Re/Max Royal (Jordan) inc. c. Landmark Properties Inc.						2015 QCCQ 5881
COURT OF QUEBEC
CANADA
PROVINCE OF QUEBEC
DISTRICT OF				MONTREAL
“Civil Division”
No:			500-22-198362-124
DATE:		June 23, 2015
______________________________________________________________________
BY	THE HONOURABLE				JEFFREY EDWARDS, J.C.Q.
______________________________________________________________________
RE/MAX ROYAL (JORDAN) INC.
Plaintiff
v.
LANDMARK PROPERTIES INC.
-and-
MARC-ANDRÉ LEGAULT
-and-
3348857 CANADA INC.
Defendants
______________________________________________________________________
JUDGMENT
______________________________________________________________________

 

I.             Introduction

 

[1]          Further to the conclusion of a promise to purchase which did not proceed to the execution of a deed of sale as a result of the exercise of a pre-existing but undisclosed right of first refusal in favour of a third party, the promising buyer’s real estate agency Re/Max Royal (Jordan) Inc. (“Re/Max”) sues the listing real estate agency, Landmark Properties Inc. (“Landmark”), one of its brokers Marc-André Legault and the promising seller 3348857 Canada Inc. (“334 Canada”) for damages in lieu of a lost commission of $64,673.44.

 

[2]          Defendants deny the claim and in particular, allege that the subsequent sale of the property, which was vacant land with a small abandoned warehouse structure, located in the borough of Saint-Laurent in the City of Montreal (“Property”), gave no rise to their respective liability.

 

II.           Questions in Issue

 

[3]          The Court is called upon to decide whether the Defendants, either individually or collectively, are liable:

 

1) for having prevented the sale to the promising buyer presented by Re/Max in accordance with Article 1503 of the Civil Code of Quebec (C.C.Q.), thereby eliminating the conditional nature of the obligation to pay a commission to Re/Max and making such obligation absolute;

 

2) on the basis that the actions of Re/Max were the effective cause of the sale of the Property to the third party;

 

3) on the basis that the respective omissions or conduct of 334 Canada and Landmark constituted civil faults under Article 1457 C.C.Q. with respect to Re/Max;

 

4) on the basis that the doctrine of unjust enrichment (Articles 1493 and 1494 C.C.Q.) applies.

 

III.         Context

 

1) The Property in Issue and the Creation of the Right of First Refusal

 

[4]          The Property was in the Aronovitch family since the 1950s. Bernard Aronovitch, the original owner, operated thereon an agricultural packaging business. Bernard Aronovitch married Goldie Lazarovitch and they had three surviving children, Martin, Joseph and Walter.

 

[5]          It was stated in testimony that Bernard Aronovitch put in his last will and testament a Right of First Refusal (“RFR”) in favour of his son Joseph regarding the Property. That was because Joseph worked with his father in the business and the idea was that, upon the father’s passing, Joseph may have wanted to continue the business. In 1982, Bernard Aronovitch passed away.

 

[6]          The Property was transferred to his wife, Goldie Lazarovitch. A similar RFR was put in Goldie Lazarovitch’s last will and testament.

 

[7]          In 1997, as part of a corporate and fiscal reorganization, the Property was sold to 334 Canada[1]. The sole shareholder of 334 Canada was Goldie Lazarovitch (hereafter “Goldie Aronovitch”)[2].

 

[8]          The RFR in favour of Joseph Aronovitch was maintained and incorporated in the deed of sale[3] to 334 Canada.

 

[9]          In 2006, Joseph Aronovitch was involved in a major automobile accident which caused serious cognitive impairment. In 2009, Joseph Aronovitch was declared unable to act and his wife Gale Aronovitch (née Gluz) and his son Don Aronovitch were named as his mandataries[4].

 

[10]       In 2011, Goldie Aronovitch passed away. It became necessary for the settlement of her estate to sell the Property. Her three sons, Martin, Joseph and Walter Aronovitch, were the named legal executors of the estate of Goldie Aronovitch.

 

[11]       The representative of 334 Canada at the hearing was Walter Aronovitch. He is a lawyer who resides in Toronto. He acknowledged and volunteered in his testimony that he had no knowledge and was unfamiliar with both the areas of real estate law and real estate practice, in general, but especially in Quebec. Walter Aronovitch testified that, while not obligated to do so in his opinion, he kept Gale Aronovitch informed of developments and he had understood that she was in agreement to also sell the Property.

 

[12]       Walter testified that he was fully aware of the existence of the RFR. However, he assumed that Joseph Aronovitch and his mandatary Gale Aronovitch would not exercise it.

 

2) The Brokerage Contract with Landmark, Offer to Purchase of Développement Pennino and the Brokerage Agreement Between 334 Canada and Re/Max

 

[13]       As the plan was to sell the Property, Walter Aronovitch sought out and retained Landmark to act as a real estate agency and Marc-André Legault to act as broker. Landmark is a company that carries out the business activities of a real estate developer, property manager and real estate agency. Mr. Legault was an acquaintance of a friend of Walter Aronovitch in Toronto.

 

[14]       Before the brokerage contract was signed, Walter Aronovitch and Mr. Legault never actually met, as they were located in different cities (Mr. Legault in Montreal, Walter Aronovitch in Toronto).

 

[15]       Contact was through telephone conversations and e-mail. The brokerage contract was prepared by Mr. Legault, sent to Walter Aronovitch by e-mail on or around December 14, 2011. It was signed by Walter Aronovitch on January 25, 2012. Mr. Legault testified that it was e-mailed back to him afterwards. Strangely, the brokerage contract filed as an exhibit[5] in Court is not actually signed by Mr. Legault but the pages were initialled by him.

 

[16]       In 2012, Mr. Legault had been a real estate agent for 2 years having been licensed since 2010.

 

[17]       At Clause 6.2 of the Brokerage Agreement, 334 Canada, acting through Walter Aronovitch, specifically declared that the Property was not the subject of a ''right of first refusal in favour of a third party''[6].

 

[18]       A commercial listing describing the features of the Property was prepared and circulated[7]. The agreed listing or asking price was set at $2,250,000.

 

[19]       Walter Aronovitch testified that he did not disclose to the real estate agency or broker the existence of the RFR in favour of Joseph Aronovitch. He felt that since Joseph Aronovitch had sold the business in 2001 and was, in any event, no longer in a physical and mental state to run any business following his accident, Joseph would not exercise the RFR. Walter Aronovitch also assumed that since he was keeping Gale Aronovitch aware of developments of the planned sale of the Property, she would have expressed her interest in the Property if she had one.

 

[20]       As we will see, that assumption was erroneous. Walter Aronovitch did not anticipate that Gale, with Joseph Aronovitch’s children, Don and Aviva, could be and in fact were interested in acquiring the Property.

 

[21]       Further to the circulation of the listing prepared by Landmark, there were several expressions of interest and offers in the Property[8]. One potential buyer was particularly interested, being Développement Pennino SEC (“Développement Pennino”) represented by Mario Sulpizio, broker with Re/Max.

 

[22]       Mr. Sulpizio testified at trial. He explained that he had spoken many times with Marc-André Legault of Landmark to obtain information and express his client Développement Pennino’s interest in acquiring the Property.

 

[23]       On February 16, 2012, an offer to purchase by a third party was made for $1,800,000[9]. That was not accepted. On February 22, 2012, another potential purchaser offered $2,150,000[10]. This also was not accepted.

 

[24]       Mr. Sulpizio was told by Mr. Legault that his client 334 Canada would accept $2,250,000. Mr. Sulpizio confirmed to Mr. Legault verbally that Développement Pennino would accept to pay $2,250,000.

 

[25]       Mr. Legault revised an offer prepared by Mr. Sulpizio and included the purchase price of $2,250,000 (“Pennino Offer”). On February 23, 2012, the Pennino Offer unsigned by Développement Pennino was “accepted” by the representative of 334 Canada, Walter Aronovitch. On February 24, 2012, Développement Pennino signed the Pennino Offer and the contract of promise to purchase was concluded. The brokers of the parties got the documents signed by their respective clients and sent the executed Pennino Offer to each other by fax.

 

[26]       Pursuant to Clause 7 of the Pennino Offer, 334 Canada agreed that upon the conclusion of the deed of sale, it would pay Re/Max a commission of 2.5% of the purchase price. The commission on $2,250,000 was $64,698 ($56,250, plus taxes). Clause 7 reads as follows:

 

“COMMISSION

 

In the event a real estate transaction is concluded with the client/3348857 Canada Inc. and/or its nominee, represented by Re/Max (Royal Jordan) Inc., to the Purchaser’s exoneration, the Vendor shall pay a commission of Two and a Half Percent (2.5%) of the purchase price. Said Commission to be due and payable at the execution of the Deed of Sale and shall be deducted from the proceeds of the sale and remitted directly to the above noted broker [Re/Max Royal (Jordan) Inc.], as per the above-mentioned amount.”

 

[27]       The clause is unusual in that it creates a direct contractual obligation of the owner-seller to pay a commission to the buyer’s real estate agency and it is not generally found in a promise to purchase. The common attorney acting for all the defendants in the case acknowledged that it constituted a stipulation for another (Article 1444 C.C.Q.) in favour of Re/Max[11].

 

3) Exercise of the Right of First Refusal Based Upon the Pennino Offer and Failure to Sell to Développement Pennino

 

[28]       On February 27, 2012, Mr. Legault contacted Gale Aronovitch to request keys for access to the Property which she apparently had in her possession. From the ensuing correspondence, it does not appear that Gale had been kept aware of developments about the sale of the Property. She took the position that the Pennino Offer should not have been accepted given the existence of the RFR of Joseph Aronovitch. The attorney of Joseph Aronovitch immediately wrote to Walter Aronovitch and Martin Aronovitch to advise as follows[12]:

 

“As you are also aware in date of October 31st, 1997 your late mother reiterated that Joseph Aronovitch had a Right of First Refusal to Purchase the aforesaid “Thimen’s Property” when she transferred the property to 3348857 Canada Inc., the said Deed having been duly executed and registered.

