SUPERIOR COURT OF JUSTICE - ONTARIO
RE: HAMIDREZA KHATIBI, Plaintiff
AND:
ASHIQUE KAMAL KHAN, SANJANA BARI, RE/MAX HALLMARK REALTY LTD., BELLA LEE, AMIR ESHTIAGHI and REAL ESTATE COUNCIL OF ONTARIO ("RECO"), Defendants
BEFORE: Cavanagh J.
COUNSEL: Dheeraj Bhatia, for the Plaintiff (Responding Party)
Aaron Postelnik, for the Defendants, Real Estate Council of Ontario ("RECO"), Re/Max Hallmark Realty Ltd., Bella Lee and Amir Eshtiaghi
Aaron Pearl, for the Defendants, Ashique Kamal Khan and Sanjana Bari
HEARD: October 31, 2017
ENDORSEMENT
1This action involves a failed real estate transaction in which the Plaintiff was to be the purchaser of the property in question and the defendants Ashique Kamal Khan and Sanjana Bari are the owners.
2The defendants Bella Lee and Amir Eshtiaghi were real estate agents working for the defendant Re/Max Hallmark Realty Ltd. (collectively, the "Realtor Defendants").
3The defendant Real Estate Council of Ontario ("RECO") administers the Real Estate and Business Brokers Act, 2002, S.O. 2002, c 30, Sch C pursuant to authority conferred by the Safety and Consumer Statutes Administration Act, 1996, S.O. 1996, c 19 (the "SCSAA").
4RECO moves for an Order dismissing the action as against RECO on the ground that it is frivolous, vexatious or otherwise an abuse of the process of the court.
5The Realtor Defendants move under rules 25.06 and 25.11 for an order striking out paragraphs 42-46, 51, 52, 54, 55, 56 and 65 of the Statement of Claim on the ground that these paragraphs are scandalous, frivolous or vexatious or an abuse of the process of the court because the statements in these paragraphs consist of argument. RECO also moves for this relief, in the alternative to its motion for an order dismissing the action as against it.
Should the action as against RECO be dismissed?
6RECO moves to dismiss the action as against it under rule 21.01(3)(d) of the Rules of Civil Procedure.
7In Salasel v. Cuthbertson, 2015 ONCA 155, Brown J.A. explained the authority of the court on a motion under rule 21.01(3)(d):
Rule 21.01(3)(d) of the Rules of Civil Procedure permits a defendant to move to stay or dismiss an action on the ground that "the action is frivolous or vexatious or is otherwise an abuse of the process of the court". Any action for which there is clearly no merit may qualify for classification as frivolous, vexatious or an abuse of process, with a common example being the situation where a plaintiff seeks to re-litigate a cause which has already been decided by a court of competent jurisdiction. A court only invokes its authority under rule 21.01(3)(d) or pursuant to its inherent jurisdiction to dismiss or stay an action in the clearest of cases: Currie v. Halton Regional Police Services Board (2003), 2003 CanLII 7815 (ON CA), 233 D.L.R. (4th) 657 (Ont. C.A.), at paras. 17 and 18.
8In the action, the Plaintiff pleads that the Realtor Defendants who, it is alleged, acted as agent for the Plaintiff and agent for the Sellers, failed to follow his instructions and, against his instructions, delivered an accepted offer of purchase and sale to the Sellers. The Plaintiff also asserts claims in relation to misrepresentations of the lot size of the property in question and the alleged failure of the Realtor Defendants to discharge their duties to him this respect.
9The Plaintiff seeks various relief, including an order declaring that the agreement of purchase and sale dated April 10, 2017 is null and void, return of the deposit, damages, and an order directing RECO to take action against the Realtor Defendants "for the reasons stated in the claim".
10The Plaintiff also claims that RECO is "equally responsible for the Plaintiff's costs and damages for failing to govern real estate practices in Toronto, which directly led to the Plaintiff suffering costs and damages".
