Court File and Parties

COURT FILE NO.: CV-17-130014 DATE: 20190403 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: York National Realty Inc. Plaintiff – and – Eydie Joy Jackson and Robert S. McBurney Defendants

Counsel: Leo Klug, for the Plaintiff Alan S. Price, for the Defendants

HEARD: November 21-23, 2018

REASONS FOR JUDGMENT

CHARNEY J.:

Introduction

[1] This is an action by the plaintiff real estate brokerage, York National Realty Inc. (York National), for $36,000 commission (plus HST) for the sale of a residential property.

[2] In most cases, the vendor pays the real estate commission, and the commission is deducted from the proceeds of sale on closing. In this case, York National claims that the purchasers, the defendants Eydie Jackson and Robert McBurney (Jackson and McBurney), agreed to pay its commission, and that the commission is in addition to the $1.2 million the purchasers paid for the house on closing.

[3] The question in this case is whether the purchasers have a contractual obligation to pay the real estate brokerage the commission for the sale of the house.

Facts

(i) The events leading to the final Agreement of Purchase and Sale

[4] Jackson and McBurney resided in a house at 579 Wellington Street West in Aurora, Ontario. They had recently sold their house, and had a scheduled closing on January 9, 2017. They were planning to move to an investment property they owned once the tenant moved out. In the meantime, they were looking for another property to lease for about a year.

[5] On September 15, 2016, Jackson and McBurney noticed that their neighbour’s house, three houses down at 543 Wellington, had a For Lease/For Sale sign on the front lawn. The sign included the following information:

[6] The words “FOR LEASE” and “FOR SALE” were both highlighted in red boxes.

[7] York National is owned by Farid Ameryoun. Mr. Ameryoun is not a party to this case, but he was summonsed to testify by the defendants under Rule 53.07 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

[8] Jackson and McBurney had seen this house when their neighbours lived there, and they were interested in renting it because it had an insulated garage. They called the listing agent, Stefan Woyslaw, and told him that they had just sold their own home and were interested in renting 543 Wellington for about a year. They asked if they could come by and see the house. Mr. Woyslaw is a registered real estate agent who works for York National.

[9] Mr. Woyslaw agreed, and met them at 543 Wellington at around 7:00 p.m. Mr. Woyslaw opened the door and let them look around while he waited outside. Jackson and McBurney examined the property and concluded that it needed a lot of repair work. They asked Mr. Woyslaw if the landlord was prepared to do the repairs, and he told them that the landlord was not going to repair it. They asked Mr. Woyslaw how it could be rented in this state of disrepair, and he told them that if the house was not rented it would go up for sale on Monday, September 19, 2016.

[10] In his testimony, Mr. Woyslaw testified that he did not tell Jackson and McBurney that the house would be listed for sale on September 19, 2016, only that the house might be listed for sale if it was not rented. This factual dispute is not relevant to the legal issues to be decided in this case.

[11] Jackson and McBurney asked Mr. Woyslaw how much the owner was going to ask to sell the house, and Mr. Woyslaw told them he would have to speak to his partner. While Jackson and McBurney waited in the courtyard, Mr. Woyslaw spoke to someone on the phone. He called them over and the person on the phone was placed on speakerphone and told Jackson and McBurney that the house would be listed for $1.1 million.

[12] Jackson and McBurney reiterated that they wanted to lease the property, but Mr. Woyslaw told them that it was not for lease anymore, and it was only for sale.

[13] In his testimony, Mr. Woyslaw testified that it was Jackson and McBurney who first raised the prospect of purchasing the house, and insisted that they wanted to purchase it and not lease it. He also testified that he told them that the owner wanted $1.2 million for the property. These factual disputes are not relevant to the legal issues to be decided in this case.

[14] Jackson and McBurney had a brief discussion, and told Mr. Woyslaw that they wanted to put in an offer for the $1.1 million asking price.

[15] Mr. Woyslaw said he would be right back, and left Jackson and McBurney in the kitchen for 10 or 15 minutes, and he returned with a document that he told them was a Buyer Representation Agreement (BRA) that they would have to sign, because it was an exclusive listing and he was the only agent who could put in offers and show the house.

[16] The BRA is the key document in this case. York National’s claim for the $36,000 commission is based on the terms of the BRA, and I will return to this document in greater detail in the analysis portion of this decision.

[17] Jackson and McBurney told Mr. Woyslaw that they already had an agent, Mr. Patterson, who had just sold their house at 579 Wellington, and they wanted to use their own agent. Mr. Woyslaw resisted at first, but eventually told them that he would cut the other agent in for “5 points”, which he explained meant one-half per cent. Ms. Jackson thought this was not fair and threatened to walk, and Mr. Woyslaw agreed to raise the cut to 1%, but that they would have to sign the BRA. He encouraged them to sign so that he could prepare the offer before other people started making offers on Monday, September 19, 2016.

[18] Ms. Jackson testified that Mr. Woyslaw did not review the terms of the 3-page BRA document with them, he just told them that they had to sign it because he could not represent them without the BRA because it was an exclusive listing and no other real estate agent could show the house or make an offer. Ms. Jackson testified that Mr. Woyslaw said nothing about her and McBurney being responsible for the real estate commission under the BRA.

[19] In his testimony, Mr. Woyslaw testified that he did not give Jackson and McBurney the BRA to sign when they were at 543 Wellington, but when he met them at their house at 579 Wellington later that evening at around 10:00 p.m. Whether the BRA was first presented to Jackson and McBurney at 543 Wellington or later in the evening at 579 Wellington is not material to the legal issues to be decided in this case. There is no dispute that Mr. Woyslaw prepared the BRA on behalf of York National and that Jackson and McBurney signed the BRA on September 15, 2016.

[20] Mr. Woyslaw testified that he carefully reviewed the BRA with Jackson and McBurney, explaining all of its terms, including the term that required them to pay the commission if the seller did not pay the commission.

