Derek Carlyle Pink and James Arthur Smith were expecting a huge payday.
It was supposed to be $1.3 million, their commission as realtors for a Vancouver transaction.
But the deal fell through, even though they brought a viable buyer.
Bosa Properties had offered to buy three contiguous Robson Street properties at the corner of Denman Street for $39 million.
The site is home to a B.C. liquor store, Safeway, and two banks: CIBC and Vancity.
However, Shun Li Tian, who co-owns the properties with his spouse Hua Liang, was no longer interested to sell.
Pink and Smith went to court, arguing that they are entitled to their commission because they worked to find a buyer.
However, B.C. Supreme Court judge Janet Winteringham ruled that Pink and Smith cannot have their $1.3 million commission.
“In my view, granting the relief sought would undermine the rule of contract law,” Winteringham wrote in her reasons for decision. “To conclude otherwise requires the very sort of palm tree justice the Supreme Court of Canada has warned against.”
Winteringham related that the proceeding started “primarily as a claim based in breach of contract, oppression and breach of trust”.
“At trial, the realtors abandoned their contractual claim and instead focused their claim as an equitable one framed as unjust enrichment,” the judge wrote.
Tian bought the Robson Street properties for $23 million in 2012.
In 2016, Tian ordered his property manager Phillip Chou to sell the commercial real estate holding.
Gigi Cheng, who knows Pink and Smith, introduced the two realtors to Chou.
Bosa Properties was interested. It offered to buy the properties by using Frankfurt Investments Ltd., a shelf company.
A signed fee agreement stated that the seller will pay a brokerage fee of three percent, plus other amounts, “if a legally enforceable Contract of Purchase and Sale in respect of the Property is entered into at any time between the Seller and the Buyer”.
During the back-and-forth of the negotiations, Smith sent an email to Tian’s property manager Chou about a $37 million counter-offer.
Upon learning of the said offer, Tian decided that he doesn’t want to sell anymore.
Unaware that Tian is no longer interested, Bosa Properties “determined that it would accept the price of $39 million” to buy the Robson Street properties.
But it was already too late. Tian had walked away.
According to the judge, realtor Smith “could have ensured that the Signed Fee Agreement reflected his wish that the realtors would receive a fee for bringing a viable purchaser to the table”.
“The Signed Fee Agreement could have been drafted as such and it was not,” Winteringham wrote. “Mr. Tian’s evidence was that he believed he would only have to pay 3% if there was a completed deal and there was not.”
Winteringham noted that the realtors are “asking the court, under the guise of the principles of unjust enrichment, to rewrite the bargain”.
However, the judge pointed out that their claim of unjust enrichment on the part of the sellers fails.
Winteringham explained that the realtors were unable to establish that there was no legal reason to deny them recovery of their commission.
According to the judge, “there was a substantial commission to be paid if certain events occurred”.
“As Mr. Smith stated, he wanted the Signed Fee Agreement to protect his fee,” Winteringham wrote. “The parties thereafter governed themselves as if there was a valid and subsisting fee agreement between them. Participants in commercial real estate transactions require certainty when they structure their arrangements. Ignoring the bargain in the circumstances presented here requires, in my view, a sort of palm tree justice the Supreme Court of Canada warns against.”