DISCIPLINE DECISION AND REASONS FOR DECISION - reco.on.ca · For the Real Estate Council of Ontario: George Drametu Heard in Toronto: May 23 and 24, 20113 October 29, 2013 Steven

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Real Estate Council of Ontario

This document also contains the Appeals Decision, released July 14, 2015

IN THE MATTER OF A DISCIPLINE HEARING HELD PURSUANT TO THE REAL ESTATE AND BUSINESS BROKERS ACT, 2002, S.O. 2002, c. 30, Sch. C

BETWEEN:

REGISTRAR UNDER THE REAL ESTATE AND BUSINESS BROKERS ACT, 2002

- AND-

STEVEN MATTHEW ZAHND (also known as STEVE ZAHND),

ROY BALWANT SINGH and CENTURY 21 HOME REALTY INC.

DISCIPLINE DECISION AND REASONS FOR DECISION

For the Registrants: Anthony Keller, representing Mr. Zahnd

Randell Thomson, representing Mr. Singh and Century 21 Home Realty Inc.

For the Real Estate Council of Ontario: George Drametu

Heard in Toronto: May 23 and 24, 20113 October 29, 2013

Steven Matthew Zahnd (also known as Steve Zahnd) FINDINGS: In violation of Sections 3, 5, 7(1), 37(2), 38 and 39 of the

Code of Ethics.

Roy Balwant Singh FINDINGS: In violation of Sections 3, 5, 7(1) and 41(2) of the Code

of Ethics.

Century 21 Home Realty Inc. FINDINGS: In violation of Sections 3, 5, 7(1), 15, 38 and 39 of the

Code of Ethics.

ORDER: Counsel for the Registrar, REBBA 2002 to deliver written submissions to the Panel and to the Respondent on the issue of penalty and costs within 15 days of the date on which the Panel’s decision and reasons are delivered.

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The Respondent shall deliver to the Panel and to Counsel for the Registrar, REBBA 2002 its written submissions on penalty and costs in response to Counsel for the Registrar, REBBA 2002’s submissions within 15 days of the date on which Counsel for the Registrar, REBBA 2002’s submissions on penalty and costs are delivered to the Respondent. Counsel for the Registrar, REBBA 2002 shall deliver to the Panel and to the Respondent its reply to the written submission on penalty and costs of the Respondent within 5 days of the date on which the Respondent’s submissions on penalty and costs are delivered to Counsel for the Registrar, REBBA 2002. Any inquiries relating to the delivery of the above-mentioned documents should be directed to the Hearings Coordinator.

COSTS AND EXPENSES: If appropriate, submissions to be made on costs and expenses with submissions on penalty.

WRITTEN REASONS:

REASONS FOR DECISION INTRODUCTION

This hearing was held on May 23 and 24, and October 29, 2013 in the presence of the

Respondent Steven Matthew Zahnd, also known as Steve Zahnd, (“Mr. Zahnd”);

Anthony Keller, counsel for Mr. Zahnd; Roy Balwant Singh (“Mr. Singh”); Randell

Thomson, counsel for Mr. Singh and Century 21 Home Realty Inc. (“Home Realty”); and

George Drametu, counsel for the Real Estate Council of Ontario.

ALLEGATIONS BY THE REGISTRAR, REBBA 2002

Century 21 Home Realty Inc.

In its allegation statement the Registrar, REBBA 2002 alleged that Home Realty acted

unprofessionally as follows:

A. Dealing directly with the Buyer when it knew, or ought to have known, that the

Buyer was a client of Brokerage A, without ensuring that it had written consent

from Brokerage A to do so.

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B. By failing to ensure it informed the Buyer of all of the requirements under s. 10(1)

of the Code of Ethics prior to entering into an agreement with the Buyer. In the

alternative, Home Realty failed to ensure it used its best efforts to obtain from the

Buyer a written acknowledgement that she had received all of the information

referred to in s. 10(1) of the Code of Ethics before the Second Offer had been

made.

C. By failing to reduce a representation agreement with the Buyer to writing at the

earliest practicable opportunity.

D. By improperly entering into the Second Confirmation of Co-operation and

Representation (“CCR”), which indicated that it and the Buyer had entered into a

Buyer Representation Agreement (“BRA”) when it had not in fact done so.

E. By entering into the Buyer Customer Service Agreement (“BCSA”) with the Buyer

after the Buyer had entered into the Agreement.

The Registrar, REBBA 2002 alleged that Home Realty breached the following sections

of the Code of Ethics:

Fairness, honesty, etc.

3. A registrant shall treat every person the registrant deals with in the course of a trade

in real estate fairly, honestly and with integrity.

Conscientious and competent service, etc.

5. A registrant shall provide conscientious service to the registrant’s clients and

customers and shall demonstrate reasonable knowledge, skill, judgment and

competence in providing those services.

Dealing with other registrants

7.(1) A registrant who knows or ought to know that a person is a client of another

registrant shall communicate information to the person for the purpose of a trade in real

estate only through the other registrant, unless the other registrant has consented in

writing.

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Information before agreements

10.(1) Before entering into an agreement with a buyer or seller in respect of trading in

real estate, a brokerage shall, at the earliest practicable opportunity, inform the buyer or

seller of the following:

1. The types of service alternatives that are available in the circumstances, including a

representation agreement or another type of agreement.

2. The services that the brokerage would provide under the agreement.

3. The fact that circumstances could arise in which the brokerage could represent more

than one client in respect of the same trade in real estate, but that the brokerage could

not do this unless all of the clients represented by the brokerage in respect of that trade

consented in writing.

4. The nature of the services that the brokerage would provide to each client if the

brokerage represents more than one client in respect of the same trade in real estate.

5. The fact that circumstances could arise in which the brokerage could provide

services to more than one customer in respect of the same trade in real estate.

6. The fact that circumstances could arise in which the brokerage could, in respect of

the same trade in real estate, both represent clients and provide services to customers.

7. The restricted nature of the services that the brokerage would provide to a customer

in respect of a trade in real estate if the brokerage also represents a client in respect of

that trade.

10.(2) The brokerage shall, at the earliest practicable opportunity and before an offer is

made, use the brokerage’s best efforts to obtain from the buyer or seller a written

acknowledgement that the buyer or seller received all the information referred to in

subsection (1).

Buyer representation agreements

14. If a brokerage enters into a buyer representation agreement with a buyer and the

agreement is not in writing, the brokerage shall, before the buyer makes an offer,

reduce the agreement to writing, have it signed on behalf of the brokerage and submit it

to the buyer for signature.

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Agreements with customers

15. If a brokerage enters into an agreement with a customer in respect of a trade in real

estate and the agreement is not in writing, the brokerage shall, at the earliest

practicable opportunity, reduce the agreement to writing, have it signed on behalf of the

brokerage and submit it to the customer for signature.

Error, misrepresentation, fraud, etc.

38. A registrant shall use the registrant’s best efforts to prevent error, misrepresentation,

fraud or any unethical practice in respect of a trade in real estate.

Unprofessional conduct, etc.

39. A registrant shall not, in the course of trading in real estate, engage in any act or

omission that, having regard to all of the circumstances, would reasonably be regarded

as disgraceful, dishonourable, unprofessional or unbecoming a registrant.

Duty to ensure compliance

41.(1) A brokerage shall ensure that every salesperson and broker that the brokerage

employs is carrying out their duties in compliance with this Regulation.

Roy Singh

In its allegation statement the Registrar, REBBA 2002 alleged that Mr. Singh acted


A. By counseling an employee to deal directly with the Buyer when he knew, or

ought to have known, that the Buyer was a client of Brokerage A, without

ensuring that written consent was obtained from Brokerage A to do so.

B. By failing to ensure the Buyer was informed of all of the requirements under s.

10(1) of the Code of Ethics prior to entering into an agreement with the Buyer. In

the alternative, by failing to ensure that best efforts were used to obtain from the

Buyer a written acknowledgement that she had received all of the information

referred to in s. 10(1) of the Code of Ethics before the Second Offer had been

made.

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C. By failing to reduce a representation agreement with the Buyer to writing at the

earliest practicable opportunity.

D. By failing to ensure Home Realty complied with the Code of Ethics.

The Registrar, REBBA 2002 alleged that Mr. Singh breached the following sections of

the Code of Ethics:












writing.

7.(2) If a broker or salesperson knows or ought to know that a buyer or seller is a party

to an agreement in connection with a trade in real estate with a brokerage other than

the brokerage that employs the broker or salesperson, the broker or salesperson shall

not induce the buyer or seller to break the agreement.


38. A registrant shall use the registrant’s best efforts to prevent error,

misrepresentation, fraud or any unethical practice in respect of a trade in real estate.

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Duty to ensure compliance

41.(2) A broker of record shall ensure that the brokerage complied with this Regulation.

Steven Zahnd

In its allegation statement the Registrar, REBBA 2002 alleged that Mr. Zahnd acted


A. Dealing directly with the Buyer and representing the Buyer in a real estate

transaction when he knew, or ought to have known, that the Buyer was a client of

Brokerage A, without having written consent from Brokerage A to do so.

B. By indicating on the Second CCR that the Buyer had entered into a ‘Buyer

Representation Agreement’ when in fact the Buyer had not entered into any such

agreement with Home Realty.

C. By causing Home Realty to contravene the Code of Ethics, specifically in

reference to its obligations under section 10, 14 and 15.

The Registrar, REBBA 2002 alleged that Mr. Zahnd breached the following sections of

the Code of Ethics:

Brokers and salespersons

2.(1) A broker or salesperson shall not do or omit to do anything that causes the

brokerage that employs the broker or salesperson to contravene this Regulation.




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writing.

Inaccurate representations

37.(2) A registrant shall not knowingly make an inaccurate representation about

services provided by the registrant.


38. A registrant shall use the registrant’s best efforts to prevent error, misrepresentation,

fraud or any unethical practice in respect of a trade in real estate.





EXHIBITS

1. Allegation Statement, dated August 3, 2012

2. Notice of Hearing, dated April 24, 2013

3. RECO Book of Documents

4. Excerpt from OREA educational module re: Buyer Representation (8 pages)

5. Code of Ethics Explanatory Notes – Pages 162-163 (2 pages)

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WITNESSES FOR THE REGISTRAR, REBBA 2002

1. Broker of Record A (“Broker A”)

Broker A testified that he is the broker of record for Brokerage A and that the brokerage

had a signed Buyer Representation Agreement (“BRA”) with the Buyer to look for

properties in City A. Broker A indicated that he had no personal involvement in the

transaction regarding the Property; rather, he simply filed the complaint based on the

existing BRA signed by the Buyer. Broker A confirmed that the Buyer signed the BRA

on December 5, 2010, with an expiry date of March 31, 2011, and that there was also a

90-day holdover clause in the agreement.

Broker A confirmed that the issue relating to commission entitlements was arbitrated

and resolved through the local real estate board. He also confirmed that Brokerage A

did not take legal action against the Buyer with respect to any commission-related

issues.

Broker A indicated that one of his salespersons, Registrant A, had advised him that he

had discovered subsequent to his initial dealings with the Buyer under the BRA that the

Buyer had dealt directly with Mr. Zahnd and Home Realty, the listing brokerage for the

Property, and that she had ended up purchasing the Property. Given that no

communications had been received from Mr. Zahnd or from Home Realty, Broker A

concluded that they had likely interfered with Brokerage A’s contractual relationship with

the Buyer and, by doing so, Mr. Zahnd and Home Realty had been able to increase

their commission on the sale of the Property.

Broker A was asked numerous questions regarding the BRA and he indicated that he

understood that they (BRAs) were not mandatory under RECO’s requirements and that

they varied, depending on length of time, specific purpose, etc.

Broker A testified that he believed Mr. Zahnd knew that the Buyer was a client of

Registrant A, on behalf of Brokerage A. Broker A based his belief primarily on the fact

that, by the time Mr. Zahnd began dealing with the Buyer directly, he (Zahnd) already

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had a copy of the offer from the Buyer from Brokerage A which had not been accepted

by the Seller of the Property. That offer had been accompanied by a Confirmation of

Co-operation and Representation Form (“CCR”) which identified the Buyer as being

represented by Brokerage A. Further, the CCR confirmed that the Seller had agreed to

pay the co-operating broker a commission of 2.5% on the proposed transaction. Thus,

even though the offer of the Buyer from Brokerage A had not resulted in the purchase of

the Property by her, at that time the Seller and Mr. Zahnd had knowledge that the Buyer

was being represented by Brokerage A.

A number of documents which had been prepared by Mr. Zahnd and/or Home Realty

were presented to Broker A by the prosecutor and he was asked to opine on those

documents. The Panel, however, is mindful that Broker A was only capable of testifying

as to his discussions with Registrant A and the documents which had been prepared by

Brokerage A.

Cross-examination of Broker A by counsel for Home Realty and Mr. Singh

On cross-examination, Broker A confirmed that all of the work in the unsuccessful

transaction involving the Buyer and Brokerage A was done by Registrant A. He testified

that he did not know whether the BRA between his brokerage and the Buyer had ever

been shown to Mr. Zahnd or Home Realty. He also acknowledged that, in his

experience, BRAs are not ordinarily submitted or provided to the other parties in a

transaction. Nevertheless, Broker A emphasized that the CCR submitted with the offer

from the Buyer had represented to all the parties that Brokerage A would be paid a

2.5% commission on the sale of the Property.

Broker A acknowledged that a client does not have to execute a BRA if the client

objects and that BRAs can be limited in their duration. In this case, the BRA had

specific terms relating to the type of property which the Buyer was looking for, the area

in which a property might be located, and the duration of the agreement. He also

agreed that a BRA can be registered but that the BRA executed by the Buyer with

Brokerage A had not been registered anywhere.

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Broker A conceded that it appeared that the Buyer had not been truthful when she had

signed a CCR with Home Realty on February 1, 2011 in which she confirmed to that

brokerage that she had not signed any BRA or Buyer Customer Service Agreement

(“BCSA”) with any other real estate agency for the purpose of buying a property located

in City A.

Broker A also confirmed that Brokerage A never sued the Buyer or demanded that she

pay that brokerage a 2.5% commission pursuant to the CCR which she had executed.

