempt from registration under this Act and the court may stay any such action upon motion.

[82] REBBA states that a "registrant" means a brokerage or a broker or salesperson who is registered under REBBA. Windrock has admitted that it and John have never been registered as a broker or salesperson under REBBA.

[83] REBBA states that a "trade" includes a disposition or acquisition of or transaction in real estate by sale, purchase, agreement for purchase and sale, exchange, option, lease, rental or otherwise and any offer or attempt to list real estate for the purpose of such a disposition, acquisition or transaction, and any act, advertisement, conduct or negotiation, directly or indirectly, in furtherance of any disposition, acquisition, transaction, offer or attempt, and the verb "trade" has a corresponding meaning [emphasis added].

[84] REBBA also provides that "real estate" includes leasehold interests and businesses, whether with or without premises, and fixtures, stock-in-trade and goods connected with the operation of a business [emphasis added]. A "business" is defined as an undertaking carried on for gain or profit and includes any interest in such undertaking.

[85] The Court of Appeal has also held that the words "in connection with" have a very broad meaning; Mantini v. Smith Lyons LLP, 2003 ONCA 20875, para. 19. For a subject to be "in connection with" an object, the subject need only be connected to the object, even if it does not arise from or out of the object.

[86] Dealing first of all with the cases relied upon by the defendants, in Market Leadership Inc. v. Loretta Foods Ltd., 2005 ONCA 46933, [2005] O.J. No. 5430, leave to appeal to the SCC refused, [2006] S.C.C.A. No. 61, the Court of Appeal considered whether or not the non-registered plaintiff’s claim for compensation was caught by s. 22 of the former Real Estate and Business Brokers Act, the wording of which was identical to the current s. 9. The agreement the parties entered into provided that the defendant engaged the professional services of the plaintiff to sell their food merchant business Loretta Foods Ltd. (“Loretta Foods”) and the real estate held by Alpen Realty Investments Limited (“Alpen”) which held the lease to the premises from which Loretta Foods operated. Part of the compensation was a percentage of the gross selling price of the defendants’ real estate.

[87] Loretta Foods was sold to a third party through the disposition of the principal’s shares in the company. Relying on Roche v Marston, 1951 SCC 4, [1951] S.C.R. 494, Cronk J.A., speaking for the court, found at para. 27 that s. 22 of the former act did not extend to the sale of a business effected by a sale of the shares of an incorporated company. Justice Cronk also went on to find, as an additional basis for setting aside the stay of the plaintiff’s claim, that Loretta Foods had owned no real estate.

[88] Cronk J.A. went on to deal with the other claim asserted by the plaintiff for part of the value of Alpen’s agreement to extend the terms of the lease to Loretta Foods. She found, at para. 35 that the definition of a “trade in real estate” was broadly cast and included a leasing transaction in relation to real property. She also noted that the agreement between the parties had contemplated a sale of the property and made no provision for payment to Market Leadership in respect of a lease extension for the property. On this basis she found that the claim for compensation with respect to the lease extension should be stayed.

[89] In this case Market Leadership also asserted that it performed “further and other professional work” requested by the respondents having a total value of $106,425 in accordance with the hourly rate provided for under the agreement and in the alternative that it was entitled to compensation for services provided on the basis of unjust enrichment, quantum meruit or breach by the respondents of duties of good faith and fair dealing. However, the material facts necessary to support these claims were not pleaded nor was any evidence led on the motion that Market Leadership provided additional professional work of any kind at the request of the respondents. In addition Cronk J. found at para. 46 that to the extent that the alleged additional professional work involved a “trade” of Alpen lands within the meaning of the Act, this claim was also barred by s. 22 of the Act. No comment was made by Justice Cronk as to whether or not the claims of unjust enrichment, quantum meruit would have been caught by REBBA if properly pleaded.

