DEBBIE HANLON REAL ESTATE INCORPORATED Appellant And: MARY DWYER Respondent, 2021 NLSC 163

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : Debbie Hanlon Real Estate Incorporated v. Dwyer , 2021 NLSC 163 Date : December 6, 2021 Docket : 202101G0312 Between: DEBBIE HANLON REAL ESTATE INCORPORATED Appellant And: MARY DWYER Respondent Before: Justice Robert P. Stack On Appeal From: A Decision of the Provincial Court of Newfoundland and Labrador, Small Claims Division, File # 0120C00154, dated December 15, 2020. Place of Hearing: St. John’s, Newfoundland and Labrador Date of Hearing: November 25, 2021

Summary: A judge of the Provincial Court of Newfoundland and Labrador (Small Claims Division) held that the appellant was liable to pay the respondent damages arising out of the breach of a contract for the payment of real estate commissions. The appellant has appealed that decision to this Court arguing that the trial judge erred in finding that the respondent’s claim was not prohibited by

section 22 (

a) of the Real Estate Trading Act, 2019 , S.N.L. 2019, c. R-2.1 .

Section 22 (

a) bars an action to recover a commission for services relating to a real estate trade unless at the time the services were rendered the plaintiff was licensed under the Act .

The Court dismissed the appeal with costs to the respondent. Appearances: Michael H. Duffy Appearing on behalf of the Appellant Devin Drover Appearing on behalf of the Respondent Authorities Cited: CASES CONSIDERED: Courtney v. Cleary , 2010 NLCA 46 ; Z.B. v. Provincial Director of Adults in Need of Protective Intervention , 2020 NLCA 17 ; Newfoundland and Labrador v. Newfoundland and Labrador Teachers’ Association , 2018 NLCA 54 ; Tran v. Canada (Public Safety and Emergency Preparedness) , 2017 SCC 50 ; Hurst Real Estate Services Inc. v. Great Lands Corporation , 2020 ONCA 109 ; Butler Realty Ltd. v.

Banfield (1982), 39 Nfld. & P.E.I.R. 240, 111 A.P.R. 240 (Nfld. S.C. (C.A.)) STATUTES CONSIDERED: Small Claims Act , R.S.N.L. 1990, c. S-16 ; Real Estate Trading Act, 2019 , S.N.L. 2019, c. R-2.1 ; Real Estate and Business Brokers Act , 2002 , S.O. 2002, c. 30, Sch. C RULES CONSIDERED: Rules of the Supreme Court, 1986 , S.N.L. 1986, c. 42, Sch. D REASONS FOR JUDGMENT Stack J. : INTRODUCTION [ 1 ] This is an appeal from a decision of the Honourable Mark D. Pike, P.C.J., sitting on December 15, 2020, in the Provincial Court of Newfoundland and Labrador (Small Claims Division).

The trial judge found a binding agreement existed between the parties by which the appellant was to pay to the respondent ninety percent of the commission generated by the sale of a property. The appellant has appealed to this Court pursuant to

section 14 of the Small Claims Act , R.S.N.L. 1990, c. S-16 . The appellant submits that the trial judge erred in finding that the Real Estate Trading Act, 2019 , S.N.L. 2019, c. R-2.1 (the “ Act ”), did not prohibit payment of a commission to the respondent. [ 2 ] This is my decision on the appeal by the appellant from the decision of the trial judge. For the reasons that follow, I would dismiss the appeal and order costs in favour of the respondent. BACKGROUND FACTS [ 3 ] The appellant holds a licence to trade in real estate pursuant to the Act . The respondent is a retired real estate agent, formerly licensed to act as a salesperson pursuant to a salesperson licence issued under

section 6 of the Act . [ 4 ] On June 20, 2019, Debbie Hanlon (“Hanlon”), representing the appellant, entered into an agreement with the respondent (the “Agreement”). By the Agreement, the respondent agreed to transfer her existing and future real estate listings to the appellant, and in the event the properties sold, would receive ninety percent of the commission payable with the remaining ten percent payable to the appellant.

The Agreement required that the respondent pay her own realtor fees and, in addition, pay the appellant $200 monthly. [ 5 ] Among the listed properties transferred to the appellant under the terms of the Agreement was a house located in Paradise (the “Property”). The Property was listed with the respondent on August 2, 2019, at a price of $455,000. As part of the services relating to the listing, the respondent arranged, at her expense, for (

a) the Property to be staged; (

b) the Property to be photographed; and (

c) the placement of a sign on the Property advertising it for sale. [ 6 ] On September 10, 2019, the respondent’s salesperson licence was cancelled with an effective date of September 6, 2019. [ 7 ] On April 1, 2020, the Property sold for $365,000. Following the sale, the appellant refused to pay the respondent the money due to her relating to the sale of the Property.