 

In full knowledge of the foregoing and in full wilful disregard of same you apparently accepted an Offer to Purchase from Pennino Development Inc. in the amount of $2,250,000.00.

 

On behalf of Joe Aronovitch please be advised that he exercises for himself and/or a person designated by him the aforementioned Right of First Refusal and will therefore Purchase the “Thimen’s Property” upon the same terms and conditions set forth in the Pennino Development Inc. Offer to Purchase in the amount of $2,250,000.00.

 

In view of the foregoing you are to IMMEDIATELY advise Pennino Development Inc. and its Real Estate Agents that your acceptance is rescinded effective IMMEDIATELY and you are to provide me with a copy of same.”

 

[Emphasis added]

 

[29]       On February 29, 2012, Walter Aronovitch advised Mr. Legault that there was a litigation issue and to stand by for further instructions[13]. On March 2, 2012, Mr. Legault advised Mr. Sulpizio of Re/Max of the “discovery” of the RFR and its exercise[14].

 

[30]       According to Mr. Legault’s letter, prior to the notice of the attorney of Joseph Aronovitch, “Walter had no idea, and had never been advised prior thereto, that in fact the RFR had been granted by 3348857 to Joseph”. This contradicts the version of Walter Aronovitch that he was always aware of the existence of the RFR. Landmark took the position on behalf of 334 Canada that 334 Canada “had no legal entitlement to proceed with a sale transaction of the Property to [Développement] Pennino”.

 

[31]       On March 5, 2012, Développement Pennino took the position that it had a valid and binding promise to purchase and that the RFR was not opposable to it[15]. Développement Pennino insisted on closing the sale transaction, and deposited the full purchase price with the notary[16]. Développement Pennino threatened legal proceedings “en passation de titre” if 334 Canada did not present itself at the notary’s office for signature of the deed of sale on March 6, 2012[17]. That date was then changed to March 7, 2012.

 

[32]       In response, 334 Canada agreed to proceed to the signature of the deed of sale with Développement Pennino, despite the RFR.

 

[33]       On March 6, 2012, 334 Canada prepared a power of attorney authorizing Mr. Legault to sign the deed of sale on its behalf[18]. 334 Canada also prepared the accessory documentation for the notary, including the Letter of Direction to the notary regarding payments[19].

 

[34]       However, also on March 6, 2012, the attorney of Joseph Aronovitch sent by telecopy a letter to Développement Pennino, its attorney, the notary, Landmark and 334 Canada, threatening to sue each of them, if they proceeded to the sale, for damages in excess of $2,500,000.00, plus punitive damages pursuant to Article 1397 C.C.Q.[20] and to avail itself of all other legal rights to seize the Property, affect title, and request ultimately the cancellation of the sale.

 

[35]       On March 7, 2015, Mr. Legault presented himself at the notary’s office to sign the deed of sale on behalf of 334 Canada. However, the representative of Développement Pennino, Mr. Paolo Pennino, did not do so. The subsequent exchange of e-mails between the attorneys of 334 Canada and Développement Pennino, as well as the testimony of Mr. Paolo Pennino before the Court, show that Mr. Pennino, in light of the threats of litigation and seizure, had lost his nerve to proceed to the sale.

 

[36]       Mr. Pennino was concerned that if he was to proceed to the sale, he would be buying, along with the Property, a protracted law suit and title problems regarding the Property, including seizure of the land and the registration of rights against the title[21], in particular a registration of an advanced registration (“préinscription”)[22].

 

[37]       As of that date, 334 Canada understood that Développement Pennino would not proceed to the sale.

 

[38]       That position was formally confirmed on March 14, 2012, when Développement Pennino’s attorney wrote to 334 Canada, its attorneys and Landmark, advising that the letter of March 6, 2012 from the attorney of Joseph Aronovitch “indicates that the title of the Property is not free and clear given a pending right of first refusal in favour of a third party”[23]. Accordingly, pursuant to the terms of the due diligence review under the Pennino Offer, Développement Pennino’s attorney declared the Pennino Offer to be null and void.

 

4) Sale to Aronovitch Investments Inc. Based Upon the Pennino Offer and the Division of Re/Max’s Share of Commission Under the Pennino Offer Between 334 Canada and Landmark

 

[39]       Before that date, namely on March 9, 2012, the attorneys of 334 Canada wrote to the attorneys of Joseph Aronovitch offering to proceed to the sale of the Property to Joseph Aronovitch on the basis and in accordance with the same terms of the promise to purchase previously concluded with Développement Pennino, namely the Pennino Offer[24]. The attorney of 334 Canada wrote as follows:

 

“We represent 3348857 Canada Inc. We understand that your client, Mr. Joseph Aronovitch, purports to benefit from a right of first refusal in respect of the Thimens Property and has objected to the pending sale to be concluded between our client and Pennino Development Inc. (the “Offeror”), pursuant to an offer to purchase dated February 24, 2012 (the “Offer”), on the grounds that your client intends to exercise the said right of first refusal.

 

While our client doesn’t acknowledge the legitimacy of your client’s claim to the Thimens Property, it is nonetheless, given the circumstances, prepared to offer your client the opportunity to exercise the alleged right of first refusal. Notwithstanding the foregoing, and given the present state of circumstances, our client has instructed us to advise Mr. Aronovitch, through you as his attorney, that your client is being offered the opportunity of exercising the right of first refusal by completing the sale transaction in accordance with the terms of the Offer, which terms provide for a sale price of $2,250,000.00, plus applicable taxes, subject to ordinary adjustments.

 

In such connection, we have attached herewith a copy of the Offer to Purchase as well as a draft Deed of Sale, which the Offeror declared itself ready, willing and able to sign yesterday.”

 

[Emphasis added]

 

[40]       As the above text indicates, the executed Pennino Offer, signed and initialed by Mr. Pennino, including the commission due to Re/Max and notice provisions to Re/Max, along with the draft deed of sale based on the Pennino Offer, were attached to the letter of the attorney of 334 Canada.

 

[41]       The Pennino draft deed of sale maintained the effect of Clause 7 of the Pennino Offer by declaring as binding the terms and conditions of the Pennino Offer, except to the extent that they were modified by the draft deed, as follows:

 

“DECLARATION AS TO PRELIMINARY CONTRACT

 

This sale is made in execution of the pre-contract signed by the vendor the twenty third day of February two thousand and twelve (2012) and accepted by the Purchaser the twenty fourth day of February two thousand and twelve (2012). Except for the case of conflict, the parties confirm the agreements therein contained but not reproduced herein”.[25]

 

[Emphasis added]

 

[42]       Although both 334 Canada and the representatives of Joseph Aronovitch agreed that the basis of the transaction of sale was the Pennino Offer, there continued to be protracted negotiations on accessory issues.

 

[43]       At one point, an offer came in to Landmark for an increased price of $2,500,000. On May 1, 2012, 334 Canada then required that Joseph Aronovitch’s representatives increase the purchase price to that amount[26]. On May 3, 2012, the attorney for Joseph Aronovitch declined as follows[27]:

 

“The Offer contained in your said letter is refused due to the fact that my client is already the beneficiary of a duly accepted Offer in the amount of $2,250,000.00 and, accordingly, your client is bound to sell the Thimens property to my client who is prepared to sign a Deed of Sale that would reflect same and subject to the reimbursement of all expenses related to the decontamination of the said property in conformity with the stipulations and warranties of the original Pennino Offer in the aforementioned amount.”

 

[Emphasis added]

 

[44]       It is clear that both 334 Canada and the representatives of Joseph Aronovitch took the position that the sale to Joseph Aronovitch (in fact, a company nominated by his mandataries, Aronovitch Investments Inc.) had to be based on the terms of the accepted Pennino Offer.

 

[45]       However, discussions even with respect to the interpretation of those terms became contentious between 334 Canada and Joseph Aronovitch’s representatives.

 

[46]       On May 7, 2012, this gave rise to the institution of a motion in “passation de titre” by Joseph Aronovitch’s representatives against 334 Canada[28]. It is relevant to refer to several of the paragraphs of the said motion:

 

19. Or, nonobstant les droits de Joseph, les codéfendeurs, Walter et Martin, ont volontairement et systématiquement fait abstraction du droit de premier refus de leur frère, Joseph, en ne collaborant d’aucune manière avec les représentants légaux de Joseph;

 

30. Par lettre datée du 9 mars 2012, [334] Canada, agissant par l’entremise de son procureur, Me Arthur Wechsler, a accepté de vendre l’Immeuble au mis en cause, Joseph, aux mêmes termes et conditions que celles apparaissant à l’offre d’achat de Pennino (P-10), conformément à son droit de premier refus; le tout tel qu’il appert d’une copie d’une lettre de Me Arthur Wechsler datée du 9 mars 2012 à laquelle était d’ailleurs joint une copie de l’offre de Pennino, produite en liasse avec ses pièces jointes sous la cote P-14;

 

31. Or, bien que la lettre de Me Wechsler fait spécifiquement référence au fait que le droit de premier refus exercé par Joseph était directement relié aux termes et conditions stipulés à l’offre de Pennino (P-10), celle-ci ignore totalement ladite offre en imposant notamment le notaire du vendeur, des délais pour la signature de l’acte de vente déraisonnable et surtout un acte de vente qui ne reprend aucune des garanties que Canada a données au groupe Pennino; le tout encore afin de spolier l’exercice du droit de premier refus de Joseph;

 

36. Or, de nouveau, tel qu’il appert de la lettre (P-17), les termes et conditions qui y sont stipulés ne concordent pas avec celles stipulées dans l’offre d’achat (P-10), notamment surtout en ce que le projet d’acte de vente présenté est muet quant aux garanties et représentations que Canada a données au groupe Pennino;

 

38. À cet égard, la société demanderesse, [Aronovitch] Investissement [inc.], a accepté d’être liée par tous et chacun des termes et conditions stipulés dans l’offre de Pennino (P - 10) à titre de cessionnaire des droits de Joseph;

 

39. C’est dans ce contexte que le 5 avril 2012, suite aux commentaires du notaire Litvack, Me Ovadia [avocat de Joseph Aronovitch] a avisé Me Gaon [avocat de 334 Canada] que l’acte de vente soumis par Me Wechsler le 19 mars 2012 n’était notamment pas conforme aux représentations et garanties décrites à l’article 4 de l’offre (P-10); le tout tel qu’il appert d’une lettre datée du 5 avril 2012 transmise à Me Gaon par Me Ovadia produite sous la cote P-19;

 

60. À cet égard, Investissement a refusé les nouvelles conditions imposées par Canada dans la lettre (P-30) en lui rappelant qu’elle est déjà bénéficiaire de l’offre d’achat (P-10) pour la somme de 2 250 000.00 $ et qu’elle est disposée à signer un acte de vente reflétant les termes et conditions qui y sont stipulés, sujet au remboursement des frais de décontamination de l’Immeuble, conformément aux garanties de la défenderesse [334 Canada] contenues dans ladite offre; le tout tel qu’il appert d’une lettre de Me Daniel Ovadia datée du 3 mai 2012 adressée à Michael Gaon produite au soutien des présentes sous la cote P-31;

 

[Emphasis added]

 

[47]       According to the testimony of Mr. Legault and that of Mr. Sulpizio of Re/Max, during the months of March, April and May 2012, it is clear that 334 Canada always strongly encouraged Développement Pennino and Mr. Sulpizio to maintain their interest in the Property and also negotiated as to whether Développement Pennino would agree to increase the purchase price to $2,500,000.

