Trynchy v. Gabriel, 2012 ABQB 682

Court of Queen ’ s Bench of Alberta Citation: Trynchy v. Gabriel, 2012 ABQB 682 Date: 20121102 Docket: 0803 06075 Registry: Edmonton Between: Marlin Trynchy and Connie Trynchy Plaintiffs - and - Tammy Gabriel, Kerrie Meunier and Leading Realty Ltd. Operating As Realty Executives Leading Defendants _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice J.J. Gill _______________________________________________________ I. Introduction [ 1 ] This litigation arises from the sale of a lakeside cottage in May of 2006. The plaintiffs claim damages for breach of fiduciary duty and negligence. II. Background

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a) Ms. Trynchy [ 2 ] The plaintiff, Connie Trynchy, testified that the plaintiffs owned a lake front cottage at Lake Isle, in the County of Lac St. Anne, west of Edmonton. They bought the 3 bedroom, 850 square foot cottage in 2001 for $59,000 . They added a three piece bathroom and a deck. In 2006 they decided to sell the cottage. [ 3 ] The plaintiffs met the defendant realtor, Tammy Gabriel, through curling. In mid-March of 2006 Ms.Gabriel agreed to act as their realtor to sell the cottage [ 4 ] Ms. Gabriel wanted to see the property. She picked up the Trynchys on May 16, 2006 and they went out to the cottage.

Ms. Trynchy recalls after they walked into the cottage, Ms. Gabriel commented that she valued it at under $100,000. Ms. Gabriel noted that the cottage needed a new roof. [ 5 ] After Ms. Gabriel left , the plaintiffs discussed the price that they should list the cottage. They decided they should go higher than Ms. Gabriel ’ s evaluation and list it at $112,000. They believed that it was better to list the cottage at higher price, so the price could be reduced later if necessary.. [ 6 ] Ms. Trynchy did not recall any real discussion with Ms. Gabriel about the price. They trusted Ms.

Gabriel to get them the best price. Ms. Trynchy testified that she did not receive any comparable listings from Ms. Gabriel either by e-mail or in person prior to listing the property. [ 7 ] Ms. Gabriel sent the Trynchys a listing agreement (the “ Listing Agreement ” ) on May 16, 2006, showing a listing price of $112,000. The Trynchys signed the Listing Agreement and sent it back. [ 8 ] Ms. Gabriel called the Trynchys on May 17,2006 and advised them that she was putting the listing on MLS and arranging for signs to be put up at the cottage. [ 9 ] At suppertime on May 17, 2006 Ms.

Gabriel called to tell the Trynchys that she had an offer of $108,000. The Plaintiffs discussed it and decided to counteroffer at $110,000. There was no discussion concerning the reasonableness of this offer with Ms. Gabriel. [ 10 ] Ms. Trynchy indicated that they made the decisions to list the cottage for $112,000 and to make the counteroffer of $110,000 themselves .There was no pressure from Ms. Gabriel. [ 11 ] The defendant, Kerrie Meunier accepted the counteroffer. [ 12 ] The following day, May 18, 2006, Ms. Gabriel met with the Trynchys to have the sale agreement signed (the “ Sale Agreement ” ).

The Sale Agreement had a closing date of June 20, 2006. Ms. Gabriel told them that the purchaser, Ms. Meunier, was a realtor who worked in the same office. Ms. Trynchy had no direct dealings with Ms. Meunier. [ 13 ] Ms. Gabriel pointed out that clause 7.6 of the Sale Agreement which that had been added by the purchaser It stated: It is understood by the seller, the buyer has a right to sell at a profit or loss at a later date. [ 14 ] Commenting on clause 7.6, Ms. Trynchy testified that she did not care what the purchaser did with the cottage after she

bought it. [ 15 ] Subsequently, the Plaintiffs met with their lawyer who told them that the purchaser wanted to be in the cottage with her family for the long weekend in July. The transaction closed and the Plaintiffs received their money. [ 16 ] Several weeks later on July 15, 2006, Ms. Trynchy saw an advertisement in a local newspaper listing the cottage for $190,000. She felt at that time they had been “ dumb. ” [ 17 ] The Trynchys wrote a letter to the Edmonton Real Estate Board complaining about what had happened as they did not think it was right. In 2007, the Trynchys received a letter from Ms.

