Roberta Bishop v. Edwin harris, 2019 NLSC 66

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : Bishop-Tombleson Estate v. Hearn , 2019 NLSC 66 Date : March 21, 2019 Docket : 201601G5387 Between: Roberta Bishop and Edwin harris , as Executors for Margaret E. Bishop-Tombleson Plaintiff/ DEFENDANT BY COUNTERCLAIM And: James Hearn Defendant/ PLAINTIFF BY COUNTERCLAIM Before: Justice Alphonsus E. Faour Place of Hearing: St. John’s, Newfoundland and Labrador Dates of Hearing: January 31 and February 1, 2019

Summary: The Plaintiffs applied for a

summary trial to determine whether the Defendant’s failure to comply with a requirement for registration under the Real Estate Trading Act would invalidate transactions entered into between the parties in 1982. The court decided that in the circumstances of the impugned transactions, the Defendant was not subject to the registration provisions in the Act . Even if he had been, the failure to register would not have served to invalidate the transactions. In any event, an action to enforce an obligation arising from the Act was beyond the period set out in the Limitations Act . The application was dismissed, with costs to the Defendant.

Appearances: Michael Crosbie, Q.C. Appearing on behalf of the Plaintiff Thomas Johnson, Q.C. Appearing on behalf of the Defendant Authorities Cited: CASES CONSIDERED: Dalley v. Northern Arm (Town), 2016 NLTD(G) 68; Royal Trust Co. v. Clarke (1980), 28 Nfld. & P.E.I.R.409, 1980 CarswellNfld 143 (Dist. Ct.); Cleary v. Martin (1990), (NS SC), 100 N.S.R. (2d) 102, 1990 CarswellNS 73 (S.C. (T.D.)); Golko v. Alberta Real Estate Assn. (1995), 1995 ABCA 178 , 123 D.L.R. (4th) 609, 1995 CarswellAlta 177(C.A.); Still v.

Minister of National Revenue, (1997), (FCA), 154 D.L.R. (4th) 229, 1997 CarswellNat 2193 (FCA) STATUTES CONSIDERED: Real Estate Trading Act, R.S.N.L.1990, c. R-2; Limitations Act, S.N.L.1995 c. L-16.1; Immigration Act,R.S.C. 1985, c. I-2. Employment Insurance Act, S.C. 1996, c. 23 RULES CONSIDERED: Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sch. D TEXTS CONSIDERED: The Canadian Encyclopedic Digest, Volume II.2(a) (Thompson Reuters Canada Limited) REASONS FOR JUDGMENT Faour, J.: INTRODUCTION [1] This is an application by the executors of the estate of the late Margaret Bishop for a

summary trial to determine a discreteissue. Roberta Bishop is the daughter of Margaret Bishop and resides in Winnipeg. Edwin Harris was a friend and solicitor for MargaretBishop, and currently resides in Halifax. I will refer to the Executors collectively as “Bishop” or “Plaintiffs”. Bishop is seeking adeclaration of invalidity in respect of several documents executed by the deceased about 35 years prior to her death. A declaration ofinvalidity would dis-entitle the Respondent, James Hearn, to a share of the proceeds from the sale of the properties, and thereby benefitthe estate. [2] Margaret Bishop died in 2017.

At the time of her death she was living in Halifax. During her lifetime she did not reside inthis Province, and during the time relevant to this matter, the early 1980’s, she was living and working in Africa. She received, throughinheritance, a large tract of land in the Whitbourne-Blaketown area of the Province known as “The Grange”. The land at issue in thisproceeding constitutes about 3 square miles, or about 7.5 square kilometres.

She wished to convert this asset into cash, and entered intoan arrangement with the Respondent, James Hearn, to develop the land and sell smaller lots. [3] Bishop argues that Hearn was not registered under the Real Estate Trading Act, R.S.N.L.1990, c. R-2 (the “Act”), andtherefore the court has the power to declare invalid any transactions concluded contrary to the Act. Hearn says that the Act does notapply, and even if it has the effect argued by Bishop, the Limitations Act, S.N.L.1995 c. L-16.1 would bar any action because of thepassage of time. [4] This application seeks a

summary trial to determine two aspects of the case. The first, whether Hearn’s actions were contraryto the Act and if so, did that invalidate the transactions into which he entered. The second, if the transactions are invalidated in thatmanner, does the Limitations Act operate to preclude an action in respect thereof. [5] Bishop is challenging three transactions evidenced by documents signed by Margaret Bishop and Hearn, where they agreedto develop the land. [6] I will deal only with the discrete issue involving the status of the Act, and the related limitations issue.