 

[48]       As appears from the correspondence filed[29], 334 Canada wanted to convey the impression that the Pennino Offer was still alive so as to maintain pressure on Joseph Aronovitch’s representatives in order that the terms of the Pennino Offer be used as the basis for the transaction, in default of which the position conveyed to Joseph Aronovitch’s representatives was that Développement Pennino continued to be ready, willing and even bound to do so. This tactic and use of the Pennino Offer was employed by 334 Canada and was the reason for the “conditional” request to Développement Pennino to “increase” the purchase price under a revised Pennino offer to $2,500,000[30].

 

[49]       On June 28, 2012, further to the exercise of the RFR and legal proceedings taken by the representatives of Joseph Aronovitch, a deed of sale was entered into by which 334 Canada sold the Property to a company designated by Joseph Aronovitch, namely Aronovitch Investments Inc[31].

 

[50]       The deed of sale is expressly based upon the terms of the accepted Pennino Offer which the parties declared as being binding upon them:

 

“This sale is made in accordance with the terms and conditions of an Offer to purchase dated February 24, 2012 between the Vendor and Développement Pennino S.E.C., which the parties hereby recognize as being binding upon them, subject however to the terms and conditions hereof, which terms and conditions supersede those of the said Offer to the extent of any conflict or inconsistency therewith.”[32]

 

Although the commission Clause 7 in favour of Re/Max was no longer expressly maintained in the deed of sale, it was not expressly removed either. To the extent only that such clause was inconsistent with the terms and conditions of the executed Deed of Sale, it would be excluded by interpretation.

 

[51]       Upon the execution of the deed of sale, Landmark claimed and was paid an increased amount for its commission. Under the terms of its brokerage contract, Landmark was to receive a commission of 2.5% when sharing the commission payment with another real estate agency[33]. This was the agreement under the Pennino Offer in that the commission was then to be shared with Re/Max which was also to receive a commission of 2.5% of the purchase price.

 

[52]       However, since there was no longer another real estate agency involved representing the buyer Aronovitch Investments Inc., 334 Canada and Landmark jointly took the position that another clause of the brokerage contract applied. Under that clause, the commission payable to Landmark was increased from 2.5% to 4%[34]. On the same day as the closing, June 28, 2012, Landmark issued an invoice for $103,477.50 ($90,000, plus taxes) and was paid from the purchase price.

 

[53]       As for 334 Canada,  in accordance with that joint position, it paid less than the commission owed under the Pennino Offer as the total combined commissions were reduced to one commission and therefore it went from 5% to 4% of the purchase price. 334 Canada’s payment of commission was reduced by $25,869.38 ($22,500 plus taxes (GST: $1,125; QST: $2,244.38)). Therefore, both 334 Canada and Landmark benefited financially by excluding and not paying any commission to Re/Max.

 

IV.        Analysis and Decision

 

[54]       Based upon the facts as appears from the evidence, the Court will now review the questions in issue to determine whether any of the Defendants are liable to Re/Max and if so, for what amount.

 

[55]       The liability of 334 Canada and Landmark will be examined under the heading of each question. With regard to the Defendant Marc-André Legault, as he was acting as a mandatary of Landmark, his liability will be examined at the same time as that of Landmark.

 

1) Whether There Was Prevention of the Sale in Accordance with Article 1503 C.C.Q. Rendering the Obligation to Pay the Commission Absolute

 

[56]       This alleged ground of liability, as presented by counsel of Re/Max, applies only to 334 Canada. It was 334 Canada that owed an obligation to pay Re/Max as a result of Clause 7 of the accepted Pennino Offer. So the question will not be discussed with respect to Landmark.

 

[57]       Re/Max submits that 334 Canada did not act in accordance with its obligation to sign the deed of sale under the accepted Pennino Offer. This submission of fact is however not supported by the evidence. On the contrary, according to the evidence, even after (a) Joseph Aronovitch’s representatives exercised his RFR; (b) 334 Canada Canada was summoned by demand letter to rescind the acceptance of the accepted Pennino Offer, to cease and desist from entering into the deed of sale with Développement Pennino; and (c) despite the threat of the representatives of Joseph Aronovitch to claim damages for the breach of the RFR, the evidence shows that 334 took active measures to proceed with the sale to Développement Pennino. In particular, 334 Canada prepared and executed a power of attorney authorizing Mr. Legault to sign the deed of sale at the notary’s office, delivered it to Mr. Legault, had directions of payment prepared and sent to the notary and finally Mr. Legault did in fact attend at the notary’s office on March 7, 2012 in order to sign the deed of sale.

 

[58]       Instead, it was Développement Pennino, acting through Mr. Pennino, that decided, as a result of the threats of the representatives of Joseph Aronovitch of legal proceedings, seizures, registration of rights against title of the Property, to not proceed with the sale.

 

[59]       It is true that the reason for these threats was the false declaration and omission of 334 Canada to declare the existence of the RFR. It is also true that these threats, the existence and exercise of the RFR, and a future advance inscription or registration (prior notice) of a claim against title after the sale had the potential to tie up title of the Property after the sale. The position of Développement Pennino is contradictory in that regard. On one hand, it declared itself satisfied with its title search in full knowledge of the existence of the exercise of the RFR[35]. On the other hand, it declared that the exercise of the RFR gave rise to a title issue that it was not prepared to accept[36].

 

[60]       Under the due diligence provisions of the accepted Pennino Offer, Développement Pennino did have discretion to refuse to proceed and it exercised that discretion. That decision was never contested by 334 Canada.

 

[61]       We will examine later if 334 Canada committed a fault in declaring to its broker that the Property was not subject to a RFR as well as failing to disclose to its broker the existence of the RFR and the legal consequences thereof with respect to Re/Max.

 

[62]       The fact remains that 334 Canada gave Développement Pennino the opportunity to acquire title to the Property. Had it taken that opportunity, it would have acquired valid title and the various recourses of Joseph Aronovitch would have constituted only personal actions for damages in accordance with Article 1397 C.C.Q.

 

[63]       The rule is clear that with regard to registration of real rights, the law accords priority to the first person who registers title on the public registry, even with knowledge of a pre-existing right of a third party[37]. However, the legal proceedings could have been long, protracted and costly and included, for a certain indeterminate period at least, during litigation, registration of rights against title.

 

[64]       It was a business decision by Mr. Pennino to not acquire such a conflict along with the Property since he had in no way been informed of these problems from the outset.

 

[65]       But based upon the facts, the Court cannot conclude that 334 Canada prevented, by its conduct, the fulfilling of the prerequisite condition giving rise to the payment of the Re/Max’s commission, namely the sale of the Property.

 

2) Whether Re/Max was the Effective Cause of the Sale to Joseph Aronovitch’s family

 

[66]       Counsel for Re/Max submits that the theory of the “effective cause of the sale”, known to real estate brokerage law in Quebec and in Common Law, applies in the circumstances making 334 Canada liable for the commission which Re/Max was deprived of as a result of the exercise of the RFR by the representatives of Joseph Aronovitch. This theory is an equitable remedy that the jurisprudence has sanctioned as a variant of the violation of the duty of good faith (Articles 6, 7 and 1375 C.C.Q.). It has been used primarily when the owner-seller of a property has acted disloyally in attempting to avoid paying the commission due to his own broker, notably when the owner-seller goes behind the back of his broker and concludes a sale with a person introduced by that broker but after the expiry of the term of the brokerage contract.

 

[67]       Maître Claude G. Leduc, in Le courtage immobilier: aspects civils et déontologiques, updates and augments the book of Le courtage immobilier au Québec[38] of Henri Richard, now Judge of the Court of Quebec. Maître Leduc, as did Judge Richard, summarizes the general legal theory of effective cause of the sale as follows:

 

«Lorsqu’une agence ou un courtier met en relation son client-inscripteur avec un promettant-acheteur et qu’une vente intervient, le Conseil privé conclut que cette agence ou ce courtier possède le droit à une rétribution puisqu’il représente la «cause efficiente» de cette vente, quoiqu’elle se réalise sans sa connaissance.»[39]

 

[68]       The Court will now examine the application of this theory to recourses against the owner-seller 334 Canada and the listing agency Landmark.

 

a) Claim Against Owner-Seller 334 Canada

 

[69]       Under this theory of liability, an initial condition of the jurisprudence was that the ultimate sale of the property be to the party who was introduced or brought into relation with the seller by the claiming broker. In the case at bar, the sale was ultimately concluded with an entity designated by the representatives of Joseph Aronovitch, namely Aronovitch Investments Inc. Re/Max was in no way responsible for presenting that entity to 334 Canada.