[ 8 ] To recover the amount due under the Agreement, the respondent issued a Statement of Claim out of the Provincial Court of Newfoundland and Labrador (Small Claims Division). [ 9 ] A trial was held on December 15, 2020, immediately following which Pike P.C.J., in an oral decision, held that the appellant was liable to pay the respondent $8,341.16 (following set-off for some small amounts that are not pertinent to the appeal) plus costs. the positions of the parties The Appellant [ 10 ] The appellant submits that the trial judge erred in finding that the respondent’s claim was not prohibited by

section 22 (

a) of the Act , which bars an action to recover a commission for services relating to a real estate trade unless at the time the services were rendered the plaintiff was licensed under the Act . In the alternative, it submits that the trial judge erred in finding that there was a binding agreement in any event, because it is contrary to the Act having been made for an illegal purpose. The Respondent [ 11 ] The respondent submits that the parties had an agreement to share the commission on the sale of the Property, which was initially listed by the respondent.

Because the respondent held a sales licence at the time she rendered services in relation to the sale, payment to her under the Agreement is not prohibited by the Act . issue [ 12 ] Did the trial judge err in holding that the payment of commission to the respondent for the services she rendered in relation to the sale of the Property is not prohibited by the Act ? The decision at trial [ 13 ] All of the background facts listed above were found by the trial judge based upon the evidence adduced at the trial.

Furthermore, during the course of the trial, the trial judge had extensive discussions with the parties regarding the nature of the Agreement and the application of the Act to it. In particular, he explored in detail the sections of the Act that the appellant claims prohibit payment of the respondent’s claim. [ 14 ] In his oral decision given on December 15, 2020, the trial judge accepted the testimony of the respondent as to the nature of the Agreement, the circumstances around the listing of the Property, and the events after the Property was sold. He said, “Ms.

Dwyer’s testimony was straightforward, supported by the documentation, the texts, so I found her to be quite credible, and I accept her testimony” (Transcript, page 107). [ 15 ] The trial judge was less accepting of the testimony of Hanlon on behalf of the appellant. He found that her testimony disclosed “animosity” and that the animosity was “somewhat gratuitous” (Transcript, page 108). He did, however, find that her testimony supported the essential terms of the Agreement, namely that there was to be a 90/10 split of commission between the respondent and the appellant. He went on to find Ms.

Hanlon’s position “incongruent” insofar as she claimed to be the respondent’s friend, yet attempted to unilaterally change the Agreement to a 50/50 split.

The trial judge found that when the respondent did not accept the proposed revised terms of the Agreement, the appellant claimed that the Agreement was illegal such that the respondent should not receive any payment at all (Transcript, pages 107 and 108). [ 16 ] The trial judge’s findings relating to the formation of the Agreement and its terms are not under appeal. [ 17 ] The trial judge did not refer to the specific issue before me in detail in his oral decision. As I noted above, however, he did canvass the issue extensively with counsel during the evidence and again during submissions.

His conclusion is set out at pages 108-109 of the Transcript: The legislation itself, as I indicated, you know, in testing the positions of the counsel for the parties, is consumer protective legislation. I accept Mr. Duffy’s submissions in that regard, but I don’t feel that it’s fair under the circumstances here that it be used—that the Defendant be able to—the Defendant corporation be able to use this as a shield not to pay monies which I feel and find were legally and properly owed to the Plaintiff. I can see why the provisions are there, as we discussed back and forth, to protect the public.

Similarly with the agents and—or brokers themselves, licensed real estate agents can’t pay monies out to someone, salespeople who are not licensed because the government wants to regulate through the board the behaviours, activities of people engaged in the buying and selling of real estate on behalf of others. That’s the purpose of this, and the purpose of legislation is not to prohibit someone in Ms. Dwyer’s or Plaintiff’s position from recovering what is legally entitled to her. I don’t regard the object of the contract here to be illegal, so the agreement is valid, enforceable by law.

