February 22nd - 2015

Legal Beat: Plaintiff in commercial case has great expectations

An executive seeking to develop commercial condos spent nearly $100,000 on marketing then sued his brokerage for reimbursement after the relationship soured.

Legal Beat

An executive seeking to develop commercial condos spent nearly $100,000 on marketing then sued his brokerage for reimbursement after the relationship soured.

Legal Beat

The plaintiff in this case was a sophisticated business person running a dental practice who also owns a dental company. He decided to develop commercial condominiums and retained the commercial brokerage under a listing agreement.

The relationship between the businessman and the brokerage soured. He then decided to work with a different brokerage.

He had also hired a marketing company, paid them extensive costs, and now sued his first brokerage for reimbursement of those costs, which totalled $85,984.52. The judge reviewed the listing, the legal advice given to the plaintiff by his lawyer, his wife’s evidence, and all of the surrounding facts. The judge dismissed the plaintiff’s claim and the brokerage won the case.

One key part of the listing stated that the brokerage would “prepare, at the expense of the agent and in consultation with the seller, marketing materials for the promotion of the site, subject to the seller’s prior written approval.”

As noted by the judge, listings are to be interpreted in accordance with sound commercial principles and practices. The reasonable expectations of the parties must be determined on an objective basis.

“Looked at objectively, and from a commercially reasonable perspective, it is difficult to accept the position of the plaintiff where the agreement was a non-exclusive listing agreement which could be terminated on 30 days’ notice.”

1598223 Ontario Inc v. The Behar Group 2014 ONSC 7170

Mervin Burgard Q.C.

MERV’S COMMENTS

It was also a factor that the claim only arose after the brokerage demanded payment of $7,926.95 for the “For Sale” sign, and that there was no prior discussion of these external marketing costs or warning to the brokerage that it might be liable for these costs.

This claim was more than the usual commercial practice of preparing feature sheets, brochures and mailings. Representatives of the brokerage in this case stated that brokerages do not normally become involved in advertising through various media outlets such as radio, TV or direct marketing. The brokerage wisely abandoned its claim for the expense of the sign.

Mervin Burgard, Q.C.

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