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(BCREA) Number 508, November 2018

by David Tam

 

DUELLING REGULATORS

Recent amendments to the Real Estate Services Act (RESA) granting the Superintendent of Real Estate (Superintendent) greater oversight over the Real Estate Council of BC (Council) resulted in a recent jurisdictional clash between the two regulators.1

In February 2016, in response to concerns about real estate licensee conduct, the Superintendent established an Independent Advisory Group (IAG) to "examine whether the current regulatory regime adequately protected consumers and the wider public interest from real estate licensee conduct that is inconsistent with the duties and standards of conduct required of licensees."2 The IAG examined the existing regulatory scheme and made a number of recommendations, one of which was to increase the Superintendent's oversight of the Council. In implementing that recommendation, amendments to RESA were enacted. The amendments included rescinding the Council's rule-making authority and giving it to the Superintendent and making Council's administration of RESA—its regulations, rules and bylaws—expressly subject to the Superintendent's oversight and direction. A new Part 6.1 was added setting out the new role of the Superintendent in relation to the Council. Part 6.1 included a new section 89.1, which allows the Superintendent to direct the Council to issue a notice of discipline hearing.

Two consumers submitted a complaint to the Council alleging that licensee P, while acting as a dual agent, misrepresented a property they wished to buy. A compliance officer of the Council began an investigation, received submissions from the interested parties, including licensee P, and submitted his report to the Council. The Council's discipline committee reviewed the report and decided to close the file, notifying the complainants and licensee P of its decision. The consumers then complained to the Superintendent. The Superintendent reviewed the complaint and the process followed by the Council and determined that the public interest would be best served by considering the matter further. The Superintendent, pursuant to his powers under Section 89.1, directed the Council to issue a notice of discipline hearing against licensee P regarding the subject matter of the complaint. Council declined on the grounds that they had already considered the matter and had come to a decision, thus exhausting their statutory jurisdiction. The Council respectfully argued that Section 89.1 could not be interpreted as reviving that spent jurisdiction. Not surprisingly, the Superintendent disagreed and sought an order from the BC Supreme Court that the Council be compelled to issue a notice of discipline hearing.

The courtroom was crowded. In addition to the lawyers for the Superintendent and the Council, licensee P was represented as was the British Columbia Real Estate Association (BCREA), which was granted status as an intervenor. While the Superintendent and the Council focussed on the limits of the Superintendent's newly minted powers, licensee P and BCREA focussed on the lack of procedural fairness afforded to licensee P in the Superintendent making his decision to invoke Section 89.1. Their argument was that an order under Section 89.1 was tantamount to an appeal of the Council's decision and as such licensee P should have been afforded an opportunity to make submissions.

On the issue of jurisdiction, the court sided with the Superintendent. It concluded that "the plain wording of the statute indicates that the Superintendent may direct a notice of discipline hearing even if the Council has previously determined otherwise."3 This is significant as it might provide consumers who are dissatisfied with Council's disposition of their complaint a second kick at the can.

On the issue of procedural fairness to licensee P, the Superintendent was not as fortunate in this case. The Court determined that, at a minimum, licensee P should have at least been notified that the Superintendent was considering the matter and that the matter was not fully concluded. As a result, the Court declined to issue an order requiring the Council to issue a notice of discipline hearing. The Court stressed that issues of procedural fairness are determined by the individual facts and circumstances in each case and its decision regarding licensee P might not apply in all circumstances.

As evidenced by this case, the increase in the powers of the Superintendent have increased the chances of jurisdictional clashes between the Superintendent and the Council, both of which have an active role in the regulation of licensees. We can only hope that such clashes are kept to a minimum and that licensees have a clear understanding of the regulatory scheme they are operating under.

Brian Taylor
Norton Rose Fulbright LLP

  1. Superintendent of Real Estate v Real Estate Council of BC, 2018 B.C.S.C. 1500.
  2. IAG Report Appendix 2 p. 53.
  3. Superintendent of Real Estate v Real Estate Council of BC, 2018 B.C.S.C. 1500 at para. 29.
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