OTTAWA — A high-stakes proposed class action challenging the traditional methods by which buyer brokerage commissions are negotiated and paid across Canada has successfully cleared yet another critical legal hurdle.
In a unanimous decision delivered on October 13, the Federal Court of Appeal firmly rejected attempts by the Canadian Real Estate Association (CREA), the Toronto Regional Real Estate Board (TRREB), and a group of major brokerages to have the remaining core claims against them thrown out of court. The ruling directly upholds a previous 2003 Federal Court decision that had originally cleared the path for plaintiff Mark Sunderland to pursue allegations that various brokerages engaged in anticompetitive behavior by agreeing to control the pricing structures of buyer brokerage commissions.
Furthermore, the appellate court ruled that related claims asserting CREA and TRREB "aided, abetted and counselled the formation and extension of the alleged anti-competitive arrangement" are legally sound enough to proceed through the judicial system.
Despite this significant procedural milestone, the lawsuit has not yet been officially certified as a class action, and all allegations made by the plaintiff remain entirely unproven in a court of law. The recent appellate ruling does not make any final determination or finding regarding whether any of the named defendants actually violated Canada’s Competition Act.
The legal battle first commenced in 2021 when Sunderland filed his lawsuit following the sale of his Toronto home the previous year. According to court filings, Sunderland paid a standard 5 per cent commission on the transaction, with half of that total remuneration being directed straight to the buyer’s brokerage. Sunderland alleges that the deeply entrenched rules established by major industry bodies like CREA and TRREB, and subsequently adopted and abided by member brokerages, cultivate an institutionalized system that severely limits genuine market competition and artificially drives up transaction costs for home sellers.
Through the lawsuit, Sunderland is seeking substantial financial damages on behalf of a broad class of individuals: sellers of residential real estate properties who have listed their homes on TRREB’s Multiple Listing Service (MLS) system since March 11, 2010.
Can rules control the price of a service without setting a specific rate?
At the heart of the legal dispute is a fundamental question regarding how industry rules impact consumer costs. Sunderland contends that the challenged regulatory framework mandates that listing brokerages must offer buyer brokerages a commission greater than zero. Under this system, home sellers are ultimately responsible for bearing the full financial burden of the buyer’s agent commission, even though the professional services are rendered directly to the homebuyer. Sunderland argues that this structural requirement effectively stifles open price competition over the fees charged within the marketplace.
Conversely, the defendants maintained throughout the proceedings that both buyers and sellers remain entirely free to independently negotiate commission rates with their respective brokerages. While the Federal Court of Appeal acknowledged that such individual negotiation remains technically possible within the current framework, the panel of judges found that an overarching arrangement which dictates and controls who ultimately negotiates commissions could potentially constitute a form of price control under the provisions of the Competition Act.
While the court permitted the primary price-control claim to move forward, it did draw a legal boundary by rejecting Sunderland’s separate attempt to restore broader allegations that the parties had entered into a direct conspiracy to fix, maintain, or increase buyer brokerage commissions outright.
Allegations against CREA and TRREB survive
Beyond the direct actions of brokerages, Sunderland’s legal action targets the systemic role played by the real estate industry’s leading associations. The plaintiff alleges that CREA and TRREB actively assisted brokerages in forming and joining the challenged market arrangement by authoring the governing rules and strictly requiring their nationwide and regional members to adhere to them.
The associations countered by arguing that the allegations leveled against them were overly narrow, concerning only the routine implementation and enforcement of standard industry guidelines. However, the appellate court determined that Sunderland had provided a sufficient level of factual detail to allow his claim that their institutional involvement went far beyond basic administration to proceed to the next stage of litigation.
Meanwhile, legal claims involving various franchisor defendants—including major industry names such as Century 21, Sutton, and HomeLife—remain dismissed. The appellate court upheld the lower court’s finding that Sunderland had failed to provide an adequate level of factual detail to substantiate his specific allegations concerning their corporate knowledge and intent. Nevertheless, the door remains slightly open, as the plaintiff retains the legal option to seek permission to amend his claim with additional supporting facts if they become available.
Previously, REMAX Canada chose a different path, reaching a separate out-of-court financial settlement with Sunderland totaling $7.8 million, which was subsequently approved by the court.
The appellate court also addressed complex questions surrounding legal time limits, declining to dismiss claims involving conduct that occurred more than two years prior to the initial filing of the lawsuit on the grounds of being filed too late. Whether older claims brought forward by other prospective members of the class action fall outside of the strict legal limitation periods remains an unresolved question to be determined later in the litigation process.
CREA and TRREB respond
In the wake of the appellate decision, representatives for the major industry associations voiced their respective positions on the ongoing legal saga.
In a formal statement provided to media outlets, CREA emphasized the procedural nature of the recent ruling. "It is important to emphasize that this ruling simply allows the lawsuit to move forward," the organization stated. "It does not represent a judgment on the merits of the claims against CREA, which we continue to believe are without merit."
CREA further reiterated its longstanding position that its established policies and guidelines are intentionally designed to foster fairness, maximize consumer choice, and encourage healthy collaboration within the Canadian real estate marketplace.
TRREB CEO John DiMichele chose to highlight the aspects of the appellate decision that went in favor of the defense, pointing specifically to the dismissal of certain expansive conspiracy claims. "TRREB welcomes the Court’s decision to uphold the dismissal of allegations that the challenged rules constituted an agreement to fix, maintain or increase buyer brokerage commissions," DiMichele said in his official statement.
Both organizations confirmed that they are actively reviewing the detailed judicial decision alongside their respective legal counsel to carefully determine their appropriate next steps in the litigation.
Next steps
On the opposing side of the courtroom, legal counsel for the plaintiff expressed satisfaction with the appellate court’s thorough review. Garth Myers, a partner at the Toronto-based law firm Kalloghlian Myers LLP and lead counsel for Sunderland, stated that his legal team is pleased the case can now proceed forward against both the individual brokerages and the major trade associations. Myers added that he hopes the legal proceedings can now advance toward a speedy determination based on the actual merits of the case.
The litigation remains active before the Federal Court. According to Myers, the crucial motion required to officially certify the lawsuit as a formal class action is still pending review. Additionally, the involved parties retain the legal option to seek leave to appeal the Federal Court of Appeal’s latest ruling directly to the Supreme Court of Canada, which could introduce another layer of appellate scrutiny to the dispute.
The broader implications of this ongoing legal challenge extend beyond the immediate parties involved in the Sunderland case. Legal observers and market participants are also closely monitoring a separate proposed national class action, known as McFall, which features strikingly similar allegations regarding buyer brokerage commissions. According to an updated administrative filing submitted to the Federal Court, the parties involved in the McFall matter had deliberately paused their procedural next steps to await the outcome of the Sunderland appeal decision.