CITATION: Chang v. Registrar, [Real Estate and Business Brokers Act](https://www.canlii.org/en/on/laws/stat/so-2002-c-30-sch-c/latest/so-2002-c-30-sch-c.html), 2002, 2010 ONSC 3162
DIVISIONAL COURT FILE NO.: 11/10
DATE: 20100623
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
GREER, JENNINGS AND MOLLOY JJ.
BETWEEN:
ALAN W. CHANG, Appellant (Applicant)
– and –
REGISTRAR, REAL ESTATE AND BUSINESS BROKERS ACT, 2002, Respondent
Christopher Wirth and Andrea Gonsalves, Counsel for the Appellant
Timothy E. Snell, Counsel for the Respondent
HEARD at Toronto: May 4, 2010
ENDORSEMENT
BY THE COURT:
[1] On May 4, 2010, we heard an Appeal in this matter. We endorsed the Record as, “This Appeal is dismissed for reasons to follow.” These are our reasons.
[2] Alan W. Chang (“the Appellant”) appeals from the Decision and Order of the License Appeal Tribunal (“the Tribunal”) dated December 8, 2009, which refused to renew the Appellant’s registration as a real estate broker. The Tribunal ordered the Registrar, Real Estate and Business Brokers Act, 2002. S.O. 2002, c. 30, Sch. C, (“the Act”) to carry out his proposal to refuse to renew the appellant’s registration. At that time, the Appellant was a 62 year old real estate broker and appraiser.
[3] The basis for the Order was that the Appellant’s past conduct afforded reasonable grounds for the belief that he would not carry on his real estate brokerage business in accordance with the law and with integrity and honesty. Between December 2003 and July 2006, in his capacity as an appraiser and a member of the Appraisal Institute of Canada, the Tribunal found that the Appellant made false appraisals of 21 properties in Hamilton as part of a “mortgage fraud scheme involving 33 properties in total.”
[4] In many cases, the appraisals were approximately double the value of the recent purchase price of the property in question. As a result, the principals of the scheme were able to obtain mortgages that were well over the fair market value of the properties. Eventually, Royal Bank of Canada (“RBC”), the financial institution that advanced the mortgages, suffered losses when the properties were sold. Litigation ensued. The civil litigation with RBC settled, largely due to the Appellant’s co-operation and willingness to make restitution.
[5] The Tribunal set out the steps, in some detail, which the Appellant had taken over that period of time to do these false appraisals. He was found by the Tribunal to have earned approximately $150,000 from completing these false appraisals over the period in question. It found, on page 4 of its Decision, that while the Appellant had expressed remorse and regret for his actions, he failed to delineate his remorse in a clear manner.
[6] When the fraudulent scheme came to light in October 2006, and he was confronted with it by the RBC investigators, the Appellant decided not to co-operate with the investigators. Instead, he sought to remain silent and to seek legal advice. After retaining counsel, and after being served with a Mareva injunction, the Appellant chose to co-operate with the investigators. He also helped bring the two masterminds behind the scheme, with whom he worked to commit the fraud, to the settlement table of the civil action.
[7] The Appellant’s counsel negotiated a settlement with RBC by which the Appellant paid $260,000 in compensatory damages and costs and agreed to fully co-operate in any continuing litigation. He also gave testimony at the criminal trial of at least one of the masterminds of the fraud. Criminal charges, which were laid by the police against the Appellant, were then withdrawn at the Crown’s request, given the Appellant’s co-operation.
[8] The Tribunal found on p.5 of its Decision, that the Appellant only decided to co-operate “…after the commencement of the litigation and on the advice of counsel.”
[9] Under S.10 (1)(a)(ii) of the Act, the Tribunal considers the whole of the Appellant’s conduct and not just his behaviour that led to the Registrar’s proposal. He had been involved in the real estate business for approximately 26 years without a record of wrongdoing.
[10] In its conclusion on p.8 of its Decision, the Tribunal said:
The Tribunal’s role, however, is to apply the provisions of the Act. The Act is public protection legislation. Its role is to ensure that all persons dealing with real estate professionals can do so with the understanding that their professional realtor acts in accordance with the law and with integrity and honesty. To put the Applicant’s position at its highest, it is that he was an integral part of creating the fraudulent scheme and now he is helping to clean up his own misdeeds. The Tribunal needs more evidence of rehabilitation before it can repose the public trust in the Applicant again.
[11] In coming to its conclusion, the Tribunal did not accept the Appellant’s testimony that he had only requested the sum of $10,000 per appraisal to deter the masterminds of the scheme. It saw this as a way the Appellant tried to rationalize what he had done. It saw his co-operation with the investigators as the prudent course to take in the circumstances of what was taking place but this did not totally exonerate him.
