Commission Clause #231

Jan 01, 1995

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By Gerry Neely
B.A., LL.B.

Another commission case in which the licensee's success illustrates again the importance of the wording of the commission clause.

A foreclosing mortgagee obtained an Order allowing it to appoint a receiver. The latter then gave a nonexclusive agency to a licensee to whom commission would be payable, "should you procure for us a prospective purchaser who offers a price and other terms that are acceptable."

The letter agreement further went on to state that, "this letter is intended to ensure that your commission is paid should the property be sold through yourself." The licensee agreed to waive payment of a commission, if a sale did not complete, and a deposit was forfeited to the mortgagee.

An offer was obtained by the licensee which was acceptable to the mortgagee and which was subsequently approved by the court. One of the terms of the offer was that completion was subject to tenancies existing as at the date of the offer. Between the date of the offer and the date the court order was made the receiver leased two stores.

When the purchaser learned of this it refused to close because it asserted that they were leased below market rent. The mortgagee elected not to force completion or to retain the deposit, and authorized the licensee to repay to the purchaser the $ 1 00,000 deposit received from it.

The licensee sued for commission of $59,000, and the mortgagee's defense was that no commission was payable because the sale didn't complete.

The only circumstance in which the licensee agreed to waive commission was if a deposit was forfeited to the mortgagee. The licensee's agreement did not extend to waiving the commission if a deposit was repaid to the purchaser. The licensee was the effective cause of sale and entitled to the commission.

The judge's decision in favour of the licensee was helped by the fact that neither the purchaser nor the licensee was at fault. It was the receiver's decision to lease the two units, which caused the mortgagee to breach its covenant to deliver possession subject only to the leases that existed at the date of the offer.1

***

A case - which serves as a reminder to a licensee of the importance of advising the licensee's principal immediately - when a deposit cheque given by a prospective purchaser is returned NSF. An Ontario licensee took an offer from a purchaser with a deposit which consisted of two $5,000 post-dated cheques. They were returned NSF, but the owners were not told of this until 38 days had elapsed.

Between this delay and the subsequent time spent to try and have the cheques made good, the owners were held up for 51 days. That delay was held to be negligence on the part of the licensee, which made it liable for carrying costs, including taxes and mortgage interest, plus legal fees, totaling $6,126.2

***

Even if your neighbour has a registered ten foot easement for a water line over your property, which allows him to inspect the line and its equipment, you don't have to put up with unreasonable conduct, which interferes with your right to a reasonable degree of privacy. When an inspection of a water box was the only reason for the almost weekly, if not daily entry upon your land, and when that inspection was accompanied by verbal abuse, a judge modified the easement to limit the neighbour's right of entry for inspection to one day a month without undue disturbance to you.3

  1. FWC The Land Company Inc. dba Cold well Banker The Land Company v. Kopasand Burritt Funding Inc., B.C.C.A., Victoria Registry VOI942.
  2. Morton v. Francis, 40 RPR(2d),p.234.
  3. Barcley v. Denault, S.C.B.C., Reasons for Judgment, May 16, 1994.

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