Not Registered: No Commissions
In McGuire v. Dejong and Coldwell Banker Integrity Real Estate Brokerage (2021 ONSC), Associate Justice A. Kaufman delivered a decision that underscores a difficult truth in Ontario real estate law, fairness does not always prevail when statutory rules are breached.
Background
Kyle McGuire, a recent economics graduate, joined Coldwell Banker in 2012 as a “sales associate.” He was clear that he had begun the OREA courses but was not yet registered under the Real Estate and Business Brokers Act, 2002 (REBBA).
Coldwell Banker, through its broker of record William Dejong, brought him on as an independent contractor, paying him by commission. Over two years, McGuire worked on ten real estate transactions worth roughly $600,000 in commissions for the brokerage, yet he received only $10,363.
When he later demanded payment of the balance, the brokerage refused, arguing that because he was unlicensed, he was not entitled to any remuneration.
The Legal Issue
Could McGuire recover his unpaid commissions or damages for his work, even though he wasn’t registered at the time?
The Court’s Analysis
Justice Kaufman found that McGuire:
- Had not misrepresented his licensing status, Dejong knew he was unregistered.
- Was hired as a sales representative, not as an intern.
- Worked under a commission agreement, not a training arrangement.
However, the Court was bound by section 9 of REBBA, which strictly prohibits anyone from suing for compensation related to a “trade in real estate” unless they were registered or exempt at the time.
McGuire’s services, prospecting clients, showing properties, negotiating leases, and participating in transactions, all qualified as “trading in real estate.” Since he was not registered, the statute barred his claim completely.
Even his alternative claims for unjust enrichment, quantum meruit, and wrongful dismissal were rejected. Each was simply another way of seeking payment for real estate services, which REBBA forbids.
A Harsh but Inevitable Result
The court acknowledged that this outcome was “harsh and unfair.” McGuire acted honestly, contributed to the brokerage’s success, and was misled into believing his situation was legitimate. Nevertheless, the law left no room for discretion.
REBBA’s purpose is consumer protection, ensuring that only licensed professionals handle real estate transactions. The cost of non-compliance, however unintentional, is total loss of compensation rights.
Costs and Conduct
Despite losing the case, McGuire was awarded full indemnity costs against the defendants. Justice Kaufman was sharply critical of Coldwell Banker and Dejong for:
- Knowingly employing an unregistered salesperson in breach of REBBA.
- Falsely accusing McGuire of dishonesty.
- Prolonging unnecessary and wasteful litigation.
The court made clear that brokerages cannot benefit from illegal conduct and then hide behind statutory protections when caught.
Considerations
This case is a sobering reminder for both salespeople and brokers:
- Unregistered individuals cannot recover any compensation for real estate work, no matter how fair it seems.
- Brokers of record have a legal duty to verify and maintain registration status.
- Ignoring REBBA’s registration rules exposes brokerages to severe cost consequences and reputational harm.
In short, REBBA compliance is not optional, and Courts will strictly enforce it, even when the result seems unjust.
Brian Madigan LL.B., Broker
www.OntarioRealEstateSource.com