Broker A was not aware of the conditional offer on the Property from another buyer.

When presented with an excerpt from an OREA document which covered the issue of

BRAs and when it was appropriate or inappropriate to deal with a would-be buyer

directly, he agreed that the excerpt (as presented by counsel for Mr. Singh and Home

Realty) suggested that when a person advises that she does not have a BRA with

another real estate representative, the second real estate representative is free to deal

with him or her.

The OREA excerpt in question read as follows:

…At the time of first contact, two important questions must always be asked. The first is: “Are you working with a real estate salesperson?: The second question is: “Have you signed a buyer representation agreement with a real estate brokerage?” If the answer to both questions is “yes”, then the buyer should be directed to speak to their own representative. If the answer to the first question is “yes” but the answer to the second questions is “no”, then you are free to work with them…

After being presented with the excerpt above, Broker A advised that when he took the

OREA course, he was told to make further inquiries to ensure that a would-be buyer did

not have any kind of obligations to another real estate representative. However, he

conceded that the CCR which the Buyer had signed with Home Realty represented that

she had not signed a BRA with anyone else, something which was not true at the time

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that she made that written representation. The BCSA signed by the Buyer with Home

Realty on February 4, 2011 contained a similar representation.

Cross-examination of Broker A by counsel for Mr. Zahnd

Broker A advised that the seller in a real estate transaction ordinarily pays the

commissions upon the successful completion of a sale.

As far as the BRA between the Buyer and Brokerage A was concerned, Broker A stated

that Brokerage A did not forward a copy of that agreement to Home Realty; he added

that he was not directly involved in the first offer submitted by the Buyer to try to

purchase the Property. He also advised that it was not Brokerage A’s policy or practice

to provide a copy of an executed BRA to the other parties in a proposed transaction.

Broker A stated that he believed that Mr. Zahnd should have made inquiries with

Brokerage A given the previous dealings which the Buyer had had with Home Realty

when she was working with Registrant A.

Broker A conceded that the CCR which identified the Buyer as being represented by

Brokerage A did not specifically refer to any BRA, but he emphasized that the CCR

would have put Mr. Zahnd and Home Realty on notice that Brokerage A was

representing the Buyer in respect of a proposed transaction relating to the Property.

Counsel for Mr. Zahnd asked Broker A a number of questions about what Mr. Zahnd

should or should not have known about any continuing relationship between the Buyer

and Brokerage A. Broker A made it clear that no inquiries were made by Brokerage A

to Mr. Zahnd after he and Registrant A found out that the Buyer had purchased the

Property; the action taken by Brokerage A was simply to lodge a complaint with RECO.

Re-examination by the Prosecutor for the Registrar

On re-examination by the Prosecutor, Broker A stated that he understood that there is

no requirement in representing a buyer that a BRA has to be signed or used. He

reiterated that, based on the CCR which was provided with the Buyer’s initial offer for

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the Property, Mr. Zahnd should have known that Brokerage A was acting as her real

estate representative. He also noted that the CCR which had been prepared by Home

Realty for the Buyer stated that the Buyer had entered into a BRA with Home Realty but

that turned out not to be the case.

2. Registrant A

Registrant A testified that he was the sales representative on behalf of Brokerage A

working with the Buyer. Upon prompting from the Prosecutor, Registrant A outlined his

understanding of the difference between a BRA, a BCSA, and dual agency.

Registrant A submitted an offer on the Property on behalf of the Buyer on January 21,

2011. There were numerous sign-backs and discussions about the Property. During

the same period, however, another would-be buyer submitted an offer. For her part, the

Buyer declined to increase the price she was willing to pay for the Property and, as a

result, it was sold to the other bidder conditional on the sale of that party’s property.

Registrant A confirmed that he had prepared the offer for the Buyer after she had

retained the services of Brokerage A. The offer and the CCR were prepared at the

same time. Registrant A made it clear that he does not ordinarily provide the other

parties to a transaction a copy of any BRA which his own client has signed; one reason

is that he does not necessarily want the other party to know when a BRA will expire.

Registrant A testified that even though the Buyer’s initial offer was not accepted, he

continued discussions with Mr. Zahnd about the Property and was told that an

unconditional offer of $335,000 would likely be accepted by the Seller. Registrant A

conveyed that information to the Buyer, who indicated that she would consider it.

Registrant A testified that he continued to identify potential properties in City A for the

Buyer, but that she subsequently advised him that she wanted to look for a home in City

B.

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Registrant A testified that after being told by the Buyer that she would be looking in City

B for a home, he drove past the Property and, to his surprise, he saw the Buyer in the

driveway. After doing so, he went back to his office and reviewed GeoWarehouse, a

property information website, and it confirmed that the Buyer was the owner of the

Property.

Registrant A confirmed that the issue of commission payable in the transaction for the

Property was arbitrated through the local real estate board and that Brokerage A was

successful in obtaining a commission. He further indicated that the decision of the local

board was under appeal by Home Realty.

Registrant A stated that he believed that a simple phone call from Mr. Zahnd indicating

that the Buyer was thinking about or had purchased the Property would have made a

difference in the circumstances, but no such call was ever received from Mr. Zahnd or

Home Realty. He also said that he could not understand why Mr. Zahnd and Home

Realty would take the Buyer at her word that she was not represented by another real

estate representative when they had only recently received the CCR from Brokerage A

making it clear that it was representing the Buyer.

Registrant A was questioned on the 90-day holdover in the BRA which Brokerage A had

with the Buyer about introduction to properties and the possibility of an individual being

responsible for commission even if they purchased through another real estate

representative. Registrant A testified that he explained the BRA to the Buyer when she

signed that agreement.

Cross-examination of Registrant A by counsel for Home Realty and Mr. Singh

Registrant A agreed that when he was dealing with the Buyer he never introduced her

to Mr. Zahnd or anyone else from Home Realty. Nor did he ever show the BRA which

the Buyer had signed with Brokerage A to Mr. Zahnd or Home Realty. After he

discovered that the Buyer had purchased the Property, she was never asked to pay

Brokerage A the 2.5% commission confirmed in her BRA with that brokerage.

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Registrant A testified that he told Mr. Zahnd that he had a BRA with the Buyer but he

did not disclose the terms of that agreement to Mr. Zahnd. However, he stated that Mr.

Zahnd had no problem with the 2.5% commission identified in the CCR. In Registrant

A’s view, the CCR provides notice to another party that he is representing a would-be

buyer.

After the Buyer’s offer from Brokerage A fell through, she stopped working with

Registrant A and told him that she would be looking for a property in the City B area.

WITNESS FOR THE RESPONDENT STEVEN ZAHND

1. Steven Zahnd

Mr. Zahnd testified that he understood that Registrant A had initially shown the Buyer

the Property by using a key in a lock box to gain access to the Property. He was later

advised by Registrant A that the Buyer would be submitting an offer for the Property,

which he received through email and discussed with the Seller.

For his part, the Seller needed to sell because he was purchasing a new property at the

end of April 2011. Registrant A met at the Property with Mr. Zahnd and the Seller to

present the first offer, which included a signed CCR confirming that the Buyer was being

represented by Brokerage A and Registrant A. The first offer was for $320,000 and was

countered at $341,000, which was communicated via emails. During Registrant A’s first

offer another conditional offer from another brokerage was accepted at full price.

Mr. Zahnd testified that he and Registrant A had follow-up discussions regarding the

accepted conditional offer. Mr. Zahnd had discussions with Registrant A about a

$335,000 offer, but Registrant A advised that his client would not meet that request.

On January 29, 2011, Mr. Zahnd received an email request from the Buyer to view the

Property and he made arrangements to do so the same evening. At the viewing, the

Buyer wanted to make an offer. Mr. Zahnd advised that he became suspicious when

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The Buyer went through the Property quickly and when he learned that her first name

was “[NAME]”. As a result, he asked the Buyer whether she was the same person who

had submitted an offer on the Property through Registrant A’s brokerage the previous

week. She confirmed that she had indeed submitted the offer on the Property.

According to Mr. Zahnd, however, the Buyer expressed dissatisfaction with Registrant A

and she said she no longer wished to work with him (Registrant A) and that she was

working on her own. When Mr. Zahnd asked the Buyer whether she had signed a BRA

with Registrant A, she stated that she had not. Mr. Zahnd informed the Buyer he would

discuss with his broker how to proceed.

Mr. Singh, the broker of record for Home Realty, advised Mr. Zahnd to explain the

consequences to the Buyer of buying through another brokerage while under contract

with a different brokerage. He also advised Mr. Zahnd to get something in writing from

the Buyer. Since the Buyer had insisted that she had not signed any agreement, Mr.

Zahnd believed that she was not under contract with anyone. Mr. Zahnd stated that,

based on the information and written confirmation from the Buyer, he was not aware of

any BRA between the Buyer and Registrant A or Brokerage A. Further, he believed that

he was doing precisely what his broker of record had told him to do.

Subsequently, Mr. Zahnd prepared an offer of $335,000 on behalf of the Buyer even

though the Seller had wanted $340,000. The Property ultimately sold for $335,000 with

Mr. Zahnd reducing his portion of commission by $5,000.00 in order to satisfy the

bottom line price of $340,000 demanded by the Seller. The Buyer’s offer with Home

Realty acting as agent for the Buyer and the Seller was accepted on February 1, 2011.

The offer which became the agreement of purchase and sale was accompanied by a

CCR which stated that the Buyer and Seller were in multiple representation, with a

statement adding that the Buyer was not party to any other agreement with another

brokerage and a further explanation that the commission on the transaction had been

reduced to $12,000.00.

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Despite the CCR that had accompanied the offer from the Buyer which the Seller

accepted, it was pointed out that a BCSA and Working with Realtor Form dated

February 4, 2011 had also been signed by the Buyer three days after her offer had been

accepted. Thus, the files of Home Realty contained a CCR indicating that the Buyer

was in a dual agency situation with that brokerage but there was also a BCSA stating

that the Buyer was simply a customer in the transaction. Both the CCR and the BCSA

contained written representations from the Buyer that she was not party to a BCSA with

any other real estate brokerage for the purchase of real property of the kind described in

those documents.

When asked about the discrepancy between the CCR which indicated a dual agency

situation and the BCSA which stated that only customer services were being provided to

the Buyer, Mr. Zahnd indicated at the time of preparing the offer and the CCR that he

clicked the wrong box for the disclosure and representation in the CCR. He also stated

that he had forgotten to bring the Working with a Realtor Form and a BCSA with him

when he had drafted the offer for the Buyer on February 1, 2011.

Mr. Zahnd maintained that he believed he had protected the interests of both parties in

the transaction. Further, when he had dealings with Registrant A at no time did

Registrant A present him with a copy of a BRA to confirm that Brokerage A had such an

agreement with the Buyer.

Cross-examination of Mr. Zahnd by the Prosecutor

On cross-examination, Mr. Zahnd confirmed that he never met with the Buyer when she

first viewed the Property with Registrant A. However, when he subsequently met the

Buyer and realized that she had been working previously with Registrant A, he posed

questions to her about the nature of that relationship and then he reported the questions

and answers to his broker of record, Mr. Singh. He stated the Mr. Singh advised him to

document the Buyer’s answers, which he did in the CCR and again in the BCSA. He

also drafted representations in those two documents through which the Buyer confirmed

that she was not party to any BRA with any other brokerage.

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Also, according to Mr. Zahnd, Mr. Singh had told him that the proper way to verify

whether the Buyer was under any obligation to another brokerage was to ask the Buyer

two questions (1) Has she been working with another real estate representative? If the

answer to that question was yes, she should be asked (2) Is there any contract signed

(i.e. a BRA) with the other real estate representative? If the answer to the second

question was no, then Mr. Zahnd would be free to work with the Buyer.

Mr. Zahnd confirmed to the Prosecutor that he knew at all times that he had to comply

with the Code of Ethics and REBBA, 2002. He acknowledged having the Buyer sign the

CCR even though it was not accurate (because of the multiple representation or dual

agency clause therein). He also agreed with the Prosecutor that it could have been

confusing to a third party that the Buyer had signed a CCR and a BCSA stating first that

she was a client of Home Realty and then, a few days later, that she was simply a

customer.

Mr. Zahnd also advised that, in real estate transactions, he does not have a practice of

providing the other party with a copy of any BRA he has with a client, nor does he

discuss the terms of any such agreement with another real estate representative or

party. Mr. Zahnd stated that he was not surprised when the original offer from the

Buyer from Brokerage A was not accompanied by a copy of a BRA.

At no time did Mr. Zahnd contact Registrant A or make any inquiries with him

concerning his relationship with the Buyer. Mr. Zahnd’s approach was to make

whatever inquiries he thought were relevant with the Buyer and she confirmed that she

was not a party to any BRA. Mr. Zahnd testified that not only did he believe that his

approach was sufficient but that Mr. Singh had only directed him to make inquiries with

the Buyer.

Although Mr. Zahnd agreed that he made more commission by acting in the transaction

for the Seller and the Buyer, he denied that it was the reason he did not contact

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Registrant A to make inquiries about his relationship with the Buyer. Concerning the

reduction in the commission upon the actual sale of the Property, Mr. Zahnd stated that

it was an agreement between him (Home Realty) and the Seller which did not involve

the Buyer.

WITNESS FOR THE RESPONDENTS ROY SINGH & HOME REALTY

1. Roy Singh

Mr. Singh testified that his only participation in transaction was to field a phone call from

Mr. Zahnd.

Mr. Singh was referred to Exhibit #4, which was an excerpt from an OREA educational

module concerning Buyer Representation. Mr. Singh indicated that it was from a course

he recently attended. He understood that two questions had to be asked in dealing with

a would-be buyer: (i) Are you working with a real estate representative, and (ii) Are you

signed with a brokerage. If ‘yes’ is answered to the first question but ‘no’ to the second

question, then the registrant is free to work with the individual. If ‘yes’ is answered to

both questions, then the registrant cannot work with the individual. Mr. Singh was

satisfied with the Buyer’s answer of ‘no’ to the second question.

Mr. Singh testified that, in his view, the reduction in commission on the transaction was

an agreement between Mr. Zahnd and the Seller which did not involve the Buyer.

