By Don Procter
After a years-long legal battle, a Burlington, Ont.-based real estate brokerage recently won a court case and was awarded 100 per cent of its claim for unpaid commissions. However, the case is being appealed.
Bob Van de Vrande, broker of record for the plaintiff Apex Results Realty, says that as result of the judgment by Superior Court Justice J.R.H. Turnbull, “We feel vindicated that our salesperson . . . will be appropriately paid for the work that was done.”
The case could have precedence regarding the 2.5 per cent commissions owed to Apex sales agent Naeem Rahman. It was for the purchase of two properties in Mississauga in 2012 by the defendant Sharief H. Zaman. Eminence Living Inc. and Higher Living Development Inc. – Zama’s “closely held corporations” – are also named as defendants, says Van de Vrande.
The purchases were for roughly $5.5 million plus HST. The commission judgment, including court costs, was more than $200,000.
Rahman had a real estate contract with Zaman under a buyer representation agreement (BRA) – a standard form used by Realtors throughout Ontario.
Contrary to evidence, the defendant contended that due to a side agreement, if Rahman had any entitlement to commission it was to be obtained only from the seller/owner of the property in question, says Van de Vrande.
“That was simply his false assertion and his way of trying to avoid paying the commission,” he says.
“Our position all along was that there was no side agreement and as the judge found…even if it did exist, which in this case it did not, it is not enforceable because any agreement or amendment must be in writing and that wasn’t the case,” says Van de Vrande.
The BRA stipulates “that we attempt to obtain the commission from the sellers or the sellers’ real estate brokerage but the buyer is responsible for the commission . . . if the seller does not pay,” he says.
“What became problematic in this case is that our salesperson was excluded from the negotiations by the buyer (with the seller). He didn’t, in fact, know that the transaction was being done until after the closing date.”
Van de Vrande says after having made several offers on one of the properties with the agent, the defendant went back on his own, “offered more money (to the seller) and made the deal happen without our salesperson and contrary to the terms of the agreement.”
The BRA stipulates that all negotiations are to be done through the sales representative.
Van de Vrande says Rahman met all of the contractual obligations of the BRA. “The actual terms of the contract are discussed and negotiated between the parties.”
He says the case highlights the importance of a buyer representation agreement. “We are hoping that will be precedent in other cases… salespeople can rely on the contracts and they have recourse if those terms are breached.”
In the judgement, Apex was also awarded pre- and post-judgement interest, “which is significant because of the money involved and the length of time to resolve the claim,” says Van de Vrande.
Apex’s lawyer, Walter Wellenreiter, says, “The total costs, plus disbursements plus interest that we sought was $70,861.02 plus a post-judgment per diem interest rate of $12.75 per day. Justice Turnbull awarded $58,855.95 plus the per diem of $12.75 per day (from January 11, 2019 forward), a difference of $11,975.07.”
Van de Vrande says it’s important that agents have complete and accurate documentation in place for every contract. That includes listing agreements, agreements of purchase and sale and leases. What happened to Rahman is uncommon but it occurs more frequently in the industry than it should, he says.
“Not all cases are pursued in court (or at all),” says Van de Vrande, noting he had another experience where a buyer client bought a property they viewed on their own at an open house. “I was able to resolve the matter with the listing agent at the open house, who simply agreed to pay me the commission.”
To ensure brokerage and agent protection, Apex stipulates that all agents have a BRA. Van de Vrande says a BRA also offers “significant benefits” to buyer clients because “it allows their agent to negotiate the best possible terms on their behalf. It is a very balanced agreement.”
The case was conducted through a summary judgment – a process where a judge determines the outcome without impaneling a jury or requiring witness evidence in court.
“When documentation is all in place and the circumstances are clear, as in this case, then a summary judgment can be deemed appropriate,” Van de Vrande says.
A full trial would have prolonged the case, possibly by years, he adds. Still, the matter involved years of litigation. Van de Vrande says Apex was awarded substantial costs because the defendant refused early and reasonable settlement offers. However, the defendant is now appealing the judgment.
The agent and the seller originally agreed to a one-year BRA in 2012, which stipulated that Apex Realty’s sales rep was the exclusive agent for defendants to buy commercial properties for development and/or residential dwellings for resale in the GTA and surrounding towns and cities in Ontario.
“Unfortunately, we have no control over whether another party breaches a contract but from a salesperson’s point of view…it is important to make sure all agreements are in writing and the client understands it and receives a full copy of it,” says Van de Vrande. “Then you have proper recourse if someone breaches that agreement.”