A complaint was brought against a real estate broker under the rules of professional ethics in Quebec. The broker had signed an Agreement of Purchase and Sale to buy the property himself. There was a counter proposal that had been accepted by both the vendors and the purchaser. The agent then threatened to back out of the deal unless the vendors reduced the selling price.
The committee found that by refusing to purchase under the agreed purchase agreement, the broker had sought to influence the price and cause significant prejudice to the vendors.
The vendors, having been caught off guard, were forced to agree to the price reduction.
The broker was found guilty of breaching the rule that “a member shall not participate in any act… in real estate which may cause prejudice to the public or the profession.”
The broker’s license was suspended for 90 days and a fine was imposed. Appeals right up to the Supreme Court of Canada were dismissed because there were no errors in the committees’ findings of facts, which were reasonable. The committee was open to find that the broker’s acts adversely affected the broker profession.
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As repeated a number of times in our articles, for a professional to be liable, he “must cause” the damage for which the client seeks indemnification.
In an Ontario case, the plaintiff decided to invest in second mortgages. The plaintiff renewed the investments several times and even increased the investment to the borrower after obtaining independent legal advice.
The borrower (mortgagors) went into receivership, their property was sold and the second mortgagee lost its investment. The second mortgagee then brought an action against the accountant, lawyer and their firms for damages for “breach of fiduciary duty”. The defendant lawyer who performed the legal work on the mortgage failed to disclose that he had a personal interest in the mortgagor corporations (the borrowers). However, the court determined that there was no genuine issue requiring a trial. The reasons were:
a) The second mortgagee’s losses were not “caused” by any alleged breach of fiduciary duty by the lawyer (non-disclosure);
b) The second mortgagee did not rely on the lawyer because it had independent legal advice when it extended and increased the mortgages;
c) The investment losses were caused by the fact the investments were made in second mortgages on properties for which values did not provide adequate security for the second mortgage investments.
In other words, the court said the second mortgagee lender would have suffered a loss in any event by reason of investments in second mortgage investments. (Kubas v. Misir, 2012 ONSC 4683)
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A B.C. action confirms that where a matter has been directly determined in an earlier court decision, the principle that “the matter speaks for itself and has been decided” cannot be re-litigated.
In 1963, the predecessor to the plaintiff sought a declaration that a strip of land formed part of her lands. The court found against the predecessor in that dedication to the strip of land was for “public purposes” and therefore belonged to the Crown.
The plaintiff then brought an action seeking a declaration that they had title to the strip of land. When that action was dismissed, the plaintiff appealed and the appeal was dismissed as well.
The reasoning was that the new case fell within the doctrine of “res judicata” and was given by a court of competent jurisdiction, and the decision was not tangential but the very question that was now argued again before the court.
In 1963 the predecessor applicant could have appealed but did not. Any argument that the decision was erroneous and therefore res judicata should be eliminated would offend the proposition that res judicata precisely means that issues decided previously cannot be re-litigated. (MacDougall v. Lake Country (District), 2012 BCCA 408)
Donald Lapowich, Q.C. is a partner at the law firm of Koskie, Minsky in Toronto, where he practices civil litigation, with a particular emphasis on real estate litigation and mediation, acting for builders, real estate agents and lawyers.