[90] The defendants also rely on a M.J.K. Consultants Inc. v. Citibank Canada; [1993] O.J. No. 2175 (Gen. Div.) a case where the plaintiff alleged that the plaintiff and the defendant entered an agreement wherein if the plaintiff was successful in procuring an offer for certain lands, a "consulting fee" of four percent of the final sale price of the lands would be paid once the lands were successfully sold. The lands were sold for $6.95 million and the plaintiff claimed four percent being the sum of $297,460.00 as consulting fees. Mr. Justice Rosenberg (as he then was) wrote (at paras. 11 and 12):

11 … In my view, if the remuneration to be paid depends on the eventual sale of the property and is calculated as a percentage of the sale price, whether it is called "consulting fee" or "commission" does not matter. It is clearly caught by the Act. [REBBA]. In this regard, see Cleary v. Martin (1990), 14 R.P.R. (2d) 88 (N.S.T.D.)[Emphasis added]

12 … The court cannot decide a case such as this on the basis of sympathy for the plaintiff, but on the law as the legislature has intended it to be and the legislation which they have passed in pursuance thereof. In my view, the whole purpose of the legislation would be defeated if, in a situation such as this where the remuneration was calculated as a percentage of the sale price and conditional on the sale going through, the Act [REBBA] could be avoided by calling such services "consulting fees". If that were the case, then the protection that the legislature intended would be ineffective.

[91] Although Justice Rosenberg did not refer to a specific passage from the Cleary decision, it would appear that he was referring to a passage at p. 13 of that decision where Gruchy J., who was considering the Nova Scotia equivalent to REBBA stated:

It seems to me that the rationale of these three cases is that if the fees to be charged by the “agent” (for lack of a better word to describe all three individuals) are dependent upon, in whole or in part the equivalent sale of the property, then the activity constitutes “trading” in real estate. That is in order to avoid the purview of the legislation, the agent must not have a direct pecuniary interest in the sale of the property. [Emphasis added]

[92] In a decision from the Alberta Court of Queen's Bench; M.B. Realty Services Inc. v. Lehndorff Management Ltd., [1999] A.J. No. 1356 (Q.B.), the court had to decide whether the non-registered plaintiff was entitled to be paid a fee of 5% based on the selling price of a parcel of land owned by the defendant. The plaintiff took the position that the actions of the plaintiff did not constitute a "trade in real estate", but were actions directed towards the implementation of a business plan. The court referred with approval to the passages from M.J.K. Consultants at para. 12 and from Cleary at p. 13, set out above and held that what the plaintiff described as a management fee or consulting fee was really a fee based on the sale price of the land and therefore, subject to the prohibition in the Real Estate Agents Licensing Act, R.S.A., 1980, c. R-5 which based on the court's description is very similar to the language in REBBA. Significantly the court also held that since the plaintiff had no cause of action, as it was not licensed under the Act, it, accordingly had no quantum meruit claim that survived.

[93] In Ferraton v. Shular, [2012] O.J. No. 5613 (S.C.J.) Justice J.M. Wilson dealt with a similar issue arising from s. 9 of REBBA on a summary trial. She concluded that the plaintiff was precluded from advancing any claim for any compensation once there was a finding that the REBBA applies. In coming to her decision Wilson J. referred (at para. 53) to a decision of this court by Justice Strathy (as he then was); Neiman v. Duffmits Holding Inc., 2010 ONSC 4643 where at para. 26 he stated, relying on Market Leadership, that s. 9 of REBBA has been consistently enforced by the courts.

[94] I note that Justice Strathy in Neiman also found that the application of REBBA may appear to result in unfairness in particular cases, because the plaintiff may have invested substantial time and effort on the defendant’s behalf, yet the defendant receives a windfall, but that the objective of the statute is the protection of the public by regulating those who engage in the real estate business, relying at para. 26 on Maroney v. Tebbutt, [2000] O.J. No. 4157 (S.C.J.), at paras. 13-15.

