Monday, January 21, 2008

Court refuses to reduce commission payable because lawyer-vendor and realtor did not have clean hands

Citation:

Pierce v. Catalano

Date:

20080121

2008 BCPC 0008 

File No:

06-13760

 

Registry:

Vancouver

 

 

IN THE PROVINCIAL COURT OF BRITISH COLUMBIA

    

 

 

 

BETWEEN:

LAWRENCE E. PIERCE

CLAIMANT

 

 

AND:

BEN CATALANO

    

DEFENDANT

 

 

   

    

   

 

 

 

 

REASONS FOR JUDGMENT

OF THE

HONOURABLE JUDGE P.R. MEYERS

 

 

 

 

 

 

 

 

Appearing on their own behalf:

Lawrence E. Pierce

Counsel for the Defendant:

B. Hara

Place of Hearing:

Vancouver, B.C.

Dates of Hearing:

October 31, 2007 & November 20, 2007

Date of Judgment:

January 21, 2008

             

 


[1]        Mr. Pierce (“Plaintiff”) owned a house in White Rock.  He signed a Multi-Listing Agreement with Wholesale Realty Ltd.  The listing was placed on the MLS Listing Service by Wholesale Realty Ltd.  What was somewhat unusual about the Multiple Listing Agreement, was that:

(a)        Wholesale Realty Ltd. were to be paid, as the listing broker, a flat gross commission of $10,000.00 plus GST, upon the occurrence of any of the standard conditions in the Real Estate Board of Greater Vancouver, Multiple Listing Contract;

(b)        To assist in obtaining a buyer, the listing broker was authorized to pay any co-operating broker $10,000.00 plus GST;

(c)        Wholesale Realty Ltd. would receive a flat fee of $600.00 “up front” for their anticipated assistance in effecting an eventual sale of the property.

 

[2]        The $600.00 was paid to Wholesale Realty Ltd., the house was listed on MLS for $975,000.00 and a perspective buyer came forth.

[3]        The prospective buyer was a Mr. Little.  He came to see the house with his friend, Mr. Leonard Lauriente.  Mr. Little made an offer to the buy the house, but that offer “collapsed”.

[4]        Approximately one month later, Mr. Lauriente was at the Art Knapp Nursery in Surrey.  The Plaintiff and his partner, Ms. Margaret Leader, by coincidence, were there also.  Ms. Leader recognized Mr. Lauriente from the previous month when he had viewed the house with Mr. Little.  She asked Mr. Lauriente if he was perhaps interested in buying the house.  She told him that the Little offer had collapsed, as had two other offers.  Mr. Lauriente said that he had recently been away on vacation in Cuba and had not wanted to get involved in purchasing any property that his friend, Mr. Little, was still interested in.  He went on to say that if Mr. Little was no longer a potential buyer, he would be interested in possibly buying the property.

[5]        Mr. Lauriente has a cousin, Mr. Catalano, who is a real estate agent.  Mr. Lauriente was in the home construction business and had, in the past, exclusively used Mr. Catalano as his realtor.  Mr. Lauriente told Ms. Leader and Mr. Pierce that “my cousin, the realtor will contact you”.  Mr. Lauriente testified that there was no discussion about not using realtors, reducing fees or commissions.  Mr. Lauriente said that he certainly would not have been able to make any commitments at all concerning any fees or commissions that Mr. Catalano would be entitled to.  He also said that he would not think about buying a property without a realtor.   Mr. Lauriente testified that he was fairly certain that Mr. Catalano had actually also written Mr. Little’s (collapsed) offer to buy the property a month before.

[6]        The Plaintiff’s testimony was different.  He said that Mr. Lauriente told him that he had a realtor friend who would write up the contract and charge him just a couple of thousand dollars.  Ms. Leader testified that no one mentioned anything about anyone reducing their fees or commissions.

[7]        I find as a fact, that there was no discussion about reducing commissions or fees and the only mention of a realtor being involved, occurred was Mr. Lauriente told the Plaintiff and Ms. Leader, that his realtor cousin would phone them to make an offer.

