REAL ESTATE COUNCIL OF ONTARIO DISCIPLINE DECISION

Transcription

1 REAL ESTATE COUNCIL OF ONTARIO DISCIPLINE DECISION IN THE MATTER OF A DISCIPLINE HEARING HELD PURSUANT TO BY-LAW NO. 10 OF THE REAL ESTATE COUNCIL OF ONTARIO JOHN VAN DYK Respondent This document also contains the Appeals Decision: April 12, 2005 DATE OF DECISION: August 17, 2004 FINDINGS: In violation of Rules 2, 3, 4, 7 & 11 of the RECO Code of Ethics PENALTY: Administrative Penalty of $5000 payable to RECO within 60 days of sending this decision. To take Buyer Agency Course and RECO Code of Ethics Course and provide RECO with proof of completed course within 6 months of sending this decision. This hearing was held on August 17, The hearing involved allegations that John Van Dyk ( John Van Dyk ), a salesperson with Seller Broker and later with Broker A had acted unprofessionally and in breach of RECO s Code of Ethics (the Code ). The allegations against John Van Dyk arose in respect of the sale and purchase of a farm of approximately 300 acres, municipally known as 1 A Street (the Farm ). The Farm was initially owned by the complainant in this matter, Seller and was purchased by Buyer. The alleged infractions under RECO s Code of Ethics relate primarily to differences between the purported and/or advertised size of the workable acreage of the Farm and the actual workable acreage as subsequently measured, and to other alleged breaches arising from the conduct of John Van Dyk surrounding the sale of the Farm from Seller to Buyer. Parties And Witnesses At The Hearing At the hearing, John Van Dyk represented himself. The complainant Seller and Buyer appeared as witnesses. In addition, counsel for RECO called the Compliance Officer

2 involved in this matter and a RECO researcher, Researcher. RECO s Allegations Against John Van Dyk According to RECO, John Van Dyk acted unprofessionally by: 1. failing to explain agency to the parties and get an acknowledgment in writing; 2. failing to adequately disclose in writing his role and the services in the transaction to the parties; 3. failing to have a representation agreement with the Buyer; 4. failing to get confirmation of representation of dual agency in writing from the parties prior to the Agreement of Purchase and Sale being submitted; 5. failing to verify the correct acreage of the Farm; 6. inserting incorrect acreage for the Farm in various publications such as the Ontario Farmer and MLS listing information; 7. failing to disclose the cost of measuring the Farm; 8. failing to encourage the parties to seek independent legal advice with respect to drafting clauses in the offer; and 9. failing to urge the seller and buyer to seek independent legal counsel prior to the offer becoming binding. Given its allegations against John Van Dyk, RECO claimed that John Van Dyk had breached Rules 1(2), 2, 3, 4, 5, 7, 10, 11, and 21 of RECO s Code of Ethics. Preliminary Issues And Exhibits No issues were raised at the outset of the hearing. However, in the course of presenting evidence, counsel for RECO made a motion to amend paragraph 3 of the Allegation Statement to correct what it characterized as a typographical error. By order of the Panel, the amendment was permitted changing the estimated size of the total area of the Farm from 330 acres to 300 acres. The notice of hearing tendered by RECO was marked as Exhibit 1. The document book filed by RECO was entered into evidence as Exhibit 2. During the cross-examination of Seller by John Van Dyk, an Offer to Purchase signed by Seller and Buyer evidencing various offers that were exchanged prior to the final offer being accepted was also allowed into evidence by the Panel pursuant to Rule 5.2 of the Rules of Practice; it was marked as Exhibit 3.

