Case Summary: Sunderland v. Toronto Regional Real Estate Board

  • January 03, 2024
  • Soudeh Hosseini

The Federal Court’s ruling in Sunderland v. Toronto Regional Real Estate Board, 2023 FC 1293 ("Sunderland"), emerges as potential turning point with far-reaching implications for the Greater Toronto Area (“GTA”) Real Estate Industry. In the context of a motion to strike, Chief Justice Paul Crampton of the Federal Court (the “Court”) examined whether the Statement of Claim alleged sufficient facts against each of the named defendants, which, on their face, fell within the purview of s. 45(1) of the Competition Act, R.S.C. 1985, c. C-34 (the “Competition Act). The Court employed a generous and holistic reading, as instructed in R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42 at para. 23 (“Imperial Tobacco”), to conclude that the action may proceed against the brokers (defined below) and associations (defined below) on the narrower claim that the brokers and associations attempted to control the price for buyer brokerage services.  With respect to the franchisors, the Court held that the claims shall be removed. This summary solely focuses on the Court’s analysis of whether the Statement of Claim discloses a reasonable cause of action under s. 45.

The proposed class action comprises individuals who sold residential real estate in the Greater Toronto Area (“GTA”) dating back to 2010. The plaintiff alleges that several leading brokerages (collectively, the “brokers”) and their "co-conspirators" conspired, agreed, or arranged with each other to fix, maintain, increase, or control the price for the supply of buyer brokerage services in contravention of s. 45. Also named in the Statement of Claim are the Toronto Regional Real Estate Board (“TRREB”) which owns and operates the Multiple Listing Service (“MLS”), and the Canadian Real Estate Association (“CREA”) who owns certain other MLS marks. The plaintiff further alleges that TRREB and CREA (collectively, the “associations”) and certain franchisors of brokerage services (collectively, the “franchisors”) facilitated and contributed to the execution of this arrangement through promulgation of rules to which member brokerages are supposedly bound.

The test for evaluating whether the pleadings disclose a reasonable cause of action is whether “it is plain and obvious, assuming the facts pleaded to be true, that each of the plaintiff’s pleaded claims disclose no reasonable cause of action”: Atlantic Lottery Corp Inc. v. Babstock, 2020 SCC 19, at para. 14. The Court applies this standard throughout to ascertain if the alleged facts plausibly satisfy each element and sub-element of s. 45.

Section 45 comprises three constituent elements: (i) a 'conspiracy, agreement, or arrangement,' (ii) with a 'competitor,' and (iii) to engage in one of the activities outlined in paragraphs 45(1)(a)–(c), respectively. These activities are as follows: (a) to fix, maintain, increase or control the price for the supply of the product; (b) to allocate sales, territories, customers or markets for the production or supply of the product; or (c) to fix, maintain, control, prevent, lessen or eliminate the production or supply of the product.