[21] For reasons that will be explained after I have reviewed the documents themselves, I reject Mr. Woyslaw’s evidence on this point, and find that he did not review or explain to Jackson and McBurney the terms of the BRA. In particular, he did not explain to Jackson and McBurney York National’s legal obligations under the BRA or the possibility that the buyers would be responsible for the commission. We will return to this point later.

[22] Jackson and McBurney signed the BRA without reading it. Ms. Jackson testified that there was only one copy of the BRA, and Mr. Woyslaw retained it.

[23] Mr. Woyslaw testified that there were two copies of the BRA, and that he left one with Jackson and McBurney. Whether there were one or two copies of the BRA is not relevant to the legal issues to be decided in this case.

[24] Mr. Woyslaw left for his office to prepare the offer. He returned to Jackson and McBurney’s home at 579 Wellington at about 10 or 11:00 p.m. with the offer to purchase the property for $1.1 million with a closing date of January 9, 2017, a Confirmation of Cooperation and Representation agreement (CCR), and a form entitled “Working With A Realtor”. Like the BRA, the offer to purchase and the CCR were both prepared by Mr. Woyslaw. As indicated above, Mr. Woyslaw testified that he also provided Jackson and McBurney with the BRA at this time.

[25] The terms of the CCR are also relevant to the legal analysis in this case, and I will return to this document in greater detail in the analysis portion of this decision.

[26] The CCR prepared by Mr. Woyslaw expressly stated that the 3% commission was to be paid by the seller.

[27] Jackson and McBurney signed the three (or four) documents presented by Mr. Woyslaw: the offer to purchase, the CCR, the “Working With A Realter” form, and if it was not signed earlier, the BRA. Mr. Woyslaw initialled the CCR on behalf of York National and left to take the offer to the owner of the property.

[28] At approximately 12:42 a.m. Mr. Woyslaw emailed to Jackson and McBurney electronic copies of these documents, including an electronic copy of the BRA. These electronic copies were the only copies provided to Jackson and McBurney.

[29] Jackson and McBurney’s offer was left open until 5:00 p.m. on September 16, 2016, and they waited for acceptance or sign-back before their offer expired.

[30] The sign-back did not come before the offer expired. Mr. Woyslaw informed Ms. Jackson that the seller now wanted $1.2 million. Ms. Jackson emailed Mr. Woyslaw that if the seller signed it back at $1.2 million she and McBurney would agree to pay that amount.

[31] On September 19, 2016, Mr. Woyslaw came by with an offer by the seller to sell the property to Jackson and McBurney, which he referred to as a “seller’s offer”. He assured Jackson and McBurney that it was identical to their offer, except the price was now $1.2 million. The offer was open until September 20, 2016 at 5:00 p.m. Mr. Woyslaw was in a rush because he had to pick up his daughter from daycare, and gave the papers to Jackson and McBurney to sign on the hood of Mr. McBurney’s truck.

[32] Mr. Woyslaw testified that he told Jackson and McBurney that the terms of the offer were “relatively the same”.

[33] In addition to the “seller’s offer” the papers included a new CCR. This second CCR was prepared by Farid Ameryoun, the owner of York National. Unlike the previous CCR, which expressly stated that the seller was responsible for the commission, the second CCR was silent with respect to the commission. This second CCR was signed by Jackson and McBurney, and by Mr. Woyslaw on behalf of York National.

[34] The terms of this second CCR are also relevant to the legal analysis in this case, and I will return to this document in greater detail in the analysis portion of this decision.

[35] Ms. Jackson felt uncomfortable signing the papers in a rush, and Mr. Woyslaw told her that she was free to talk to her lawyer if she had any concerns. He gave her a copy of the “seller’s offer”, and Jackson and McBurney arranged to meet with their lawyer that evening to review the offer. Jackson and McBurney were not given a copy of the new CCR.

[36] Jackson and McBurney met with their lawyer, Gerry Miller, and reviewed the seller’s offer with him. On review, they noted two significant differences between this “seller’s offer” and their September 15, 2016 offer, in addition to the increased price.

[37] The first difference was that the September 15, 2016 offer included a referral agreement to pay Jackson and McBurney’s real estate agent, Mr. Patterson, .5% of the commission. The September 19, 2016 seller’s offer did not include any referral agreement.

[38] The second difference was that Jackson and McBurney’s September 15, 2016 offer provided that the purchasers could move into the property on September 20, 2016 on a rent-free basis to begin renovations and repairs. In contrast, the seller’s September 19, 2016 offer required the purchasers to pay $2,000 per month to rent the property from September 30, 2016 until the January 9, 2017 closing date.

[39] Ms. Jackson was very unhappy that her real estate agent was not getting the agreed cut of the commission. She also did not want to pay to rent the property prior to closing because it was not in habitable condition, and she only wanted access to it to begin renovations prior to closing.

[40] Ms. Jackson called Mr. Woyslaw from her lawyer’s office, and left him a message asking that he call her back. This call is confirmed by her cell phone records. Mr. Woyslaw returned the call almost immediately, and Ms. Jackson asked Mr. Woyslaw why there was nothing in the offer about sharing a percentage of the commission with her agent, as previously agreed. Mr. Woyslaw replied that the seller was not giving enough commission for him to share with another agent, and it was not going to happen. This conversation was held over the speakerphone and Ms. Jackson’s lawyer, Mr. Miller, who testified at the trial, kept detailed notes of the conversation.

[41] The telephone call was brief. Ms. Jackson’s lawyer told her not to worry about her agent’s share of the commission if she still wanted to purchase the house. They struck out the paragraph that required Jackson and McBurney to rent the property until closing, and signed back the offer at $1.2 million.