3 Compliance Officer s Testimony Compliance Officer testified that she was familiar with the letter of complaint written by Seller on August 12, 2002 and received by RECO on August 16, She testified she had concerns because the letter stated that 200 acres of workable land was advertised incorrectly twice, that this had been brought to the attention of John Van Dyk by Seller, that no change had apparently been made, that the same inaccuracy appeared in the offer to purchase, and that solicitors had to get involved to rectify the situation. In Compliance Officer s view, issues had been raised by the letter relating to Rule 21 of the Code, Rule 11, and dual agency i.e. working for both buyer and seller in the absence of John Van Dyk making proper disclosures to the parties. In light of these possible contraventions of the Code, Compliance Officer referred the matter to a researcher. On cross examination, Compliance Officer acknowledged that she herself had never sold real estate. Compliance Officer was asked a number of times if she had double checked the information provided by Seller. Compliance Officer responded by advising that, as a Compliance Officer, her role is not to investigate a complaint but rather to identify issues raised by a complaint and ensure that relevant documentation is received from and sent to the parties involved in the complaint. Thereafter, interviews are then conducted by RECO s researcher if additional follow up is deemed appropriate, which it was in this case. Compliance Officer also stated that RECO s Allegation Statement was drafted by RECO s legal counsel. It was at this time that counsel for RECO brought its motion to amend the Allegation Statement to change the stated size of the Farm from 330 acres to 300 acres, which the Panel permitted. At the same time, the Panel indicated that the discrepancies in the figures of the workable acreage relating to the two ads (Exhibit 2, Tab 2 pages 5 and 6) may also have been a similar typographical error. Counsel for RECO was also asked by the Panel whether RECO intended to proceed with Allegation 6 as set out in RECO s Allegation Statement. RECO confirmed that it intended to do so. Seller s Testimony The complainant Seller testified he has been a farmer all his life. On May 3, 2001, he listed the Farm with John Van Dyk. He testified that issues of agency and dual agency were never explained to him and he never saw any documents regarding his representation by John Van Dyk or the services to be provided by John Van Dyk. Seller stated that the Farm had been assembled from three separate parcels, with the first 100 acres being purchased in 1947, a further 100 acres being added in 1955, and the final 100 acres being purchased in These purchases created a total acreage of 300. Seller also expressly stated that the Farm had 220 workable acres. However, the Panel finds this evidence to be inaccurate because the Farm has recently been measured using the Global Position System ( GPS ) methodology, and those results show the Farm has

4 approximately 205 acres of workable land. In the view of the Panel, Seller s initial statement that there are 220 workable acres (which he later changed to 200 acres) was indicative of a level of inconsistency and confusion that also appeared to be evident in certain other areas of Seller s testimony. Seller indicated that in addition to workable land, the Farm has approximately 50 acres of woodlot and 45 acres of rough pasture. Seller has been harvesting the Farm since In recent years he has used a seed drill equipped with a measuring device that he has found to be very accurate, and this was what he had used to estimate the workable acreage. Exhibit 2 Tab 4B at page 6 is an MLS Listing Agreement. Seller did not initially recall completing this form. However, he was able to identify the signature on the document as his own. He then testified that he had some recollection of completing the form with John Van Dyk. The form states that the Farm s workable acreage is 220. However, Seller denied that he provided that figure to John Van Dyk. Instead, Seller said that John Van Dyk was told 200 acres were workable. Seller said he was not aware that John Van Dyk had put 220 on the form when Seller had signed off at the bottom of the page. Seller testified that he was also disgusted with the ads that John Van Dyk had placed for the Farm because, in Seller s view, the Farm had many other features that ought to have been included. He also stated that, after he became aware of the discrepancy in the ads showing either 220 or 225 acres (when the Farm only had 200 acres of workable land), each time Seller met John Van Dyk he would bring this issue up, but John Van Dyk never corrected this error. Seller also indicated that he was never advised by John Van Dyk to seek independent legal advice. A week or two before the final offer of $950,000 was accepted by Seller, Seller refused an offer of $840,000 for the Farm from Buyer. Seller testified that John Van Dyk was very mad when this offer was refused. Regarding the final offer, Seller said he believed that the workable area was 200 acres. Seller asserted that John Van Dyk had eyeballed the Farm and added an additional 20 acres to the listing deliberately, knowing from day one that this would be reduced later on. Seller stated that the Farm was ultimately measured using the GPS method and the workable area was reduced to approximately 205 acres. As a senior citizen (almost 80 years of age at the time), Seller believed that John Van Dyk was attempting to take advantage of him. Seller indicated that he was pleased that Buyer, an honest man, purchased the Farm. Seller believed that Buyer had no knowledge of the scam that John Van Dyk was trying to perpetrate. In Seller s mind, it was John Van Dyk s plan to have Buyer make a higher offer, and then suggest measuring the Farm and having the price reduced accordingly. On cross-examination, Seller indicated that he sometimes but not always takes documents to lawyers. He does not do his own income tax. He calculated his initial asking price of $1,000,000 by allowing for 200 acres of workable land at $4,000 per acre, 50 acres of

