Law Times

Law Times • January 19, 2015 Page 9 www.lawtimesnews.com Case a reminder to get it in writing Real estate broker out $100K commission and $150K in costs By marg. Bruineman For Law Times recent Ontario Court of Appeal decision serves as a stern re- minder for those working with any kind of con- tract to get it in writing. If not, thousands of dollars can be on the line. For one real estate broker, the failure resulted in the loss of $100,000 in commis- sion along with a costs award of $150,000. "There's probably hundreds of these signed every day across Ontario and people need to know what they're getting into," says Matt Maurer, a litigator with Minden Gross LLP. "It sends a clear message. . . . If your contract requires written notice, you've got to give written notice or you're not going to get paid. I think in this case the Court of Appeal wanted to emphasize the principle of commercial cer- tainty and strict adherence to the terms of written agreements, especially so since Superior Court judges will be obligated to follow suit." At the core of Ariston Realty Corp. v. Elcarim Inc. is the rela- tionship between Elcarim Inc., a real estate investing company owned by Elaine Mascall, and real estate brokerage Ariston Realty, whose principal is com- mercial real estate broker An- thony Philip Natale. The two entered into a six- month listing agreement that contained a holdover clause stipulating that any introduc- tions made in writing and resulting in a sale within six months of the expiration of the listing would result in a com- mission for Ariston. Natale introduced Context Development Inc. to the listed property. Just over three months after the listing agreement pe- riod expired, Context Develop- ment purchased the property. But there was no paper trail for the introduction. And when Ariston submitted an invoice to Elcarim for commission on the sale, the company refused to pay. The trial judge found the lack of written notice not to be of issue and ordered Mascall's Elcarim to pay the $120,000 commission. Mascall begged to differ and won on appeal. While Justice Russell Juriansz of the Ontario Court of Appeal de- cided the lack of written notice was indeed a significant issue, he did throw the real estate bro- ker a bone. "I would allow the appeal, concluding that the respon- dent has no contractual entitle- ment to commission. However, I would also allow, in part, the cross-appeal, concluding that the respondent is entitled to some compensation under the doctrine of restitutionary quantum meruit." So while the court denied Natale the $120,000 com- mission, Juriansz did find the value of his services fol- lowing the six-month listing period to be worth $20,000. Juriansz determined the tri- al judge based the finding on actual rather than writ- ten notice. And that, he de- clared, goes against the prin- ciples of commercial contract. "The requirement of written no- tice, rather than actual notice, is intended to promote com- mercial certainty and to reduce the potential for litigation, such as that with which we are now dealing," wrote Juriansz. In the followup decision in- volving costs, Elcarim received $20,000 for the costs of the ap- peal and $130,000 for the trial. While the judgment, which leaves the broker $100,000 short, combined with the costs award might seem harsh, the appellate court did follow the letter of the contract, says Maurer. The clause did refer to making the introduction in writing, something the broker had failed to do. Lawyer Bryan Skolnik says that while that's indeed the way the clause reads, that wasn't the intent. "The notice-of clause was intended to protect the vendor of property and ensure they wouldn't be liable for a commis- sion that they weren't aware of after the fact," says Skolnik, who acted for Ariston. And the reference to mak- ing introductions in writing is no longer in the standard boil- erplate used by agents across Toronto. In Ariston's case, the broker's name also appeared in the agreement, according to Skolnik. As a result, a written in- troduction seemed superf luous. "While there was not strict compliance with the terms of the agreement, everyone knew what was happening," he says. The Court of Appeal deter- mination, however, does serve as a lesson to the real estate in- dustry, Skolnik adds. "You have to strictly comply with every single term and if you don't, you're not going to be get- ting your commission." That lesson applies to sce- narios that use clauses, such as leases, says David Taub, who represented Elcarim. This case paid particular attention to the need for a written document even if it seemed superf luous. "If there's an argument that it was oral, this decision will guide courts that if a written notice is a prerequisite . . . then a written notice is required," says Taub, a partner at Robins Appleby LLP. He expects the decision will also reduce the number of law- suits. "It reinforces what should have been settled law and should have been in this case." LT FOCUS For more information, please contact Jennifer Brown Email: jen.brown@thomsonreuters.com | Phone: 416-649-8867 The Canadian Lawyer InHouse 2015 Innovatio Awards is the pre-eminent award program recognizing innovation by members of the in-house bar within the Canadian legal market. The second annual awards celebrate in-house counsel, both individuals and teams, who have found ways to show leadership by becoming more efficient, innovative and creative in meeting the needs of their organizations. NOMINATIONS ARE NOW OPEN AND THE SEARCH IS ON FOR CANADA'S MOST INNOVATIVE IN-HOUSE COUNSEL NOMINATE YOURSELF OR YOUR DEPARTMENT IN THE FOLLOWING CATEGORIES: • Law department management • Diversity • Best practices in compliance systems • In-house M&A/Dealmakers • Working with external counsel • Litigation management • Risk management • Tomorrow's leader in innovation NOMINATIONS CLOSE FEBRUARY 16, 2015 Nomination forms and more information can be found at: www.innovatio-awards.com Untitled-6 1 2015-01-13 3:01 PM A 'There's probably hundreds of these signed every day across Ontario and people need to know what they're getting into,' says Matt Maurer.

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