[42] When they returned the signed offer to Mr. Woyslaw the next morning (September 20, 2016), Mr. Woyslaw told Jackson and McBurney that there would be no deal without the rental provision because the owner did not want the property to sit empty until January 9, 2017. Accordingly, the rental clause was written back into Schedule B of the offer, and became the final Agreement of Purchase and Sale (APS) dated September 19, 2016, but actually settled on the afternoon of September 20, 2016.

[43] Pursuant to the APS, Jackson and McBurney paid the $60,000 deposit on September 21, 2016.

[44] The final APS is silent regarding the payment of commission. It does not say that the commission will be paid by the vendor, it does not say that the commission is to be paid by the purchaser.

[45] Ms. Jackson testified that she had only two discussions with Mr. Woyslaw about the payment of commission. The first was her original discussion on September 15, 2016, in which she asked that her real estate agent be given a share of the commission. The second was the brief telephone discussion at her lawyer’s office on September 19, 2016, in which Mr. Woyslaw told her that the seller was not giving enough commission for him to share with another agent.

[46] Mr. Woyslaw denied that the September 19, 2016 telephone conversation ever occurred. He could not recall the conversation as set out in the lawyer’s contemporaneous notes. He testified that he became aware that the seller was not going to pay commission, and that the commission would have to be paid by the purchasers, when he read the second CCR prepared by Mr. Ameryoun on September 19, 2016. He testified that when he gave the APS and the CCR to Jackson and McBurney on September 19, 2016, he told Jackson and McBurney that the seller was not going to pay any commission, and that if Jackson and McBurney’s real estate agent wanted to be paid, Jackson and McBurney would have to pay him themselves.

[47] Given the detailed notes kept by Mr. Miller at the time of the conversation, I have no hesitation in accepting Ms. Jackson’s version of this telephone call, and find that Mr. Woyslaw never advised Jackson and McBurney prior to their signing the APS on September 19, 2016, that the seller was not going to pay any commission. Mr. Woyslaw’s failure to provide this information was a breach of his fiduciary duties.

[48] In any event, there is no dispute that Mr. Woyslaw never advised Jackson and McBurney prior to their signing the APS on September 19, 2016 that Jackson and McBurney would be required to pay York National’s $36,000 commission and that this commission payment would be in addition to the $1.2 million Jackson and McBurney agreed to pay for the property when they accepted the seller’s offer of September 19, 2016.

[49] Mr. Woyslaw testified that, in his view, he had no obligation to advise Jackson and McBurney that they would be responsible for York National’s $36,000 commission because he had reviewed the terms of the BRA with Jackson and McBurney on September 15, 2016, and they signed it. In his opinion, this was all the information they needed.

[50] When asked if he told Jackson and McBurney on September 19, 2016, that they would be paying the commission, Mr. Woyslaw testified:

I never told her that at that point. I told her that the seller would not be paying any commission… She had the BRA when she signed it, and if she reviewed it properly she would have understood that she is responsible, ultimately the buyer is responsible for the commission… I gave her a copy of the BRA, which is her contract with the brokerage. I did not have to tell her…I have to advise her at the most practical point in time that the seller is not paying commission, I do not have to remind her that she is responsible for commission…I don’t want to give legal advice, because I am not a lawyer… I was obligated to tell her that the seller was not paying commission, that is all I was obligated to do…I never told her she would have to pay the commission, I told her the seller was not paying the commission... I told her at my earliest possible – which was less than two hours from receiving the document – that the seller was no longer paying commission. It is not my obligation to tell her that she is responsible for commission, I did that on the night we sat down on the 15 th [of September] and signed the BRA… I told her that the seller was not paying any commission, if she had any questions she should have asked them at that point in time.

[51] As indicated above, I reject Mr. Woyslaw’s testimony that he told Jackson and McBurney on September 19, 2016 that the seller would not be paying commission.

[52] Even if I had accepted Mr. Woyslaw’s evidence on this point, his contention that he had no obligation to spell out to Jackson and McBurney that if they signed the seller’s offer they would be expected to pay an additional $36,000 plus HST on closing to pay for York National’s commission demonstrates a fundamental misunderstanding of his fiduciary duties to his client. If he was acting as their agent in accordance with the terms of the BRA, he had a fiduciary duty to inform Jackson and McBurney of all material facts in relation to the transaction. The fact that York National intended to collect an additional $36,000 plus HST from Jackson and McBurney was a material fact.

[53] To his credit, I should note that Farid Ameryoun broke ranks with Mr. Woyslaw on this issue. He acknowledged that both he and Mr. Woyslaw knew that the seller would refuse to pay commission if the purchase price was only $1.2 million. When asked if he thought that the real estate agent had an obligation to tell the buyers that they will not only have to pay the sale price of the home but the commission on top of that, Mr. Ameryoun replied “Absolutely”. He testified that he was not aware that this was not done. He stated: “I agree that this has to be disclosed to the purchaser. You must indicate how much the buyer is going to pay”. He further stated: “Stefan [Woyslaw] should disclose that the seller is not paying commission and that the buyer will have to pay the entire 3% commission”.

[54] As I will explain later when I review the terms of the documents in greater detail, if York National/Mr. Woyslaw was not acting as Jackson and McBurney’s agent, but was just providing customer service (as Mr. Woyslaw sometimes claimed in his testimony), York National had no right to claim any commission from Jackson and McBurney.

(ii) The events subsequent to the signing of the Agreement of Purchase and Sale

[55] On December 5, 2016, Saverio Cirone of York National sent a fax to Jackson and McBurney’s lawyer, Mr. Miller, including an attached letter addressed to Jackson and McBurney. Jackson and McBurney did not receive a copy of this letter directly. The letter stated:

Please be advised that the Seller of above property will not be paying commission to York National Realty Inc., Brokerage. Moreover, you had signed documents accepting responsibility for the commission payable to the Brokerage (Buyer Representation Agreement/Confirm of Cooperation and Representation, a copy of which is attached). We therefore ask that on completion of the agreement you remit 3% of the total purchase price plus HST to York National Realty Inc., Brokerage.