 

[70]       However, counsel for Re/Max relies on the case of Fiducie Prêt et Revenu v. Marché populaire de Beauport Inc.[40] to support its position. In that case, Pidgeon, J. held that the listing broker was entitled to claim his commission from his client, the owner-seller, when the broker had presented an offer that was accepted but did not lead to a sale as a result of the intervening cause of an exercise of an undisclosed RFR by a third party. Justice Pidgeon concluded that the listing broker was the effective cause of the sale to the third party since the work involved by the listing broker to obtain the accepted offer triggered the exercise of the RFR and the subsequent sale to the beneficiary of the RFR was nonetheless based upon the same terms and conditions of the said offer.

 

i) Clause 7 of the Pennino Offer Constitutes a Stipulation for Another in Favour of Re/Max and the Creation of a Contractual Brokerage Agreement Between 334 Canada and Landmark

 

[71]       There is no doubt that such a recourse would have been available to Landmark had 334 Canada not paid it a commission. But Landmark was paid a commission.

 

[72]       The attorney for Landmark and 334 Canada submits that this theory of liability can only be invoked by the listing agency and not the buyer’s agency. In normal circumstances, the only real estate agency having a contract or brokerage agreement with the owner-seller is the listing agency.

 

[73]       However, in the present case, the circumstances are different and unusual. In the promise to purchase, namely the accepted Pennino Offer, the owner-seller agreed to a clause by which it accepted to assume direct contractual responsibility to pay the promising buyer’s agency a commission of 2.5% of the purchase price in the event that a sale was executed on the basis of the said offer. It is worthwhile to review the clause which reads as follows:

 

“COMMISSION

 

In the event a real estate transaction is concluded with the client/3348857 Canada Inc. and/or its nominee, represented by Re/Max (Royal Jordan) Inc., to the Purchaser’s exoneration, the Vendor shall pay a commission of Two and a Half Percent (2.5%) of the purchase price. Said Commission to be due and payable at the execution of the Deed of Sale and shall be deducted from the proceeds of the sale and remitted directly to the above noted broker [Re/Max Royal (Jordan) Inc.], as per the above-mentioned amount.”

 

[74]       This clause was a stipulation for another in favour of Re/Max pursuant to Article 1444 C.C.Q[41]. This clause was drafted with the direct participation and at the request of Re/Max. The Pennino Offer, including this clause, was signed by 334 Canada. It was then communicated by fax to Re/Max. Then the Pennino Offer was signed by Développement Pennino. The duly completed Pennino Offer was then sent by Re/Max to Landmark, which then sent it to 334 Canada.

 

[75]       In those circumstances, there can be no doubt that the beneficiary of the stipulation, Re/Max, was fully aware of its existence. In his testimony, in cross-examination, Mr. Sulpizio in fact confirmed that he was both aware of the existence of Clause 7 at the time and that he was in agreement with it. Also Re/Max advised both the stipulator (Développement Pennino) and the promisor of its intention or will to accept the stipulation in its favour by sending or communicating the Pennino Offer containing such stipulation to both 334 Canada and Développement Pennino[42]. It has been long settled and established in Quebec law that such acceptance can be tacit[43]. In the circumstances, the Court concludes that acceptance of the stipulation by Re/Max occurred simultaneous to the respective communication to the parties of the mutually executed Pennino Offer. The result was that the stipulation in favour of Re/Max then became irrevocable.

 

[76]       Clause 7 created a contractual brokerage agreement between 334 Canada and Re/Max.

 

[77]       It is therefore not necessary for the Court to decide whether a buyer’s real estate agency which has no brokerage agreement with the owner-seller can invoke the legal theory of effective cause of the sale to claim a commission against the owner-seller.

 

[78]       Instead, the Court must decide whether, under the brokerage agreement encompassed by that clause, Re/Max should, in virtue of the legal theory of the effective cause of the sale, be considered the effective cause of the sale to Aronovitch Investments Inc., in light of the non-disclosure and exercise of the RFR and the use of the Pennino Offer as the basis for the transaction and sale to Aronovitch Investments Inc.

 

ii) Application of the Effective Cause of the Sale to the Buyer’s Broker Having a Contractual Brokerage Agreement with the Seller-Owner

 

[79]       By the inclusion of that clause, 334 Canada and Landmark departed from the terms contained in their brokerage contract between them. This contract specified that the real estate commission was to be paid exclusively to Landmark[44]. In the event of the participation of a buyer’s agency, it provided that Landmark would be sharing equally (2.5% each) the total commission (5%) with the buyer’s broker[45]. Under the terms of the Pennino Offer, 334 Canada had now agreed to be contractually directly bound to pay to Re/Max a commission of 2.5% of the purchase price if the sale proceeded.

 

[80]       In so doing, 334 Canada put both brokers on a level of equality and recognized that, subject to the sale being concluded on the basis of the Pennino Offer, Re/Max was the effective cause of the sale and earned its commission. Under the Pennino Offer, 334 Canada became bound to both brokers.

 

[81]       The legal basis of the recognition of the application of the legal theory of the effective cause of the sale in favour of a broker, when the transaction with the promising buyer 1) aborts or does not occur because the owner-seller forgot or failed to disclose an existing RFR and 2) the accepted offer then forms the basis of the transaction with the beneficiary of the RFR, is the case of Fiducie Prêt et Revenu[46].

 

[82]       That judgment was accepted by counsel of all parties as good law. The doctrine is also of that view[47].

 

[83]       It therefore appears important to refer to the reasons in the judgment of Justice Pidgeon, J.C.S.:

 

« [p. 3] Il n’y a pas eu de suite à cette contre-offre d’achat dûment acceptée, puisqu’en date du 30 octobre 1984, la défenderesse avait accordé au « GROUPE DES ÉPICIERS UNIS MÉTRO-RICHELIEU INC. » une option d’achat qui contenait entre autre les clauses suivantes que le Tribunal juge à propos ici de reproduire. …

 

[p. 4] Ce n’est que le 11 décembre 1986, que le président de la défenderesse remit au représentant de la demanderesse, le contrat qu’il avait signé le 30 octobre 1984.

 

À la lecture de ce contrat, les représentations de la demanderesse constatèrent que MARCHÉ POPULAIRE DE BEAUPORT INC. avait accordé à MÉTRO-RICHELIEU une option d’achat sur le commerce en question.

 

[p. 5] Suite à la réception de la lettre produite au dossier de la Cour sous la cote P-4, MÉTRO RICHELIEU décida de se porter acquéreur du commerce de la défenderesse aux mêmes conditions et prix que celles énoncées dans l’offre d’achat de RICHARD GOSSELIN. Suite à la conclusion de cette transaction, la défenderesse refuse de payer la commission de la demanderesse …

 

[p. 6] Le Tribunal ne peut que référer les parties au contrat du 30 octobre 1984 intervenu entre la défenderesse et MÉTRO. Selon ce contrat, MÉTRO pouvait acquérir le commerce de la défenderesse selon les termes et conditions prévus à l’offre de RICHARD GOSSELIN et dans le cas présent c’est ce que MÉTRO a fait.

 

N’eut été le travail des représentants de la demanderesse, la défenderesse aurait-elle pu vendre son commerce aux conditions de l’offre de RICHARD GOSSELIN? Le Tribunal croit que c’est la crainte de voir le commerce vendu à RICHARD GOSSELIN, compagnie en voie de formation, et le travail exécuté par les représentants de la demanderesse auprès de RICHARD GOSSELIN qui a amené MÉTRO-RICHELIEU à acquérir ledit commerce de la défenderesse.

 

[p. 7] La preuve a démontré que la défenderesse était satisfaite de l’offre d’achat soumise par l’entremise des préposés de la demanderesse, et que son représentant avait oublié le contrat [de premier refus] du 30 octobre 1984.

 

Le 11 décembre 1986, réalisant l’erreur qu’il avait commise, le président de la défenderesse s’empressa de soumettre l’offre qu’il avait reçue de RICHARD GOSSELIN à MÉTRO-RICHELIEU en leur demandant de lui donner l’autorisation de conclure la transaction vers le 20 janvier 1987. Il est important de noter ici que l’offre d’achat reçue de RICHARD GOSSELIN fut transmise à MÉTRO-RICHELIEU en même temps que la lettre du 11 décembre 1986.

 

[p. 7 et 8] Le Tribunal en vient à la conclusion que c’est le travail des préposés de la demanderesse qui est la cause efficiente de la vente et il ne voit pas comment on pourrait en arriver à une conclusion différente. La transaction avec MÉTRO-RICHELIEU s’est conclue parce que la défenderesse avait reçu une offre de RICHARD GOSSELIN.

 

[p. 11] Le Tribunal a conclu que c’est grâce au travail de la demanderesse que la vente à MÉTRO s’est conclue.

 

… la Cour a retenu de la preuve que c’est le vendeur qui, suite à une erreur de sa part, a été dans l’impossibilité de concrétiser la vente. »

 

[Emphasis added]

 

[84]       The Pennino Offer was the result of the joint work of Landmark and Re/Max. As stated, had 334 Canada refused to pay Landmark its commission, there is no doubt that Landmark would have been entitled to obtain payment, regardless of any other ground, on the basis of being one of the effective causes of the sale.

 

[85]       334 Canada had a direct contractual brokerage obligation under the terms of the Pennino Offer to pay Re/Max its commission. By accepting the Pennino Offer and Clause 7, 334 Canada acknowledged that it was satisfied with these conditions and that Re/Max was the effective cause of the sale under its terms. As a result of the exercise of the RFR, the sale to Développement Pennino did not proceed but the sale on the explicit and express same terms as those of the Pennino Offer did proceed with Aronovitch Investments Inc. It was as a result of the omission of 334 Canada to disclose the RFR that Re/Max was deprived of its commission due under the Pennino Offer. Under the reasoning of Fiducie Prêt et Revenu, Re/Max was in those circumstances the effective cause of the sale.

 

[86]       To paraphrase Justice Pidgeon, but for the work of Re/Max with Développement Pennino, would 334 Canada have sold the Property on the terms and conditions of the Pennino Offer? The answer is clearly no.

 

[87]       The terms and conditions of the Pennino Offer were the only thing that both 334 Canada and Joseph Aronovitch’s representatives could agree on. And that was only the case because Développement Pennino stood ready to proceed with the sale, if Aronovitch Investments Inc. defaulted on those terms and conditions.