Mr. Singh stated that after Mr. Zahnd called him and outlined the situation involving the

Buyer – that she had previously been represented by Registrant A and Brokerage A but

that she had advised that she was not in a BRA with that brokerage – Mr. Singh thought

that the Buyer might have had a BRA of short duration with Brokerage A or,

alternatively, she might not have had a BRA at all. He stated that he instructed Mr.

Zahnd to ask the Buyer and remind her of the ramifications of her not telling the truth

about the BRA issue and, finally, to get a written representation from the Buyer.

20 | Page

Mr. Singh advised that he did not instruct Mr. Zahnd to call Registrant A. Mr. Singh

simply instructed Mr. Zahnd to use a BCSA.

Mr. Singh accepted that a mistake had been made by Mr. Zahnd when he had

presented an offer with the CCR stating that the Buyer and the Seller were in “multiple

representation”.

SUBMISSIONS FOR THE REGISTRAR RELATING TO MR. ZAHND

The Prosecutor drew the Panel’s attention to and reviewed the Summary of Allegations

for each Respondent.

The Prosecutor reiterated that Registrant A was in a BRA with the Buyer with a 90-day

holdover period. The Buyer made an offer (and several sign-backs) on the Property in

late January 2011 while being represented by Registrant A. The offer did not result in

the sale of the Property to the Buyer at that time. However, Registrant A later

discovered that the Buyer had bought the Property through Mr. Zahnd and Home

Realty. Registrant A filed a complaint with the local real estate board to deal with

commission-related issues. That complaint proceeded to arbitration with a favourable

decision being made for Registrant A and Brokerage A. However, that decision is

currently under appeal.

The Prosecutor emphasized that Mr. Zahnd realized that the Buyer had previously

submitted an offer on the Property through Registrant A and Brokerage A but that he

had clung to the explanation that he did not have to make any direct inquiries with them

because the Buyer had told him that she had no BRA with Brokerage A.

It was also noted that Mr. Zahnd claimed he had been instructed by Mr. Singh to

proceed with an offer through Home Realty while ensuring that the answer to the

question, “Have you signed any contract with another broker”, was “no”. The approach

followed by Mr. Zahnd in not contacting Registrant A to confirm that no BRA existed

was criticized by the Prosecutor.

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The Prosecutor also alleged that Mr. Zahnd had been evasive in his testimony and

suggested that his motivation in completing the transaction without contacting

Registrant A was self-interest because it was designed to increase his commission on

the sale of the Property.

A review of various trade documents was offered, with the Prosecutor emphasizing the

CCR that Mr. Zahnd had completed only to claim at the hearing that the CCR had been

a “mistake” that had been replaced by a BCSA. The Prosecutor stated that the BCSA

was not signed until February 4, 2011, that is, three days after the Buyer’s offer had

been accepted by the Seller. The Registrar submitted that the contradictory information

in the CCR and the BCSA showed that Mr. Zahnd had failed to meet the required

standard of care in the circumstances.

The Prosecutor also asserted that Mr. Zahnd could hardly complain about Registrant A

not providing him with a copy of the BRA between the Buyer and Brokerage A when it

was not Mr. Zahnd’s practice to provide copies of BRAs to other real estate

representatives in transactions.

Section 7.(1) of the Code of Ethics was also emphasized. It states that an “oral

agreement or otherwise has to be reduced into writing prior to an offer”. In Mr. Zahnd’s

transaction, the correct agreement identifying the nature of the Buyer’s relationship with

Home Realty in the transaction for the Property was reduced to writing after acceptance

of the offer which Mr. Zahnd had prepared for the Buyer.

In the end, the Prosecutor emphasized that the proper thing for Mr. Zahnd to have done

in the circumstances was that he should have called Registrant A to make sure that the

Buyer was not subject to any BRA with Brokerage A.

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SUBMISSIONS FOR THE REGISTRAR RELATING TO ROY SINGH & HOME

REALTY

The Prosecutor emphasized that these Respondents (along with Mr. Zahnd) all had

knowledge that the Buyer was represented by Brokerage A when she was trying to

purchase the Property from January 21 to 24, 2011. It was therefore incumbent upon

them to contact Registrant A when the Buyer began trying to purchase the Property on

her own only a few days later.

It was further submitted that the two simple questions and answers of “no” outlined in

the OREA material (marked as Exhibit #4) did not apply to the facts of this case to

exonerate the respondents. Mr. Zahnd had actually received an offer from Brokerage A

in late January 2011 and he had spoken with Registrant A on the telephone. As such,

this was a case where the Respondents (Mr. Zahnd, Mr. Singh, and Home Realty) had

actual knowledge that the Buyer had been represented by another brokerage. In such

circumstances, simply asking the two general questions outlined in the OREA materials

was not sufficient for the Respondents to meet the required standard of care in the

circumstances. In other words, this was not a case of a “first meeting” with a would-be

buyer who was a complete stranger to Home Realty, Mr. Singh, or Mr. Zahnd.

The Prosecutor underscored that a simple phone call to Registrant A would not have

cost anything in the circumstances and it would have avoided all of the trouble which

ensued.

It was also submitted that the Respondents had failed to give the Buyer the protection

she was entitled to receive under Section 10 of the Code of Ethics. The offer from the

Buyer which had been drafted by Home Realty was presented before the “agency

relationship” was explained to her and she had been provided with the Working with a

Realtor Form. Further, after having the Buyer sign a CCR stating that she had entered

into a BRA (when, in fact, she had not) and confirming that Home Realty was

representing the interests of the Seller and the Buyer in the transaction, she was

requested to sign a BCSA a few days later stating something different. The Prosecutor

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emphasized that Mr. Zahnd had the Buyer sign a CCR that contained a false statement

because, contrary to that document, she had not entered into any BRA with Home

Realty.

SUBMISSIONS FOR THE RESPONDENT STEVEN ZAHND

Mr. Keller, counsel for Mr. Zahnd, asserted that the allegations relating to Mr. Zahnd

should be dismissed. He stated that, based on the existing case law, the standard of

proof in disciplinary cases is high. In his view, there must be “clear and cogent

evidence” presented of a breach of a requirement before any finding of liability can be

made.

Equally important, in this case, there was only one issue to be determined by the Panel.

Was there a standard of care to be met in respect of Mr. Zahnd’s inquiries with the

Buyer to ascertain if she was in a contractual relationship with another real estate

representative?

It was submitted that no evidence had been provided by the Registrar to identify the

standard of care to be met and no proof of any breach of such a standard had been

offered.

Further, the allegations against Mr. Zahnd were very general and they provided no

particulars as to the standard of care he had apparently breached.

Reference was made to the OREA document and the two general questions to be

posed to a potential new client. Counsel for Mr. Zahnd emphasized that the only

evidence presented at the hearing had confirmed that the Buyer gave a clear “no” to

both questions. As a result, Mr. Zahnd had clearly met whatever standard he had to

meet in the circumstances. He had directly and repeatedly asked the Buyer if she was

party to a BRA with another real estate representative and she had repeatedly

answered no, both verbally and in writing.

24 | Page

Further, counsel stated that it was not the job of the Prosecutor to tell the Panel how Mr.

Zahnd had given his testimony (e.g. whether he had been evasive or not).

Counsel also referred to the letter from Mr. Zahnd to RECO in answer to the complaint

letter from Broker A of Brokerage A and it was suggested that he had provided a full

and reasonable answer to that complaint.

Also, counsel emphasized that Mr. Zahnd was new to the business and he had called

his broker of record, Mr. Singh, for direction. As such there was no intentional

wrongdoing or negligence on Mr. Zahnd’s part. Mr. Zahnd obtained advice and he

followed that advice. He obtained a written representation from the Buyer that she was

not party to a BRA with any other real estate representative; as a result, he did not

breach any standard of care in the circumstances.

Counsel also asked why the Registrar had not summoned the Buyer to the hearing. He

asserted that the Buyer’s evidence would have been the “best evidence” to present to

the Panel.

Finally, counsel for Mr. Zahnd stated that Section 14 of the Code of Ethics does not

require a Buyer to sign a BRA with a real estate representative. He therefore

questioned how Mr. Zahnd could know whether the Buyer was party to a BRA when, in

fact, she was under no obligation to enter into such an agreement if she chose not to do

so.

In short, it was submitted that there was no obligation on Mr. Zahnd’s part to contact

Registrant A to verify whether the Buyer was telling him the truth about any BRA. It was

also problematic for the Registrar to claim that Mr. Zahnd “ought to have known” better,

especially since he was a relatively junior salesperson.

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Finally, counsel emphasized that Registrant A had chosen not to produce the BRA

during his dealings with Mr. Zahnd when the Buyer had submitted her first offer through

Brokerage A.

SUBMISSIONS FOR THE RESPONDENTS ROY SINGH & HOME REALTY

Mr. Thomson, counsel for Mr. Singh and Home Realty, concurred with counsel for Mr.

Zahnd on the presumption of innocence.

He suggested that the fact that the CCR from Home Realty was completed, signed, and

it contained some inaccuracies, and the fact that the “Working with a Realtor” Form and

BCSA were provided after the Buyer’s offer had been accepted by the Seller were

“window dressing” in the Registrar’s list of allegations. Mr. Zahnd acted for a buyer in

accordance with the advice given by his broker of record, Mr. Singh. There was no

wrong-doing in believing the representations which the Buyer had made to them that

there was no BRA with another real estate representative.

Counsel for Mr. Singh and Home Realty emphasized that the Buyer had not been

truthful to the Respondents and the Registrar had not called her as a witness at the

hearing. Also, according to Registrant A’s own testimony, the Buyer had not been

truthful to him. The Buyer had informed Registrant A that she no longer wished to

purchase a property in the City A area and that she was going to look in City B. She

made these statements when she was, in fact, already dealing with Mr. Zahnd. Further,

the Buyer was not truthful when she stated in writing that she was not party to another

agreement with another brokerage.

It was also pointed out that Registrant A had testified that, in his view, the BRA he had

with the Buyer was “only a piece of paper” which the Buyer could have walked away

from at any time. Registrant A never confirmed that he actually gave a copy of the BRA

to the Buyer for her own records. Finally, Registrant A had testified that his practice

was not to give another real estate representative a copy of any BRA he had with his

26 | Page

own client, and that even if Mr. Singh or Mr. Zahnd had requested a copy of the BRA he

had with the Buyer he would not have given it to them.

It was submitted that the two OREA questions in Exhibit #4 outlined the applicable

standard of care for the Panel. The two questions in that Exhibit were posed to the

Buyer repeatedly and her answers in the negative to both questions discharged

whatever obligations the Respondents owed to anyone else. In light of the oral and

written representations of the Buyer that she was not party to a BRA with any other real

estate representative, the Respondents had met the relevant standard of care.

Counsel for these Respondents asserted that Mr. Singh had taken a phone call from Mr.

Zahnd and he had properly advised Mr. Zahnd to ask the questions as outlined in

Exhibit #4. By following the example used in Exhibit #4, and by advising Mr. Zahnd to

obtain a written representation from the Buyer, Mr. Singh believed he followed the

proper approach. In short, Mr. Singh was a “hands on” broker who had responded to

Mr. Zahnd’s phone call immediately.

Counsel for Mr. Singh and Home Realty acknowledged that Mr. Zahnd made some

administrative mistakes in completing certain documents correctly. However, in

response to the Registrar’s question as to “why did Mr. Zahnd not pick up the phone

and call Registrant A”, the answer is simple: a phone call or inquiry with another real

estate representative was not mandated by OREA. Counsel further stated that raising

the issue of a phone call to Registrant A was “enticing” but that it was simply a backdoor

attempt by the Registrar to introduce a new standard of care for real estate

representatives.

Finally, counsel asserted that Mr. Singh could not be expected to “micro-manage” the

forms used in any transaction or know all the details at any given time. However, as

“captain of the ship”, Mr. Singh had addressed issues drawn to his attention in an

appropriate manner.

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REPLY SUBMISSIONS FOR THE REGISTRAR

The Prosecutor offered a few reply submissions as follows: First, the standard of proof

in RECO hearings was no more and no less than proof “on a balance of probabilities”.

The Supreme Court of Canada decision in F.H. v. McDougall, [2008] S.C.J. No. 54 was

cited to support this submission. Second, as far as standards of care are concerned,

the Panel is at the hearing to apply its expertise and judgment in determining whether

Sections in the Code of Ethics apply and whether they have been breached and to

determine the proper standard of care which the Respondents had to meet in all the

circumstances of this case.

CODE OF ETHICS

The Registrant is governed by the Real Estate and Business Brokers Act, 2002, S.O.

2002, c.30, Schedule C (“REBBA 2002”).

This Discipline Committee is established to hear and determine these issues, in

accordance with the prescribed Regulations. The Discipline Committee must determine

if the Registrant has failed to comply with the Code of Ethics established by the Minister

in accordance with Section 21 of the REBBA 2002.

Section 50 of the REBBA 2002 provides that the Minister may make Regulations

establishing a Code of Ethics for the purposes of subsection 21(1).

Ontario Regulation 580/05 is the Code of Ethics pursuant to the REBBA 2002 and is the

Code of Ethics that governs these proceedings.

FINDINGS BY THE PANEL

Having carefully considered the testimony of the witnesses at the hearing, and the

documentary evidence, the Panel has arrived at the following conclusions:

Despite questioning by counsel for the Respondents as to why Registrant A did not

provide a copy of the BRA to Mr. Zahnd when he delivered the first offer and CCR for

28 | Page

the Buyer, it is not the conduct of Registrant A which is under review here but what Mr.

Zahnd, Mr. Singh, and Home Realty did or ought to have done when the Buyer began

working with them to make her own offer on the Property. In the Panel’s view, it is no

answer to the Registrar’s allegations to say that there is no requirement that a client has

to sign a BRA with a real estate representative. On cross-examination, it was

suggested that Mr. Zahnd had no obligation to make direct inquiries with Registrant A or

Brokerage A about any BRA which might not even exist and which no client could be

compelled to execute in the first place.

Given the Registrar’s allegations, the key issue is what should the Respondents have

done upon realizing that the Buyer was interested in purchasing the Property on her

own (or through Home Realty) when she had just recently been represented in an offer

by another real estate representative? In this case, the time which had elapsed

between the Buyer’s actual representation by Brokerage A and her direct contact with

Mr. Zahnd and Home Realty was only a week.