Gabriel enclosing copies of comparable listings she claimed to have provided to the Plaintiffs prior to the sale. [ 18 ] As regards their involvement in other property transactions, Ms. Trynchy indicated that they had bought the cottage in 2001 without a realtor .Her husband had dealt directly with the seller. In addition, her husband had previously sold their farm property in Mayerthorpe without a realtor. (

b) Mr. Trynchy [ 19 ] The plaintiff, Mr. Trynchy testified. He works as a parts person. [ 20 ] Mr. Trynchy has been involved in several real estate transactions in the past. He bought a quarter

section and an 80 acre parcel of land and sold property he owned in Mayerthorpe. He did not use a realtor for any of these transactions. He also has experience with negotiations and sales of machinery and parts. [ 21 ] Mr. Trynchy bought the cottage directly from the sellers in 2001 for $59,000, using a handwritten contract. [ 22 ] The amount of $112,000 used in the Listing Agreement was the amount he wanted from the sale. He had no discussions with Ms. Gabriel concerning that amount. He and his wife discussed the price. [ 23 ] Mr. Trynchy had no dealings with the purchaser Ms. Muenier. He knew Ms.

Meunier was a realtor and worked in the same office as Ms. Gabriel. The first time he met Ms. Meunier was in January of 2009. [ 24 ] When the initial offer of $108,000 came in, Mr. Trynchy testified that they decided to make a counteroffer. They had the evening of May 17, 2006 to consider the sale .They did not sign the sale agreement until May 18, 2006. (

c) Ms. Gabriel [ 25 ] The defendant, Ms. Gabriel testified. She has been a realtor for 16 years. She took the Edmonton Real Estate Board courses and exams in 1997 and continues to take upgrading courses. Her sales consist of 25% recreational property, 30% country residential and the balance residential. In 2006 she had 3 to 4 recreational property transactions per year. [ 26 ] Ms. Gabriel uses a standard procedure when she is hired to sell a property. First, she obtains detailed information on the property itself;for example the number of rooms and bathrooms. Next Ms.

Gabriel searches the computer for comparable listings including past sales and active, pending, or expired listings. She prints off any comparables, meets the client, and views the property. The

listing price is decided by the clients after a discussion and review of the comparables. Some people have a fixed price in mind. If that is the case, she has to decide if she wants to accept the listing. [ 27 ] Ms. Gabriel prepares a listing agreement. Once the listing agreement is signed she phones her office to get a message out quickly to all the realtors in her company. When she gets back to her office she gets a copy of the title and uploads the listing to MLS. Ms. Gabriel also has a number of checklists that she follows in terms of documents that have to be signed.

If she receives an offer, she contacts the clients and explains that they have the option to accept the offer, make a counter offer, or reject the offer. [ 28 ] Ms. Gabriel lived in the same community as the plaintiffs and they curled together. Ms. Gabriel ’ s family was friends with Mr. Trynchy ’ s family. One night at curling the question of selling the cottage came up. She subsequently contacted the Trynchys and set up a meeting. She found some comparable listings from the MLS and e-mailed them to Ms. Trynchy. These comparables included active, sold, pending, or expired listings.

She did not keep a copy of the e-mails she sent or the comparables. [ 29 ] Ms. Gabriel picked up the Trynchys and drove them to see the cottage. She found the inside of the cottage to be neat and clean but the cottage was dated. Outside, the roof shingles did not look good and the deck needed repair. [ 30 ] Ms. Gabriel does not recall saying that the cottage was worth less than $100,000.

She was adamant that she would not have made a comment to the Trynchys saying that the property was worth less than $100,000 off the top of her head. [ 31 ] She testified that she never she never lists a property without completing a review of comparable listings. Her practice is to inspect the entire property and then discuss comparable listings. The comparables she provided would have been obtained from the MLS system. [ 32 ] After the listing was signed, Ms. Gabriel prepared what she called a group page for the property and had her secretary notify all realtors in her office of the listing.

She also uploaded the listing onto MLS , obtained a copy of the title, and went through some of her checklists. [ 33 ] Ms. Meunier would have contacted her. She did not recall contacting Ms. Meunier. Ms. Meunier acted on behalf of herself. Because Ms. Meunier was a realtor, Ms. Gabriel said she was very careful. [ 34 ] If Ms. Meunier could have viewed the cottage herself because there was a lockbox on the property. [ 35 ] Later on, Ms. Meunier called with an offer . She told Ms. Gabriel that she was building a house at the lake and she needed somewhere to live.