[12] While the Appellant, after the fact, took an ethics course in 2009, the Tribunal found that he was aware in 2003 that his actions were wrong but he went ahead with the scheme. It also noted that the Appellant did not participate in any more fraudulent appraisals after July 2006. It found that the Appellant may have known the others were under investigation in July of that year and no further appraisals were being asked to be done.
The issues raised by the Appellant
[13] The Appellant raises the following two issues arising out of the Tribunal’s Decision:
Did the Tribunal err in failing to consider alternatives to revocation of the Appellant’s licence, such as the imposition of conditions under S.14(5) of the Real Estate and Business Brokers Act, 2002, S.O.2002, C.30?
Did the Tribunal err in taking into account an irrelevant factor in reaching its decision by commenting on the Appellant’s exercise of his right to counsel and his right to silence, when confronted by RBS investigators in October 2006 as to the fraud that had been committed?
The position of the Appellant
[14] The Appellant says the Tribunal erred by relying on the Appellant’s decision to remain silent and seek legal advice of counsel before co-operating with the RBC’s investigators. The Appellant says that in the criminal context, the trier of fact cannot draw an adverse inference from an accused’s decision not to testify and this test should be applied in the Appellant’s circumstances.
[15] The Appellant says that the Tribunal erred in relying on the Appellant’s right to remain silent as the “main factor” in concluding he had not adequately rehabilitated himself. He says, absent this error, it is not clear that the Tribunal’s decision would have been the same. He therefore says that a new hearing should be ordered.
[16] The Tribunal attached no conditions to its Order when it refused to renew the Appellant’s licence. Subsections 10(1) and (2) of the Act read as follows:
- (1) an applicant that meets the prescribed requirements is entitled to registration or renewal of registration by the registrar unless,
(2) A registration is subject to such conditions as are consented to by the applicant or registrant, as are applied by the registrar under section 13, as are ordered by the Tribunal or as are prescribed.
[17] Under S.13 of the Act, the Registrar has the power to approve the registration on such conditions as he or she considers appropriate, and at any time apply such conditions to a registration that he or she considers appropriate.
[18] The Appellant submits that a high degree of procedural fairness is owed when a person’s livelihood is at stake. The Appellant says that the Tribunal had a duty to give reasons why no conditions were imposed on the revocation of his licence. He says that the Tribunal had a duty to explain why revocation was warranted, and a lesser penalty was not suitable, pointing to the Appellant’s age and noting that he would have little opportunity to enter into a new profession. He relies on the decision of this Court in Megens v. Ontario Racing Commission (2003), 2003 30010 (ON SCDC), 225 D.L.R. (4th) 757 (Div. Ct.) paragraphs 30-32 in support of his position.
[19] The Tribunal, says the Appellant, must provide reasons explaining why the outcome is just and reasonable in the circumstances of the case. The Tribunal has the power to substitute its opinion for that of the Registrar and therefore it should have done this and attached what conditions it considered appropriate, he says.
[20] The Appellant proposed several conditions and limitations, which the Tribunal could have attached to his registration. Firstly, he had already resigned from the Appraisal Institute of Canada, given the charges against him. Secondly, he says he voluntarily participated in and completed an ethics course in the summer of 2009. Thirdly, he says he intends to wind-up his appraisal company, Kingsland Appraisal Corporation, which he had used to perform the fraudulent appraisals. In addition, the Appellants says he would comply with a condition that he not be a broker of record and that he act only as an agent under the supervision of Times Square Realty, a broker. He sees all of these conditions as terms the Tribunal should have considered, in addition to considering his 26 years of an unblemished record.
[21] The Appellant also wants the Court to consider his efforts at rehabilitation, his compensatory payment to RBC, and his co-operation with the police and others in the investigation of the fraud.
[22] The Appellant asks the Court to grant judgment directing the Registrar to issue the renewal of his licence or in the alternative to renew it on conditions as imposed on it by this Court, or in the further alternative, to order a new hearing take place.
The position of the Respondent
[23] The Respondent submits that the Tribunal did not base its decision on the Appellant’s right to silence or his right to counsel. The Tribunal’s findings and analysis, says the Respondent, centre on the Appellant’s failure to come forward prior to the Mareva injunction being issued. It accepted the Appellant’s position at the hearing that it should draw a positive inference about his conduct beginning immediately after his last appraisal in July 2006. The Tribunal did not condemn him for this, says the Respondent, but there was no evidence that he came forward prior to the Mareva injunction to assist, even in the face of the overwhelming evidence against him. Further, it says, there was no evidence that the Appellant’s involvement in the fraud scheme ceased in July 2006 on his own initiative.
