Luzak v. Real Estate Council of Ontario et al.

[Indexed as: Luzak v. Real Estate Council of Ontario]

67 O.R. (3d) 530

[2003] O.J. No. 4494

Divisional Court File No. 591/02

Ontario Superior Court of Justice Divisional Court McRae, Then and Ferrier JJ. October 9, 2003

Administrative law -- Boards and tribunals -- Judicial review -- Statutory power -- Statutory power of decision -- Real Estate Council of Ontario ("RECO") -- RECO administering Real Estate and Business Brokers Act -- RECO establishing Discipline Committee and Appeals Committee -- RECO exercising statutory power -- RECO having statutory power of decision -- Decisions of Discipline Committee and Appeal Committee subject to judicial review -- Real Estate and Business Brokers Act, R.S.O. 1990, c. R.4 -- Safety and Consumers Statutes Administration Act, 1996, S.O. 1996, c. 19 -- Judicial Review Procedure Act, R.S.O. 1990, c. J.1 -- Statutory Powers Procedure Act, R.S.O. 1990, c. S.22.

The applicant BL was a registered real estate agent under the Real Estate and Business Brokers Act ("REBBA") and a member of the Real Estate Council of Ontario ("RECO"). In 2000, RECO received complaints that BL had advertised properties for sale where the listing agent had an exclusive advertising agreement with the vendor. After a discipline hearing at which he gave evidence, the Discipline Committee appointed by RECO found that BL's conduct was unprofessional and in contravention of Rule 23 of RECO's Code of Ethics. He was ordered to pay an administrative penalty of $6,000 and costs of $1,000, and he was placed on probation for one year. He appealed to the Appeal Committee appointed by RECO.

After learning that the appeal panel would include as a member the person who had chaired the discipline hearing, BL requested a different panel and indicated that he would not participate until satisfied that all panel members were clear of any conflicts of interest. The appeal went ahead on June 14, 2001. BL did not attend. The Appeal Committee rejected any allegation of reasonable apprehension of bias, upheld the finding of the Discipline Committee, and imposed additional costs of $1,000. BL failed to pay, and his membership in RECO was terminated effective July 16, 2001, which, in turn, automatically terminated his registration under REBBA. BL applied for judicial review of the decision of the Discipline Committee.

Held, the application for judicial review should be dismissed.

Pursuant to REBBA, the Safety and Consumers Statutes Administration Act and an agreement with RECO, the legislature had established a protocol which devolved power to the real estate profession so that it became in many respects self- governing. RECO was designated to administer REBBA. Section 7(1) of the Safety and Consumers Act delegated authority to RECO to carry out the provisions of REBBA. Sections 3 and 4 of the Administrative Agreement between the Ministry of Consumer and Commercial Relations and RECO contemplated that it would pass by-laws respecting qualifications, terms and conditions of registration or memberships. To enforce compliance with its Code of Ethics, RECO had passed by-laws to establish a Discipline Committee and an Appeals Committee. This delegation of power was a statutory power as defined under the Judicial Review Procedures Act. RECO had a "statutory power of decision" that was subject to judicial review under the Statutory Powers Procedure Act. [page531]

Turning to the merits of BL's application for judicial review, he failed to show that RECO's conduct was unfair and a denial of natural justice. He was advised of the allegations against him, and he had an impartial hearing. There was no evidence of bias or conflict of interest on the part of the Discipline Committee or any member. The fact that RECO appointed the Discipline Committee and the fact that penalties were retained by RECO did not equate to a conflict of interest. All self-governing professions select Discipline Committees from their ranks. The Appeals Committee was selected by RECO, but there was no basis for an allegation of bias or conflict of interest. Accordingly, the application for judicial review should be dismissed.

APPLICATION for a judicial review.