Her kids were coming home and she wanted the cottage for the July long weekend. Ms. Gabriel did not consider that this was a fast offer as it was a very active market. [ 36 ] Ms. Gabriel then contacted the plaintiffs. The next morning she met with Ms. Meunier to sign the offer to purchase and then also with Mr. Trynchy at work and Ms. Trynchy at a Tim Horton ’ s. [ 37 ] When she meet with the plaintiffs she went through the offer to purchase in detail. She advised them that Ms. Meunier was a realtor and outlined clause 7.6. She also explained the dual agency arrangement. [ 38 ] Ms.

Gabriel testified that she never discussed what would be an appropriate price with Ms. Meunier. Ms. Meunier did not advise her of other customers interested in the property. [ 39 ] Ms. Gabriel testified she had followed her standard procedure with the plaintiffs, in terms of the listing and the offer. She took no steps to convince them to accept the offer. They had overnight on May 17th to consider the offer from Ms. Meunier.

[ 40 ] Ms. Gabriel testified that from the time the plaintiffs accepted the offer up until May 24the, when the purchasers inspection condition was removed, there was no other offers on the cottage. [ 41 ] The first time Ms. Gabriel heard the Trynchys were dissatisfied was in 2007 when a complaint was made to the Edmonton Real Estate Board. In response, she wrote to the Trynchys including a number of comparable listings. [ 42 ] Ms. Gabriel had no knowledge of or involvement in the subsequent sales of the cottage. She found out later that Ms. Meunier sold the property to Mr.

Hiebert for $165,000 with a closing date on July 31, 2006. She was shocked that Mr. Hiebert had paid more than the market price. [ 43 ] The commission from the sale of the cottage was calculated as follows: 7% on the first $100,000 and 3% on the balance. Ms. Meunier as a realtor was entitled to receive 50% of this commission . [ 44 ] Ms. Gabriel does not consider it be her job to decide the listing price. She shows the owners comparable listings, they have a discussion, and usually come to a consensus.

It was her experience that usually people do not under value property. [ 45 ] In 2006 there was a lot of speculation in the market. People were buying and flipping properties. A lot of homes were selling immediately. The market was strong and prices were rising. Ms. Gabriel does not recall discussing the state of the market specifically with the plaintiffs but believes anybody who listened to the radio or tv would have known that the property market was very active. (

d) Ms. Meunier [ 46 ] The defendant, Ms. Meunier testified. She is a licensed realtor based in Spruce Grove. She has been a realtor for 10 years. In May 2006 she was driving around the lake when she received a notification concerning the listing of the cottage. She phoned Ms. Gabriel who told her there was a lockbox on the property and therefore she could go and look at it. [ 47 ] Ms. Meunier drove to the property and recalled that it had little curb appeal. Her impression was that the cottage was not looked after. The boat house and holding tank were full of junk and debris.

The roof needed repair and the deck was rotting. From her perspective the land value was the important element when she initially looked at the property. [ 48 ] Ms. Meunier testified that she phoned Ms. Gabriel and made her an offer of $108,000. She also indicated that she wanted to add a clause in the listing that she might sell the cottage for a profit or a loss. The plaintiff countered at $110,000 and Ms. Meunier accepted that price. In the purchase agreement, she identifies herself as a licensed realtor and clause 7.6 indicates that she may sell the property. Ms.

Meunier ’ s first contact with the plaintiff was at the examinations for discovery. Her and Ms. Gabriel are not friends. They are fellow realtors. [ 49 ] After Ms. Meunier obtained possession, she cleaned up the property and there was a lot of weeds which had to be treated. She recalls that the water was not working. It was a summer cottage and could not be used all year. There was no fireplace. [ 50 ] Ms. Meunier also stated that she bought this cottage as an investment. It was the first time she had done this.

She had been doing quite well during the boom and was building a lakefront property on the other side of the lake. She thought she could make some money off of the cottage. [ 51 ] Ms. Meunier had the property for about two weeks before she listed it. She cleaned up the property and listed it for sale by way of an exclusive listing in her own brokerage, not on the MLS. She chose a price of $170,000 to see what would happen. She was not in a rush to sell and was shocked to receive an offer of $165,000. The offer was from a builder, Mr. Hiebert, who she knew from doing several other projects with him.

He told her he needed a project.

