Golden Ears Plaza v. Rafieyan et al. Date:, 2013 BCPC 219

Citation: Golden Ears Plaza v. Rafieyan et al. Date: 20130705 2013 BCPC 0219 File Nos: C10974; C10980 Registry: Port Coquitlam IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: GOLDEN EARS PLAZA LTD. CLAIMANT AND: SAEED RAFIEYAN AND MASTERS REALTY

(2000) INC. DEFENDANTS ORAL REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE DE COUTO Counsel for the Claimant: J.A. Jaffer Counsel for the Defendant Masters Realty: M. Bradley

Appearing on his own behalf: S. Rafieyan Place of Hearing: Port Coquitlam , B.C.

Dates of Hearing: March 7, 8 and April 12, 22, 2013 Date of Judgment: July 5, 2013 [ 1 ] THE COURT: This is a matter that was put over for decision this morning to allow me the opportunity to review the evidence and submissions and I have my decision. [ 2 ] These proceedings which commenced on March 7th, 2013 and continued over a number of days separated in time combine two separate but related claims and were heard together as they involve the same parties and related issues surrounding the sale and purchase of certain pre-construction residential units in a development known as "The Villagio".

It is a complex of residential units and retail outlets located at the corner of Shaughnessy Street at McAllister Avenue in the City of Port Coquitlam. [ 3 ] The developer and owner of the project is the claimant, Golden Ears Plaza Ltd., while the defendant, Saeed Rafieyan, a realtor, was the selling agent for a number of the residential units including one purchased by him. The corporate defendant, Masters Realty

(2000) Inc. doing business as RE/MAX Masters Realty (hereinafter referred to as "Masters Realty") is a real estate brokerage firm which had contracted with Mr. Rafieyan to be one of its listed realtors and is named only on the second file, Registry File No. C10980. [ 4 ] The issues that are the subject of these proceedings primarily involve commissions advanced to Mr. Rafieyan as the selling agent of units on which the purchasers were unable to complete on their contracts. [ 5 ] On the other file, No.

C10974, the claim involves a unit that the defendant had personally contracted to purchase but failed to complete. It resulted in the claimant selling it to another purchaser at a reduced price due to a subsequent downturn in the economy. The claimant through this action seeks to recover the difference from the defendant between the price agreed upon and the price it was eventually sold for. [ 6 ] In file No. C10980, the claimant owner/developer seeks the repayment of $12,108.06 as advances given on commissions relating to four units for which Mr. Rafieyan acted as the selling real estate agent.

The claimant alleged in the notice of claim that advances were made to Mr. Rafieyan on the basis that the purchasers had entered into a Contract of Purchase and Sale of the units with the claimant but had failed to complete on their purchase. [ 7 ] Their claim against Masters Realty is on the basis that the advances were made to that company who in turn paid Mr. Rafieyan as one of their sales associates. Golden Ears Plaza Ltd. has demanded repayment of this amount but the defendants did not repay it. [ 8 ] Mr. Rafieyan disagreed with the claim against him by Golden Ears Plaza Ltd. in File No.

C10974 while in the second action he takes issue with the repayment of the partial commissions advanced to him and seeks partial reimbursement of his deposit on the unit he purchased for himself. In addition, by way of a counterclaim, he seeks the payment of the balance of the commission on Unit No. 421. [ 9 ] The corporate defendant, Masters Realty, denied any liability owed to the claimant on the basis that it was not a party to any agreement entered into between Golden Ears Plaza Ltd. and Mr.

Rafieyan. [ 10 ] In the event that Masters Realty was found to be liable for the amount received from Golden Ears Plaza Ltd. on commissions that were advanced on behalf of Mr. Rafieyan but not earned, they in turn seek indemnification for such amounts together with interest and costs, including legal costs, from Saeed Rafieyan as a third party on the basis of an Independent Contractor's Agreement that Mr.

Rafieyan had entered into with Masters Realty. [ 11 ] With respect to the evidence, it is not disputed that Golden Ears Plaza Ltd. was the owner and developer of the complex known as The Villagio or that Saeed Rafieyan was the selling agent for Unit Nos. 103, 223, 411 and 323, or that he worked out of an office owned by Masters Realty pursuant to an Independent Contractor's Agreement. [ 12 ] As the trial progressed, Mr.

Rafieyan conceded that the individual purchasers he had arranged for Units 103, 223 and 411 failed to complete on the purchase of their respective units and the claims involving those three units were accordingly not disputed. [ 13 ] The trial as a result proceeded around the issues as noted above on the remaining Unit No. 323 and, as well, whether commission was payable to Mr. Rafieyan on another unit, 421. [ 14 ] With respect to the claim brought by Golden Ears Plaza Ltd. in both actions, Mr. Mahmud Sunderji testified on behalf of the company.

He is a principal and director of the company and was involved in the pre-construction sales of the condominium units. [ 15 ] The project was undertaken in two phases. Phase 1 involved the construction of 50 strata title units and commercial outlets, while Phase 2 involved the building of 87 units. The 50 units in Phase 1 were completed in September 2008 while the 87 units were available in October 2009. [ 16 ] Mr. Sunderji told the Court that most of the contracts for the purchase and sale of the units in Phase 2 were made between May and June, 2007, and the listing agent for those units was Mr.

Mahamed Karim of RE/MAX All Points Realty. The commission was set at 2.55 percent for the first $100,000 of the purchase price and 1.15 percent on the balance. [ 17 ] As the market was strong during this period he provided an incentive to attract realtors to introduce prospective customers to his project. That incentive was an advance payment of 50 percent of the commission with the balance payable upon the successful completion of the sale. To participate in this incentive, realtors were required to sign a "Selling Realtor Registration Form" for each unit

the realtor acted as a selling agent. Mr. Rafieyan signed such a form for each of the units that are the subject of these proceedings. [ 18 ] On signing the form, the realtor was to receive an advance on the commission based on the "net sale price" with the balance to be received upon the successful completion of the transaction. Net sale price was defined in the agreement as excluding GST among other exclusions. The arrangement further provided that commission was deemed to have been earned upon successful completion of the transaction.

It provided further: In the event that the purchaser does not complete the transaction upon the scheduled date of closing or is in breach of any term or condition of the Contract of Purchase and Sale preventing the scheduled completion of this transaction or any other reason solely determined by the vendor, the selling realtor will repay to or as directed by the vendor any commissions advanced pertaining to this transaction within 14 days after receipt of written demand therefor from the vendor or the vendor's authorized agent. [ 19 ] The defendant, Mr. Saeed Rafieyan, was one of those realtors.

As a selling agent, he introduced purchasers for Units 103, 223, 411 and each of them subsequently entered into a contract for the purchase of their respective units. As noted earlier, Mr. Rafieyan himself entered into a purchase agreement for Unit No. 323. [ 20 ] With respect to Unit No. 103, Hassan and Parniz (phonetic) Fereidouni signed a Contract of Purchase and Sale for that unit on June 24th, 2007 for $419,900 following which Mr. Rafieyan received $3,301.29 as an advance on his commission. [ 21 ] Mr.

Mohammed Reza Jokar signed a Contract of Purchase and Sale for Unit No. 223 on June 17th, 2007 for $359,900 with a deposit of $17,995. As a result, Mr. Rafieyan was advanced $2,935.59 as being 50 percent of the commission he would be entitled to on completion. [ 22 ] As for Unit No. 411, Mr. Zuhar Karkouch entered into a Contract of Purchase and Sale for that unit on July 24th, 2007 for $349,900 with a deposit of $17,495 and Mr.

Rafieyan accordingly was advanced $2,874.64 in commission. [ 23 ] As noted above, the defendant signed a Contract of Purchase and Sale for Unit No. 323 for $369,900 with a deposit of $18,495. His signed offer was accepted by the claimant vendor on June 18th, 2007 and Mr. Rafieyan received an advance of $2,996.54 on his commission. [ 24 ] In each of these agreements the respective purchaser of the units failed to complete the purchase pursuant to the contract entered into by them, including the defendant Mr.