Cases referred to Dearing v. Real Estate Council of Ontario, [2001] O.J. No. 2107 (QL) (Div. Ct.); Forde and Ontario Secondary School Teachers' Federation(Re) (1980), 1980 1872 (ON SC), 30 O.R. (2d) 169, 115 D.L.R. (3d) 673 (Div. Ct.); MacPump Developments Ltd. v. Sarnia (City) (1994), 1994 3448 (ON CA), 20 O.R. (3d) 755, 120 D.L.R. (4th) 662, 24 M.P.L.R. (2d) 1 (C.A.), revg in part (1993), 24 M.P.L.R. (2d) 21 (Ont. Div. Ct.); Pearlman v. Manitoba Law Society Judicial Committee, 1991 26 (SCC), [1991] 2 S.C.R. 869, 75 Man. R. (2d) 81, 84 D.L.R. (4th) 105, 130 N.R. 121, [1991] 6 W.W.R. 289, 6 C.R.R. (2d) 259 Statutes referred to Judicial Review Procedure Act, R.S.O. 1990, c. J.1, s. 1 "statutory power""statutory power of decision" Real Estate and Business Brokers Act, R.S.O. 1990, c. R.4 Safety and Consumers Statutes Administration Act, 1996, S.O. 1996, c. 19, s. 7(1) Schools Administration Act, R.S.O. 1970, c. 424, s. 11 Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, s. 1(1) "statutory power of decision" Rules and regulations referred to R.R.O. 1990, Reg. 986 ("Real Estate and Business Brokers Act"), s. 17.1

Barry Wadsworth, for applicant. Christopher D. Bredt, for respondents.

The judgment of the court was delivered by

[1] MCRAE J. : -- This is an application to judicially review a decision of the Discipline Committee of the Real Estate Council of Ontario ("RECO"), dated January 21, 2001.

[2] The applicant, a real estate broker, was disciplined by the Discipline Committee of RECO. He was required to pay a fine and costs. He launched an appeal which was dismissed with a further costs order. When he did not pay the fine and costs, his membership in RECO was terminated and his broker's licence expired.

[3] The respondents, by preliminary motion, seek to strike or stay the application on the grounds: [page532]

(1) That the applicant has failed to exhaust his administrative remedies; and,

(2) That the application does not involve the exercise of a statutory power of decision which could give the court jurisdiction under the Judicial Review Procedure Act, R.S.O. 1990, c. J.1.

[4] The law is quite settled that the court will not -- except in rare circumstances -- permit judicial review in a case where an applicant has failed to first pursue other remedies which are available -- such as the right to appeal -- which was available in this case.

To quote Then J. in Dearing v. Real Estate Council of Ontario, [2001] O.J. No. 2107 (QL) (Div. Ct.), at para. 10:

In the circumstances of this case, a proper application of the factors enunciated in Matsqui lead inexorably to the conclusion that the court should not enter into judicial review but that the applicant be required to exhaust his appeal rights.

[5] The fact is this applicant did pursue his right of appeal. He paid the required fee of $500 and filed a notice of appeal. His notice of appeal set out the grounds of appeal in detail. He also engaged in a round of correspondence with officials at RECO explaining his position.

[6] In the end, he unwisely refused to appear before the Membership Appeals Committee and did not appear. In spite of this, the appeal went forward and was considered by the panel on the basis of the record from the Discipline Committee, as well as his notice of appeal and correspondence. The appeal was dismissed, but it cannot be said that he did not avail himself of the right.

[7] The issue of whether the Discipline Committee exercised a statutory power or a statutory power of decision requires an analysis of the empowering legislation.

[8] The legislature, by means of the Real Estate and Business Brokers Act, R.S.O. 1990, c. R.4 ("the Brokers Act"), the Safety and Consumers Statutes Administration Act, 1996, S.O. 1996, c. 19 ("the Safety and Consumer Act") and Regulations under those Acts, along with an agreement between the Ministry and RECO, established a protocol which devolved power to the real estate profession so that it became in many respects self- governing.

[9] RECO is a not-for-profit corporation without share capital incorporated January 27, 1997. It has been designated pursuant to the Safety and Consumer Act to administer the Brokers Act.

[10] A person applying to become a broker or a salesperson must first apply to the Registrar for registration. Terms of registration [page533] require continuing professional education and continued membership in RECO.

[11] Section 17.1 of Regulation 986 under the Brokers Act provides:

17.1(1) A person registered as a broker or salesperson shall become a member of the Real Estate Council of Ontario immediately after being registered if the person is not a member of the Council.

(2) The registration of a registered broker or salesperson described in subsection (1) expires if the person ceases to be a member of the Real Estate Council of Ontario.

[12] Section 7(1) of the Safety and Consumers Act delegates authority to RECO to carry out the provisions of the Brokers Act.

[13] Section 7(1) provides:

7(1) A designated administrative authority shall carry out the administration of designated legislation delegated to it and shall do so in accordance with law, this Act, the designated legislation and the administrative agreement, having regard to the intent and purpose of this Act and the designated legislation.

