In October 2005, a national company (the Buyer) purchased a commercial building in downtown Calgary from the defendant seller. The plaintiff, a real estate brokerage, claims to be entitled to a commission as a result of the sale.

The defendant had purchased the property approximately twenty years earlier. The property was attractive to the defendant because it was located next to a small office building owned by the national company that eventually became the Buyer. The defendant felt it was possible the national company would eventually want to purchase the subject property and an adjacent parkade.

As a result of other commercial real estate business dealings, the defendant had a long acquaintance with a couple of the Buyer’s employees. During the 1990s, there were ongoing discussions between the defendant and these employees with respect to the possible sale and purchase of the subject property by the Buyer.

In September 1999, the sale of the property to Buyer was further discussed, but those discussions did not materialize in a sale.

In early 2002, the defendant contacted the plaintiff brokerage. The defendant signed a three-month exclusive listing agreement on May 17, 2002. Under that agreement, the plaintiff became the exclusive agent to sell the property with a three per cent commission. It included wording to the effect of requiring a commission payable “should a Sale be made by whomsoever during the currency hereof, or as a result of negotiations or inquiries originating during such currency.”

The plaintiff brokerage received a number of offers for the property, but none were acceptable to the defendant. The Buyer was one of the interested parties and in fact, the listing agent identified the Buyer as a potential buyer early on in the listing.

In August 2002, the defendant entered into a second three-month exclusive listing agreement with the plaintiff brokerage. In November 2002, after receiving word of the Buyer’s renewed interest in the property, the listing agent met with the defendant and a Buyer’s representative, one of the individuals with whom the defendant had a long acquaintance. The meeting did not result in an offer to purchase the property.

The second listing agreement expired in December 2002, but the listing agent continued to market the property to the Buyer and others. In January 2003, the subject property’s former listing agent and a Buyer’s employee discussed the possibility of the Buyer acquiring the parkade on the other side of the subject property. The Buyer retained the plaintiff brokerage to act as its agent in the purchase of the parkade.

In January 2004, using the plaintiff brokerage as its representative, the Buyer purchased the parkade beside the subject property.

As the purchase of the parkade was finalized, there was increased activity with respect to the purchase of the subject property. The former listing agent continued to meet with Buyer representatives and the defendant seller throughout 2004 to present offers and counter-offers, though there was no listing agreement between the defendant and the plaintiff brokerage.

In April 2005, a different company made an offer to purchase the subject property and the defendant indicated to the former listing agent that he should see if this new offer would bring the Buyer back to the table. Nothing came of this communication.

This was the last time, prior to the eventual sale of the subject property on October 29, 2005, that the plaintiff brokerage’s agent was in touch with the Buyer or made any other efforts to sell the subject property.

A Buyer’s employee enlisted the assistance of another Buyer employee, who also had a long acquaintance with the defendant seller. In March and July 2005, Buyer representatives met directly with the defendant with respect to the subject property. They were no longer communicating through the former listing agent as they understood from the defendant that the listing agreement had expired.

The Buyer representatives brought an offer to purchase the subject property to their July 2005 meeting with the defendant. By the end of the meeting, the Buyer’s offer to purchase was accepted.

The subject of a commission for the plaintiff brokerage arose at the July meeting. According to the defendant, the Buyer asked him if there would be a commission payable. The defendant brought out the second listing agreement, and the parties concluded that it had expired. Though the defendant told him no commission was payable, the defendant also indicated he wanted some protection in respect of a commission nevertheless. In the event that a commission was payable, the defendant asked that the Buyer pay half of it, with which they agreed.

In November 2005, the plaintiff became aware the defendant had sold the subject property to the Buyer. The defendant and the plaintiff were not able to come to an agreement with respect to commission and the plaintiff brought the matter to court.

The plaintiff claimed entitlement to a commission on the basis of breach of contract (pursuant to the terms of both listing agreements it signed with the defendant) and on the basis of quantum meruit.

Since the sale to the Buyer occurred long after the second listing agreement expired, the plaintiff must establish that the sale occurred as a result of negotiations or inquiries originating during the listing agreement(s).

The defendant seller and the Buyer were not introduced to each other as a result of the defendant’s agreements with the plaintiff. Though the listing agent worked to negotiate a sale between the defendant and the plaintiff, the judge was not satisfied those efforts materially contributed to the deal that was eventually signed.

The plaintiff failed to establish entitlement to a commission under the terms of the first and second listing agreements. Alternatively, the plaintiff contends that it is entitled to a commission on the basis of quantum meruit, and relied on section 22(b) of the Real Estate Act.

Pursuant to s.22 of the Real Estate Act, an agent may bring an action for a commission only if a) there is a written agreement; or b) there is no written agreement but the person sought to be charged has employed the services of the broker and has effected a sale of lease of land as a result of the broker’s efforts. Quantum meruit is not available under s.22(b) where a written listing agreement has expired.

In a previous matter, the Court of Appeal found that in “a claim based on quantum meruit, the case law makes it clear that where there is an enforceable written contract quantum meruit can only be raised if the defendant has acted wrongfully.” There was clearly an enforceable written agreement between the parties, and as such quantum meruit is only available on proof of wrongful conduct by the defendant. The plaintiff did not establish that the defendant acted wrongfully.

There is a second reason why the claim in quantum meruit failed. The plaintiff and defendant agreed that to succeed, the plaintiff must prove the defendant was enriched as a result of the services provided to them by the plaintiff and that the plaintiff suffered a corresponding deprivation. The claim failed to establish that the defendant was enriched as a result of the plaintiff’s efforts.

The judge found that the plaintiff failed to prove entitlement to a commission under the listing agreements or in accordance with the principles of quantum meruit. The claim is dismissed.

If you are interested in the case reference, please contact RECA communications at: communications@reca.ca, 

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