11Although the Statement of Claim includes many paragraphs that refer to actions taken by "the Defendants" and duties owed by "the Defendants", the only specific allegations against RECO, in addition to the prayer for relief, are found in paragraphs 65-67 which read:
The Plaintiff has come to know that lawyers are not allowed by the Law Society to act for both parties to a real estate transaction. However, RECO allows realtors and real estate brokerages to act for both buyers and sellers in the same transaction. This is against ethics and principles of fair play and natural justice. How can a real estate brokerage protect the interest of both the buyer and a seller of the property in the same transaction, especially when the interest of both parties is not adjoined and are in fact exactly contrary to each other.
Thus, RECO is also directly responsible for the costs and damages suffered by the Plaintiff as a result of the Defendants being allowed to cheat the Plaintiff. The Plaintiff's deposit of $50,000 is stuck with the brokerage and the Plaintiff is not able to look at any other properties to buy. The price of properties is increasing every day and the Plaintiff requires the said funds to be enabled to purchase a property fairly.
RECO has failed to govern and discipline the real estate licensees. As such, the common public like the present Plaintiff has to suffer as a result of realtors who make double commissions, at the cost of common people.
12RECO submits that the law is settled that RECO owes no duty of care to individuals in the position of the Plaintiff.
13RECO relies upon the SCSAA under which RECO was designated as the sole administrative authority to administer and enforce the Real Estate and Business Brokers Act, 2002 on behalf of the Ontario government. Pursuant to the SCSAA and its regulations, RECO has an exclusive contract (known as the Administrative Agreement) to so administer and enforce the Real Estate and Business Brokers Act, 2002.
14The SCSAA provides in s. 11.1:
11.1 (1) No action or other proceeding for damages shall be instituted against a person mentioned in subsection (2), for any act done in good faith in the execution or intended execution of any duty or power under designated legislation or a Minister's order made under designated legislation, or for any alleged neglect or default in the execution of good faith of that duty or power.
(2) Subsection (1) applies to the following persons:
A Director or director to whom designated legislation gives duties or powers.
A deputy director,
i. to whom duties are assigned by a director referred to in paragraph 1, or
ii. who is acting as a director referred to in paragraph 1.
A Registrar or registrar.
A deputy registrar,
i. to whom duties are assigned by a registrar, or
ii. who is acting as a registrar.
An inspector.
An investigator.
An officer of a designated administrative authority.
A person whom a designated administrative authority employs or whose services the authority retains under subsection 9 (1).
An agent of a designated administrative authority.
A member of a discipline committee or of an appeals committee under designated legislation.
(3) Subsection (1) does not relieve a designated administrative authority or a member of the board of directors of a designated administrative authority of liability to which it, he or she would otherwise be subject in respect of the acts or omissions of a person mentioned in subsection (2).
15Ontario regulation 581/05 made under the Real Estate and Business Brokers Act, 2002, provides:
- (1) Subject to subsections (2) and (3), the power to make regulations under subsection 50(1) of the Act is delegated to the board of the administrative authority.
(2) The authority to make regulations under paragraph 20 of subsection 51(1) of the Act that require information required under the Act to be in a form approved by the Minister is not delegated to the board of the administrative authority.
(30 A regulation made by the board of the administrative authority pursuant to subsection (1) is subject to the approval of the Minister.
16Although the provisions of the SCSAA that protect persons from personal liability does not specifically name RECO, in my view, based upon the reasoning in Robson v. The Law Society of Upper Canada, 2017 ONCA 468, this protection also extends to RECO. In Robson, the plaintiff argued that the applicable statute protected only employees and officials of the Law Society from negligence claims, but not the Law Society itself. The Court of Appeal concluded that the statute must be construed to establish judicial immunity from negligence claims to the Law Society in respect of its disciplinary process and that its disciplinary powers must respond to its statutory mandate and the requirements of due process, not to a private law duty of care: Robson, at paras. 2-7. In my view, the same reasoning applies to protect RECO from liability under the SCSAA.