Rafieyan, as a result of their inability to obtain the necessary financing. [ 25 ] The claimant forwarded these advances to Masters Realty based on an agreement between the latter and Mr. Rafieyan. Masters Realty in turn paid the respective amounts to Mr. Rafieyan after deducting expenses pursuant to the said agreement.

This was not in dispute. [ 26 ] As a result of the failure by the purchasers to complete their respective purchases and pursuant to the terms in the Selling Realtor Registration Form, it is clear that Golden Ears Plaza Ltd. is entitled to the return of the advances in commissions it made with respect to Units 103, 223 and 411. Mr. Rafieyan does not take issue with that. [ 27 ] However, Mr. Rafieyan disagrees with the position taken by the claimant that he should return the advance commission on his unit on the premise that he took steps to minimize the loss to the vendor.

His position is that he had found another bona fide purchaser for his unit and that as a result he should not be required to repay the advance but should be paid the balance of the commission that would otherwise have been payable to him. Golden Ears Plaza Ltd. disagrees with that position. [ 28 ] The determination of this issue which forms the subject matter of Action No. C10974 requires an examination of the transactions that took place with respect to Unit No. 323 including a review of the documents that were generated between the parties. [ 29 ] According to Mr.

Sunderji, and as reflected in the Contract of Purchase and Sale relating to that unit, Mr. Rafieyan executed the agreement as the purchaser on June 17th, 2007 to purchase the unit for $369,900 "exclusive of GST" with a deposit of $18,495. It was accepted by the claimant as vendor the following day.

As it was a pre-construction sale, the completion date was estimated to be on or about July 31st, 2009 but set at the tenth day after the vendor or its solicitors notified the purchaser that the unit was ready to be occupied and legal title had been created. [ 30 ] The agreement further provided that if the completion date had not occurred by December 31st, 2009, the Contract was to be considered terminated and the deposit returned to the purchaser.

The Contract also provided that the purchaser would not be allowed to assign his interest without the written consent of the vendor but that such consent was not to be unreasonably withheld. The agreement was amended by way of an insertion of an additional term by which the parties agreed that the "purchaser may list the property on MLS when given permission by the developer to assign". [ 31 ] As noted above, Mr. Rafieyan was unable to secure the necessary financing and as a result he approached the developer through Mr.

Karim in June 2009 and requested permission to list the property on MLS to re-sell it and was granted permission to do so. It was done by way of a written authorization to solicit offers dated and executed June 8th, 2009. A copy of that authorization was entered as an Exhibit in these proceedings. [ 32 ] When the unit was not re-sold, on instructions of the developer their solicitor Peterson, Stark, Scott sent a letter via email to Mr.

Rafieyan dated October 5th, 2009 notifying him of his failure to complete the purchase of Unit No. 323 pursuant to the terms of the Contract of Purchase and Sale but on a without prejudice basis, advising him that the developer was prepared to extend the completion date by a further two weeks from that date. [ 33 ] Mr. Sunderji told the Court that he had been notified by his listing agent Mohammed Karim that the latter had received three

separate offers for Unit 323 from interested buyers that Mr. Rafieyan had provided. The first offer was from a relative of his who had offered to purchase it for $315,000, but it was not accepted. The second one was from an interested party who was willing to purchase the unit as an assignee for $350,000, and that offer was also rejected by the vendor. The third offer produced by Mr. Rafieyan was for $10,000 less than the original purchase price which was also not accepted. [ 34 ] However, Mr. Sunderji instructed Mr.

Karim that they were prepared to accept the original purchase price of $369,900 and were prepared to waive the assignment fee. He said he never heard back from Mr. Rafieyan and never saw or received an executed assignment of his interest to a third party. [ 35 ] When Mr. Rafieyan was unable to complete the purchase despite the extension, the developer took the position that he was in fundamental breach of his contract and advised him that it was terminated. Mr. Sunderji then obtained an appraisal from an independent appraiser, Mr.