Further, this was not a situation, as described in the example in the partial OREA

excerpt (as produced by the Respondents), where a real estate representative (e.g.

Home Realty) was dealing with a would-be client or customer for the first time. In such

a situation, the two questions posed in the OREA materials may very well have been

sufficient to discharge the obligation of a real estate representative to determine if the

would-be buyer was already dealing with another real estate representative.

The circumstances of this case, however, were quite different. Not only did Mr. Zahnd

know through the CCR from Brokerage A that the Buyer was being represented by that

brokerage, but he also knew that Brokerage A had delivered an offer on her behalf in

late January 2011. Having actual knowledge of the Buyer’s previous dealings with

Brokerage A put the Buyer on higher level and, in the Panel’s determination, it raised

the threshold of required action on the part of the Respondents.

29 | Page

A more complete version of the OREA material was produced at the request of the

Panel and it sheds light on the requirements which the Respondents should have met.

After citing Section 7 of the Code of Ethics, the full OREA excerpt provided examples of

scenarios:

Dealing with other registrants 7.(1) A registrant who knows or ought to know that a person is a client of another registrant shall communicate information to the person for the purpose of a trade in real estate only through the other registrant, unless the other registrant has consented in writing. (2) If a broker or salesperson knows or ought to know that a buyer or seller is a party to an agreement in connection with a trade in real estate with a brokerage other than the brokerage that employs the broker or salesperson, the broker or salesperson shall not induce the buyer or seller to break the agreement. Problems arise when a registrant doesn’t bother to ask about or chooses to ignore the existence of a buyer representation agreement with another brokerage. Consider a situation where a buyer is under contract with another brokerage but a registrant fails to inquire about it. The registrant proceeds to show the buyer a property, prepares an offer, and sells it to the buyer. When the buyer brokerage finds out about it, a claim will likely be made at the Arbitration Committee of the local real estate board. A defense based on the fact that the registrant didn’t know because the registrant didn’t bother to ask is usually no defence at all at an arbitration hearing. Chances are the buyer will win ... That’s not the end of it. A complaint may be lodged against the registrant with RECO by the other brokerage for a violation of Section 7. So, at the end of the day, what has the registrant gained and lost? The registrant sold a property and made a commission. But, the registrant ignored an existing buyer representation agreement and lost the selling commission at arbitration. The registrant interfered with an existing contract and violated REBBA’s Section 7 and will likely be penalized a monetary fine which will be made public on the RECO website. Lastly, and most importantly, the registrant put the buyer in a position of possibly being sued by the other brokerage.

The more detailed OREA excerpt summarizes a RECO case which involves slightly

different facts from the situation before this Panel. However, even that case, which

involved a listing salesperson who knew that the buyer (a) was a party to a BRA with

another real estate representative, (b) where the buyer had been explicitly warned by

30 | Page

the listing salesperson that the buyer could be contractually obligated to the other real

estate representative to pay a commission, and (c) despite the warnings from the listing

salesperson, the buyer decided to deal with the listing salesperson to purchase the

Property, the discipline hearing panel found that such warnings did not absolve the

listing salesperson from ensuring that she did not participate in the buyer’s breach of the

buyer’s contract with the other real estate representative. That panel found that, despite

the decision of the buyer to work with the listing salesperson in the face of the latter’s

explicit warnings, the salesperson should have contacted the other real estate

representative and worked out a satisfactory arrangement. Further, if such an

arrangement could not be negotiated, the listing salesperson should have refrained from

dealing with the buyer. That case was decided under RECO’s former rules under By-

Law No. 10 and, for the record, is RECO v. Middleton and Baird (January 25, 2002).

In the case before this Panel, Mr. Zahnd and the other Respondents should have

reviewed Section 7 of the Code of Ethics.

Given the ease with which a phone call/email could have been made by Mr. Zahnd to

Registrant A to verify the contractual situation if any between the Buyer and Brokerage

A, the Panel has determined that it was unreasonable in the circumstances for the

Respondents not to have made such a call or sent an email. Mr. Zahnd had no qualms

about talking to Registrant A on the phone when it related to the Buyer’s initial offer to

purchase the Property. However, he never convincingly explained at the hearing why

he decided not to make a call or send an email to Registrant A about the Buyer after he

started dealing with her directly at the end of January 2011.

While the Respondents testified that they had received oral and written representations

from the Buyer that she was not a party to any BRA with Brokerage A, the Panel notes

that there was nothing in her written representations (which were drafted by Mr. Zahnd

himself) where she acknowledged that if her representation was not that she knew she

could be personally liable for a commission to another real estate representative (e.g.

Brokerage A).

31 | Page

Given the Buyer’s conduct, any concerns or uncertainties about the nature of her

relationship with Brokerage A could have easily been resolved by a simple phone call or

email from Mr. Zahnd to Registrant A.

In his letter to RECO responding to the complaint initiated by Broker A, Mr. Zahnd

stated that after the Buyer had denied being party to a BRA with Brokerage A and she

had expressed her disinterest in working with that brokerage, and since he “was not

aware of the details to [sic] [Brokerage A] relationship to [the Buyer], if any”, he pursued

the offer with the Buyer “in the best interest of my Seller”. Mr. Zahnd also stated that

the “only way I could make certain that the Buyer was not signed to such an Agency

agreement [e.g. a BRA] was to directly ask the actual Buyer.”

In the same letter, Mr. Zahnd responded to Broker A’s assertion that Mr. Zahnd had

“added a clause” to the CCR and the BCSA stating that the Buyer had “not signed any

BRA or BCSA with any other Real Estate Agency” when he knew that the Buyer was

party to such an agreement. In response to this assertion, Mr. Zahnd stated that it was

“odd that this statement [by Broker A] was made since I would have no real idea what

type of documents were signed between [Brokerage A] and [the Buyer]...[f]urther, a

CCR is not and does not replace a BRA.”

Contrary to Mr. Zahnd’s assertions, and his evidence at the hearing, the only way that

Mr. Zahnd could be assured that the Buyer was not signed to a BRA with Brokerage A

would be to speak to or email Registrant A and obtain his information on that issue.

That would be the easiest and most cost effective way to ensure that the Buyer was not

mistaken about her legal relationship with Brokerage A or that she was not misleading

Home Realty and/or Mr. Zahnd. A quick phone call or email to Registrant A would also

have been a simple way for the Respondents to adequately protect the Buyer’s interests

in the circumstances and ensure that the Respondents did not interfere with any

contractual relationship between the Buyer and Brokerage A.

32 | Page

By his own admission (to RECO), Mr. Zahnd made it clear that he “was not aware of the

details to [sic] [Brokerage A] relationship to [the Buyer], if any”. That uncertainty should

have compelled Mr. Zahnd to pick up the telephone or email the very salesperson he

had previously talked to when the Buyer submitted her first offer on the Property — that

is, Registrant A.

Further, as far as Mr. Zahnd is concerned, the Panel believes that he should not be held

to a lower standard than the other Respondents. It is apparent that Mr. Zahnd sought

advice and direction from Mr. Singh in dealing with his concerns about the Buyer’s

previous relationship with Brokerage A. However, all real estate representatives are

subject to the same obligations in the Code of Ethics and the advice which Mr. Zahnd

received from Mr. Singh did not excuse him from complying with those obligations.

For his part, Mr. Singh’s advice and direction to Mr. Zahnd was neither sound nor

reasonable in the circumstances. The advice which was given was designed to rely

solely on the Buyer’s understanding or information about the nature of her relationship,

contractual or otherwise, with Brokerage A, the brokerage through which the Buyer had

submitted an offer on the Property only a week earlier.

In the Panel’s view, red flags were raised by the Buyer’s conduct in contacting Mr.

Zahnd shortly after she had submitted an offer because the CCR had made it clear that

she was being represented by Brokerage A.

The advice given by Mr. Singh, which was based on a partial excerpt from an OREA

document, was inadequate because the Buyer was not a ‘cold’ buyer or someone with

whom the Respondents had never had previous dealings. Mr. Zahnd knew that the

Buyer had been working with Brokerage A during the prior week when she contacted

him directly. In such circumstances, Mr. Zahnd ought to have known that the Buyer was

likely under contract with Brokerage A (with or without a BRA). To be certain, he should

have contacted Registrant A directly.

33 | Page

Finally, the presentation of the offer from Home Realty for the Buyer, and the execution

of a CCR and a BCSA (which were at odds with each other and which clearly contained

inaccuracies of which Mr. Zahnd would have been aware when those documents were

executed) was poorly handled. The execution of the BCSA three (3) days after the offer

from the Buyer had been accepted by the Seller was also improper. A review of the

CCR and the BCSA together raises serious questions about the true nature of the

relationship between the Buyer and Home Realty and her responsibilities in that regard.

Century 21 Home Realty Inc.

Given the evidence presented at the hearing, and for the reasons outlined above, the

Panel finds that Home Realty breached the following sections of the Code of Ethics

because the following allegations were proven as it related to this respondent:

Section 3 (based on proof of Allegations A, D. and E);

Section 5 (based on proof of Allegations A, C, D, and E);

Section 7(1) (based on proof of Allegation A);

Section 15 (based on proof of Allegations C and E);

Section 38 (based on proof of Allegations D); and

Section 39 (based on proof of Allegations C and E)

The Panel has also found that Home Realty did not breach sections 10(1) and (2), 14,

and 41(1) of the Code of Ethics. No convincing evidence was provided at the hearing to

permit the Panel to find that Allegation B had been proven.

Roy Singh

Given the evidence presented at the hearing, and for the reasons outlined above, the

Panel finds that Mr. Singh breached the following sections of the Code of Ethics

because the following allegations were proven as it related to this respondent:

Section 3 (based on proof of Allegation A);

Section 5 (based on proof of Allegation A);


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Section 41(2) (based on proof of Allegation A and breaches of the Code of Ethics

committed by Home Realty)

The Panel has found that there was no breach of Rules 7(2), 38, and 39 by Mr. Singh.

The Panel has also found that there was no evidence, written or oral, to support

allegations B, C, and D. In fact, Allegation D is conclusory and circular in nature.

However, with respect to Section 41(2), which appears to be related to Allegation D, the

Panel has found that proof of Allegation A is sufficient to support a finding of a breach of

Section 41(2) in this case.

Steven Zahnd

The Panel has found that Mr. Zahnd breached the following Sections of the Code of

Ethics:

Section 3 (based on proof of Allegation A and B);

Section 5 (based on proof of Allegation A and B);

Section 7(1) (based on proof of Allegation A and B);


Section 38 (based on proof of Allegation B); and

Section 39 (based on proof of Allegation B).

The Panel declines to find that Mr. Zahnd breached Section 2(1) for the principal reason

that, in this case, the responsibility of ensuring that the brokerage did not contravene

the Code of Ethics fell principally on Mr. Singh because of his direct involvement in

determining the approach to be taken in dealing with the Buyer.

With respect to Section 38, the Panel is emphasizing Mr. Zahnd’s responsibility to avoid

error and any unethical practice in respect of trades in real estate; there was no

misrepresentation or fraud in this case.

Concerning Section 39, the Panel finds that the conduct of Mr. Zahnd was

unprofessional given that a simple phone call and/or email to Registrant A would have

35 | Page

likely avoided this matter coming before RECO. Further, the “errors” and delays on the

part of Mr. Zahnd in properly completing the CCR and the BCSA for the Buyer should

have been avoided.

PENALTY

Counsel for the Registrar, REBBA 2002 to deliver written submissions to the Panel and

to the Respondent on the issue of penalty and costs within 15 days of the date on which

the Panel’s decision and reasons are delivered.

The Respondent shall deliver to the Panel and to Counsel for the Registrar, REBBA

2002 its written submissions on penalty and costs in response to Counsel for the

Registrar, REBBA 2002’s submissions within 15 days of the date on which Counsel for

the Registrar, REBBA 2002’s submissions on penalty and costs are delivered to the

Respondent.

Counsel for the Registrar, REBBA 2002 shall deliver to the Panel and to the

Respondent its reply to the written submission on penalty and costs of the Respondent

within 5 days of the date on which the Respondent’s submissions on penalty and costs

are delivered to Counsel for the Registrar, REBBA 2002.

If appropriate, submissions to be made on costs and expenses with submissions on

penalty.

Any inquiries relating to the delivery of the above-mentioned documents should be

directed to the Hearings Coordinator.

The Panel shall deliver its decision on penalty and costs after considering the written

submissions of the parties.

[Released: April 2, 2014]

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IN THE MATTER OF A DISCIPLINE HEARING HELD PURSUANT TO THE REAL ESTATE AND BUSINESS BROKERS ACT, 2002, S.O. 2002, c. 30, Sch. C

BETWEEN:


- AND-

STEVEN MATTHEW ZAHND (also known as STEVE ZAHND),

ROY BALWANT SINGH and CENTURY 21 HOME REALTY INC.

DISCIPLINE DECISION AND REASONS FOR DECISION

The Panel held a teleconference on May 26, 2014 to discuss the written submissions by all Parties with respect to Penalty. The Panel decided as follows: Steven Matthew Zahnd (also known as Steve Zahnd) ORDER: Fine of $7,500.00 payable to RECO on or before

December 1, 2014.

Successful completion of the Real Estate Institute of Canada (REIC) “REIC 2600: Ethics and Business Practice” course and provide confirmation of successful completion on or before December 31, 2014.

Roy Balwant Singh and Century 21 Home Realty Inc. ORDER: Fine of $12,000.00 payable, jointly and severally, to

RECO on or before December 1, 2014.

Roy Balwant Singh is Ordered to successfully complete the Real Estate Institute of Canada (REIC) “REIC 2280: Legal Issues in Real Estate” course and provide confirmation of successful completion on or before December 31, 2014.

COSTS AND EXPENSES: N/A

WRITTEN REASONS:

REASONS FOR DECISION PENALTY

The Panel received written submissions on Penalty from George Drametu, counsel for

the Registrar under the Real Estate and Business Brokers Act, 2002; Anthony Keller,

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counsel for the respondent Mr. Zahnd; and Randell Thomson, counsel for the

respondents Mr. Singh and Century 21 Home Realty Inc. The Panel convened via

teleconference to review and make a determination on penalty based on the written

submissions from the parties.

