Commission - Solicitor's Liability for Payment; Garnishee Orders #92

Oct 01, 1986

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By Gerry Neely
B.A. LL.B.

The decision of an Ontario District Court Judge is good news for licensees but bad news for solicitors who are too dutiful in carrying out their clients' instructions.

A vendor had accepted an offer containing in the standard form of offer to purchase the following words:

"the undersigned accepts the above offer and agrees with the agent above named in consideration for his services in procuring the said offer, to pay him upon the date above fixed for completion, a commission of 6% of an amount equal to the above mentioned sale price, which commission may be deducted from the deposit. I hereby irrevocably instruct my solicitor to pay to the agent any unpaid balance of commission from the proceeds of the sale."

The agent wrote to the vendor's solicitor to draw to his attention the direction in the offer, and told the solicitor to send the cheque to a specific address. The vendor revoked its original instructions to its solicitor with the result that the solicitor paid all of the proceeds of sale to the vendor. The agent then brought an action against the solicitor for the vendor claiming payment of the balance of commission of $3,130.00. The agent argued that the direction in the offer to purchase, was an equitable assignment of the commission funds which was enforceable personally against the solicitor once the proceeds of sale came into his hands. To this, the solicitor argued that there was no consideration for the assignment.

The Court decided that obtaining the offer constituted sufficient consideration to support the binding assignment. The solicitor then argued that he should not be liable personally for the breach but the Court in citing a British Columbia case, stated that once it was found that there was an equitable assignment supported by consideration, the solicitor was personally negligent for not paying the assigned funds to the agent.1

* * *

While on the subject matter of commissions, the difficulty in garnisheeing any commissioned salesman's wages is evident from the facts of one case. Over a five or six month period, a creditor served some 20 garnishee orders upon the salesperson's employer, without receiving any funds. It then sued the employer unsuccessfully for the amount owed to it, arguing that it was entitled to a summary judgment against the employer.

The reason the creditor was unsuccessful was because a commission payable to a real estate salesperson is a wage within the meaning of the Court Order Enforcement Act.

No "wage" can be successfully garnisheed unless the wage is payable or due within 7 days after the date of the Affidavit sworn in support of the garnishee order.2

  1. Family Trust Corporation v. Morra, 39 R.P.R. 187.
  2. Crown Trust Company v. Licensee, SCBC Nanaimo Registry SC4147.

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