Facts:
The Plaintiff has a resort known as "Northwood Beach Resort" near
Bayfield, Ontario. The Plaintiff owns the land and signs with
various parties rental agreements exclusively for Park Model
Trailers (herein referred to as the "trailer" or "trailers").
The parties signed one of those rental agreements effective May 13,
2000 and which was still in effect in August 2004. It allowed the
Defendants to place their trailer on Site 25 in the Plaintiff's
resort property. The initial term was for 7 months with the option
for further renewals (which were done). The Defendants could also
leave their trailer on the site during the 5 months of each
off-season. At the termination of the rental agreement, pursuant to
paragraph 6 (e), the Defendants were required to remove their
trailer (and anything else that they brought onto their lot) from
the site and leave the site in a clean and tidy state.
The rental agreement also contemplated that the Defendants might
decide to sell their trailer to a third party and leave it on Site
25. If the Defendants chose to do this, paragraph 4 (q) states: "The
Tenant shall pay to the Landlord a fee of 5 % of the gross selling
price … on any sale … by the Tenant of the Tenant's [trailer]…."
The Plaintiff prepared the lot for the Defendants' trailer, which
was then towed into place. The trailer was jacked onto piers that
consisted of concrete that went 4 feet (or approximately 1.2 meters)
into the ground. However, the wheels, axles and tongue remained on
the trailer (although hidden from view).
With the Plaintiff's approval, the Defendants built an addition
called an "add-a-room" to their trailer, a garden shed and added a
deck to the front of the trailer.
Both parties testified that if the trailer was moved from the lot,
the add-a-room would first need to be disconnected from the trailer.
This would be difficult because the add-a-room was not on wheels.
The Defendant, Gerrit Deweerd, testified that the removal of the
trailer would virtually require the complete demolition of the
add-a-room. All of the witnesses agreed that at least part of one
wall of the trailer had been removed to accommodate the add-a-room.
Something would have to be done to protect this opening in the wall
in the event that the trailer was moved down the highway.
The President of the Plaintiff agreed that there would have to be a
significant amount of work and dismantling done to prepare the
Defendants' trailer for moving. But he said that the trailer was not
attached to the land, other than by being fastened to the concrete
piers and the connections for utilities.
Paragraph 6 (e) of the rental agreement is very clear. It states
that if the Defendants decided to move out of the Plaintiff's resort
without selling their trailer to a third party who was going to keep
the trailer in the Plaintiff's resort, the Defendants would have to
remove their trailer, their garden shed, their deck and their
add-a-room. It appears from the evidence, and I find, that while the
Defendants' trailer could only be removed from Site 25 with a great
deal of difficulty (and likely expense), it could be moved from the
lot and taken to another location. Therefore, the Defendants made
the improvements to their trailer and site at their own peril.
Perhaps that is why the Defendants decided to sell their trailer to
a third party with it remaining on Site 25.
The Plaintiff and Gerrit Deweerd, one of the Defendants, signed a
document on April 17, 2004 entitled "Agreement for conditions of
sale." The relevant portions of that document state:
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"[Gerrit Deweerd] authorizes the
Plaintiff to: |
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(1) |
advertise this trailer … for
sale
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(2) |
give out information about the
trailer, the site, the cost of [hydro] bills, … and anything
that might effect the operation of a residence
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(3) |
contact the trailer owner to
introduce a perspective buyer, and to arrange a viewing of
the inside of the trailer ….
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[Gerrit Deweerd] agrees to
inform a buyer that all moneys owed to [the Plaintiff] …
must be paid up-to-date before the ownership change can take
place.
[Gerrit Deweerd] agrees to pay [the Plaintiff] 5 % of the
total selling price of unit on the closing of sale.
This agreement will remain in effect until the trailer is
sold." |
I accept the evidence of Jay Fisher,
the President of the Plaintiff, that he did advertise the
Defendants' trailer for sale by putting up posters which had
information (including pictures) about the said trailer. He further
testified that he gave information to several prospective buyers.
There was some discrepancy as to whether the Defendants changed
their minds about selling the trailer. But I find that the April 17,
2004 agreement that the male Defendant made with the Plaintiff was
never cancelled. Mr. Fisher said that while he suspended advertising
the Defendants' trailer for a period of time, he did resume
advertising it for sale before it was actually sold.
After the trial commenced, the parties agreed that the Plaintiff
owes the Defendants $ 400.00 for overpayment of rent, and the
Defendants owe the Plaintiff $ 256.21 for property taxes, making a
net amount owing by the Plaintiff to the Defendants of $ 143.79.
The issue left for the Court to decide is whether the Plaintiff is
entitled to collect a 5 % fee on the sale price of the Defendants'
trailer.
The Defendants sold their trailer to a third party in August 2004.
While the April 17, 2004 agreement with the Plaintiff was in effect,
the Defendants were also advertising their trailer for sale.