Richard Sieb of Intercity Appraisals Ltd. located in Port Coquitlam, who provided a comparative analysis for that unit relative to other similar units in the area. Based on those appraisals, Golden Ears Plaza Ltd. sold that unit on January 30th, 2010 for $347,500. [ 36 ] With respect to Unit No. 421, Mr. Sherazad (phonetic) Siavashis entered into a Contract of Purchase of Sale for that unit on June 18th, 2007 for $383,900 with a deposit of $19,195. It was accepted by Golden Ears Plaza Ltd. on the same day. Mr.

Rafieyan was the selling agent and received an advance on his commission pursuant to the incentive offered by the developer. The completion was estimated to occur on or about July 31st, 2009 but no later than December 31st, 2009. [ 37 ] Subsequently however the purchaser encountered difficulties in obtaining financing for the balance owing on the purchase price as reflected in an email dated November 10th, 2009 and sent by the listing agent, Mr. Mahamed Karim of RE/MAX All Points Realty to Mr. Sunderji. That email is an exchange of emails between Mr. Karim and Mr.

Sunderji as just noted and is found in Exhibit 1, Tab 15, p. 1513 and goes over to 1514, commencing with an email from Mr. Karim as I said to Mr. Sunderji dated November 10th, 2009 at 5:09 p.m. stating: This purchaser has now finally got his financing in place after numerous attempts. However after emptying all his accounts, selling furniture and other assets, he is short on completion in the amount of 15K. He needs 90K and only has 75K. He is supposed to sign docs at his lawyer Thursday and complete Monday. He is asking for the developer's assistance by reducing the price or is forced to let it go.

Let me know. [ 38 ] There is an email from Mr. Sunderji to Mr. Karim it would appear dated November 11th, Wednesday, 2009 at 02:30:08. It reads: Hi Mo, Yes, we do realize what you are doing for us. That's why on Mana's (phonetic) I never asked you but in this case it's more than double and I know it will come up. Here are our thoughts. Outside realtor is same and he is owed roughly $2,900 so he shouldn't get that and we put a second mortgage on his unit with interest for say $12,000. Thanks and yes trust me I realize. If you recall it was me that told them to choose you and I'm happy for that.

That's why in Mana's unit I didn't even let them bring your commissions into it. Let me know. [ 39 ] There is a subsequent email from Mr. Karim to Mr. Sunderji dated November 12th, 2009 at the time of 04:41:07 noted in which he says: Re: Unit 421 [And incidentally all of these emails refer to Unit 421] I will prepare an addendum stating the 15K credit on the purchaser's statement of adjustments. I have confirmation from the outside realtor that he forfeits the balance commission payment.

Can you ask Jalal to prepare an agreement for the 12K second mortgage with a one year term, interest only monthly payments of 6 percent interest. (FYI the purchaser feels he should be able to pay back within six months). It is very important that the purchaser's lawyer is not involved with the second mortgage as this may affect the first mortgage and the second can only be registered after the completion and registration of first. [ 40 ] Mr. Sunderji told the Court that as a result of that email, the developer agreed to take a second mortgage on the property provided that Mr.

Rafieyan agreed to forego the balance of his commission of some $2,900. In doing so, the developer would save the approximate $3,000 in commission that would otherwise have been paid to the selling agent who would have been entitled to it on completion of the sale and was prepared to extend that amount as a credit for the benefit of the purchaser, Mr.

Savioshi, to be applied towards the full purchase price. [ 41 ] By taking this approach, the vendor would have had to only provide a further credit of $12,000 to the purchaser by way of a second mortgage on the property to make up the short fall in the purchase price as outlined in the exchange of emails between Mr. Sunderji and Mr. Karim of November 11th and 12th, 2009. [ 42 ] This course of action clearly benefitted the purchaser as he was now in a position to complete the purchase, and it benefitted the vendor as they were in a position to sell the unit for the full purchase. Mr.

Savioshi took advantage of the arrangement and completed the purchase.