[8]        The next thing that happened was that Mr. Catalano drove out to the Whiterock property and presented a written offer to the Plaintiff for $950,000.00.  The Plaintiff took the offer and drove home to think about it.  The next day, the Plaintiff called Mr. Catalano and said that he was planning to make a counter-offer.  Mr. Catalano told him that his client wasn’t interested in a counter-offer, so he shouldn’t bother.  Before the call, the Plaintiff had written into the offer, a counter-offer of $960,000.00, but then scratched it out, after speaking with Mr. Catalano.  The Plaintiff then signed the Acceptance of the Offer as it was originally made and immediately faxed it back to Mr. Catalano.  The price agreed to was $950,000.00

[9]        Mr. Catalano and Mr. Pierce never discussed with one another, even the “possibility”, of reducing Mr. Catalano’s fees.  There were several opportunities to do so.  Such a discussion could have been initiated by the Plaintiff during his face to face meeting with Mr. Catalano or when he sent faxes to Mr. Catalano.  Those opportunities were available to the Plaintiff during the approximately four weeks of discussions between the Plaintiff and Mr. Catalano.

[10]       When Mr. Catalano testified, he said that Mr. Lauriente never asked him to reduce his fees or commission;  Mr. Pierce didn’t ask him to reduce his fees or commission;  Ms. Leader did not ask him;  and no one from Wholesale Realty asked him, either.  He said that he certainly never would have volunteered to reduce his fees or commission.  Mr. Catalano testified that he had written the failed original Offer to Purchase for Mr. Little;  that he had been Mr. Lauriente’s realtor on a number of previous purchases and sales.  He said that he wrote up the Offer for Mr. Lauriente and, as was the custom, he telephoned Mr. Mikulas of Wholesale Realty Ltd. to arrange for presentation of the Offer.  Mr. Mikulas told him that he could present the Offer directly to the Plaintiff and he did so.  The Plaintiff took the Offer with him overnight;  the Plaintiff, called him the next day to say he would be counter-offering at $975,000.00;  and Mr. Catalano said that he told the Plaintiff that his clients were not interested in a counter-offer.  A few moments later, the Plaintiff called him back, saying that he would be faxing back an Acceptance of the Offer at the offered price of $950,000.00.  There was no discussion about reducing Mr. Catalano’s fees during either their one face to face meeting, their telephone conversations and, nothing was written in the Acceptance that the Plaintiff faxed back to Mr. Catalano.

[11]       The sale, presumably, was to press ahead at a sale price of $950,000.00, with commissions and fees being as they were set out in the original Multi-Listing Agreement as between Wholesale Realty Ltd. and the Plaintiff.  There was a firm, final and binding contract as between the Plaintiff and Mr. Lauriente, and there was a firm, final and binding contract between the Plaintiff and Wholesale Realty Ltd.

[12]       Although Mr. Pierce was correct in saying that, as between Mr. Lauriente and himself, there was a valid and enforceable contract to sell the house to Mr. Lauriente for $950,000.00, there were also other valid and enforceable contracts that Mr. Pierce had signed. He signed a Multiple Listing Agreement with Wholesale Realty Ltd. requiring him to pay (via Wholesale Realty Ltd.) $10,000.00 plus GST to any co-operating broker.  Mr. Catalano was a “co-operating broker” and as “a co-operating broker”, he was entitled to receive a fee of $10,000.00 plus GST. 

[13]       However, it was Mr. Catalano who, after the Offer was presented, chose to muddy the waters in order to facilitate a private arrangement between himself and the buyer, Mr. Lauriente.  Instead of just privately making whatever arrangements for dividing up his $10,000.00 fee, he decided to involve the Plaintiff (Vendor) in these arrangements. Mr. Lauriente previously did some landscaping work for Mr. Catalano.  Mr. Catalano owed him $8,000.00 for the work.  Mr. Catalano decided that if he could re-structure the paperwork of the house sale, without affecting the financial outcome for the vendor (the Plaintiff), he might be able to benefit himself and Mr. Lauriente.  Mr. Catalano’s plan was to have the Contract of Purchase and Sale and the Fee Agreement, reflect a lower price for the house and a lower commission being paid for his real-estate efforts.  The results he sought were:

(a)        Mr. Catalano would end up with a T5 Income Tax Form, showing that he had earned only $2,000.00, rather than a $10,000.00 commission on the sale; and

(b)        Mr. Lauriente would be paid the $8,000 that Mr. Catalano owed him, by being able to buy the house for less.  This would enable Mr. Lauriente, should he wish to do so, to avoid reporting the $8,000.00 as income from his landscaping business.