The Panel, after carefully considering the submissions of the parties, has made the

findings on penalty as outlined below.

In making its determinations, the Panel reviewed and took into account the principles

and factors set out in the Appeals Decision of the Registrar under the Real Estate and

Business Brokers Act, 2002 and Suzette Thompson, as provided in the submissions

received from Mr. Drametu. The Panel has been mindful of these factors in making its

determinations on penalty in this case:

1. The nature and gravity of the breaches of the Code of Ethics.

2. The role of the offending member in the breaches.

3. Whether the offending member suffered or gained as a result of the breaches.

4. The impact of the breaches on the complainant or others.

5. The need for there to be specific deterrence to protect the public.

6. The need for there to be general deterrence to protect the public.

7. The need to maintain the public’s confidence in the integrity of the profession.

8. The degree to which the breaches are regarded as being outside the range of

acceptable conduct.

9. The range of sanction in similar cases.

The Respondents knew that the Buyer had been dealing with and had been

represented by another brokerage shortly before she contacted the Respondents

directly; the Panel has already determined that, given those circumstances, the

Respondents ought to have known that the Buyer was still involved in a contract with

another brokerage or, alternatively, they should have made adequate inquiries other

than simply talking to the Buyer, including obtaining a written representation from her

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alone. Although Mr. Zahnd requested advice from his broker/mentor in dealing with the

Buyer and the issue of her previous representation by another brokerage, he was not

provided with sound or prudent advice from his broker of record or brokerage. Still, all

respondents were under an obligation to ensure that their conduct did not breach the

Code of Ethics of the Real Estate Council of Ontario.

The Real Estate and Business Brokers Act, 2002 (REBBA 2002) and associated

regulations are designed to protect the public, clients, customers, and registrants. Mr.

Zahnd is not to be excused from his obligations under statute and the regulations

thereunder (including the Code of Ethics) on the basis of his limited experience as a

registrant when the challenged conduct took place.

Mr. Singh was the broker of record and the advice he gave to Mr. Zahnd was

inadequate and inappropriate given that the Respondents knew that the Buyer had

been represented by another brokerage only a week before she had contacted the

Respondents directly. It is the opinion of the Panel that the Respondents displayed a

lack of understanding about the impropriety of their conduct and their obligations in

dealing with other registrants, brokerages, etc. who could be affected by the

Respondents’ decision to deal directly with the Buyer.

The Panel has given due consideration to Mr. Zahnd’s position as a new registrant at

the time of the impugned conduct as well as his reliance on his broker’s advice. As a

result, and keeping in mind the impact of Mr. Zahnd’s actions on the complainant (i.e.

the other brokerage), the Panel has concluded that a fine of $7,500.00, and an

educational requirement for him is appropriate in the circumstances.

Further, since the advice given by Mr. Singh and the brokerage fell short of the standard

that should have been met in the circumstances of this case - where a simple phone call

or email to the other brokerage could have prevented any complaint from arising in the

first place and it would have precluded the various legal proceedings at the local board

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level and at RECO - the Panel has concluded that a fine of $12,000.00, payable jointly

and severally by Mr. Singh and Century 21 Home Realty Inc. is warranted.

Also, the Panel has decided that there should be an educational requirement for Mr.

Singh as part of the penalty in this case. Mr. Singh, as the broker of record, had direct

knowledge of the representational problems raised by the Buyer contacting Mr. Zahnd

directly when she had only recently been working with another brokerage to submit an

offer on the subject property. However, instead of advising Mr. Zahnd to contact the

other brokerage, it appears that measures intended primarily to protect Century 21

Home Realty Inc. - rather than anyone else – were devised and put into place. The

result, however, was that another brokerage’s contract was interfered with and an

unnecessary and costly dispute over commissions took place.

Although the Respondents testified that they received oral and written representations

from the Buyer confirming that she was not under contract with another brokerage, the

Respondents ought to have known that such information was likely not accurate. At the

very least, the Respondents should have investigated further since the Buyer had

presented an offer on the same property with the assistance of another brokerage less

than a week before she contacted the Respondents directly. The Panel has made it

clear in its reasons for decision from the hearing that relying solely and exclusively on

the Buyer was both imprudent and contrary to the requirements of the Code of Ethics.

The Respondents knew that this was not an “initial” or “first meeting” with the Buyer.

They had actually dealt with the Buyer through another brokerage only a week before

she appeared on the scene again, claiming that she was free to deal with them directly.

The Respondents violated the Code of Ethics by entering into an Agreement of

Purchase and Sale (APS) with a Buyer directly in circumstances where they failed to

verify whether the Buyer was still under contract with another brokerage. They knew

about the other brokerage but the way in which they dealt with the real possibility that

the Buyer was still under contract with the other brokerage was self-serving and it

showed no consideration for the rights and interests of the other brokerage.

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The advice that was provided by Mr. Singh was not supported by the OREA materials

that were produced at the hearing because this was not a situation where a real estate

representative (e.g. Mr. Zahnd) was dealing with a would-be client/customer for the first

time. The Panel has determined that since the respondents had actual knowledge of

the Buyer’s previous dealings with another brokerage, including the fact that she had

previously submitted an offer on the subject property through that other brokerage, the

threshold of the required actions on the part of the Respondents was higher than simply

asking the Buyer a couple of questions.

The Panel has concluded that the penalties which have been imposed reflect the gravity

of the violation of the Code of Ethics in this case. Further, the educational requirements

for Mssrs. Zahnd and Singh will turn their attention to important issues that the Panel

believes will prevent this or similar situations from arising in the future.

A request has been made from the Respondents that the Panel’s decision not be

posted on RECO’s website. The Panel would draw the attention of the Parties to the

requirement under Ontario Regulation 567/05 of REBBA 2002 relating to the publication

of Discipline and Appeals Decisions. There is no reason in this case why this Panel,

assuming it even has the jurisdiction to do so, would prohibit the publication of its

reasons for decision, including its reasons on the issue of penalty.

The Panel has reached this decision unanimously and has concluded that the penalties

and educational requirements are appropriate given the evidence which was presented,

the findings which the Panel made after a hearing on the merits, and the submissions of

counsel. The Panel, therefore, makes the following order:

Steven Matthew Zahnd (also known as Steve Zahnd)

1. Fine of $7,500.00 payable to RECO on or before December 1, 2014.

2. Steven Matthew Zahnd (also known as Steve Zahnd) is ordered to successfully

complete the Real Estate Institute of Canada (REIC) “REIC 2600: Ethics and

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Business Practice” course and provide confirmation of successful completion on

or before December 31, 2014.

Roy Balwant Singh and Century 21 Homes Realty Inc.

1. Fine of $12,000.00, payable jointly and severally by these respondents to RECO

on or before December 1, 2014.

2. Roy Balwant Singh is ordered to successfully complete the Real Estate Institute

of Canada (REIC) “REIC 2280: Legal Issues in Real Estate” course and provide

confirmation of successful completion on or before December 31, 2014.

[Released: September 2, 2014]

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IN THE MATTER OF AN APPEALS HEARING HELD PURSUANT TO THE REAL ESTATE AND BUSINESS BROKERS ACT, 2002

BETWEEN:


Respondent to the Appeal

- and -

STEVEN MATTHEW ZAHND (also known as STEVE ZAHND), ROY BALWANT SINGH and CENTURY 21 HOME REALTY INC.

Appellants

APPEALS DECISION AND REASONS FOR DECISION

For the Appellants: Anthony Keller, representing Mr. Zahnd

Randell Thomson, representing Mr. Singh and Century 21 Home Realty Inc.

For the Real Estate Council of Ontario: George Drametu

Heard in Toronto on: March 20, 2015

FINDINGS: The Appeal is dismissed.

Steven Matthew Zahnd (also known as Steve Zahnd)

ORDER: The Discipline Committee Decision is upheld. Fine of $7,500.00 payable to RECO on or before December 31, 2015.

Successful completion of the Real Estate Institute of Canada (REIC) “REIC 2600: Ethics and Business Practice” course and provide confirmation of successful completion on or before December 31, 2015.

Roy Balwant Singh and Century 21 Home Realty Inc.

ORDER: The Discipline Committee Decision is upheld. Fine of $12,000.00 payable, jointly and severally, to RECO on or before December 31, 2015.

Roy Balwant Singh is Ordered to successfully complete

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the Real Estate Institute of Canada (REIC) “REIC 2280: Legal Issues in Real Estate” course and provide confirmation of successful completion on or before December 31, 2015.

COSTS AND EXPENSES: No costs awarded.

WRITTEN REASONS:

REASONS FOR DECISION

This is an appeal by Steven Matthew Zahnd, a registrant, Roy Balwant Singh, a

registrant and a broker of record of the third appellant, Century 21 Home Realty Inc. At

all material times Steven Matthew Zahnd (“Zahnd”) was registered as a salesperson

with Century 21 Home Realty Inc. (“Home Realty”). The appeals stem from a decision

of the Discipline Committee hearing heard on May 23 and 24, 2013 and on October 29,

2013.

The Discipline Committee (or “Lower Panel”) found that Zahnd had violated Sections 3,

5, 7(1), 37(2), 38, and 39 of the Code of Ethics, and imposed a fine of $7,500 and the

requirement to complete the Real Estate Institute of Canada’s “REIC 2600 – Ethics and

Business Practice” course and provide confirmation of successful completion. The

Lower Panel found that Roy Balwant Singh (“Singh”) had violated Section 3, 5, 7(1) and

42(2) of the Code of Ethics. Home Realty was found to have violated Sections 3, 5,

7(1), 15, 38 and 39 of the Code of Ethics. Singh was ordered to successfully complete

the Real Estate Institute of Canada’s “REIC 2280: Legal Issues in Real Estate” course

and provide proof of its completion. Singh and Home Realty were also ordered to jointly

and severally pay a fine of $ 12,000. No order as to costs was made by the Lower

Panel.

For the Reasons that follow the Appeals Committee (“this Panel”) would dismiss the

appeals of Zahnd, Singh, and Home Realty.

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Background

For the most part the factual background related to this appeal is not in dispute. The

matters leading to this appeal culminate from a real estate transaction that occurred on

February 1, 2011.

1. Registrant A, a registrant with Brokerage A, entered in a Buyer Representation Agreement (“BRA”) dated December 5, 2010 with a potential buyer named the Buyer. The BRA had a termination date of March 31, 2011. It also provided for a 90 day hold over period.

2. By an Agreement of Purchase and Sale dated January 21, 2011

Registrant A made an offer on behalf of the Buyer for the Property. 3. The Property was at the time listed by Zahnd. 4. The offer made by Registrant A on behalf of the Buyer was not

accepted by Zahnd’s seller. 5. The offer that Zahnd received from Registrant A and Brokerage A

was accompanied by a Confirmation of Co-Operation and Representation form. This is an industry form that sets out who the registrants and brokerages represent and in what capacity.

6. Paragraph 2 of the Confirmation of Co-operation and

Representation (“CCR”) states that “The Co-Operating Brokerage [Registrant A and Brokerage A] represents the interests of the Buyer in this transaction.”

7. Approximately four or five days after the negotiations with

Registrant A ended, Zahnd was approached directly by the Buyer for a viewing of the Property.

8. Following the viewing, the Buyer expressed an interest in offering

on the Property. Zahnd inquired if she was the same buyer who had put in an offer on the Property with Registrant A. The Buyer confirmed that she was.

9. The Buyer further indicated that she was not contractually obligated to Registrant A or his brokerage.

10. The Buyer further indicated that she wished Zahnd to put an offer

together on her behalf for the Property.

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11. Zahnd advised that he would have to check with his broker to determine if he could act for her given her previous relationship with Registrant A.

12. Zahnd contacted Singh, his broker. Singh referred to the OREA

teaching module and advised Zahnd to ask the Buyer two questions:

(a) Has she been working with another real estate representative; and

(b) Has she signed a BRA with the other real estate representative?

13. Singh went on to advise that if the answer to the first questions is

“yes” but to the second question is “no”, then subject to having confirmation in writing, which she did, twice, Zahnd can act for her in preparing and submitting an offer for the Property which he had listed.

14. Zahnd met with the Buyer and she answered “yes” to question one

and “no” to question two. 15. On the strength of the Buyer’s answers, confirmed in writing, Zahnd

prepared an offer for the Buyer that was accepted. The offer was accepted after Zahnd reduced his commission.

16. Accompanying the offer that Zahnd prepared was a CCR form

signed by the Buyer on February 1, 2011 indicating that Zahnd and Home Realty represented the Buyer pursuant to a BRA.

17. The Buyer’s Agreement of Purchase and Sale was accepted by

Zahnd’s Seller on February 1, 2011. 18. On February 4, 2011, four days after the Agreement of Purchase

and Sale for the Property was accepted, accompanied by a CCR form indicating that Zahnd had entered into a BRA with the Buyer, Zahnd and Home Realty entered into a Buyer Customer Service Agreement with the Buyer.

19. At no time did Zahnd attempt to contact Registrant A or Brokerage

A. 20. In the spring of 2011 Registrant A noticed the Buyer’s vehicle in the

driveway of the Property. After searching at the local registry office he discovered that Zahnd had acted for the Buyer in purchasing the Property.

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21. After receiving from the Appellants all their documents relating to

the Property transaction a complaint was lodged with RECO by Registrant A’s brokerage, Brokerage A, that led to an Allegation Statement, the Hearing and findings of the Discipline Committee and this appeal.

The Allegation Statement dated August 3, 2012 issued by the Deputy Registrar

pursuant to the Real Estate and Business Brokers Act, 2002 set out allegations against

both Home Realty, Singh as the broker of record, and Zahnd. Home Realty was alleged

to have acted unprofessionally by:

A. Dealing directly with the Buyer when it knew, or ought to have known, that the Buyer was a client of Brokerage A, without ensuring that it had written consent from Brokerage A to do so.

B. By failing to ensure it informed the Buyer of all the requirements under s. 10.(1) of the Code of Ethics prior to entering into an agreement with the Buyer. In the alternative, Home Realty failed to ensure it used its best efforts to obtain from the Buyer a written acknowledgement that she had received all of the information referred to in s. 10.(1) of the Code of Ethics before the Second Offer has been made.

