The Manderley: brokers must repay $111,674.10 on sales that failed to close

On seven suites at The Manderley, the 194-suite condominium at 1478–1496 Kingston Road in Toronto, the buyers signed, the debtors paid the co-operating brokers advances on their commissions, and the sales failed to close, per the Factum of the Receiver, Sept. 29, 2026, paras. 4, 47–48. On October 1, at the videoconference where AlixPartners Restructuring, Inc., the receiver, asked Justice Barbara Conway to make those brokers pay the money back, two of them addressed the court: a representative of Bay Street Group Inc., and one of the two Homelife Landmark Realty Inc. agents on the receiver's list. Both, the judge recorded, sought relief from repayment, per the Endorsement of Justice Conway, Oct. 1, 2026, Participant Information and para. 7. None of the brokers had filed materials in response to the motion, the receiver had reported the day before, per the First Supplement to the Second Report, Sept. 30, 2026, para. 2.0.4.

Justice Conway granted the order. She wrote that "the terms of their agreements clearly require the repayment of these commissions within five days if the sale in question fails to close for any reason whatsoever. The case law provides that the parties may agree otherwise but must do so clearly in the contract: Ayuba v. Erhunmwun, 2026 ONCA 635, at para. 51. They did not do so in this case," per the Endorsement of Justice Conway, Oct. 1, 2026, para. 7. Her order directs each broker on its schedule to pay its net amount to the receiver by October 16, 2026, "unless otherwise agreed by the Receiver." The schedule carries the receiver's figures as filed: $25,169.10 from Bay Street Group Inc., $37,165.60 from Royal LePage Supreme Realty, and $12,979.80 and $36,359.60 from Homelife Landmark Realty Inc., one line for each of its two agents, for a total of $111,674.10, per the Order (Repayment of Commission Advances), Oct. 1, 2026, para. 3 and Sched. "A" and the Second Report of the Receiver, Sept. 22, 2026, para. 7.1.2.

The motion, and Bay Street's written objections to the demand, were reported here on September 23. The same attendance dealt with the motion's two larger requests: a procedure to find the claims that rank ahead of the lenders, and authority to start paying the lenders, owed approximately $30.6 million by the debtors as of June 8 plus accruing fees, costs and interest, per the Factum of the Receiver, Sept. 29, 2026, para. 9.

A week of answers from the brokerages

Each brokerage was served with the motion record on September 22. The sales agent then told the receiver that the Homelife Landmark agent who would later address the court had contacted it on September 24, asking it to ask the receiver not to seek repayment; Homelife Landmark had not contacted the receiver directly, per the First Supplement to the Second Report, Sept. 30, 2026, paras. 2.0.1–2.0.2.

Royal LePage Supreme Realty, which owes on suites 906 and 914, wrote to the receiver's counsel on September 29 objecting to repayment, and the receiver's counsel replied the same day. The receiver told the court it had considered all of the brokers' arguments and remained of the view that the commissions should be paid, per the First Supplement to the Second Report, Sept. 30, 2026, paras. 2.0.3, 2.0.5.

The receiver's factum, filed September 29, set out the law it relied on. "Earlier this month, the Ontario Court of Appeal confirmed the established law that commissions are not payable to brokers where the transaction has not been completed unless there is clear contractual language to the contrary," it said, citing Ayuba at para. 51. Parties "are free to agree that a brokerage will earn its commission despite a failure to close," it went on, and "That did not occur in this case." As the basis for the order, the factum pointed to s. 243 of the Bankruptcy and Insolvency Act, which it says is "interpreted broadly and purposively and extends to relief incidental to a receiver's express powers," and to the receivership order, which, it says, already authorizes the receiver to collect all monies owing to the debtors. Separate actions to recover sums of this size, the factum argued, "would be impractical and incur unnecessary costs in the receivership," per the Factum of the Receiver, Sept. 29, 2026, paras. 57–59, 64.

On the deadline and the amounts, Justice Conway wrote that the October 16 date "gives the Brokers a period that is three times what they are entitled to receive under the relevant contract," and the receiver "has already reduced the amount of the commission to reflect a set-off of any pre-receivership commissions owing to the Broker on other transactions," per the Endorsement of Justice Conway, Oct. 1, 2026, para. 8.

The holdbacks stay with the receiver

The priority claims procedure is meant to identify, determine and resolve the claims against the debtors that rank ahead of the lenders' security: in Justice Conway's summary, they include claims for statutory holdbacks on valid and properly registered construction liens, to the extent the Construction Act (Ontario) gives them priority, and claims for amounts held in trust, per the Endorsement of Justice Conway, Oct. 1, 2026, paras. 2(a), 4. The receiver's factum had argued for it on the ground that one of a receiver's duties is "to ascertain what creditors have claims against the debtor company and evaluate the priority, quantum and quality of those claims," citing among other authorities Royal Bank of Canada v. Casselman PHBC Ltd., 2017 ONSC 4107, at para. 35, and had added: "This duty cannot be delegated to a non-judicial third party." It describes the list of known potential priority claimants as "discrete and relatively small": approximately 10 liens registered against the real property and two registrations against the debtors under the Personal Property Security Act (Ontario), whose holders are all on the service list. Wilkinson Manderley Inc.'s lien, at approximately $8.4 million, is among them, per the Factum of the Receiver, Sept. 29, 2026, paras. 13, 23, 27 and n. 23.