[14] Pursuant to this delegated authority, RECO has power to grant or revoke memberships in RECO and to administer the provisions of the Brokers Act.

[15] Sections 3 and 4 of the Administrative Agreement between the Ministry of Consumer and Commercial Relations and RECO contemplate that RECO will pass by-laws respecting qualifications, terms and conditions of registration or memberships.

[16] RECO has established a Code of Ethics for its members. To enforce and ensure compliance with the Code of Ethics, RECO has established by by-law a Discipline Committee whose members are appointed by the Board. A full procedural scheme for hearing is provided.

[17] By-law 10, s. 48, sets out penalties which may be assessed against a member, including costs, orders, fines, probation, suspension or revocation of membership.

[18] By-laws 8 and 9 establish an Appeals Committee which is empowered to confirm, reverse or vary the disposition of the Discipline Committee.

[19] The issue is: Does this delegation of power equate to a statutory power which is subject to judicial review?

[20] The Judicial Review Procedure Act, R.S.O. 1990, c. J.1 defines statutory power [in s. 1] as:

. . . a power or right conferred by or under a statute,

(a) to make any regulation, rule, by-law or order, or to give any other direction having force as subordinate legislation, [page534]

(b) to exercise a statutory power of decision,

(c) to require any person or party to do or to refrain from doing any act or thing that, but for such requirement, such person or party would not be required by law to do or to refrain from doing,

(d) to do any act or thing that would, but for such power or right, be a breach of the legal rights of any person or party[.]

[21] "Statutory power of decision" means a power or right conferred by or under a statute to make a decision regarding or prescribing,

(a) the legal rights, powers, privileges, immunities, duties or liabilities of any person or party, or

(b) the eligibility of any person or party to receive, or to the continuation of, a benefit or licence, whether the person or party is legally entitled to or not,

and includes the powers of an inferior court.

[22] The applicant says that RECO's Discipline Committee and the appeal tribunal are established by by-laws passed by RECO and that they do not, therefore, have a statutory power of decision subject to judicial review.

[23] I disagree.

[24] The legislative framework, including the operative sections of the Safety and Consumers Act, bestows responsibility on RECO to administer the Brokers Act. The regulations and the Administrative Agreement bestow a "statutory power" under s. 1(1)(a) of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, and constitutes a power or right to exercise a "statutory power of decision".

[25] A number of cases have found that such a delegation of power is subject to judicial review.

[26] In Re MacPump Developments Ltd. v. Sarnia (City) (1994), 1994 3448 (ON CA), 20 O.R. (3d) 755, 120 D.L.R. (4th) 662 (C.A.), at p. 757 O.R., the City passed a resolution "that Sarnia City Council ask for the appointment of a judge under the appropriate legislation to carry out an inquiry for the City concerning the sale of City land" -- and later a second resolution naming Mr. Justice Gordon Killeen to carry out the inquiry.

[27] Judicial review was brought. No objection to the jurisdiction of the Divisional Court was made.

[28] On appeal to the Court of Appeal, it was argued that the resolutions passed by City Council do not come within the meaning of "statutory power" in s. 1 of the Judicial Review Procedures Act. Justice Doherty found [at p. 760 O.R.]: [page535]

In my opinion, this submission (which was not raised in the Divisional Court) must fail and is fully answered in the reasons of Reid J. in Mississauga Hydro-Electric Commission, supra, at pp. 524-26. In passing the resolutions, the city council purported to exercise the power delegated to it by s. 100(1) of the Municipal Act. The resolutions ordered or directed the holding of a public inquiry. The form in which the delegated authority could be exercised, that is, by resolution as opposed to by-law, did not alter the nature or effect of the city council's actions. Assuming the resolutions were within the authority granted by s. 100(1) of the Municipal Act, they constituted an order or direction made in the exercise of a power granted by statute and had the force of subordinate legislation. The resolutions constituted the exercise of a statutory power within the meaning of that phrase as defined in s. 1 of the J.R.P.A.

[29] This question of jurisdiction to judicially review was raised before this court in Re Forde and Ontario Secondary School Teachers' Federation (1980), 1980 1872 (ON SC), 30 O.R. (2d) 169, 115 D.L.R. (3d) 673 (Div. Ct.).

