Court orders new trial for broader decision on realtor’s alleged negligence
In proceedings arising from a failed real estate transaction, the Ontario Court of Appeal ordered a new trial before another judge to determine whether a real estate agent had breached the standard of care by contributing to his clients’ misunderstanding of a purchase agreement.
The appellants worked with a real estate agent and broker – the respondent in Painchaud v. Krimker, 2026 ONCA 494 – to buy an expensive residential property in Toronto’s Bridle Path area. The appellants executed an unconditional agreement of purchase and sale requiring a $350,000 deposit.
Opting not to move forward with the purchase, the appellants did not deliver the deposit. Upon learning that the purchase would not push through, the vendors sued the appellants for breach of the agreement. The appellants settled the sellers’ claim.
Negligence claim filed
The appellants brought a third-party claim alleging negligence against the respondent.
The appellants alleged that the respondent, who had a relationship of trust with them, said they could sign a mutual release and walk away from the deal because the agreement’s mutual release clause was an “escape hatch” that would absolve them of liability.
The respondent admitted that he lied to the vendors and their agent that the purchase would proceed. He also said he did not correct the appellants’ misunderstanding or advise them that failing to pay the deposit would breach the agreement and could make them liable for damages to the vendors.
Denial of third-party claim
On July 21, 2025, Justice Grant Dow of the Ontario Superior Court of Justice dismissed the third-party claim. Though declining to award the respondent substantial indemnity costs, the trial judge ordered the appellants to pay the respondent $185,451.16 in costs.
The judge recognized that the respondent owed fiduciary duties to the appellants. The judge also acknowledged that the respondent did not keep contemporaneous notes or records of his conduct, failed to adopt best practices, and lied to the sellers and their agent.
However, the judge determined that the respondent did not actively mislead the appellants and reviewed the agreement with them, as demonstrated by the appellants’ signatures and initials on the document.
The appellants appealed against the denial of their third-party claim.
New trial ordered for negligence claim
The Court of Appeal for Ontario allowed the appeal due to the trial judge’s reversible errors and set aside his judgment and costs order.
The appeal court acknowledged that the judge could find that the respondent did not actively mislead the appellants about walking away from the agreement by not delivering the deposit.
However, the appeal court ruled that the judge failed to make findings about the respondent’s other conduct in the circumstances and failed to sufficiently address the negligence claim, which went beyond the allegation that the respondent had actively misled the appellants.
The appeal court noted that the appellants and their counsel alleged negligence as follows:
- The respondent failed to inform the appellants that they could breach the agreement at all negotiation stages and after the finalization of the agreement
- As the appellants’ agent, the respondent actively lied to and misled the vendors and their agent about the purchase status
- The respondent failed to update the appellants about his communications with the sellers and their agent
The appeal court held that the judge also erred by relying primarily on the appellants’ signatures and initials to determine that the respondent had gone through and explained the agreement to the appellants.
The appeal court added that the judge failed to address whether the appellants reasonably misunderstood the agreement’s meaning and whether the respondent failed to correct this misunderstanding, thus breaching the standard of care expected of a real estate agent in the circumstances.
Costs order
The Ontario Court of Appeal ordered the respondent to pay the appellants their appeal costs of $20,000. The appeal court found that the new trial judge could determine the trial costs.
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