January 25, 2017
by Merv Burgard
In this case, a company, Windrock Associates Ltd., engaged in advisory services for clients with respect to mergers and acquisitions, corporate finance, restructuring and public listings. Ludovico Minicucci was a partner in a company. The partners’ disagreement led to a decision to sell the partnership, which owned real estate, or one would buy out the other.
Minicucci retained Windrock to render “advisory services” in connection with the sale of or purchase, and/or financing, of the shares or assets of a Toronto multi-residential apartment building and/or the land, and all related assets located at that location. Apart from an initial deposit, Minicucci was to pay a “success fee” based on a certain percentage of the gross value of the sum of all transactions.
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Windrock did extensive work in attempting to deal with the situation, a partnership dispute, including a sale agreement between the partners. After a sale was concluded, the company sent an invoice for $95,000 plus HST for its advisory services. The court heard extensive details of the dealings and negotiations.
However, section 9 of REBBA provides that no commission is payable for a trade in real estate to an unregistered person. The judge relied on several precedents, including Market Leadership v. Loretta Foods, a case that dealt with the difference between a share transaction and a sale of real estate. Windrock lost the case.
Windrock Associates Ltd. v Minicucci 2016 ONSC 4504 (CanLII).
If you have my earlier Memos, see the Loretta Foods decisions for the possible difference between negotiating a share transaction that does not involve real estate and a real estate one.
Similarly, an unregistered spouse of a RECO registrant in driving her and clients and explaining and interpreting and negotiating for her clients were both found guilty of a breach of REBBA.
Real Estate Council of Ontario v Virk, 2016 ONCJ 451 (CanLII).
You may consider yourself an interpreter, an advisor or a consultant, but if you walk like a duck and talk like a duck -- you are a duck. Isn’t it easier and cheaper to take the OREA College courses and get a RECO registration?
Merv Burgard, Q.C.