[30] The Ontario Secondary School Teachers' Federation ("OSSTF") was a member of the Ontario Teachers' Federation, which was a statutory corporation under the Teaching Profession Act, R.S.O. 1970, c. 456. Every elementary and secondary school teacher was automatically a member of the Ontario Teachers' Federation as a result of the Schools Administration Act, R.S.O. 1970, c. 424. Section 11 of [the Teaching Profession Act] mandated the deduction of fees from teachers' salaries and the Board of Governors of the Ontario Teachers' Federation was empowered by the Act [in s. 12] to make regulations with respect to various subjects, including "prescribing a code of ethics for teachers . . . and . . . providing for the suspension and expulsion of members from the Federation and other disciplinary measures".

[31] This delegation of authority was to the Ontario Teachers' Federation not to the OSSTF.

[32] Despite the fact that no specific delegation of authority was made by the Federation to the OSSTF, the OSSTF laid charges against the applicant teacher, conducted a hearing and imposed a penalty. This procedure was found to be properly a subject of judicial review. Robins J., at pp. 179-80 O.R., p. 683 D.L.R., stated:

Finally, I come to the respondent's submission that this Court ought not to entertain this application for judicial review on the ground that the O.S.S.T.F. is not a body exercising a statutory power of decision and has no right or power conferred by or under statute.

In our view the relief sought here is properly obtainable by way of judicial review in the circumstances of this case. Clearly the applicant's membership in O.S.S.T.F. is statutory and a decision will affect his rights and privileges of membership. Further, the duties, the alleged breach of which have resulted in the discipline proceedings, are, as the charge makes clear, based upon the provisions of the Teaching Profession Act and the Education Act, 1974. This [page536] case cannot be perceived as one of a private or voluntary organization simply endeavouring to enforce its own by-laws. The O.S.S.T.F. is seeking to enforce a Regulation adopted under the Teaching Profession Act which requires O.T.F. members to "comply with the Acts and regulations administered by the Minister". In reality it purports to exercise concurrent jurisdiction with respect to a power conferred by statute on the O.T.F. to decide whether various Acts and Regulations have been complied with. The decisions it makes while purporting to enforce those statutory requirements should, the same as those of O.T.F., be subject to judicial review.

[33] In the instant case, the Discipline Committee and the Membership Appeals Committee both had a statutory power and exercised a statutory power of decision when they acted as they did. They are subject to review by this court, pursuant to the Statutory Powers Procedure Act.

[34] Turning to the merits of the applicant's case, only a brief review of the facts is necessary.

[35] In the year 2000, Bruno Luzak was a registered real estate broker in the Fenelon Falls area and was a member of RECO.

[36] Between May and September, 2000 RECO received eight complaints that the applicant, Luzak, had advertised properties for sale where the listing agent in each case had an exclusive advertising agreement with the vendor.

[37] The complaints in each case were communicated to Luzak along with a copy of the complaint. The letters were posted May 19, 2000; May 23, 2000; June 1, 2000; June 1, 2000; June 2, 2000; June 9, 2000; September 8, 2000; and September 8, 2000. They referred to RECO's By-law 10, a member consent to be interviewed form, and a copy of RECO's Member's Guide to the CCD Process. He was given 15 days in which to reply.

[38] Luzak replied to all of the letters, but at no time did he deny advertising the properties, nor did he claim he had the consent of the vendor.

[39] On September 13, 2000 and October 12, 2000, RECO served Luzak with books of documents containing

(1) a statement containing the particulars of each complaint and the Rules of RECO's Code of Ethics allegedly breached, as well as the guiding principles which had been breached, each letter of complaint, the anticipated evidence of RECO's Compliance Mediation Officer, Suzanne Brocklehurst, correspondence, RECO's By-law 10 and RECO's Rules of Practice.

[40] A hearing of the complaints was scheduled for October 26, 2000, at which time all of the complaints were consolidated. At his request, the hearing was adjourned to January 18, 2001. [page537]

[41] At that time, a full hearing was held. Luzak was present, as was his agent, another broker who acted on his behalf.

[42] He gave evidence and made argument. At no time did he deny that he had advertised the subject properties without the consent of the vendor or the listing broker. The panel found that his conduct was unprofessional in contravention of Rule 23 of the Code of Ethics. This decision was faxed to him February 7, 2001. He was allowed to make written submissions on penalty. These submissions were considered by the panel. In the end, he was ordered to pay an administrative penalty of $6,000, costs of $1,100 and he was placed on probation for one year.