5 bush and 50 of rough pasture for $100,000, and buildings at $100,000 which, according to Seller, were undervalued. He established his price of $4,000 per acre based on information from others in the area. Seller remained critical of John Van Dyk s advertising plan. However, the Panel noted that this issue had not been raised in the Allegation Statement or by counsel for RECO and, therefore, it formed no part of the hearing. The Panel also heard that prior to the sale in 2002, the Farm had been rented out to share croppers. The purchase offer was not read by a lawyer until after it had been signed by both parties. However, Seller acknowledged that his lawyer had never suggested, and Seller had not requested, that the deal be cancelled after the discrepancy in workable acreage had been discovered. Seller acknowledged that almost all of the information in the Listing Agreement had been provided by Seller to John Van Dyk. This included such information as house room sizes, well depth, soil types, crop yields and acreages for the non-workable portions of the Farm. However, Seller again denied that he had provided the figure of 220 acres found on the form. Seller also denied that certain offers and counter-offers had been exchanged between Seller and the final buyer Buyer. However, it was at this time that John Van Dyk produced an Offer to Purchase that was allowed into evidence as Exhibit 3 pursuant to Rule 5.2 of the Rules of Practice. The Panel accepts that Exhibit 3 clearly contradicts some of Seller s evidence on these points, and accepts the written record of these events as set out in Exhibit 3. The Panel, however, accepts Seller s evidence that Seller was under considerable personal stress during the same period because his wife was seriously ill. During cross-examination, there was also a discussion of the commission structure, and the nature and scope of the listing arrangements; this discussion revealed further discrepancies between the understandings of Seller and John Van Dyk. The Panel also asked about discrepancies between various copies of the Listing Agreement and the calculations used by the parties on various documents. The Panel notes that none of the witnesses was able to provide a clear explanation of how the listing was transferred from Seller Broker to Broker A when John Van Dyk resigned from Seller Broker and was hired by Broker A. Buyer s Testimony Buyer testified that he previously purchased two farms from John Van Dyk. The first farm was purchased in October 2000, and it had been described as 60 acres in area. However, in May 2001, Buyer discovered that it was in fact only 45 acres. No abatement was ever obtained by Buyer for this discrepancy.

6 Buyer stated that, with respect to the Farm transaction, agency, dual agency and the agent s relationship and role were never explained, nor was documentation on these issues provided or executed. Also, Buyer was never advised to seek independent legal advice in drafting clauses for the Agreement of Purchase and Sale. Buyer testified that he required the full area of 220 acres as advertised in order to build a barn and have space necessary for nutrient management activities. He stated that prior to May 2001 he had only made one offer for the Farm. He always believed that there were 220 workable acres. He was never advised what the cost would be to measure the Farm. However, when the Farm was measured using the GPS method, a shortfall of approximately 15 acres in workable land was discovered and Seller s lawyer was contacted to arrange for an adjustment in the purchase price. This resulted in an abatement in the purchase price of $59,600. On cross-examination, Buyer indicated that he has been farming in Canada for 18 years. To the best of his recollection, he was only warned by neighbours after the transaction had closed that there might be less than 220 acres of workable land. Buyer also acknowledged that Seller currently holds a mortgage on the Farm. Buyer denied that he had ever called John Van Dyk; instead, he claimed that he recalled John Van Dyk calling him and leaving a message. Exhibit 3 was also shown to Buyer, who did not deny its contents. Buyer also stated that he fully understood the Agreement of Purchase and Sale when he signed it. He stated that he did not want to go through the same problem he previously experienced with the first farm he had purchased from John Van Dyk. As a result, he wanted the Farm measured. He acknowledged that John Van Dyk had told him he was working for him as well as the seller. Buyer also acknowledged that he had read and initialed the listing information sheet that had been attached as a schedule to the Agreement of Purchase and Sale. Buyer also recalled that his lawyer had said that she wished that other Agreements of Purchase and Sale had clauses like the adjustment clause which John Van Dyk had included. Upon further questioning, the Panel confirmed that, in Buyer s view, there was no attempt by John Van Dyk at any time to create a scam, and that John Van Dyk honestly believed there were 220 workable acres. Buyer also indicated that he believed John Van Dyk was acting in Buyer s best interest when he suggested getting a GPS measurement done. Researcher s Testimony Researcher testified that she has been a researcher with RECO since She confirmed that she had conducted the interview of John Van Dyk and prepared an interview report. The interview took place in Town. John Van Dyk had also indicted that it was not his general practice to measure land, but instead to rely on the seller s

