The Federal Court of Appeal has rejected challenges from the Canadian Real Estate Association (CREA), the Toronto Regional Real Estate Board (TRREB), and various brokerages, permitting a lawsuit over buyer broker commissions to advance to the next stage with its core arguments intact.
The court found it arguable that the rules could amount to price control under the Competition Act without setting a specific rate and that the associations could be held liable for damages as parties to the alleged offence.
Background of the Lawsuit
The lawsuit was launched in 2021 by Mark Sunderland after he paid a 5 per cent commission on the sale of his Toronto home the previous year, with half going to the buyer’s brokerage.
Sunderland alleges that rules set by CREA and TRREB, and agreed to by brokerages, create a system that limits competition and drives up costs for sellers.
He is seeking damages on behalf of sellers of residential properties listed on TRREB’s MLS since March 11, 2010.
Allegations Against CREA and TRREB
The plaintiff maintains that CREA and TRREB helped brokerages form or join the arrangement by creating the rules and requiring members to follow them.
While the associations claimed their involvement was limited to rule enforcement, the court concluded there was sufficient evidence to explore whether their actions went further.
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Claims against franchisor defendants, including Century 21, Sutton and HomeLife, also remain dismissed. The court upheld the finding that Sunderland had not provided enough detail to support his allegations about their knowledge and intent, although he could seek to amend his claim with further supporting facts.
Response from CREA and TRREB
CREA responded that the decision only clears the case to proceed, adding that they dispute the lawsuit’s validity and stand by their policies, which they say encourage fairness and market collaboration.
TRREB CEO John DiMichele emphasized the allegations that remain dismissed. “TRREB welcomes the Court’s decision to uphold the dismissal of allegations that the challenged rules constituted an agreement to fix, maintain or increase buyer brokerage commissions,” he said in a statement.
Both organizations said they are reviewing the decision with legal counsel to determine next steps.
Garth Myers, a partner at Toronto law firm Kalloghlian Myers LLP and counsel for Sunderland, said his side is pleased that the case can go forward against the brokerages and the associations, and hopes it can move toward a speedy determination on the merits.
The case remains before the Federal Court, where the motion to certify the lawsuit as a class action is still pending. The parties could also seek leave to appeal the Federal Court of Appeal’s decision to the Supreme Court of Canada.
The unanimous Oct. 13 decision upholds a 2023 Federal Court ruling allowing plaintiff Mark Sunderland to pursue allegations that brokerages agreed to control buyer brokerage commission prices. Related claims that CREA and TRREB “aided, abetted and counselled the formation and extension of the alleged anti-competitive arrangement” can also proceed. The parties in McFall, a separate proposed national class action involving similar allegations, were waiting for the Sunderland appeal decision before next steps, according to an update filed with the Federal Court on Oct. 1. Share this article:
