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Real Property - RECO - Arbitration. Intercity Realty Inc., Brokerage v. Salerno Realty Inc., Brokerage
In Intercity Realty Inc., Brokerage v. Salerno Realty Inc., Brokerage (Ont CA, 2026) the Ontario Court of Appeal dismissed an appeal, here brought against a motion "order dismissing the action ... on the basis that the court lacked jurisdiction over the subject matter of the complaint under r. 21.01(3)(a) of the Rules of Civil Procedure" - this concerning "a dispute between real estate brokerages over entitlement to the commission payable on a residential home purchase transaction".
Here the court considered the R21.01(3)(a) ['Dismissal or Stay of Action (by Defendant) - Jurisdiction]'] issue, and R25.11 ['Pleadings or Documents, Narrowing (by the Court)'] by way of issue estoppel:[19] The motion judge first considered whether the action should be stayed or dismissed pursuant to r. 21.01(3)(a) on the basis that the court lacked jurisdiction over the subject matter. She found that the Superior Court has jurisdiction over all claims, unless they do not disclose a reasonable cause of action or the jurisdiction has been removed by legislation or an arbitral agreement: TeleZone Inc. v. Canada (Attorney General), 2008 ONCA 892, 94 O.R. (3d) 19, at para. 92, aff’d 2010 SCC 62, [2010] 3 S.C.R. 585.
[20] The motion judge found that Intercity was, like Salerno, subject to REBBA and the Code of Ethics, and that the TRREB Arbitration Guidelines required all members to submit to arbitration to resolve all commission disputes.
[21] The motion judge rejected Intercity’s submission that the action should proceed since Salerno was not a party to the TRREB proceeding. She found that that this was of no consequence since the arbitration decision, upheld by the appeal panel, binds Salerno as RE/MAX was directed to hold the commission for Salerno and all issues relating to Salerno were dealt with as part of the TRREB proceeding. Accordingly, the motion judge found that the court had no jurisdiction over the dispute, since such jurisdiction was ousted by virtue of the TRREB Arbitration Guidelines.
[22] The motion judge continued, however, to consider whether the matter was an abuse of process under r. 25.11 by way of issue estoppel in the event that she was in error about the jurisdictional question. The parties agreed that the applicable test for issue estoppel was that set out in Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, [2001] 2 S.C.R. 460, at paras. 24-25.
[23] Applying that test, the motion judge found that the issue as between Intercity and RE/MAX and Salerno had been fully adjudicated through the TRREB proceeding. RE/MAX represented Salerno’s interest before the TRREB hearing panel and the decision, affirmed on appeal, was final.
[24] Accordingly, the motion judge concluded that Intercity was attempting to relitigate the same claim before the court, and that such conduct constituted an abuse of process. She concluded that she would have dismissed the claim on that basis had she not found that the court was without jurisdiction.
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[29] Application of the tests for issue estoppel and abuse of process by a motion judge is owed deference: The Catalyst Capital Group Inc. v. VimpelCom Ltd., 2019 ONCA 354, 145 O.R. (3d) 759, at para. 24, leave to appeal refused, [2019] S.C.C.A. No. 284. An appellate court should intervene only if the motion judge misdirected herself, came to a decision that is so clearly wrong as to be an injustice, or gave no or insufficient weight to relevant considerations.
[30] The motion judge properly articulated the test in Danyluk and applied it to the facts before her. She considered whether: (1) the same question has been decided; (2) whether the TRREB decision was final; and (3) whether the parties to the TRREB decision or their privies were the same persons as the parties in this proceeding in which the estoppel is raised.
[31] We see no error in the analysis of the motion judge.
[32] As to the first Danyluk factor, the issue raised in the action is precisely the issue that was considered and determined in the TRREB proceeding: whether Intercity was entitled to a portion of the commission as a co-operating brokerage since Mr. Cardwell was its employee at the time of the transaction.
[33] The TRREB Arbitration Panel fully considered the issue and all relevant evidence and found that no commission was payable to Intercity. Before us, Intercity submitted that the questions in the action were different since it was claiming damages against Salerno for inducing breach of contract and intentional interference with contractual relations. Fatal to that submission is the fact that those causes of action are not pleaded in the statement of claim against Salerno. The claims against Salerno are limited to the payment of the disputed commission.
[34] As to the second Danyluk factor, Intercity appealed the decision of the arbitration panel to the appeal panel which affirmed and upheld the decision. The award of the appeal panel, and the TRREB Arbitration Guidelines to which Intercity is subject as a registrant, are clear that the award is final.
