OTTAWA — A high-stakes legal battle scrutinizing how buyer brokerage commissions are negotiated and paid across Canada has cleared a critical hurdle, as the Federal Court of Appeal has rejected attempts to throw out the remaining claims against major industry bodies and brokerages.
In a unanimous decision handed down on October 13, the appellate court upheld a pivotal 2023 Federal Court ruling. That initial ruling had given the green light to plaintiff Mark Sunderland to pursue allegations that various brokerages engaged in anticompetitive behavior by conspiring to control the price of buyer brokerage commissions. Furthermore, the appeal court determined that related claims alleging the Canadian Real Estate Association (CREA) and the Toronto Regional Real Estate Board (TRREB) "aided, abetted and counselled the formation and extension of the alleged anti-competitive arrangement" can also move forward.
While this latest legal development keeps the multibillion-dollar litigation alive, the lawsuit has not yet been officially certified as a class action. The accusations leveled against the defendants remain entirely unproven in a court of law, and the appellate ruling does not determine whether any individual defendant actually violated the federal Competition Act.
The origins of the legal challenge date back to 2021, when Sunderland filed his lawsuit after selling his Toronto home the previous year. Sunderland paid a standard 5 per cent commission on the transaction, with half of those funds allocated directly to the buyer’s brokerage. Following the sale, he launched his legal crusade, alleging that the mandatory rules established by CREA and TRREB—and systematically adhered to by member brokerages—create an uncompetitive market structure that artificially inflates costs for home sellers.
Through the lawsuit, Sunderland is seeking substantial financial damages on behalf of a proposed class consisting of individuals who sold residential properties listed on TRREB’s Multiple Listing Service (MLS) system all the way back to March 11, 2010.
Can Rules Control the Price of a Service Without Setting a Specific Rate?
At the core of the legal dispute is a fundamental question about market mechanics: Can industry rules effectively control the price of a service without explicitly dictating a specific, rigid rate?
Sunderland argues that the challenged regulatory framework requires listing brokerages to offer buyer brokerages a commission greater than zero. Under this system, sellers are forced to shoulder the financial burden of compensating the buyer’s agent, even though it is the buyer who directly receives the professional representation and services. Sunderland contends that this architectural requirement severely stifles true market competition over the fees charged for real estate transactions.
Conversely, the defendants maintained throughout the proceedings that both buyers and sellers retain the ultimate freedom to negotiate commission rates independently with their respective brokerages. While the Federal Court of Appeal acknowledged that such individual negotiation remains technically possible, it ultimately concluded that an overarching industry arrangement dictating who negotiates commissions could still legally amount to a form of price control under the strict definitions of the Competition Act.
Although the court allowed the core price-control claim to proceed to the next stages of litigation, it did not rule entirely in favor of the plaintiff on every front. The appellate panel rejected Sunderland’s separate attempt to restore broader allegations that the defendants had formed a direct agreement to fix, maintain, or increase buyer brokerage commission rates outright.
Allegations Against CREA and TRREB Survive Scrutiny
The survival of claims against major industry associations represents a significant moment for Canadian real estate governance. Sunderland’s legal team argued that CREA and TRREB actively assisted brokerages in forming and joining the challenged market arrangement by drafting the underlying rules and making compliance mandatory for all members.
The associations attempted to parry these claims by arguing that their actions were strictly limited to the ordinary implementation and enforcement of standard industry guidelines. However, the appeal court found that the plaintiff had provided a sufficient level of detail to allow the claim that the associations’ institutional involvement extended far beyond routine regulatory enforcement to move forward.
At the same time, the appellate court maintained the dismissal of claims previously brought against various franchisor defendants, including major industry names such as Century 21, Sutton, and HomeLife. The court upheld the earlier finding that Sunderland had failed to supply adequate factual detail to support his specific allegations regarding their internal knowledge and legal intent. The court noted, however, that the plaintiff technically retains the procedural option to seek permission to amend his claim with further supporting facts should they become available.
Notably, this corporate landscape has already seen some movement; RE/MAX had previously reached a separate, independent financial settlement with Sunderland totaling $7.8 million, which was previously approved by the court.
The appellate court also addressed timing issues, declining to dismiss claims involving conduct that occurred more than two years prior to the date the lawsuit was formally filed. The defendants had argued these older claims were time-barred, but the court ruled against throwing them out on those grounds. Whether older claims submitted by other members of the proposed class fall outside the strict legal limitation periods remains an unresolved question to be determined later in the litigation.
CREA and TRREB Respond to the Decision
Reaction from the targeted organizations was swift following the release of the appellate ruling. In an official statement provided to media outlets on October 14, CREA emphasized the preliminary nature of the judicial step.
"It is important to emphasize that this ruling simply allows the lawsuit to move forward," CREA stated. "It does not represent a judgment on the merits of the claims against CREA, which we continue to believe are without merit."
The national association added that its institutional policies are intentionally designed to promote fairness, foster consumer choice, and encourage professional collaboration within the broader Canadian real estate marketplace.
Meanwhile, TRREB CEO John DiMichele chose to highlight the aspects of the decision that went in favor of the real estate boards, specifically pointing to the dismissal of the direct price-fixing allegations.
"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 they are actively reviewing the detailed appellate decision alongside their legal counsel to determine their next strategic steps in the ongoing litigation.
Next Steps in the Litigation
Legal representatives for the plaintiff expressed satisfaction with the court’s refusal to dismiss the remaining core components of the action. Garth Myers, a partner at the Toronto law firm Kalloghlian Myers LLP and counsel for Sunderland, stated that his side is "pleased that the case can go forward against the brokerages and the associations." He added that he hopes the legal proceeding "can move toward a speedy determination on the merits."
The complex case now returns to the Federal Court for ongoing management. Myers noted that the crucial motion seeking to have the lawsuit formally certified as a class action remains pending before the court. Additionally, legal experts point out that the involved parties still retain the legal option to seek leave to appeal the Federal Court of Appeal’s decision directly to the Supreme Court of Canada, which could potentially elevate the dispute to the nation’s highest court.
The implications of the Sunderland litigation extend beyond this single file. Parties involved in separate proposed national class actions featuring highly similar allegations—such as the parallel McFall lawsuit—have been closely monitoring the situation. According to a formal update filed with the Federal Court on October 1. those parties had deliberately paused their own strategic decisions while awaiting the outcome of the Sunderland appeal.