Court File and Parties

2020 ONSC 856

COURT FILE NO.: CV-19-615383

DATE: 20200213

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Your Community Realty Inc., Plaintiffs

AND:

Stouffville Glass Mirrors & Aluminum (2012) Ltd. and Thomas and Pelman Professional Corporation, Defendants

BEFORE: Pollak J.

COUNSEL: Catherine Francis & Samantha Bogoroch, for the Applicant Barry S. Greenberg, for Stouffville glass Mirrors & Aluminum, Respondent James R.G. Cook, for Thomas and Pelman Professional Corporation, Respondents

HEARD: September 25, 2019

ENDORSEMENT

Facts

[1] The Plaintiff, Your Community Realty Inc. (“YCR”) is a real estate brokerage in Ontario. The Defendant, Stouffville Glass Mirrors & Aluminum (2012) Ltd. (“Stouffville Glass”) is the vendor of a property at 12762 Tenth Line, Whichurch-Stouffville, Ontario (the “Property”). The Defendant, Thomas and Pelman Professional Corporation (“Pelman”) is a law firm in Stouffville, Ontario, which acted for Stouffville Glass on the sale of the Property.

[2] In this action, YCR claims the balance of commission it alleges is owing from funds that Pelman is holding in trust for Stouffville Glass.

[3] Stouffville Glass claims a set off against YCR for alleged damages as a result of the alleged negligence of Mr. Eugene Sturino (“Sturino”), a real estate agent of YCR, for failing to properly investigate and confirm the size of the Property before the execution of the Agreement of Purchase and Sale of the Property (“APS”). Stouffville Glass claims it has suffered damages equal to the reduction in the purchase price of the Property, resulting from the reduced area of the Property equal to $114,851.50. It therefore claims a set-off of $114,851.50 from any amounts held to be payable to the Plaintiff in this action.

[4] YCR brings this motion for summary judgment on its Claim, and an Order requiring Pelman to release the funds held in trust for the Plaintiff.

[5] The issue to be determined on this motion is whether there is a genuine issue requiring a trial with respect to YCR’s Claim.

[6] YCR submits that there is no genuine issue requiring a trial with respect to its Claim pursuant to Rule 20.04(2)(a) of the Rules of Civil Procedure.

[7] Stouffville Glass submits that as there are genuine issues requiring a trial, summary judgment should not be granted.

[8] YCR operates as a real estate brokerage firm with the name “Royal Lepage Your Community Realty”.

[9] Stouffville Glass signed a listing agreement with YCR, through its real estate agent Mr. Sturino, for the sale of the Property on the Multiple Listing Service (“MLS”) from April 16, 2018 to December 31, 2018 for the price of $12,900,800.00 (the Listing Agreement”).

[10] Pursuant to the Listing Agreement, Stouffville Glass agreed to pay YCR as listing brokerage a commission of 4% of the sale price.

[11] The data sheet signed by Mr. Ross Cairo (“Cairo”), the president and director of Stouffville Glass (the “Data Sheet”), provides for a 2% commission payable to a co-operating brokerage.

[12] The MLS Listing also states that a co-operating broker is entitled to receive a commission of 2%.

[13] On July 28, 2018, a buyer made an offer to purchase the Property for $10,750,000.00 through real estate agent Mr. Renato Viele (“Mr. Viele”), who is a real estate agent of YCR at a different office than Mr. Sturino.

[14] On the same day, at the request of Mr. Viele, Stouffville Glass signed a Confirmation of Cooperation and Representation (the “Cooperation Agreement”), which provided that:

(a) YCR as Co-operating Brokerage was providing customer service to the Buyer Ambria; and that

(b) The Listing Brokerage would pay to the Co-operating Brokerage the commission as indicated in the MLS Listing of 2%.

[15] The Cooperation Agreement referred to YCR, represented by Mr. Viele at 8854 Yonge St. Richmond Hill as the Co-operating/Buyer Brokerage and Mr. Sturino, as the YCR Listing Brokerage, at different addresses.