Summary Trial

[ 7 ] The first question is whether a

Summary Trial is appropriate for such a determination. This is governed by Rule 17A of Rules of the Supreme Court, 1986 , S.N.L. 1986, c. 42, Sch. D . [ 8 ] It provides that the court may determine the matter if certain criteria are met: 1) If the court is convinced there is no genuine issue for trial,

summary judgment may be granted. 2) If the court decides there is a genuine issue for trial, it may grant judgment, unless the court decides that it is unable to find the facts necessary to decide the matters in issue. 3) If the only genuine issue is a question of law, the court may determine the question. [ 9 ] In Dalley v. Northern Arm (Town) , 2016 NLTD(G) 68, Justice Butler discussed the two-stage process that ought to be followed – first, to determine whether

summary trial was appropriate, and if so, second, to decide the merits. She also determined that these stages could be heard on separate occasions. [ 10 ] Both sides agree that this matter is appropriate for determination under Rule 17A. However, it is a discretionary question for the court to resolve, and therefore I must address it. The issue is whether, on the materials before me, the application meets the test of first stage as articulated in Dalley .

In this case, I am considering the focused issues of, first, the impact of the Act on the validity of the transactions, and second, the limitations’ issue as applied to that determination. [ 11 ] Having reviewed the submissions, I am satisfied that, on three narrow issues, there is a genuine issue and the evidential base is sufficient for a determination. Accordingly, a

summary trial is appropriate. The three issues will not resolve all the issues in the proceeding, but it will determine an issue important to the Plaintiffs’ case. That issue involves three elements: first, whether the Act applies to the circumstances surrounding the transaction between Margaret Bishop and James Hearn in 1982; second, if it is applicable, then the possible effect of a breach of that Act on the validity of the transactions; and, third, whether the Limitations Act would serve to preclude an action for a declaration based on non-compliance with the Act .

On the broader issues raised in the briefs, related to the substantive effect of the transactions, and the property interest of the parties arising from those transactions, I am of the view that the evidential record is insufficient, and a trial may be warranted. The Effect of the Act [ 12 ] It is undisputed that Margaret Bishop and James Hearn entered into a business relationship in the early 1980’s. At the time, she was living outside the Province and was interested in turning the inheritance into cash. She entered into an arrangement with Hearn to develop the lands.

She was living in Africa at the time, and wished for Hearn to deal with sales of lots subdivided from the land in 1982. There are three documents which are relevant to this action. [ 13 ] The first, a Power of Attorney executed by Margaret Bishop on July 28, 1982. In it, she appointed Mr. Hearn as her Attorney in respect of sales of her interest in the land. The document read, in part, as follows: . . . I, Margaret Bishop of Digby, in the Province of Nova Scotia, hereby irrevocably appoint J. P. Hearn, of St.

John’s, in the Province of Newfoundland, my Attorney to assign and convey my interest in the lands and premises … situate near Blaketown, Trinity Bay . . . AND I authorize my attorney to assign and convey individual lots each comprising of one acre more or less. [ 14 ] I shall refer to this document as the “Power of Attorney”. It was registered in the Registry of Deeds on September 9, 1982. A revocation of the Power of Attorney was signed by Margaret Bishop on March 17, 2001, and registered in the Registry of Deeds on May 1, 2001. [ 15 ] The second document was an agreement between them dated October 30, 1982.

It stated an intent to use a newly incorporated company named Seagull Limited as a vehicle for developing and selling the lots. It established the share structure of the company. Margaret Bishop (then known as Margaret Bishop-Tombleson) was to hold 51 shares. John Tombleson, her then husband, was to hold one share. James Hearn was to hold 48 shares. It also specified that written authorization from Margaret Bishop-Tombleson was required before Hearn could dispose of any portion of the property.

I shall refer to this document as the “Seagull Agreement”. [ 16 ] The third document was a conveyance between Margaret Bishop and Seagull Limited dated November 30, 1982. It served to convey to the company the land at Whitbourne-Blaketown for consideration of $40,000 which was acknowledged to have been paid. I shall refer to this document as the “Seagull Conveyance”. It was registered in the Registry of Deeds in 2016. According to Mr. Hearn’s discovery testimony, it had been misplaced for some 34 years, and was registered only when it surfaced.

