George Dundas Realty Ltd. v. Cash, [1976] 2 SCR 796

Supreme Court of Canada

George Dundas Realty Ltd. v. Cash, [1976] 2 S.C.R. 796

Date: 1975-10-07

George Dundas Realty Limited (Defendant) Appellant;

and

Harry Cash (Plaintiff) Respondent.

1975: June 3; 1975: October 7.

Present: Martland, Judson, Spence, Dickson and de Grandpré JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.

Agency—Sale—Real estate agent—Commission on sale—Entitlement to commission—Real Estate and Business Brokers Act, R.S.O. 1960, c. 344, s. 40, now R.S.O. 1970, c. 401, s. 34.

Respondent, a real estate agent, had conversations with the appellant’s President with a view to obtaining a listing of a hotel property which the appellant owned and was ready to dispose of. Respondent did not obtain the listing but eventually did approach the appellant with an offer which the appellant’s President refused to accept. A few days later an offer substantially in the same form and on behalf of the same purchaser was accepted on behalf of the appellant. The trial judge feeling bound by Dani Real Estate Limited v. Tyschtschemko, (1958), 17 D.L.R. (2d) 168 dismissed the action, however the Court of Appeal allowed the appeal and gave the plaintiff judgment for five per cent of the purchase price.

Held: The appeal should be dismissed.

The action was governed by s. 34 of the Real Estate and Business Brokers Act, R.S.O. 1970, c. 401 (then R.S.O. 1960, c. 344, s. 40) and on the facts could only be based on s. 34(b) as the original offer to purchase was neither signed by the purchaser nor accepted by the vendor and respondent never had a listing of the property. While the effect of s. 34(b) was to prohibit the bringing of the action unless respondent had obtained an offer in writing that was accepted, the vendor cannot hide behind the statute when he agreed that the agent might earn the commission if he obtains a purchaser; takes advantage of the agent’s good offices to meet the purchaser; meets with the purchaser and agent to discuss a draft agreement arranged by the agent through the purchaser’s solicitor; and allows the agent to deliver the draft to the vendor’s solicitor for revision in light of discussions held between the vendor, the purchaser and the agent.

[Page 797]

It is a practical and proper explanation of the effect of s. 34(b) that when an acceptable offer by these processes is thereafter produced and executed in a direct sequence of events in which the real estate agent is intimately involved that the agent has proved that he “obtained an offer in writing” that was subsequently accepted.

Dani Real Estate Ltd. v. Tyschtschemko et al. (1958), 17 D.L.R. (2d) 168 distinguished.

APPEAL from a judgment of the Court of Appeal for Ontario[1] allowing an appeal from a judgment of Parker J. dismissing an action for recovery of a real estate commission. Appeal dismissed.

Sydney L. Robins, Q.C., for the appellant.

W.R. Maxwell and Paul Gollom, for the respondent.

The judgment of the Court was delivered by

SPENCE J.—This is an appeal from the judgment of the Court of Appeal for Ontario pronounced on September 24, 1973. By that judgment, the Court of Appeal allowed an appeal from the judgment of Parker J. pronounced on October 22, 1971, dismissing the plaintiff’s action without costs.

The plaintiff, here respondent, is a real estate agent in the City of Toronto. The defendant George Dundas Realty Limited was the owner of a hotel property situated at 212 Dundas Street East in the said City of Toronto. The defendant was ready to sell the hotel and its president had been engaged in conversations with various real estate agents aimed at either the sale of the land and buildings as a going concern or the sale of the hotel enterprise with a lease of the land and buildings for a specific period.

The plaintiff had, on some few occasions, attempted to obtain a listing of the buildings and enterprise but the defendant’s president had always refused to list the property with the plaintiff expressing the view that it would be unwise to give one agent the exclusive opportunity to make a sale and also the desire to carry out a sale without the intervention of an agent and therefore avoid the payment of an agent’s commission.

[Page 798]

In the year 1967, through the agency of the plaintiff, a George Yarmoluk and his then partner Sylvester Kalyn made certain approaches with the intention of purchasing the property but these negotiations proved abortive. In August of 1968, the plaintiff, acting for the said George Yarmoluk, made an offer to lease the property which the defendant rejected and the defendant in turn made an offer on its own part to George Yarmoluk which George Yarmoluk rejected. This occurred about August 27, 1968. Immediately thereafter, the plaintiff informed Mr. Morris Ruby, the president of the defendant company, that George Yarmoluk was prepared to give him an offer for $550,000 with a $50,000 down payment.

During the earlier discussions between the plaintiff and Mr. Ruby, Mr. Ruby, on behalf of the defendant, had orally promised to pay to the plaintiff a commission at the ordinary rate if the plaintiff obtained a purchaser for him. The learned trial judge has made an express finding of fact to this effect.

Upon the plaintiff informing Mr. Ruby of the fact that he could obtain an offer in the aforesaid terms, Mr. Ruby replied, “You bring down this offer and when I see the offer then I’ll believe it”. Mr. Yarmoluk immediately arranged an appointment with his lawyer, a Mr. Robert Hall, and on August 30, 1968, Mr. Ruby for the defendant, Mr. Yarmoluk for the purchaser, and the plaintiff went to Mr. Hall’s home in the City of Toronto and there they discussed the proposition. Mr. Hall took notes and as a result thereof prepared an offer to purchase which was produced at trial. On Friday, September 6, 1968, Mr. Yarmoluk and the plaintiff attended Mr. Hall’s office and received this offer to purchase in an original and four copies. They then attended the hotel premises and discussed the offer in detail with Mr. Ruby. Mr. Ruby made objection to various provisions in the said offer to purchase and in conversation between Mr. Ruby and Mr. Yarmoluk there was a complete agreement as to the portions of the offer to purchase with which Mr. Ruby took issue. It was the plaintiff’s evidence, accepted by the learned trial judge, that all of the changes which Mr. Ruby

[Page 799]

desired had been agreed to by Mr. Yarmoluk in that conference at the hotel.