7 information. Further, during his interview, John Van Dyk stated that farms can be measured by GPS at a cost of $275 but, in John Van Dyk s view, a decision to do so was the buyer s responsibility. Based on her investigation, Researcher concluded that John Van Dyk had not properly explained agency with his clients and that there were deficiencies in the documentation regarding agency and agency representation. On cross-examination, Researcher indicted she had never sold real estate or held a license to do so. She also acknowledged that she had not interviewed Seller or Buyer. Researcher agreed that the MLS listing sheet was an important document that had been signed by the seller. Researcher also indicated that she had not seen any reason to interview either Broker B, the broker who had drawn the offer up, or any representative of Seller Broker, the initial listing broker. When questioned by the Panel, Researcher indicated that she had not noticed that John Van Dyk was with Seller Broker at the time of the initial listing. She did not know if there had been any assignment of the listing agreement from Seller Broker to Broker A. John Van Dyk s Testimony John Van Dyk testified that when he first read the Allegation Statement he had called Researcher and she had said Paragraph # 2 (concerning who the listing and selling brokers were) was not relevant. At the same time, John Van Dyk indicated that the listing was never transferred to Broker A, and that Seller Broker s principal Broker C had said that if John Van Dyk was able to sell the Farm John Van Dyk would be entitled to retain a commission. In John Van Dyk s view, information provided on the MLS listing sheet by a seller to an agent must be regarded as accurate. In John Van Dyk s opinion, Seller was an educated man who went through the listing sheet with John Van Dyk, and John Van Dyk still believes, based on Seller s evidence during the hearing, Seller had indicated that the Farm had 220 workable acres. Regarding the ad published in the Ontario Farmer, John Van Dyk stated that the error (showing 225 instead of 220 workable acres) was brought to John Van Dyk s attention by Seller, and was subsequently rectified by the Ontario Farmer with an apology also being made in the publication. John Van Dyk agreed that a GPS measurement was appropriate because he was working for both parties, and that he told them he did not want to get sued. John Van Dyk also claimed that he explained dual agency to Seller, but if I m guilty of anything, it s not doing it the way should have been done. John Van Dyk also admitted there was no written representation agreement or confirmation of representation in the usual form, other than confirmation of representation on the back of the final agreement (signed by John Van Dyk but not by the parties). John Van Dyk stated that at the outset of each listing he advises people to speak with

8 their children, their accountant, and their lawyer. In this case, Seller indicated to John Van Dyk that he understood the transaction and that he was not stupid. Buyer also stated that he understood the transaction. John Van Dyk indicated that he never discouraged Seller or Buyer to seek independent legal advice. However, at the hearing John Van Dyk asked the Panel rhetorically, do I have to say I urge you to get a lawyer? John Van Dyk also noted that the first line of the offer says subject to adjustment and advised that anything that was not correct could be adjusted. John Van Dyk added that if anyone was guilty of anything it was Seller for fraudulently signing the MLS listing agreement he knew was not accurate. John Van Dyk commented that if he were to list 25 properties in a year and have to pay to have each measured, the cost would be approximately $5,000. John Van Dyk also noted that when the problem arose, Seller s lawyer called him a number of times but did not attempt to cancel the agreement. John Van Dyk also asked Seller s lawyer what it was going to take to close the deal. John Van Dyk was asked to reduce his commission by 1%, which he did, and the deal closed. John Van Dyk denied there was any attempt to perpetrate a scam. In summary, in response to Allegations 1, 2, 3 and 4, John Van Dyk generally admitted that he did not follow RECO s requirements in explaining agency relationships to his clients, nor did he confirm same with appropriate documentation. On cross-examination, John Van Dyk confirmed that he had not initially verified the size of the Farm and its workable acreage. He also confirmed that he had not urged either Seller or Buyer to seek independent legal advice, although he had not prevented them from doing so. John Van Dyk continued to rely on his assertion that the estimate of 220 workable acres had been given to him by Seller. Submissions on the Evidence, and Penalty and Costs The parties summarized the foregoing evidence and made submissions concerning same to the Panel. On the issue of penalty, RECO sought a penalty of $25,000, citing the importance of general deterrence, specific deterrence, and the values of consumer protection and maintaining professional standards. John Van Dyk submitted that if any penalty was found to be warranted, it should only involve attendance at courses on agency relationships. RECO s counsel also indicated that she had no instructions to seek costs if RECO should be successful.