C. By failing to reduce a representation agreement with the Buyer to writing at the earliest practicable opportunity.

D. By improperly entering into the Second CCR, which indicated that it and the Buyer had entered into a BRA when it had not in fact done so.

E. By entering into the Buyer Customer Service Agreement with the Buyer after the Buyer had entered into the Agreement.

As a result the Registrar alleged that Home Realty, had breached the following Sections

of the Code of Ethics.

3. A registrant shall treat every person the registrant deals with in the course of a trade in real estate fairly, honestly and with integrity.

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5. A registrant shall provide conscientious service to the registrant’s clients and customers and shall demonstrate reasonable knowledge, skill, judgement and competence in providing those services.

7.(1) A registrant who knows or ought to have known that a person is a

client of another registrant shall communicate information to the person for the purpose of a trade in real estate only through the other registrant, unless the other registrant has consented in writing.

10.(1) Before entering into an agreement with a buyer or seller in respect

of trading in real estate, a brokerage shall, at the earliest practicable opportunity, inform the buyer or seller of the following:

1. The types of service alternatives that are available in the

circumstances, including a representation agreement or another type of agreement.

2. The services that the brokerage would provide under the agreement.

3. The fact that circumstances could arise in which the brokerage could represent more than one client in respect of the same trade in real estate, but that the brokerage could not do this unless all of the clients represented by the brokerage in respect of that trade consented in writing.

4. The nature of the services that the brokerage would provide to each client if the brokerage represents more than one client in respect of the same trade in real estate.

5. The fact that circumstances could arise in which the brokerage could provide services to more than once customer in respect of the same trade in real estate.

6. The face that the circumstances could arise in which the brokerage could, in respect of the same trade in real estate, both represent clients and provide services to customers.

7. The restricted nature of the services that the brokerage would provide to a customer in respect of a trade in real estate if the brokerage also represents a client in respect of that trade.

10.(2) The brokerage shall, at the earliest practicable opportunity and

before an offer is made, use the brokerage’s best efforts to obtain from the buyer or seller a written acknowledgement that the buyer or seller received all the information referred to in subsection (1).

14. If a brokerage enters into a buyer representation agreement with a

buyer and the agreement is not in writing, the brokerage shall, before the buyer makes an offer, reduce the agreement to writing,

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have it signed on behalf of the brokerage and submit it to the buyer for signature.

15. If a brokerage enters into an agreement with a customer in respect

of a trade in real estate and the agreement is not in writing, the brokerage shall, at the earliest practicable opportunity, reduce the agreement to writing, have it signed on behalf of the brokerage and submit it to the customer for signature.



39. A registrant shall not, in the course of trading in real estate, engage

in any act or omission that, having regard to all the circumstances, would reasonably be regarded as disgraceful, dishonorable, unprofessional or unbecoming a registrant.

41.(1) A Brokerage shall ensure that ever salesperson and broker that the

brokerage employs is carrying out their duties in compliance with this Regulation.

As a result of his involvement in the transaction the Registrar alleged that Singh, the

broker of record, acted unprofessionally by:

A. By counselling an employee to deal directly with the Buyer when he knew, or ought to have known, that the Buyer was a client of Brokerage A, without ensuring that written consent was obtained from Brokerage A to do so.

B. By failing to ensure the Buyer was informed of all the requirements

under s. 10(1) of the Code of Ethics prior to entering into an agreement with the Buyer. In the alternative, by failing to ensure that best efforts were used to obtain from the Buyer a written acknowledgement that she had received all of the information referred to in s. 10(1) of the Code of Ethics before the Second Offer had been made.

C. By failing to reduce a representation agreement with the Buyer to writing at the earliest practicable opportunity.

D. By failing to ensure Home Realty complied with the Code of Ethics.

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As a result the Registrar alleged that Singh had breached the following Sections of the

Code of Ethics:

3. A registrant shall treat every person the registrant deals with in the course of a trade in real estate fairly, honestly, and with integrity.

5. A registrant shall provide conscientious service to the registrant’s

clients and customers and shall demonstrate reasonable knowledge, skill, judgement and competence in providing those services.

7.(1) A registrant who knows or ought to have known that a person is a

client of another registrant shall communicate information to the person for the purpose of a trade in real estate only through the other registrant, unless the other registrant has consented in writing.

7.(2) If a broker or salesperson knows or ought to know that a buyer or

seller is a party to an agreement in connection with a trade in real estate with a brokerage other than the brokerage that employs the broker or salesperson, the broker or salesperson shall not induce the buyer or seller to break the agreement.




in any act or omission that, having regard to all the circumstances, would reasonably be regarded as disgraceful, dishonorable, unprofessional, or unbecoming a registrant.

42.(2) A broker of record shall ensure that the brokerage complies with

this Regulation.

Zahnd was alleged to have acted unprofessionally by:

A. Dealing directly with the Buyer and representing the Buyer in a real estate transaction when he knew, or ought to have known, that the Buyer was a client of Brokerage A, without having written consent from Brokerage A to do so.

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B. By indicating on the second CCR that the buyer had entered into a “Buyer Representation Agreement” when in fact the Buyer had not entered into any such agreement with Home Realty.

C. By causing Home Realty to contravene the Code of Ethics, specifically in reference to its obligations under section 10, 14, and 15.

As a result the Registrar alleged that Zahnd breached the following Sections of the

Code of Ethics.

2.(1) A broker or salesperson shall not do or omit to do anything that causes the brokerage that employs the broker or sales person to contravene this Regulation.

3. A registrant shall treat every person the registrant deals with in the

course of a trade in real estate fairly, honestly, and with integrity. 5. A registrant shall provide conscientious service to the registrant’s

clients and customers and shall demonstrate reasonable knowledge, skill, judgement and competence in providing those services.

7.(1) A registrant who knows or ought to know that a person is a client of

another registrant shall communicate information to the person for the purpose of a trade in real estate only through the other registrant unless the other registrant has consented in writing.

37.(2) A registrant shall not knowingly make an inaccurate representation

about services provided by the registrant. 38. A registrant shall use the registrant’s best efforts to prevent error,

misrepresentation, fraud, or any unethical practice in respect of a trade in real estate.


in any act or omission that, having regard to all of the circumstances, would reasonably be regarded as disgraceful, dishonorable, unprofessional or unbecoming a registrant.

The Discipline Committee found that Home Realty breached Sections 3, 5, 7(1), 15, 38,

and 39 of the Code of Ethics, but not Sections 10(1) and (2), 14, and 41(1) of the Code.

The Lower Panel found that Singh, the broker of record for Home Realty, had breached

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Sections 3, 5, 7(1), and 41(2) of the Code, but not Sections 7(2), 38, and 39 as alleged.

Zahnd was found to have breached Sections 3, 5, 7(1), 37(2), 38, and 39 of the Code,

but not Section 2(1). The Lower Panel found that it was Singh as broker of record who

had the statutory responsibility to ensure that the brokerage did not contravene the

Code of Ethics. The Lower Panel also clarified its findings as to Zahnd by emphasizing

that his breach of Section 38 of the Code did not involve misrepresentation or fraud, but

merely a failure to avoid error and unethical practice. Zahnd’s failure to make a

telephone call or email to Registrant A was the basis of his unprofessional conduct.

Home Realty, Singh and Zahnd appeal the findings of the Discipline Committee as set

out in its Reasons for Decision released on April 2, 2014, and the orders as set out in

the Order released May 26, 2014.

Grounds of Appeal

Singh and Home Realty were represented by counsel. Zahnd was represented by

separate counsel. For the purpose of simplicity, Singh and Home Realty will be

collectively or alternatively referred to as Singh or Home Realty. Two Notices of Appeal

were filed, one by Singh and Home Realty, dated September 29, 2014, and one by

Zahnd, dated September 25, 2014. Their grounds of appeal are related, and as was

emphasized in their submissions, focus on the Lower Panel’s error in creating a

standard of care when none existed, and the Lower Panel’s failure to properly consider

the evidence before it. A fine of $12,000 was payable jointly and severally by Singh and

Home Realty. The Lower Panel imposed a fine of $7,500 on Zahnd. Both are

contested in this Appeal.

Submissions by Zahnd

Zahnd’s submissions on appeal were focused on a narrow position. It was Zahnd’s

submission that Section 7(1) of the Code of Ethics required an expert opinion that a

certain duty of care had to be met, a duty of care that Zahnd in the circumstances of the

case failed to meet.

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It was Zahnd’s submission that the Lower Panel, which was composed of two real

estate practitioners and one lay person, erred in law by enacting legislation,

retroactively creating a duty based upon the Lower Panel’s subjective determination of

Zahnd’s conduct, and then finding that he had failed to meet that duty.

Zahnd submitted that the Lower Panel created a duty that does not exist in the Code of

Ethics when it determined that Zahnd had a duty to make a telephone call or send an

email, when in the opinion of the Lower Panel, the circumstances associated with this

transaction “raised the threshold of required action”. (Page 27, Reasons of Decision)

Zahnd submitted that the rule of law requires that a registrant should know in advance

what is professionally expected of the member in the circumstances that gave rise to

the allegations. Zahnd could not have known that he was required to make a telephone

call and/or to send an email to Registrant A. The Lower Panel created a standard that

Zahnd was not aware existed.

Zahnd cited Krawchuk v. Scherbak, a 2011 Court of Appeal for Ontario decision. Citing

the case of Mileos v. Block Bros. Realty Ltd. (September 30, 1994), Doc Vancouver

C913338 (B.C.S.C.), unreported, the Court states that there is a standard of care

expected of “realtors”. In disciplinary matters that standard of care must be established

by the presentation of evidence.

. . . I am of the opinion that the onus is on the plaintiff to show that there was a certain standard of care required by the real estate agent and the agency, that the standard was breached, and that the breach caused damages. No evidence was called to establish the standard. (Page 34, paragraph 131)

The Registrar did not call any expert evidence before the Lower Panel. Notwithstanding

this lack of expert evidence, the Lower Panel established its own standard of care.

Given the ease with which a phone call/email could have been made by Mr. Zahnd to [Registrant A] to verify the contractual situation if any between [the Buyer] and [Brokerage A], the Panel has determined that it was unreasonable in the circumstances for the Respondents not to have made such a call or sent an email. Mr. Zahnd had no qualms about

53 | Page

talking to [Registrant A] on the phone when it related to [the Buyer]’s initial offer to purchase the Property. However, he never convincingly explained at the hearing why he decided not to make a call or send an email to [Registrant A] about [the Buyer] after he started dealing with her directly at the end of January 2011. (Reasons for Decision, Page 29)

Zahnd submitted that without expert evidence the Lower Panel could not establish the

standard of care, and by doing so, its decision resulted in an error in law.

Submissions of Singh and Home Realty

Singh commenced his submission by stating that he concurred with the submissions

made by Zahnd.

Singh then took this Panel to Page 438 and 439 of the Transcripts (May 24, 2013).

Singh submitted that the essence of this appeal is encapsulated by the comments made

to the Lower Panel by the Panel’s independent legal counsel during the Hearing:

ILC: Before the Panel? Is it the issue that - - do we

have a situation here where someone has alleged to have refused to sign a Buyer Agency Agreement? No, the whole issue in this hearing what was the standard of care that had to be met in terms of making inquiries, possibly beyond the buyer herself, when she said, ‘no, I don’t have a Buyer Representation Agreement’, and she signs a couple a documents where she represents and warrants that to be the truth The question really here is what is the standard of care to be met? Was that sufficient, or was there something in addition to that that may have had to have been done?

When the Buyer indicated to Zahnd that she was not contractually committed to

Registrant A and that she wanted Zahnd to put an offer together, Zahnd contacted his

broker, Singh. Singh referred to the OREA teaching module he had previously studied.

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Active practitioners are always prospecting for buyers. Newspaper ads, flyers, for sale signs and open houses attract buyers every day. At the time of first contact, two important questions must always be asked. The first is: “Are you working with a real estate salesperson?” The second question is: “Have you signed a buyer representation agreement with a real estate brokerage?” If the answer to both questions is “yes”, then the buyer should be directed to speak to their own representative. If the answer to the first question is “yes” but the answer to the second question is “no”, then you are free to work with them. (Record of Documents, Tab C4, Page 5)

Singh submitted that he advised Zahnd to ask the Buyer two questions; has she been

working with another registrant and is there a signed BRA between the Buyer and

another registrant? If the answer to the first question is “yes”, but the answer to the

second question is “no”, then subject to the Buyer confirming in writing, which she did,

on two occasions, Zahnd could act for her preparing and submitting an offer for the

Property.

Singh submitted that based on the information contained in the OREA module he

satisfied the required standard of care by directing Zahnd as he did. There was no

evidence submitted by the Registrar that something more was required. The OREA

module, which was the only evidence of a standard of care before the Lower Panel, did

not mandate that Singh or Zahnd do anything more than ask the two questions and then

act appropriately, depending on the answers.

Singh submitted that the Lower Panel adopted the “easy” solution. The Panel held

Singh and Zahnd to a standard of care that did not exist. There was no objective

evidence as to a standard of care other than the OREA module. Given that the OREA

module was the only evidence as to a standard of care, the Lower Panel erred in finding

Singh and Zahnd in breach of the Code of Ethics.

Singh further submitted that the Buyer did not believe she was bound by a BRA, and

that in fact may have been the case. Registrant A did nothing to prove that the Buyer

was contractually obligated to him and his brokerage. Singh submitted that there was

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evidence before the Lower Panel that even Registrant A did not believe that his BRA

with the Buyer was binding.

Q. You say the commission provision in the Buyer Representation

Agreement, the document at tab 3, binds your client, so that you get paid for commission?

A. It is supposed to. Q. Okay. A. Okay? Q. Yes. A. I mean, it’s only a piece of paper. If someone wants to ignore it,

they can. Q. Okay, and what would be the consequences if somebody actually

ignored it, like in this - - - A. That’s why we’re here. Q. Okay. A. To see whose fault it is. Q. What steps did you take to actually enforce this agreement or the

Buyer Agency Agreement, which is at tab 3, with your client? A. I phoned Century 21, and expressed my displeasure that they had

sold the house, that they knew was my client, and they said that they had checked with [the Buyer], and she expressed that she did not have a Buyers Agency with me, therefore there was nothing that they had done wrong.