[95] The plaintiff relies on another decision of J.M. Wilson J.; Geofre Management Ltd v. Li, 2012 ONSC 5777, at paras. 2-5, 23, for the proposition that the courts in the past have refused to grant motions for summary judgment on account of REBBA, when there are differing factual accounts. Windrock submits that in Geofre it was unclear whether the transaction in question was with respect to the sale of professional licenses or the sale of a business, which would determine whether or not REBBA applied. If the transaction was characterized as a sale of a business it would engage REBBA because business brokers, like those dealing in real estate, must be registered under REBBA.

[96] Justice Wilson concluded at para. 23 that the: "matter should be determined on a full and tested factual record, given the disputed factual issues and the nuances of context". She referred again to the decision of Strathy J. in Neiman where he had found that some aspects of the deal appeared to engage REBBA whereas other aspects did not and at paragraphs 39 and 46 he adopted reasoning in an earlier case of this court that a stay should not be granted summarily unless the applicability of REBBA is “clear and beyond doubt." I note that Geofre was decided before Hryniak. In any event, for the reasons I have given, there are no important facts in dispute that are relevant save for the nature of the work done by John where I have relied only on his evidence. There is therefore no reason for me not to proceed to determine this case by way of a summary judgment motion.

Law – Quantum Meruit

[97] The plaintiff advances a claim in the alternative on the basis of quantum meruit. The plaintiff relies on Koliniotis v. Tri Level Claims Consultants Ltd., 2005 ONCA 28417, [2005] O.J. No. 3381 (C.A.), para. 34 where the Court of Appeal described quantum meruit as a quasi-contractual remedy that “allows a court to order payment of the reasonable value of services to a service provider when the contract under which the services were provided does not state prices for those services or when that contract cannot be enforced” [emphasis added]. The court went on to hold that even when an agreement is found to be illegal, rather than unenforceable, it is no longer an absolute bar against quantum meruit recovery (at para. 40).

[98] Windrock relies in the alternative upon the severability clause in the Agreement and a number of cases dealing with severance in support of its position that the Agreement can be read down so as to make it legal and enforceable. In my view this analysis is unnecessary in light of Koliniotis and in any event would leave an enforceable agreement that is silent on the matter of compensation.

[99] In a later decision from the Court of Appeal; Consulate Ventures Inc. v. Amico Agreement & Engineering (1992) Inc., 2011 ONCA 418, the court, commencing at para. 44, provided some guidance on the approach to be taken in quantifying a quantum meruit claim.

Law – Unjust Enrichment

[100] The doctrine of unjust enrichment permits recovery whenever the plaintiff can establish three elements: (i) an enrichment of or a benefit to the defendant; (ii) a corresponding deprivation of the plaintiff; and (iii) and the absence of a juristic reason for same; see Kerr v. Baranow, 2011 SCC 10 at para. 32.

Analysis – Claim under the Agreement

[101] In my view it is clear that in this action Windrock is making a claim for remuneration for services rendered in connection with the sale of the Property as that is ultimately how the partnership dispute was resolved. As indicated on the plaintiff's invoice to the defendants, the plaintiff calculates its claim at 2% of the price that MinicucciCo paid to acquire the Rinomato’s 50% interest in the Property.

[102] As already stated John deposed that at the outset no one had any idea as to what form a resolution of the ongoing partnership dispute would take and initially, his proposal was that the shares of one or both of the holding companies could be sold in addition to the shares of the management company. Due to this uncertainly, Mr. Urback argues that it is false to assert that Windrock was retained to effect a real estate transaction and that since Windrock was not retained to act in this regard, it would be unfair and inequitable to preclude it from receiving its remuneration; simply due to the nature of the transaction that ultimately was forged. It is his position that Windrock was retained to resolve a partnership dispute.

[103] Had there ultimately been a sale of shares of the RinomatoCo’s shares instead of a sale of RinomatoCo’s interest in the Property, Windrock would have had to argue that the transaction should be characterized as a sale of a business, not real estate; see Market Leadership at para. 27, to attempt to avoid the consequences of REBBA. In my view that argument would not likely have succeeded since unlike Loretta Foods which owned no real estate, the main asset the partnership held was the apartment building and land.

