Licence Tribunal

Appeal d'appel en Tribunal matière de permis

DATE: 2015-04-22

FILE: 9230/REBBA

CASE NAME: 9230 v. Registrar, Real Estate and Business Brokers Act, 2002

Appeal from a decision of the Registrar under the Real Estate and Business Brokers Act, 2002, S.O. 2002, c. 30, Sch. C to Refuse a Registration

Maryam Asadi Appellant

-and-

Registrar, Real Estate and Business Brokers Act, 2002 Respondent

REASONS FOR DECISION AND ORDER

ADJUDICATOR: D. Gregory Flude, Vice-Chair

APPEARANCES:

For the Appellant: Andrew Rogerson and Sean Larjani, Counsel

For the Respondent: Maya Sabharwal, Counsel

Heard in Toronto: April 7, 2015

REASONS FOR DECISION AND ORDER

OVERVIEW

1The Appellant appeals the decision of the Registrar under the Real Estate and Business Brokers Act, 2002, S. O. 2002 c. 30 Sched C (the “Act”) to deny her registration as a real estate sales person on the grounds that her past conduct provides reasonable grounds for belief that she will not carry on business in accordance with law and with integrity and honesty, and that she is financially irresponsible.

2The Appellant’s regulatory problems arose out of her mortgage business in British Columbia where she was registered as a sub-mortgage broker. She was also registered as a real estate agent. Following an investigation on a number of mortgage transactions processed by the Appellant, the BC Registrar of Mortgage Brokers commenced proceedings to revoke the Appellant’s registration. The result of the proceeding was that the Appellant entered into a Consent Order that her mortgage registration be suspended for life.

3Following the mortgage investigation the Real Estate Council of British Columbia (RECBC) began its own investigation and commenced its own proceedings against the Appellant and, by order released on January 27, 2009, suspended her for a period of three years. Thereafter the Appellant moved to Ontario and in August 2012 she applied for registration as a real estate salesperson. The Registrar refused to register her on the grounds set out above.

4After reviewing all of the evidence, the Tribunal has decided to set aside the decision of the Registrar and order the Registrar to register the Appellant as a real estate salesperson.

PROCEDURAL HISTORY

5This is the second time that this matter has come before the Tribunal. In a decision released on October 16, 2013 the Tribunal set aside the Registrar’s decision to deny registration to the Appellant. The Registrar appealed that decision to the Divisional Court (see Asadi v. Registrar, Real Estate and Business Brokers Act, 2014 ONSC 6517). Pursuant to the applicable legislation, an appeal to the Divisional Court of a decision of this Tribunal does not automatically act as a stay of the order. Thus, the Appellant has been licensed and selling real estate in Ontario for approximately the last 18 months.

6On November 10, 2014, the Divisional Court held that the Tribunal had applied the wrong standard of proof (balance of probabilities) instead of the one set out in the statute (reasonable grounds for belief) for these kind of registration matters. The Court applied a March 18, 2013 decision of the Ontario Court of Appeal in Ontario (Alcohol and Gaming Commission of Ontario) v. 751809 Ontario Inc. (Famous Flesh Gordon's), 2013 ONCA 157.

7It is not clear whether the Famous Flesh Gordon’s decision was brought to the attention of the Tribunal at the earlier hearing. The Vice-Chair who presided at that hearing found that “on a balance of probabilities” there were no reasonable grounds to deny the Appellant registration. On appeal, the Divisional Court applied the Famous Flesh Gordon’s case, overturned the Tribunal’s decision and remitted the matter back to the Tribunal for hearing before a differently constituted panel. In doing so, it made the following comment:

[10] Since we are not satisfied that if the Tribunal had used the proper standard of proof and applied the proper test, refusing to register the respondent as a salesperson would have been the only result the Tribunal could have reached, we would send this matter back to the Tribunal for a reconsideration in accordance with these reasons. In reaching this conclusion, we accept that while past conduct can provide the necessary basis for reasonable grounds for belief, it does not have to. That conduct must be weighed against any evidence of the respondent’s more recent circumstances, including any evidence that would point to the fact that the conduct of concern will not be repeated.

EVIDENCE

8Due to diligence and hard work by counsel for both sides, the Tribunal had before it an Agreed Statement of Facts and a Joint Book of Documents. It then heard oral testimony evidence from the Deputy Registrar, Brian Schlotzhauer; the Appellant’s employer, Paul Zammit; and the Appellant. The Agreed Statement of Facts states:

AGREED STATEMENT OF FACTS

REGISTRATION HISTORY IN BRITISH COLUMBIA

1. Ms. Maryam Asadi (“Asadi”) was previously registered in British Columbia as a Mortgage sub-broker with Mortgage Alliance of Canada (“Mortgage Alliance”) between August 21, 2006 and August 10, 2008.

2. The office of the Registrar, Mortgage Brokers Act, British Columbia, received a Complaint from its designated Broker in respect of Asadi. The substance of the complaint was that Asadi has collected fees from a consumer without proper disclosure to her Broker.

3. The complaint resulted in an investigation by the Registrar, Mortgage Brokers Act. The result of the investigation was that 15 of 21 selected mortgage application files were examined and were deemed suspicious for reasons set out in the Suspension Order. As a result of the investigation, the Registrar, Mortgage Brokers Act sought to terminate Asadi’s registration. The result of this was that Asadi agreed to a lifetime suspension of her mortgage licence in British Columbia.

4. Asadi was also registered as a Real Estate Salesperson in British Columbia, which Registration she held from April 8, 2004 to August 1, 2008.

5. Following the lifetime suspension of her registration as a mortgage sub-broker by the Registrar, Mortgage Brokers Act, the matter was referred for a qualification hearing with the Real Estate Council of British Columbia (RECBC).

6. During the course of the RECBC hearing, Asadi testified, as did several witnesses, including investigators from the Financial Institutions Commission. The Qualification Hearing Committee (the “Committee”) found the following:

(a) The Committee determined that it was compelled to consider the evidence and that it would not speculate. In particular, the Committee was unwilling to conclude that inconclusive information deemed suspicious by the investigators should necessarily implicate Asadi. The Committee was also unwilling to speculate who provided the information found on the questioned mortgage applications - Mr. Sultani or the applicant in question or a combination of the two. The Committee did conclude, however that Asadi had a responsibility to exercise a reasonable degree of due diligence over the information found in the mortgage applications and where necessary, to verify that information. The Committee found that the inconsistencies discussed during the hearing would have put a prudent person on notice to conduct further investigation and inquiries, which Asadi did not do.

(b) Some of the mortgages were matters involving a concurrent real estate transactions. [sic]

(c) The Committee did not believe Asadi when she claimed not to have any knowledge of the mortgage applicants’ financial circumstances, as that information is required by a licensee to determine the type of property prospective buyers can acquire.

(d) There were numerous examples of mortgage applications where fundamental information regarding the applicants’ creditworthiness appeared to be overstated such that the applicant would appear to qualify for mortgage financing as a result of the overstatement, but would not qualify if the real state of affairs were known.

7. The Committee ordered Asadi’s real estate registration be suspended for a period of three (3) years. After the completion of that period, Asadi may re-apply for registration in British Columbia however, their rules would require her to participate in another qualification hearing.

PROCEEDINGS IN ONTARIO

8. On August 29, 2012, Asadi applied to be a salesperson under the Real Estate and Business Brokers Act, S.O. 2002 (hereinafter the, “Act”).

9. The Registrar refused Asadi’s application for registration, relying upon the conduct the subject of the BC proceedings [sic] as follows:

(a) under Section l0(l)(a)(i) of the Act, arguing that Asadi cannot be reasonably expected to be financially responsible in the conduct of business.

(b) under Section 10(1)(a)(ii) of the Act, where the registrar advised that Asadi would not be able to carry on business with honesty, integrity, or in accordance with the law.

10. Asadi appealed to the Licence Appeal Tribunal (‘Tribunal”) against the Registrar’s Proposal to Refuse arguing that she had been rehabilitated, had paid for her mistakes, and that her past conduct would not be repeated.

11. The Tribunal set aside the Registrar’s decision ordering the Registrar to register Asadi as a salesperson under the Act with no conditions imposed upon Asadi’s registration.

12. Real Estate Council of Ontario (“RECO”) appealed the Tribunal’s decision to the Divisional Court, arguing that the Tribunal erred in law in making its decision by applying the improper standard of proof when it made the decision it did.

13. The Divisional Court agreed that the incorrect standard of proof had been applied by the Tribunal, but recognized that even if the Tribunal had used the proper standard of proof and applied the proper test, refusing the respondent as a salesperson would not have been the only result the Tribunal could have reached.

14. The Divisional Court set aside the Tribunal’s decision and sent the matter back to the Tribunal for a new hearing, in accordance with the reasons provided in its written decision.