[ 43 ] It was an unusual arrangement entered into between the parties and was seen to be an exception made by Golden Ears Plaza Ltd. in the sale of The Villagio unit. In my view, that unusual process is indicated by the conditions set out in the addendum to the Contract of Purchase and Sale in which the purchaser agreed to keep the terms of the addendum "strictly confidential". It seems to me that the effect of doing so was to keep Mr. Rafieyan in the dark as to the details, and as a result I am unable to determine on what basis his waiver was obtained.

As well, there was no benefit that accrued to him by waiving the balance of the commission payable to him. There was no valuable consideration given to Mr. Rafieyan in exchange for his waiver. [ 44 ] It is a fundamental principle of contract law that for an agreement to be binding there must be valuable consideration given. That seems to be lacking with respect to this particular term which, in my view, renders it voidable at the instance of Mr. Rafieyan. [ 45 ] Mr. Mohammed Karim, the listing agent for the development, also testified.

He is a licensed real estate agent with RE/MAX All Points Realty and had been working in that profession for approximately 15 to 17 years. [ 46 ] He testified that after Mr. Rafieyan had signed the Contract of Purchase and Sale for Unit 323, he had some conversation with Mr. Rafieyan and received an email from him seeking approval to list the unit on MLS for re-sale. The approval was given and the unit was listed on MLS on June 9th, 2009. [ 47 ] In September 2009, Mr.

Rafieyan contacted him by email advising that he had a possible buyer who was prepared to take over the Contract at $10,000 less than the Contract price and less the 1.5 percent assignment fee. Mr. Karim stated that he conveyed this message to the developer who was not prepared to accommodate the proposal but was prepared to waive the assignment fee. [ 48 ] He advised Mr.

Rafieyan of the developer's position and suggested that the latter accept the $10,000 loss on the basis that it would be reduced when the commission was advanced to him together with the commission that would be paid to him on completion of the sale. [ 49 ] According to Mr. Karim, Mr. Rafieyan said he thought the developer should bear the cost, but later emailed him to let him know that he had a potential buyer who was almost ready to purchase the unit for $350,000. Mr. Karim did not consider this to be a proposal.

He stated he never received a proposal from the defendant for the full purchase price in whatever form it may have taken and that the only potential agreement he saw was one for $20,000 less than the original purchase price. [ 50 ] As for the sale of Unit 421, Mr. Karim told the Court that prior to the completion date, the purchaser advised that he may have difficulty in obtaining the necessary financing to complete the purchase and was told to contact his realtor and come up with a plan. The purchaser at that time revealed that he did not want to deal with his realtor, the defendant, in any way whereupon Mr.

Karim said he called Mr. Rafieyan and explained what he had been told. According to him, Mr. Rafieyan at that time gave him permission to continue to have discussions with the purchaser, Mr. Savioshis. They did so and proceeded to make the appropriate arrangements with Mr. Savioshis as outlined above to enable him to complete the purchase on his unit. [ 51 ] In defending the claims, Mr. Rafieyan testified that he had been a licensed real estate agent since 2003 and was with RE/MAX Masters from 2005 until 2007.

He is currently working for Homeland Realty. [ 52 ] He told the Court that he became aware the residential units of the development complex known as The Villagio were to be available for sale at the pre-construction stage. He was attracted to it because of the 5 percent deposit, the reduction of the assignment fee, and the eligibility to list the unit on MLS once a sale was completed. As a result, he introduced potential clients to the project over a period of time in 2007. [ 53 ] He also invested in a unit on the expectation that it was a good investment.

He and five others each committed to buy a unit and signed their respective Contract of Purchase and Sale. While the purchases were made in 2007 possession was expected to be in 2009 after the units were built. Unfortunately, and contrary to expectations, the market turned downwards in the intervening time resulting in financing difficulties for the purchasers. [ 54 ] With respect to his unit, Mr. Rafieyan listed it from June to December 31st, 2009 on MLS and testified he managed a lot of showings as a result. He subsequently found a buyer, a relative, who offered $315,000 with the condition that Mr.

