R. v. Virk
Court Information
Citation: 2016 ONCJ 451
Court: Ontario Court of Justice, Brampton, Ontario
Judge: Quon J.P.
Date of Judgment: July 21, 2016
Dates of Trial: November 18, 19, 25, 2015; March 31, 2016
Parties
Prosecutor: Her Majesty the Queen in Right of Ontario (Real Estate Council of Ontario)
Defendants: Gurdeep Virk and Mokshi Virk
Counsel
For the Prosecution: T. Snell
For the Defendants: J. Ennis
Charges
Count #1
Gurdeep Virk, while not registered under the Real Estate and Business Brokers Act, 2002, and Mokshi Virk as a party to the offence, did trade in real estate as defined in section 1 of the Act by being actively involved in open houses, contract negotiation, and providing client advice, contrary to section 4(1)(d) of the Real Estate and Business Brokers Act, 2002, and thereby contravened section 40(1)(c) of the said Act.
Count #2
Mokshi Virk, being a registrant as defined by section 1 of the Real Estate and Business Brokers Act, 2002, did commit the offence of furnishing false information relating to a trade in real estate by preparing a false Buyer's Representation Agreement for buyers Sashikalabahen Bardoliwala and Bharatkumar Bardoliwala and furnishing said document in a civil court action, contrary to section 35 of the Real Estate and Business Brokers Act, 2002, and thereby contravened section 40(1)(c) of the said Act.
Count #3
Mokshi Virk, being a registrant as defined by section 1 of the Real Estate and Business Brokers Act, 2002, did commit the offence of furnishing false information relating to a trade in real estate by preparing a false Buyer's Representation Agreement for buyers Dheeraj Kohli and Reena Kohli and furnishing said document in a civil court action, contrary to section 35 of the Real Estate and Business Brokers Act, 2002, and thereby contravened section 40(1)(c) of the said Act.
Facts
Background
For most people, purchasing a house represents the most significant financial transaction of their lives. To assist with such purchases, buyers typically engage licensed real estate professionals. When doing so, buyers reasonably expect their agents to act honestly, competently, and in their best interests. They do not expect agents to misrepresent material facts, pressure them into purchases they cannot afford, or involve unlicensed individuals in real estate transactions.
The Ontario Legislature enacted the Real Estate and Business Brokers Act, 2002 to protect the public in real estate transactions. The Act requires anyone wishing to become a real estate agent or broker in Ontario to fulfill education requirements, pass examinations, and obtain registration and licensing. The Real Estate Council of Ontario (RECO) is delegated authority to license and regulate real estate professionals and enforce the statute's provisions.
The Defendants
Mokshi Virk is a registered real estate salesperson under the Act, first registered on September 17, 2007. At the time of the offences, she was employed as a real estate salesperson with Royal Star Realty Inc. in Brampton.
Gurdeep Virk is Mokshi's husband. He is not registered under the Act as a real estate salesperson. However, he had completed most or nearly all of the real estate courses required to obtain a license and had applied to RECO for a salesperson's license, which he subsequently placed on hold pending the outcome of this trial.
The Three Complainant Families
The charges arise from real estate transactions involving three families between August 1, 2010, and July 31, 2012:
The Vandras' Transaction
Prafulchandra Vandra and Parul Vandra were introduced to Mokshi for the purpose of purchasing a house. They had previously purchased a condominium directly from the seller without using a real estate agent, making their engagement with Mokshi their first experience with a real estate agent.
On August 29, 2010, the Vandras entered into an Agreement of Purchase and Sale to purchase a house located at 25 Gore Valley Trail in Brampton for $552,000. During negotiations, the Vandras informed Mokshi they could afford a maximum of $550,000. Mokshi promised to give the Vandras $1,000 after closing to make up the difference between what they could afford and what the sellers wanted, along with an earlier promise of $500 for lawyer's fees.
Mr. Vandra testified that Gurdeep had introduced himself, stating that Mokshi was a license holder and that he was in the process of obtaining a license. Gurdeep told Vandra that both he and Mokshi worked in the profession and worked together. During property viewings, Gurdeep showed Mr. Vandra the house and explained its features while Mokshi spoke primarily with Mrs. Vandra. Gurdeep explained the commission structure (5% total, with 2.5% to each agent, but Royal Star keeping 0.5% and Mokshi receiving 2%).
