An Ontario small claims court has ordered two homebuyers to pay a real estate brokerage $12,100 in commission after finding they cut their agent out of a property deal, but also ruled that the brokerage’s Buyer Representation Agreement (BRA) was unenforceable due to misrepresentation.
The dispute in Urban Landmark Realty Inc. v Hill, 2025 CanLII 78648 (ON SCSM) involved Urban Landmark Realty Inc., represented by agent Michael Gerace, and defendants Brenda Hill and James Bernt, who were common-law partners. Urban claimed $34,182.50, alleging breach of the BRA or, alternatively, unjust enrichment. The defendants denied liability, arguing they were unaware they had signed a BRA and asserting the defence of non est factum, which applies when someone signs a document without understanding its nature due to misrepresentation and without carelessness.
Gerace began working with Hill and Bernt in July 2022, showing them properties and providing real estate advice. The BRA, which entitled Urban to a 2.5 percent commission plus tax on a qualifying purchase between January 23 and July 31, 2023, was allegedly signed on January 23, 2023, when the defendants instructed Gerace to submit an offer for a property on Meadow Street in Oshawa. The defendants said they believed they were only signing offer-related documents to meet a tight deadline and did not know a BRA was included.
The court found that Gerace inserted the BRA between offer documents in an electronic signing package labelled “Meadow Acknowledgment BR,” without separately drawing it to the buyers’ attention. This misrepresentation led the court to conclude the defendants were mistaken about the document’s nature and had not been careless. As a result, the BRA was declared unenforceable.
Despite this, the court examined Urban’s unjust enrichment claim. An unjust enrichment claim is used when one person has gained a benefit at another’s expense in a way the law considers unfair. To succeed, the claimant must prove three things: first, that the other party was enriched, meaning they gained something of value or avoided a cost; second, that the claimant suffered a matching loss; and third, that there is no legal reason, known as a “juristic reason”, for the other party to keep that benefit, such as a valid contract, a gift, or a legal obligation. If all three elements are met, the court can order payment to restore fairness, even without an enforceable contract.
Evidence showed Gerace had shown the defendants around 45 properties and submitted multiple offers on their behalf. In early May 2023, the defendants viewed and negotiated directly with the owner of a home on Sagewood Avenue in Clarington, listed as a “mere posting” with a stated 2 percent commission to the buyer’s agent. They told the seller they were not working with a realtor, secured a $40,000 price reduction, and completed the purchase without involving Gerace.
Deputy Judge L. Carr found that while Gerace misrepresented the BRA, Hill and Bernt nonetheless benefited from his significant efforts in their property search, and that they deliberately excluded him from the Sagewood purchase to avoid paying commission. However, given the misrepresentation, the court reduced the commission entitlement to 1 percent of the purchase price, amounting to $12,100.
No interest was awarded because Urban was already holding more than that amount from the sale of Bernt’s previous home, and no costs were ordered unless later submissions were made. The judgment was released on July 25, 2025.