[56] The documents attached to this fax were the BRA signed on September 15, 2016, and the second CCR, prepared by Mr. Ameryoun, that was presented with the “seller’s offer” on September 19, 2016.

[57] Also attached was a Commission Statement, dated December 5, 2016, setting out the total commission payable by Jackson and McBurney as “$36,000 plus HST of $4,680 for a total commission of $40,680 due to York National on closing.” The closing date was stated as “January 9, 2016” rather than January 9, 2017.

[58] Mr. Miller testified that when he received this letter he assumed that it was a mistake because the closing date was wrong and there was nothing in the APS he had reviewed to suggest that his clients were required to pay the commission. He testified that he frequently receives incorrect letters from real estate agents, and he simply disregarded this letter on the assumption that it had been sent in error.

[59] Mr. Miller’s secretary emailed a copy of the December 5, 2016 fax to Jackson and McBurney on January 3, 2017.

[60] There is no dispute that the December 5, 2016 fax was the first written notice by York National to Jackson and McBurney that the seller would not be paying commission and that York National would be looking to Jackson and McBurney for their $36,000 commission, plus HST. It is significant that the fax begins with the words “Please be advised” – it does not suggest that Jackson and McBurney were already aware that the seller would not be paying commission or that they had been previously advised of this fact by Mr. Woyslaw. In my view, the wording of this fax confirms my finding that Mr. Woyslaw did not advise Jackson and McBurney, prior to their signing the APS on September 19, 2016, that the seller was not going to be paying the commission.

(iii) The Relationship Between York National and the Seller

[61] One important fact relevant to the legal analysis in this case is that the seller of the property, Nasser Ameryoun, is the uncle of Farid Ameryoun, the owner of York National.

[62] This fact was not disclosed to Jackson and McBurney before they signed the BRA on September 15, 2016. It was only disclosed when they were provided with the “seller’s offer” on September 19, 2016. One paragraph in Schedule A of the seller’s offer included the following statement:

The Seller wishes to disclose that he is related to the listing representative (Farid Ameryoun).

[63] As indicated above, Farid Ameryoun is the owner of York National. He is also a licenced real estate broker.

[64] In addition to disclosing the relationship between the seller and the brokerage, this line confirms that York National was the listing representative for the sale of the property. This is important, because the seller did not sign a listing agreement with York National to sell the property. The listing agreement signed with York National was for the lease, rather than the sale, of the property. In his testimony, Farid Ameryoun confirmed that even though no listing agreement to sell the property was signed, York National was the listing representative for the seller. Given the relationship between Farid Ameryoun and the seller, it is perhaps not surprising that they did not enter into a formal listing agreement for the sale.

[65] There were cryptic references to the relationship between Farid Ameryoun and the seller prior to September 19, 2016. For example, Mr. Woyslaw sent an email to Ms. Jackson on September 17, 2016, advising her: “Farid is meeting with his uncle tonight”. Ms. Jackson testified that she did not understand that this cryptic reference to Farid’s uncle was a reference to the seller. That Farid’s uncle was the owner of the property was not made explicit until Ms. Jackson reviewed Schedule A of the seller’s offer.

[66] In addition, Mr. Woyslaw testified that he never dealt with the seller directly. Only Farid Ameryoun dealt directly with his uncle, the seller, and Mr. Woyslaw was the go between who provided the documents to Farid Ameryoun, and then reported back to Jackson and McBurney.

Analysis

(a) Background

[67] In order to understand the significance of the documents involved in this case, it will be helpful to provide some background on the home purchase and sale process and the role of the real estate agent in this process. To this end, I adopt the summary of this process set out by the Competition Tribunal of Canada in its decision in The Commissioner of Competition v. The Toronto Real Estate Board, 2016 CACT 7, at paras. 62–69. This case dealt with the issue of whether the Toronto Real Estate Board was violating the Competition Act, R.S.C. 1985, c. C-34, when it restricted access to certain Multiple Listing Service (MLS) information to its real estate brokers and salesperson members and restricted the manner in which its members could display this information. The facts giving rise to the Tribunal case are not relevant to the issues in this case, but the summary of the home purchase and sale process set out in that decision is very relevant to my analysis:

The home purchase and sale process

Although the involvement of an agent is not required in order for real estate transactions to be completed in Ontario, the majority of buyers and sellers choose to work with agents.

Most agents routinely deal with both categories of clients, and sometimes represent both the seller and the buyer in the same real estate transaction.

A home seller who retains an agent ordinarily will enter into a contractual arrangement known as a “listing agreement” with the agent’s brokerage. Among other things, the standard listing agreement prepared by OREA (the “Listing Agreement”) and recommended by TREB for use by its Members authorizes the brokerage to market and sell the home on behalf of the owner.

As with home sellers, residential buyers will often retain an agent to assist them with the purchase of a house. As noted earlier, the agent representing a buyer is known as a “cooperating broker.”

In most circumstances, and at the recommendation of TREB, the agent and buyer will enter into either OREA’s standard Buyer Representation Agreement (the “BRA”) or OREA’s Buyer Customer Service Agreement (the “BCSA”). Services typically provided to home buyers by agents include: (1) educating the buyer about the real estate market; (2) assisting the buyer to determine the characteristics and price of the home he or she wishes to purchase; (3) identifying and showing homes which meet the buyer’s objectives; (4) assisting the buyer to determine the price to be offered; (5) negotiating a purchase on the buyer’s behalf; and (6) finalizing the transaction.

Agents typically receive compensation in the form of a commission payment calculated as a percentage of the sale price. Generally, home sellers pay a commission to the listing brokerage, which then offers a portion of that commission to the cooperating brokerage. Among other things, this encourages the cooperating broker to show the home.