[ 52 ] Mr. Hiebert purchased the cottage on July 31, 2006 for $165,000. He proceeded to do a lot of work on the property and sold it on October 16, 2006 for $225,000. The work done by Mr. Hiebert after he purchased the cottage from Ms. Meunier included: (

a) adding a covered deck at the back, (

b) adding a high end fire place, (

c) fixing the walls, (

d) freshly painting the cottage, (

e) adding a high end hardwood floor, (

f) adding a new roof, (

g) putting the bathroom in working order, (

h) installing water, and (

i) clearing up the property compliance issues. [ 53 ] Ms. Meunier ’ s profit from the sale of the cottage and the commissions from acting on the two purchases totalled approximately $67,400. [ 54 ] Ms. Meunier understood that she had a duty to disclose that she was a realtor which she did. [ 55 ] Ms. Meunier bought the property as an investment, knowing that waterfront properties hold their value. She considered that she took a risk.When she bought the property it had a number of problems including a broken dock and there was some real property compliance issues. [ 56 ] Ms. Meunier had no discussions with Ms.

Gabriel regarding the listing price nor did she share any profit or commission with Ms. Gabriel. (

e) Mr. Simpson [ 57 ] Mr. Bruce Simpson was called by the defendants. He was qualified as a real estate appraisal expert. His expert report was entered as Exhibit 6. He provided an appraisal in relation to the market value of the cottage as of May 16, 2006 and July 31, 2006. [ 58 ] Mr. Simpson ’ s appraisal was carried out in May 2009. He was unable to get access to the cottage so he completed a roadside inspection on May 12, 2009 which made the appraisal more difficult. He also noted that there had been significant changes to the property since pictures were taken in May 2006. [ 59 ] Mr.

Simpson used two (2) different approaches to determine the retrospective market value of the cottage. The “ Direct Comparison Approach ” and the “ Cost Approach. ” The “ Direct Comparison Approach ” was a better approach in these circumstances because he had the opportunity to review a large number of sales.

The “ Cost Approach ” required many more assumptions. [ 60 ] The “ Direct Comparison Approach ” arrives at a value by comparing the subject property to similar properties of the same type and class which have sold, been offered for sale, or on which offers have been made in the same or competing areas at or about the same effective date. He used thirteen (13) comparable sales. Using this approach he appraised the cottage at a value between $115,000 and $140,000, as of May 16, 2006.

[ 61 ] The “ Cost Approach ” arrives at a value estimate of land treated as vacant and adds the depreciated value of the improvements. Using the “ Cost Approach ” the appraised value was $119,000. [ 62 ] Combining the two approaches Mr. Simpson appraised the cottage as of May 16, 2006 at between $120,000 and $125,000. He appraised the property as of July 31, 2006 at between $140,000 and $147,000. [ 63 ] Mr. Simpson testified that one of the most important factors in looking at the appraisal of this cottage was the market conditions.

In hindsight, it was apparent that the market value increased significantly from 2006 to 2007. There was a lot of speculation and in many situations properties doubled in value. [ 64 ] Furthermore, properties were in high demand, especially lakefront properties. As regards recreational property and lake lot sales in the Edmonton metropolitan area, the average monthly change in sale price from May 2006 to May 2007 was 9.75%. This resulted in an annual percentage change of 117%.

By way of comparison, for the same period from May 2005 to May 2006 the change was -2.83% per month and -34% over the year. [ 65 ] The sale price for a single family dwelling within the Edmonton metropolitan area from January 2006 through to December 2006 saw an average monthly increase of 4.4%. This is in contrast to the same period in 2005, where the average monthly increase was 0.78%. [ 66 ] Mr. Simpson noted that the comparatives he used in the “ Direct Comparison Approach ” were sold subsequent to May 2006. A realtor in May 2006 would not have had this information available.

Also a realtor in May 2006 could not know what was going to happen to the market. [ 67 ] As regards the accuracy of his appraisal, Mr. Simpson noted that it is not unusual for appraisers with the same qualification and using the same data to have some variation in their appraisals. A 5% variation is not unusual. III. Documents [ 68 ] The parties entered the following documents: (

a) The Listing Agreement [ 69 ] The Listing Agreement was executed on May 16, 2006 by the plaintiffs as vendors and Ms. Gabriel on behalf of the defendant brokerage firm. The cottage was listed for $112,000. [ 70 ] The following clauses of the Listing Agreement are relevant : 11.1 The Brokerage: - will make reasonable efforts to find a buyer for the Property. - will market the Property through the Multiple Listing Service (MLS) operated by the Board.

