Century 21 Leading Edge Realty Inc. v Khanna
(30 December 2025, Small Claims Court)
This Ontario Small Claims Court decision addresses a recurring issue in real estate disputes: when a commission is earned, and how fiduciary duties can limit recovery, even where the contract is clear.
The defendants, Nidhi and Ajay Khanna, listed their home with Century 21 Leading Edge Realty Inc. The brokerage secured a buyer at $1.1 million, with a firm Agreement of Purchase and Sale in place.
The Khannas refused to close after failing to obtain a last-minute extension, effectively terminating the deal.
The Brokerage sued for commission. The Khannas counterclaimed, alleging breach of fiduciary duty and arguing that a Mutual Release eliminated any commission obligation.
Court Findings
1. Commission Was Earned Despite Failed Closing
The Court confirmed that the Brokerage earned its commission by producing a ready, willing, and able Buyer. The Sellers’ refusal to close triggered the commission clause in the listing agreement.
This reasoning aligns with prior authority, including (T. L. Willaert Realty Ltd. v. Fody) which similarly held that commission is payable where the Seller’s default prevents completion.
2. Mutual Release Did Not Eliminate Commission
The Khannas argued that the Mutual Release discharged all parties, including the Brokerage. The Court rejected this:
- A mutual release binds only those who sign it
- The brokerage did not sign the release
- Therefore, its commission claim survived
There was no legal requirement for the Brokerage to sign in order for the Buyer–Seller release to be effective.
3. No Causative Breach of Fiduciary Duty
Although fiduciary duties were acknowledged, the Court found no actionable breach that caused the Sellers’ loss.
The Court relied on causation principles from Canada Trustco v Barlol & Richards
and Rose v McKee
These cases confirm that a breach of fiduciary duty is only actionable if it actually causes the loss. Here, the Khannas would have aborted the deal regardless.
4. Brokerage Breached Fiduciary Duty in Overbilling
Despite winning on entitlement, the Brokerage significantly undermined its position by invoicing 4.25% commission, including the Cooperating Brokerage’s share which had already been waived.
The Court found this to be:
- A conflict of interest
- A failure of loyalty
- High-handed conduct warranting sanction
To address this, the Court invoked principles of deterrence from: Goldentuler Estate v Crosbie.
The Court emphasized that simply correcting the invoice would not be enough, a penalty was required to discourage overbilling.
5. Emotional Distress Claim Rejected
The Khannas’ claim for emotional distress failed due to insufficient evidence of serious and prolonged harm.
The Court applied the threshold set out in Saadati v Moorhead.which requires more than ordinary stress or upset.
Result
- Proper commission: $21,752.50
- Less punitive damages: $10,000
- Final judgment: $11,752.50
No costs were awarded. The counterclaim was dismissed.
Considerations
This case is a strong reminder that:
- Commission is earned when a buyer is secured, not when the deal closes—if the seller is at fault
- Mutual releases do not bind brokerages unless they sign
- Fiduciary duties apply even when collecting commission
- Courts will impose punitive consequences for overreaching conduct
- As noted in cases like T. L. Willaert Realty Ltd. v. Fody, the contractual right to commission is strong, but not immune from equitable scrutiny
Comment
The Brokerage proved its legal entitlement to commission, but its own misconduct in billing cut its recovery nearly in half.
A simple written clarification and accurate invoice would likely have avoided both the lawsuit and the penalty.
Punitive damages in the amount of $10,000.00 were awarded because the Listing Brokerage invoiced for 4.25%, the entire commission when the Buyer’s Cooperating Brokerage had already waived its entitlement. The proper Invoice should have been 1.75%. This matter was not one simple incorrect, overstated amount, it continued in the litigation pleadings and the case as presented at Trial.
Brian Madigan LL.B., Broker
www.OntarioRealEstateSource.com