[68] It is important to note that an agent can ask the buyer to sign either a Buyer Representation Agreement (BRA) or a Buyer Customer Service Agreement (BCSA). When a BRA is signed, the brokerage acts as the buyer’s representative and owes the client a fiduciary duty.

[69] The BCSA is used when the buyer is not represented by the brokerage; in fact, OREA’s BCSA states at the top: “For Use When the Buyer is Not Represented By the Brokerage. This Form is used when a Buyer is not a Client but rather a Customer”. The obligations of the brokerage providing customer service under a BCSA are more limited, although the broker or agent is still required to deal with the customer fairly, honestly and with integrity with a view to providing information and avoiding misrepresentation: see Crisafi v. Urban Landmark Realty Inc., 2018 ONSC 191, at para. 21. See also: Fors v. Overacker & Mallon, 2014 ONSC 3084, at para. 57 and Crossview Developments Inc. v. 2262443 Ontario Limited, 2015 ONSC 2854, at para. 13.

[70] The BRA and the BCSA create two distinct relationships with different legal obligations. An agent cannot be both a buyer’s agent and a buyer’s customer service representative. The buyer is either a client or a customer. It is obviously important for the brokerage to get the buyer to sign the correct agreement that accurately reflects the intended relationship between the parties.

[71] With that introduction, we can analyse the various agreements relied on by the plaintiff to support its position.

(b) Listing Agreement

[72] The first document relevant to the legal issues in this case is the listing agreement dated September 9, 2016, made between York National and the owner of the property, Nasser Ameryoun. It is a Multiple Listing Service (MLS) Agreement to lease the property for $2,900 per month. The listing agreement indicates that the landlord will pay the broker a commission of one full months rent plus HST. The agreement is signed by the owner of the property, Nasser Ameryoun, and by Farid Ameryoun on behalf of York National.

[73] At this point York National did not have a listing agreement to offer the property for sale on MLS. Accordingly, the sign placed in front of the property by Mr. Woyslaw, which indicated that the property was for lease or sale under MLS, was in error.

[74] Mr. Woyslaw acknowledged that this was a mistake. It was the first of many he was about to make with regard to the sale of this property.

(c) The Buyer Representation Agreement

[75] The next document is the Buyer Representation Agreement (BRA) between York National (the Brokerage) and Jackson and McBurney signed on September 15, 2016. This is a standard Ontario Real Estate Association (OREA) form, referred to as “Form 300”. The BRA establishes the brokerage as the buyer’s “agent” and “representative”. The BRA gives the brokerage “the exclusive and irrevocable authority to act as the Buyer’s agent”, and includes several other provisions that are directly relevant to this case.

[76] The BRA was prepared by Mr. Woyslaw.

[77] The BRA related only to the purchase of 543 Wellington St. West in Aurora, and was to expire on January 9, 2017. It was signed by Mr. Woyslaw on behalf of York National.

[78] The provision in the BRA relied on by York National in this case is paragraph 2, dealing with commission. In a nutshell, paragraph 2 provides that if the seller does not pay the brokerage the full commission, the buyer must make up for any shortfall. In this case, York National argues, the seller decided not to pay any commission, and so the buyer is on the hook for the full 3%.

[79] Paragraph 2 provides:

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 this Agreement, the Buyer enters into an agreement to purchase or lease a real property of the general description indicated above, the Buyer agrees the Brokerage is entitled to receive and retain any commission offered by a listing brokerage or by the seller. The Buyer understands that the amount of commission offered by a listing brokerage or by the seller may be greater or less than the commission stated below. The Buyer understands that the Brokerage will inform the Buyer of the amount of commission to be paid to the Brokerage by the listing brokerage or the seller at the earliest practical opportunity. The Buyer acknowledges that the payment of any commission by the listing brokerage or the seller will not make the Brokerage either the agent or sub-agent of the listing brokerage or the seller.

If, during the currency of this 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 3% of the sale price of the property.

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.

[80] Another provision relevant to this case is paragraph 3, which deals with “multiple representation”, which occurs when the same brokerage represents both the buyer and the seller. Multiple representation is a situation that is fraught with potential conflicts of interest because the brokerage owes a fiduciary duty to both the buyer and the seller and must equally protect the interests of both. Paragraph 3 of the BRA provides that the brokerage will not enter into a multiple representation agreement without the buyer’s written consent to represent both the buyer and the seller. It provides:

MULTIPLE REPRESENTATION: The Buyer hereby acknowledges that the Brokerage may be entering into listing agreements with sellers of properties the Buyer may be interested in buying or leasing. In the event that the Brokerage has entered into or enters into a listing agreement with the seller of a property the Buyer may be interested in buying or leasing, the Brokerage will obtain the Buyer’s written consent to represent both the Buyer and the seller for the transaction at the earliest practicable opportunity and in all cases prior to any offer to purchase or lease being submitted or presented.

[81] The obligation to obtain the written consent of both the buyer and the seller before entering into a multiple representation agreement is a requirement of the Code of Ethics, which is a regulation under the Real Estate and Business Brokers Act, 2002, S.O. 2002, c. 30, O. Reg. 580/05. Section 10(1) 3 of the Code of Ethics provides:

10. (1) Before entering into an agreement with a buyer or seller in respect of trading in real estate, a brokerage shall, at the earliest practicable opportunity, inform the buyer or seller of the following:

11. The fact that circumstances could arise in which the brokerage could represent more than one client in respect of the same trade in real estate, but that the brokerage could not do this unless all of the clients represented by the brokerage in respect of that trade consented in writing.