I’ll allow the Plaintiff’s claim of $9,219.15. Standard of Review [ 18 ] The standard of review to be applied by an appellate judge reviewing the decision of a trial judge is well settled and is as set out in Courtney v. Cleary , 2010 NLCA 46 . In Courtney , Cameron J.A. stated for the court, at paragraph 15: 15 The standards of review applied by this Court were discussed in Ring v. Canada (Attorney General) , 2010 NLCA 20 (N.L. C.A.), at para. 6 :

The standard of review applied by an appellate court depends upon the nature of the matter being reviewed. A pure question oflaw is reviewed on a standard of correctness and an appellate court is free to replace the opinion of the trial judge with its own. Findingsof fact, on the other hand, cannot be reversed unless the trial judge has made a palpable and overriding error. A determination of whethera legal standard was met involves the application of a legal standard to a set of facts which is a question of mixed fact and law.

Aquestion of mixed fact and law is subject to a standard of palpable and overriding error unless it is clear that the trial judge made someextricable error in principle with respect to the characterization of the standard or its application, in which case the error may amount toan error in law and the applicable standard is correctness. These principles are well established: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235. … [19] The standard of review for a question of statutory

interpretation is as stated in Z.B. v. Provincial Director of Adults in Need ofProtective Intervention, 2020 NLCA 17. At paragraph 32, Butler J.A., held for the court: 32 The standard of review on a question of statutory

interpretation is correctness but whether a detention is lawful is a question ofmixed fact and law subject to review on the deferential standard of palpable and overriding error unless there is an extricable error inprinciple. [20] The trial judge’s determination that securing the listing and readying the Property for sale were included in the term “services”referred to in

section 22(

a) is a matter of statutory

interpretation. Therefore, it is reviewable on a correctness standard. His application ofthat determination to the facts that he found from the evidence is a mixed question of fact and law, which will not be disturbed absentpalpable and overriding error. [21] The general principles relating to statutory

interpretation were reiterated by White J.A for the majority in Newfoundland andLabrador v. Newfoundland and Labrador Teachers’ Association, 2018 NLCA 54 at para. 15: 15 The appellate judge rightly pointed to Archean Resources Ltd. v. Newfoundland (Minister of Finance), 2002 NFCA 43, 215 Nfld.& P.E.I.R. 124 (Nfld. C.A.) as the leading case in this province on interpreting provincial legislation. At paragraph 22 Green J.A. setsout the approach to be followed: [22] Instead of mandating some fictionalized search for a collective “legislative intention”, s. 16 [of the

Interpretation Act]directs the court to consider every provision “remedial” and to interpret it so that it “best” ensures the attainment of its “objects”according to its “true” meaning.

This requires a consideration, as an integral part of the interpretive exercise, of the problem or“mischief” to which the legislature directed its legislative act as a remedy and then the drawing of an inference, based on the language ofthe whole enactment and the court’s general knowledge of the state of the pre-existing law and any information as to the broad socialcontext in which the legislative act occurred, as to what, broadly speaking, the object or objects of the legislative act must have been.

Theend result is to arrive at a “true” meaning. ... [22] Another way of framing this is as stated by the Supreme Court of Canada in Tran v. Canada (Public Safety and EmergencyPreparedness), 2017 SCC 50. There Côté J. stated for a unanimous court at paragraph 23: 23 The modern principle of statutory

interpretation is that “the words of

an Act are to be read in their entire context and in theirgrammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament” (E. A.Driedger, Construction of Statutes (2nd ed. 1983), at p. 87)…. the legislative regime [23] Several sections of the Act bear on the matter before me. I have set them out below. [24] Section 2(1)(cc) of the Act defines “trading”: 2.

(1) In this Act … (cc) "trade" or "trading" includes (

i) a disposition or acquisition of or transaction in real estate by sale, purchase, agreement for sale, exchange, option, lease orotherwise, (ii) an offer or attempt to list real estate for the purpose of a disposition, acquisition or transaction, and

(iii)

an act, advertisement, conduct or negotiation, directly or indirectly, in furtherance of a disposition, acquisition, transaction, offer or attempt. [ 25 ]

Section 16 (

b) of the Act provides that a person may not “trade” or hold themselves out as a salesperson, unless the person holds a valid sales licence under the Act : 16. A person shall not … (

b) trade or hold himself or herself out as a salesperson, unless he or she holds a valid licence issued under paragraph 6(1)(b), (

d) or (e). [ 26 ]

Section 22 of the Act bars payment of commission or other remuneration in certain circumstances: 22. An action shall not be brought for commission or remuneration for services relating to a trade unless (

a) at the time the services were rendered the person bringing the action was licensed under this Act or exempted from licensing under this Act . [ 27 ]

Section 29 prescribes who can work with a broker (such as the appellant) and receive a commission or other remuneration: 29. A broker shall not (

a) employ or permit the salesperson of another broker or a person who is not licensed as a salesperson under this Act to trade; or (

b) pay commission or other remuneration to a person referred to in paragraph (a). law and analysis [ 28 ] The statutory

interpretation question before me is whether the act of obtaining a listing for the sale of real estate is included in the term “services” as it is used in

section 22 (

a) of the Act . [ 29 ] The trial judge found that the Act had as its purpose the protection of the public. I agree. It is clear from reading the Act as a whole that it is intended to prohibit people who are not subject to regulation under the Act from trading in the acquisition and disposition of real estate in the province.

