Luminary Holding Corp. v Fyfe


Written by Connor Jonsson, supervised by Professor Darcy MacPherson

At law, an agency agreement can be implied to exist based on the conduct of the parties alone – without any explicit written or verbal references to “agency”.  This is referred to as an “implied agency”, and in a recent case, Luminary Holding Corp. v. Fyfe, 2022 BCCA 185,[1] the British Columbia Court of Appeal examined whether the lower court erred in determining that such a relationship existed, in the context of a land sale, between a real estate agent and a corporate purchaser. 

The issue of implied agency arose after Fyfe, a real estate agent acting on behalf of a seller, failed to disclose important material facts to the buyer, Luminary Holding Corp, which caused the company to incur significant additional costs.[2]  Fyfe argued that he had no duty to disclose this information as Dunn, who controlled the corporation, was in a “customer relationship” vis-á-vis the real estate agent.[3]  The “customer” relationship was the lowest level of relationship between the agent and the party (whether buyer or seller).  Fyfe argued that this meant that duties that might otherwise apply would be inappropriate on these facts.[4] Dunn countered that the conduct of both parties was such that an implied agency relationship had been created and Fyfe owed the full range of client duties.  At the heart of this dispute was the question:  What sort of mutual conduct will create an implied agency relationship during the course of communications between a real estate agent and a potential buyer?

The Appellant, Fyfe, was the listing agent for a 160-acre property in Fernie, British Columbia. The Respondent, after lengthy discussions with the Appellant, purchased the property but was not told that a portion of it would be transferred to the Agricultural Land Reserve after a boundary review unless the purchaser opted out.[5]  Fyfe was aware of the boundary review and of the entitlement of the owner to opt out well before the closing date but failed to disclose this information.[6]  As a result, Dunn failed to opt out, and his plans for development were delayed and significant costs were incurred.  At trial, the B.C. Supreme Court found that an implied agency relationship existed between the purchaser and the agent, and as such, there was a duty to disclose all known material respecting real estate services, including the possibility of a land transfer.

The form that Dunn signed allowed for three options for the type of relationship entered into between a realtor and his or her client. Dunn had agreed to the lowest level of relationship, that is, a customer relationship.[7] Nonetheless, the trial court had held that there was still a greater degree of duties owed by the realtor, and the realtor (Fyfe) had fallen below the standard of those duties by failing to disclose information that his client needed.

The decision was upheld in the Court of Appeal, which found that the trial judge correctly instructed himself on the legal test for an implied agency as set out in Siemens v. Howard[8] and applied it reasonably.[9]  The question to be asked in each case is “whether it is reasonable for the party asserting an agency relationship to [have inferred] from the conduct of the other party that [they] consented to an agency relationship”.[10]  To determine whether an implied agency exists, a judge must examine the events asserted in support of an agency “in the context of all of the circumstances”.[11]  The higher court found that the trial judge correctly considered the entirety of the evidence found in the correspondence between the two parties and looked at the totality of the circumstances in coming to his conclusion. 

In examining the totality of the circumstances the lower court considered the communication between the two parties, in which Fyfe “moved deeper into the provision of advice, rather than simply providing information”[12]; the nature of the inquiries Dunn made of Fyfe, including calling upon the realtor to perform substantial research on road access and power line issues[13] and the affirmative responses received in this regard; the absence of any clarifying discussion about the applicability or non-applicability of an agency relationship; Dunn’s understanding, as made manifest in one of his emails, that Fyfe would “act for both the seller and the buyer”[14] [emphasis added]; the absence of a response from Fyfe disabusing him of any such notion or declining to act as his agent; and Fyfe’s unqualified commitment to prepare the purchase contract as requested by Dunn before clarifying the nature of their relationship.  In looking at the details of the communication between the two parties the trial judge concluded, “This is precisely the type of fact pattern that calls out for the imposition of an implied agency”.[15]  The Court noted that Fyfe should have been tipped off that he had crossed the line from what a listing agent in a mere customer relationship would normally do and, in the court’s view, it was reasonable for Dunn to infer from Fyfe’s conduct that Fyfe was willing to act as his agent in purchasing the Fernie Property, even though such a relationship was never explicitly agreed to by either party.  The Court of Appeal agreed.

Ultimately, the B.C. Court of Appeal reminds us that whether an implied agency relationship exists will involve a case-by-case assessment, informed by the entirety of the evidence and totality of the circumstances, of the interactions between all relevant parties.  The Court notes that realtors should clarify the nature of the relationship at the outset of their dealings with an unrepresented customer if they want to avoid the situation that arose in this case.[16] Also, parties to a relationship may determine, as between themselves, what is reasonably expected from the other. However, simply because one party signs a form indicating that he or she expects a lower level of service is not necessarily determinative of the duties required, if the actions of the other party reasonably lead to the inference that the higher level of service is being provided. In this case, Fyfe’s words and actions would have led a reasonable person to believe that he would provide the necessary information to Dunn. Since he did not do this, he was in violation of his duties as an agent, because regardless of the form that had been signed, the relationship between the parties was what they would reasonably believe it to be, that is, one of agency.

[1] Luminary Holding Corp. v. Fyfe, 2022 BCCA 185 [Luminary (CA)].

[2] Luminary (CA), ibid, at para 2.

[3] Luminary Holding Corp v. Fyfe, 2021 BCSC 167 [Luminary (SC)], at para 30.

[4] Luminary (CA), supra note 1, at para 52.

[5] Luminary (CA), ibid at para 2.

[6] Luminary (CA), ibid at para 3.

[7] Luminary (CA), ibid at para 21.

[8] 2018 BCCA 197 [Siemens].

[9] Luminary (CA), supra note 1 at para 59.

[10] Siemens, ibid at para 12.   

[11] Siemens, ibid at para 14.  See also, Luminary (CA), supra note 1, at para 59

[12] Luminary (SC), supra note 3 at para 121; This was reproduced by the Court of Appeal, Luminary (CA), supra note 1 at para 50.

[13] Luminary (SC), ibid.

[14] Luminary (SC), ibid.

[15] Luminary (SC), ibid.

[16] Luminary (CA), supra note 1 at para 64.

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