[16] Mr. Cairo’s evidence is that when he signed the Cooperation Agreement, he understood that Mr. Viele was providing assistance to Mr. Sturino, who was away on vacation, and that he was acting as the agent for Stouffville Glass and not as a “co-operating Broker”. He signed and initialled the Co-operation Agreement because Mr. Viele did not tell him that the Agreement gave YCR the right to the payment of additional commission as a co-operating broker. The Co-operation Agreement made no reference to the amount of commission to be paid to a co-operating broker pursuant to the MLS Listing. It only included the consent of the buyer and seller to YCR representing more than one client in the transaction. Mr. Cairo’s evidence is that he believed that YCR was the only broker involved in the transaction and that no co-operating broker was involved.

[17] Further, Mr. Cairo and Stouffville Glass relied on Mr. Sturino’s representation made to Mr. Cairo when he signed the Listing Agreement, that a total commission of 2% would be payable if no other broker was involved in the transaction. Stouffville Glass submits that there was an oral variation to the Listing Agreement.

[18] Mr. Cairo signed the Co-operation Agreement as directed by Mr. Viele because he thought it was part of the Offer to buy the Property. His evidence is that had Mr. Viele told him that an additional commission of 2% was to be paid to YCR, he would not have signed the Co-operation Agreement on behalf of Stouffville Glass. Mr. Cairo was not given any opportunity to read the Agreement.

[19] On this motion, YCR relies on the Listing Agreement which provides for a commission to a co-operating broker.

[20] Stouffville Glass’s position is that Mr. Cairo signed the Listing Agreement because it relied on Mr. Sturino’s representation that the total commission payable on a sale would be reduced to 2% if no other real estate broker presented an offer which was accepted by Stouffville Glass. YCR has filed no evidence contradicting its evidence and further, there is no evidence to contradict Mr. Cairo’s evidence that Mr. Sturino did provide advice with respect to the actual acreage of the Property. There is no evidence from Mr. Sturino.

[21] To counter Stouffville Glass’s argument on a variation of the Listing Agreement, YCR relies on the Listing Agreement which provides in part:

13. CONFLICT OF DISCREPANCY: If there is any conflict or discrepancy between any provision added to this Agreement (including any Schedule hereto) and any provision in the standard pre-set portion hereof, the added provision shall supersede the standard pre-set provision to the extent of such conflict or discrepancy. This Agreement, including any Schedule attached hereto, shall constitute the entire Agreement between the Seller and the Listing Brokerage. There is no representation, warranty, collateral agreement or condition which affects this Agreement other than as expressed herein.

[22] Stouffville Glass however, submits that the equitable remedy of rectification should be granted with respect to the Listing Agreement.

[23] Further, Stouffville Glass submits that there are numerous genuine issues on this motion requiring a trial including:

(a) was there a collateral agreement between the parties to reduce the commission payable to the Plaintiff to 2% in the event that another broker was not involved in the transaction?

(b) does the provision of customer service to the buyer constitute representation by the Plaintiff such that the provisions of the Code of Ethics apply and did the Plaintiff comply with its obligations pursuant to the Code of Ethics?

(c) did Mr. Viele advise Mr. Cairo that he was providing customer service to the buyer and did Mr. Viele have an obligation to specifically advise Mr. Cairo as to the nature and extent of his involvement in the transaction?

(d) is YCR a “co-operating broker” as defined in the Listing Agreement?

(e) was Mr. Sturino negligent in insisting that the acreage of the Property to be 5.05 acres in the absence of proper calculation of the acreage, both before and after receipt of the surveyor’s certificate?

(f) various credibility issues must be resolved with respect to the conflicting evidence of Mr. Viele and Mr. Cairo, regarding the amendment of the Agreement of Purchase and Sale to increase Stouffville Glass’s acreage.