[24] Since the licence of the Appellant was not renewed by the Registrar, the Respondent says that the Tribunal must have looked at his past conduct and found that there were reasonable grounds for the belief that he would not conduct business in accordance with law and honesty and integrity pursuant to subsection 10(1)(ii) of the Act. The Respondent says that the Tribunal had unfettered discretion to determine that the evidence before it did not establish reasonable grounds to believe that the Appellant would not carry on business in accordance with this subsection.
[25] The Respondent says that the Tribunal was entitled to weigh the magnitude of the evidence before it about the 21 frauds involving millions of dollars and the effect such frauds have on the public trust involving the real estate profession. It sees the Tribunal’s Decision as reasonable in the circumstances of this case.
[26] The Respondent says that the Tribunal had no obligation to consider conditions as an alternative to refusing to renew the Appellant’s registration. It points to the fact that the Appellant had raised the issue of conditions at the hearing. Specifically, the Appellant referred the Tribunal to McDonalds v. Ontario (Real Estate and Business Brokers Act, Registrar), 2009 43664 (ON SCDC), [2009] O.J. No. 3466 (Div. Ct.) at paras. 5-8, This was a case where conditions were imposed. The Tribunal had that reference before it but chose not to impose conditions. The Appellant had admitted his participation in the frauds, and the Respondent says that the Tribunal did not see this as just a “blip” on his record. The Respondent says that there was no denial of natural justice or procedural fairness in the hearing before the Tribunal.
[27] The fact that the Tribunal did not explain why it was imposing no conditions, is not a denial of natural justice or procedural fairness, says the Respondent. The Registrar had made the recommendation that the licence of the Appellant not be renewed and the Tribunal found, on the evidence before it that this was the appropriate decision.
Standard of Review
[28] The parties agree that the correctness standard of review applies to questions of general law outside the tribunal’s area of expertise, and that the standard of reasonableness applies to questions of mixed fact and law. The Appellant says that both issues, as noted above, raise questions of law and are subject to the standard of correctness.
[29] We do not see either issue raised by the Appellant as being only a question of law. In both issues the factual and legal issues are intertwined and cannot easily be separated, so the reasonableness standard applies: Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] S.C.J. 9.
[30] On the first issue, with respect to the determination of the appropriate penalty, the Tribunal correctly identified the test to be applied. This is a licensing issue within the core of the Tribunal’s function and entitled to deference. Further, to the extent issues of law are involved, this is still an issue of licensing and an interpretation of the Tribunal’s home statute, which falls within its core function. The standard would still be that of reasonableness.
[31] That said, the tribunal is required to provide adequate reasons for its decision as part of its duty of procedural fairness. A failure to comply with the rules of procedural fairness and natural justice can be sufficient grounds, in and of itself, for setting aside a decision, regardless of reasonableness or correctness. This issue is separately dealt with below.
[32] On the second ground of appeal raised by the appellant with respect to the right to counsel and right to silence issue, again there is no legal question of general importance. This is a question of mixed fact and law as to the weight given by the Tribunal to various factors and how it considered this particular issue. The standard of review is reasonableness.
Analysis
1. Revocation of License
[33] We can see no error of fact and law in the conclusions the Tribunal came to in accepting the Registrar’s proposal that the Appellant’s licence be revoked. The Registrar concluded that the Appellant was not entitled to a renewal of his registration. The Tribunal then correctly identified and applied the test delineated in S.10 of the Act. It found under subsection 10(1)(a)(ii) that the Appellant would not carry on business in accordance with the law and with integrity and honesty.
[34] In coming to the conclusion it did, the Tribunal had before it an abundance of evidence with respect to the frauds the Appellant had committed in authoring false appraisals, allowing them to be sent to RBC’s mortgage department, to be used in new financings on properties purchased by those persons applying for mortgages. These frauds were of such magnitude that the scheme, authored by the Appellant and two other persons, was detected by RBC investigators. This led not only to its own investigation but also to civil litigation and criminal charges being laid against the Appellant and the other mastermind fraudsters.
[35] The Tribunal spent several pages setting out the facts, upon which it relied. For example, on p.3 of the Decision, the Tribunal pointed to the fact that the Appellant not only produced the inflated fraudulent appraisals, but “with respect to several of the properties, the Applicant had acted in his capacity as a realtor in the earlier purchase and earned commission.” Given that finding, it was reasonable for the Tribunal not to place any condition that would allow the Appellant to be a realtor for some other broker.
[36] On p. 4, the Tribunal noted that the Appellant said he was pressured into the scheme when he tried to say no. He further made allusions about the masterminds’ acquaintance with “biker gangs.” The Tribunal then said:
This evidence stands in direct conflict with his evidence in examination in chief that prior to the third meeting, when he attended knowing he would participate in the frauds, the conversations with the masterminds were affable.