- will not discourage any person who is an industry member as defined in the Real Estate Act (Alberta) and who is not a member of the Board from attempting to sell the Property, unless you otherwise instruct the Brokerage in writing. - will pay any Commission, Alternate Compensation and GST that are payable to another brokerage. 16. Advice to the seller: 16.4 The Seller acknowledges that the Brokerage is being retained as a real estate broker, not as a lawyer, tax advisor, lender, appraiser , surveyor, structural engineer, property inspector, or other professional service provider (emphasis added). 17.

Agency Disclosure/Acknowledgement: 17.1 You, the Seller, have entered into an agency relationship under common law with the Brokerage, including its broker, all its associate brokers and agents (collectively referred to as the Seller ’ s Agent ). A brokerage, its broker, associate brokers and agents representing a buyer are referred to as the Buyer ’ s Agent . 17.2 The Seller ’ s Agent is obligated to protect and promote your interests.

Specifically, the Seller ’ s Agent owes you the fiduciary duties of loyalty, obedience, confidentiality, reasonable care and skill, full disclosure, and full accounting. 17.3 You, as the Seller, and potential buyers may be represented by different brokerages (the Seller ’ s Agent and the Buyer ’ s Agent). Each of these Agents owes its client the full fiduciary duties listed above.

Other brokerages representing buyers will not have a fiduciary relationship with you. 17.4 Dual Agency occurs when one brokerage (the Dual Agent), trading in real estate from one or more locations, represents both you and one or more buyers with respect to the potential purchase of the Property. In such circumstances, the described fiduciary duties are limited as follows: The Dual Agent:

a) will not , without prior written authority, disclose:

i) to a buyer that you will accept a price less than the asking price (for a countered selling price), ii) to you that a buyer will pay a price higher than the price offered, iii) to a buyer the reason that you are selling, iv) to you the reason that a buyer is buying, and

v) to a buyer the terms and conditions of competing offers;

b) except as set out in (a), will owe no duty of confidentiality and will disclose to you and a buyer all known defects and information

that materially affect or may materially affect the marketability or value of the Property. 17.5 The Seller authorizes the Seller’s Agent to act as a Dual Agent according to the terms of this section. (

b) The Residential Real Estate Purchase Contract [71] The Residential Real Estate Purchase Contract (the “Purchase Contract”) was signed on May 18, 2006 between the plaintiffsand the defendant, Kerrie Muenier. The sale price was $110,000. Ms. Meunier identified herself as “a Licensed Realtor in the Provinceof Alberta”. [72] Paragraph 7.6 (under Additional terms of sale) stated: It is understood by the Sellers, the buyer has the right to sell as a profit or loss at a later date. IV.

Issues [73] In the Statement of Claim, the plaintiffs alleged fraudulent misrepresentation, negligence, conspiracy, and breach of fiduciaryduty. Specifically, the plaintiffs allege that Ms. Gabriel fraudulently misrepresented the value of the lands or in the alternative that Ms.Gabriel was negligent in falling to properly assess the value of the lands. The plaintiffs also allege that Ms. Meunier conspired with Ms.Gabriel. The plaintiffs allege that both Ms. Gabriel and Ms.

Meunier breached their fiduciary duties to the plaintiffs. [74] No evidence was led, or argument made, to support the fraud and conspiracy claims. [75] The issues that this Court must decide are as follows: 1. Was Ms. Gabriel negligent? 2. Was there a breach of fiduciary duty by Ms. Meunier or Ms. Gabriel? V. Law (

a) Fiduciary Duty [76] The agent-principal relationship is generally recognized as a fiduciary relationship: Hodgkinson v Simms, (SCC), [1994] 3 SCR 377 at 409, 117 DLR (4th) ; LAC Minerals Ltd v International Corona Resources Ltd, (SCC), [1989] 2 SCR 574 at 646, 61 DLR (4th) 14. The essence of a fiduciary relationship is “discretion, influence over interests, and an inherentvulnerability:” Hodgkinson at 409 (emphasis in original).