Stouffville Glass Set Off Claim

[24] The MLS Listing showed the Property to be of an area of 5 acres.

[25] Mr. Cairo’s evidence is that when he signed the Listing Agreement, he met with Mr. Sturino who advised him that to his knowledge and understanding and based on his calculations, the Property was comprised of an area of 5.05 acres. Mr. Sturino insisted that his calculations on the area of the Property were accurate .

[26] Mr. Cairo deposes that Mr. Sturino provided advice to Stouffville on the acreage of the Property and continued to advise after the receipt of the surveyor’s certificate (showing the property to be 5 acres), that the actual area of the Property was 5.05 acres and further, that Mr. Sturino continued to advise that no adjustment to the purchase price should be made. Mr. Cairo also deposed that he showed Mr. Sturino a copy of the survey with his handwritten notations of acreage of 5. Mr. Sturino insisted that the actual acreage of the Property was 5.05 acres and that there should be no adjustment to the purchase price.

[27] The evidence is also that Mr. Viele told Mr. Cairo that the Offer of Purchase and Sale provided for confirmation of the acreage by way of a surveyor’s certificate and for adjustment of the purchase price accordingly and that any difference in the acreage would be resolved prior to closing. Mr. Viele did not tell him that a reduction of the actual acreage from that indicated in the Offer would result in a reduction of the purchase price. Mr. Cairo did not realize that such would be the result.

[28] Mr. Cairo’s evidence is that based solely on Mr. Viele’s advice and representation, he initialled the change in acreage to 5.05 acres and signed back the offer at a purchase price of $11,600,000.00 which was accepted by the buyer.

[29] YCR emphasized that after Mr. Viele refused to reduce the “Cooperating Brokerage’s” share of the commission from 2% to 1%, Stouffville Glass then took the position that YCR should be required to reduce the total commission to 2% (i.e. 1% for the Listing Brokerage and 1% for the Cooperating Brokerage) because the APS contained an acreage adjustment clause.

[30] YCR argues that Stouffville Glass was not prejudiced by the acreage adjustment clause. The buyer paid $850,000.00 more than the amount of its original offer, based on acquiring a parcel of 5.05 acres. The buyer did not agree to pay $11,600,000.00 for 5.0 acres. The buyer was contractually entitled to an adjustment to the purchase price because the Property was certified by a land surveyor as measuring 5.0 acres.

[31] Mr. Cairo’s evidence is that he knew all along that the acreage was only 5.0 acres, not 5.05 acres. Stouffville Glass got a higher offer for the Property based on 5.05 acres. The buyer exercised its right to an adjustment to the purchase price based on the certified acreage.

[32] YCR submits that this allegation is not a defence to YCR’s commission claim. Stouffville got more than it bargained for. It received a highly satisfactory offer for the Property, and it received a 1% reduction in the commission from Mr. Sturino’s share. It is not entitled to withhold the balance of the commission.

The Claim for Commission Owing

[33] YCR bases its Claim on these documents which it submits contradict Stouffville Glass’s submission:

(a) The Data Sheet, which Mr. Cairo signed on behalf of Stouffville Glass, and which provided for a 2% commission for any Cooperating Brokerage;

(b) The MLS Listing, which was based on the Data Sheet and provided for a 2% commission for any Cooperating Brokerage;

(c) The Cooperation Agreement, which Mr. Cairo signed on behalf of Stouffville Glass, which specifically provided that YCR as Cooperating Brokerage would be entitled to a 2% commission;

(d) The efforts by Mr. Cairo, after the APS was firm, to reduce YCR’s (Viele’s) commission as Cooperating Brokerage from 2% to 1%.

[34] In response to Stouffville Glass’s submissions that it was an oral variation to the Listing Agreement contains an “entire agreement clause”. YCR submits that the parol evidence rule precludes reliance on oral representations to vary or contradict the plain wording of a written agreement.