9 Findings of the Panel The Panel accepts much of the testimony of the witnesses. However, the Panel does not accept that Seller told John Van Dyk that the Farm had only 200 workable acres when it was initially listed. Instead, the Panel accepts that the figure of 220 acres was provided by Seller to John Van Dyk when the MLS listing form was completed by John Van Dyk and signed by Seller. Further, the Panel does not accept that there was any conspiracy or scam planned or perpetrated by John Van Dyk. The Panel accepts the testimony of John Van Dyk and Buyer on this issue, and that all of the parties generally believed there were 220 workable acres until shortly before the transaction closed. It is also clear that advertisements relating to the Farm reflected the erroneous belief of the parties as to the available workable acreage. The evidence of John Van Dyk alone was sufficient to establish that agency, and the role of the agent and services relating to this transaction, had not been fully explained to either client. In addition, John Van Dyk admitted that documentation regarding agency and a written representation agreement with Buyer was never provided to Buyer or executed. Based on this evidence, the Panel finds that Allegations 1, 2 and 3 made by RECO in its Allegation Statement (also reproduced above) have been proven, thus confirming John Van Dyk s violation of Rules 3 and 4 of the RECO Code of Ethics. Regarding Allegation 4, the Panel has concluded that, owing to the lack of clear and convincing evidence on the issue, it is not possible to fix liability on John Van Dyk for failing to obtain written confirmation of dual agency prior to the agreement being signed. Regarding Allegation 5, the Panel agrees with the position of John Van Dyk that there was no initial obligation on John Van Dyk to verify the information on workable acreage given to him by Seller. John Van Dyk was entitled to accept, list and advertise the Farm based on the information provided on the MLS information form, as acknowledged by Seller s signature. However, as time progressed, and especially by the time the Agreement of Purchase and Sale was signed, this issue should have been addressed. By that time, Buyer s problems with the first farm he had purchased were plainly evident. It also appears that neighbours and/or the farmer who was sharecropping the Farm, had also raised issues about the workable acreage on the Farm. The evidence of the witnesses, including John Van Dyk, suggests that these concerns caused the parties and John Van Dyk to insert the condition in the agreement stating the Farm could be measured by the buyer at his expense and adjustments could be made to the purchase price. In the Panel s opinion these facts raised a red flag that ought to have caused John Van Dyk to independently verify whether information given to him by Seller was correct. On the specific facts of this case, the Panel concludes that Allegation 5 is made out, and that Rule 11 was breached by John Van Dyk. Regarding Allegation 6, as noted above, the Panel finds that at all material times John Van Dyk placed ads based on information provided to John Van Dyk by Seller. Consequently, this allegation has not been proven.

10 Regarding Allegation 7, the Panel finds that there was no material violation as alleged. Specifically, there was no express duty to disclose the cost of items such as the GPS survey. While Rule 5 addresses costs in a general way, Guiding Principle 5.1 indicates that the agent need not disclose the cost of an expense, so long as the type of expense is disclosed. In this case, the GPS expense was discussed at the time the Agreement of Purchase and Sale was signed. Therefore, the allegation and alleged breach of the Rules has not been established by RECO. Regarding Allegation 8, the Panel finds that there is no specific obligation requiring an agent to encourage parties to seek legal assistance in the drafting of clauses in an offer. Therefore, there has been no breach of the Rules. With respect to Allegation 9, although John Van Dyk did not discourage Seller or Buyer from seeking legal advice, John Van Dyk did not urge the parties to do so. Rule 7, and more specifically Guiding Principle 7.3, indicates that where a consensual dual agency relationship exists, as it did in this case, a representative should urge the Parties to seek independent legal advice, before an Agreement becomes binding. Given the issues that had already arisen before the Agreement of Purchase and Sale was finalized, John Van Dyk breached his obligation under Rule 7 by failing to urge Seller and Buyer to seek legal advice. In addition, the Panel finds that this conduct also violated Rule 2. As a result, the Panel has concluded that Allegations 1, 2, 3, 5 and 9 have been proven and, as a result, Rules 2, 3, 4, 7 and 11 of the RECO Code of Ethics were breached by John Van Dyk. While these breaches are significant, the Panel also notes that, for the most part, they had limited impact on the transaction. Furthermore, a number of the allegations and breaches claimed by RECO were not established. It is clear to the Panel that certain aspects of RECO s investigation and the Allegation Statement were either deficient or based on errors. Therefore, the Panel cannot accept RECO s submissions recommending a penalty of $25,000. Having considered all the evidence, and in light of the submissions of RECO and John Van Dyk, the Panel has decided that the following order shall be issued: 1. John Van Dyk shall pay an administrative penalty of $5,000 within sixty (60) days of RECO sending him this decision; and 2. John Van Dyk shall, within 6 (six) months of RECO sending him this decision, successfully complete a Buyer Agency Course and the RECO Code of Ethics Course and, upon receiving confirmation of his successful completion of same, he shall immediately thereafter provide written confirmation of such completion to the Manager of Complaints, Compliance and Discipline at RECO.