[43] By letter of April 9, 2001, Luzak appealed the decision of the Discipline Committee to the Appeal Committee.

[44] He was informed that the appeal would be heard June 14, 2001, in Toronto. Three proposed panel members were named -- Chris Kapches, Ettore Cardarelli and Harold Gardner. Their identities were disclosed to Luzak.

[45] Luzak asked for a complete member profile and details of previous experiences sitting on RECO panels or committees. After a series of letters and replies, by letter dated May 9, 2001, Luzak alleged that Chris Kapches had a conflict of interest and must be replaced.

[46] He wrote"Since Mr. Kapches chaired the previous hearing, dealing with a similar situation, he clearly has a conflict of interest and I request he be replaced. The other panel members may also have a conflict of interest and must be replaced."

[47] His objection to the panel was denied, but he was advised that he could renew his application based on a conflict of interest at the commencement of the appeal.

[48] Luzak replied by letter of May 24, 2001"Therefore I will not accept this panel and will not participate in this appeal until I am satisfied that all panel members are clear of conflicts of interest and a fair and unbiased hearing will be held."

[49] On June 12, 2001, Luzak again wrote"I request a new panel be appointed and approved by me. I also request a new hearing date. Please be advised that I will not be present for the above noted appeal hearing as stated in my letter of May 24, 2001. I will not be responsible for any costs legal or otherwise, should the hearing proceed in my absence."

[50] The appeal hearing was held on June 14, 2001. The panel rejected any allegation of reasonable apprehension of bias, upheld the finding of the Discipline Committee and imposed additional costs of $1,000.

[51] In spite of repeated warnings about failure to pay the administrative penalty and cost awards, Luzak refused to pay [page538] either the penalty or costs. On July 18, 2001, the Registrar informed him his membership in RECO had been terminated, effective July 16, 2001. His registration under the Brokers Act was automatically terminated by virtue of the Regulations under the Brokers Act, s. 17.1(2) of Ontario Reg. 986.

[52] He continues to be disqualified and unable to practise as a real estate broker or sales person.

[53] The applicant, Bruno Luzac, must show that the conduct of the respondent, RECO, was unfair and amounted to a denial of natural justice.

[54] The duty of fairness requires that the subject of the proceedings be advised of the allegations against him and he must have a right to be heard at an impartial hearing.

[55] Luzac was supplied with notice of the complaints, along with full documentary material which, on their face, established a prima facie case in support of those complaints.

[56] The Discipline Committee granted him an adjournment of the hearing from October 26, 2000 to January 18, 2001.

[57] He was given a full and complete opportunity to be heard and to have an agent represent him. The panel found that the correspondence and related documents provided sufficient detail of his alleged misconduct.

[58] Luzak at no time disputed the allegation that he had advertised the properties without the consent of the vendor or the listing agent.

[59] There was no evidence of bias or conflict of interest on the part of the Committee or any member.

[60] There was no need therefore for the panel to subpoena or otherwise call the complainants to the hearing. There was, as I have said, complete documentary evidence.

[61] The fact that RECO appoints the Discipline Committee and the fact that penalties are retained by RECO does not equate to a conflict of interest. All self-governing professions select Discipline Committee members from their ranks.

[62] These two issues were considered by the Supreme Court in Pearlman v. Manitoba Law Society Judicial Committee, 1991 26 (SCC), [1991] 2 S.C.R. 869, 84 D.L.R. (4th) 105, where the court found that neither the make-up of the Committee nor the impugned "costs" provision creates a pecuniary interest that is sufficient to substantiate a reasonable apprehension of bias.

[63] The Appeals Committee was selected by RECO, but there is no basis, again, for an allegation of bias or conflict of interest.

[64] Counsel for the Committee in this case did not "descend into the arena" so as to create an appearance of unfairness. [page539]

[65] In summary, there is no evidentiary basis on which to find bias either at the Discipline Committee level or the appeal level.

[66] This applicant did not deny that he was in contravention of the by-law, but based his defence on the fact that he did not agree with it.

[67] He was given full and complete disclosure of the case he had to meet and he was given a full and fair hearing at both the Discipline Committee hearing and the appeal.

[68] The application for judicial review is dismissed.

[69] If counsel are unable to agree on costs of the application, they are invited to make brief written submissions within 30 days.

Application dismissed.