[35] Stouffville Glass submits that based on Mr. Cairo’s uncontradicted evidence, regarding a collateral agreement to reduce the commission payable to 2% in the event that no other broker was involved in the transaction, the court should exercise its jurisdiction in equity and grant the remedy of rectification.

[36] In the Norman Estate v. Norman, 1990, CarswellBC 29 case, the court accepted that rectification should be granted in appropriate circumstances to reproduce the contract in harmony with the intention of the parties and defeat claims which would otherwise unfairly succeed. The court further held that rectification can be granted when it was neither pleaded nor asked for where the question of whether there was a binding oral agreement was argued and affidavit evidence was directed at that issue.

[37] In Coscan Development Corporation Ltd. v. Evercrete Ltd., 94 CarswellOnt 3637, the court held that exceptions to the parol evidence rule are a response to the harsh results if the rule is vigorously applied without regard to commercial realities that prevail between parties to contracts. The court accepted that the parol evidence rule does not apply where the document at issue may not incorporate all the terms of the agreement. Even where the document seems to embody all the terms of the agreement, there are numerous exceptions to the rule including but not limited to evidence of an oral agreement even where its effect may be to add, to subtract from, vary or contradict the document as follows:

(a) in support of a claim for rectification;

(b) to establish a collateral agreement;

(c) in support of an allegation that the document was not intended by the parties to constitute the whole agreement; and

(c) in support of a claim for an equitable remedy on any ground that supports such a claim including misrepresentation of any kind, innocent, negligent or fraudulent.

[38] The court further accepted that although parol evidence is inadmissible to vary or contradict the terms of a written agreement, such evidence may be admitted for the purpose of rectifying the written agreement to make it conform with the real intention of the parties when the parol evidence is so clear and convincing as to establish that a mistake was made in the instrument contrary to the agreement of the parties.

[39] Stouffville Glass submits that there are also genuine issues requiring a trial to determine if the Listing Agreement reflects the true intentions of the parties, if parol evidence is admissible and if the equitable remedy of rectification is appropriate.

[40] In Hryniak v. Mauldin, 2014 SCC 7, [2014] S.C.R. 87, the Supreme Court of Canada provided a roadmap to follow on a summary judgment motion. At para. 66, the court states:

"On a motion for summary judgment under Rule 20.04, the judge should first determine if there is a genuine issue requiring trial based only on the evidence before her, without using the new fact-finding powers. There will be no genuine issue requiring a trial if the summary judgment process provides her with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportionate procedure, under Rule 20.04(2)(a).

If there appears to be a genuine issue requiring a trial, she should then determine if the need for a trial can be avoided by using the new powers under Rules 20.04(2.1) and (2.2). She may, at her discretion, use those powers, provided that their use is not against the interest of justice. Their use will not be against the interest of justice if they will lead to a fair and just result and will serve the goals of timeliness…”

[41] The Supreme Court of Canada in Hryniak attempted to create a procedure designed to be expeditious and affordable. However, the process must also ensure that the dispute is resolved fairly and justly.

[42] The Ontario Court of Appeal stated in Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450, 120 O.R. (3d) 438, at paras. 35 and 37, that the advisability of a staged summary judgment process must be assessed in the context of the litigation as a whole. The Court noted that in a staged summary judgment process there was a risk that a trial judge would develop a fuller appreciation of the relationships and the transactional context than the motion judge. This difference in appreciation could lead to a trial decision that would be implicitly inconsistent with the motion judge's finding, even though the parties would be bound by the motion judge’s finding. This difference in appreciation could lead to inconsistent findings and substantive injustice. At paras. 44-45 the court stated:

“…Evidence by affidavit, prepared by a party's legal counsel, which may include voluminous exhibits, can obscure the affiant's authentic voice. This makes the motion judge's task of assessing credibility and reliability especially difficult in a summary judgment and mini-trial context. Great care must be taken by the motion judge to ensure that decontextualized affidavit and transcript evidence does not become the means by which substantive unfairness enters, in a way that would not likely occur in a full trial where the trial judge sees and hears it all.