Rafieyan would look after the difference between the original purchase price and this amount, but that offer was not accepted by the developer. [ 55 ] He said he then received another offer to purchase by way of a fax assignment dated September 18th, 2009. It was an offer to purchase for $350,000 from Dale and Sandra Reilly with Mr. Rafieyan's deposit on the unit of $18,495 to be kept by the developer. On receipt of the assignment, he said he faxed a copy of it to Mr. Karim's office on the night he received it and followed it up with a telephone call the next day to Mr. Karim's receptionist, Ms.

Nancy Norden. [ 56 ] Mr. Rafieyan referred to a copy of the purported assignment of Contract of Purchase and Sale between himself as assignor and the Reillys as the assignees dated September 18th, 2009. It was one of many documents entered together as one of the Exhibits and shows that it was faxed from the offices of Keller Williams Elite Realty to Mr. Rafieyan on September 18th, 2009 at 10:24 p.m. I note, however, there was no supporting document produced by the defendant to corroborate the fact he faxed it to Mr.

Karim that night. [ 57 ] He testified that sometime in the summer of 2009 the developer told him that the purchaser of Unit No. 421, Mr. Savioshi, was unhappy with his work and after some back and forth discussions between the developer and himself, he said he was persuaded to waive the balance of his commission. [ 58 ] In cross-examination, it was pointed out to him that the assignment that he had produced to the Court only had the first four of six pages and was asked about the missing pages.

He replied that he did not have the other two pages and when asked, said he had signed it but had not initialled each page. He said the prospective assignees initialled each page. [ 59 ] When reminded about his evidence in direct that he had phoned Mr. Karim's office the next day following receipt of the assignment, and when told September 18th, 2009 was a Friday, he replied that he did not phone the next day but that he obviously meant

the next business day. He added "This is obvious as we are businessmen". [ 60 ] He was asked how the vendor would have received the full purchase price if the assignment was accepted, as s. 5.18 of the assignment provided that the assignment included the GST, while his Contract with Golden Ears Plaza Ltd. specifically excluded the GST from the purchase price.

His reply was that it could have all been sorted out once the assignment was accepted. [ 61 ] According to him the 6 percent GST would have been deducted from the assignment amount and notwithstanding the clear provision of s. 5.18 it would have been "open to negotiation". According to Mr.

Rafieyan's thinking, this meant that while s. 5.5 of the assignment provided that he was responsible to pay the assignment fee of $3,564.05, because this had been waived, this amount could have been applied towards the difference between the original price and the assignment amount. [ 62 ] In addition, according to him, the assignees would have been entitled to the new homeowners rebate and he said this amount could have been the subject of negotiation and applied as credit towards the difference as well. [ 63 ] Mr.

Rafieyan took great umbrage at the fact that the developer or his agent did not return his calls nor contact him and was thus unable to discuss these proposals with them although he did acknowledge that there was no obligation on the developer's part to call him back. His position, which he repeated on a number of occasions, was that the developer was not acting in good faith in dealing with him and that Mr.

Sunderji deliberately did not want him to succeed with his proposal with respect to the assignment because that would have required him to be paid the commission on it as well as on two others, Units 421 and 113, and that the developer deliberately went about creating stumbling blocks or placing obstacles in his way so that he would fail in his endeavours. [ 64 ] While these were the defendant's personal beliefs, in my view the evidence is lacking to support them. Mr.

Rafieyan testified that although Unit No. 323 was not ultimately purchased by him or the Reillys (the assignees), he was of the view that the commission was owed to him because he had brought a bona fide customer who was prepared to purchase the unit, but he was unable to proceed any further only because of the developer's lack of response although he conceded that the assignment was not binding on the developer. [ 65 ] As for Unit No. 421, Mr. Rafieyan testified that as the purchase was completed, he was entitled to the commission.

He stated that while he agreed he sent an email waiving the balance of his commission, it was written under duress and was not done by consent. [ 66 ] With respect to the email referred to above from Mr. Karim to Mr. Sunderji dated November 10th, 2009 in which he outlined the difficulties the potential purchaser of Unit 421, Mr. Savioshi, was having and wrote that he was "short on completion in the amount of 15K", Mr. Rafieyan referred to it as "a joke".

