Sherwin et al. v. Chaudhary et al. Date:, 2013 BCPC 81

Citation: Sherwin et al. v. Chaudhary et al. Date: 20130410 2013 BCPC 0081 File No: 1122530 Registry: North Vancouver IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: STEPHEN SHERWIN AND COURTNEY SHERWIN CLAIMANTS AND: SHAUNA CHAUDHARY AND TRG THE RESIDENTIAL GROUP REALTY LTD. DEFENDANTS REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE AUXIER Counsel for the Claimants: John McNeil Appearing for the Defendant TRG: Rick Valouche , Representative Shauna Chaudhary: No one appearing

Place of Hearing: North Vancouver , B.C. Date of Hearing: April 5, 2013 Date of Judgment: April 10, 2013 The following facts are not disputed: [ 1 ] On or about January 31, 2011, the plaintiffs, seeking to purchase a house, entered into an agreement with a real estate agent, the defendant, Shawna Chaudhary, wherein she agreed to perform the modified services of a real estate agent in return for the payment of a flat fee commission of $599 plus HST.

Those modified services basically involved the defendant’s assistance in drawing up and presenting and negotiating an offer of purchase and sale for property located at 3945 Capilano Road in North Vancouver. The claimants undertook the locating of the property and made all arrangements for its viewing and determination of its suitability for their purposes.

It was understood that the defendant would, upon closing of the transaction of purchase and sale, receive a commission payment from the vendor broker of $12,285, being 50% of the full commission payable under the listing agreement between the vendor and the vendor’s broker. It was agreed that Ms. Chaudhary would then pay ½ of that amount to the claimants, $6,142.50, less the $599 flat fee commission referred to above. [ 2 ] The transaction closed on April 1, 2011. But the defendant filed to reimburse the claimants. [ 3 ] On July 22, 2011, this action was commenced by the claimants, naming both Ms.

Chaudhary and TRG The Residential Group Realty Ltd. (TRG) as defendants. The latter defendant is the real estate broker that Ms. Chaudhary was “connected with”. (I’m choosing my words carefully here because it’s the nature of the relationship between Chaudhary and TRG that is at issue in this litigation.) [ 4 ] Ms. Chaudhary did not file a reply to the Claim and a Default Judgment was made against her on March 15, 2012 for the full amount of the claim ($6,171.62) plus costs and prejudgment interest from July 22, 2011. [ 5 ] A payment

schedule was ordered, requiring her to pay the claimants $500 per month until the judgment is satisfied. I’m advised that to date she has complied with that Order, though several payments were late. The total paid as of this date is $3,500. The payment

schedule is to be reviewed next month. [ 6 ] TRG did file a Reply to the claim. It’s succinct – essentially a statement that the company wasn’t involved with the commission agreement. The claimants suggested adjourning this hearing generally, keeping it in reserve in case Ms. Chaudhary failed to abide by the payment schedule. But TRG opposed any adjournment, confident that the court would dismiss any claim against them. At the conclusion of the trial, counsel for the claimants urged the court to make several findings of fact, and I do so: 1. Ms. Chaudhary was a licencee under the Real Estate Services Act.

She held the position of “representative” which can be described as an entry level category.

Section 5 of that Act requires a representative to be supervised by a managing broker. Mr. Valouche, of TRG, was her supervisor. 2. Ms. Chaudhary was delivering services for TRG in her capacity as a licenced representative. 3. She was authorized by TRG to enter into contracts on their behalf with clients which had the effect of making TRG the agent of the client. That’s clear from clause 20 of the Contract of Purchase and Sale. It’s also clearly stated in the document entitled Working With a Realtor which Ms. Chaudhary provided to the claimants. 4.

She was given free rein in the negotiation of remuneration in the contracts she entered into with the buyer clients. There was no evidence of any restriction or rules that prohibited her in being as creative as she wanted to be in drumming up business. 5. TRG financially benefitted from the contracts Ms. Chaudhary made for them. They charged her a fee for each “deal” that she concluded. They also charged her a monthly fee to be her managing broker.

And in addition, in this case, from the commission paid on this transaction, they collected a very significant accounts receivable (in excess of $6,000) owed to them by Ms. Chaudhary. 6. TRG controlled the money. By law, they had to. And they did. [ 7 ] TRG didn’t dispute these facts. What the company did dispute was whether this made them liable for the agreement Ms. Chaudhary entered into regarding the splitting of the commission. [ 8 ] I turn to the law.

Professor Fridman speaks of the principal, on whose behalf the agent contracts, being the one entitled to take the benefit of the contract so negotiated, as well as being the one liable in the event of default. He explains that this result will only eventuate when the agent, in contracting, has acted within the scope of his authority. But then emphasizes that “authority” may be express, implied, …ostensible. [ 9 ] Professor Waddams addresses the issue of agency arrangements in his book , The Law of Contracts, 4 th edition at page 179 and 180.

He, too, makes reference to ostensible authority: Contract law has been more concerned to protect the reasonable expectations of the promisee than to give effect to the will of the promisor. This preference is strikingly illustrated in the law of agency. Frequently an agent whose authority is restricted by the

principal’s express instructions deals with a third party in disregard of those instructions. If the limitation of authority is not known to the third party, the latter may quite reasonably assume that the agent is acting within the authority the agent purports to have. .. The agent has no “right” to disregard the principal’s instructions,…but the agent has a “power” to bind the principal vis-à-vis the third party.

One of two innocent parties must suffer for the agent’s default, and the risk is placed on the principal, perhaps because the principal has the better opportunity to investigate the agent’s trustworthiness, or perhaps because it is thought that the principal should absorb as one of the costs of the enterprise the loss caused by the agent’s defaults. [ 10 ] I agree with counsel when he submits that the gist of the Real Estate Services Act is to give the public the security of knowing that realtors are under the management and supervision of more knowledgeable and experienced personnel - people who hold a higher category of licence under the legislation.

Realtors are empowered to negotiate agency relationships on behalf of their principals with the customers they’re dealing with. I don’t find that there was any restriction on Ms. Chaudhary’s ability to negotiate a commission. But if I’m incorrect in that, she was certainly acting within her ostensible authority. And TRG is bound by what she did. [ 11 ] As I stated earlier, $3500 has been paid by Ms. Chaudhary towards satisfying the judgment against her. I will order that TRG – The Residential Group Realty Ltd. Is jointly and severally liable, together with Ms. Chaudhary, for the balance of that judgment.

The full amount of the judgment (including costs and prejudgment interest) totalled $6,467.86. Thus $2,967.86 remains outstanding. And, again, I conclude that TRG is jointly and severally liable for that amount. ______________________________ The Honourable Judge J. Auxier Provincial Court of British Columbia