17The SCSAA, the governing statute, does not impose a private law duty of care on RECO to protect members of the public in circumstances involving multiple representation by a real estate agent. The SCSAA does not reveal any legislative intent to expressly or by implication impose a private law duty of care on RECO in the facts of this case. The Plaintiff has not pleaded facts that, if true, support the existence of a private law duty of care owed by RECO to members of the public in the position of the Plaintiff. The Plaintiff has not pleaded facts that plausibly lead to a conclusion that RECO breached any duty of care owed to the plaintiff.
18It is plain and obvious that RECO does not owe a private law duty of care at common law to persons in the position of the Plaintiff: Cooper v. Hobart, 2001 SCC 79, [2001] 3 S.C.R. 537, at paras. 30-55; Edwards v. Law Society of Upper Canada, 2001 SCC 80, [2001] 3 S.C.R. 562 at paras. 8, 11-19; Robson v. The Law Society of Upper Canada, 2017 ONCA 468, at paras. 2-7; Gendron v. Thompson Fuels, 2017 ONSC 4009 at paras. 268-272; and Umlauf v. Halton Healthcare Services et al., 2017 ONSC 4240, at paras. 16-23.
19I therefore conclude that the Plaintiff's claim against RECO clearly has no merit and that it is plain and obvious that, assuming the facts pleaded in the Statement of Claim to be true, the Plaintiff's claim against RECO is frivolous and an abuse of the process of the court.
Should the paragraphs of the Statement of Claim that are challenged by the moving parties be struck out?
20The Realtor Defendants and RECO (in the alternative to its motion for an order dismissing the action) move under rule 25.11 to strike out paragraphs 42-46, 51, 52, 54, 55, 56 and 65 of the Statement of Claim on the ground that these paragraphs contain impermissible pleadings of argument.
21The moving parties rely upon the following passage from the decision in Somerleigh v. Lakehead Regional Conservation Authority, 2005 CarswellOnt 3546, as quoted by Master Pope in Brunn v. Halton Children's Aid Society, 2016 ONSC 6195 at para. 29:
Pleading Argument
Argument is a discrete and identifiable process in litigation. While argument may be oral or written, it is the culmination of the litigation process. It is the persuasion that comes at the end of a motion or trial. When it is inserted in a pleading, it is out of place, like the cart before the horse. It is a distraction and does not constitute proper pleading.
22I have reviewed the paragraphs of the Statement of Claim that the moving parties challenge. These paragraphs are filled with statements of legal argument supported by citations to jurisprudence and statements of law. These paragraphs read like a factum or written submissions made at the conclusion of a trial.
23I agree with the moving parties that such pleadings of argument are not permissible. I allow paragraph 42 to remain, but order that paragraphs 43, 44, 45, 46, 51, 52, 54, 55, 56 and 65 of the Statement of Claim be struck out.
24The Plaintiff is granted leave to amend the Statement of Claim to plead a concise statement of any additional facts on which the Plaintiff relies for the claim, and to plead conclusions of law, without argument, if the material facts supporting them are pleaded.
Disposition
25The motion by RECO is granted, and the action as against RECO is dismissed.
26The motion by the Realtor Defendants is granted and paragraphs 43, 44, 45, 46, 51, 52, 54, 55, 56, and 65 of the Statement of Claim are struck out, with leave granted to the Plaintiff to amend the Statement of Claim. The amended Statement of Claim should also remove paragraphs that relate only to the claim against RECO.
27The moving parties seek costs of this motion in the amount of $13,590.05 comprised of fees of $11,280.00, disbursements of $843.65 and HST of $1,466.40. These costs include costs of the action for RECO.
28In my view, a fair and proportionate award of costs to the moving parties, that takes into account the costs of the action as against RECO, is $11,000, inclusive of fees, disbursements and HST. The Plaintiff is ordered to pay costs in this amount to the moving parties.
29The defendants Ashique Kamal Khan and Sanjana Bari seek costs in the amount of $1,500 because they were required to deliver of Statement of Defence while this motion was pending. They submit that this resulted in unnecessary costs because they will be required to amend their Statement of Defence as a result of the outcome of this motion. I do not agree that these Defendants are entitled to costs of this motion, and I decline to award costs to them.
Cavanagh J.
Date: December 8, 2017