Executive Summary: Key Legal and Evidentiary Issues

• Royal Family Realty Inc. sued Juanli Liu for a $237,300 commission under a Buyer Representation Agreement after she failed to close the purchase of a farm property priced at $8,400,000.
   
• Ms. Liu, who neither speaks nor reads English, relied on the defence of non est factum, arguing that the agent never translated or explained the agreement to her.
   
• Because real estate agents are fiduciaries, the court placed the onus on Royal to prove with clear, convincing and cogent evidence that its agent fully disclosed the commission terms before Ms. Liu signed.
   
• Credibility concerns weakened the agent's evidence, including the absence of her nephew as a witness, her departure from client instructions on price, and an undisclosed $225,000 fee on a separate land transaction.
   
• Carelessness, the third element of non est factum, was held not to apply where the party relying on the document was a fiduciary in breach rather than an innocent third party.
   
• On costs, proportionality, a 2022 without-costs settlement offer and unsupported travel disbursements reduced the defendant's $200,000 partial indemnity claim to an all-in award of $75,000.
   

Facts of the case

Juanli Liu and her husband, Gui Zhao, reside in China and do not speak English. They came to Canada in 2017, on the recommendation of their friend Vicky Hui, to find a school for their teenaged son. Ms. Hui had obtained her real estate licence in 2015. She worked as an independent agent through Royal Family Realty Inc. ("Royal") and was entitled to half of any commission and to 50% of any judgment in Royal's favour.

Mr. Zhao found a farm property on Weston Rd. online and used Ms. Hui as his agent to buy it. After his brother's death, he returned to China on March 21, 2017, and continued to instruct Ms. Hui from there. He told her he wanted to offer the $8.9 million asking price [described as the "offer price" at para. 12 of 2026 ONSC 3172] rather than "slash" it, but she negotiated a price of $8.4 million.

Because Mr. Zhao was in China, he asked Ms. Liu to sign whatever documents were needed. She signed the transaction documents, including the Agreement of Purchase and Sale and the Buyer Representation Agreement (BRA). The BRA is dated March 26, 2017. According to Ms. Liu, she could not read the documents, and Ms. Hui never translated or explained them. Ms. Hui maintained that she had reviewed and translated the documents for Ms. Liu with her nephew present. After the signing, she referred Ms. Liu to a solicitor, Mr. Pak.

Two other transactions ran alongside the farm purchase. On a $55 million development land purchase, Ms. Hui acted as translator rather than as agent. Mr. Zhao's lawyer on that deal, Mr. Kligerman, had all sale documents translated and sent to him. Ms. Hui instructed Mr. Kligerman to waive the buyer's conditions, ostensibly on Mr. Zhao's behalf. Mr. Zhao said he never gave those instructions. Ms. Hui said she had received them but had no written confirmation.

On April 4, 2017, Ms. Hui also signed a service agreement with the seller's agent, Ms. Tan, entitling her to $225,000 of a $1 million consultant fee payable on closing of the land sale. Believing Ms. Hui had been deceitful, Mr. Zhao refused to close any transaction in which she had been involved, including the farm purchase. A house purchase on Bronte Road, which also involved Ms. Hui, did not close, ostensibly for the same reason.

The sellers' resulting lawsuits all settled, as did related third party actions and a direct action by the couple against Royal and Ms. Hui. Royal paid sums to resolve those proceedings. In this action, Royal claimed a 2.5% commission of $237,300 inclusive of HST [stated as $237,000 at para. 28 of 2026 ONSC 3172 and at para. 1 of 2026 ONSC 5228], together with pre-judgment and post-judgment interest and costs. The trial was heard by Callaghan J. of the Ontario Superior Court of Justice from March 16 to 23, 2026.

Policy and legislative provisions at issue

The BRA is a standard form Toronto Real Estate Board document between the buyer and its own agent. Its key clause entitled the brokerage to a commission of 2.5% of the sale price. It also required the buyer to pay that commission even where a transaction was not completed, "if such non-completion is owing or attributable to the Buyer's default or neglect." A separate document, the Confirmation and Co-operation and Representation form [rendered as "Confirmation and Cooperation and Representation form" at para. 21 of 2026 ONSC 3172], was signed with the purchase agreement. It provided that the seller's broker would pay the buyer's agent on a completed sale.

At the costs stage, the court applied the factors in r. 57.01, considered an informal settlement offer under r. 49.13, and relied on its discretion under s. 131 of the Courts of Justice Act to give effect to a non-party's undertaking.

Reasoning and analysis

The court decided the case on non est factum. The defence is available to someone who, through misrepresentation, signs a document mistaken as to its nature and character without being careless (Bulut v. Carter, 2014 ONCA 424; Marvco Colour Research Ltd. v. Harris, [1982] 2 S.C.R. 774). Ms. Liu bore the onus of proving three things: that she was mistaken about the BRA's nature, that the mistake resulted from a misrepresentation by Ms. Hui, and, if the element applied, that she was not careless.