[104] Furthermore, as I have already noted, there are no documents to suggest that a share transfer was ever seriously considered and before the Agreement was signed the final solution that was being considered was either a sale of Ludy’s position or a sale of the whole Property.

[105] Even if this were not the case, the language of s. 9 of REBBA does not suggest that it is the nature of what is considered as part of any initial retainer or the nature of the transaction that is initially contemplated that determines the application of s. 9 but rather whether or not the claim is for remuneration for services in connection with what was ultimately a trade in real estate. The sale of an interest in the Property is what has triggered this claim for compensation and the fact that this is how the transaction was ultimately implemented in my view is what matters.

[106] Mr. Urback argues that right from the outset, both parties agreed that Windrock was not to perform any broker or agent services and that Ludy understood that Windrock was not a broker or agent. In fact, Windrock was specifically not listed as an agent or broker in the Agreement. Paragraph 2 of the Agreement states that:

The Client acknowledges and agrees that Windrock has been retained to act solely as advisor to the Client and not as an agent or broker to the Client, nor as an advisor to nor agent or broker of any other person...

[107] Windrock also relies on the fact that it did not actively market the property or specifically seek to initiate or effect a purchase or sale of the property; introduce any potential buyers to Minicucci nor did Windrock introduce the two partners to each other; engage in any negotiations on behalf of Minicucci, as Minicucci conducted all of the negotiations himself, as he has stated at his examination; and ensure it was listed as an agent/broker (and it was not listed as such) in the agreement that was ultimately reached with the Rinomatos.

[108] In my view the fact that Ludy contemplated hiring an agent or broker in addition to the plaintiff does not mean that the advisory services provided by the plaintiff are not properly considered being services in connection with a trade in real estate. In fact, given the fee to be paid to Windrock was to be reduced if an agent or broker was retained implies that some of the work Windrock was doing would be what would be expected of an agent or broker. In any event, this submission does not address the fact that the services in connection with a trade in real estate in s. 9 of REBBA is not defined by what one would expect a broker or agent to typically do in the purchase of a property. It is enough that the services are “in connection with” a trade in real estate.

[109] Mr. Urback argued that as an advisor, John’s role was no different than a person retained to appraise the value of a property or a financial planner to who was working with a broker and that s. 9 cannot be interpreted in such a way that all services rendered in connection with the sale of a property are caught by REBBA. The passages from M.J.K. Consultants Inc. and Cleary that I have set out address this concern. Justice Rosenberg and Justice Gruchy make it clear that it is not enough that the services were rendered “in connection with a trade in real estate”. It must also be the case that the fees to be paid are dependent upon a trade in real estate which, as Justice Gruchy noted, means that the plaintiff has a direct pecuniary interest in the sale of the property. Valuators typically do not make their fees for services rendered for assistance in a real estate transaction conditional and payable on a transaction closing. In the case at bar however, Windrock would only be paid if a transaction closed in which case the fee was a percentage of the gross transaction value.

[110] In my view the cases of M.J.K. Consultants and Cleary have a direct application to the case at bar. Simply put the action in this case claims remuneration that is alleged to be owing by the defendants to the plaintiff because of the sale of the RinomatoCo’s 50% interest in the Property to MinicucciCo and the claim is calculated as a percentage of the sale price. Whether it is called a "success fee" or "commission" does not matter. Windrock had a direct pecuniary interest in the sale of the Property. In my view the action pursuant to the Agreement is clearly caught by REBBA.

[111] For these reasons I agree with Mr. Morris, that in light of the wording of s. 9 of REBBA and how it has been interpreted, the plaintiff’s claim in this case is clearly a claim for remuneration for services in connection with a trade in real estate and is caught by s. 9 of REBBA since neither Windrock nor John were registered under REBBA at any time. This finding does not depend on any disputed facts and it is appropriate that it be made now.

[112] Mr. Urback argues that more than real estate was sold. He submits that in addition, office furniture and a sale of shares in the management company 2135 were included in the price, neither of which constituted a trade in connection with real estate according to the provisions of REBBA.