In a fiduciary relationship, one party has a duty to act in the best interests ofthe other party: Hodgkinson at 409. [77] The Court may determine that fiduciary obligations arise in relationships not previously recognized as fiduciary relationships,depending on the specific facts and circumstances surrounding the relationship: LAC Minerals at 648. The Supreme Court of Canadahas adopted the observations by Justice Wilson (dissenting) in Frame v Smith, (SCC), [1987] 2 SCR 99 at 136, 42 DLR (4th) 81 as providing three general characteristics of a fiduciary relationship:

1. The fiduciary has scope for the exercise of some discretion or power. 2. The fiduciary can unilaterally exercise that power or discretion so as to affect the beneficiary’s legal or practical interests. 3. The beneficiary is peculiarly vulnerable to or at the mercy of the fiduciary holding the discretion or power. (

i) Listing Agent and Vendor [78] Listing agents and brokers are fiduciaries who owe the “highest obligation of full disclosure and fair dealing to the vendor who pays the commission:” Knoch Estate v Jon Picken Ltd (1991), (ON CA), 4 OR (3d) 385 at 395, 83 DLR (4th)447 (CA). In Knoch Estate, the Ontario Court of Appeal observed that this fiduciary duty aries from the confidential nature of therelationship, when the agent undertakes to list and sell the property, either using a multiple or exclusive listing agreement.

The vendor islegally entitled to expect that the real estate agent will “faithfully serve to promote the vendor’s interests” (at 396). [79] In D’Atri v Chilcott (1975), (ON SC), 7 OR (2d) 249 at 258, 55 DLR (3d) 30 (Sup Ct), the Courtdetermined that four principles apply to the nature of the relationship between the owner of a property and the agent that is retained tosell the property: 1. The relationship between a real estate agent and the person who has retained him to sell his property is a fiduciary and confidentialone; 2.

There is a duty upon such an agent to make full disclosure of all facts within the knowledge of the agent which might affect the valueof the property; 3. The price paid must be adequate and the transaction must be a righteous one. The price obtained must be as advantageous to theprincipal as any other price that the agent could, by the exercise of diligence on his principal's behalf, have obtained from a third person;and 4.

The onus is upon the agent to prove that those duties have been fully complied with. [80] The duty of an agent appointed to sell property is to make full and fair disclosure of all material circumstances and ofeverything the agent knows regarding the subject matter: Palinko v Bower, 1976 ALTASCAD 86 , [1976] 4 WWR 118 at 121(ABCA).This duty includes a duty to make full disclosure of all facts within the agent’s knowledge, which might affect the value of theproperty or the principals’ decision, including the knowledge that the purchaser is a real estate agent: Polaris Realty

(1995) Ltd.vMinchau, 2010 ABQB 116, 491 AR 209 at paras 42-53. (ii) Purchaser’s Agent and Vendor [81] The relationship between the purchaser’s agent and the vendor does not fall into a traditional category of fiduciaryrelationships. The Court must consider the nature of the relationship to determine if a fiduciary relationship has been established: LACMinerals at 648.

Also, in Cocks v Clark, [1992] OJ 381 (QL), the Court found that the mere fact that two agents worked for a commonbroker did not automatically raise the relationship between the purchaser’s agent and the vendor to a fiduciary one (at 25). [82] Courts have found a fiduciary relationship between a vendor and a real estate agent who is the prospective purchaser or whois acting for a prospective purchaser where the real estate agent knows that the vendor is placing a degree of trust in them and knows that

the vendor is relying on the information provided by them. Specifically, the fiduciary relationship arises where the real estate agentprovides, or fails to provide, information which they know would influence the decision of the vendor and the vendor acts on thatinformation, or lack of information: Westrheim v Gao, 2007 BCSC 274, 155 ACWS (3d) 1005 para 53, 54. (

b) Negligence [83] Real estate agents have a duty to exercise reasonable care and skill in the performance of their undertakings: William FFoster, Real Estate Agency Law in Canada, 2d ed (Toronto: Thomson Canada, 1994) at 214-15. [84] Real estate agents must provide services to the standard of a reasonably skilled agent dealing with property in a specific area:Nixon v Eden, (BC SC), [1998] BCJ no 1986 (QL) at para 26, 82 ACWS (3d) 206 (Sup Ct); see also AcademyAluminum Products Ltd v McInerny Realty Ltd (1980), 1980 ABCA 173 , 25 AR 84 at para 14, 113 DLR (3d) 289 (CA); Styles v Rogers Realty Ltd (1987) 1987 ABCA 193 , 80 AR 288 at para 9, 43 DLR (4th) 629 (CA); Power v Goodram, 2012ABQB 50, 529 AR 195 at para 137.