 

[14]       He was an experienced realtor and although he intended the two Addendums to be read together as one Addendum, he chose (mistakenly) to fax them to the Plaintiff (Vendor) as two separate and distinct documents.  Neither Addendum made any reference to the other Addendum.  One Addendum (eventually signed by the Plaintiff) reduced Mr. Catalano’s commission to $2,000.00 and the other Addendum (never signed by the Plaintiff) set out a condition to reduce Mr. Catalano’s commission to $8,000.00 and to reduce the selling price from $950,000.00 to $942,000.00

[15]       It is true that Mr. Pierce effectively seized upon the opportunity that presented itself, to sign, accept and return only one of the Addendums (the one that reduced the commission to $2,000.00) rather than both and thereby be able to, “short change” Mr. Catalano and benefit himself, it was Mr. Catalano who opened that door.

[16]       Often, the concept of “Equity” is resorted to, in order to prevent an injustice.  On the surface of it here, there would be an injustice if Mr. Catalano were to receive only a $2,000.00 fee, when he was really entitled to a $10,000.00 fee as per the signed Multi-Listing Agreement which authorized a $10,000.00 commission to a co-operating realtor.  However, the Court has to look at Mr. Catalano’s purpose in faxing those two Addendums to the Plaintiff.  His purpose was not a proper one.  The Court also has to look at the fact that a legally enforceable Contract of Purpose and Sale was in existence:  such a contract could only be amended by an Addendum signed by both Vendor (the Plaintiff) and the Purchaser (Mr. Lauriente).  The Addendum purporting to reduce the price to $942,000.00 and the brokerage fee to $8,000.00 was not signed by both the Purchaser and the Vendor (Plaintiff).  It was only signed by the Purchaser.

[17]       The Court also has to decide whether a contract (Multiple Listing Agreement) which is signed by two parties (Wholesale Realty Ltd and the Plaintiff) can be unilaterally amended by one of the parties (the Plaintiff) by signing an Amendment with some third party (Mr. Catalano) who was not a party to the original contract?  The answer, of course, is no.  That then leaves the original Multiple Listing Agreement in place and enforceable.  The original Multiple Listing Agreement required the Plaintiff to pay (through Wholesale Realty Ltd.), $10,000.00 plus GST to the co-operating realtor, who in this case was, Mr. Catalano.

[18]       Conclusion:

(1)        The Original Multiple Listing Agreement, signed by the Plaintiff and Wholesale Realty, remained legally intact and enforceable;

(2)        The Contract of Purchase and Sale, signed by both the Plaintiff (Vendor) and Mr. Lauriente (Purchaser), remained legally intact and enforceable;

(3)        The Addendum decreasing the sale price to $942,000.00 was not signed and accepted by the Plaintiff (the Vendor) and therefore is not enforceable;

(4)        The Addendum purporting to change the fees payable to the co-operating broker, required the signatures of both signatories to the original Multiple Listing Agreement and the original parties to the Multiple Listing Agreement did not both sign the Addendum and accordingly that Addendum is not valid and enforceable.

(5)        The final result then, is that we had one party, Mr. Catalano, trying to create documentation for an improper purpose (showing less taxable income for himself and Mr. Lauriente), on the one hand and on the other hand, Mr. Pierce, trying to take advantage of an opportunity that arose, whereby he could sign one, rather than two Addendums, and thereby try to reduce the commission which he had originally agreed to pay.  Equity should not come into play here, because neither party has come with “clean hands”.

[19]       Accordingly, the case is decided purely on the law and that is, that Mr. Catalano was and is entitled to a commission of $10,000.00 plus GST.  The Plaintiff’s case against Mr. Catalano, is dismissed.

[20]       Both parties shall, in the circumstances, be responsible for their own costs.

 

 

________________________

P. R. Meyers

Provincial Court Judge