A recent Saskatchewan judgment dismissed four summary judgment applications in a $26 million dollar real estate deal, finding that none of the claims were appropriate for summary judgment.
Under an Exclusive Listing Agreement between a real estate company and the seller executed in January 2016, the seller’s farm was listed for sale for $30 million.
The real estate company was to receive a five percent commission if the farm sold during the term of the agreement, January 26, 2016 to May 25, 2016. Additionally, the Exclusive Listing Agreement provided that the seller would pay the commission if the farm sold within 180 days of the termination of the Exclusive Listing Agreement and the real estate company’s efforts were the “effective cause” of the sale.
When the Exclusive Listing Agreement expired, the seller signed a new listing agreement with another realtor. In August 2016, the new realtor completed the sale of the farm to a buyer for $26 million. When the farm was sold, the realtor received his agreed-to commission.
The real estate company then alleged that it had first introduced the farm to the buyer and, therefore, the effective cause clause was operative and the commission rightfully belonged to it.
By statement of claim against the seller, issued January 13, 2017, the real estate company sought damages on three grounds:
- breach of contract,
- unjust enrichment, and
- quantum meruit.
Additionally, the real estate company asserted that the realtor, being a professional realtor, should have forewarned the seller of the Effective Clause and was negligent in failing to do so. As well, the real estate company alleged that the realtor should have determined which, if any, potential purchasers the real estate company had contacted prior to the expiry of the Exclusive Listing Agreement. Consequently, it claimed that the realtor was unjustly enriched by the commission he was not entitled to receive.
In the seller’s statement of defence, the seller stated that the real estate company only showed the farm to one interested buyer from Québec. Further, the seller alleged that the real estate company never informed it of any contact the real estate company had with the eventual buyer. Accordingly, the real estate company was not an effective cause of the sale to the buyer.
In the realtor’s statement of defence, he alleged that the Exclusive Listing Agreement deviated from the standard form listing agreement provided by the Saskatchewan Realtor’s Association which creates an exception to the 180-day effective clause agreement. Additionally, the realtor denied that he failed to act according to his professional obligations; he had no obligation to determine if potential buyers had been in contact with the real estate company prior to the expiry of the Exclusive Listing Agreement, nor did he have any obligation to advise the seller whether a claim might arise from the effective cause provision in the agreement with the real estate company.
The parties brought four applications for summary judgment:
- The real estate company sought entry of a judgment against the seller for unpaid realtor fees that it asserted it should have received upon the sale of the seller’s farm;
- The seller sought two summary judgments, asking for orders dismissing the claim advanced by the real estate company, or, in the alternative, entry of judgment against the realtor in the amount of any judgment in favour of the real estate company;
- The realtor sought summary judgment dismissing the cross-claim advanced by the seller.
At the outset, the court expressed its scepticism surrounding the parties’ applications to have their matters resolved by summary judgment, rather than by trial:
“In these reciprocated applications for summary judgment, the court has before it two claims and two defences, with three parties simultaneously suggesting that either the position against it is so lacking in merit or the position it is advancing is so meritorious, that no genuine issue requires a trial. At first glance, this hardly seems an action that can be resolved by the summary judgment rules.
Even when a single plaintiff seeks summary judgment and a defendant simultaneously responds seeking dismissal of the claim, someone has miscalculated the certainty of their case. At best, the court might find that one party has proven a trial is unnecessary and will grant summary judgment in one or the other’s favour. Both parties cannot be correct in their position. One might be, or neither might be, but both cannot be.
In this application, even before engaging upon any analysis, one might ask what is summary in an application that involves three parties, a cross-claim and defence to cross-claim, four requests for summary judgment, accompanied by several affidavits, three substantial briefs of law and dozens of authorities.”
In fact, Rule 7-5 of The Queen’s Bench Rules respecting summary judgments states that a court may only grant summary judgment if it is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence or the parties agree to have all or part of the claim determined by summary judgment and the Court is satisfied that it is appropriate to grant summary.
After reviewing the applicable legal principles, the court ultimately decided that none of the applications were appropriate for a summary judgment determination.
As a result, the applications for summary judgment were dismissed.
There are significant legal and financial risks in entering into a real estate transaction. Such large purchases should not be made without proper guidance from an experienced lawyer. Without sound legal advice, you could end up paying more than you should for your home, or accept an offer that is too low, or worse yet, end up with a transaction that falls through due to missed paperwork, or details and technicalities that go unnoticed.
At DBH Law in Calgary, our real estate lawyers have more than 25 years of combined experience acting for purchasers, lenders, and developers through all stages of real estate transactions.
We help our clients avoid huge areas of risk, including poorly drafted or incomplete agreements of purchase and sale, hidden fees, encroachment or easement issues, complex concerns like properties held in trust, and similar pitfalls. We also look for contract language which may impose unfavourable duties or obligations. To learn more about how we can help, contact us online or by phone at 403.252.9937.