Executive Summary: Key Legal and Evidentiary Issues

• This case concerns whether a buyer was contractually obligated to pay a realtor's commission when a commercial real estate transaction failed to close.
• Central to the dispute was a Buyer Representation Agreement that left the commission amount as "TBD" (to be determined), with no mechanism specified for fixing that amount.
• Neither the Buyer Representation Agreement nor the Revised Co-op Agreement imposed any obligation on the buyer to pay the commission.
• Mr. Qureshi was not a party to the Commission Agreement executed between Zeema Investments and Re/Max, and could not be bound by it.
• Contractual interpretation was governed by the deferential standard set out in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, requiring a highly fact-specific analysis.
• On appeal, the appellants could not argue that summary judgment was inappropriate, as the motion had been brought by the appellants themselves.

Facts of the case

Nadeem Qureshi sought to purchase a commercial property as an investment and approached Nik Handa, a realtor affiliated with Re/Max Realty Services Inc. ("Re/Max"), for assistance. Mr. Handa suggested that Mr. Qureshi make an offer on a property owned by Zeema Investments Incorporated ("Zeema") that was not listed for sale. On October 29, 2019, Mr. Qureshi signed four documents provided by Mr. Handa: an offer to purchase, OREA Form 815 (Working with a Commercial Realtor), OREA Form 320 (Confirmation and Cooperation of Representation), and a Buyer Representation Agreement ("BRA").

On November 5, 2019, Zeema executed a Commission Agreement with Re/Max to pay a commission of $650,000 (inclusive of HST) if the parties entered into a binding agreement of purchase and sale. Mr. Qureshi was not a party to this agreement and did not sign it. On November 7, 2019, a Revised Co-op Agreement was signed between Mr. Qureshi and Re/Max, providing that Re/Max would represent Mr. Qureshi's interests only, and that its commission would be paid by the seller as per the terms of the Commission Agreement dated November 5, 2019. An agreement of purchase and sale was executed on November 20, 2019, and Mr. Qureshi paid deposits totalling $750,000. Mr. Qureshi subsequently chose not to proceed with the purchase and, on April 29, 2020, asked Re/Max to return his deposit. Re/Max instead invoiced him $650,000 for a commission under the BRA, which Mr. Qureshi refused to pay. Zeema resold the property to a third party at a loss of $667,635.

Contractual terms at issue

Two agreements were central to the commission claim. The BRA contained a provision stating: "The Buyer agrees the Brokerage is entitled to be paid a commission of TBD," and further that the buyer agrees to pay such commission even if a contemplated transaction is not completed, where non-completion is owing to or attributable to the buyer's default or neglect. Both parties understood "TBD" to mean "to be determined." The original Co-op Agreement — a standard form with a blank space indicating who would pay the commission — was left unfilled and did not reference the BRA. It was later superseded by the Revised Co-op Agreement of November 7, 2019, which specified that Re/Max's commission would be paid by the seller, Zeema, as per the Commission Agreement.

Court's reasoning and analysis

The motion judge applied the contractual interpretation principles from Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, focusing on the intent of the parties and the ordinary meaning of the words used in context. He found that the BRA's use of "TBD" failed to provide either a commission amount or a mechanism to determine one. Because the BRA contained an entire agreement clause, and nothing in it indicated that the commission amount would be set by a separate agreement between Zeema and Re/Max, Mr. Qureshi could not be bound by that Commission Agreement. The Revised Co-op Agreement similarly provided no basis for Mr. Qureshi, as buyer, to be liable for the commission — it directed only that the seller, Zeema, would pay.

On appeal, the appellants raised two arguments. First, they contended that a factual dispute — namely, whether Mr. Handa had shown the Commission Agreement to Mr. Qureshi and Mr. Qureshi had signed it — required a trial. The Court of Appeal rejected this submission, noting that the appeal arose from the appellants' own summary judgment motion, and it was not open to them to now argue that summary judgment was inappropriate. Second, the appellants argued that the motion judge ought to have read the BRA, the Commission Agreement, and the Revised Co-op Agreement together to conclude that Mr. Qureshi had agreed to pay the commission if the transaction did not close. The Court of Appeal was not persuaded, finding that while fairness may have recommended such an arrangement and it may have been Mr. Handa's subjective understanding, the parties had simply not reached an agreement imposing that obligation on Mr. Qureshi. There was no extricable question of law, and deference to the motion judge's interpretation was required.

Ruling and outcome

The Court of Appeal dismissed the appeal, finding no reviewable error in the motion judge's contractual interpretation. The respondent, Nadeem Qureshi, was the successful party and was awarded costs of the appeal in the amount of $12,000, all inclusive, as agreed between the parties.