Real Estate Broker’s Failure to Disclose That It Was Acting for Both Buyer and Seller Results in Forfeit of Nearly $18,000 Commission

Justice Pollak of the Ontario Superior Court of Justice has ruled that a real estate broker is not entitled to nearly $18,000 in commission as a result of its failure to notify the seller that the broker was acting for the buyer as well.

Royal Lepage (Partners Realty Ltd.) sued the defendant, Ms. Morrow, for $17,788.75 representing commission payable pursuant to a listing agreement that Morrow signed with Royal Lepage.

Ms. Morrow entered into a listing agreement with Royal Lepage and subsequently entered into an agreement of purchase and sale with a purchaser that was brought to Ms. Morrow through Royal Lepage.

Ms. Morrow ultimately decided not to proceed with the transaction and Royal Lepage sued for the commission of the aborted sale, which it argued it was owed pursuant to the terms of the listing agreement.

However, Ms. Morrow successfully argued before Justice Pollak that the purchaser was also a Royal Lepage client and that the broker had failed to disclose this information to Ms. Morrow prior to presenting the offer to purchase to Ms. Morrow. Ms. Morrow argued that in failing to do so, the broker had breached the listing agreement thus disentitling the broker to the commission of the aborted sale which to it would otherwise have been entitled to pursuant to the listing agreement.

Justice Pollak agreed with Ms. Morrow and found that the broker’s failure to advise Ms. Morrow in writing of the dual agency situation prior to the offer to purchase being presented constituted a breach of the listing agreement, disentitling the broker to nearly $18,000 in commission.