He continued by stating, "They expect a kickback from me", and, "They were pissed off at me". [ 67 ] At other times in his cross-examination when discrepancies between his testimony and the documents were put to him for an explanation, he responded by saying that counsel was "nit-picking". [ 68 ] It strikes me that much, if not all, of what Mr. Rafieyan had in mind was very speculative and presumptive, relying greatly on the goodwill of the assignees that they would be prepared to apply the homeowners rebate and assignment fee towards the difference in price which would have been Mr. Rafieyan's responsibility.

There is nothing in the evidence to suggest that the assignees were interested in such an arrangement. [ 69 ] As for the corporate defendant, Denise Solomon (phonetic), their current office manager, described the business relationship between the company and the realtors who work out of their offices. Each such realtor signs an Independent Contractor Agreement with Masters Realty that governs their relationship. She confirmed that Mr. Rafieyan was one of the listing realtors under contract with Masters Realty pursuant to an agreement entered into on May 5th, 2006. [ 70 ] Ms.

Solomon referred to the provisions of that Agreement in emphasizing the independent nature of the working relationship between Masters Realty and Mr. Rafieyan. That Agreement specified the independent nature of the arrangement by providing that Masters Realty as the broker "retains contractor as an independent contractor real estate sales associate or broker and contractor shall be an independent contractor with control over the manner and means of his performance". The realtor contractor was free to set his own office hours and amount of work. [ 71 ] Under the Contract, Mr.

Rafieyan also agreed to have all commissions and other compensation made payable to the broker. The broker in turn agreed to disburse the funds to the contractor upon receipt and after deducting office expenses incurred by the broker, which was set at $895.00 per month in Mr. Rafieyan's case. [ 72 ] As a result and as testified to above, Golden Ears Plaza Ltd. forwarded the commissions payable to Mr. Rafieyan, both advance and earned, to Masters Realty who was then responsible for disbursing the amounts to Mr. Rafieyan after deduction of the agreed upon expenses. Masters Realty did disburse those funds to Mr.

Rafieyan as described, including those which were advanced pending completion of the sale of those units referred to above but which ultimately did not complete. [ 73 ] Following the conclusion of the hearing of evidence, the parties made the following submissions. [ 74 ] Mr. Jalal Jaffer, counsel for Golden Ears Plaza Ltd., submitted that with respect to Claim No. 10974, his client was seeking to recover the loss suffered by having to sell the defendant's unit at a reduced price.

That amount is based on the difference between the original purchase price of $369,900 and $347,500 which was the price the unit was eventually sold for, plus accrued interest and costs which came to $27,201.84. Golden Ears Plaza Ltd. has stated it is prepared to forego the amount in excess of $25,000 due to the $25,000 jurisdictional limit of this Court. [ 75 ] As for Mr. Rafieyan's assertion that he had a completed and valid assignment on hand and had faxed a copy to the claimant, Mr. Jaffer argued that it was not credible and made no sense in the circumstances.

He referred to the following points in support of his argument:

1. The copy of the assignment produced by Mr. Rafieyan in Court and referred to by him during the course of his testimony was incomplete and that it had the last two pages missing, including the critical signature page. In addition, he had not initialled each of the pages as a party to the agreement at the time it was signed. 2. The very late unexplained production of the missing last two pages well after Mr. Rafieyan had concluded his testimony and after other witnesses had testified rendered the document suspect especially in view of his earlier testimony that he did not have those pages. 3.

The suggestion made by Mr. Rafieyan that if the developer had accepted the purchase price set out in the assignment combined with the losses Mr. Rafieyan was prepared to cover by forfeiting his deposit of $18,495, the commission payable to him as the selling agent of some $6,000, the 1.5 percent assignment fee, as well as paying the GST himself of some $15,000. Golden Ears Plaza Ltd. would have received the same amount as the original price, was preposterous. He said the total amount that Mr.