15. Due to the ongoing litigation in this matter, the Registrar allowed Asadi to be registered as a Salesperson until the conclusion of the herein matter.

REGISTRATION HISTORY IN ONTARIO

16. On or about October 18, 2013 Asadi’s application for registration as a Real Estate Salesperson in Ontario was approved, in keeping with the order of the Tribunal. Asadi was subsequently employed by Paul Zammit Realty Ltd. Brokerage.

17. Asadi has been active in the real estate industry as a Salesperson for approximately 18 months with Paul Zammit Realty Ltd.

18. Asadi has been supervised by her Broker, Mr. Paul Zammit, and Asadi has had a total of ten (10) completed transactions with her brokerage.

9In support of her recent behaviour in the real estate industry, the Appellant called the evidence of her supervising broker, Paul Zammit. Mr. Zammit testified at the previous hearing about his willingness to employ the Appellant. He now testified about the fact that he has been impressed with the Appellant’s performance as a salesperson for his company. He had a track record upon which to measure the performance of the Appellant. He told the Tribunal about unsolicited emails from and discussions with clients praising the Appellant’s behaviour. Mr. Zammit is well aware of the Appellant’s prior history in British Columbia but is of the view that she will be a fine agent in Ontario. He is prepared to accept and enforce any terms that may be applied to the Appellant’s registration.

10The Appellant’s testimony was directed to her regulatory difficulties in British Columbia as a mortgage broker. She emphasized that she had never had a complaint against her with respect to her real estate dealings. As a sub-mortgage broker she stated that there was no training course in BC. She simply applied for the registration. She had recently married and applied to be a mortgage broker at the behest of her new husband. He then handled the mortgage business as her assistant, working out of a home office. She expressed surprise at how many mortgage approvals were coming in. It seemed that no application was refused. When she questioned her new husband about transactions, a family argument would ensue, so she developed a practice of simply signing whatever documents were placed in front of her. She acknowledges that, as the registrant, it was her responsibility to review all of the documents and oversee her husband but the newness of her marriage and the cultural norms of her community were such that she deferred to him. She told the Tribunal that she has learned her lesson and will not abrogate her responsibilities in the future.

11The Appellant stated that she had paid a high price for her failure to supervise. Since the BC proceedings, she has lost her registrations and hence her business in BC. Her own mortgage went into default and she lost her house. She had medical issues with dire personal consequences and her marriage failed. Because of a loss of standing in her community in BC, the Appellant decided to move to Ontario and start again. She has had satisfied clients in Ontario and has never had a complaint relating to her real estate practices.

12Mr. Schlotzhauer focussed on that part of the BC disciplinary findings that do not support the Appellant’s assertions that she was unaware of her assistant’s/husband’s dealings. She admitted as part of the real estate licensing proceedings that she charged fees in certain cases. It is the Registrar’s position that these fees were illegal. They were also not reported to her employer. Mr. Schlotzhauer is of the view that the failure of the Appellant to take responsibility for her own actions, her attempt to deflect the behaviour onto her husband in her explanations, initially to the Registrar and ultimately to this Tribunal, indicate that she has not learned the lessons required to be a trustworthy registrant.

13It is not disputed, although not specifically set out in the Agreed Statement of Facts, that the Appellant declared personal bankruptcy in the 1998. She was absolutely discharged on October 27, 1998. The Registrar raises the bankruptcy to indicate that the Appellant will not be financially responsible in the conduct of her business. The Appellant argues that it is irrelevant and neither party gave it any emphasis in their evidence.

ANALYSIS

14The Act sets out the grounds upon which a registrant may be denied registration. The applicable grounds are:

10. (1) An applicant that meets the prescribed requirements is entitled to registration or renewal of registration by the registrar unless,

(a) the applicant is not a corporation and,

(i) having regard to the applicant’s financial position or the financial position of an interested person in respect of the applicant, the applicant cannot reasonably be expected to be financially responsible in the conduct of business,

(ii) the past conduct of the applicant or of an interested person in respect of the applicant affords reasonable grounds for belief that the applicant will not carry on business in accordance with law and with integrity and honesty,

15S. 10(1) of the Act establishes that there is a presumptive right to registration once the prescribed requirements have been met. In the current case the Appellant has been working as a real estate salesperson for some time so there is no issue concerning the prescribed requirements. S. 10(1)(a)(ii) provides that the presumption may be rebutted if the Registrar can demonstrate that the past conduct of the Appellant affords reasonable grounds for belief that the Appellant will not carry on business in accordance with law and with integrity and honesty. The Tribunal must examine the whole of the Appellant’s past conduct in applying the statutory test.