 

[88]       Those terms and conditions, including the price, were the result of the work and contacts of Re/Max.

 

[89]       It is precisely because those terms and conditions were real and verifiable with Développement Pennino being ready and willing to proceed that they were also acceptable to Joseph Aronovitch’s representatives.

 

[90]       In light of the difficulties of 334 Canada and Aronovitch Investments Inc. to close their sale even on the basis of known terms and conditions of the Pennino Offer, 334 Canada would certainly not have been able to conclude the sale without them. 334 Canada benefited from Re/Max’s work as the real estate agency which found the promising buyer who agreed to the terms and conditions of the eventual sale and who triggered the eventual sale.

 

[91]       But there is another reason to apply here the rule decided in Fiducie Prêt et Revenu, that was less present in the facts of that case.

 

[92]       It is not only that the work, contacts and execution of the Pennino Offer by Re/Max triggered and expressly formed the basis of the subsequent transaction entered into between 334 Canada and the representatives of Joseph Aronovitch.

 

[93]       The relations between 334 Canada and the representatives of Joseph Aronovitch appear to have been so contentious and antagonistic that had it not been for (a) the continued conduct and actions of Re/Max and Mr. Sulpizio after the events of March 7, 2012 to nonetheless informally keep alive the Pennino Offer and (b) the confirmation that Développement Pennino remained ready to proceed to the sale in the event of default of Joseph Aronovitch’s representatives to do so, it is improbable that 334 Canada and Joseph Aronovitch’s representatives would have been able to conclude their transaction, as they did on June 28, 2012.

 

[94]       Furthermore, the legal theory of effective cause of the sale is an equitable remedy based upon good faith.

 

[95]       Since 334 Canada concluded the sale on the basis of the terms and conditions of the Pennino Offer, it had to respect all of those terms, including Clause 7 by which it had agreed to pay Re/Max a commission of 2.5% of the sale price. In choosing to set aside or ignore that term and condition but to follow and benefit from all other terms and conditions of the Pennino Offer, 334 Canada acted in bad faith. 334 Canada also had a financial incentive to do so. Its total commission payable was reduced from 5% to 4% of the sale price.

 

[96]       The Court concludes that Re/Max was the effective cause of the sale. It is entitled to have 334 Canada pay its agreed commission of 2.5% of the purchase price, namely $64,698 ($56,250, plus taxes).

 

b) Claim against Landmark

 

[97]       Counsel for Re/Max also claims payment of damages in lieu of commission against Landmark on the basis of the legal theory of “effective cause of the sale”.

 

[98]       However, in light of the definition of this legal theory as enunciated by Justice Richard, J.C.Q. and Me Leduc above, and its interpretation by the Courts, its application to a claim by one broker/agency against another is problematic. Counsel for Re/Max referred the Court to passages of the book of Justice Richard in that regard[48]. However, with respect, these passages do not appear to support Re/Max’s claim.

 

[99]       These passages refer to a special regulatory process involving dispute resolution regarding the division of commission payments between the listing broker and the promising buyer’s broker, when one of them is not a member of an accredited Real Estate Chamber. That would not apply to the case at bar. Each of the brokers involved here are members of the local real estate chamber.

 

[100]    Barring proof of a breach of a contractual obligation owed by Landmark to Re/Max in accordance with the general rules of Quebec civil law, in order to obtain a condemnation of Landmark, the promising buyer’s broker/agency would have to establish either the commission of an extra-contractual fault or the application of another source of obligation[49]. The Court will examine below if either of these legal theories apply in the present circumstances.

 

3) Whether the Respective Actions and Conduct of 334 Canada and Landmark Constitute a Civil Fault Under Article 1457 C.C.Q. with respect to Re/Max

 

a) Conduct and Actions of 334 Canada

 

[101]    We have already examined the conduct and actions of 334 Canada with respect to its contractual liability to Re/Max on the basis of it being the effective cause of the sale. As we have concluded that there was a contractual relationship between 334 Canada and Re/Max and contractual liability on behalf of 334 Canada in that regard, it is not necessary to examine the liability of 334 Canada on other contractual or extra-contractual grounds such as (a) its false representations to Landmark in the brokerage agreement that the Property was not subject to a RFR, (b) the omission of 334 Canada to disclose the RFR to Landmark and Re/Max was negligent, (c) the failure of 334 Canada to take the necessary precautions to eliminate the RFR by requesting the intentions of the representatives of Joseph Aronovitch and of obtaining a waiver of the RFR before putting the Property up for sale. But the Court does state that, if it was necessary to decide whether 334 Canada had breached its contractual obligations under 1458 C.C.Q. to Landmark, under those grounds, the Court would answer, based upon the proof, that 334 Canada had done so and was liable in that regard.

 

[102]    In the Court’s opinion, in making a completely false contractual representation, with regard to such a fundamental issue as to whether 334 Canada even had the authority to sell the Property, when clear foreseeable and probable damages to third parties would result from such an incorrect and false representation, 334 Canada did not act in a reasonable way with regard to third parties and as such engaged its extra-contractual responsibility with respect to Re/Max[50].

 

[103]    There is however no automatic link between the contractual fault of a party and the commission of an extra-contractual fault with respect to a third party[51].

 

[104]    In the case of Ibrahim v. Groupe Sutton Immobilier Inc., the Court of Appeal, referring to principles set out by the Supreme Court in Banque de Montréal v. Bail[52], summarized as follows:

 

"Pour qu'il y ait faute extracontractuelle, il faut donc, comme l'indique le juge Gonthier dans l'arrêt Bail, déterminer si "la partie recherchée en responsabilité s'est comportée en personne raisonnable à l'égard des tiers[53]".

 

[105]    Based upon the proof, if it was necessary to make that determination on an alternative basis, the Court would also conclude that the above mentioned breaches of contractual obligations constituted either individual or multiple extra-contractual faults under Article 1457 C.C.Q. in relation to Re/Max in that they were unreasonable with regard to third parties, in particular Re/Max, and that it was foreseeable that such false representations, omissions, negligence and failures would cause damage to third parties.

 

b) Conduct and Actions of Mr. Legault and of Landmark

 

[106]    Re/Max alleges that Mr. Legault and Landmark were negligent and at fault in the performance and execution of their mandate and that has caused damages to Re/Max. The Court has reviewed the proof with regard to the conduct of Mr. Legault and Landmark and the Court concludes that this allegation is correct with respect to certain obligations that the law imposes on Mr. Legault and Landmark.

 

i) Duty or Obligation of Counsel and Information

 

[107]    As the listing agency, Mr. Legault and Landmark had a legal and statutory duty of counsel and information (“devoir de conseil et d’information”) before and as part of the brokerage contract as well as before putting the property on the market. That is part of their legal responsibilities as real estate professionals which justifies their claim for a commission. The duty of counsel and information imposes, according to the circumstances, on the broker and agency a pro-active role in the obtaining and validation of information given by the client, in this case the owner 334 Canada, as represented by Walter Aronovitch.

 

[108]    This obligation exists in civil law and in special statutory law applicable to real estate agencies and brokers.

 

[109]    Under the law and in practice, the real estate broker and agency present themselves to the public as experts and professionals in their field. As such, they benefit from certain privileges but as a corollary assume certain legal and statutory responsibilities. Claude G. Leduc, in Le courtage immobilier: aspects civils et déontologiques situates the context and intensity of the obligations of the broker and agency as follows :

 

“Nous croyons qu’un agent immobilier, maintenant désigné comme « courtier », ne peut être associé à « tout le monde ». Il est un professionnel du domaine du courtage immobilier. Un auteur, s’appuyant sur le droit français, prétend même qu’il risque de devenir « une sorte d’officier public, comparable au notaire ». Cette assertion, bien qu’excessive, démontre à juste titre le caractère important de la fonction d’un courtier. Cet état de « professionnel », entendu au sens commun du terme, doit nécessairement apparaître dans l’évaluation de la responsabilité d’un courtier dans l’exécution de ses fonctions. Une agence et un courtier doivent être à l’affût de tous les changements législatifs se rapportant au domaine du courtage immobilier. Les derniers changements législatifs et réglementaires se rapportant à ce domaine démontrent bien à quel point le législateur entend encadrer sévèrement cette industrie et les personnes qui y oeuvrent.[54]

 

…

 

Il apparaît que le courtier doit posséder un niveau de compétence élevé puisque c’est lui le professionnel dans le domaine de l’immobilier. Bien qu’il ne soit pas un notaire, ni un architecte et encore moins un évaluateur agréé, il se doit néanmoins de posséder des connaissances minimales afin de conseiller adéquatement ses clients. Il ne peut se permettre d’empocher des sommes importantes en commission sans être soumis à des normes de conduite qui reflètent son expertise et ses obligations déontologiques, lesquelles, rappelons-le, font souvent partie intégrante des contrats auquel participe le courtier.”[55]

 

[110]    The relevant legal and statutory articles regulating the real estate broker and agency include:

 

Article 2100 (1) C.C.Q.:

 

L'entrepreneur et le prestataire de services sont tenus d'agir au mieux des intérêts de leur client, avec prudence et diligence. Ils sont aussi tenus, suivant la nature de l'ouvrage à réaliser ou du service à fournir, d'agir conformément aux usages et règles de leur art, et de s'assurer, le cas échéant, que l'ouvrage réalisé ou le service fourni est conforme au contrat.

The contractor and the provider of services are bound to act in the best interests of their client, with prudence and diligence. Depending on the nature of the work to be carried out or the service to be supplied, they are also bound to act in accordance with usage and good practice and, where applicable, to ensure that the work carried out or service supplied is in conformity with the contract.

 

Article 2102 C.C.Q.:

 

L'entrepreneur ou le prestataire de services est tenu, avant la conclusion du contrat, de fournir au client, dans la mesure où les circonstances le permettent, toute information utile relativement à la nature de la tâche qu'il s'engage à effectuer ainsi qu'aux biens et au temps nécessaires à cette fin.

Before the contract is entered into, the contractor or the provider of services is bound to provide the client, as far as circumstances permit, with any useful information concerning the nature of the task which he undertakes to perform and the property and time required for that task.