During negotiations on August 29, 2010, after Mokshi had been unsuccessful in getting the deal done, Gurdeep told Mr. Vandra he would go inside and get the deal done. When Gurdeep and Mokshi returned, they informed the Vandras that the sellers would not go below $552,000. At that point, Mokshi promised to give the Vandras $1,000 from her commission to make up the difference.
After the Vandras took possession on October 29, 2010, Mr. Vandra repeatedly requested the promised $1,500. On January 12, 2011, Gurdeep met with Mr. Vandra and stated they would only give $500 because the Vandras had complained too much and would not buy another property through them. Mr. Vandra eventually accepted a $500 cheque signed by Mokshi on February 15, 2011.
On May 12, 2011, Mr. Vandra filed a complaint with RECO. RECO closed the file on October 24, 2011, finding no conclusive evidence of wrongdoing since Mokshi's promise had not been reduced to writing.
The Bardoliwalas' Transaction
Bharatkumar Bardoliwala and Shashikalabahen Bardoliwala were introduced to Mokshi by a neighbor. They were residing in a house owned by Mrs. Bardoliwala and a family friend. This was not their first real estate experience.
On May 2, 2012, the Bardoliwalas made an offer to purchase a house at 21 Eastview Gate, Unit #22, in Brampton. The offer was accepted on May 3, 2012, conditional on arranging financing within five days. The Bardoliwalas subsequently applied for a mortgage at TD Bank but were declined based on Mrs. Bardoliwala's income alone.
Mr. Bardoliwala testified that Mokshi and Gurdeep told him they could help him get a mortgage. Gurdeep stated he could create a fraudulent job letter for 1% of the mortgage value. Mr. Bardoliwala expressed concern about the Canada Revenue Agency, to which Gurdeep replied there was no connection between the bank and CRA, and that he had helped many people obtain mortgages this way.
On May 3, 2012, in the evening on the porch of the property, Mrs. Bardoliwala testified that Gurdeep gave her papers to sign. She complained she did not have her glasses and could not see where to sign, but Gurdeep forced her to sign, stating there was nothing to read and they were just normal papers. Gurdeep advised that everyone rents out basements for income and that they should not worry about the mortgage.
The Bardoliwalas obtained a mutual release on May 8, 2012, and subsequently purchased a different house through another real estate agent on August 5, 2012.
Mokshi discovered in September 2012 that the Bardoliwalas had purchased a house through another agent. She filed a Statement of Claim on December 7, 2012, in Small Claims Court claiming $6,941.03 in commission, submitting a Buyer's Representation Agreement dated May 2, 2012, as evidence.
The Bardoliwalas filed a complaint with RECO on January 24, 2013, alleging the initials on the Buyer's Representation Agreement were not theirs and that they had never seen the document before the Small Claims lawsuit.
The Kohlis' Transaction
Dheeraj Kohli and Reena Kohli were residing in a basement apartment and were first-time homebuyers when they met Mokshi.
Mr. Kohli testified that he first met Gurdeep at an open house at Mosely Crescent. Because Mokshi was busy with another client, Gurdeep walked Mr. Kohli around the house, showed him different rooms and the basement, and described the house's features. Gurdeep asked if Mr. Kohli had a real estate agent and offered to show him other houses. Mr. Kohli felt both Gurdeep and Mokshi were doing real estate work.
On April 19, 2012, Gurdeep and Mokshi attended the Kohlis' basement apartment and had them sign documents for an offer on 43 Windmill Blvd. for $375,000. Gurdeep presented the offer documents but did not explain what they were about, only stating the papers were ready and Kohli should sign them. Gurdeep took photographs of the Kohlis' driver's licenses and SIN cards.
The sellers countered at $395,000, which the Kohlis could not afford. They did not pursue the purchase.
On May 1, 2012, the Kohlis signed a Buyer's Representation Agreement with another real estate agent, Major Singh Nagra, and subsequently purchased a house at 35 Banting Crescent for $378,000 on May 13, 2012.
Mokshi discovered the Kohlis had used another agent and filed a Statement of Claim on October 10, 2012, claiming $10,678.50 in commission, submitting a Buyer's Representation Agreement dated April 20, 2012, as evidence.
The Kohlis filed a complaint with RECO on July 19, 2013, alleging the signatures and initials on the Buyer's Representation Agreement were not theirs and that they had never seen the document before the Small Claims lawsuit.