Therefore, it is difficult to know whether the Plaintiff's efforts
facilitated the sale. But the wording of the April 17, 2004
agreement does not require the Plaintiff to actually find the
eventual buyer. It simply states that Gerrit Deweerd will pay the
Plaintiff "5 % of the total selling price of the unit on the closing
of sale."
Therefore, barring some other defence, I would find that the
Plaintiff is entitled to collect a 5 % fee from the male Defendant,
Gerrit Deweerd, based on a sale price of $ 79,075.00.
However, the Defendants plead section 22 of the Real Estate and
Business Brokers Act, R.S.O. 1990, c. R.4. This section states:
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"No action shall be brought for
commission or for remuneration for services in connection
with a trade in real estate unless at the time of rendering
the services the person bringing the action was registered
or exempt from registration…." |
Section 3 (1) of the Real Estate and
Business Brokers Act states that:
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"No person shall, |
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(a) |
trade in real estate as a broker
unless the person is registered as a broker;
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(b) |
trade in real estate as a
salesperson unless he or she is registered as a salesperson
of a registered broker;
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(c) |
act on behalf of a corporation …
in connection with a trade in real estate unless the person
and the corporation … are registered as brokers." |
The Plaintiff admits that neither it
nor any of its officers are registered as a broker or a salesperson
under the Real Estate and Business Brokers Act.
The exemptions are listed in section 5 of the Real Estate and
Business Brokers Act. I have examined each of the exemptions. I find
that none of them apply to the Plaintiff, not even section 5 (h).
The Plaintiff was not trying to sell its own trailer.
If the sale of the trailer is a trade in real estate, then I find
that the Plaintiff has contravened section 3 (1) of the Real Estate
and Business Brokers Act.
On the facts before me, I find that the Plaintiff and its President
did what a real estate salesperson would do to try to effect a sale
of real estate. It does not matter that the Plaintiff would not try
to negotiate the sale price. It also does not matter that the
Plaintiff would not prepare the Bill of Sale. In a sale of land, the
real estate salesperson does not prepare the deed.
"Trade" is defined in section 1 of the Real Estate and Business
Brokers Act as follows:
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"trade" includes a disposition …
by sale, … and any act, advertisement, conduct or
negotiation, directly or indirectly, in furtherance of any
disposition, … and the verb "trade" has a corresponding
meaning; |
Clearly from that definition the
Plaintiff and its President were trading.
The real issue, therefore, is whether the Plaintiff and Mr. Fisher
were trading in real estate within the meaning of the Real
Estate and Business Brokers Act.
Neither party provided any case law which is exactly our fact
situation. I have been unable to find any on my own.
Alberta's Real Estate Act, SA 1995, c. R-4.5, which is comparable in
many respects to Ontario's Real Estate and Business Brokers Act,
also refers to "trades in real estate." The Alberta statute defines
"real estate" as follows:
"real estate" means
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(i) |
real property,
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(ii) |
leasehold property,
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(iii) |
a business, whether with or
without premises, and the fixtures, stock-in-trade, goods or
chattels in connection with the operation of the business,
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(iv) |
a property user's licence, or
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(v) |
a portable dwelling, other
than a holiday trailer or recreational vehicle wholly or
mainly used for recreational purposes, that
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(A) |
is designed for use as and is
used as a residence,
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(B) |
is mounted on or otherwise
attached to its own chassis and running gear,
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(C) |
is capable of being transported
on its own chassis and running gear by towing or other
means, and
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(D) |
is situated on a site that is
used or intended to be used … for residential purposes; |
If I was able to use the definition of real estate found in the
Alberta statute, I would find that the Defendants' trailer was not
real estate since it was a recreational vehicle used mainly for
recreational purposes.
But this case is governed by Ontario statutes. The Ontario statute
is not a clear as the Alberta one. Portable dwellings, holiday
trailers and recreational vehicles are not mentioned in Ontario's
Real Estate and Business Brokers Act.
Section 1 of Ontario's Real Estate and Business Brokers Act defines
"real estate" as follows:
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"real estate" includes
real property, leasehold and business whether with or
without premises, fixtures, stock-in-trade, goods or
chattels in connection with the operation of the business; |
The definition of "real estate" in
section 1 of the Assessment Act, R.S.O. 1990, c. A.31, includes:
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"(d) … all structures … and
fixtures erected or placed upon, in, over, under or affixed
to land," |
That definition in the Assessment Act
would appear to include the Defendants' trailer (which is why the
Defendants paid property taxes on their trailer).
But do I apply the definition of "real estate" that is contained in
the Assessment Act ? If the legislature had intended to have the
same definition for real estate in both statutes, it would have said
so. The legislature has chosen a different definition in each of the
Assessment Act and the Real Estate and Business Brokers Act. One
would assume that that was done deliberately.
