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Contract - Commission. Ayuba v. Erhunmwun
In Ayuba v. Erhunmwun (Ont CA, 2026) the Ontario Court of Appeal considered three related appeals, here arising "from two failed transactions involving the assignment of agreements to purchase pre-construction homes".
Here the court considered liability for a brokerage 'commission':[49] This interpretation accords with the established law governing brokerage commissions. In Luxor, the House of Lords held that, absent sufficiently clear contractual language to the contrary, commission is not payable where the contemplated transaction fails through no fault of the client. This court adopted Luxor in Gladstone v. Catena, 1948 CanLII 92 (ON CA), [1948] O.R. 182 (C.A.), and the Supreme Court of Canada later confirmed its continuing authority in H.W. Liebig & Co. v. Leading Investments Ltd., 1986 CanLII 45 (SCC), [1986] 1 S.C.R. 70, at pp. 79-81 and 99-100. Courts have ruled that similar “valid offer” language is not clear enough to meet Luxor’s test: H.W. Liebig, at pp. 87, 100-1; Windsor Italian Village Restaurant Ltd. v. Remo Valente Real Estate Ltd. (1992), 27 R.P.R. (2d) 221 (Ont. Gen. Div.), at paras. 30-33.
[50] The same principle has continued to be applied in the real-estate context. The contractual language must make clear that commission is payable notwithstanding the failure of the contemplated transaction through no fault of the client: see, e.g., Windsor Italian Village, at para. 30; Bird v. Ireland (2005), 2005 CanLII 44382 (ON SCDC), 205 O.A.C. 1 (Div. Ct.), at paras. 34-35; Shapiro v. 1086891 Ontario Inc. (2006), 2006 CanLII 2050 (ON SC), 39 R.P.R. (4th) 246 (Ont. S.C.), at para. 165; Green v. Shamash, 2018 ONSC 1810, at paras. 7-12; and Real Estate Professionals Inc. v. Castel Homes Inc. et al., 2023 ONSC 4099, at para. 182.
[51] That approach promotes commercial certainty. The parties are free to agree that a brokerage will earn its commission despite the later failure of the transaction, but an obligation of that kind must emerge clearly from the agreement. It should not be inferred from language that can equally be read consistently with the ordinary rule that commission depends upon completion of the transaction the brokerage was retained to facilitate: Devani v. Wells, [2019] UKSC 4, [2020] A.C. 129, at para. 21, citing Midgley Estates Ltd. v. Hand, [1952] 2 Q.B. 432 (C.A.), at pp. 435-36; Leading Investments Ltd. v. New Forest Investments Ltd. (1981), 1981 CanLII 1700 (ON CA), 34 O.R. (2d) 175 (C.A.), at pp. 183-84, aff’d in H.W. Liebig.
[52] The commercial structure of these agreements reinforces that interpretation. Hometon’s commission was calculated as a percentage of the full sale price, rather than merely the assignment mark-up. The full purchase prices were never paid because the transactions failed before final closing. That structure does not support an interpretation requiring the clients to pay a percentage commission on a purchase price that was never fully paid: Devani, at paras. 20-22; Leading Investments, at p. 184.
[53] Nor does the release of the commissions on the assignment closing dates determine Hometon’s ultimate entitlement. The assignment agreements governed the relationship between assignor and assignee; the listing agreements governed the relationship between the assignors and Hometon. The former could authorize release of funds at an intermediate stage without altering the conditions under which the commissions were ultimately earned under the latter. The agreements should be read harmoniously in the absence of clear language producing a different result: H.W. Liebig, at pp. 88-89, 100; Leading Investments, at pp. 180-81. A payment made before the contractual contingency is resolved may have to be returned if the entitlement to retain it never crystallizes.
[54] Hometon’s performance of substantial work likewise does not create an independent entitlement to the commissions. The parties agreed to a contingent commission, not compensation calculated according to the time or effort expended. The brokerage, therefore, assumed the ordinary risk that the contemplated transaction might fail for reasons not attributable to its client: Société en commandite Place Mullins v. Services immobiliers Diane Bisson inc., 2015 SCC 36, [2015] 2 S.C.R. 699, at para. 1; Ariston Realty Corp. v. Elcarim Inc., 2014 ONCA 737, 378 D.L.R. (4th) 197, at paras. 26-27, leave to appeal refused, [2015] S.C.C.A. No. 79; Burns Fry Ltd. v. Khurana (1985), 1985 CanLII 2149 (ON HCJ), 51 O.R. (2d) 257 (H.C.), at pp. 271-75, citing Luxor.
