Commission Claims Made in Small Claims Court #275
By Gerry Neely
The increase several years ago of Small Claims Court monetary jurisdiction to $10,000, opened the door for a number of licensees to sue for payment of a commission which they might otherwise have chosen to forget about. The advantage is that there are no costs, other than minor court costs, that can be assessed against the licensee if the claim is dismissed. The disadvantage is that the dollar limit is not greater.
With these pros and cons before him a White Rock licensee, whose commission was $52,000, sued in Small Claims Court for $10,000. He took this action upon advice that the success of his claim was difficult to predict.
The claim was based upon a contract between the developer and the licensee's agency with respect to a specific property the developer needed as part of a land assembly. The contract, which was the standard form Fraser Valley contract, had been amended to provide that commission would be payable, even if a binding contract of sale was entered into more than 90 days after the date of expiration of the listing contract. An offer made to the owner of the property in August of 1992 was rejected because the owner wanted to wait until a neighbourhood community plan for the area had been completed.
That took almost a year and a half, during which period the licensee kept in touch with the developer and made one or two approaches to the owner. When the owner learned from his neighbour that he had sold his property to the developer, and the price and terms upon which the sale was made, he dealt directly with the developer.
Upon these facts the developer refused to pay commission, arguing that while the licensee had maintained a relationship with the developer, the licensee had not cultivated as much of a relationship with the owner as the developer expected.
That argument failed. The long delay was attributable to the time spent in approving the neighbourhood control plan. The parties were bound by the contract, which did not limit the time within which the sale of the property might be made. The licensee was the effective cause of sale, the failure to follow up with the sellers was a non-issue. Judgment was given for $10,000.1
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A Ucluelet agency has taken the same route successfully in two cases brought into Small Claims Court. In one case a licensee brought a prospective buyer to a FSBO property. The owner signed a fee agreement to pay a commission, if a sale was made to the buyer. Neither the offer made by the buyer, nor the counter offer made by the seller were accepted.
Four months later when the owner offered the property for sale again, the licensee contacted the earlier prospective buyer who was not interested. However, in another month, a contract between the two parties was entered into which the licensee became aware of when the sale completed.
The sale price had been reduced by the approximate amount of the real estate commission. The judge held that this action, together with the manner in which the documents were drawn and the attempt to conceal the sale, was improper conduct on the part of the owner. The judge decided that the agent's introduction of the buyer was the effective cause of the sale and that the sale would have been effected by the licensee had it not been for these actions. judgment was given in favour of the licensee for $5,600.2
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The same licensee sued successfully for a commission in Small Claims Court, in connection with a somewhat similar set of circumstances, where the buyer introduced by the licensee bought the property directly from the owner, in a manner intended to avoid payment of a commission.
In this case, the licensee had a listing on and off for a period of approximately 18 months. The licensee showed the property to the buyer at least two or three times before the buyer decided to wait until his house sold.
The final listing, which entitled the licensee to a commission on the sale of the property to any buyer introduced to it by the licensee, was to expire on February 28th, 1995. Two offers were made directly to the owner by the same buyer, the first dated February 18th and the second March 20th and each for the same amount.
The judge found that the licensee's introduction of the buyer, her continued work with them, the fact that the buyer's reason for deferring an offer was for the sale of their own home first, meant that she was the effective cause of sale and entitled to payment of the commission.3
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