Let us examine the Plaintiff's documentation. In addition to what I
have already stated, the Rental Agreement refers to the Defendants'
trailer as "Tenant's Fixtures." In the Plaintiff's Claim, the
Plaintiff says that "we are asking for the 5 % real estate fee."
The Plaintiff's Claim was prepared by the President of the
Plaintiff, and not by its agent who appeared before me. I am not
going to find that the trade involved "real estate" just because the
Plaintiff used that phrase (perhaps carelessly) in its Claim.
In the century-old Divisional Court case of Stack v. T. Eaton Co.,
(1902), 4 O.L.R. 335, at page 338, Meredith, C.J. summarized certain
principles in so far as they dealt with when fixtures become part of
the land. It is useful to quote that passage:
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"I take it to be settled law:
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(1) |
That articles not otherwise
attached to the land than by their own weight are not to be
considered as part of the land, unless the circumstances are
such as shew that they were intended to be part of the land.
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(2) |
That articles affixed to the
land even slightly are to be considered part of the land
unless the circumstances are such as to shew that they were
intended to continue chattels.
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(3) |
That the circumstances necessary
to be shewn to alter the prima facie character of the
articles are circumstances which shew the degree of
annexation and object of such annexation, which are patent
to all to see.
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(4) |
That the intention of the person
affixing the article to the soil is material only so far as
it can be presumed from the degree and object of the
annexation.
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(5) |
That, even in the case of
tenants' fixtures put in for the purposes of trade, they
form part of the freehold, with the right, however, to the
tenant, as between him and his landlord, to bring them back
to the state of chattels again by severing them from the
soil, and that they pass by a conveyance of the land as part
of it, subject to this right of the tenant." |
In Bank of Nova Scotia v. Mitz,
(1979), 27 O.R. (2d) 250, the Ontario Court of Appeal considered
whether portable horse stalls which were affixed to posts set in
concrete became fixtures and hence part of the land, or remained
chattels which the owner could remove. That decision involved a
dispute between a property owner and a mortgage holder. While the
Court of Appeal held in that case that the portable horse stalls
became part of the land, the court said:
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"The law has developed very
differently in this area between landlord and tenant as
opposed to owner and purchaser." |
If the Plaintiff was going to sell
its resort, it would be inconceivable that a prospective buyer would
think that the trailers in the resort would be conveyed with the
land.
As I have already said, the Defendants' trailer was clearly a
tenant's fixture that was to be removed by the tenant at the
termination of the rental agreement. If that is the case, how can
one interpret the trailer to be "real estate" ? If the legislature
had intended a trailer such as the Defendants' to come within the
definition of "real estate," the legislature could have said so.
As part of the Statement of Agreed Facts which was filed as Exhibit
1, the parties agree that the Tenant Protection Act, S.O. 1997, c.
24 (as amended) does not apply. From the evidence, it was clear that
the Plaintiff's resort was not a mobile home park. A "mobile home"
is defined in the Tenant Protection Act to be a dwelling that is
used as a permanent residence. The Defendants' trailer was not used
as such.
I conclude that the Defendants' trailer was not "real estate" for
the purposes of the Real Estate and Business Brokers Act. Therefore,
the Plaintiff and Mr. Fisher were not trading in real estate.
Accordingly, I find that the Plaintiff is entitled to collect,
pursuant to the agreement signed on April 17, 2004, a fee of 5 % of
$ 79,075.00, being $ 3,953.75. But this fee is only collectable from
the Defendant, Gerrit Deweerd, since he is the only Defendant who
signed the April 17, 2004 agreement.
Paragraph 4 (q) of the rental agreement requiring the Tenant to pay
to the Landlord a fee of 5 % of the gross selling price on any sale
by the Tenant of the Tenant's Trailer troubles me. Based on that
paragraph, it would appear that anyone in the Plaintiff's resort has
to pay the Plaintiff the 5 % fee, even if the Plaintiff did not do
anything. That seems unfair to the Tenant. But in this case we have
the April 17, 2004 "Agreement for conditions of sale" in which the
male Defendant agreed to pay the 5% fee in return for the Plaintiff
doing certain things to help with the sale of the Defendants' Park
Model Trailer.
Result:
There shall be judgment in favour of the Plaintiff against the
Defendant, Gerrit Deweerd, for $ 3,953.75, being the 5 % fee owing
pursuant to the agreement of April 17, 2004.
There shall be judgment in favour of both Defendants against the
Plaintiff in the amount of $ 143.79, being the difference between
the $ 400.00 that the Plaintiff owes the Defendants for overpayment
of rent and the $ 256.21 that Defendants owe the Plaintiff for
property taxes,
Costs:
Hopefully the parties can agree on the costs of this trial. However,
if they cannot, each of them may provide me with copies of any
written Offers to Settle and make and exchange brief written
submissions (no more than 2 pages in length), within 21 days of the
release of these Reasons.
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Norman B. Pickell, Deputy Judge
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Arbitration Decisions - Norman Pickell - Northwood Beach v. Deweerd
