Executive Summary: Key Legal and Evidentiary Issues

• Dispute over entitlement to a buyer’s commission on a residential purchase where the buyer was a registrant employed by one brokerage but represented by another.
• Interpretation and effect of TRREB Arbitration Guidelines and by-laws in ousting Superior Court jurisdiction over commission disputes between member brokerages.
• Application of issue estoppel and abuse of process principles where a prior TRREB arbitration and internal appeal had already determined entitlement to commission.
• Question whether Salerno could be bound by the TRREB arbitration decision when it was not formally a party but its interests were represented by RE/MAX as privy.
• Consideration of whether Intercity’s claims against Salerno were truly distinct (e.g., inducing breach of contract) or simply a relitigation of its failed claim to commission.
• Assessment of whether the TRREB arbitration process and outcome were sufficiently “judicial” to attract issue estoppel and preclude subsequent court proceedings.

Facts of the dispute

The case arises from a commission dispute between two real estate brokerages over a residential home purchase in Vaughan, Ontario in February 2021. Steven Cardwell and his wife purchased a home listed by RE/MAX West Realty Inc. (“RE/MAX”), which acted as the listing brokerage for the vendors. The Cardwells were represented on the purchase by Salerno Realty Inc., Brokerage (“Salerno”), which acted as the co-operating brokerage on the transaction. At the time of the purchase, Mr. Cardwell was also employed as a salesperson by Intercity Realty Inc., Brokerage (“Intercity”) and was registered under the Real Estate and Business Brokers Act, 2002 (REBBA). Intercity did not participate in the transaction in any brokerage capacity. When Intercity later learned of the purchase, it claimed that, by virtue of Mr. Cardwell’s employment relationship, the multiple listing agreement, and the operation of REBBA, Intercity should be treated as a co-operating brokerage for Mr. Cardwell and therefore entitled to share in the 2.5% buyer’s commission payable on the transaction. RE/MAX, which held the commission in trust for Salerno, refused to pay Intercity and maintained that Salerno, as the actual co-operating brokerage on the deal, was the rightful recipient of the disputed commission. Mr. Cardwell subsequently resigned from Intercity.

Intercity’s court claim and regulatory complaints

In June 2021, Intercity commenced a Superior Court action against Salerno, Mr. Cardwell and RE/MAX, alleging breach of contract or, in the alternative, quantum meruit and unjust enrichment, and seeking damages equal to the co-operating broker’s commission. A few months later, in October 2021, Intercity also filed a formal complaint with the Toronto Regional Real Estate Board (TRREB) against RE/MAX and its salesperson, alleging violations of TRREB’s MLS Rules and Policies and Code of Conduct. In its email to TRREB, Intercity indicated that it wished to proceed against Salerno as well, but TRREB advised that it could not add Salerno as a respondent and instead noted that RE/MAX could bring evidence from Salerno if it chose. Intercity took the position that Mr. Cardwell, Salerno and RE/MAX all breached obligations as REBBA registrants. Under REBBA, registrants who buy or sell property must make written disclosure of their interest using Form 160 – Registrant’s Disclosure of Interest. In this transaction, Mr. Cardwell signed Form 160 indicating that he would not receive any portion of the commission. Intercity did not sign the form. Intercity argued that its signature was required because Mr. Cardwell was employed by Intercity and that, by proceeding without informing Intercity or securing its signature, Mr. Cardwell misrepresented that he was acting independently and improperly waived any commission that Intercity otherwise could claim. Intercity further alleged that Salerno and RE/MAX were complicit because, as registrants, they should have known that Intercity’s acknowledgement was necessary.

TRREB arbitration and appeal decisions

TRREB convened an arbitration panel to resolve the commission dispute. In April 2022, the arbitration panel dismissed Intercity’s complaint. It found that the Cardwells, and specifically Mr. Cardwell, purchased the property in his personal capacity and not as a salesperson acting for Intercity, as evidenced by the Confirmation of Cooperation and Representation naming Salerno as the brokerage representing the buyers. The panel also relied on the executed Buyer Representation Agreement between the Cardwells and Salerno, which reinforced that Salerno was the actual co-operating brokerage. The panel held that it was not its role to interpret or enforce any employment terms between a salesperson and a brokerage; any dispute over Mr. Cardwell’s employment obligations to Intercity fell outside its jurisdiction. Although the panel noted that RE/MAX might, as a courtesy, have consulted Intercity on receiving a Form 160 signed only by Mr. Cardwell, it concluded that consultation was not required because Mr. Cardwell submitted the offer in his personal capacity through his relationship with Salerno. The panel found there were insufficient grounds to conclude that Intercity was a party to the transaction and ordered that the disputed commission be retained by RE/MAX for disbursement to Salerno. Intercity appealed under TRREB’s by-laws. In October 2022, the arbitration appeal panel dismissed the appeal, finding that the arbitration panel’s process and conclusions were reasonable and leaving the original award in place.