The significance of the delay in registration may be relevant in a determination of the overall issues between the parties, but in my opinion it is not relevant in the narrow issue of the applicability of the Act in 1982. [ 17 ] The Plaintiffs, as executors of the Estate of Margaret Bishop, argue that these three documents are evidence of transactions which are, in their essence, agreements which would be covered by the Act . If that is the case, then either Margaret Bishop or James Hearn, or both, should have been registered under that Act . They were not.

It is argued that if the documents were, in effect, listing agreements for the sale of land by an agent, then the failure of Hearn, at minimum, to register under the Act would serve to void the effect of the agreements. If the documents are invalidated, then the property interest in the land would revert to the estate for the benefit of the beneficiaries. [ 18 ] The contents of the three documents are consistent with two parties entering into a business deal respecting the development of a parcel of land.

Margaret Bishop appears to have freely entered into these agreements, with the expectation that she would benefit

financially as the development proceeded. During her lifetime she did not disavow the documents. Hearn entered into the agreements with much the same intent, that with Bishop’s land and his involvement the development would be of benefit to them both. [ 19 ] Several lots of land were sold, but the development did not have the success intended because of unspecified environmental regulations.

It was interesting that, notwithstanding the Seagull Conveyance, which purported to transfer Margaret Bishop’s land to the company, Seagull Limited, the conveyancing of the lots was effected by James Hearn by means of the Power of Attorney. It appears the company was never a part of the development, even though that appeared to be the intent of Margaret Bishop and James Hearn. The significance of this aspect of the case is not in issue in this proceeding. As noted, this

summary trial will deal only with whether the Act applies to the transactions. [ 20 ] At some point in the ensuing years, Margaret Bishop developed an infirmity of the mind. By order of the Supreme Court of Nova Scotia, dated March 26, 2015, Roberta Bishop was appointed guardian of the estate of Margaret Bishop. In August of the same year, as guardian, she sold a portion of The Grange to the Eastern Regional Services Board, a waste management agency, for $464,000. [ 21 ] Margaret Bishop died in 2017. The Plaintiffs in the within action were appointed executors of her estate.

This action was commenced in 2016, while Margaret Bishop was still alive. At that time Roberta Bishop had been appointed guardian. The action claimed a declaration that the three documents did not serve to transfer ownership of the property. That would have the effect of vesting the property in the estate, thereby benefiting its beneficiaries, including the executors. [ 22 ] At issue in this proceeding is whether these documents reflect a relationship which would be covered by the Act . At this stage of the proceedings, the substantive effect of the documents is not in issue.

What I have to consider is whether the content of the documents brought the relationship between Margaret Bishop and James Hearn under the Act . [ 23 ] The Act contains several provisions which the Applicant says are relevant: - Definition of “agent” – in the 1977 version of the Act – amended in that year, in paragraph 2 (a); - Paragraph 4(

c) provides an exemption from registration for an individual who does limited trades in his or her own land; - A prohibition on trading in real estate as an agent without a valid license is contained in

Section 20; - A prohibition on an action for commissions or remuneration in connection with a trade in real estate without being licensed or exempt is contained in

Section 32; -

Section 41 prohibits a registered agent engaging in transactions involving him or herself without full disclosure to the other party; - Subsection 45(2) provides that an agreement to list real estate is not valid without an expiry date. [ 24 ] With the three documents as background, the Plaintiffs argue that Mr. Hearn was holding himself out to Margaret Bishop as a real estate agent and ought to have been registered under the Act . Since he was not so registered, it is argued, the documents are void.

It is argued that the three documents are evidence of a “client-agent” relationship, and in the absence of registration under the Act , the documents are of no effect. [ 25 ] Both sides agree that Mr. Hearn was not registered. [ 26 ] I will first examine the various provisions of the Act to determine whether they apply to the relationship between Margaret Bishop and James Hearn, based on the three documents. Then, if I find the Act is applicable, I will determine whether the transactions would thereby be invalidated. Only then, will I address the limitations issue raised by the Respondent.

The Real Estate Trading Act [ 27 ]

Section 2 (

a) of the Act defines the term “agent” as . . . a person who by himself or herself or through 1 or more officials or salespersons trades or purports to trade in real estate on behalf of himself, herself or another; [ 28 ] This should be read with paragraph 4(c), which provides for an exemption from registration: 4. This Act shall not apply to . . . .

