Legally Speaking - January 2014 (467)
News and Publications » Publications » Legally Speaking » Legally Speaking - January 2014 (467)
Share on Facebook
Share on Twitter
Search Legally Speaking:
Legally Speaking (467, January 2014)


Number 467, January 2014


Jennifer CleeBC courts have accepted that the Limited Dual Agency Agreement (LDAA) limits certain general obligations that a licensee has to their clients. However, licensees must remember that while their duty of loyalty and disclosure are modified by the LDAA, they still owe a duty of “full and fair disclosure of all material circumstances and of everything known to him respecting the subject matter of the contract which would be likely to influence the conduct of the principal.”1 Other general duties of a licensee remain intact when acting in a limited dual agent capacity.

In Pepper’s Produce, the plaintiff company (the buyer) agreed to buy a grocery business operated by the seller. Licensees acting as limited dual agents represented both the buyer and seller. The seller’s lease with the landlord provided that the lease for the grocery premises could not be assigned without the landlord’s written consent. The buyer’s offer was subject to certain conditions, including the landlord approving the purchaser to assume the existing lease by a certain date.

There was a conflict in the evidence as to whether the buyer was to assume the existing lease or enter into a new lease. The evidence at trial was that, at a meeting held prior to subject removal between the principals of the buyer and seller and the landlord, the landlord either agreed verbally on the terms of a new lease, or was agreeable to entering into a new lease. However, the terms were not finalized and the landlord did not testify.

The buyer subsequently removed all subject conditions without entering into either a new lease or obtaining the landlord’s written consent to assign the existing lease. When the completion date arrived without either a new lease or the landlord’s written consent to the assignment, the buyer refused to complete.

Both the buyer and seller claimed the buyer’s $15,000 deposit. Ultimately, the seller settled with the buyer, returning the buyer’s deposit plus $10,000. The buyer also claimed against the licensees for $31,000, allegedly for buying and storing equipment to be used in the business.

The main issue considered by the court was whether the licensee had a duty to advise the buyer against removing the lease subject when no new lease or written consent to assume the existing lease was in place. The court considered the general duties owed by a licensee and acknowledged that the LDAA limited, to some extent, the normal obligations owed by a licensee.

However, the court stated that it found “nothing that excludes the basic duty to fully discuss the terms and effect of a contract, and to at least point out terms that are clearly not in a party’s best interest.”2 The court held that a reasonable licensee would be expected to recommend against removing the lease subject condition until a new lease or proper assignment was in place.

The court also found that the licensee should have known that if the lease was to be for a term of more than three years, only a written agreement would make the agreement binding in light of Section 59 of the Law and Equity Act3 and should have advised the buyer that a verbal agreement with the landlord was insufficient.

Despite finding the licensee to have breached their contractual and agency duties to the buyer, the buyer’s complaint was dismissed, as it was unable to prove damages caused by the licensee’s conduct.

The decision is an important reminder for licensees to:

i) fully discuss, and ensure that clients understand, the terms and effects of the documents they sign; and
ii) ensure that all agreements between parties are reduced to writing.

Jennifer Clee
B.A., LL.B.

  1. Pepper’s Produce Ltd. v. Medallion Realty Ltd., 2013 BCSC 2314.
  2. Pepper’s Produce Ltd. v. Medallion Realty Ltd., p. 6.
  3. R.S.B.C. 1996, c. 253.
Back issues of Legally Speaking are available to REALTORS® on BCREA's REALTOR Link® homepage. Subscribers who are not REALTORS®, and who wish to see back issues, should contact BCREA by email at [email protected], or by phone at 604.742.2784.
Legally Speaking is published eight times a year by email and quarterly in print by the British Columbia Real Estate Association. Real estate boards, real estate associations and REALTORS® may reprint this content, provided that credit is given to BCREA by including the following statement: "Copyright British Columbia Real Estate Association. Reprinted with permission." BCREA makes no guarantees as to the accuracy or completeness of this information.
Copyright © British Columbia Real Estate Association
1420 – 701 Georgia Street West
PO Box 10123, Pacific Centre
Vancouver, BC  V7Y 1C6
Phone 604.683.7702
Fax 604.683.8601
[email protected]
To subscribe to receive BCREA publications such as this one, or to update your email address or current subscriptions, click here.