11 ADDENDUM The Respondent, John Van Dyk, filed an appeal of this decision.

12 REAL ESTATE COUNCIL OF ONTARIO DECISION IN THE MATTER OF AN APPEAL HEARING HELD PURSUANT TO BY-LAW NO. 10 OF THE REAL ESTATE COUNCIL OF ONTARIO JOHN VAN DYK DATE OF DECISION: April 12, 2005 FINDINGS: The Appeal is dismissed. PENALTY: The Discipline Committee Penalty of $5000 is upheld. This Penalty is payable to RECO within 60 days of sending this decision. To successfully complete the Buyer Agency Course and RECO Code of Ethics Course within 6 months of sending this decision to John Van Dyk and immediately upon successful completion to provide confirmation to the Manager of CCD. INTRODUCTION This Appeal brought by the Appellant, John Van Dyk, was heard in Toronto on April 12, The John Van Dyk appealed the decision of the Discipline Committee made on August 17, 2004 and was brought pursuant to Section 59 of By-Law No. 10 of the Real Estate Council of Ontario ( RECO ). This case involves allegations that John Van Dyk, a salesperson with Seller Broker and later with Broker A, had acted unprofessionally and in breach of RECO s Code of Ethics (the Code ). The allegations against John Van Dyk arose in respect of the sale and purchase of a farm of approximately 300 acres, municipally known as 1 A Street (the Farm ). PRELIMINARY OBJECTIONS The John Van Dyk objected to the composition of the panel. The John Van Dyk indicated that the Appeals Committee members should be comprised of members who had agricultural experience. The John Van Dyk objected on the basis that there were a number of technical issues that would not be understood by a Committee member who

13 did not have agricultural experience. RECO submitted that the objection made by the John Van Dyk should be overruled on the basis that the allegations made in the original complaint and the matters to be dealt with in this Appeal Committee were not strictly agricultural issues but rather were issues of general importance relating to all members. The Committee through the chair overruled this objection. They decided that the issues in this Appeal related to the regulation of members in the Province even though the facts related specifically to a rural or farming property issue in this particular case. Background And Discipline Committee Decision In its decision, the Discipline Committee carefully reviewed and set out the basis upon which it made its decision. At the original hearing, RECO had alleged that the John Van Dyk had breached RECO s Code of Ethics pursuant to 9 specific allegations recited on page 2 of the Discipline Committee decision. It is clear from the decision of the Discipline Committee that it carefully reviewed and analyzed the evidence of each party including that of the John Van Dyk. RECO in it s request at the Discipline Committee sought a penalty of $25, citing the importance of general deterrence, specific deterrence and the values of consumer protection and maintaining professional standards. At the original hearing, the John Van Dyk submitted that if any penalty was found to be warranted, it should only involve attendance at courses on agency relationships. The Discipline Committee in its decision determined that the John Van Dyk had failed to explain agency to the parties and obtain an acknowledgment in writing, failed to adequately disclose in writing his role and the services relating to this transaction to the parties and failed to have a representation agreement with the Buyer. The Discipline Committee made this determination not just on the evidence of the third party witnesses but found that the evidence of the John Van Dyk alone was sufficient to establish that agency, and the role of the agent and services relating to this transaction had not been fully explained to either client. Further, the John Van Dyk admitted that documentation regarding agency and a written representation agreement with Buyer was never provided to Buyer or executed. Based on this evidence, the Discipline Committee found that allegations 1, 2 and 3 made by RECO in its allegation statement and reproduced in the decision of the Discipline Committee had been proven and the Discipline Committee found that the John Van Dyk had violated Rules 3 and 4 of the RECO s Code of Ethics. With respect to the allegation that the John Van Dyk failed to verify the correct acreage of the farm, the Discipline Committee found that there was no initial obligation on the John Van Dyk to verify the information on workable acreage given to him by Seller. The John Van Dyk was entitled to accept, list and advertise the farm property based on the information provided on the MLS information form as acknowledged by Seller s

14 signature. However, as time progressed, and especially by the time the Agreement of Purchase and Sale was signed, this issue should have been addressed. The Discipline Committee found that a number of factors had arisen with respect to the issue of workable acreage. These included the fact that Buyer had problems with the first farm that he had purchased, that the neighbours and the farmer who was sharecropping the farm property had also raised issues about the workable acreage on the farm and the fact that a condition had been inserted in the Agreement of Purchase and Sale stating that the farm property could be measured by the buyer at his expense and adjustments could be made to the purchase price. These issues raised what the Discipline Committee referred to as a red flag that ought to have caused the John Van Dyk to independently verify whether information given to him by Seller was correct. The Discipline Committee concluded that allegation 5 had been proven by RECO and that the John Van Dyk had breach Rule 11 of RECO s Code of Ethics. The Discipline Committee also found that the John Van Dyk had violated Rules 2 and 7 of RECO s Code of Ethics by failing to urge the parties to seek independent legal advice before the Agreement became binding. This was based on Rule 7 and the guiding principal 7.3 which provides that where there is a Consensual Dual Agency relationship the member should urge the parties to seek independent legal advice, before an Agreement becomes binding. However, the original Discipline Panel dismissed allegations 4, 6, 7 and 8 of the allegations based on the reasons and finding of the Discipline Committee. TEST ON APPEAL An Appeal to the Appeals Committee of a decision by the Discipline Committee is made under Section 59 of the RECO By-Law No. 10. In a hearing of an Appeal by an John Van Dyk, no evidence other than the record before the Discipline Committee shall be given to the Appeals Committee unless the prior permission of the Appeals Committee is obtained. No such permission was requested by either party, nor was any permission obtained by either party prior to or at the hearing. The panel reminded the parties of Section 59 of By-Law 10 and confirmed that an Appeal hearing was not a hearing de novo, but rather it was incumbent upon the John Van Dyk to show an error in law or fact that was made by the Discipline Committee in the original hearing or in its decision. APPELLANT S SUBMISSIONS The John Van Dyk in his submissions pleaded that he was not guilty and that there were many errors in the documentation. The John Van Dyk also alleged that the original RECO Prosecutor was overzealous and that the charges were laid as a result of the overzealous staff at RECO. The John Van Dyk further indicated that Seller had provided