(

c) a person who completes not more than 3 trades in a calendar year in real estate owned by him or her or in which that person has a substantial interest, or a person who rents property owned by that person, or in which that person has a substantial interest; [ 29 ]

Section 20 of the Act prohibits a person from trading in real estate as an agent without a valid licence issued under the Act . It reads: 20. A person shall not (

a) trade in real estate as an agent, unless that person holds a valid agent's licence issued under

section 5; (

b) trade in real estate as a salesperson, unless that person holds a valid salesperson's licence issued under

section 5; (

c) act as an official of or on behalf of a partnership or corporation in connection with a trade in real estate by a partnership or corporation unless that person or the partnership or corporation holds a valid agent's licence; or (

d) act as a salesperson of or on behalf of a partnership or corporation in connection with a trade in real estate by the partnership or corporation unless that person holds a valid salesperson's licence of that partnership or corporation and the partnership or corporation holds a valid agent's licence. [ 30 ]

Section 32 prohibits any action for commissions or remuneration in connection with a trade in real estate unless that person was licensed or exempt from licensing. [ 31 ]

Section 41 prohibits an agent or salesperson engaging in transactions involving him or herself without full disclosure to the other party. [ 32 ] Finally,

section 45 requires a listing agreement to have an end date, otherwise it will be invalid. [ 33 ] The Plaintiffs say that these three documents, in essence, constitute a listing arrangement for the sale of real estate that is covered by the Act . Looking at the substance of the three documents entered into between Margaret Bishop and James Hearn, they appear to be simply an agreement to develop and sell land. The first, the Power of Attorney, on its face, gave Mr. Hearn the authority to act on her behalf in doing the acts necessary to deal with the land which Ms. Bishop contributed to their joint venture.

It also authorized him to act on her behalf to sell the lands to third parties.

It did not contain a termination date, and it stated that James Hearn was appointed “irrevocably” as her attorney. [ 34 ] The second document, the Seagull Agreement, contains in the recital clauses an explicit statement of their intention: WHEREAS the parties hereto are in agreement to develop and manage the property known as The Grange Estate. [ 35 ] The agreement itself, as noted above, stated the share structure of a newly incorporated entity known as Seagull Limited. [ 36 ] The third document, the Seagull Conveyance, is consistent with the other two documents.

The Power of Attorney and the Seagull Agreement contemplated the development of the land by use of the company. The Seagull Conveyance simply placed the land in the name of the company, presumably for the purposes of the Seagull Agreement. [ 37 ] The three documents, on their surface, appear to be evidence of an intention on the part of Margaret Bishop and James Hearn to enter into a business arrangement to mutual benefit.

The Plaintiffs argue that they also represent an intention to trade in real estate, and as such, would require registration as an agent under the Act . [ 38 ] The Plaintiffs have argued that the purpose of the Act is primarily consumer protection, and failure to comply should carry with it significant consequences. I was referred to Royal Trust Co. v. Clarke (1980), 28 Nfld. & P.E.I.R. 409, 1980 CarswellNfld 143 (Dist. Ct.) , a decision of Chief Justice Steele of the District Court wherein he discussed the policy behind the Act , at paragraph 17: 17.

Contracts between property owners and real estate agents are governed in this Province, as in the other Provinces of Canada, by Statute. The Real Estate Trading Acts of the various Provinces have much in common. In Newfoundland the Statute is cited as the Real Estate Trading Act ,

Chapter 326 of the Revised Statutes of Newfoundland, 1970. The purpose of the legislation in this Province and in the other Provinces of Canada was summed up by Mr. Justice Culliton (as he then was) of the Saskatchewan Court of Appeal in Prince Albert Properties and Land Sales Limited v. Kushneryk (1950) 16 W.W.R. 567 at p. 575 : I think it is abundantly clear that the whole purpose of the Act is the protection of the public.

The legislature, in my opinion, in enacting the Real Estate Agents Licencing Act had in view the protection of the public in all matters connected with trading in real estate, and by implication contracts made in contravention of its provisions are prohibited and therefore illegal. [ 39 ] The consumer protection aspects of the legislation, it is argued, point to an

interpretation which is broad and remedial. It should be interpreted in a manner which ensures the protection of the public in the widest range of transactions. The Clarke case was an action by a real estate agency for a commission arising from the sale of property pursuant to an exclusive listing agreement.

[40] In Cleary v. Martin (1990), (NS SC), 100 N.S.R. (2d) 102, 1990 CarswellNS 73 (S.C. (T.D.)), JusticeGruchy of the Nova Scotia Supreme Court also found that legislation similar to the Act was, indeed, designed for protection of thepublic.