Judges are aware that the process of preparing summary judgment motion materials and cross-examinations, with or without a mini-trial, will not necessarily provide savings over an ordinary discovery and trial process, and might not "serve the goals of timeliness, affordability and proportionality" (Hryniak at para. 66). Lawyer time is expensive, whether it is spent in court or in lengthy and nuanced drafting sessions. I note that sometimes, as in this case, it will simply not be possible to salvage something dispositive from an expensive and time-consuming, but eventually abortive, summary judgment process. That is the risk, and is consequently the difficult nettle that motion judges must be prepared to grasp, if the summary judgment process is to operate fairly.”

[43] The Ontario Court of Appeal considered the appropriateness of motions for summary judgment that will determine some of the issues, but will not dispose of the action as a whole. The Ontario Court of Appeal reviewed the problems associated with partial summary judgment motions.

[44] In particular, the partial summary judgment motions tend to defeat the stated objectives of proportionality, timeliness, and affordability set out in the Hryniak case.

[45] The Court of Appeal held in Butera v. Chown, Cairns LLP, 2017 ONCA 783, 137 O.R. (3d) 561, at para. 34, that a partial summary judgment motion should be considered a “rare procedure” that is reserved for issues that can be easily bifurcated from the main action and that can be dealt with expeditiously and in a cost-effective manner.

[46] The Court, at paras. 26-34, reasoned that this approach is entirely consistent with the Supreme Court’s comments in Hryniak:

“[26] The pre-Hryniak appellate jurisprudence on partial summary judgment limited its availability. At para. 3 of Corchis v. KPMG Peat Marwick Thorne, 2002 CanLII 41811 (ON CA), [2002] O.J. No. 1437 (C.A.), this court applied Gold Chance International Ltd. V. Daigle & Hancock, [2001] O.J. No. 1032 (S.C.J.) to state that:

[P]atrial summary judgment ought only to be granted in the celarest of cases where the issue on which judgment is sought is clearly severable from the balance of the case. If this principle is not followed, there is a very real possibility of a trial result that is inconsistent with the result of the summary judgment motion on essentially the same claim.

[27] Since Hryniak, this court has considered partial summary judgment in Baywood homes Partnership v. Haditaghi, 2014 ONCA 450, 120 O.R. (3d) 438 and in Canadian Imperail Bank of commerce v. Deloitte & Touche, 2016 ONCA 922, 133 O.R. (3D) 561. Baywood was decided in the context of a motion for summary judgment on all claims, but where only partial summary judgment was granted. CIBC involved a motion for partial summary judgment.

[28] In both Baywood and CIBC, the court analyzed the issue from the perspective of whether (i) there was a risk of duplicative or inconsistent findings at trial and whether (ii) granting partial summary judgment was advisable in the context of the litigation as a whole. In both cases, the court held that partial summary judgment was inadvisable in the circumstances.

[29] The caution expressed pre-Hryniak in Corchis is equally applicable in the post-Hryniak world. In addition to the danger of duplicative or inconsistent findings considered in Baywood and CIBC, partial summary judgment raises further problems that are anathema to the stated objectives in Hryniak.

[30] First, such motions cause the resolution of the main action to be delayed. Typically, an action does not progress in the face of a motion for partial summary judgment. A delay tactic, dressed as a request for partial summary judgment, may be used, albeit improperly, to cause an opposing party to expend time and legal fees on a motion that will not finally determine the actions and, at best, will only resolve one element of the action. At worst, the result is only increased fees and delay. There is always the possibility of an appeal.

[31] Second, a motion for partial summary judgment may be very expensive. The provision for a presumptive cost award for an unsuccessful summary judgment motion that existed under the former summary judgment rule has been repealed, thereby removing a disincentive for bringing partial summary judgment motions.

[32] Third, judges, who already face a significant responsibility addressing the increase in summary judgment motions that have flowed since Hryniak, are required to spend time hearing partial summary judgment motions and writing comprehensive reasons on an issue that does not dispose of the action.