[113] The final agreement of purchase and sale does include all chattels located at the Property that are not owned by existing tenants. In addition the shares of 2135 Avenue Inc. were part of the transaction. No value is assigned to either of these assets. Notably the Land Transfer Tax that was paid on the transaction was based on the total sale price of $4.750 million. There is therefore no evidence that these other assets had anything but perhaps a nominal value as compared to the Property.

[114] Mr. Urback also argues in the alternative, that even if I find that the Agreement is unenforceable, it does not follow that Windrock is unable to collect in respect of some of the work it performed. He submits that different elements of services performed may be treated differently by the courts, and it may be that one element of the transaction is covered by REBBA, whereas another of the transaction is not. At paragraph 64 of Windrock’s factum certain tasks are set out that John did that are alleged to have no connection whatsoever to a trade in real estate as follows:

a) Windrock assisted and advised Ludy with respect to issues relating to the partnership conflict generally, such as drafting letters to the Rinomatos and advising on various operational, financial and tax issues.

[115] I have already reviewed the evidence on this point. This assistance was either directed to negotiating a purchase of the Rinomato’s interest in the Property or dealing with operational issues pending the closing of the purchase;

b) Windrock built the financial model, developed strategies and options and provided advice to Ludy that caused the Rinomatos to engage in negotiations.

[116] Again based on my review of the evidence the financial model was to assist with the value of the Property and the strategies John developed were for the purpose of negotiating a sale of the Rinomato’s interest in the Property.

c) Windrock set up and attended meetings with the Rinomatos in order to address the said issues and corresponded with them by other means.

[117] I have only found evidence of one meeting but in any event these meeting were with the ultimate goal of selling either MinicciCo’s or buying RinomatoCo’s interest in the Property or selling the Property to a third party.

d) Windrock introduced and met with third party agents and brokers along with Ludy to understand the process, the potential value range, the fee structures, the required disclosure and the brokers sense of the market demand for the asset.

[118] In my view all of this work was also done with a view to selling either MinicucciCo’s interest or buying RinomatoCo’s interest in the Property or selling the Property to a third party.

[119] Finally Windrock’s position is that the strategy that John developed of withholding the distribution of funds was far beyond what could conceivably fall into the scope of work of a real estate agent/broker, and was instrumental in bringing the Rinomatos to the negotiating table, that this was something that Ludy had attempted, and failed, to do for years.

[120] I agree that this strategy played an important part in the ultimate resolution of the dispute but unfortunately for the plaintiff that is not how I must determine the applicability of REBBA to the agreement. Even if John’s position on his role in developing this strategy is accurately stated, the strategy was developed in order to assist Ludy in negotiating a purchase of the Property from the Rinomato family.

[121] For these reasons in my view all of this work that John relies on was done in order to assist in Ludy negotiating a sale of either MinicciCo's or RinomatoCo's interest in the Property or selling the Property to a third party and as such is caught by s. 9 of REBBA.

[122] In my view given the language of s. 9 of REBBA and in particular the fact that it applies to all “services in connection with” a trade in real estate, there is no work that John did that did not have the objective of a trade in real estate; be it a sale of MinicucciCo’s interest in the Property to the Rinomato family, a purchase of the Rinomato family’s interest in the Property or a sale of the Property to a third party. In my view all of the services performed by John on behalf of the plaintiff are therefore caught by s. 9 of REBBA.

[123] I have considered the plaintiff’s reliance on Geofre but in my view it is distinguishable because I have taken the plaintiff’s case pursuant to the Agreement at its highest and found that REBBA applies. In my view it is clear and beyond doubt that s. 9 of REBBA precludes the plaintiff’s claim pursuant to the Agreement. Nothing would be gained by a trial on this issue.

[124] Windrock argue in its factum, in the alternative that if it is found that REBBA is applicable in these circumstances that its activity falls into an exception set out in s. 5(1) of REBBA. That argument was abandoned during oral submissions. In any event, in my view it is without merit.

