No agreement to sell immovable was concluded, brokerage enterprise not entitled to commission

Supreme court | Sale of Land

AGREEMENT OF PURCHASE AND SALE

No agreement to sell immovable was concluded, brokerage enterprise not entitled to commission

Sellers signed standard form exclusive brokerage contract giving brokerage enterprise a mandate to sell their immovable. Contract provided that obligation to pay brokerage enterprise’s commission would be triggered, inter alia, when “agreement to sell the immovable” was concluded during term of contract or if “the seller voluntarily prevents the free performance of the contract”. Promise to purchase initially accepted by sellers gave buyer a right to withdraw promise if not completely satisfied with due diligence results. When it was discovered that immovable might be affected by environmental contamination, buyer attempted to impose condition that sellers decontaminate immovable at their expense. Sellers refused and sale did not go through. Sellers refused to pay commission to brokerage enterprise. Superior Court dismissed brokerage enterprise’s action but Court of Appeal allowed brokerage enterprise’s appeal. Sellers appealed. Appeal allowed. Promise to purchase is binding on parties as soon as it is concluded but until it is possible for one party to bring action to compel transfer of title, there is no “agreement to sell the immovable” within meaning of brokerage contract. Once environmental assessment disclosed that soil was contaminated, buyer clearly expressed intention not to conclude sale until property decontaminated at sellers’ expense. Buyer therefore repudiated initial promise and submitted new offer to purchase. No agreement to sell immovable was concluded and brokerage enterprise not entitled to commission. Nor was payment of commission triggered by sellers voluntarily preventing free performance of brokerage contract. Under contract, sellers did not have obligation to decontaminate property or renegotiate terms of initial promise to purchase. Although brokerage contract contained sellers’ declaration that immovable was in accordance with environmental protection laws and regulations, declaration could not, on its own and in absence of bad faith, serve as basis to argue that sellers voluntarily prevented free performance of contract. Accepted promise to purchase is not a sale and does not produce any of effects of a sale. Sellers committed no fault in relation to obligations under promise to purchase or brokerage contract.
Société en commandite Place Mullins c. Services immobiliers Diane Bisson inc. (Mar. 18, 2015, S.C.C., McLachlin C.J.C., Abella J., Rothstein J., Cromwell J., Wagner J., Gascon J., and Côté J., File No. 35461) Decision at 236 A.C.W.S. (3d) 779 was reversed.  254 A.C.W.S. (3d) 87.

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