The Tribunal was therefore aware that the Appellant’s evidence at various times was contradictory and could not be considered as completely honest.
[37] Further, the Tribunal notes that the Appellant spent two and one-half years knowingly embarking on a scheme to defraud a financial institution. In other words, it was not one separate appraisal where he inflated the value. It was an on-going scheme that involved 21 incidents over a long period of time. There was no evidence presented that the Appellant suddenly decided he could not live with the guilt and went to the authorities. There was no evidence that the Appellant was in “need of money at the time”. The Tribunal said on p.7 that “…his involvement can only be attributed to greed.”
[38] In all of these circumstances, the Tribunal’s conclusion that the Appellant’s license should be revoked was reasonable and entitled to deference.
2. Natural Justice and Procedural Fairness
[39] The issue of natural justice and procedural fairness was not pleaded. It was, however, argued by counsel in his submissions. In Megens, supra, the Court said in para. 12:
Where a tribunal is said to have failed to give a party natural justice, the court does not engage in an assessment of the appropriate standard of review, but evaluates whether the rules of procedural fairness or the duty of fairness have been adhered to. The court assesses the specific circumstances and determines what safeguards were required to comply with the duty to act fairly: London (City) v. Ayerswood Development Corporation, [2002] O.H.J. No.4859 (C.A.) at paragraph 10.
[40] The Appellant relies on Megens, supra, where this Court found that the reasons of the Commission were deficient to the point of denying Megens natural justice and procedural fairness. The matter was remitted back to the Commission by the Court. This is not the case before us. The Decision of the Tribunal here is comprehensive. It had no legal obligation to attach conditions to the license, nor did it have an obligation to say why it was not doing so. We agree with the Respondent’s position in this regard.
[41] In the case before us the Tribunal did assess the specific circumstances of the case and did not fail to give the Appellant natural justice in reaching the decision it did. It is clear in the Decision why the Tribunal did not attach conditions where the conduct of the Appellant was so egregious that no member of the public would say that he had not been treated fairly. The failure to explicitly state the obvious is not a failure to give reasons amounting to a breach of natural justice.
3. Right to Counsel and Right to Silence
[42] The Tribunal noted that it was only when the investigators came that the Appellant knew the fraud was at an end. Further, it was only when the Mareva injunction had been granted, which presumably froze all his assets, that the Appellant decided it was a good idea to co-operate. In taking this into account, the Tribunal specifically stated at page 6, “The right to counsel is the Applicant’s fundamental right and the Tribunal does not condemn him for exercising his rights in light of his extensive criminal behaviour.” However, the Tribunal also recognized that the Appellant’s eventual admissions and cooperation were not as powerful a demonstration of his remorse as they would have been if they had occurred before he was confronted with the overwhelming case against him. As the Tribunal stated, “He missed an opportunity to demonstrate a true change of heart after June 2006 and prior to becoming a defendant in the civil litigation.”
[43] The Tribunal found at the top of p.7:
It cannot be concluded with any certainty that the Applicant’s lack of a record prior to his involvement with the scheme is due to inherent trustworthiness or lack of opportunity. What can be concluded is that once an opportunity presented itself, the Applicant jumped at it.
[44] It concluded its Decision by saying the Tribunal “needs more evidence of rehabilitation before it can repose the public trust in the Applicant again.” This was a reasonable conclusion by the Tribunal and in coming to that conclusion the Tribunal was entitled to take into account the timing of the Appellant’s admissions anad cooperation, as it did.
Conclusion
[45] In our view, the analysis by the Tribunal of the evidence before it and its careful reasons, do not disclose any error of law or fact and law. The Decision was reasonable in the circumstances of the case. The Appeal is therefore dismissed. The Tribunal’s Order of February 5, 2010, granting a stay of the proceedings against the Appellant pending the hearing of the Appeal, expired on March 31, 2010. The Respondent was successful in having the Appeal dismissed. It, however, is not asking for Costs and none are awarded.
Greer J.
Jennings J.
Molloy J.
Released: June 23, 2010
CITATION: Chang v. Registrar, Real Estate and Business Brokers Act, 2002, 2010 ONSC 3162
DIVISIONAL COURT FILE NO.: 11/10
DATE: 20100623
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
GREER, JENNINGS AND MOLLOY JJ.
BETWEEN:
ALAN W. CHANG, Appellant (Applicant)
– and –
REGISTRAR, REAL ESTATE AND BUSINESS BROKERS ACT, 2002, Respondent
ENDORSEMENT
The Court
Released: June 23, 2010