He found that a company that sold “kits” for consumers to use in selling their own property, given that a portion of theremuneration for the kit was a percentage of the eventual sale, was required to be registered under the Act in order to claim thecommission. [41] In both the Clarke and Cleary cases, the court found that the Act covered real estate transactions where a commission wassought to be collected. By analogy the Plaintiffs argue that the profit sharing contemplated by the agreement between Bishop and Hearnwas akin to commissions, since any entitlement was dependent on the sale of the properties.

Therefore, it is argued, the transactionsshould be covered by the Act. [42] The Plaintiffs have urged the court to consider that the three documents are in essence “listing agreements” which they argueare covered by the Act. The Act does not define “listing agreements”. It does define “agent”, as noted above. Does the collection ofthree documents constitute something akin to a “listing agreement” with an “agent” in the sense contemplated by the Act? [43] An examination of the three documents shows, in my view, an arrangement between two parties to do business together.

Thefact that the subject of the arrangements was the development and sale of land does not, by itself, make it a “listing agreement”, nor doesit make either Bishop or Hearn an “agent” subject to the Act. [44] The evidence before me, including the evidence of Hearn on discovery, indicates that the Power of Attorney was simply amechanism for the land owned by Bishop to be dealt with in pursuance of the intention of the parties.

They intended to make profits bydeveloping and selling the land to prospective purchasers. [45] The other two documents, the Seagull Agreement and the Seagull Conveyance, were further elements supporting the view thatthese two parties intended to go into business together. In my view, the three documents do not disclose any element which may havebeen covered by the Act in respect of the arrangement between Margaret Bishop and James Hearn. If the arrangement had proceeded toits intended outcome, it may have resulted in a series of transactions to third parties.

The third party transactions may have been coveredby the Act, and may have required Hearn to be registered as an agent. [46] However, I am satisfied that as between the parties, the three documents do not constitute the type of agreement which wouldhave been subject to the Act. It was, on its face, an arrangement between the two parties for the development of land and subsequent saleof lots. It was not a listing agreement. It was not an agreement to pay commissions for the sale of land.

It was an agreement which theparties intended would result in profits which would have been shared in accordance with the share structure of the company. [47] The Plaintiffs have further argued that Hearn’s counterclaim for a portion of the proceeds of the transaction between RobertaBishop as Guardian of the Estate of Margaret Bishop and the Eastern Regional Services Board come under the prohibition in

section 32of the Act. That conveyance was completed in August of 2015 and the consideration appeared to be $464,200. However, on the factsbefore me, I would find that a share of the proceeds from a transaction is not the same as “commission or for remuneration for services inconnection with a trade in real estate” (s. 32). A commission for facilitating a trade is not the same as seeking entitlement to a portion ofthe value of a sale of real estate as a shareholder with a direct interest in the profits of the transaction. Hearn is claiming an entitlement toprofits pursuant to their business arrangement.

Since, in my view, his claim for a share of the transaction is not in the nature of a claimfor commissions on a real estate transaction, then

section 32 is not applicable. [48] The next issue raised by the Plaintiffs arises because of the requirement for disclosure under

section 41 of the Act. If Mr.Hearn was an “agent or salesperson” to which the Act applied, he would have been subject to certain disclosure requirements if he had aninterest in the land that was the subject of the transaction. In this case, he has claimed an interest. However, for the purpose of the threedocuments at issue, I have found that he is not an agent or salesperson subject to registration under the Act. Accordingly the disclosureprovision does not apply. Even if he was subject to disclose under

section 41, the documents signed by himself and Margaret Bishopwould certainly qualify as full disclosure. There is no doubt that she was fully apprised of the nature of these transactions. Their intentwas clearly set out in the agreement to establish a company called Seagull Ltd., and while it did not have the words “Disclosure Notice”in a prominent place, the effect of the contents of the document was to provide a full outline of his involvement in the transactions. [49] The final issue arising from the argument of the Plaintiffs relates to

section 45 which sets out terms under which a listingagreement would be valid. Subsection (2) requires a termination date. The Plaintiffs argue that since the Power of Attorney had noexpiry date, it was therefore invalid. [50] I believe this argument fails for several reasons. First, I have already found that as between himself and Margaret Bishop, Mr.Hearn was not required to be registered under the Act. Second, on its face, the document was a power of attorney. It was not a listingagreement.