Fiduciary duty shaped the analysis. Since the BRA allowed Royal to collect a commission on a failed sale, Royal stood to benefit at its client's expense and was in a position of potential conflict. Relying on Raso v. Dionigi (1993), 12 O.R. (3d) 580 (C.A.), the court held that an agent in conflict must make full and timely disclosure before the principal enters the transaction. The agent bears the onus of proving that disclosure on a balance of probabilities with clear, convincing and cogent evidence (F.H. v. McDougall, 2008 SCC 53).

Royal did not meet that onus. Ms. Hui's evidence gave little detail about the meeting or what she explained. She said nothing about the difference between commission on a completed sale and commission owing on a failed one. Her nephew was available but not called, and his presence was never put to Ms. Liu.

Ms. Hui's dealings with Mr. Zhao pointed the same way. She communicated with him throughout, including on price, yet sent him the documents without translation or explanation. Her email about adding provisions to the standard purchase agreement said nothing about the BRA or about a commission on a sale that did not close. She did this even though she knew Mr. Kligerman had provided translations on the land deal.

Other conduct also raised doubts about her diligence, including her disregard of Mr. Zhao's instructions on price. The court characterized her $225,000 fee as an undisclosed commission for referring Mr. Zhao to Ms. Tan, and found that it undermined her credibility on her entitlement to commissions. Any explanation by Mr. Pak came too late, since he was retained only after the BRA was signed. The evidence of what he did was also unclear.

All elements of the defence were satisfied. Ms. Liu did not understand the commission structure in Ontario, could not read the English BRA and was not told what it contained. Her misunderstanding resulted from Ms. Hui's failure to explain the agreement, which amounted to a misrepresentation by omission (Canada Trustco Mortgage Co. v. Bartlet and Richardes (1996), 28 O.R. (3d) 768). She was not careless, as it was reasonable for her to believe the documents had been explained to her husband.

The court went further and found the carelessness element inapplicable altogether. As Estey J. explained in Marvco, that element exists to protect innocent third parties. Royal was not innocent, because its fiduciary failure was at the core of Ms. Liu's mistake (see also Isaacs v. Royal Bank of Canada, 2011 ONCA 88). The BRA was therefore void ab initio.

The court left two issues undecided. Given the precedential weight of interpreting standard form contracts under Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, it declined to decide whether the failed closing was "owing or attributable to the Buyer's default or neglect." It also did not need to resolve the ancillary issues about document authenticity and alleged forgeries.

In a separate cost endorsement, the court addressed Ms. Liu's claim for $200,000 in partial indemnity costs. The claim was made up of $168,893.19 in fees, $27,837.65 in disbursements [stated as $27,837 at para. 9 of 2026 ONSC 5228] and $3,269.16 for cost submissions. The court found her entitled to partial indemnity costs as the successful party [the endorsement refers to "the plaintiff" at para. 3, which appears to mean the defendant].

Costs nearly as great as the claim did not accord with proportionality. The exception for wholly unmeritorious or unduly prolonged claims (Youkhana v. Pearson, 2024 ONSC 3184) did not apply. The action involved no discoveries and was not complex either legally or factually. Only a bill of costs was filed, without dockets.

Two further factors pointed to a more modest award. In March 2022, Royal had offered to settle on a mutual walk-away, without-costs basis. Although not a formal r. 49 offer, it was very near the eventual result, and fees in the range of $125,000 were incurred afterward (Lawson v. Viersen, 2012 ONCA 25; Konig v. Hobza, 2015 ONCA 885). Royal's own partial indemnity bill of $55,000, filed before the trial decision, indicated what a losing party might reasonably expect to pay.

Of the disbursements, $20,460.57 was for airfare ($10,621.47) and a downtown Toronto hotel ($9,839.10). There were no details and no invoices, although the court accepted that some compensable amount should be factored in.

Ms. Hui had undertaken in January 2026 to pay any costs above the $45,000 that Royal had placed in its lawyer's trust account as security for costs. She was a promoter of the litigation and stood to receive half of any award. Her son was plaintiff's counsel, and she did not contest the request. On that basis, the court gave effect to the undertaking (Printing Circles Inc. v. Compass Group Canada Ltd., 2007 CanLII 57095 (ON SC)).

Ruling and overall outcome

Royal's action was dismissed in reasons released June 4, 2026, leaving Ms. Liu as the successful party. In the September 16, 2026 cost endorsement, the court fixed her costs at an all-in figure of $75,000. The $45,000 held in trust is to be released to her. Royal and Ms. Hui are jointly and severally liable for the remaining $30,000, with post-judgment interest on any outstanding amount under the Courts of Justice Act.