[125] Finally, Windrock argues that it was taken advantage of in that Ludy got the benefit of John's assistance, took on very little risk and never intended to honour the terms of the Agreement then used John's efficiency, timeliness, and effectiveness, against him in trying to renegotiate the fees. I appreciate that this allegation would have been disputed had there been a trial but it does appear that this is the case. John did provide a great deal of assistance to Ludy in his ultimate purchase of the Rinomato;s interest and it may be that he has not been fairly compensated. Unfortunately as Justice Rosenberg held in M.J.K. Consultants Inc. at para. 12, I cannot decide this case based on sympathy for the plaintiff’s position.

[126] For these reasons, to the extent the plaintiff asserts its claim pursuant to the Agreement it is caught by s. 9 of REBBA and must be dismissed.

Analysis – Claim in Quantum Meruit

[127] In the alternative Windrock asserts a claim in quantum meruit. In response to an undertaking given on John's continued examination for discovery on October 9, 2015, Windrock asserted that its quantum meruit claim was based on "a portion/percentage of the discounted value of the new income the Defendants derived from 2135 Avenue Road on an annual basis, as a result of the Plaintiff's assistance (see Tab 11 of the Plaintiff's Affidavit of Documents), plus HST." The income from 2135 Avenue Road is rental income, and is connected with and flows from the leases of the units of that property.

[128] The defendants rely on Market Leadership at paras. 34-35 for the proposition that calculating damages on the basis of income derived from a lease constitutes a "trade in real estate" within the meaning of the legislation and submit that the quantum meruit claim is also barred by s. 9 of REBBA. Mr. Urback submits that this is a mischaracterization of what Windrock seeks, as well as the law. He argues that in Market Leadership, the plaintiff, who sought remuneration pursuant to the doctrines of quantum meruit and unjust enrichment, allegedly assisted its client with the extension of its lease arrangement with the property owner. With this in mind, the Court of Appeal commented that the remuneration directly received by the plaintiff, from its assistance with respect to the extension of the leasing transaction, constituted a "trade in real estate"; Market Leadership, at paras. 13, 34-35.

[129] Mr. Urbank argues that this case is distinguishable in that Windrock did not assist MinicucciCo at all with its leasing arrangements with its tenants, and had no involvement whatsoever with these contracts. Windrock merely seeks remuneration on the basis of business income earned by MinicucciCo. I agree with Mr. Urbank that Market Leadership is distinguishable from the manner in which the plaintiff seeks to quantify its quantum meruit claim in the case.

[130] However in my view given my finding that all of the services performed by John on behalf of Windrock are caught by s. 9 of REBBA in that they were “in connection with” a trade in real estate and that there is no work that John did, that did not have as its objective a trade in real estate; be it a sale of MinicucciCo’s interest in the Property, a purchase of the Rinomato family’s interest in the Property or a sale of the Property, in my view Windrock's claim in quantum meruit suffers from the same fatal defect that determines its claim under the Agreement. Section 9 of REBBA does not only apply to claims in contract; it applies to any action where there is a claim for commission or other remuneration for services rendered in connection with a trade in real estate.

Analysis – Claim in Unjust Enrichment

[131] In my view Windrock's claim in unjust enrichment also suffers from the same fatal defect that determines its claim under the Agreement. Even if the defendants were enriched at the expense of the plaintiff in that Windrock has not been compensated for all of the work done by John, despite the flexibility that Kerr calls for there is a juristic reason for the enrichment – namely, s. 9 of REBBA. The policy considerations the cases such as M.J.K. Consultants Inc. refer to, that s. 9 is meant to address, cannot be avoided by recasting the claim where it is asserted in an action and is for services rendered in connection with a trade in real estate.

Disposition

[132] For these reasons summary judgment is granted in favour of the defendants dismissing the action.

[133] Counsel advised me during the course of their oral submissions that following the release of my decision they would make an effort to settle the issue of costs. If after 30 days a resolution is not reached, the defendants shall provide their Cost Outline, limited to 5 pages followed by the submissions of the plaintiff, also limited to 5 pages, within 20 days.