Read together with the other two documents, the parties have indicated an intention to develop the land and to share theprofits. A power of attorney, in these circumstances, is not a listing agreement. [51] To summarize, in respect of the documents and transactions between Margaret Bishop and James Hearn, in my view theyreflect an intention to enter into a business arrangement in the nature of a joint venture. There was a clear intention to develop the landand share the profits. The three documents between them did not constitute a transaction which would lead to a requirement forregistration under the Act.

There may have been subsequent transactions involving third parties which could have attracted theprovisions of the Act. But those subsequent transactions are not at issue in this proceeding. [52] This presents an important distinction. The authorities appear to support an approach which would invalidate an agreementbetween an agent and a client for non-compliance. Hence the prohibition on actions for commissions. However, no authority waspresented to me that would serve to invalidate the underlying transfer of land.

In a similar fashion, there is a distinction to be drawnbetween the business arrangement between Margaret Bishop and James Hearn, on the one hand, and the fruits of that arrangement, thatwould have meant selling properties to third parties. The former arrangement is not subject to the Act. The latter may attract theapplication of its provisions.

[53] The Plaintiffs seek to impugn the three documents to which Margaret Bishop and James Hearn were parties by citing thestatutory requirements for registration as an agent. In my view, those provisions do not apply to the arrangements as between thoseparties. If the Act does not apply, then the documents must stand on their own. I make no finding as to their validity and effect, as thatmay be the subject of further adjudication. [54] The second issue related to the Act is the effect of non-compliance.

The Plaintiffs have argued, first, that the Act applies torequire registration, and second, that the effect of failure to register would be to invalidate any transactions which took place. Havingdecided that the Act does not apply to the transactions between Margaret Bishop and James Hearn, it is not necessary to address thisissue. However, I will comment briefly. [55] The Plaintiffs have cited the Clarke and Cleary cases as support for the proposition that transactions may be invalidated fornon-compliance. Both of these cases involved actions for commissions, or in the case of Cleary, a contingency fee.

They are not helpfulto the Plaintiffs because they do not provide authority that the transaction for the transfer of a property interest may be invalidated fornon-compliance with the Act. They must be confined to the facts of those cases, which involve actions for commissions. [56] I have already found that the counter-claim of Mr. Hearn for his share of the sale of a portion of the land to the EasternRegional Services Board does not constitute a claim for commissions. It is, instead, a claim for a share of profits pursuant to a businessarrangement.

Accordingly, the Plaintiffs may not obtain relief on this basis. [57] They cite an Alberta case, Golko v. Alberta Real Estate Assn. (1995), 1995 ABCA 178 , 123 D.L.R. (4th) 609, 1995CarswellAlta 177 (C.A.). That case involved an agent who engaged in fraud, and in my view is not applicable to the case at bar. [58] The Plaintiffs also presented excerpts from The Canadian Encyclopedic Digest, Volume II.2(a) (Thompson Reuters CanadaLimited) (the “CED”), the

section on contracts. At paragraph 394: Under the traditional approach to illegal contracts, an agreement which is expressly prohibited by statute is void ab initio and thereforeunenforceable. [59] There are two problems with this argument. First, the statute does not expressly state that the transaction would be void fornon-compliance, only that an action for commissions is prohibited if an agent is not registered. Second, it may apply to an agreementbetween a client and an agent, as set out in the Clarke case.

However, there is nothing which would expressly or impliedly invalidate aproperty transaction for non-compliance with the Act. [60] The Defendant pointed out that a subsequent paragraph, in the same

section in the CED, elaborated on the concept of non-compliance and articulated what it referred to as the “modern approach”. At paragraph 399: 399. The so-called modern approach to statutory illegality provides that where a contract is expressly or impliedly prohibited bystatute, but not expressly rendered unenforceable, a court may refuse to declare it unenforceable when, in all the circumstances of thecase, including the objects and purposes of the statutory prohibition, it would be contrary to public policy, reflected in the relief claimed,to do so.

Cases adopting this approach also consider such factors as whether the statute makes the contract inherently illegal or onlyillegal if performed without compliance with the provision of the statute, whether the offending party intended to comply with the statuteand could have done so, whether the party seeking to avoid the contract participated in the illegality, and whether the illegality can besevered from the balance of the contract. [61] There is nothing in the statute that makes the transaction evidenced by the three documents inherently illegal.

There is noexpress statement of illegality in respect of property conveyances which are carried out without full compliance with the Act. Theprohibition is confined to a claim for commissions by an unregistered agent. Hence the “modern approach” would require an expressprohibition before an underlying conveyance would be declared invalid, even without compliance with the statutory provisions. [62] This is supported by the decision of the Federal Court of Appeal in Still v.