 

Article 30 of the Regulation respecting brokerage requirements, professional
conduct of brokers and advertising (“Regulation”):

 

Le titulaire de permis doit vérifier et s'assurer de la capacité juridique de la partie qu'il représente ou de son représentant pour effectuer la transaction envisagée ainsi que de celle des autres parties à la transaction, si ces dernières ne sont pas représentées par un titulaire d'un permis.

A licence holder must verify and ascertain the legal capacity of the party represented or the party's representative for the proposed transaction as well as the legal capacity of the other parties to the transaction if the latter parties are not represented by a licence holder.

 

Article 83 of the Regulation:

 

Le courtier ou le dirigeant d'agence doit conseiller et informer avec objectivité la partie qu'il, ou l'agence pour laquelle il agit, représente et toutes les parties à une transaction. Cette obligation porte sur l'ensemble des faits pertinents à la transaction ainsi que sur l'objet même de celle-ci et doit être remplie sans exagération, dissimulation ou fausse déclaration.

A broker or agency executive officer must act with objectivity whenever advising or informing the party represented by them or the agency for which they act and all other parties to a transaction. That obligation extends to all the material facts relevant to the transaction and to its object, and must be fulfilled without exaggeration, concealment or misrepresentation.

 

 

 

 

Article 84 of the Regulation:

 

Le courtier ou le dirigeant d'agence doit entreprendre les démarches pour découvrir, conformément aux usages et aux règles de l'art, les facteurs pouvant affecter défavorablement la partie qu'il, ou l'agence pour laquelle il agit, représente ou les parties à une transaction ou l'objet même de cette transaction.

A broker or agency executive officer must take steps, in accordance with accepted practice, to learn of any factors that may adversely affect the party represented by them or the agency for which they act, the parties to the transaction or the very object of the transaction.

 

[111]    As part of the obligations of a broker and agency, pursuant to the above mentioned articles, including Article 2100 (1) C.C.Q. “to act in the best interest of [the] client, with prudence and diligence”, “to act in accordance with usage and good practice”, and to provide to the client, Article 2102 C.C.Q. “before the contract is entered into” “any useful information concerning the nature of the tasks which he undertakes to perform”, as well as Articles 83 and 84 of the Regulation, Mr. Legault and Landmark were obliged to take the requisite measures to ensure that 334 Canada and Mr. Aronovitch were alerted and sensitized to the issue and potential consequences of a non disclosed right of first refusal.

 

[112]    The Courts have concluded that, according to the circumstances, the broker may have an obligation to explain to his client each of the clauses in the brokerage contract.[56] This is especially the case with regard to the more important clauses that concern potential obstacles to the legal capacity or to the exercise of that capacity to sell a prospective property.

 

[113]    According to the testimony heard before the Court, the level of communication between Mr. Walter Aronovitch and Mr. Legault was minimal before the signature of the brokerage contract. As stated earlier, the brokerage contract was first sent by Mr. Legault in Montreal on December 14, 2011 by e-mail to Mr. Walter Aronovitch. Approximately six weeks later, on January 25, 2012 in Toronto, Mr. Walter Aronovitch signed it and sent it back to Mr. Legault, again by e-mail. Mr. Legault never actually met with Mr. Walter Aronovitch before the signing of the brokerage agreement and had still not met him at the time the RFR was exercised by the representatives of Joseph Aronovitch.

 

[114]    In his testimony, Mr. Legault did not state that he specifically asked Walter Aronovitch whether there was a right of first refusal affecting the Property as mentioned in the brokerage contract. Nor did Mr. Legault testify that he relied on the declaration of Mr. Walter Aronovitch in that regard. The issue simply fell “under the radar”.

 

[115]    In the Court’s opinion, the contract was not filled out or completed properly with Mr. Legault verbally going over and explaining each of the important declarations and the paragraphs and obtaining Walter Aronovitch’s informed consent on behalf of 334 Canada in that regard. The contract appears to have been sent as a matter of form and then returned by Mr. Aronovitch to Mr. Legault, also as a matter of form.

 

[116]    As a real estate professional, it was the responsibility of Mr. Legault to ensure that the representative of 334 Canada gave his informed consent to the brokerage contract.

 

[117]    Had the question of the RFR actually been verbally raised by Mr. Legault as part of the completion of the contract, the Court is convinced that such an inquiry would have resulted in Mr. Aronovitch being sensitized to the issue and putting it in the forefront of his awareness. Then in turn Mr. Legault would have been made aware of it and realized that it was important as an issue to be addressed and resolved with the representatives of Joseph Aronovitch before putting the Property on the market.

 

[118]    As the real estate professional and specialist assisting an out of province seller who was an executor/liquidator, that was overwhelmingly the responsibility of Mr. Legault and Landmark and the Court concludes that both failed in the civil and statutory obligations of duty of counsel and information to 334 Canada and Mr. Aronovitch.

 

ii) Obligation to Verify and Ascertain the Legal Capacity of 334 Canada to Effect the Proposed Sale

 

[119]    Furthermore, pursuant to Article 2100 (1) C.C.Q. and Articles 30, 83 and 84 of the Regulation, Mr. Legault and Landmark were obligated to verify and ascertain the legal capacity of their client 334 Canada to effect the proposed transaction, namely the sale.

 

[120]    Had Landmark requested a copy of the deed of sale from 334 Canada, it would have discovered immediately the RFR. In fact, the RFR is clearly indicated in the deed under a clause with the title in capital and bold letters “RIGHT OF FIRST REFUSAL”[57]. Mr. Legault testified that it was sufficient for him to obtain a copy of the print-out of the Index of Immovables for the title of the Property on the online service (portail) of the Quebec Registry Office.

 

[121]    The brokerage contract[58] included the standard clause that the client-seller would, upon the request of the broker, supply him with the title documents regarding the property. Clause 7.2 of the brokerage contract reads as follows:

 

“Where requested by the Broker, the Seller shall supply to the Broker the following documents in its possession: purchase contracts and any other titles of ownership, real estate tax receipts, leases, loan and hypothecary security contracts, certificates of location, plans, service contracts, proxies, the Immovable’s latest financial statements, and generally, any documents in its possession attesting to the validity of its title and establishing any restriction of private law and any restriction of public law that is an exception to ordinary law and that may affect the Immovable, and any documents that may be required for any adjustments to be made at the time of the sale.”

 

a) Negligence of Mr. Legault in not Having Reviewed the Deed of Acquisition of 334 Canada in his Possession

 

[122]    Mr. Legault testified that he does not recall asking Mr. Aronovitch specifically for a copy of the deed of acquisition. He said that he made a verbal request for general information and documents soon after their first contact. He did not recall that the deed of acquisition was sent to him by Mr. Walter Aronovitch. He said that he obtained relevant documents on his own and mostly through his own searches.

 

[123]    Mr. Legault was involved in obtaining a new certificate of location and he referred Mr. Aronovitch to an official Land Surveyor (Office of T.T. Katz) for that purpose.

 

[124]    Mr. Legault was also involved in suggesting and obtaining an environmental assessment of the Property and he referred Mr. Aronovitch to a service provider for that purpose. He appears to have been involved in the execution and follow-up of these mandates as the representative of the client towards these service providers.

 

[125]    In his testimony, Mr. Legault appeared to distance himself from these matters stating that they were arranged mostly between Mr. Aronovitch and the service providers.

 

[126]    We note that in the listing/memorandum of information prepared by Mr. Legault, the legal description of the Property from the deed of acquisition is not used and is updated to the new legal description referring to a renovated cadastre number (1 165 273)[59]. So there must have been contact and follow-up, either directly or indirectly, between Mr. Legault and the Land Surveyor.

 

[127]    As for the testimony of Mr. Walter Aronovitch, he was not able to recall at which time he had in his possession either the title of acquisition[60] or the document outlining further the terms of the RFR[61].

 

[128]    How can a broker work or assist a client in obtaining a new certificate of location without obtaining, providing or perusing a deed of acquisition containing the legal description of the property to be updated? How can a broker work on obtaining a preliminary environmental assessment on land without obtaining, previously or perusing the deed of acquisition of title which would offer indices as to the period of ownership, previous declarations and use?

 

[129]    With all due respect, the Court considers that it is unlikely as a question of fact that Mr. Legault did not actually obtain the deed of acquisition of 334 Canada as part of his preliminary research to prepare the listing or detailed advertizing brochure (Exhibit P-7) to announce the Property or in the ongoing process of updating documents for the proposed sale of the Property. After accessing the Index of Immovables online, it is only an extra click on the electronic link to obtain access to the deed of acquisition. The Court also evaluates the credibility of Mr. Legault during his testimony and his hesitation on this point. Furthermore, the Court considers the level of detail contained in the listing (Exhibit P-7).

 

[130]    Such a version of events appears so unlikely and improbable on the facts, so at variance with appropriate professional practice and norms of prudence and diligence of a listing broker as exemplified notably in the jurisprudence and doctrine that it strains any reasonable credulity. It appears beyond the power of any reasonable person to believe.

 

[131]    For these reasons, the Court concludes that it is more probable that Mr. Legault did in fact obtain the deed of acquisition of 334 Canada. However, he failed to note the obvious reference to a RFR and failed to pursue or inquire further on the matter with Mr. Aronovitch. That omission to note the presence of the RFR clause or to follow up on it was negligent and constituted a failure to act diligently and prudently in accordance with Article 2100 (1) C.C.Q., and Articles 30, 83 and 84 of the Regulation.

 

b) Alternate Basis of Negligence of Mr. Legault in Not Having Taken Appropriate Measures to Obtain the Deed of Acquisition of 334 Canada and to Summarily Review its Content

 

[132]    Second, had the Court concluded, which it does not, that Mr. Legault did not actually obtain the deed of acquisition, then in the alternative the Court would have decided that pursuant to the law, including Article 2100 (1) C.C.Q. and Articles 30, 83 and 84 of the Regulation, Mr. Legault and Landmark were, in the circumstances of the present case, negligent in not having obtained it and consequently not having ascertained the existence of the RFR before putting the Property up for sale.