Then, at Mr. Ruby’s suggestion, Mr. Ruby, the plaintiff and Mr. Yarmoluk all attended the office of Mr. Ruby’s solicitor, a Mr. Marrus, in order to have Mr. Marrus incorporate in the agreement the amendments which had been required by Mr. Ruby and agreed to by Mr. Yarmoluk. Arriving at that office, however, Mr. Ruby announced that he was not going to accept the offer because there was a small down payment and he would have to pay the plaintiff a commission on the deal. He insisted on maintaining this position and concluded the conference by arising from his chair and saying, “I am not interested in this offer”, and left the office. The plaintiff and George Yarmoluk followed him from the office. Mr. Ruby took Mr. Yarmoluk by the arm to one side and talked to him. A few days later, Mr. Yarmoluk, and Mr. Ruby on behalf of the defendant, executed an offer to purchase which had been drafted by Mr. Marrus.

The learned trial judge, in further findings, held that Mr. Ruby had made it clear that he did not intend to pay a commission to the plaintiff and also that the agreement executed on the 9th of September by the defendant and George Yarmoluk was substantially in the same form as the unsigned offer to purchase of the 6th of September. Upon those facts, the learned trial judge, feeling bound by the decision of the Court of Appeal for Ontario in Dani Real Estate Limited v. Tyschtschemko[2], dismissed the plaintiff’s action but without costs. The plaintiff appealed to the Court of Appeal and that Court in reasons given for the Court by Estey J.A. allowed the appeal and gave the plaintiff judgment for five per cent of $550,000, i.e., $27,500, and costs throughout. The defendant appealed to this Court.

The plaintiff’s action is governed by the provisions of s. 34 of the Real Estate and Business Brokers Act, now R.S.O. 1970, c. 401, which at that time was contained in R.S.O. 1960, c. 344, s. 40.

[Page 800]

Section 34 provides:

34. Subject to section 43, no action shall be brought to charge any person for the payment of a commission or other remuneration for the sale, purchase, exchange or leasing of real estate,

(a) unless the agreement upon which the action is brought is in writing and signed by the party to be charged therewith or some person thereunto by him lawfully authorized; or

(b) unless the broker or his salesman has obtained an offer in writing that is accepted; or

(c) unless the broker having been authorized in writing to list the property,

(i) shows the property to the purchaser, or

(ii) introduces the purchaser to the vendor for the purpose of discussing the proposed sale, purchase, exchange or leasing.

It is apparent, of course, that the respondent’s claim can only be based on s. 34(b) as the offer to purchase of September 6 was neither signed by Mr. Yarmoluk as purchaser nor accepted by the appellant as vendor and the respondent never had a listing of the property.

The problem, therefore, is whether the plaintiff “has obtained an offer in writing that is accepted” and, as Estey J.A. noted, the disposition of the claim revolves around the meaning of the word “obtained” as it appears in s. 34(b). Estey J.A. distinguished the Dani case, supra, on the ground that there, although the agent had brought the parties together and had engaged in some discussion, the second offer, that which was actually accepted, had not been “obtained” by the agent and the wording of the statute, was not broad enough to give rise to an entitlement to commission by reason only of the fact that the offer ultimately accepted by the vendor was a similar offer or one substantially to the same effect. Estey J.A. said:

In the inevitable give and take of negotiations and exchange of ideas in preparation for the sale of a property, such as a large hotel for the price of $550,000.00, the real estate agent can at most be a conduit and a catalyst and, after the initial launching of negotiations, may only perform these limited roles, if requested or permitted by the principals.

[Page 801]

Thus, we must look in a practical way for the meaning intended by the Legislature of the word “obtain” in this subsection of the statute. Clearly the agent cannot succeed under s.s (b), if he is a mere instrumentality concerned in some pre-contractual stage with simply introducing the parties. The cataloguing of the possibilities embraced in or contemplated by this section is neither possible, or useful even if possible, the vendor cannot hide behind the statute when as here he agreed that the agent might earn a commission if he “obtains” a purchaser; takes advantage of the agent’s good offices to meet the purchaser; meets with the purchaser and agent to discuss a draft agreement arranged by the agent through the purchaser’s solicitor; and allows the agent to deliver the draft to the vendor’s solicitor for revision in the light of discussions held between the vendor, the purchaser and the agent, as well as amendments or additions proposed by the solicitor for the vendor himself. In such circumstances, the simple denial by the vendor of any intention to pay a commission to the agent cannot frustrate the agent in asserting his claim under s.s. (b) when an acceptable offer by these processes is thereafter produced and executed in a direct sequence of events in which the real estate agent plaintiff is intimately involved.

I am of the opinion that that is a practical and proper explanation of the effect of the word “obtained” in s. 34(b) and I agree with Estey J.A. that a plaintiff who can bring himself within the requisite set out by Estey J.A. in the passage I have quoted has proved that he “obtained” an offer in writing which was subsequently accepted.

I would, therefore, dismiss the appeal with costs.

Appeal dismissed with costs.

Solicitors for the appellant: Robins & Robins, Toronto.

Solicitors for the respondent: Risk, Cavan, Gardner, Toronto.