Minister of National Revenue, (1997), (FCA), 154 D.L.R. (4th) 229, 1997 CarswellNat 2193 (FCA) where the court considered a similar situation as that posed by thePlaintiffs in this case. In Still an American immigrant legally in Canada, but without a work permit took employment contrary to theImmigration Act, R.S.C. 1985, c. I-2. She acted in good faith, but the legislation set out a prohibition from working without a workpermit. The Federal Court of Appeal reversed a lower court’s finding that she was ineligible for unemployment insurance benefits forthat reason.

It said that the contract of employment was not void ab initio, and therefore it constituted insurable employment within themeaning of the Employment Insurance Act, S.C. 1996, c. 23. In like manner, the agreements between Margaret Bishop and James Hearnwere not void or voidable under the statute. Accordingly, whether or not there was compliance with the Act, the underlying transactionsare not thereby invalidated. [63] A contract is illegal as to formation when it is prohibited by statute. It is illegal as to performance if performed in a waycontrary to statute.

It follows that only contracts that are illegal as to formation may be subject to a declaration of invalidity. Where theperformance of a contract may be contrary to a statute, the underlying agreement may still be valid. [64] Here, even if the parties acted in a manner that was contrary to the Act, the agreement itself is not prohibited by the statute. Thecontract between Margaret Bishop and James Hearn, set out in the three documents, was and is capable of lawful performance, and theAct does not make such a business arrangement illegal. It does contain sanctions for failure to comply, in the form of a

summaryconviction offence, but does not provide for invalidation of a contract, unless that contract is for payment of real estate fees orcommissions. [65] I am satisfied that even if James Hearn was required to register under the Act, the effect of non-compliance would not invalidateor void the three documents entered into in 1982. They would have to be evaluated on the basis of their contents and the circumstancesof their execution, not on the basis of compliance or non-compliance with the Act. The Limitations Act

[ 66 ] The Defendant has raised the effect of the Limitations Act on any action to invalidate the transactions evidenced by the three documents. All three, the Power of Attorney, the Seagull Agreement and the Seagull Conveyance were entered into in 1982. That was some 34 years before this action was commenced in 2016. During that period, there were no questions by either Margaret Bishop, or the executors of her estate, seeking to impugn the documents or question their intent. It is argued that the claim is statute-barred. [ 67 ] As I noted above, I have accepted the appropriateness of a

summary trial only on the issue of whether the Act applies. There may be other issues that will arise at trial, including the substantive effect of the three documents and the effect of the failure to register the Seagull Conveyance, executed in 1982, until 2016. I will only deal in this

section with the issue of whether the bringing of an action in respect of the effect of non-compliance with the Act is statute-barred. Again, while I have already decided that the Act is not applicable, I will deal briefly with the argument under the Limitations Act . [ 68 ] The Plaintiffs are seeking a declaration that the Act applies to the three documents between Margaret Bishop and James Hearn. That involves, first, an action to enforce a statutory duty and second, an action to assert an interest in land.

The Limitations Act contains a number of provisions limiting the time for bringing these types of actions. [ 69 ] To address the first, the concept of registration under the Act and the attempt to bring an action for non-compliance could be seen as enforcing a statutory obligation.

Section 6 of the Limitations Act sets a limitation of 6 years for such an action: 6.

(1) Following the expiration of 6 years after the date on which the right to do so arose, a person shall not bring an action . . . (

f) to enforce an obligation arising from a statute; [ 70 ] By any calculation, the Plaintiffs are out of time under this provision. Their action assumes that James Hearn was obligated by the statute to have been registered as an agent at the time the three documents were executed. That event took place in 1982, 34 years before the action was commenced. If James Hearn was required to be registered, the right of the Plaintiffs to claim non-compliance with the Act arose at the time the documents were executed.

Accordingly, they are statute-barred from bringing an action in respect of any obligation under the Act . [ 71 ] The second arises from the claim by the Plaintiffs for an interest in land. In the context of this

summary trial, this claim arises from their assertion of non-compliance with the Act . The Limitations Act starts with the premise that any action to recover land is limited to 10 years. Sub-section 7(1) reads: 7.