[82] The obligation to disclose multiple representation is also set out in s. 16 of the Code of Ethics, which provides:

Disclosure before multiple representation

16. A brokerage shall not represent more than one client in respect of the same trade in real estate unless it has disclosed the following matters to the clients or prospective clients at the earliest practicable opportunity:

17. The fact that the brokerage proposes to represent more than one client in respect of the same trade.

18. The differences between the obligations the brokerage would have if it represented only one client in respect of the trade and the obligations the brokerage would have if it represented more than one client in respect of the trade, including any differences relating to the disclosure of information or the services that the brokerage would provide.

[83] In the present case, the brokerage did enter into an agreement with the seller to represent the seller of the property. As indicated above, while there is no written listing agreement for the sale (as opposed to the lease) with York National, Farid Ameryoun acknowledged in his testimony that York National acted as the listing agent for the seller, his uncle, with regard to the sale. Indeed, both the seller’s offer (see para. 62 above and para. 122 below) and the second CCR (see para. 106 below) expressly refer to the fact that York National was the listing agent for and represented the seller. Both of these documents were prepared by Farid Ameryoun on behalf of York National.

[84] Farid Ameryoun was clear in his evidence that York National represented the seller and not the buyer. He testified that York National does not like to represent the seller and the buyer because this creates a conflict of interest. He stated that he made it very clear to Mr. Woyslaw that the buyers were to be represented by their agent, Mr. Patterson and that the offer should come from Mr. Patterson. Mr. Ameryoun could not recall any requirement that the offer come from Mr. Woyslaw.

[85] Notwithstanding the fact that York National was representing the seller, at no time did York National “obtain the Buyer’s written consent to represent both the Buyer and the seller for the transaction” as required by the BRA and the Code of Ethics. Accordingly, York National was in breach of the BRA from the day it was signed.

[86] Given Farid Ameryoun’s evidence that York National did not represent the buyer in this transaction, the obvious conclusion is that Mr. Woyslaw had Jackson and McBurney sign the wrong agreement. It is likely that York National only intended to provide Jackson and McBurney with customer service, and should have asked them to sign a BCSA rather than a BRA. This conclusion is confirmed by the terms of the second CCR and the seller’s September 19, 2016 offer, quoted below at paras. 106 and 122, which confirm that York National represented the seller, not the buyer. There was clearly a basic misunderstanding on Mr. Woyslaw’s part regarding the content and legal effect of the BRA.

[87] In addition, s. 18(1) 2 of the Code of Ethics required York National to disclose Farid Ameryoun’s relationship with the seller before Jackson and McBurney entered into the BRA. Section 18(1) 2 provides:

18. (1) A registrant shall, at the earliest practicable opportunity and before any offer is made in respect of the acquisition or disposition of an interest in real estate, disclose in writing the following matters to every client represented by the registrant in respect of the acquisition or disposition:

19. Any property interest that a person related to the registrant has in the real estate, if the registrant knows or ought to know of the interest.

[88] Clearly the “earliest practicable opportunity” to disclose the fact that the seller was the uncle of the owner of York National was before Jackson and McBurney were asked to sign the BRA. As indicated above at paras. 62 and 65, this was not done.

[89] Putting to one side the fact that Mr. Woyslaw failed to comply with his legal and ethical obligations from the moment he had Jackson and McBurney sign the BRA, and putting to one side the question of whether the BRA was the correct agreement to begin with, the BRA was the agreement signed by Mr. Woyslaw on behalf of York National and by Jackson and McBurney. Pursuant to that agreement, York National agreed to act as the agent for Jackson and McBurney and to represent them, and, in exchange for this agency service, Jackson and McBurney agreed to pay any shortfall of commission.

(c) The First Confirmation of Cooperation and Representation Agreement

[90] The next document is the first Confirmation of Cooperation and Representation (CCR) agreement (OREA Form 320) that was prepared and initialled by Mr. Woyslaw on behalf of York National. This first CCR was signed by Jackson and McBurney, along with the first offer for $1.1 million, on September 15, 2016.

[91] This is another OREA standard form agreement. Paragraphs 1 and 2 of the CCR provides multiple choices for the brokerage to check off. Para. 1 provides:

1. LISTING BROKERAGE

a) ☐ The Listing Brokerage represents the interests of the Seller in this transaction. It is further understood and agreed that:

1. ☐ The Listing Brokerage is not representing or providing Customer Service to the Buyer.

2. ☐ The Listing Brokerage is providing Customer Service to the Buyer.

b) ☐ MULTIPLE REPRESENTATION: The Listing Brokerage has entered into a Buyer Representation Agreement with the Buyer and represents the interests of the Seller and the Buyer, with their consent, for this transaction. The Listing Brokerage must be impartial and equally protect the interests of the Seller and the Buyer in this transaction. The Listing Brokerage has a duty of full disclosure to both the Seller and the Buyer, including a requirement to disclose all factual information about the property known to the Listing Brokerage….

[92] None of these boxes were checked off by York National in the first CCR.

[93] York National had just entered into a BRA agreeing to represent the buyers, Jackson and McBurney. Farid Ameryoun testified that York National was also representing the seller, Farid’s uncle. As such, para. 1(a) should have been checked. It was not.

[94] Moreover, if York National was also representing Jackson and McBurney, as per the terms of the BRA, this was a multiple representation situation, and York National was required to obtain Jackson and McBurney’s consent, and the multiple representation box (para. 2(b)) should also have been checked. It was not. Assuming the BRA was valid, Woyslaw’s failure to check these boxes was a breach of the BRA and the Code of Ethics.

[95] Paragraph 2 was checked off by Mr. Woyslaw, and certain information was added to the standard form. As prepared by Mr. Woyslaw paragraph 2 stated:

2. PROPERTY SOLD BY BUYER BROKERAGE – PROPERTY NOT LISTED

☑ The Brokerage (does/does not) ..... does not ..........represent the Buyer and the property is not listed with any real estate brokerage.

The Brokerage will be paid

☑ by the Seller in accordance with a Seller Customer Service Agreement

or: ☐ ☐ by the Buyer directly

Additional comments and/or disclosures by Buyer Brokerage: (e.g. The Buyer Brokerage represents more than one Buyer offering on this property.)