(Testimony of Registrant A, Page 180, May 23, 2013)

Singh submitted that since Registrant A and his brokerage did not take any steps to

enforce the BRA against the Buyer the Lower Panel should have drawn an adverse

inference. Since the BRA may not have been contractually binding, then the advice

provided by Singh and the steps taken by Zahnd met the standard of care established

by the OREA module. The Lower Panel used a standard of care that it created, without

the benefit of any expert evidence. For these reasons Singh submitted that the Lower

Panel’s decision should be dismissed.

Submissions of the Registrar

The Registrar began its submissions by setting out the standard of review for appellant

tribunals. The Registrar submitted that the well-established standard of review before

tribunals in reviewing the decisions of Lower Panels is the differential standard of

reasonableness. The heightened standard of correctness only applies where the

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question under review is one of general law that is both of central importance to the

legal system as a whole and outside the adjudicators’ specialized area of expertise. No

such issues have been raised requiring the application of the standard of correctness.

The Registrar cited the Supreme Court of Canada’s decision in Dunsmuir v. New

Brunswick, Paragraph 47. The only basis for the Appeals Committee to disturb the

findings of the Lower Panel is if the Lower Panel’s findings are unreasonable.

The Registrar submitted that in this matter it was not necessary for an expert witness to

be called by the Registrar. Two of the Lower Panel members were members of the real

estate industry. The Lower Panel members hear and review the evidence and then look

to the Code of Ethics to determine if sections of the Code of Ethics have been

breached. In doing so the determination made by the Lower Panel must be reasonable.

The Appellants have not directed this Panel to any facts that would result in the Lower

Panel’s findings being regarded as unreasonable.

The Registrar submitted that the crucial facts in this matter were not contestable. It was

clear that a relationship between the Buyer, and Registrant A and his brokerage existed.

We now know that that relationship was contractual pursuant to a BRA, dated

December 5, 2010, and expiring on March 31, 2011. On January 21, 2011, Registrant

A and Brokerage A submitted an offer for the Property to Zahnd and Home Realty. On

February 1, 2011 Zahnd and Home Realty entered into a CCR with the Buyer indicating

that they represented her, and subsequently submitted a successful offer on her behalf

for the Property.

The BRA entered into between Registrant A and Brokerage A was not contested. The

Lower Panel had the right to accept it as a valid contractual relationship. Zahnd and

Home Realty simply took the Buyer at her word that no contract existed between her

and Brokerage A. Notwithstanding that only a few days earlier Registrant A and

Brokerage A submitted an offer on her behalf on the same Property, Zahnd and Home

Realty did nothing more than rely on the Buyer’s denial as to the contractual existence

of a BRA.

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The Registrar submitted that the fact that Brokerage A did not bring an action against

the Buyer for commission cannot be interpreted as an admission that in some fashion

the BRA between Brokerage A and the Buyer was not binding. Brokerage A had

recourse before the Local Board. The Local Board is composed of realtors. It heard the

commission claim against Zahnd and Home Realty and made a finding that Zahnd and

Home Realty were required to pay a commission to Brokerage A. The decision of the

Local Board was upheld on appeal. Should the standard of care be somehow different

in these proceedings than before the Local Board?

The Registrar submitted that the only law before the Lower Panel was the Code of

Ethics, specifically Section 7.(1) of the Code.


another registrant shall communicate information to the person for the purpose of a trade in real estate only through the other registrant, unless the other registrant has consented in writing.

The Allegation Statement alleged that Zahnd dealt with another brokerage’s client,

contrary to Section 7.(1). The Lower Panel’s comments relating to Zahnd making a

telephone call or sending an email to Brokerage A did not establish a standard of care,

but rather spoke to the manner in which Zahnd could have confirmed the existence of a

BRA. The standard of care is contained in Section 7.(1). If a registrant knows or ought

to know that person is a client of another registrant, he should be communicating with

the other registrant, not the client. Zahnd and Home Realty failed to meet this standard

of care.

The Registrar submitted that the Appellants’ reliance on the OREA module was no

justification for the manner in which the Appellants dealt with the Buyer, Registrant A

and Brokerage A. The direction given by Singh to Zahnd was based on a partial

excerpt from the OREA module. It was an inadequate direction because it was based

on the potential buyer being a “cold buyer”, someone with whom Zahnd had no previous

dealings. It is not disputed that Zahnd knew that only a few days earlier Brokerage A

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had submitted an offer on the Property Zahnd had listed. The same buyer wanted to

purchase the same Property, now directly with Zahnd. A deeper review of the OREA

module specifically speaks to situations that do not involve “cold buyers”. The module

indicates that in these situations more is required by registrants who find themselves in

Zahnd’s situation. They are required to do more than simply ask the two questions that

Singh advised Zahnd to ask the Buyer.

The Registrar submitted that based on the facts before the Lower Panel and their

application to the applicable sections of the Code of Ethics and the standard of review

on appeal, the Lower Panel’s decision was reasonable and should not be disturbed.

Findings of the Appeals Committee

This Panel is not persuaded by the submissions of the Appellants, Zahnd, Singh and

Home Realty. The Appellants’ position is that the Lower Panel exceeded its jurisdiction

by creating law. It erred in law by doing so. It was the responsibility of the Registrar to

call expert evidence to establish what the standard of care Zahnd, Singh, and Home

Realty had to meet. It was the Lower Panel’s responsibility to determine if that standard

of care had been met. The Appellants submitted that the Lower Panel actually

established the standard of care by determining that Zahnd should have telephoned

and/or emailed Registrant A and Brokerage A to determine if a BRA existed between

the Buyer and Brokerage A. In attempting to establish the standard of care, without the

evidence of an expert witness, the Lower Panel’s decision was flawed and therefore

should be dismissed.

In addition Singh and Home Realty made submissions suggesting that there was

evidence before the Lower Panel that indicated that in fact no BRA existed, binding the

Buyer to Registrant A and Brokerage A. Consequently the direction given to Zahnd by

Singh was sufficient and satisfied the two question required by the OREA module,

which the Appellants submit is the only standard of care that the Lower Panel was

entitled to use in making its determination.

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1. Standard of Care

This Panel was provided with two cases that dealt with the need for expert witnesses to

establish the standard of care before tribunals.

In Ellwood v. Association of Professional Engineers of Yukon, 2006 YKSC 42 (CanLII) a

2006 Supreme Court of the Yukon Territory the Court states:

[30] The Council relied upon the case of Evans, cited above. However,

the standard of practice for engineers in these circumstances cannot be derived from case law. It must be based upon expert evidence that Mr. Ellwood can challenge by cross-examination or by calling his own expert. See Huerto v. College of Physicians and Surgeons (1996), 133 D.L.R. (4th) 100 (Sask.C.A.), at page 106 and Re: Redda II and College of Nurses of Ontario, (1983), 42 O.R. (2d) 412 (C.A.), at page 416.

[31] In my view, a proper statement of the law is that the Discipline

Committee and the Council are entitled to apply their own expertise to the assessment of the evidence. However, they are not entitled to use their expertise to establish the standard of practice to be met my Mr. Ellwood. See Palmquist v. Architectural Institute of British Columbia, [1999] B.C.J. No. 2589 (S.C.), at paragraph 61.

This position is supported, although qualified, by the 2009 Ontario Division Court case

of Cheung v. Ontario Association of Architects, 2009 CanLII 27817 (ON SCDC).

[43] I do not accept the argument that it was an error in law for the

Discipline Committee to have arrived at the conclusion that the conduct of the member/holder was dishonorable and unprofessional without receiving peer or expert opinion evidence on the issue. Although there are compelling reasons for holding that where there is a dispute concerning the standard of practice, opinion evidence should be received as to the standard of practice, there is no equivalent functional need for peer or expert evidence where the issue is one of integrity as it is in the instant case.

In the next paragraph the Court goes on to say that a tribunal does not require expert

evidence to determine if the conduct of one of its members was such that members of

its association would reasonably consider it to be unprofessional or dishonorable.

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[44] The gravamen of the alleged misconduct is that the member/holder knowingly disregarded requirements of the Building Code and knowingly made a misleading statement to the Chief Building Official. Whether this conduct is such that members of the Association would reasonably consider it to be unprofessional and dishonourable in all the circumstances is a matter upon which members of the Committee, including its lay member(s), are in as good position as a member of the Association to opine and expert evidence is unnecessary.

This Panel has carefully considered the wording of Section 7.(1) of the Code of Ethics.

For clarity that Section states:


another registrant shall communicate information to the person for the purpose of a trade in real estate only through the other registrant, unless the other registrant has consented in writing.

It is the finding of this Panel that Section 7.(1) establishes a standard of care that does

not require expert opinion.

The wording is clear. If a registrant knows or ought to know that a potential client or

customer is a client of another registrant the registrant shall communicate with that

potential client or customer “only through the other registrant.” The standard of care is

unequivocal. If a registrant knows or ought to know that a potential client or customer is

working with another registrant, the registrant should not be communicating with the

potential client or customer.

In the matter before the Lower Panel, given the findings of fact, Zahnd knew, and

certainly ought to have known, that the Buyer was Brokerage A’s client. Just days

before Brokerage A had presented an offer on her behalf to Zahnd. Now the Buyer

comes to Zahnd and asks him to represent her to purchase the same property. The

standard of care in Section 7.(1) prohibited Zahnd from even communicating with the

Buyer.

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If Zahnd wished to communicate with the Buyer he was obligated, as Section 7.(1)

states, to do so through the registrant, Registrant A and Brokerage A. He was not at

liberty to ignore Section 7.(1) and communicate with the Buyer directly, until such time

as it was determined that there was no contractual relationship between the Buyer and

Brokerage A. Zahnd, on the direction of his broker, Singh, failed to meet the standard

of care inherent in Section 7.(1).

It is the finding of this Panel that the Lower Panel’s finding that “...any concerns or

uncertainties about the nature of her [the Buyer’s] relationship with [Brokerage A] could

easily have been resolved by a simple phone call or email...” (Page 29, Reasons for

Decision) was not establishing the standard of care expected of Zahnd. The breach

committed by Zahnd was not due to his failure to telephone and/or email Brokerage A.

Zahnd breached Sections 7.(1) because he ignored the language of the Section. The

Lower Panel’s analysis of what occurred is not inconsistent with the standard

established by Section 7.(1) of the Code. Given the facts, which are clear, it is a

reasonable finding. The Lower Panel’s language related to telephone calls and/or email

is simply guidance as to how Zahnd could have avoided breaching the standard of care

set out in Section 7.(1).

This Panel accepts that there may be instances where expert witnesses are required to

establish the standard of care required of a registrant in certain circumstances as set

out in Krawchuk v. Scherbak and Ellwood v. Association of Professional Engineers of

Yukon. This case did not involve one of those circumstances.

The Appellants have submitted that the only standard of care that had to be met in this

case was that contained in the OREA module. This Panel is not persuaded by the

Appellants’ submissions. The OREA module relied upon by the Appellants states: “At

the time of first contact, two important questions must be asked” (emphasis added).

The facts are undisputed. Zahnd knew that the Buyer had, only a few days before,

been represented by Brokerage A. He had signed a CCR form dated January 21, 2011

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acknowledging that the Buyer was represented by Brokerage A. Zahnd’s relationship

with the Buyer was anything but a “first contact”.

As the Lower Panel correctly noted in its Reasons for Decision (Page 27 to 29) the

OREA module, which provides some guidance as to the standard of care in these

instances, clearly indicates that more is required than merely asking two questions. The

OREA module goes on to say:

Problems arise when a registrant doesn’t bother to ask about or chooses to ignore the existence of a buyer representation agreement with another brokerage. Consider a situation where a buyer is under contract with another brokerage but a registrant fails to inquire about it. The registrant proceeds to show the buyer a property, prepares an offer, and sells it to the buyer. When the buyer brokerage finds out about it, a claim will likely be made at the Arbitration Committee of the local real estate board. A defense based on the fact that the registrant didn’t know because the registrant didn’t bother to ask is usually no defense at all at an arbitration hearing. Chances are the buyer brokerage will win. The registrant may even have a buyer representation agreement signed by the buyer but may still loose based on the existence of a prior buyer representation agreement even though the other brokerage never showed the property. But suppose the registrant did win at arbitration. The other brokerage may now decide to pursue the buyer in court for the commission based on their buyer representation agreement. That’s not the end of it. A complaint may be lodged against the registrant with RECO by the other brokerage for a violation of Section 7. (emphasis added) So, at the end of the day, what has the registrant gained and lost? The registrant sold a property and made a commission. But, the registrant ignored an existing buyer representation agreement and lost the selling commission at arbitration. The registrant interfered with an existing contract and violated REBBA’s Section 7 and will likely be penalized a monetary fine which will be made public on the RECO website. Lastly, and most importantly, the registrant put the buyer in a position of possibly being sued by the other brokerage. (OREA Module, Tab 4, Record of Documents)

This section of the module makes it clear that in these circumstances, which are

consistent with the facts in this appeal, if the registrant ignores the existence, or even

possible existence of a BRA, the registrant has failed to meet the standard of care set

out in Section 7.(1) of the Code. “That’s not the end of it. A complaint may be lodged

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against the registrant with RECO by the other brokerage for a violation of Section 7.”

The Lower Panel specifically referenced this section of the OREA module in

determining that Zahnd had breached Section 7.(1) of the Code.

2. Validity of the BRA

Singh and Home Realty made submissions that there was evidence that supported the

argument that the BRA between Brokerage A and the Buyer, dated December 5, 2010,

was not a binding agreement. Singh and Home Realty submitted that the Lower Panel

erred in not addressing this possibility. If there was no binding BRA, then the direction

given by Singh and Home Realty to Zahnd would have met the standard of care set out

in the OREA module.

It was the submission of Singh and Home Realty that the evidence of Registrant A

supported the argument that the BRA in question was not binding. Specifically,

Registrant A had no independent recollection of what he reviewed with the Buyer in

explaining the BRA to her, and in particular the effect of the hold over clause.

