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Real Property - RECO - General. 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 illustrates the complexity of modern real estate sales transactions, separate from the title legalities:FACTS AND PROCEDURAL HISTORY
[2] Steven Cardwell and his wife purchased a home in Vaughan, Ontario in February, 2021. The listing brokerage for the vendors was RE/MAX. The Cardwells were represented on the purchase by another brokerage, Salerno Realty Inc.
[3] At the time of the purchase, Mr. Cardwell was employed by Intercity Realty Inc., another real estate brokerage as a salesperson. He was registered under the Real Estate and Business Brokers Act, 2002, S.O. 2002, c. 30, Schedule C (“REBBA”). Intercity was not involved in the transaction for the purchase of the Cardwells’ home.
[4] When Intercity learned of the house purchase, it delivered an invoice to RE/MAX for the commission to which it argued it was entitled. Intercity took the position that as a result of Mr. Cardwell’s employment relationship, the multiple listing agreement for the home he purchased together with his wife, and the operation of REBBA, it was a co-operating brokerage acting for Mr. Cardwell in the purchase and was therefore entitled to share in the 2.5 percent buyer’s commission payable on the transaction.
[5] RE/MAX, which held the disputed commission in trust for Salerno, declined to pay to Intercity the portion to which it claimed it was entitled, taking the position that Salerno, the brokerage who represented the Cardwells on the transaction, was entitled to that portion of the commission as the rightful co-operating brokerage. Mr. Cardwell subsequently resigned from Intercity.
[6] On June 10, 2021, Intercity brought an action against Salerno, Mr. Cardwell and RE/MAX for breach of contract, or alternatively, quantum meruit and/or unjust enrichment, to recover damages equal to the amount of the co-operating broker commission.
[7] Approximately four months later, on October 26, 2021, Intercity commenced a formal complaint to the Toronto Regional Real Estate Board (“TRREB”) against RE/MAX and its salesperson who handled the transaction, alleging that they had violated the MLS Rules and Policies and Code of Conduct.
[8] In its electronic mail correspondence to TRREB under cover of which it submitted the complaint, however, Intercity stated that it wished to advance the complaint against Salerno as well as RE/MAX. Salerno subsequently sought to be added to the complaint proceeding on the basis that its commission could be affected by the outcome. TRREB rejected this request, stating that it was unable to add an additional respondent to the proceeding but advised that the existing respondent (RE/MAX) may include evidence (witnesses or statements) from Salerno if it so chose.
[9] Intercity took the position that Mr. Cardwell, Salerno and RE/MAX all breached their obligations and duties as registrants under REBBA. Registrants who buy or sell a property are required to make written disclosure using a Form 160 – Registrant’s Disclosure of Interest. The Form 160 here was signed by Mr. Cardwell, who confirmed that he would “not be receiving a portion of any commission payable in connection with this transaction”. However, Intercity did not sign the Form 160.
[10] Intercity argued that its signature was required since Mr. Cardwell was employed by that brokerage. By failing to advise Intercity of the transaction or obtain its signature, Mr. Cardwell misrepresented that he was acting on behalf of Intercity and also unilaterally waived the portion of the commission otherwise payable to Intercity without its knowledge or consent. Intercity further took the position that Salerno and RE/MAX were complicit in this breach of duty by Mr. Cardwell, since they knew as registrants themselves that the signature of Intercity was required.
[11] RE/MAX took the position on behalf of itself and Salerno that since the purchase of the house was made by Mr. Cardwell in his personal capacity (together with his spouse), and since Intercity was not a party to any commission agreement and there was no involvement by Intercity in the capacity of a co-operating brokerage during the transaction, Intercity was not entitled to any portion of the commission. RE/MAX submitted that Salerno was the proper cooperating brokerage entitled to the disputed portion of the commission.
[12] On April 4, 2022, TRREB issued the decision of its arbitration panel. The arbitration panel dismissed Intercity’s complaint and determined that:(a) the Cardwells, and specifically Mr. Cardwell, purchased the property in his individual capacity, and not in his capacity as a salesperson of Intercity, as confirmed by the Confirmation of Cooperation and Representation, which reflected that Salerno would represent the Cardwells;
(b) that relationship was further substantiated through the executed Buyer Representation Agreement between the Cardwells and Salerno;
(c) it was not its role to interpret and apply the terms of any employment relationship between a salesperson and their brokerage. Any issue of a breach of Mr. Cardwell’s employment agreement with Intercity related to the purchase of a property with another brokerage was outside the jurisdiction of the arbitration panel;
(d) while consulting Intercity upon receipt of the incomplete Form 160 from Mr. Cardwell would have been a courteous gesture on the part of RE/MAX, it ultimately was not required as Mr. Cardwell submitted the offer in his personal capacity through his relationship with Salerno as co-operating brokerage on the transaction; and
(e) there were insufficient grounds to conclude that Intercity was a party to the transaction, and therefore the commission was ordered to be retained by RE/MAX for disbursement to Salerno. [13] Intercity appealed according to the TRREB by-laws. The arbitration appeal panel issued its decision on October 5, 2022. It dismissed the appeal, determining that the process undertaken by the arbitration panel, as well as the conclusions reached, were reasonable.
