From time to time, a seller will think that the agent didn’t really earn their commission. It may be that a neighbour or friend approaches them after they have signed a Listing Agreement.
The Listing Agreement will cover a certain time period, and if the property sells during that time (or the holdover period), the agent is entitled to his commission.
That’s fairly straightforward. But, it’s often difficult to find cases right on point since it is really so obvious.
The agent also needs protection since the seller and the neighbour might agree to wait just one day after the listing expires, and that would be unfair.
So, if the neighbour surfaces during the listing period, he must wait not only for the listing period to expire, but the holdover period as well. After that, the end run around the agent’s commission is fine.
Have a look at Gidda v. Malik (2006). It went on appeal to the Divisional Court. In that case, the seller sued his own law firm for leaking out the information about the sale.
However, notice what the Judge said about the agent’s commission.
The Case as set out in the Court Reports:
COURT FILE NO.: DC-05-003045-00
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: SOHAN GIDDA Appellant
MALIK LAW OFFICE/NARIN MALIK Respondent
BEFORE: SPROAT J.
COUNSEL: Peter C. Verbeek, for the Appellant
Yadvinder Singh Toor, for the Respondent
E N D O R S E M E N T This is an appeal from the decision of Deputy Judge McCrea dated March 7, 2005 dismissing the plaintiff’s claim.  At the outset of the appeal the Deputy Judge suggested to the parties that the case proceed on an agreed statement of facts as follows:
(a) the plaintiff listed his property for sale with a real estate agent;
(b) the plaintiff retained the defendant law firm to act for him in connection with the sale of the property;
(c) the plaintiff sold the property pursuant to a private agreement of purchase and sale;
(d) the real estate agent heard of the private sale, called the defendant’s office and misrepresented that she was a real estate agent acting for the plaintiff in relation to the private sale and asked for a copy of the “private offer”;
(e) a secretary in the employ of the defendants forwarded a copy of the agreement for the private sale;
(f) the real estate agent made a claim for commission against the plaintiff and was successful in attaining a judgment in the amount of $10,000. (Although the plaintiff had not, at that time, actually paid the judgment.) Counsel at trial indicated they were prepared to proceed on the basis of this agreed statement of facts. Counsel also referred to what appeared to be a number of non-contentious facts during argument and both sides appeared to accept that this was proper.  On this appeal counsel for the respondent sought to refer to a transcript of the trial in which the real estate agent obtained judgment against the plaintiff. While it appears that this transcript had been filed in the Court below it was not referred to as part of the agreed statement of facts. While there is an ambiguous reference to it during argument I am not satisfied that this was part of the agreed facts. I am also not satisfied that would be proper to admit this as fresh evidence on this appeal given that it was clearly available at trial and was not made part of the agreed statement of facts at that time.  From the plaintiff’s submissions at page 6 of the transcript it appears that the listing agreement expired February 12; that the transaction closed February 28; and it seems implicit that the agreement was dated during the currency of the listing agreement so that liability was plain once the agreement was disclosed.  On these facts Deputy Judge McCrea found that the law firm had been negligent in disclosing the private agreement for the sale of the property but dismissed the action on the basis that the plaintiff had not proven any damages because, while the real estate agent had obtained a judgment, the agent had not taken steps to enforce the judgment.  In fairness to Mr. Malik, who was present in Court, I note that the negligence alleged was that of his secretary and this finding should not be taken to reflect on his professional competence or reputation. The plaintiffs had argued that the negligence of the secretary included that she should have been alerted to the fact something was wrong because there would be no real estate agent on a private sale and there was no attempt to obtain instructions from the client or require a written request from the real estate agent.  In my opinion the agreed facts support the conclusion of negligence. While I am not prepared to disturb the finding of negligence made by the Deputy Judge, I note that the law firm was placed in a difficult position because, according to the agreed statement of facts, the real estate agent misled the secretary in order to obtain the documents.  In dismissing the action, however, Justice McCrea stated:
The defendant has not paid any part of the judgment obtained against him by the agent, nor apparently has the agent taken any steps to enforce the judgment. There has to be more than the potential for a financial loss area. Now, counsel for the plaintiff argues that the mere filing of the writ of seizure and sale constitutes liability. It is liability, but it has not been enforced. If anything it is a contingent liability. It’s at the behest of the judgment creditor to take steps to enforce the writ of seizure and sale which was issued, I believe, in October of 2004 and still has about another 3 1/2 years life left in it, and could be subject to renewal indefinitely.
However, the plaintiff did not pay any part or the full amount of the judgment and so the plaintiff has not suffered any actual financial loss. In the absence of any actual financial loss, I have no alternative but I have to dismiss the action. On appeal the appellant sought to introduce fresh evidence consisting of the fact that subsequent to trial he sold his property and so had to pay the outstanding judgment to lift the writ of execution. The admission of this evidence is academic given my opinion, discussed below, that the plaintiff had suffered damage prior to actual payment. If I am wrong in that I would admit the fresh evidence as the payment of the judgment occurred after the trial.  While no authorities were cited to me, in my opinion the plaintiff at trial had suffered damage. While not part of the facts agreed to at the outset, the Deputy Judge did refer to the fact that there had been a writ of execution. It also appears to have been accepted by both parties that the plaintiff owned property. In that case, any calculation of the plaintiff’s net worth would have been $10,000 less the day after the writ of execution was filed.  I would, however, dismiss the appeal. The trial judge found negligence and then proceeded to find that the action should be dismissed as no damage was proven. As such, he did not address causation. In my opinion, on the agreed facts, the plaintiff has not established that the negligence of the law firm caused his damage.  First, it was agreed that the agent knew of the private sale prior to calling the law firm. I think it unlikely that a real estate agent who believed she was being cheated out of a $10,000 commission would simply let the matter rest. The fact of the sale would be a matter of public record, the real estate agent would probably have pursued the matter, the plaintiff could have been compelled to testify and would have been obliged to tell the truth.  Secondly, in my opinion the direct and proximate cause of the “damages”, is the fact that the plaintiff entered into the listing agreement and agreed to make the payment. I have some difficulty in seeing how the plaintiff is damaged by being obliged to make a payment which he agreed to make under a contract that he entered into. It does not sit well with me that a person in the position of the plaintiff can enter an agreement, set out to deprive the other party of their entitlement under the agreement and then when he is caught shift the loss to the law firm.  Further, in this regard in Waddams, The Law of Damages the author at paragraph 14.740 discusses Weld-Blundell v. Stephens,  A.C. 956 (H.L.) in which the defendant wrongfully disclosed a confidential letter containing a libel on a third party. As a result the plaintiff was successfully sued for defamation. The House of Lords found the defendant was not liable. The author states:
The gist of the decision is that the defendant’s revelation of the letter had simply enabled the third parties to vindicate their legal right. Lord Sumner said it was as though the plaintiffs had been in unlawful possession of another’s property and the defendant had betrayed to the owner the secret of its whereabouts. Lord Wrenbury went so far as to say that the plaintiff had suffered no damage at all, for “a man is not damnified by being compelled to satisfy his legal obligation”. The appeal book does not reflect the disposition of costs at trial. As to the appeal, I award costs of $1500 payable by the appellant to the respondent law firm within 30 days. This is somewhat less than I might ordinarily have awarded, however, the law firm bears some responsibility for the events giving rise to the litigation.
DATE: October 20, 2006
Brian Madigan LL.B., Broker