Furthermore in his evidence in chief he stated that the BRA was “... only a piece of

paper. If someone wants to ignore it, they can.” Notwithstanding this evidence the

Lower Panel failed to draw an adverse inference as to the legality of the BRA by the

failure of the Registrar to call the Buyer as a witness at the hearing. The Buyer’s

testimony would have been the best available evidence surrounding many of the facts,

documents and issues before the Lower Panel.

The Lower Panel implicitly found that the BRA was a valid and binding contract between

the Buyer and Brokerage A. The Panel considered Registrant A’s evidence but did not

find that his answers to questions under cross-examination amounted to evidence that

was conclusive that no BRA between the Buyer and Brokerage A existed.

This Panel is not persuaded by the submission of Singh and Home Realty. Section

7.(1) of the Code of Ethics is clear that if a registrant knows or ought to know that a

potential client is another registrant’s client, the registrant can only communicate with

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the registrant that he knows or ought to know has entered a BRA with the potential

client. The language in Section 7.(1) is concise and definitive. It does not provide for

independent exploration or supposition as to the validity of a BRA contract between the

registrant and the potential client.

The evidence is clear that when the Buyer approached Zahnd to prepare an offer on her

behalf for the Property he knew that only days earlier Registrant A and Brokerage A had

presented an offer on the Buyer’s behalf for the Property. The offer was accompanied

by a CCR, which Zahnd acknowledged, that specifically indicated that the Buyer was

represented by Brokerage A in an agency capacity. Knowing that, it is somewhat

disingenuous for Singh and Home Realty to argue that it was acceptable for the

Appellants to disregard what they knew to be an existing agency relationship, at least

when Registrant A presented an offer on the Buyer’s behalf, because evidence provided

by Registrant A on May 24, 2013, more than two years after the events giving rise to the

Allegation Statement, supported their position that the BRA in question may not have

been binding, on February 1, 2011. None of that evidence was available to the

Appellants at the time they prepared an offer that was accepted for the Buyer. What the

Appellants knew, and in particular the Appellant Zahnd, was that only ten days earlier

the Buyer was in an agency relationship with Brokerage A.

It may be that the BRA in question was not binding, however there is no convincing

evidence in the Record that it was not. Even Registrant A’s testimony is not convincing

when read in context. In addition there is evidence that supports the binding effect of

the BRA between the Buyer and Brokerage A, namely Brokerage A’s success in its

commission claim against Home Realty before the Local Board of which the two

brokerages are members. It was not unreasonable for the Lower Panel to find that

there was a binding and subsisting BRA between the Buyer and Brokerage A.

It is the finding of this Panel that the issue of the binding effect of the BRA is an ex post

facto argument that has no bearing on how Zahnd and Home Realty should have

responded on or about February 1, 2011. At that time they knew or ought to have

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known that there was an agency relationship between the Buyer and Brokerage A.

Rather than determine if it still existed, in their self-interest they relied on the Buyer’s

multiple denials that she was not bound by a BRA to Brokerage A. They communicated

directly with a potential client whom they knew, or certainly ought to have known, was in

an agency relationship. Long after the fact the Appellants argue that we now have

evidence that the BRA may not have been valid and legally binding. Had the Lower

Panel made this finding it would have been unreasonable.

Further Violations of the Code

The Lower Panel found that the Appellants had breached Sections of the Code of Ethics

other than Section 7.(1) (Reasons for Decision, pages 32 and 33). These other

violations stem from the manner in which the Appellants dealt with the circumstances

surrounding the Buyer’s purchase of the Property. But for the breach of Section 7.(1) of

the Code these other breaches would not have occurred. There were no submissions

from the Appellants that these violations of the Code were violations that required

expert witness evidence. The Appellants did emphasize, however, that these additional

violations spoke to the need for expert evidence to establish the standard of care as it

related to Section 7.(1) in the circumstances of the subject transaction.

Having dealt with that aspect of the Appellant’s grounds of appeal the test as to the

further findings of violations of the Code by the Lower Panel is reasonableness. It is the

finding of this Panel that the findings of the Lower Panel as they related to the violations

of the Code committed by Home Realty (Sections 3, 5, 15, 38, and 39) Singh (Sections

3, 5, 41.(2)) and Zahnd (Sections 3, 5, 37.(2), 38, and 39) were reasonable.

The Lower Panel carefully and in some detail analyzed the actions of the Appellants. It

specifically found that contrary to the allegations, there was no evidence to support that

Home Realty had breached Sections 10.(1) and (2), 14, and 41.(2) of the Code; that

Singh had not breached Sections 7.(2), 38, and 39 of the Code; and that Zahnd had not

breached Section 2.(1) of the Code. There is nothing in the Record before this Panel

that would indicate that the findings of the Lower Panel were unreasonable. To

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summarize, the breach of Section 7.(1) led to breaches of the Code by the Appellants

that related to integrity, conscientious service, the avoidance of unethical and

unprofessional practice. In the case of Singh and Home Realty, the Lower Panel

correctly found that Singh and the brokerage failed in their statutory responsibility to

ensure that one of their registrants carry out his duties in compliance with the Code and

that the broker of record must ensure that the brokerage complies with the Code.

Having reviewed the Record of Documents, the Book of Documents, the Transcripts

dated May 23 and 24, 2013, and October 29, 2014, the Appellants’ and the Registrar’s

Factums, and the Authorities submitted to this Panel, the Appeals Committee dismisses

the appeals of Steven Zahnd, Roy Balwant Singh and Century 21 Home Realty Inc.

Findings as to Penalty

The Lower Panel held a teleconference on May 26, 2014 to discuss the written

submissions on penalty that were provided by the Appellants and the Registrar.

Following the teleconference the Lower Panel found that Zahnd should pay a fine of

$7,500 and successfully complete the Real Estate Institute of Canada “REIC 2600:

Ethics and Business Practice” course. Singh was ordered to pay a fine of $12,000,

payable jointly and severally with Home Realty, and to successfully complete the Real

Estate Institute of Canada “REIC 2280: Legal Issues In Real Estate” course.

This Panel finds that the decision of the Lower Panel on penalty cannot be disturbed.

Zahnd and Singh and Home Realty are ordered to pay their fines and to complete the

appropriate Real Estate Institute of Canada courses by December 31, 2015.

In making its determination on penalty the Lower Panel reviewed factors that should be

considered by tribunals in assessing penalties. The Lower Panel reviewed Registrar

Under the Real Estate and Business Brokers Act, 2002 and Suzette Thompson a

decision of the Appeals Committee. In Thompson the Appeals Committee set out the

following factors for consideration.

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1. The nature and gravity of the breaches of the Code of Ethics. 2. The role of the offending member in the breaches. 3. Whether the offending member suffered or gained as a result of the

breaches. 4. The impact of the breaches on the complainant or others. 5. The need for there to be specific deterrence to protect the public. 6. The need for there to be general deterrence to protect the public. 7. The need to maintain the public’s confidence in the integrity of the

profession. 8. The degree to which the breaches are regarded as being outside

the range of acceptable conduct. 9. The range of sanctions in similar cases.

Zahnd and Singh both made submissions before this Panel as to penalty. These

submissions did not address the nine factors in Thompson. Zahnd’s submissions spoke

to the fact that he was relatively new and inexperienced registrant. Given the fact that it

was his first offence the Lower Panel should treated him with a degree of leniency, as

first offenders are treated in criminal matters. Zahnd reiterated his submissions in the

main matter. How was it possible for Zahnd to violate a “law” that did not exist, but was

inappropriately created by the Lower Panel? Under the circumstances of the case the

penalty imposed on Zahnd by the Lower Panel was extreme and should be dismissed.

Singh and Home Realty cited the Appeals Committee’s 2012 decision in Bosley v.

Registrar Under the Real Estate and Business Brokers Act, 2002. In that case the

Lower Panel ordered Michael Bosley, a registrant, to pay a fine of $25,000. The

Appeals Committee modified that order, reducing the fine to $12,000.

The circumstances in Bosley were similar to those in the instant case, but more

egregious. Not only did Bosley know or ought to have known that the buyer with whom

he was working had entered into a BRA with another brokerage, but Bosley encouraged

the buyer to work with him, assuring the buyer that any claim for commission by the

other brokerage would be “worked out”. That never happened. Bosley took no steps to

fulfill his promise to the other brokerage that the commission issues between them

would be reconciled, even after receiving a copy of a binding BRA between the buyer

and the other brokerage. The Lower Panel was particularly concerned with Bosley’s

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actions in that they not only created needless controversy and litigation between the two

brokerages, but Bosley’s actions exposed the buyer to liability to pay commission to the

brokerage with whom he had entered a BRA. Bosley never entered a BRA with the

buyer, but claimed that he had in the CCR.

Singh submitted that his actions could not be compared to Bosley’s. Singh had merely

referred to the OREA module and advised Zahnd to follow what he believed to be the

standard of care in the circumstances. He did not act maliciously or in a conspiratorial

fashion. If anything he was simply wrong. A fine of $12,000 was unreasonable. Singh

submitted that there should be no fine, and that the fine imposed by the Lower Panel

should be dismissed. Alternatively, and using Bosley as his authority, the Lower Panel

should modify the penalty. Singh submitted that a fine of $7,500 would be more

appropriate.

The Registrar submitted that the Lower Panel correctly, as a starting point, considered

the nine factors set out in Thompson. The Lower Panel applied those factors to the

evidence. It concluded that the actions of Zahnd, notwithstanding his inexperience, and

Singh were serious breaches of the Code and required censure. Zahnd, Singh and

Home Realty effectively stole Brokerage A’s client, when they knew or certainly ought to

have known that the Buyer was in an agency relationship with Brokerage A. They did

nothing to determine if the Buyer was bound by a BRA to Brokerage A. In their self-

interest they did nothing but conveniently rely on the OREA teaching module. That

unprofessional behavior could have put the Buyer at risk of being sued for commissions,

and did in fact create the circumstances that needlessly led to the hearing before the

Lower Panel and this appeal.

The Registrar submitted that even considering Bosley, the fines imposed by the Lower

Panel are within the range of sanctions in similar cases. The Registrar referred to the

case of Registrar v. Kewley, a 2011 Discipline Decision. This case proceeded by way

of an Agreed Statement of Facts and Penalty and Waiver of Hearing. Kewley, a

registrant and broker of record, directly interfered with a seller who was under contract

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without including the listing brokerage in the negotiations leading to an accepted offer.

Kewley was found to have violated Section 7.(1) of the Code. The joint submissions as

to penalty ordered Kewley to pay a fine of $12,000.

The standard of review on an appeal of penalty is reasonableness.

47 Reasonableness is a deferential standard animated by the principle

that underlies the development of the two previous standards of reasonableness: certain questions that come before administrative tribunals do not lend themselves to one specific, particular result. Instead, they may give rise to a number of possible, reasonable conclusions. Tribunals have a margin of appreciation within the range of acceptable and rational solutions. A court conducting a review for reasonableness inquires into the qualities that make a decision reasonable, referring both to the process of articulating the reasons and to outcomes. In judicial review, reasonableness is concerned mostly with the existence of justification, transparency and intelligibility within the decision-making process. But it is also concerned with whether the decision falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law. (Dunsmuir v. New Brunswick)

This standard of review requires this Panel to examine the outer boundaries of

reasonable outcomes within which the Lower Panel was free to choose. It does not rest

with this Panel to substitute its position for that of the Lower Panel if the findings of the

Lower Panel fall within “a range of possible, acceptable outcomes”. This Panel finds

that the decision of the Lower Panel as to penalty in this matter falls within the range of

possible acceptable outcomes.

In its Reasons for Decision on penalty the Lower Panel is mindful of the factors it must

consider in making a determination on penalty. They include the gravity of the

breaches, the role played by the Appellants, their financial gain from the transaction, the

impact of their breaches on others, the need to protect the public and to maintain public

confidence in the integrity of the real estate profession, and the range of sanctions.

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The Lower Panel carefully analyzed the evidence, and concluded that Zahnd, Singh,

and Home Realty breached Sections of the Code that are designed to protect the

public, clients, customers, and registrants. It concluded that:

... It is the opinion of the Panel that the respondents displayed a lack of understanding about the impropriety of their conduct and their obligations in dealing with other registrants, brokerages, etc. who could be affected by the respondents’ decision to deal directly with the Buyer. (Reasons for Decision: Penalty Page 2)

Given the evidence this was a reasonable determination.

The Appellants’ conduct clearly had an impact on Registrant A and Brokerage A. They

were forced to bring a claim before their Local Board for commission. The Buyer was

put at risk. Because she had entered into a BRA with Brokerage A she could have

been sued for the commission she had agreed to pay in the BRA.

The Lower Panel concluded that the Appellants’ breaches were serious, and its decision

as to penalty was designed to reflect the gravity of those violations. The penalties

imposed were structured so that they “... will prevent this or similar situations from

arising in the future.” (Reasons for Decision: Penalty, Page 5) The penalties have both

a monetary and educational component. They had a specific and general deterrence

impact. The combined effect of the penalties was designed to maintain the public’s

confidence in the integrity of the profession.

The Lower Panel considered Zahnd’s history as a relatively new registrant, and the fact

that he relied on Singh’s advice and direction. That consideration led to a lesser

administrative penalty of $7,500 and an educational requirement he was obligated to

successfully complete. Singh being the broker of record was held to a higher standard.

He gave Zahnd “inadequate and inappropriate” direction, direction that led to the

commission controversy that culminated into a complaint, a hearing, and now an

appeal.

71 | Page

The decision on penalty of the Lower Panel meets the test of reasonableness. There is

nothing in the decision that rests outside the boundaries of possible outcomes or is

unsupported by the evidence. For these reasons the Appellants’ appeals on penalty are

dismissed. Zahnd shall pay a fine of $7,500 and successfully complete the Real Estate

Institute of Canada “REIC 2600: Ethics and Business Practice” course and provide

confirmation of successful completion on or before December 31, 2015. Singh and

Home Realty shall be jointly and severally required to pay a fine of $12,000 on or before

December 31, 2015, and Singh shall successfully complete the Real Estate Institute of

Canada “REIC 2280: Legal Issues in Real Estate” course and provide confirmation of

successful completion on or before December 31, 2015.

[Released: July 14, 2015]