The Small Claims Court found in favor of the Kohlis, holding that the Buyer's Representation Agreement was not valid because Mokshi had not taken sufficient time to explain it before they signed. The court did not make a finding that the document was fraudulent.
Legal Framework
The Real Estate and Business Brokers Act, 2002
Prohibition Against Trading Without Registration
Section 4(1) of the Act provides:
No person shall trade in real estate unless registered under this Act.
Section 4(2) provides that unregistered persons shall not directly or indirectly hold themselves out as being a real estate agent or perform any functions of a real estate agent.
Definition of "Trade"
Section 1(1) defines "trade" to include:
any act, advertisement, conduct or negotiation, directly or indirectly, in furtherance of any disposition, acquisition, transaction, offer or attempt.
Offence and Penalties
Section 40(1)(c) provides that a person is guilty of an offence who contravenes or fails to comply with any section of the Act or regulations.
Section 40(3) provides that an individual convicted of an offence is liable to a fine of not more than $50,000 or imprisonment for a term of not more than two years less a day, or both.
Limitation Period
Section 40(4) provides:
No proceeding under this section shall be commenced more than two years after the facts upon which the proceeding is based first came to the knowledge of the director.
False Information
Section 35 provides:
No registrant shall furnish, assist in furnishing or induce or counsel another person to furnish or assist in furnishing any false or deceptive information or documents relating to a trade in real estate.
Party Liability
Section 77(1) of the Provincial Offences Act provides:
Every person is a party to an offence who (a) actually commits it; (b) does or omits to do anything for the purpose of aiding any person to commit it; or (c) abets any person in committing it.
Strict Liability Offences
The offence of trading in real estate without registration is a strict liability offence. Once the prosecution proves the actus reus beyond a reasonable doubt, the defendant may avoid conviction by proving on a balance of probabilities that they took all reasonable care in the circumstances to avoid committing the offence, or that they reasonably believed in a mistaken set of facts which, if true, would render the act innocent.
Issues
Should the circumstances and events surrounding Gurdeep and Mokshi's involvement with the Vandras be disregarded due to the two-year limitation period under section 40(4)?
Did the Director of RECO have or ought to have had knowledge of the facts regarding Gurdeep's involvement with the Vandras within the two-year limitation period?
Did Gurdeep Virk, while not registered, trade in real estate by being actively involved in open houses, contract negotiation, and providing client advice?
Was Gurdeep Virk only acting as an assistant to Mokshi Virk?
Did Gurdeep Virk's conduct go beyond that of a mere assistant and constitute trading in real estate?
Did Gurdeep Virk prove on a balance of probabilities that he took all reasonable care to avoid trading in real estate without being registered?
Did the prosecution prove beyond a reasonable doubt that Mokshi Virk abetted Gurdeep Virk in trading in real estate without being registered?
Did Mokshi Virk prove on a balance of probabilities that she took all reasonable care to prevent Gurdeep from trading in real estate without being registered?
Did Mokshi Virk furnish false information by preparing a false Buyer's Representation Agreement for the Bardoliwalas?
Did Mokshi Virk furnish false information by preparing a false Buyer's Representation Agreement for the Kohlis?
Has the prosecution proven beyond a reasonable doubt that the Buyer's Representation Agreements were false or fraudulent documents?
Were the witnesses credible?
Analysis
Count #1: Trading in Real Estate Without Registration
The Two-Year Limitation Period
The defendants argued that evidence regarding Gurdeep's involvement with the Vandras should be excluded because the events occurred more than two years before the information was sworn on April 17, 2014.
The court considered the principle established in Croatian Credit Union (Liquidator of) v. Vinski, which holds that the limitation period is triggered when the salient facts come to the knowledge of the regulator, not when the regulator appreciates their legal significance. The standard is objective: facts must be discovered or ought to have been discovered by the regulator through reasonable diligence.
The court found that:
- Mr. Vandra's written complaint filed on May 12, 2011, did not specifically mention Gurdeep Virk or complain about his involvement.
- RECO closed the Vandras' file on October 24, 2011, finding no evidence of wrongdoing.
- The Director of RECO could not have known or ought to have known about Gurdeep's improper involvement until RECO investigator Craig Sanson interviewed Mr. Vandra after receiving the complaint files on July 18, 2013.