(1) Following the expiration of 10 years after the date on which the right to do so arose, a person shall not bring an action or proceeding . . . (

g) to recover land. [ 72 ] The Plaintiffs have argued that the right to commence an action for recovery of the land arose only recently, when the Seagull Conveyance was registered in 2016. It submits there was no cause of action before that time because no damage was suffered by Margaret Bishop on the estate until registration. [ 73 ] I reject that argument on two grounds. First, the conveyance had effect from the time of delivery to James Hearn on behalf of the company in 1982. There is nothing in the conveyancing system in this Province, which precludes the effect of a non-registered document. In my view, the plain meaning of paragraph 7(1)(

g) would mean that the cause of action arose at the time the transfer was consummated, in 1982. That put it beyond the 10-year limitation. [ 74 ] Second, Margaret Bishop continued to deal with James Hearn for a number of years after 1982. This indicates that she accepted the effect of the conveyance, and could not, subsequently, claim that damages arose at a later date. [ 75 ] For these reasons, it is my finding that the executors of Margaret Bishop’s estate are out of time, in that a claim for recovery of land based on non-compliance within the Act is clearly beyond the time set out in the Limitations Act . [ 76 ] The Plaintiffs have referred to sub-section 8(1) which 8.

(1) Notwithstanding

section 22, a person is not governed by a limitation period and may bring an action . . . (

b) for a declaration as to the title to property by a person in possession of that property;

[ 77 ] In order to avail of this provision, the Plaintiffs would have to demonstrate through evidence that Margaret Bishop was a “person in possession” at the time. I am not prepared in the context of a

summary trial to resolve this issue. I have already indicated that I am restricting my decision to the issues arising from the application of the Act. The question of possession does not flow from the existence of an obligation under the statute to register as an agent. Accordingly, I will not decide whether Margaret Bishop was in possession for the purposes of paragraph 8(1) (

b) of the Limitations Act . [ 78 ] I am also of the view that it is inappropriate to determine the other questions the parties have raised with respect to the Limitations Act . For example, paragraph 19(1)(

a) deals with the point in time at which the right to bring an action arises: 19.

(1) The right to enter, distrain or bring an action to recover land or rent by a person arises at the time (

a) of dispossession, discontinuance of possession or when that person has last received profit or rent from the land; [ 79 ]

Section 22 sets an ultimate limit of 30 years on any action: 22. Notwithstanding a confirmation made under

section 16 or a postponement or suspension of the running of time under sections 13, 14 and 15, no action to which this Act applies shall be brought after the expiration of 30 years from the date on which the event which gave rise to the cause of action last occurred. [ 80 ] The Limitations Act also contains transitional provisions which apply where an existing limitation period was changed.

While the new Act changed the limitation period for an action involving an interest in land, those provisions are not applicable to the narrow issue in this matter. [ 81 ] These are questions more properly addressed in a full trial of this matter. On the narrow issue of the right to bring an action to enforce the statutory obligation arising under the Act , I am satisfied that it is appropriate to make a determination in the context of a

summary trial. In this case, had I found that James Hearn was under an obligation to be registered under that Act , I would have also found that the Plaintiffs are out of time. The time within which to enforce a statutory obligation is 6 years, arising from section 6(1). Conclusion and Disposition [ 82 ] The Plaintiffs applied for a

summary trial to determine a particular issue about the applicability of the Real Estate Trading Act to certain documents and transactions entered into between Margaret Bishop and the Defendant, James Hearn, in 1982. They have asserted that the application of the Act is a discrete issue that can be dealt with separately from the other issues. [ 83 ] Notwithstanding that other issues arose both in the submitted materials and in the argument of both counsel, I have determined that the narrow issue involving the Act may be addressed by

summary trial.

On that narrow issue, I have made the following determinations: 1) The documents executed by Margaret Bishop and James Hearn in 1982 were not in the nature of a listing agreement, but instead were a proposed business arrangement to develop land whereby the parties would have shared profits resulting; accordingly, in respect of these documents, James Hearn was not required to be registered as an agent under the Real Estate Trading Act ; 2) If James Hearn had been subject to the Act , the fact of non-compliance with the registration provisions would not have resulted in a declaration of invalidity with respect to the documents; 3) If James Hearn had been subject to the Act , an action brought in 2016 concerning a transaction entered into in 1982 is statute-barred under the Limitations Act . [ 84 ] Accordingly, the application of the Plaintiffs for a declaration that the three documents entered into in 1982, including the conveyance of land from Margaret Bishop to the company Seagull Limited, are invalid for non-compliance with the Real Estate Trading Act , is dismissed. [ 85 ] The Defendant, having been successful on this

summary trial, is entitled to his costs on column 3 of the scale of costs set out in the Rules of the Supreme Court, 1986 . _____________________________ Alphonsus E. Faour Justice