Maclise (S.) Enterprises Inc. v. Grover et al., (2014) 597 A.R. 148 (QB)

• Judge: Gates, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: September 29, 2014
• Citations: (2014), 597 A.R. 148 (QB);2014 ABQB 591

Maclise (S.) Enterprises Inc. v. Grover (2014), 597 A.R. 148 (QB)

MLB headnote and full text

Temp. Cite: [2014] A.R. TBEd. OC.054

S. Maclise Enterprises Inc. (plaintiff) v. Savita Grover, Patrick John Rudiger, Remax Real Estate (Edmonton) Ltd. operating as Re/Max Real Estate and Re/Max Real Estate (defendants)

(0703 04979; 2014 ABQB 591)

Indexed As: Maclise (S.) Enterprises Inc. v. Grover et al.

Alberta Court of Queen's Bench

Judicial District of Edmonton

Gates, J.

September 29, 2014.

Summary:

The defendant real estate agent (Grover) acted as a dual agent in the sale of the plaintiff's 30 unit apartment building. The plaintiff had not been looking to sell. The agent presented an unsolicited offer. After the plaintiff agreed to pay the commission, a counter-offer was presented and accepted. The plaintiff later learned that apartment buildings were being purchased at a premium to convert to condominiums. The agent, acting for both parties, had neither informed the plaintiff of this trend nor done any market value analysis, relying on the terms of a dual agency consent form. The plaintiff sued the agent and others, alleging a breach of fiduciary duty in failing to ascertain and/or share information with the plaintiff that materially affected the marketability or value of the apartment building. The plaintiff sought $1,050,000 in damages, being disgorgement of the real estate commission ($50,000) and the alleged difference between the sale price and the actual market value of the property ($1,000,000).

The Alberta Court of Queen's Bench allowed the action. The agent breached her fiduciary duty to disclose to the plaintiff material market information (trend of condominium conversions increasing the market value of apartment buildings being sought for conversion) to the plaintiff. The dual agency consent form did not relieve the agent of this obligation. The court awarded $350,000 damages, being the disgorgement of the commission ($50,000) and the increased purchase price the plaintiff could have reasonably received from the purchaser ($300,000) had the material information been disclosed.

Brokers - Topic 3030

Duties of broker to principal - General principles - Dual agency - Requirements of - [See both Brokers - Topic 3152 ].

Brokers - Topic 3152

Duties of broker to principal - Real estate brokers - Fiduciary duty - The Alberta Court of Queen's Bench stated that "A real estate agent owes both contractual and fiduciary obligations to her principal. These include the duty to make full and fair disclosure of all material circumstances and of everything the agent knows regarding the subject matter to its principal ... The duties also include an obligation to make full disclosure of all facts within the agent's knowledge which might affect the value of the property or the principals' decision ... The test of what an agent must disclose is objective, determined by 'what a reasonable man in the position of the agent would consider, in the circumstances, would be likely to influence the conduct of his principal' ... A real estate agent will not be found to have breached his fiduciary duty just because the selling price obtained for a property is not the 'best possible price' ... However, the 'price paid must be adequate and the transaction must be a righteous one and the price obtained must be as advantageous to the principal as any other price that the agent could, by the exercise of diligence on his principal's behalf, have obtained from a third person' ... The dual agent must act with fairness and must not favour one principal over the other, and must disclose that s/he is acting as agent for the other ... There cannot be partiality either through divulging sensitive information that should not be divulged or through failing to make full disclosure of material facts not limited by the agreement." - See paragraphs 89 to 92, 96.

Brokers - Topic 3152

Duties of broker to principal - Real estate brokers - Fiduciary duty - The defendant real estate agent (Grover) acted as a dual agent in the sale of the plaintiff's 30 unit apartment building - The plaintiff had not been looking to sell - The agent presented an unsolicited offer - After the plaintiff agreed to pay the commission, a counter-offer was presented and accepted - The plaintiff later learned that apartment buildings were being purchased at a premium to convert to condominiums - The agent, acting for both parties, had neither informed the plaintiff of this trend nor done any market value analysis, relying on the terms of a dual agency consent form - The plaintiff sued the agent and others, alleging a breach of fiduciary duty in failing to ascertain and/or share information with the plaintiff that materially affected the marketability or value of the apartment building - The plaintiff sought $1,050,000 in damages, being disgorgement of the real estate commission ($50,000) and the alleged difference between the sale price and the actual market value of the property ($1,000,000) - The Alberta Court of Queen's Bench allowed the action - The agent, as a dual agent, owed fiduciary duties to both the plaintiff and the purchaser - The agent had a fiduciary duty to disclose to the plaintiff material market information (trend of condominium conversions increasing the market value of apartment buildings being sought for conversion) to the plaintiff - The dual agency consent form did not relieve the agent of this obligation - The court awarded $350,000 damages, being disgorgement of the commission ($50,000) and the increased purchase price the plaintiff could have reasonably received from the purchaser ($300,000) had the material information been disclosed.

Brokers - Topic 4049

Compensation - Right to compensation - Loss of right - Breach of fiduciary duty - [See both Brokers - Topic 3152 ].

Contracts - Topic 4062

Remedies for breach - Accounting of profits (disgorgement) - When available or appropriate - [See second Brokers - Topic 3152 ].

Equity - Topic 3655

Fiduciary or confidential relationships - Breach of fiduciary relationship - Damages - [See second Brokers - Topic 3152 ].

Cases Noticed:

Hodgkinson v. Simms et al., [1994] 3 S.C.R. 377; 171 N.R. 245; 49 B.C.A.C. 1; 80 W.A.C. 1, refd to. [para. 75].