The standard is above that of an average, informed, reasonable person but below that of a qualifiedprofessional real estate appraiser of residential property: Nixon v Eden at para 26; Connolley v Leeson (18 March 2009), Calgary 0801-02855 at 14 (ABQB).

In ascertaining the appropriate standard of care, the Court may take into account the practices of real estate brokersin the community: Foster at 218. [85] To succeed in a negligence claim against a real estate agent, the plaintiff must prove that the agents were not only wrong intheir opinion regarding the value of a property, but also that they were “negligent in the preparation and manner in which they came tothat opinion:” Nixon at para 28, Connolley at 14-15.

In Connolley, the Court found that a real estate agent had met the standard of careby researching comparable properties, relying on his knowledge of the market in an area where he lived all his life and worked as arealtor, and because the value fell within the range established by two experts (at 15). VI. Analysis (

a) Claim of negligence against the defendant Ms. Gabriel [86] The plaintiffs allege that Ms. Gabriel was negligent in carrying out her duties as a real estate agent. They suggested they wereunsophisticated vendors and there was a duty on Ms. Gabriel to provide comparable listings, to know the market, and to assist thevendors to arrive at a reasonable listing price. [87] It is also suggested that she was negligent in failing to inform the plaintiffs that the market was very hot and active and thatprices were rising rapidly. The plaintiffs suggested that when an offer came in “so quickly” from Ms. Meunier, Ms.

Gabriel should haveinvestigated it and she was required to raise a red flag of some sort and encourage the plaintiffs to wait for other offers. The plaintiffstestified that Ms. Gabriel did not provide comparable listings to them. [88] Ms. Gabriel testified that she followed her usual practice and although she had no specific recollection, her usual practice wasto provide comparable listings and that she would not prepare a listing unless that had been done. [89] I find Ms. Gabriel to be credible. At the time of this sale in May 2006 she had been a realtor for 10 years.

Her testimonyconvinced me that she was a careful and cautious realtor who followed a standard practice of obtaining comparable listings andproviding them to clients prior to any listing being finalized. I therefore find that she followed her usual practice and did providecomparable listings. [90] I find the plaintiffs’ assertion that Ms. Gabriel told them the cottage was worth less than $100,000 to be implausible. I notethe Plaintiffs chose to list the cottage for $112,000. No explanation was provided for picking that number .It suggests that they ignoredMs. Gabriel’s advice and came up with their own number.

[ 91 ] A more likely explanation is that the Plaintiffs looked at the comparable listings that Ms. Gabriel provided and after some discussion came to the figure of $112,000. [ 92 ] In any event, I note the listed value of $112,000 is very close to the lower end of Mr. Simpson ’ s expert appraisal. Unlike Ms. Gabriel, Mr. Simpson had the benefit of looking at numerous sales which took place after May 2006 and came up with an appraisal using the Direct Comparison approach of $115,000 to $140,000. I also note Mr.

Simpson ’ s evidence that expert appraisals can have a variation of up to 5%. [ 93 ] In providing any information on value, Ms. Gabriel could not have known the extraordinary rise in the real estate market that was to occur between May 2006 and May 2007.I note also that the Listing Agreement confirms that Ms. Gabriel ’ s role is not as an appraiser but as a broker. [ 94 ] I note also the testimony of the plaintiffs that they chose the price at which they wanted to list the cottage . They did not rely on Ms. Gabriel. The plaintiffs were not unsophisticated vendors. Mr.

Trynchy had bought and sold several properties previously without using a realtor. [ 95 ] I find that Ms. Gabriel was not negligent in any of her actions in relation to the preparation and signing of the Listing Agreement. [ 96 ] As regards to whether or not Ms. Gabriel should have taken other steps when Ms. Meunier, a real estate agent, made the offer shortly after the listing was posted; I find there was nothing particularly suspicious or unusual about the circumstances of this offer. The evidence is that at that time properties were being sold very quickly and there were often multiple offers on properties.

The fact that Ms. Meunier is a realtor and works in the same company was specifically disclosed in the purchase agreement. The plaintiffs were not rushed into signing any purchase agreement. They were given an evening to think about it and signed it the next day. [ 97 ] The suggestion that Ms. Gabriel was negligent in not advising the plaintiffs that this was a very active real estate market is also without merit. I accept Ms.