York National Realty Inc. Brokerage will be paid 3% plus H.S.T. for the total final sale price by the seller open (sic) completion of this transaction. Both Buyer and Seller have been advised to seek independent legal advice.

[96] This document was initialled by Mr. Woyslaw on behalf of York National, but neither Mr. Woyslaw nor Farid Ameryoun signed the document where their names were printed. Both Jackson and McBurney signed the document.

[97] The conflict between the BRA and the CCR is immediately apparent. The BRA states that York National represents and is the agent for the buyer. The CCR expressly states, in words added by Mr. Woyslaw: “The Brokerage does not represent the Buyer…”

[98] Mr. Woyslaw testified that although he typed in the words “does not”, this was a mistake.

[99] In the first place, given the testimony of Farid Ameryoun - that York National represented the seller and that York National does not like to represent the seller and the buyer – I do not believe Mr. Woyslaw’s testimony that the addition of the words “does not” was a mistake. I find that it was a deliberate choice based on Farid Ameryoun instructions to Mr. Woyslaw that York National represented the seller and did not represent the buyers.

[100] In addition, Farid Ameryoun testified that, contrary to the second checked box in paragraph 2, there was no Seller Customer Service Agreement.

[101] The CCR, initialled by Mr. Woyslaw, amounted to the repudiation of the BRA by York National. In the BRA, York National agreed to act as the representative and agent of Jackson and McBurney. In exchange, Jackson and McBurney agreed to pay any shortfall in the commission paid by the seller. In the CCR signed the same day, however, York National expressly stated that it did not represent Jackson and McBurney. As such, the BRA was immediately null and void, and any obligations imposed on Jackson and McBurney under the BRA were effectively nullified by York National’s repudiation of the BRA by the express terms of the CCR.

[102] This brings me to Mr. Woyslaw’s claim that he carefully reviewed the terms of these agreements with Jackson and McBurney. There is no way that Mr. Woyslaw could have explained these two contradictory documents. It would be impossible to explain one document, which states that York National is the buyer’s agent and represents the buyer and owes the buyer a fiduciary duty, and a second document, which expressly states that York National does not represent the buyer.

[103] Moreover, had Mr. Woyslaw actually taken the time to explain the two documents and his obligations under the terms of each, he undoubtedly would have noticed what he now claims is a “mistake” in the CCR.

[104] The final point to be made about the first CCR is that Mr. Woyslaw expressly included a provision that York National would be paid the 3% commission by the seller. This was noted not just once, but three times, in paragraph 2 of the CCR:

a. The box that states “The brokerage will be paid by the seller…” is checked; b. The box that states “The brokerage will be paid by the Buyer directly” is not checked; c. Beneath the template the words “Brokerage will be paid 3% plus H.S.T. for the total final sale price by the seller upon completion of this transaction” have been added.

(d) The Second Confirmation of Cooperation and Representation Agreement

[105] Jackson and McBurney’s offer to purchase the property for $1.1million was never accepted by the seller, and was never signed back. Instead, the seller provided a “seller’s offer” for $1.2 million. This offer was accompanied by a second CCR. This was the CCR prepared by Farid Ameryoun on behalf of York National. This CCR was signed by all the parties to the APS. It was also signed by Mr. Woyslaw on behalf of York National.

[106] Unlike the first CCR, paragraph 1 of this CCR was checked off as follows:

1. LISTING BROKERAGE

a) ☑ The Listing Brokerage represents the interests of the Seller in this transaction. It is further understood and agreed that:

1. ☐ The Listing Brokerage is not representing or providing Customer Service to the Buyer.

(If the Buyer is working with a Co-operating Brokerage, Section 3 is to be completed by Co-operating Brokerage)

2. ☑ The Listing Brokerage is providing Customer Service to the Buyer.

[107] Like the first CCR, the box for “Multiple Representation” remained unchecked.

[108] In contrast to the first CCR, the boxes for para. 2 remained unchecked and had nothing filled in. It looked like this:

2. PROPERTY SOLD BY BUYER BROKERAGE – PROPERTY NOT LISTED

☐ The Brokerage (does/does not) ............................represent the Buyer and the property is not listed with any real estate brokerage.

The Brokerage will be paid

☐ by the Seller in accordance with a Seller Customer Service Agreement

or: ☐ by the Buyer directly

Additional comments and/or disclosures by Buyer Brokerage: (e.g. The Buyer Brokerage represents more than one Buyer offering on this property.)

[109] In contrast to the first CCR, there was no reference to who would be paying the commission. The brokerage did not check the box that states: “The Brokerage will be paid by the Buyer directly”, even though Mr. Woyslaw knew at that time that York National was to be paid by the buyer directly. Nor did the brokerage indicate that the buyer would be paying the commission under the heading “Additional comments and/or disclosure”. Indeed, there was no reference to the payment of commission at all in this or any other document signed on September 19 or 20, 2016 when the APS was finalized.

[110] More importantly, the second CCR was, once again, a direct repudiation by York National of the terms of the BRA. This could not be clearer than in paragraph 1, which expressly states that York National represents the interests of the seller and provides only customer service to the buyer. Farid Ameryoun testified that this language was deliberate; at this point York National was representing only the seller and was providing only customer service to the buyer. This is a direct repudiation of York National’s agency obligations under the BRA.

[111] In the present case, York National asked Jackson and McBurney to sign the BRA, even though, as was clear from both CCRs signed by York National, it was not representing the buyer, but was only providing customer service to the buyer.

[112] Jackson and McBurney were never asked to sign a BCSA.

[113] The standard OREA form relating to the BCSA provides that the buyer/customer does not pay commission unless otherwise agreed to in writing. It provides:

2. COMMISSION: For a Buyer Customer Service Agreement between Buyer and Brokerage, there is no requirement for the Buyer to pay the Brokerage compensation for the customer service provided by the Brokerage, unless otherwise agreed to in writing.