Guerin v. Canada, [1984] 2 S.C.R. 335; 55 N.R. 161, refd to. [para. 82].

Frame v. Smith and Smith, [1987] 2 S.C.R. 99; 78 N.R. 40; 23 O.A.C. 84, refd to. [para. 83].

International Corona Resources Ltd. v. LAC Minerals Ltd., [1989] 2 S.C.R. 574; 101 N.R. 239; 36 O.A.C. 57, refd to. [para. 83].

Perez v. Galambos et al., [2009] 3 S.C.R. 247; 394 N.R. 209; 276 B.C.A.C. 272; 468 W.A.C. 272; 2009 SCC 48, refd to. [para. 84].

Henderson v. Thompson, [1909] S.C.R. 445, refd to. [para. 85].

Knoch Estate v. Picken (Jon) Ltd. et al. (1991), 49 O.A.C. 321; 4 O.R.(3d) 385 (C.A.), refd to. [para. 86].

RK Holdings Corp. v. Koyl Commercial Real Estate Services Ltd. et al. (2000), 190 Sask.R. 210; 2000 SKQB 77, refd to. [para. 86].

Gerein v. Green (2010), 525 A.R. 87; 2010 ABPC 402, refd to. [para. 86].

Elder Advocates of Alberta Society et al. v. Alberta et al., [2011] 2 S.C.R. 261; 416 N.R. 198; 499 A.R. 345; 514 W.A.C. 345; 2011 SCC 24, refd to. [para. 87].

Atlanta Industrial Sales Ltd. et al. v. Emerald Management & Realty Ltd. (2006), 399 A.R. 1; 2006 ABQB 255, refd to. [para. 89].

Trynchy v. Gabriel et al. (2012), 550 A.R. 367; 2012 ABQB 682, refd to. [para. 89].

Molstad & Co. Ltd. v. Fedoruk and Fedoruk (1957), 7 D.L.R.(2d) 574; 21 W.W.R.(N.S.) 72 (Alta. C.A.), refd to. [para. 89].

Charette v. A.H. Fitzsimmons & Co. (1990), 12 R.P.R.(2d) 290 (Ont. H.C.J.), refd to. [para. 89].

Jackson v. Packham Real Estate Ltd. (1980), 109 D.L.R.(3d) 277; 28 O.R.(2d) 261, refd to. [para. 89].

Polaris Realty (1995) Ltd. v. Minchau et al. (2010), 491 A.R. 209; 2010 ABQB 116, refd to. [para. 90].

Ocean City Realty Ltd. v. A & M. Holdings Ltd. (1987), 36 D.L.R.(4th) 94; 44 R.P.R. 312 (B.C.C.A.), refd to. [para. 91].

Phelan v. Realty World-Empire Realty Ltd. (1994), 38 R.P.R.(2d) 128 (B.C.S.C.), refd to. [para. 92].

Alwest Properties Ltd. v. Roppelt et al. (1998), 236 A.R. 201; 1998 ABQB 1027, refd to. [para. 92].

D'Atri v. Chilcott (1975), 7 O.R.(2d) 249; 55 D.L.R.(3d) 30 (H.C.), refd to. [para. 92].

Grimshaw v. Progroup Realty Ltd. et al., [2004] B.C.T.C. Uned. 902; 2004 BCSC 1836, affd. [2004] B.C.A.C. Uned. 185; 2004 BCCA 523, refd to. [para. 94].

Raso v. Dionigi (1993), 62 O.A.C. 228; 12 O.R.(3d) 580 (C.A.), refd to. [para. 94].

DeJesus v. Sharif (2010), 284 B.C.A.C. 243; 481 W.A.C. 243; 2010 BCCA 121, refd to. [para. 94].

Lombard Financial Group Inc. v. Davies & Co. et al., [2005] A.R. Uned. 436; 46 Alta. L.R.(4th) 149; 2005 ABQB 387, refd to. [para. 95].

Foster v. Reaume, [1924] 2 D.L.R. 951 (S.C.C.), refd to. [para. 96].

Summit Staging Ltd. v. 596373 B.C. Ltd. et al., [2008] B.C.T.C. Uned. A61; 2008 BCSC 198, refd to. [para. 97].

Hundley v. Garnier et al., [2011] B.C.T.C. Uned. 414; 2011 BCSC 414, affd. (2012), 320 B.C.A.C. 281; 543 W.A.C. 281; 34 B.C.L.R.(5th) 177; 2012 BCCA 119, refd to. [para. 101].

Sterling et al. v. Varcoe (1992), 7 O.R.(3d) 204 (Gen. Div.), refd to. [para. 115].

Indutech Canada Ltd. v. Gibbs Pipe Distributors Ltd. et al. (2013), 544 A.R. 205; 567 W.A.C. 205; 2013 ABCA 111, refd to. [para. 152].

McBride Metal Fabricating Corp. v. H & W Sales Co. (2002), 158 O.A.C. 214; 59 O.R.(3d) 97 (C.A.), refd to. [para. 156].

Authors and Works Noticed:

Fridman, G.H.L., Canadian Agency Law (2009), pp. 108, 109 [para. 90].

Lane, C.H., Legal Aspects of the Role of the Real Estate Broker, Special Lectures of the Law Society of Upper Canada (1960), Contracts for the Sale of Land, p. 8 [para. 93].

Counsel:

Stephen J. Livingstone, for the plaintiff;

Joe D. Spelliscy and Jarin Myskiw, for the defendant.

This action was heard on April 29-30, and May 1-3, 2013, before Gates, J., of the Alberta Court of Queen's Bench, Judicial District of Edmonton, who delivered the following judgment on September 29, 2014.