No issue is taken on this appeal with the trial judge’s characterization of the Act . [ 30 ] The appellant submits that other than being involved in negotiating the listing agreement while she was still a licensed salesperson, the respondent played no role in procuring the offer that led to the sale of the Property or in efforts to conclude the transaction. Because she was not involved in procuring the offer for the Property, says the appellant, she provided no services that would exempt her from the operation of

section 22 (a). [ 31 ] The trial judge did not err when he found that obtaining a listing amounted to the rendering of services for the purposes of

section 22 (

a) of the Act . Provisions in a statute cannot be read in isolation. They must be interpreted harmoniously with the scheme of the legislation. In this case, to understand how

section 22 (

a) of the Act applies to the facts as found by the trial judge, it must be read in conjunction with section 2(1) (cc),

section 16 , and

section 29 . [ 32 ] The definition of “trade” in section 2(1) (cc) of the Act includes more than direct involvement in the ultimate disposition or acquisition of real estate. By section 2(1)(cc)(ii), an offer or attempt to list real estate constitutes a trade in real estate. Although the appellant is correct that the Act is intended to protect the public from unregulated trading in real estate, I cannot agree with its position that the actions identified in

section 2 (cc)(ii) cannot amount to “services” rendered for the purposes of

section 22 (a). While it is true that

section 2(cc)(iii) defines “trade” and not “services”, they are two sides of the same coin. Necessarily, a person who provides services leading to the listing and sale of real estate is engaged in trading for the purposes of the Act . The rendering of such services while licensed is enough to comply with

section 22 (a). [ 33 ] Furthermore, because the respondent held a salesperson licence when she “traded”, i.e., obtained the listing for the Property, she was not in violation of

section 16 of the Act . Because the respondent was licensed when she procured the listing agreement, it cannot be said that she traded, or held herself out as a salesperson, without holding a valid licence at the time. [ 34 ] Similarly, because the respondent held a licence at the time the services were rendered, the payment of a share of the commission to her is not prohibited by

section 29. There was no suggestion that the respondent was employed by the appellant or was permitted by it to trade while not being licensed as a salesperson under the Act . The prohibition in

section 29 (

b) against paying a commission or other remuneration relates to a person who has traded in real estate without holding a licence. In light of

section 22 (a), it

cannot mean that a person is barred from being paid for past services rendered while licensed. [ 35 ] Although there do not appear to be any cases on point in this province, I find persuasive the reasoning of the Ontario Court of Appeal in Hurst Real Estate Services Inc. v. Great Lands Corporation , 2020 ONCA 109 . There the court was dealing with

section 9 of the Ontario Real Estate and Business Brokers Act , 2002 , S.O. 2002, c. 30, Sch. C (the “ Ontario Act ”), which is to the same effect as

section 22 of the Act .

Section 9 of the Ontario Act says: 9 No action shall be brought for remuneration for services in connection with a trade in real estate unless at the time of rendering the services the person bringing the action was registered or exempt from registration under this Act and the court may stay any such action upon motion. [ 36 ] In Hurst , the parties had an agreement to share commission on a property, initially listed by the respondent, in the event that the property was later sold. When the property was sold by the appellant, the respondent was no longer registered under the Ontario Act .

The appellant refused to honour the agreement, arguing that the respondent was barred from recovering commission because they were de-registered at the time of sale. The court in Hurst disagreed, finding that because the respondent was registered when they rendered services related to the property, the fact that they were later de-registered was of no consequence. The court held that they were not barred by

section 9 of the Ontario Act : 15 The appellants renew their argument made at trial that the respondent Hurst Real Estate is barred by s. 9 of the Act from bringing this action. A person bringing an action for real estate commission must have been registered under the Act or exempt from registration under the Act , at the time when the services were rendered. The appellants argue that because Hurst Real Estate was de-registered at the time of the sale, it cannot bring this action. 16 We disagree. The services were rendered by Hurst, first on behalf of Hurst Real Estate and later on behalf of DTZ.