[55] Hometon’s submission that it was not a party to the assignment agreements does not alter the analysis. Its entitlement arises from the listing agreements, which do bind it. Those agreements condition that entitlement on the completion of the assignment transaction which they each contemplated. Thus, Hometon’s entitlement ultimately depends upon the commission provisions for which it contracted. . Wallbridge, Wallbridge v. Poupore [work-in-progress (WIP)]
In Wallbridge, Wallbridge v. Poupore (Ont CA, 2026) the Ontario Court of Appeal allowed an appeal, here regarding "a dispute over the remuneration owed by a law firm to a former employee. In particular, it addresses whether a departed lawyer whose compensation was based on a percentage of collected receipts is entitled to compensation for work done during the term of employment but either not billed or not collected by the firm until post-termination".
Here the court considers whether a commission employee was entitled, upon termination, to compensation for 'work-in-progress' (WIP) [Note: the employee in this case was a lawyer, and thus the ESA benefit plan provisions did not apply to them]:[2] For the reasons set out below, I would allow the appeal in part. Under the terms of the employment contract, the respondent was to be paid for the successful resolution of claims from the fees collected by the firm. However, the contract made no provision for remuneration for an employee’s contributions to those files that were subsequently brought to resolution by others. Neither is there a basis for such compensation for unjust enrichment on a quantum meruit basis.
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[21] This case has a superficial similarity to the long line of cases addressing the post-termination compensation of commissioned salespersons. In cases such as Charles P. Rowen & Associates Inc. et al v. Ciba-Geigy Canada Inc. (1994), 1994 CanLII 1585 (ON CA), 19 O.R. (3d) 205 (C.A.), courts have held that the obligation to pay commissions to commissioned salespersons survives termination of employment for sales completed prior to the termination. Those cases have a superficial appeal because of the powerful pull of the principle stated by Galligan J.A. in Charles P. Rowen (the “Rowen principle”), that ‘[w]here a principal accepts and benefits from the work performed on its behalf by its agent the principal, in the absence of an agreement to the contrary, is liable to pay for it.’ p. 20.
[22] Although it is sparse, the employment contract in issue here constitutes “an agreement to the contrary” with respect to WIP that was unbilled as at the time of termination. At least as it relates to Mr. Poupore’s contract, the Wallbridge business model is based on contingency. The fees that Wallbridge earns, and the fees that it pays to Mr. Poupore, are a percentage of damage awards paid to their clients. Where there is no recovery of damages, there is no payment to the firm and no payment to Mr. Poupore. The contract therefore contemplates that not all work will be remunerated. And remuneration is not based on hours of work performed or on completion of discrete tasks such as drafting pleadings or conducting examinations for discovery. Remuneration is based entirely on resolution of a claim resulting in an award of damages for the client. Accordingly, just as the commissioned salesperson may receive no compensation for hours of work that do not result in a sale by that person, Mr. Poupore, working on contingency, will receive no compensation for those hours of work that do not result in a finalized judgment or settlement while he was at the firm.
[23] Mr. Poupore also did not establish a widespread practice to the contrary that would enable him to claim an implied contractual term. Although, on Mr. Poupore’s evidence, two other lawyers who left Wallbridge were given some credit for the work they did on files that were settled after their departure, his evidence was clear that the decision to provide this compensation was entirely a matter of Wallbridge’s discretion and not a contractual entitlement. Indeed, Mr. Wallbridge’s autocratic nature was a recurrent theme in Mr. Poupore’s testimony.
[24] Accordingly, there is no basis in contract for compensation for contributions made to files that remained at Wallbridge and were settled after Mr. Poupore’s departure, notwithstanding that Mr. Poupore’s efforts contributed to the achievement of those settlements.
[25] The trial judge made no error, however, in determining that Wallbridge’s obligation to pay Mr. Poupore for files settled prior to his departure survived the termination of the contract. In such cases, the Rowen principle applies. Mr. Poupore is therefore entitled to his share of fees for those files, whether those fees were paid to Wallbridge or paid to Diamond.
[26] Mr. Poupore cannot establish an entitlement to fees on the basis of his alternative argument for unjust enrichment. Quantum meruit does not apply where the services in question are within the scope of the contract and the contract establishes how the services will be remunerated. Mr. Poupore’s work on the unbilled WIP was encompassed by the contract with Wallbridge. File work was not directly compensated and the parties contemplated that Mr. Poupore would bring the file to successful resolution to earn the commission. The contract did not contemplate part-payment for work that contributed, to some degree, to a job that was finished by others.
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