The Superior Court motion to dismiss

In January 2023, Salerno brought a motion in the Superior Court action seeking to dismiss Intercity’s claim against it. Salerno argued that the court lacked jurisdiction over the subject matter of the dispute under rule 21.01(3)(a) of the Rules of Civil Procedure because, by virtue of TRREB’s by-laws and Arbitration Guidelines, member brokerages must arbitrate commission disputes and cannot bring parallel court actions. In the alternative, Salerno submitted that Intercity’s claim was frivolous, vexatious, or an abuse of process under rule 25.11, given that the commission entitlement had already been fully adjudicated in the TRREB arbitration and appeal. RE/MAX brought a similar motion but later settled with Intercity, so only Salerno’s motion was determined. The motion judge reviewed the history of the TRREB proceedings and concluded that the allegations Intercity advanced before TRREB were effectively the same as those in its civil claim against Salerno, except that Mr. Cardwell and Salerno were not formally named in the TRREB complaint. Although Salerno had attempted to be added as a party to the TRREB arbitration and was refused, the judge found that RE/MAX had represented Salerno’s interests in the arbitration and that the record supported that understanding.

Jurisdiction, issue estoppel, and abuse of process

The motion judge first considered whether the court had jurisdiction or whether it was ousted by the TRREB Arbitration Guidelines. She noted that, as a general rule, the Superior Court has jurisdiction over all claims unless the cause of action is defective or jurisdiction is removed by statute or agreement. Here, both Intercity and Salerno were REBBA registrants and TRREB members bound by by-laws and Arbitration Guidelines requiring them to submit commission disputes to TRREB arbitration. The Guidelines expressly gave TRREB’s arbitration panels exclusive power to hear and settle such claims and prohibited members from commencing legal actions regarding the subject matter of a claim, absent mutual written agreement to proceed elsewhere. The motion judge concluded that the Guidelines ousted the court’s jurisdiction over this commission dispute and that Intercity had already invoked and attorned to TRREB’s exclusive jurisdiction by pursuing arbitration and appeal. She next held that, even if the court had jurisdiction, Intercity’s action would amount to an abuse of process under rule 25.11 through the application of issue estoppel. Relying on Danyluk v. Ainsworth Technologies Inc., she found that the same issue—Intercity’s entitlement to a share of the commission—had been finally decided in the TRREB arbitration and appeal, and that Salerno’s interests were sufficiently represented by RE/MAX in those proceedings to satisfy the “same parties or privies” requirement. The arbitration process was considered sufficiently judicial in nature to justify issue estoppel. She therefore dismissed Intercity’s action against Salerno.

The appeal to the Court of Appeal and final outcome

Intercity appealed, advancing three principal arguments: that the motion judge misapplied Danyluk and erred in finding issue estoppel and abuse of process; that she was wrong in concluding that the court lacked jurisdiction because of TRREB’s Arbitration Guidelines; and that she erred in holding that Intercity was estopped from pursuing its claim against Salerno. The Court of Appeal rejected each ground. On issue estoppel and abuse of process, the court held that the motion judge correctly applied Danyluk. The issue in the civil action—whether Intercity was entitled to any portion of the buyer’s commission as a co-operating brokerage by virtue of Mr. Cardwell’s employment—was identical to the issue decided by the TRREB arbitration panel and upheld on appeal. Intercity’s suggestion that it now pursued distinct claims, such as inducing breach of contract or intentional interference with contractual relations, failed because those causes of action were not actually pleaded against Salerno; the claim remained a straightforward attempt to recover commission. The Court of Appeal agreed that the TRREB process was sufficiently judicial and that RE/MAX acted as Salerno’s privy, given that it held the commission in trust and defended the entitlement on Salerno’s behalf. The court also emphasized that, even where the technical requirements of issue estoppel might be open to debate, the doctrine of abuse of process could still bar relitigation in order to protect finality, consistency and the integrity of the justice system. Allowing Intercity’s action to proceed risked undermining the TRREB award that had already resolved the same commission dispute. On jurisdiction, the Court of Appeal endorsed the motion judge’s conclusion that TRREB’s by-laws and Arbitration Guidelines gave its arbitration panels exclusive jurisdiction over commission disputes between member brokerages and barred parallel court proceedings, absent mutual agreement to litigate elsewhere. Intercity, having agreed in its Arbitration Claim Form to “abide by the award of the arbitrators” and having pursued the internal appeal, was bound by that framework. The court stressed that nothing in its decision prevented Intercity from pursuing any separate, viable claim it might have directly against Mr. Cardwell, but the commission dispute with Salerno was conclusively determined in the TRREB process. In the result, the Court of Appeal dismissed Intercity’s appeal and confirmed the dismissal of its claim against Salerno. Salerno, as respondent, was the successful party. The only specific monetary order recorded in the appellate decision is an agreed amount of $10,500 in costs of the appeal, payable by Intercity as appellant to Salerno as respondent; any commission retained by Salerno through RE/MAX is not quantified in the judgment, so no precise damages or commission amount can be determined from the decision beyond the $10,500 costs award.