Gabriel ’ s evidence that it was well known that the real estate market was active and that anybody that watched tv or listened to the radio would have been aware of the state of the market . [ 98 ] In

summary then, I find that Ms. Gabriel was not negligent. (

b) Claim of Breach of Fiduciary Duty by Ms. Meunier and Ms. Gabriel (

i) Ms. Meunier [ 99 ] The plaintiffs suggest that Ms. Meunier owed a fiduciary duty to the plaintiffs and that she breached that duty. The plaintiffs refer to

section 17.1 of the Listing Agreement which they submit creates a duty that applies to all agents and the brokerage firm. They suggest Ms. Meunier should have disclosed that she was buying this property for speculation purposes, that she thought it was a low price, and that the price would increase. [ 100 ] The first question to be answered is whether or not a fiduciary relationship exists between the plaintiffs and Ms. Meunier. [ 101 ] Ms. Meunier had no contact with and provided no advice or services to the plaintiffs. She did not represent the plaintiffs. Ms. Meunier acted for herself in purchasing the cottage. As such she was a purchasers agent, not a sellers agent.

[ 102 ] There is no automatic presumption that a purchasers agent is a fiduciary. In order to determine if Ms. Meunier owes a fiduciary obligation to the plaintiffs, the Court must review the facts and circumstances surrounding the relationship: LAC Minerals at 648. Using the analysis by Justice Wilson in Frame , the three general characteristics of a fiduciary relationship are: 1. Power or discretion over the person; 2. An ability to affect the person ’ s interests; and 3. Vulnerability. [ 103 ] The plaintiffs did not meet Ms. Meunier before the sale. Ms. Meunier had no discussions with Ms.

Gabriel before making the offer. [ 104 ] The plaintiffs were aware that Ms. Meunier was a real estate agent working in the same brokerage as Ms. Gabriel. The plaintiffs read and understood clause 7.6 in the Purchase Agreement which confirmed that Ms. Meunier has the right to sell at a profit or loss at a later date. [ 105 ] The plaintiffs were told that Ms. Meunier was building another cottage on the lake and wanted a place to live while it was being built and to be with her family for the July long weekend. This information would also have alerted the plaintiffs to the possibility that Ms.

Meunier might sell the cottage at a future date. [ 106 ] Consequently the plaintiffs knew and accepted that Ms. Meunier was buying the cottage with the possibility that she would sell at a future date. The plaintiffs assertion that Ms. Meunier did not disclose her intentions is therefore completely baseless. [ 107 ] Also there is no evidence to support the plaintiffs ’ suggestion that Ms. Meunier thought she had bought the cottage at a low price and that the price would increase. The evidence is that Ms. Meunier was shocked when she received an offer of $165,000 in July of 2006. [ 108 ] In

summary there is no evidence that : 1. Ms. Meunier exercised power or discretion over the plaintiffs; 2. Ms. Meunier had the ability or took steps to affect the plaintiffs interests; and 3. The plaintiffs placed any reliance on Ms. Meunier. [ 109 ] This case is very similar to the Cocks decision where the Court found that there was no fiduciary duty owed by the defendant, a purchaser ’ s agent, to the vendor.

The Court determined that the agent had no confidential information which she could hold over the vendor, the agent did not negotiate directly with the vendor, and there was no trust or reliance placed in the agent regarding her view of the value of the property (at 25-26). [ 110 ] I find that Ms. Meunier was not in a fiduciary relationship with the plaintiffs and did not breach any duty or obligation. (ii) Ms. Gabriel

[ 111 ] Ms. Gabriel was a listing agent and owed a fiduciary duty to the Plaintiffs. However there is no evidence that she breached that duty. VII. Conclusion [ 112 ] The claims against all of the defendants are dismissed [ 113 ] If the parties cannot agree on costs they may speak to them within 90 days. Heard on the 15 th and 16th day of October, 2012. Dated at the City of Edmonton, Alberta this 1st day of November, 2012. J.J. Gill J.C.Q.B.A. Appearances: Mr. Russel G. Horne (Murray Chilibeck & Horne LLP) for the Plaintiffs Ms. Lisa A.

Redmond (Chomicki Baril Mah LLP) for the Defendants - Tammy Gabriel, Leading Realty Ltd., operating as Realty Executives Mr. Todd A. Shipley (Reynolds Mirth Richards & Farmer LLP) for the Defendant - Kerrie Meunier