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Brian Madigan LL.B., Broker
BRMadigan@Rogers.com

RE/MAX West Realty Inc.,
Brokerage
Independently owned and operated

96 Rexdale Blvd. 
Toronto, Ontario 


Phone: 416-745-2300

Cell: 647-404-8150 
Toll Free: 1-888-507-0817

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The Real Issue with Dual Agency

January 22, 2014 - Updated: January 22, 2014

 

 

We looked at the case of Partners Realty v. Morrow, a decision of the Ontario Superior Court of Justice rendered on 9 January 2014 by Justice Pollak (http://canlii.ca/t/g2kbj).

 

Have a look at the review which I published on this case previously at:

 

http://www.isourcerealestate.com/blog/p/informed-consent-doctrine-applied-to-commission-agreements

 

Let’s have a quick look at some of the issues in the case. There are several important background points here:

 

1)this matter arose out of a situation in March 2004

2)the buyer sued the seller for damages in April 2004

3)REBBA, 2002 was proclaimed in force on 31 March 2006

4)We now have new Forms and educational seminars, so it is not that likely that this situation will repeat itself, but who knows?

5)This trial was heard over a 5 day period in late 2013

6)The decision was rendered almost a decade after the fact

7)The delay may have been awaiting a resolution to the first lawsuit

8)Likely, the buyer dropped the case, otherwise there would be a claim here for extra expenses

9)Not disclosing dual agency, could run the risk of voiding the contract between the two principals, and that would be far more serious than the loss of commission.

 

In my view, setting aside the entire issue of commissions and commission payment and entitlement is the fundamental issue of creating an enforceable agreement between the two principals in the first place.

 

It is open to a Court to decide that there was truly no meeting of the minds resulting in an enforceable agreement. One party or both, acting through the same agent may have been duped into believing and relying upon something which in effect went to the root of the contract.

 

Consider that:

 

·Joan is Mary’s agent (seller)

·Joan is Bertha’s agent (buyer)

·Bertha knows about the double agency and accepts the risk

·Mary doesn’t know about the double agency.

 

The logically sequence here is that Mary is quite vulnerable. She is unaware of the secret (Joan acts for Bertha). It would be very easy for Joan and Bertha to gang up on Mary and take advantage of her in the circumstances.

 

So, Bertha may have what appears to be a written agreement of purchase and sale whereby Mary agrees to convey her property on a certain date for a certain price, but, it’s not worth the paper it’s written upon.

 

The consequence is: the contract is voidable at Mary’s option. If Mary simply goes along with the contract, everything is fine, if Mary wishes to void the contract, she can.

 

Bertha will not be able to sue Mary, because she participated in the advantageous arrangement. She needs to know too, that Mary was properly informed and agrees with the dual agency, otherwise she’s at risk, not having an enforceable agreement. She’s stuck at Mary’s option.

 

This would not be a good result for either party.

 

Absolutely, both principals must know about the dual agency and agree to it.

 

As a side note, dual agency has been replaced with the term “multiple representation” in the Real Estate and Business Brokers Act, 2002.

 

 Brian Madigan LL.B., Broker

www.iSourceRealEstate.com

 


Tagged with: double agency no contract ontario law
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Brian Madigan LL.B. Broker

RE/MAX West Realty Inc. Brokerage

Independently owned and operated

96 Rexdale Blvd. , Toronto Ontario,

Phone: 416-745-2300

BRMadigan@Rogers.com

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