15 the original information of 220 workable acres, which was confirmed in the information sheet that was signed by both parties. The John Van Dyk continued to assert that RECO had made a number of errors in its investigation and in the documentation. In his submissions, the John Van Dyk argued that he put information in the offer based on information that had been provided to him by Seller. The John Van Dyk also argued that there was not a dual agency relationship. Throughout his submissions the John Van Dyk argued the original facts without reference specifically to the record or any error that might have been made by the Discipline Committee. The Chair and panel members on a number of occasions pointed out Section 59 and indicated that the purpose of an Appeal was not to restate of the evidence, the errors in the original allegations or to submit new evidence. Rather, the purpose of an Appeal was for the John Van Dyk to show that the Discipline Committee made an error in fact or in law that would change the result of the original hearing. The panel reminded the John Van Dyk that the Discipline Committee heard the witnesses. They had the first hand evidence of all of the witnesses and based their decision on all of the evidence after careful review and consideration based on the record. The Discipline Committee had the power to make findings, to find and determine breaches of the RECO Code of Ethics and to impose a penalty within its jurisdiction. The Panel requested that the John Van Dyk demonstrate specifically that there was an error made in the record that would affect the decision, and requested that the John Van Dyk refer to the record to demonstrate why the decision should be reversed. The John Van Dyk continued to criticize the evidence of Seller in relation to the original hearing and indicated that Seller s testimony was flawed and the panel should not have accepted his testimony at the original hearing. After requesting that the John Van Dyk indicate any error in the record or the process, the John Van Dyk concluded his submissions. RECO S SUBMISSIONS Counsel for RECO submitted that the original Discipline Committee did not entirely rely on the evidence of Seller, but rather examined all of the evidence. Specially, RECO asserted that where there was a doubt, the benefit of that doubt was exercised in favour of the John Van Dyk. Counsel for RECO referred to a passage in the transcript at pages wherein the John Van Dyk confirmed that there was a dual agency relationship. RECO further referred to the same passage at pages of the transcript where the John Van Dyk had indicated that dual agency was explained, but it wasn t explained and it wasn t done properly. That I am guilty of. RECO argued that this evidence as well as

16 the other evidence of the witnesses and the documentation was the basis of the decision of the Discipline Committee. RECO also argued that there were a number of offers and counter offers and there would have been an opportunity for the John Van Dyk to disclose his role to all of the parties in advance of the final offer. RECO argued that confirmation of representation was not sufficient in the facts and circumstances of this case, but rather the parties should have made an advanced informed decision. RECO also indicated that a buyer representation agreement should have been executed and that the confirmation of representation was not a substitute for a buyer representation agreement. RECO also submitted that property size was an issue and referred to the Transcript in confirming that the property size was an issue. RECO argued that in the facts of this case, the John Van Dyk should have verified workable acreage. With respect to the issue of any errors that might have been made by RECO, counsel for RECO asserted that the Discipline Committee resolved any issues of any error in favour of the John Van Dyk. RECO also submitted that a minor, typographical or inconsequential error that did not interfere with the John Van Dyk s right to a fair hearing with full disclosure should not be reviewed or revised by the Appeals Committee. RECO submitted that the John Van Dyk failed to establish that there was any error in the process or that the John Van Dyk was prejudiced or prevented from calling any rebuttal witnesses or other evidence that he wished to bring or call. In conclusion, RECO stated that the evidence supported both the findings and the penalty. REPLY BY THE APPELLANT The John Van Dyk in reply referred to a number of typographical and spelling errors without specific reference to the record. The John Van Dyk further attacked the credibility of the witnesses who had given evidence at the Disciplinary Hearing and that RECO had made a lot of mistakes and that nothing was checked or crosschecked and that RECO s work had been done in a sloppy manner. DECISION Disclosure Of Role And Written Representation Agreements (Rules 3 And 4) We agree that based on the evidence that was heard by the Discipline Committee that the John Van Dyk was acting in a Consensual Dual Agency relationship. As such, the John Van Dyk by his own admission on the Record of this Consensual Dual Agency