- Therefore, the limitation period commenced after July 18, 2013, which is well within two years of April 17, 2014.
The evidence regarding the Vandras' transaction was therefore admissible.
Did Gurdeep Trade in Real Estate?
The court examined whether Gurdeep's conduct constituted "trading in real estate" within the meaning of section 1 of the Act.
Active Involvement in Open Houses
The court found credible evidence that Gurdeep was actively involved in open houses:
- Mr. Vandra testified that Gurdeep showed him the house at 25 Gore Valley Trail, explained its features and property, and described the bedrooms while Mokshi spoke primarily with Mrs. Vandra.
- Mr. Kohli testified that Gurdeep walked him around the Mosely Crescent open house, showed him different rooms and the basement, and described the house's features. Gurdeep asked if Kohli had a real estate agent and offered to show him other houses.
- Mr. Kohli testified that both Gurdeep and Mokshi would arrange showings, drive clients to properties, unlock houses using lockbox keys, and speak to property owners about showing the houses.
Active Involvement in Contract Negotiations
While the sellers' agent testified that Gurdeep did not participate in the actual negotiations for the Vandras' purchase, Mr. Vandra testified that Gurdeep pronounced he would go inside and get the deal done, and Gurdeep and Mokshi subsequently went into the house. This demonstrated that Gurdeep held himself out as capable of negotiating real estate transactions.
Additionally, Gurdeep negotiated with Mr. Vandra over the promised $1,500 payment and with Mr. Kohli over the commission dispute, demonstrating involvement beyond that of a mere driver.
Provision of Client Advice
The court found extensive evidence that Gurdeep provided advice related to real estate transactions:
- Gurdeep explained the commission structure to Mr. Vandra (5% total, with specific percentages to each party).
- Gurdeep advised Mr. Vandra that the property was very good and should not be let go because of price.
- Gurdeep advised Mr. Vandra that signing a waiver document with Mokshi's signature already on it was "normal practice" and "a formality."
- Gurdeep advised Mr. Kohli that a separate basement entrance could be made and that additional income could be obtained by renting out the basement.
- Gurdeep advised Mr. Kohli that he could get the mortgage done and that he dealt with National Bank and could arrange mortgages.
- Gurdeep advised the Bardoliwalas that the house was nice and good for them because they were Hindu and there was a Hindu temple across the street.
- Gurdeep advised the Bardoliwalas that they could rent out the basement for additional income.
- Gurdeep offered to create fraudulent employment letters to help the Bardoliwalas obtain a mortgage, charging 1% of the mortgage value.
The court found that providing advice on how to obtain a mortgage, whether legally or fraudulently, constitutes providing advice related to the acquisition of real estate property.
Conclusion on Actus Reus
The court concluded that the prosecution had proven beyond a reasonable doubt that Gurdeep's conduct and actions with the Vandras, Bardoliwalas, and Kohlis of actively being involved in open houses and providing client advice constituted conduct in furtherance of the acquisition of real estate property, thereby satisfying the definition of "trading in real estate" under section 1 of the Act.
Due Diligence Defence
Gurdeep testified that he had only assisted Mokshi by driving her to various locations and that he was not actively involved in open houses or providing advice. The court found this testimony not credible and contradicted by the testimony of five witnesses.
The court found no evidence that Gurdeep had clearly stated to the complainants that, since he was not a licensed real estate salesperson, he could not provide advice about properties, documents, commissions, or other real estate matters, and that all such questions should be directed to Mokshi.
The court concluded that Gurdeep had not met his burden of establishing the due diligence defence on a balance of probabilities.
Mokshi as Party to the Offence
The court found that:
- Mokshi knew that Gurdeep was not a licensed real estate agent.
- Mokshi was present during discussions between Gurdeep and the complainants about mortgages and at open houses when Gurdeep was guiding clients through properties and providing advice.
- The prosecution had proven beyond a reasonable doubt that Gurdeep had been trading in real estate without being registered and that Mokshi had committed the actus reus of being a party to that offence by abetting Gurdeep.
For her due diligence defence, Mokshi testified that Gurdeep only helped by driving her in the evenings after his work and that she had never encouraged him to work in real estate. However, the court found no evidence that Mokshi had clearly instructed Gurdeep that he could not provide advice to her clients or participate in real estate transactions, nor that she had instructed him that all client questions must be directed to her.