[14] On January 26, 2023, Salerno brought a motion in the Superior Court action for an order dismissing the action as against it 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, R.R.O. 1990, Reg. 194. It submitted in the alternative that the claim was frivolous, vexatious or otherwise an abuse of process under r. 25.11, as the matter had already been determined by the TRREB arbitration.
[15] RE/MAX brought a companion motion for the same relief. When the motion was heard, Intercity had settled with RE/MAX such that only Salerno’s motion proceeded. . Smith v. Real Estate Council of Ontario
In Smith v. Real Estate Council of Ontario (Div Court, 2024) the Divisional Court dismissed a JR challenging a RECO (Real Estate Council of Ontario) Appeal Panel disciplinary decision. These review cases are few in the courts.
Here the court considers the appeal allegation that the RECO tribunal improperly barred the applicant's expert witness evidence:[23] First, the Discipline Panel did not err in applying the formal test for the admissibility of expert evidence when deciding whether to permit Ms. Smith to call Mr. Metherall or Mr. Lebow. Ms. Smith is correct that the formal rules of evidence do not apply at administrative hearings. Administrative tribunals can admit any relevant evidence. Administrative tribunals have the discretion to admit expert evidence that does not meet the strict test for admissibility articulated by the Supreme Court of Canada in R. v. Mohan, 1994 CanLII 80 (SCC), [1994] 2 SCR 9: Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, s. 15. The Mohan test focuses on (a) whether the expert opinion evidence is relevant, (b) whether the proposed expert is properly qualified to give the proffered opinion, (c) whether the expert evidence in inadmissible under any other rule of evidence, and (d) whether the evidence is necessary in the sense it is outside the expertise of the decision maker. While the Discipline Panel was not required to strictly apply the Mohan test, that does not mean it was an error for the Discipline Panel to do so. Administrative tribunals are not required to apply a lower standard. It is within their discretion to apply the four-part test for the admissibility of expert evidence from Mohan.
[24] Second, it was open to the Discipline Panel to decide, within its discretion, that the expert evidence was not admissible either because the opinions proffered were too close to the ultimate issue the Panel had to decide or because the expert evidence was not necessary.
[25] Ms. Smith relied on a recent decision in which this court found that the Licence Appeal Tribunal erred in excluding expert evidence: Connor Homes v. Director, 2021 ONSC 3195. In that case, the Licence Appeal Tribunal was considering a decision not to renew the Appellant’s residential care licence, which is required to operate a foster care home. The Appellant sought to adduce expert evidence on children’s mental health and fire safety. The Divisional Court held that the Licence Appeal Tribunal erred in finding the expert evidence was unnecessary. The court held that while the Licence Appeal Tribunal has expertise adjudicating licensing matters, it did not have expertise in children’s mental health or fire safety as it related to residential care facilities for children.
[26] The circumstances of this case are distinct from Connor Homes. Here, the Discipline Panel has expertise on the professional standards and practices of real estate agents in Ontario. The Discipline Panel had the reports from Mr. Metherall and Mr. Lebow and knew what evidence they would each give. Each opined that Ms. Smith acted appropriately and did not violate the Code of Ethics, which was the precise issue the Discipline Panel had to decide. And the proposed experts would have testified about issues that fall within the scope of the Discipline Panel’s expertise. It was, therefore, open to the Discipline Panel to decide that their evidence was not necessary.
[27] Finally, Ms. Smith argues that it was unfair to prevent her from calling expert evidence when a prosecution witness gave opinion evidence about how a prudent realtor should have acted in Ms. Smith’s circumstances. The Council called a Compliance Officer, Natalia Martinez, who gave evidence about what realtors should do if they are unable to confirm the taxes and local improvement charges through proper documentation, such as a tax bill. Ms. Martinez testified that the realtor should either leave that portion of the listing blank or, if the local real estate board requires the realtor to input a dollar value for the taxes, the realtor must include a disclaimer in the listing stating the realtor was not able to confirm the taxes. Ms. Smith argued that her experts should have been permitted to give evidence on the same issue in response.
[28] In my view, the Discipline Panel’s decision to exclude Ms. Smith’s experts was not unfair. Ms. Smith’s expert reports focused on whether she took reasonable steps to get accurate information about the taxes from her clients. Ultimately that was not the determinative issue. The Discipline Panel accepted Ms. Smith’s evidence about her efforts to confirm the property taxes. The Discipline Panel accepted that Ms. Smith asked her clients if the property was subject to a local improvement charge. Those efforts were set out in the agreed statement of facts.
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