 

[133]    In particular, the Court would then be of the view that in the circumstances of this case, Mr. Legault and Landmark were negligent in the execution of their obligation to verify and ascertain that 334 Canada had the legal capacity to effect the sale of the Property. It was precisely the legal capacity of 334 Canada to sell the Property that was affected by the RFR and the existence of the RFR was the cause of the failure to conclude the sale to Développement Pennino.

 

[134]    The jurisprudence has held that, according to the circumstances, in order to comply with the obligation to verify and ascertain that the client has the legal capacity to effect the sale, the broker must obtain a copy of the deed of sale.

 

[135]    Maître Claude Barsalou in “L’obligation de verification du courtier immobilier”, basing himself on civil law, statutory obligations and on disciplinary decisions of the regulatory association of brokers and agents, writes as follows:

 

“En premier lieu, on peut prétendre qu’un courtier ou un agent immobilier n’a pas l’obligation de procéder à une recherché au bureau de la publicité des droits. Cependant, cela ne l’empêche pas, par exemple, de se procurer une copie de l’acte d’acquisition du client vendeur aux fins de s’assurer qu’il est réellement propriétaire et le seul propriétaire de l’immeuble en vente.

 

En second lieu, un courtier ou agent ne peut se contenter de réclamer les documents se rapportant à l’immeuble et de les transmettre au notaire à la suite de la conclusion d’une promesse d’achat. En agissant de la sorte, il va de soi qu’il ne vérifie rien du tout. Alors, où tracer la ligne? Le contrat de courtage obligatoire prévoit que le client vendeur doit remettre les documents concernant l’immeuble au courtier. Un courtier ou un agent doit prendre connaissance le plus tôt possible de ces documents pour y déceler toute limitation, par exemple une hypothèque ou une servitude de vue, bien qu’il ne soit pas « un notaire ou un spécialiste des titres ». Il peut ainsi s’assurer, dans le cadre d’une promesse d’achat éventuelle, que le propriétaire vendeur fasse toutes les déclarations pertinentes concernant l’immeuble”.[62]

 

[References omitted; emphasis added]

 

[136]    The jurisprudence has noted that the current formulation of Article 30 of the Regulation, adopted in 2010, goes beyond the previous version commented above by specifying that the broker and agency must not only verify the legal capacity but also ascertain (s’assurer) it. This has been interpreted, in conjunction with Article 84 of the Regulation, to mean that the broker and agency must, when appropriate in the circumstances, take pro-active steps to ensure the legal capacity of the client to sell the property.

 

[137]    With regard to matrimonial context[63], estate/succession context[64] and certain moral persons[65], the Courts have required that, according to the circumstances, the broker/agency take pro-active measures to verify the legal capacity of the owner-seller to sell.

 

[138]    When the Courts have decided that the circumstances required that the broker/agency inquire further and take pro-active measures, in order to satisfy the applicable legal obligations to act prudently and diligently, the broker/agency must obtain the document of acquisition of the client and conduct a preliminary review of its content and an omission to do so constitutes a professional fault.

 

[139]    In La Capitale Distinction Inc. v. Fondation Dyson Moore[66], Landry, J. stated in the following paragraphs :

 

“[80] Parmi les dispositions réglementaires énumérées ci-dessus, on remarque plus particulièrement l'article 30 qui fait notamment obligation au courtier immobilier de « vérifier et s'assurer de la capacité juridique de la partie qu'il représente pour effectuer la transaction envisagée » (30R) (je souligne).

 

[81] Cet article est de droit nouveau; il n'existait pas dans l'ancien règlement remplacé le 1^er mai 2010.

 

[82] Avant l'adoption de ces nouvelles dispositions réglementaires, les règles ayant trait aux vérifications qui devaient être faites par un courtier prudent et diligent étaient plus générales et notamment prévues aux articles 11 et 27 de l'ancien règlement:

 

11. Le membre doit vérifier, conformément aux usages et aux règles de l’art, les renseignements qu’il fournit au public ou à un autre membre. Il doit toujours être en mesure de démontrer l’exactitude de ces renseignements.

 

27. Le membre doit entreprendre les démarches pour découvrir, conformément aux usages et aux règles de l'art, les facteurs pouvant affecter défavorablement son client ou les parties à une transaction visée à l'article 1 de la Loi ou l'objet même de cette transaction.

 

[83] Dans la jurisprudence sous ces articles, on exigeait généralement la présence d'indices sérieux de l'existence d'un problème de capacité ou de titre pour conclure à une faute d'un courtier susceptible de lui faire perdre le droit à sa rétribution.

 

[84] Par contre, si une partie n'avait pas l'autorité complète de vendre, par exemple en matière matrimoniale ou de succession, le défaut de vérification du courtier lui était habituellement fatal.

 

[85] À n'en pas douter, le nouvel article 30R précise et même accroît les devoirs des courtiers et des agences en matière de capacité juridique du client, en ce sens qu'il ne doit plus se contenter de « vérifier la capacité de son client » mais également doit s'en « assurer ».

 

[86] En transposant dans le texte de l'article 30R les coordonnées du présent dossier, on décode que Capitale Distinction, par l'entremise des courtiers au dossier, devait donc « vérifier » et « s'assurer » de la « capacité juridique » de la Fondation Dyson Moore de vendre ses actifs.

 

[90] Dans le présent dossier, j'en conclus que l'article 30 du Règlement imposait donc aux courtiers l'obligation de vérifier et attester que la Fondation avait la capacité juridique de vendre sa propriété à compter du moment où elle a signé le contrat de courtage le 30 janvier 2012.

 

[132] C'étaient pourtant là des éléments importants quant à la capacité d'agir de la Fondation que les courtiers avaient pour mission de vérifier et de s'assurer. Comme on l'a vu précédemment, la capacité juridique comprend non seulement l'aptitude à détenir un droit mais aussi celle de l'exercer.

 

[137] Par conséquent, le défaut de la demanderesse et de ses courtiers de s'être

« assurés » de la capacité de vendre de la Fondation l'a disqualifiée de son droit à une rétribution car elle n'a pas rempli ses obligations. Ils n'ont pas agi avec la prudence, la diligence et la compétence exigées par la législation sur le courtage immobilier.”

 

[140]    Commenting on the case of La Capitale Distinction Inc. v. Fondation Dyson Moore, Maître Hugo Poirier stated:

 

“Nous sommes cependant d’avis, tout comme le juge Landry, que les courtiers se doivent d’être plus que de simples intermédiaires chargés de faire visiter un immeuble et qu’ils doivent pleinement remplir leur rôle de conseiller. Après tout, ce sont eux qui disposent des connaissances et de l’expertise en ce domaine”.[67]

 

[141]    In light of the above mentioned articles (Articles 2100, 2102 C.C.Q., Articles 30, 83 and 84 of the Regulation) and authorities, it is therefore important to consider the circumstances and the context of the mandate of Mr. Legault and Landmark with 334 Canada in the present case.

 

[142]    The Court considers that there were several red flags which justified and required a pro-active approach of verification of the capacity to sell and in order to act with prudence and diligence under the mandate.

 

[143]    First, the contemplated sale was in the context of the settling of an estate. That infers that the executor/liquidator does not have first hand knowledge of the particularities of the situation.

 

[144]    A sale of property by an estate/succession is more complicated than others for reasons of legal requirements and formalities, capacity to sell, and can be contentious among the heirs. Mr. Legault was fully aware of this succession context. He knew or should have known, as declared by Walter Aronovitch, that the owner of 100% of the shares of 334 Canada, Goldie Aronovitch, was deceased. He was also told that Walter Aronovitch was not the only executor/liquidator of the estate/succession. He was told that there were two others, Martin and Joseph. He knew or should have known that Joseph was legally unable to act, which raised many other capacity issues and dangers. Walter Aronovitch emphasized that he did not consider that Joseph Aronovitch’s mandatary, Gale Aronovitch, had any decisional role as an executor. However, he testified that he kept her aware of developments. Despite these issues and risks, Mr. Legault did not request or require a resolution of 334 Canada authorizing Walter Aronovitch to act as sole representative to sell the Property.

 

[145]    Second, Mr. Legault had not actually met Walter Aronovitch before signing the brokerage contract. They had still not met when the RFR was executed by the representative of Joseph Aronovitch on February 28, 2012. This should have affected his comfort level regarding information given about the Property.

 

[146]    Third, Walter Aronovitch appears to have been very busy with his principal occupation. Mr. Legault testified that he obtained documents regarding the mandate mostly by his own initiative. If Mr. Legault had requested a copy of the deed of acquisition from Walter Aronovitch and had not obtained it, that was, in and of itself, a red flag which should have prompted him to obtain a copy thereof online on the registry office website.

 

[147]    Fourth, Walter Aronovitch, did not live on or use the Property and therefore had limited knowledge with respect to it.

 

[148]    Fifth, Walter Aronovitch, being based in another province, was unfamiliar with local real estate usage or practice.

 

[149]    Sixth, the mandate was for the sale of a Property of a considerable value and an asking price of $2,250,000. The commission payable to Landmark for the sale on the proposed asking price was between 5% ($129,346.88) (to be split with broker of buyer at 2.5% each ($64,673.44)) or 4% ($103,477.50 without participation of buyer’s broker).

 

[150]    In order to earn a commission of that magnitude, and in light of all the other factors mentioned, the broker agency should have obtained and reviewed, from a summary point of view at least, the deed of acquisition of the prospective seller. As stated, it would have been simple enough to obtain the deed of sale as it was a public document that is available online and just as easily obtainable as the Index of Immovables that was admitted as being obtained. As stated, it is just an additional electronic click or link on the Index of Immovables of the Property.

 

[151]    The required appropriate level of verification varies according to the circumstances of the parties and the proposed transaction. But in the context of the circumstances of this transaction, for the reasons mentioned, the Court is of the view that, as part of the required professional inquiries before putting the Property on the market and preparing the listing or the detailed advertizing brochure announcing and highlighting many details of the Property[68], it behooved Mr. Legault and Landmark to have at least requested, and if not received, then otherwise obtain a copy of the deed of acquisition of 334 Canada pursuant to which 334 Canada alleged to have the legal capacity to sell the Property.