[35] We are satisfied for the purposes of this appeal that the TRREB decision is judicial since it was made by a body capable of receiving and exercising adjudicative authority, the decision was required to be made in a judicial manner, and the decision was, in fact, made in a judicial manner: Danyluk, at para. 35; Metropolitan Toronto Condominium Corporation No. 1352 v. Newport Beach Development Inc., 2012 ONCA 850, 113 O.R. (3d) 673, at para. 45. The object and purpose of the TRREB Arbitration Guidelines are to provide a judicial framework for the adjudication of commission disputes between brokers just like this one.
[36] As to the third Danyluk factor, we agree with the conclusion of the motion judge that Salerno’s interests were represented in the TRREB proceeding through RE/MAX. The fact that Salerno was technically not a party to the proceeding is of no consequence in the particular circumstances of this case. As observed by the Supreme Court in Danyluk, at para. 60, the concept of privity is “somewhat elastic” and it is impossible to be categorical about the degree of interest which will create privity. Determinations must be made on a case-by-case basis.
[37] In the particular circumstances of this case, we are satisfied that RE/MAX was the privy of Salerno. RE/MAX held the disputed portion of the commission in trust. As the motion judge found, when TRREB denied party status to Salerno, RE/MAX represented Salerno’s interests, and as a result of that direction all parties were clearly aware of this. For its part, Salerno clearly understood that it would be bound by the decision as the motion judge found.
[38] As the Supreme Court stated in Danyluk, the rules governing issue estoppel should not be mechanically applied. The underlying purpose is to balance the public interest in the finality of litigation with the public interest in ensuring that justice is done on the facts of a particular case. There is residual discretion in the court to determine whether issue estoppel should be applied even if the technical requirements are met: Danyluk, at para. 33.
[39] Moreover, even if the technical requirements of any Danyluk factor were not met, the Supreme Court has noted that Canadian courts have applied the doctrine of abuse of process to preclude relitigation in circumstances where the strict requirements of issue estoppel are not met, but where allowing the litigation to proceed would nonetheless violate such principles as judicial economy, consistency, finality and the integrity of the administration of justice: Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77, at para. 37.
[40] This is the case here. Were the action against Salerno to proceed, there would be the potential for the decision in that action to undermine the findings of the TRREB arbitration panel, already upheld on appeal, since the underlying claims in both proceedings are the same. The motion judge’s conclusion to dismiss the claim on the basis of abuse of process does not work an injustice and should not be interfered with.
[41] We note that dismissal of this ground alone is sufficient to dispose of the appeal.
[42] Second, Intercity submitted that the motion judge erred in law in finding that the court lacked jurisdiction on the basis that the inherent jurisdiction of the Superior Court had been ousted by the TRREB Arbitration Guidelines.
[43] We also reject this ground of appeal. There is no dispute that Intercity is a REBBA member subject to the TRREB Arbitration Guidelines. The Guidelines provide in relevant part that:By virtue of the By-Law, all members have agreed to submit all claims to Arbitration as provided for in the By-Law, and the Hearing Panels are given exclusive jurisdiction to hear or settle all Claims, with the exception of Claims where both parties have agreed in writing to have their Claims resolved in another forum. No legal action or other proceeding shall be taken by any Member with regards [to] the subject matter of a Claim, except as previously mentioned. [44] TRREB jurisdiction was clear, exclusive, and was not waived: TeleZone, at para. 92. Intercity irrevocably attorned to that jurisdiction as a registrant and in fact invoked the jurisdiction to advance its claim to the commission in this particular case, such that TRREB was the appropriate forum in which commission disputes such as this were required to be determined. That itself is sufficient.
[45] Moreover, in Intercity’s TRREB Arbitration Claim Form, it confirmed that it “hereby agrees to abide by the award of the arbitrators”. As observed by the motion judge, nothing in her decision ousts the jurisdiction of the court with respect to Intercity’s claim, if any, against Mr. Cardwell.
[46] Third, Intercity submitted that the motion judge erred in law in finding that Intercity was estopped from advancing a claim against Salerno because the issue was fully adjudicated and determined through the TRREB proceeding such that this action constituted an abuse of process.
[47] To the extent that this ground of appeal is substantively different than the first ground, we reject it also. For the above reasons, we are satisfied that this action against Salerno is inescapably an attempt by Intercity to relitigate the very issue already determined in the TRREB proceeding with the result that it is, as found by the motion judge, an abuse of process.
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