[33] Fourth, the record available at the hearing of a partial summary judgment motion will likely not be as expansive as the record at trial therefore increasing the danger of inconsistent findings.

[34] When bringing a motion for partial summary judgment, the motion be dealt with expeditiously and in a cost effective manner. Such an approach is consistent with the objectives described by the Supreme Court in Hryniak and with the direction that the Rules be liberally construed to secure the just, most expeditious, and least expensive determination of every civil proceeding on its merits.” [emphasis added]

[47] I will now apply the Supreme Court of Canada’s roadmap from Hryniak. I must first determine whether on the basis of the evidentiary record alone, there are genuine issues that require a trial. I must ask if the evidentiary record in front of me provides me with the evidence I need to “fairly and justly adjudicate the dispute”.

[48] In my view, the answer is no. I do not have evidence before me to fairly and justly adjudicate the dispute. There is evidence by Stouffville Glass, relevant to the major issues which raises “genuine issues” which require a trial. These are identified above in paragraph 23.

[49] Second, I must determine if the need for a trial in this case can be avoided by the use of my fact-finding powers. I must ask if it would be in the interest of justice to do so. Will the use of these powers that I have, lead to a “fair and just result” that will serve the goals of timeliness, affordability, and proportionality in light of the litigation as a whole?

[50] I find that the answer is no. This is an action which requires a trial on major issues in dispute. To resolve this case justly and fairly, I would need to use the additional fact-finding powers to conduct a significant portion of the trial. That would not be in the interests of justice.

[51] Further, I find that there are genuine issues requiring a trial with respect to YCR’s claims and Stouffville Glass’s set off claim which cannot be adjudicated on this motion. The granting of any partial summary judgment would result in the risk of inconsistent findings and there is also no evidence that the granting of partial summary judgments would fulfill any of the goals set out by the Supreme Court of Canada in the Hryniak case. As well, there is no evidence of any time or cost saving to the parties.

[52] I find that the concerns raised by our Court of Appeal which I have referenced above are applicable on this motion. The facts of this case are too intertwined and interrelated. The Court is of the view that it is not possible to segregate and isolate the issues as the court is being urged to do so by the parties. I am of the opinion that the plaintiff has not satisfied its burden of proving that its motion for summary judgment should be granted and it is therefore dismissed.

[53] There is one further practical issue. The Supreme Court of Canada in Hryniak also held, at para. 78, that:

Where a motion judge dismisses a motion for summary judgment, in the absence of compelling reasons to the contrary, they should also seize themselves of the matter as the trial judge.

[54] In my view, this is an appropriate case for me to follow the Supreme Court’s direction. I must, however, qualify this to be subject to the practical reality of our court’s ability to schedule trials in a timely and expeditious manner. I will not be seized of this trial if the effect of my unavailability would be to delay the hearing of the trial between the parties. If it is possible to do so without adverse delay or consequences to the parties, I seize myself of the trial of this matter as directed in Hryniak.

Costs

[55] The parties have reached an agreement on costs to be awarded on a partial indemnity basis to the successful party on these motions at the hearing of this matter. The successful parties, the Defendants, are therefore awarded costs on a partial indemnity basis equal to $18,000 in accordance with the agreement of the parties.

[56] Should the Defendants wish to make submissions that costs on a higher scale should be awarded, written submissions may be made as follows:

Defendants submissions (copied to the Plaintiff) no more than 3 pages in length by 12 p.m. on February 25, 2020 and Plaintiff’s responding submissions (copied to the Defendant) no more than 3 pages in length by 12 p.m. on March 5, 2020.

[57] Submissions are to be delivered to Room 106, 361 University Avenue or via email to my assistant. After March 5, 2020, if no submissions are submitted for costs by these deadlines, the matter will be deemed resolved.

Pollak J.

Date: February 13, 2020