 

[152]    There is no doubt that had Landmark taken elementary measures to obtain the deed of acquisition and reviewed it summarily, it would have discovered from the very outset the existence of the RFR. This would have led to confirmation of its existence and an inquiry as to the intentions of the representatives of Joseph Aronovitch. Again, this in turn would have led to either the statement or declaration of Joseph Aronovitch’s representatives as to their active interest to exercise the RFR or to waive such RFR.

 

[153]    These preliminary inquiries would have prevented all the subsequent drama, wasted efforts, wasted time, costs, threats of litigation, litigation before the sale and indeed the current litigation.

 

[154]    It appears to be unnecessary for the Court to decide whether, in the circumstances, that as part of their obligation of verification and ascertainment of the title, Mr. Legault and Landmark should not only have obtained the title of acquisition of 334 Canada but also ascertained and ensured that 334 Canada had the legal capacity to exercise that right of ownership by selling the Property. Based upon even the stated and admitted fact by Mr. Legault that he did not obtain the title of acquisition, it is sufficient to conclude that he and Landmark were negligent in not doing so. As stated, the preponderance of the proof is to the effect that had they obtained the title of acquisition, the existence of the RFR is so evident on the face of the title of acquisition that to not inquire further at that point would constitute negligence on behalf of Mr. Legault and Landmark.

 

[155]    Nevertheless, were it necessary for the Court to decide whether Mr. Legault and Landmark were in the circumstances negligent in not having verified and ascertained that 334 Canada could validly exercise its legal capacity to sell the Property, the Court would hold that they were also negligent on that ground.

 

[156]    The Court concludes that Mr. Legault and Landmark failed in their contractual and statutory obligations of counsel, information and verification and those failures constituted extra-contractual faults under Article 1457 C.C.Q. which caused prejudice to Re/Max in the circumstances. The legal principles of extra-contractual liability with respect to Re/Max regarding faults of Mr. Legault and Landmark to 334 Canada have been referred to earlier in this judgment. These faults are serious errors that should have been avoided by a real estate professional in the circumstances. The Court states that the contractual and statutory faults of Mr. Legault and Re/Max were unreasonable with respect to third parties, in particular Re/Max and that it was foreseeable that such faults would cause damage to third parties, including Re/Max.

 

iii) Amount of Damages for the Fault of Landmark (and on the Basis of Alternative Ground of Liability, of 334 Canada)

 

[157]    The common counsel representing all Defendants submits that, even in the case that 334 Canada, Mr. Legault or Landmark committed a fault regarding the non-disclosure or failure to raise or address the issue of the RFR, Re/Max has not suffered any damages as a result since the transaction with Développement Pennino would then not have occurred and then Re/Max would not have received a commission.

 

[158]    However, this contention does not take into account the fact that even had the renunciation to the RFR been refused and its existence declared, it is clear that Re/Max would not have suffered substantial and direct damages caused by the omission to declare the RFR or other negligence of Landmark (or on the basis of the alternative ground of liability, 334 Canada).

 

[159]    Those damages include loss of much time to make inquiries about the Property, review of documents, many, many telephone conversations with and e-mails to and from representatives of Landmark, meetings with representatives of Landmark, circulation of the listing of the Property to potential interested buyers, telephone conversations with representatives of Développement Pennino, discussions with them and follow-ups, meeting with its representatives, visit to the location of the Property with Mr. Pennino, drafting and revising offers to purchase, discussions, meetings with the notary, meetings scheduled, cancelled and rescheduled with Mr. Legault, including that of February 26, 2012, as well as those discussions and negotiations regarding raising the potential purchase price to $2,500,000 and also the loss of opportunities by representatives of Re/Max with regard to other projects that were truly available[69].

 

[160]    It is important to note that, on the request of 334 Canada and Mr. Legault, these discussions were ongoing and continuous even after the accepted Pennino Offer was formally cancelled. These discussions were initiated by the representatives of 334 Canada and pursued by Mr. Legault for the purpose of keeping the interest of Développement Pennino alive in order to pressure Joseph Aronovitch’s representatives as well as to have a backup plan in favour of 334 Canada if Joseph Aronovitch’s representatives did not actually proceed to sale.

 

[161]    Consequently, as the negotiations with the representatives of Joseph Aronovitch were so protracted and the sale with them was finally executed only on June 28, 2012, discussions and negotiations between Re/Max and 334 Canada, mostly through Landmark, were ongoing for almost 5 months from the beginning of February 2012 to the end of June 2012.

 

[162]    It should also be noted that Re/Max through Mr. Mario Sulpizio was listed as the only contact on behalf of Développement Pennino for the transaction and was listed as such in the accepted Pennino Offer. Accordingly, everything went through Mr. Sulpizio.

[163]    In those circumstances, the Court arbitrates that the amount of damages suffered by Re/Max is $22,500. As that amount seeks to compensate for the damages suffered as a result of the fault of Landmark (as opposed to lost revenue for services rendered) and does not constitute a commission payment, the Court will not add taxes to that amount.

 

[164]    The terms and conditions of the Pennino Offer used for the transaction with Aronovitch Investments Inc. called for an equal share of the 5% commission between Re/Max and Landmark, namely 2.5% each in accordance with Clause 7. It is surprising and unfortunate that Landmark requested and 334 Canada agreed to an increase of its commission to 4% for the sale to Aronovitch Investments Inc. despite these violations of the obligations of counsel and of verification and the express confirmation in the deed of sale to Aronovitch Investments Inc. that the parties were bound to the terms and conditions of the Pennino Offer[70], and therefore implicitly also to Clause 7. However, there is no claim by 334 Canada against Landmark before the Court in that regard.

 

4) Recourse of Re/Max for Unjust Enrichment

 

[165]    Counsel for Re/Max also submits that 334 Canada and Landmark benefitted from all of Re/Max’s work to put together the transaction without compensation since both 334 Canada and Aronovitch Investments Inc. used the accepted Pennino Offer as the basis for financial and legal terms of the eventual sale to Aronovitch Investments Inc.

 

[166]    From a factual point of view, that submission is accurate. The parties of 334 Canada and Landmark and the third party Aronovitch Investments Inc. all benefitted, relied upon, invoked and used the accepted Pennino Offer to advance, defend, maintain and eventually, through the sale, render effective their respective rights pursuant to the exercise of the RFR.

 

[167]    The remedy of unjust enrichment has been granted by the courts with respect to claims for real estate brokers/agencies’ commissions[71].

 

[168]    The recourse for unjust enrichment is codified at Articles 1493 and 1494 C.C.Q.[72] which specifies its conditions and defences.

 

[169]    However, this recourse lies when no other recourse is available. In particular, Article 1494 C.C.Q. specifies that this recourse cannot apply when the victim of the impoverishment “exercise[s] a right of which he may avail himself” to remedy the situation. In the present case, Re/Max has established claims for damages with respect to 334 Canada and Landmark, and has been compensated for its prejudice suffered under the present judgment. Accordingly, there is no recourse available under the doctrine and rule of unjust enrichment.

 

V.          Conclusion

 

[170]     In conclusion, for the reasons expressed above, the Court will condemn 334 Canada to pay Re/Max the amount of $64,698 and Landmark to pay Re/Max the amount of $22,500.

 

[171]    With regard to the claim against Marc-André Legault, opposing considerations apply. On one hand, Mr. Legault was personally involved in the omissions which lead to the liability of Landmark. On the other hand, no argument was raised by counsel before the Court that such omissions fell outside of the scope of his duties or that he exceeded his authority as a mandatary of Landmark. For these reasons, Re/Max’s motion against Mr. Legault will be dismissed, without costs.

 

[172]    As the sources of liability of 334 Canada (contractual) and of Landmark (extra-contractual) are different, the Court will condemn them in solidum. Although in virtue of the rule of in solidum, 334 Canada and Landmark will each as solidary debtors be responsible to Re/Max for payment of the entirety of the amounts of their respective condemnations, the Court determines and will declare that, in accordance with Article 469 of the Code of Civil Procedure (C.C.P.), with regard to the amount of $22,500, and as between only 334 Canada and Landmark themselves, their respective proportion of liability of that amount, in light of the seriousness of the respective faults and the circumstances of the present case, should be as follows: 334 Canada (10%); Landmark (90%).

 

[173]    As for the remaining amount of $42,173.44, 334 Canada will be condemned to pay it alone.

 

[174]    Regarding that amount and exercising its discretion (Article 1618 C.C.Q.; Article 477 C.C.P.) based on the fact that 3348857 Canada and Landmark should in the circumstances share equally the judicial costs of the present case, the Court will not condemn 334 Canada to pay either the additional indemnity or judicial costs on the remaining amount of $42,173.44. Additionally, on that amount, legal interest only (not the additional indemnity) will run from the date of the judgment.

 

FOR THESE REASONS, THE COURT:

 

GRANTS in part Re/Max Royal (Jordan) Inc.’s Motion;

 

CONDEMNS 3348857 Canada Inc. and Landmark Properties Inc. in solidum to pay Re/Max Royal (Jordan) Inc. the amount of $22,500, with legal interest of 5% per year, plus the additional indemnity provided at Article 1619 of the Civil Code of Quebec, calculated from the letter of demand (Exhibit P-13) dated October 30, 2012;

 

With respect to the total amount of the condemnation of $22,500, and only between 3348857 Canada Inc. and Landmark Properties Inc., DECLARES and APPORTIONS their respective liability as follows: 3348857 Canada Inc. (10%); Landmark Properties Inc. (90%);

 

WITH COSTS.

 

CONDEMNS 3348857 Canada Inc. to pay Re/Max Royal (Jordan) Inc. the amount of $42,173.44, with legal interest of 5% per year from the date of the present judgment;

 

DISMISSES Re/Max Royal (Jordan) Inc.’s Motion against Marc-André Legault;

 

WITHOUT COSTS.

 

		__________________________________ Jeffrey Edwards, J.C.Q.
Me Catia Larose
Bernard & Brassard s.e.n.c.r.l.
Attorneys for Plaintiff
Me Jean-François Carpentier
Kugler Kandestin
Attorneys for Defendants
Date of hearing:	November 26 and 27, 2014