At the time when services were rendered by Hurst through Hurst Real Estate it was duly registered. The fact that it was de-registered later is of no consequence to this action. [ 37 ] The appellant in this case submits that Hurst is distinguishable on its facts. There, the respondent found a buyer for the property in question but was no longer registered under the Ontario Act when the transaction closed. Consequently, the appellant submits that the finding of a buyer is a service which, if the matter had been litigated in this province, would constitute the rendering of services for the purposes of

section 22 (

a) of the Act . That is, says counsel for the appellant, simply procuring a listing agreement, which may or may not lead to a sale, is not sufficient to overcome

section 22 (a). [ 38 ] I do not agree with the appellant’s position. Where Hurst differs from the matter at hand is that the agreement there provided for Mr. Hurst being entitled to a share of the commission only in the event that an offer procured by him was accepted by the vendor (paragraph 4). Here, all that was required for the respondent to be entitled to a share of the commission from the sale of the Property was that she obtain a listing agreement. Procuring a listing and procuring an offer are distinct steps on the path to concluding a sale of real estate.

Both are services; they differ in degree only, not in kind. [ 39 ] The appellant’s claim that the respondent played no beneficial role in the procurement of the offer for the Property is not supported by the evidence or the facts as found by the trial judge. It is logical that an offer cannot be procured to purchase real estate until the property is listed and made ready for presentation to the public for sale.

There is no logic to the assertion that the provision of services only manifests itself further along the path from listing to closing. [ 40 ] Consequently, as in Hurst , in this case it is of no import that when the transaction for the sale of the Property closed, the respondent no longer held a salesperson licence under the Act . All that matters is that she was licensed when she obtained the listing agreement and readied the Property for sale—services that contributed to the ultimate sale. [ 41 ] The appellant relies on Butler Realty Ltd. v. Banfield (1982), 39 Nfld. & P.E.I.R. 240, 111 A.P.R. 240 (Nfld.

S.C. (C.A.)). There, a real estate agent obtained an exclusive listing for the sale of a property. The vendor sold the property to a person who had not been introduced to the property by the agent. Subsequently, when the transaction closed, the vendor refused to pay a commission to the agent. The Court of Appeal agreed with the trial judge that the vendor had breached the contract with the agent.

It also agreed that damages would be for the amount of the commission provided for in the agreement only if the agent could prove that but for the breach, he would have been able to effect a sale within the time prescribed by the agreement. The agent in Butler had done very little to find a buyer for the property, so it was held that he was only entitled to nominal damages of $300. [ 42 ] Butler is readily distinguishable from the case at hand. First, it involved an agent and its customer, not a salesperson and a broker. More importantly, Butler does not address the

interpretation of the Act (or its predecessor) for the purposes of determining what services would entitle a salesperson to a commission from a broker. [ 43 ] I find that the

interpretation of the operative sections of the Act by the trial judge is consistent with their grammatical and ordinary sense. Importantly, that

interpretation is harmonious with the scheme of the Act , the object of the Act , and the intention of the Legislature. Furthermore, the trial judge did not err in his application of the Act to the facts found by him. [ 44 ] Based upon the foregoing, the trial judge made no error when he found that the respondent was licensed under the Act when she performed the services in question. Therefore,

section 22(

a) did not bar her claim in the Provincial Court. [ 45 ] Furthermore, there is no merit to the appellant’s alternative argument. Because the Agreement provided for the payment of a commission to the respondent for services rendered while she was licensed under the Act , it was not made for an illegal purpose. [ 46 ] The appellant’s real issue seems to be that it expended more time and effort obtaining an offer and concluding the sale than did the respondent. It says that the respondent was not involved in any of the efforts required to effect the actual agreement of purchase and

sale and in furtherance of certain undisclosed efforts required to close the transaction. Because of this, the appellant seems to feel that it is unfair for the respondent to receive ninety percent of the commission. This is apparently why the appellant first tried to renegotiate the Agreement so that the respondent would be paid fifty percent. It was only when the unilateral renegotiation failed that the appellant took the position that the Agreement was unlawful. Whether or not the Agreement was a good bargain on the part of the appellant is not for me to say.

There was ample evidence upon which the trial judge could find that the Agreement was made whereby the respondent would receive ninety percent of the commission generated by the sale of the Property. dispostion [ 47 ] The trial judge did not err in his

interpretation of the Act and its application to the facts as found by him. I would order that the appeal be dismissed and that the respondent have her costs on Column 3 of the Scale of Costs in the Appendix to Rule 55 of the Rules of the Supreme Court, 1986 , S.N.L. 1986, c. 42, Sch. D . _____________________________ Robert P. Stack Justice