17 relationship, had an obligation pursuant to Rules 3 and 4 of RECO s Code of Ethics to fully disclose in writing the role and nature of the services that he would be providing to the parties, disclose his role to the others involved in the transaction, and enter into a representation agreement with Buyer before the Offer to Purchase was submitted. The failure by the John Van Dyk to explain agency to the parties and obtain an acknowledgement in writing, of his role in the services in the transaction to the parties, and by failing to have a representation agreement with the buyer, Buyer, is a violation of Rules 3 and 4 of RECO s Code of Ethics. The John Van Dyk failed to demonstrate any error on the record in the findings or decision made by the Discipline Committee relating to this point. Discovery Of Facts (Rule 11) Rule 11 of RECO s Code of Ethics requires a Member to discover and verify the pertinent facts relating to a Property and the Transaction relevant to the Member s Client that a reasonably prudent Member would discover in order to fulfill the obligation to avoid error, misrepresentation or concealment of pertinent facts. In this case, the concern that Buyer had with the first farm he purchased, the information received by the John Van Dyk from the neighbours and/or the farmer who was sharecropping the farm relating to workable acreage and the insertion of the condition in the Agreement stating the farm could be measured by the buyer at his expense and adjustments could be made to the purchase price (which clause appears to have been inserted for the benefit of the Buyer only) was important information relating to the Property and the Transaction which would be relevant to the Seller and Buyer. Based on this information, the pertinent fact that should have been discovered and verified was the workable acreage of the Property. The Discipline Committee correctly concluded that the John Van Dyk should have independently verified the workable acreage of the Property. The John Van Dyk should have been guided by Guiding Principle 11.4, which states that a Member should not rely completely on the information obtained from the Client when such information is pertinent and it can be practicably verified from an independent source. In this case the John Van Dyk should have independently verified the workable acreage of the Property. Accordingly, the John Van Dyk breached Rule 11 of RECO s Code of Ethics. The John Van Dyk failed to demonstrate any error on the record in the findings or decision made by the Discipline Committee relating to this point.

18 Outside Professional Advice (Rule 7) Guiding Principal of 7.3 of Rule 7 of RECO s Code of Ethics states that where there is a Consensual Dual Agency relationship, the Member should urge the parties to seek independent legal advice before an Agreement becomes binding. It is clear from the evidence before the Discipline Committee that there was a Consensual Dual Agency relationship and that the John Van Dyk was acting for his clients Buyer and Seller with respect to the Transaction. Where a Member acts for both the Buyer and Seller a Member should urge the parties to seek independent legal advice before an Agreement becomes binding. The Discipline Committee found that the John Van Dyk breached his obligation by failing to urge Seller and Buyer to seek independent legal advice thereby breaching Rules 7 and 2 of RECO s Code of Ethics. This obligation to urge the parties to seek independent legal advice arises even if the Member believes that the Client will not seek that advice and is discharged even if the Client fails to heed the urging of the Member. We see no error made by the Discipline Committee in it s finding and decision regarding the issue of the obligation of the John Van Dyk to have advised his Clients to seek independent legal advice and his failure to do so. The John Van Dyk failed to demonstrate from the record any error in the findings or decision made by the Discipline Committee relating to this point. PENALTY The Panel notes that RECO requested a penalty of $25, before the Discipline Committee and the obligation on the John Van Dyk to attend at courses on agency relationships. We are mindful that the request by RECO or by a Member with respect to penalty should be supported by reference to what might be an appropriate penalty having regard to other cases that have come before other Discipline Committees and Appeal Committees. The John Van Dyk did not specifically submit that there was any error in the penalty imposed by the Discipline Committee in this case. Notwithstanding the lack of submissions from the John Van Dyk with respect to penalty, we have considered whether based on the record, if there was any error in the penalty. After consideration, we find that having regard to the facts and circumstances of this case the penalty imposed by the Discipline Committee was reasonable and appropriate and no error was made by the Discipline Committee with respect to penalty. CONCLUSION Based on the reasons above, we find that the John Van Dyk has not demonstrated any error in the decision of the Discipline Committee. Accordingly, this Appeal is dismissed.

19 1. John Van Dyk shall pay an administrative penalty of $5,000 within sixty (60) days of RECO sending him this decision; and 2. John Van Dyk shall, within 6 (six) months of RECO sending him this decision, successfully complete a Buyer Agency Course and the RECO Code of Ethics Course and, upon receiving confirmation of his successful completion of same, he shall immediately thereafter provide written confirmation of such completion to the Manager of Complaints, Compliance and Discipline at RECO.