16It is clear from a reading of the RECBC Tribunal decision that it had concerns about the extent of the Appellant’s knowledge of false disclosure in mortgage applications. In the end, it held that the Appellant had failed in her obligations as a sub-mortgage broker and by doing so had disqualified herself from registration for a period of three years. Its concluding words are both instructive and persuasive for this Tribunal:

The Qualification Hearing Committee decided that Maryam Asadi was not qualified to be licensed as a representative…Further, the Committee decided the Real Estate Council would not consider an application from Ms Asadi for licensing for three years since her interim suspension, or prior to August 12, 2011, at which time it would be open to the future Qualification Hearing Committee to consider what steps, if any, she had taken to rehabilitate herself and to develop the skills, character and qualities required of a licensee.

17The focus then, of any RECBC proceeding would be on rehabilitation efforts. This thought is reflected in the words of the Divisional Court that, notwithstanding the unacceptable past conduct, the Tribunal should also consider recent events to determine that the impugned behaviour will not be repeated. The Divisional Court’s comments are, of course, obiter dictum, but the Tribunal finds them germane to the many regulatory hearings that come before it. The Act, and the other statutes with similar wording, ask the Tribunal to assess the whole of an appellant’s past conduct, up to the date of the hearing, to determine if it is necessary to protect the Ontario public by denying an appellant registration. While the majority of time spent at a hearing will necessarily address the impugned or improper behaviour, it is in assessing the whole of an appellant’s prior behaviour that the Tribunal finds the answer.

18The Appellant has paid a very high price for her actions in BC. In the words of her counsel, Mr. Rogerson, she has had a very expensive lesson in ethics. In addition to a three year suspension, a $15,000 monetary penalty and costs, she has lost her home and her family. She has rebuilt a life for herself in the real estate industry in Ontario. The price paid for her actions does not automatically guarantee the change of heart necessary to ensure future compliant business dealings. The Tribunal must look for indicia of the change of heart in all of the evidence.

19Recognizing the Registrar’s concerns about the deflection of blame to her husband, the Tribunal noted that the Appellant took responsibility for her actions and made a credible commitment not to run afoul of the regulatory scheme going forward. While it was her position that her family circumstances and culture militated against her assuming the necessary level of regulatory oversight of her husband’s activities, she accepted that as the registrant it was her responsibility to ensure regulatory compliance. It is indicative of her acceptance of responsibility that she consented to an order barring her from the mortgage business in British Columbia for life. Her evidence before this Tribunal is that she has recognized the circumstances that allowed for her default and will not permit such circumstances to manifest themselves in the future.

20The Tribunal finds strong evidence of her reformed attitude in two facts. In BC, it was the Appellant who advised RECBC that she had had her mortgage registration revoked when she submitted her 2008 renewal application. Equally, in Ontario, the Appellant was forthright in her application for registration. She disclosed both the mortgage revocation and her three year RECBC suspension. These actions underscore that the Appellant has accepted her responsibilities, even when they may have a serious negative effect on her business. Looking at the evidence as a whole, the Tribunal does finds that there are not reasonable grounds for belief that the Appellant will not carry on business in accordance with law and with integrity and honesty.

21The second issue raised by the Registrar addressed financial fitness. Other than the fact that the Appellant had become bankrupt and received a full discharge in 1998, no other evidence was put before the Tribunal concerning the Appellant’s financial position. The bankruptcy indicates that she had a poor financial position 17 years ago but the Act uses wording that directs the Tribunal to consider the Appellant’s current financial position, not historic financial conduct, especially not such ancient historic conduct. Section 10(1)(a)(i) refers to “the applicant’s financial position,” in contrast to section 10(1)(a)(ii) which refers to the applicant’s past conduct. In the absence of evidence about the Appellant’s current financial position, the Tribunal cannot conclude that she will be financially irresponsible in carrying out her duties as a real estate salesperson. In any event, even if past events could be considered in assessing the financial responsibility of the Appellant, her bankruptcy 17 years ago does not provide enough evidence for the Registrar to prove that the Appellant “cannot reasonably be expected to be financially responsible in the conduct of business.”

ORDER

22Pursuant to the authority vested in it under the Act, the Tribunal orders the Registrar not to carry out his proposal to refuse the registration of Maryam Asadi.