The court found that Mokshi was present when Gurdeep provided improper advice without ever stopping him. The court concluded that Mokshi had not met her burden of establishing the due diligence defence on a balance of probabilities.
Credibility Assessment
The court found that:
- Mr. Vandra gave credible and forthright testimony. His account was logical and convincing, and he had nothing to gain or lose by testifying. His testimony held up during cross-examination.
- The Kohlis and Bardoliwalas gave inconsistent and incredible testimony regarding the signing of the Buyer's Representation Agreements, appearing motivated by concern about liability for commissions. However, their testimony regarding other matters was consistent, plausible, and credible.
- Gurdeep's testimony that he was only a driver and had no involvement in real estate transactions was not credible and was contradicted by five witnesses.
- Mokshi's testimony was not credible and was contradicted by the complainants. Her claim that the $500 cheque was a "house-warming gift" was self-serving and inconsistent with Mr. Vandra's efforts to obtain the promised $1,500.
Conclusion on Count #1
The court found that the prosecution had proven beyond a reasonable doubt that:
- Gurdeep Virk committed the offence of trading in real estate within the meaning of section 1 without being registered, contrary to section 4(1)(d) of the Act.
- Mokshi Virk was a party to that offence by abetting Gurdeep.
Both defendants were convicted on Count #1.
Count #2: False Buyer's Representation Agreement for the Bardoliwalas
The prosecution alleged that Mokshi prepared and furnished a false Buyer's Representation Agreement dated May 2, 2012, to the Small Claims Court.
The Bardoliwalas testified that the signatures and initials on the agreement were not theirs and that they had not seen the document until the Small Claims lawsuit. However, the court found their testimony regarding the signing of the agreement to be inconsistent and incredible, motivated by concern about liability for the commission.
The Centre of Forensic Sciences conducted three handwriting analyses and was unable to identify or eliminate the Bardoliwalas as the writers of the signatures or initials on the agreement.
The court found that:
- The Bardoliwalas' testimony was evasive and inconsistent when dealing with the signing of the agreement.
- Mr. Bardoliwala portrayed himself as a simple immigrant despite being highly educated and studying dentistry.
- Mrs. Bardoliwala's testimony was exaggerated and self-serving.
- The forensic evidence did not exclude the Bardoliwalas as the signatories.
The court concluded that the prosecution had failed to prove beyond a reasonable doubt that the Buyer's Representation Agreement was a false document. Mokshi was acquitted on Count #2.
Count #3: False Buyer's Representation Agreement for the Kohlis
The prosecution alleged that Mokshi prepared and furnished a false Buyer's Representation Agreement dated April 20, 2012, to the Small Claims Court.
The Kohlis testified that the signatures and initials were not theirs and that they had not seen the document until the Small Claims lawsuit. However, the court found their testimony to be inconsistent and incredible, motivated by concern about liability for the commission.
The Centre of Forensic Sciences was unable to identify or eliminate the Kohlis as the writers of the signatures or initials.
The court noted that the Small Claims Court found the agreement was not a valid contract because Mokshi had not properly explained it, but the Small Claims Court did not make a finding that the document was fraudulent.
The court found that:
- The Kohlis' testimony was inconsistent and evasive regarding whether they signed the agreement.
- Their testimony was similar to the Bardoliwalas' testimony, suggesting possible contamination.
- The forensic evidence did not exclude the Kohlis as the signatories.
- Mokshi's testimony that she properly explained the agreement line by line was not credible given the consistent pattern of all complainants describing her as always being in a rush and hurry.
The court concluded that the prosecution had failed to prove beyond a reasonable doubt that the Buyer's Representation Agreement was a false document. Mokshi was acquitted on Count #3.
Disposition
Count #1: Gurdeep Virk and Mokshi Virk are CONVICTED of trading in real estate without being registered, contrary to section 4(1)(d) of the Real Estate and Business Brokers Act, 2002, and thereby contravening section 40(1)(c) of the Act.
Count #2: Mokshi Virk is ACQUITTED of furnishing false information relating to a trade in real estate regarding the Bardoliwalas' Buyer's Representation Agreement.
Count #3: Mokshi Virk is ACQUITTED of furnishing false information relating to a trade in real estate regarding the Kohlis' Buyer's Representation Agreement.
Released: July 21, 2016
Judge: Quon J.P., Ontario Court of Justice