Filing a lawsuit does not set your case in stone.
Plaintiffs typically feel they have a good idea of how they have been wronged by a defendant when they file a statement of claim with the court. However, as time passes and more details emerge, key aspects of the originating document may no longer line up with the known facts.
Luckily, Ontario’s Rules of Civil Procedure recognize that possibility, allowing parties — in the right circumstances — to amend the pleadings to match their evolving understanding of the case.
For example, in the recent matter of Ker v. Deol et al., the sellers of a residential property launched a seemingly straightforward claim over a collapsed real estate deal against the abortive buyer. But when the defendant painted a more complicated picture of events in his statement of defence, Ontario Superior Court Justice David Harris allowed the plaintiff to add a new claim against fresh defendants, including the realtor who acted for the purchaser.
The facts
The case dates back to March 2021, when Margaret Ker entered an agreement of purchase and sale with Satinder Deol after accepting the $1.1-million offer he made for her Orangeville, Ontario home via realtor Gurpreet Pandher, with a $10,000 deposit on the property.
Almost a year later, Ker sued Deol for breach of contract after his lawyer told her he was backing out of the deal.
Things took a turn when Deol alleged in his statement of defence that he had made his offer on behalf of another individual named Satinder Cheema — a friend of Pandher who was the actual purchaser of the property. Deol’s pleadings also claimed that he was unsure he had ever signed the agreement of purchase and sale, and alleged that Cheema had paid the $10,000 deposit.
As a result, Ker moved to amend her statement of claim to name Cheema, Pandher, and his company Remax Gold Realty as additional defendants, as well as adding a claim for negligent misrepresentation.
The results
Noting that Rule 26.01 of the Rules of Civil Procedure grants courts broad power to allow amendments to pleadings at any stage of proceedings, the judge wrote that leave to amend must be granted unless:
- The responding party would suffer non-compensable prejudice;
- The amended pleadings are scandalous, frivolous, vexatious, or an abuse of the court’s process; or
- The amended pleading discloses no reasonable cause of action.
While the realtor argued that his reputation would be damaged if the amendments were allowed, Justice Harris ruled that this was not the type of “non-compensable prejudice” the case law refers to.
“It would defeat the request for an amendment in every instance,” he wrote, adding that prejudice resulting from the potential success of an amended plea is not included in the assessment.
Pandher also claimed that there was no basis for a claim against him because, as the realtor for the purchaser, he did not owe a duty of care to Ker, the vendor. However, the judge wrote that the identity of his client was not determinative, pointing to several cases where realtors acting for sellers were found to have owed a duty of care to buyers.
“The crucial vantage point is that of the representor. A duty of care and special relationship exists if it is reasonable to foresee from the representor’s perspective that there will be reliance on the representation made. That is the case here. A real estate agent representing a purchaser has a duty of care to the vendor that he is representing who he says he is representing,” the judge wrote.
Although Pandher made no explicit representations to Ker or her real estate agent, Justice Harris concluded that his identification on the agreement of purchase and sale as the broker acting for Deol was enough to ground a cause of action for negligent misrepresentation against him. While the amended claim against Pandher has not been tested or proven in court, the judge found a reasonable possibility of success on the amended statement of claim.
“Justice requires Pandher to be joined as otherwise Deol’s position that he was an innocent dupe could potentially leave the plaintiff without a remedy,” Justice Harris added as he granted Ker’s motion.
The lessons
This decision highlights the relatively low bar the court sets for amendments to pleadings. Plaintiffs should not feel stuck with the allegations they made at the outset of their lawsuit if further developments suggest that they missed off defendants or causes of action that were not obvious at the time.
The case is also a good reminder to real estate agents that their obligations are not necessarily limited to their clients. In certain circumstances, a judge could find that the relationship between a realtor and the party on the other side of the transaction rises to the point where a duty of care exists across the boundary of the deal. As a result, realtors should take care in their communications with both sides to limit their exposure to a claim of negligent misrepresentation.