[114] In an effort to explain the conflict between the BRA and the second CCR, Mr. Woyslaw explained that, on September 19, 2016, York National was representing the seller, and that he was providing “customer service” to Jackson and McBurney. He stated “I had a BRA in place, which is a customer service agreement. The BRA was live and good until January the 9 th ” .

[115] A BRA is not a customer service agreement. A BRA is a Buyer Representation Agreement. A Buyer Customer Service Agreement (BCSA) is a customer service agreement. These are two different forms with different legal obligations. The fact that Mr. Woyslaw does not understand the difference between these two documents is further confirmation that he gave Jackson and McBurney the wrong agreement to sign and did not explain to them the terms of the agreement they did sign. Mr. Woyslaw could not have explained something that he does not understand.

[116] When asked about the conflict between the BRA and the statement in the CCR that the brokerage was representing the seller, Mr. Woyslaw stated “I was not representing the seller, Mr. Farid was representing the seller…I was on contract to represent Ms. Jackson…We wanted to keep it at arms length.”

[117] This answer also demonstrates Mr. Woyslaw’s fundamental misunderstanding of his legal obligations as an agent. Jackson and McBurney had no contract or agreement with Mr. Woyslaw. The BRA and the CCR agreement were both with York National. Mr. Woyslaw worked for York National. York National did not sign a multiple representation agreement with either the buyer or the seller. York National cannot operate at arms length from itself. York National was representing the seller and providing only customer service to the buyer, even though York National had signed the BRA promising to represent the buyer. York National repudiated the BRA when it asked Jackson and McBurney to sign the CCR (both the first and the second), and York National cannot now seek to enforce the terms of the same BRA that it repudiated.

[118] Finally, in the alternative, even if York National had not repudiated the BRA when it signed the CCR, York National would have violated its fiduciary duty to Jackson and McBurney under the BRA when Woyslaw failed to advise Jackson and McBurney, before they signed the seller’s offer, that York National intended to collect the $36,000 commission from the buyer and that this commission was in addition to the $1.2 million sale price of the property.

[119] York National’s fiduciary duties under the BRA included an obligation to act in good faith and in the best interests of Jackson and McBurney, and, in particular, to inform the clients of material facts in a transaction known to the agent. If Jackson and McBurney were its clients, York National failed to inform its clients of a material fact and breached its fiduciary duty. A fiduciary who breaches his duty by non-disclosure of a material fact is precluded from claiming any commission: Raso v. Dionigi (1993), 12 O.R. (3d) 580 (C.A.); 100 D.L.R. (4th) 459, at para. 32.

[120] As the buyer’s representative and agent under the BRA, York National had a fiduciary duty to ensure that Jackson and McBurney knew that they would be on the hook for York National’s $36,000 commission before they accepted the seller’s offer. It was not enough to explain this possibility when the BRA was signed on September 15, 2016 (assuming that this was explained, which, I have found, it was not). York National and Mr. Woyslaw knew on September 19, 2016 that this was no longer just a possibility. York National and Mr. Woyslaw knew that York National would be looking to Jackson and McBurney to pay an additional $36,000 if they accepted the seller’s offer of $1.2 million. Mr. Woyslaw failed to act in the best interests of Jackson and McBurney when he failed to disclose this material information to them.

[121] This conclusion is reinforced by the specific facts of this case. Recall that the first CCR prepared by Mr. Woyslaw on September 15, 2016, and signed by Jackson and McBurney that same day, expressly provided that “the Brokerage will be paid by the seller” and “York National Realty Inc., Brokerage will be paid 3% plus H.S.T. for the total final sale price by the seller upon completion of this transaction.” Given that express representation in the first CCR, it can only be described as misleading to fail to put a correction or amendment into the second CCR if York National intended to collect the commission from the buyer. Silence was not sufficient disclosure.

(e) The Seller’s September 19, 2016 Offer

[122] While the CCR makes it clear that York National was not acting as the buyer’s agent or representative as required by the BRA, the seller’s offer of September 19, 2016 doubles down on this point. Schedule A of the seller’s offer, which was prepared by Farid Ameryoun, states:

The Parties to this Agreement acknowledge that York National Realty Inc., Brokerage, is representing the Seller and providing customer service to the Buyer in this transaction.

[123] As before, this statement is an express repudiation of York National’s agreement to act as the buyer’s agent and representative under the BRA. York National cannot seek to enforce the terms of an agreement that it has repudiated.

Conclusion

[124] For the foregoing reasons, the plaintiff’s action is dismissed.

Costs

[125] The defendants are entitled to their costs on a partial indemnity basis.

[126] The defendants seek $30,818 costs on a partial indemnity basis for fees and disbursements including HST. This sum includes legal fees for 62.10 hours work by Mr. Price, based on a rate of $390 per hour. Mr. Price was called in 1967.

[127] The hours claimed by defendants’ counsel are slightly greater than the hours claimed by the plaintiff’s counsel (55.20), and Mr. Klug’s partial indemnity rate is slightly lower, at $350 per hour (Mr. Klug is a 1971 call). Had the plaintiff been successful, the plaintiff would have claimed $27,169 costs on a partial indemnity basis for fees and disbursements, indicating that the parties had similar expectations regarding costs for this two and one half day trial.

[128] Taking into account the various factors listed in Rule 57.01, cost are fixed at $30,000, inclusive of fees, disbursements and H.S.T., payable by the plaintiff to the defendants within 30 days.

Justice R.E. Charney Released: April 3, 2019

ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: York National Realty Inc. Plaintiff – and – Eydie Joy Jackson and Robert S. McBurney Defendants REASONS FOR JUDGMENT Justice R.E. Charney Released: April 3, 2019