Rafieyan was suggesting he was prepared to take responsibility for, approximately $43,000, was just not believable in the circumstances. In any event, the assignment was not unconditional as it contained a "subject to" clause that had not been removed. That clause provided that the offer was subject to the assignee receiving, reading, and approving the original disclosure statement and any amendments by September 30th, 2009. 4. As for Mr. Rafieyan's suggestion that his Unit No. 323 was not sold by the developer at fair market value, Mr.

Jaffer argued that the selling price was based on an independent appraisal conducted by qualified, experienced and objective appraisers. He urged the Court to accept this independent appraisal over that provided by Mr. Rafieyan who had prepared it himself and clearly had a self interest in it. 5. With respect to whether the commission should be paid on the sale of Unit 421, Mr. Jaffer referred to Mr. Rafieyan's expressed waiver of his commission as set out in his email of November 11th, 2005 to Mr. Karim as the basis of his client's release from having to pay it. 6. Lastly, Mr.

Jaffer argued that Masters Realty should also be found to be liable for the repayment of the commissions advanced pursuant to the provisions of the Real Estate Services Act , S.B.C. 2004, c. 42 and as a result of the relationship of the corporate defendant to the personal defendant as a broker within the definition of that Act. [ 76 ] As for Mr. Rafieyan's defence, I have already referred to his position as it relates to the assignment of his interest in Unit No. 323. He argued that the assignment fee would have been waived and he was willing to forego his deposit of $18,495.

He said he was prepared to add a further $1,400 to the amount of his deposit which would have brought the total amount close to $19,900. He said that when that amount was added on to the offer to purchase the unit for $350,000 as set out in the assignment, it would bring the total amount of the purchase price up to the original purchase price of $369,900. [ 77 ] With respect to the developer's position that the assignment was not an unconditional one, he argued that it was essentially a "subject free offer" as the providing of the disclosure documents was a relatively routine and simple matter. [ 78 ] Mr.

Rafieyan submitted that the developer exercised bad faith in the circumstances and was holding their acceptance of the assignment and that the assignment itself was a contract prepared by lawyers to favour the developer. He said he filled in the date on the last page of the assignment and signed the document. He indicated it was not a big deal and his cross-examination on this point by the developer's counsel was just nit-picking. [ 79 ] His position was that the unit was undersold based on his own appraisal which indicated that the unit's value was around $368,713.

He stated that conducting an appraisal was not "a big deal" and that "anybody can do it". He suggested an appraiser was not necessary as all the MLS listings were available to anyone. As to his own appraisal, he testified that he prepared it, checked it based on MLS listings he obtained, and then calculated the value of Unit No. 323. He had another agent just "certify it". He submitted that his appraisal was good enough and based on it questioned why the unit was deliberately undersold.

He answered his own question by stating that "they", that is, the developer and the "inside listing agent", were counting on his deposit and his commission as part of the total value of the unit and proceeded with the sale for a "quick cash grab". [ 80 ] As for his email to the listing agent in which he agreed to waive his commission on the sale of Unit No. 421 to Mr. Savioshi, Mr.

Rafieyan's explanations in submissions were often difficult to follow as I found his comments to wander off in those instances in a convoluted diatribe, often interspersed with comments such as "the developer wanted kickbacks"; "the unit was over-priced"; "in proceeding with the sale of Unit No. 421, the developer was engaged in a racket to make money"; and "they court-martialled me". [ 81 ] While comments or expressions of opinion such as these were not of any assistance, I gather that his basic submission was that his consent was obtained under duress and without his full consent. [ 82 ] As for the corporate defendant Masters Realty and whether they were liable to repay the commissions, their counsel Ms.

Bradley argued that there was no contractual relationship between her client and the claimant as Masters Realty never entered into any agreement with Golden Ears Plaza Ltd. She argued that as a result there was no obligation on her client's part to repay the commissions. She relied on the Independent Contractor Agreement to support her position and the principles set out in Khullar v. Lee , 2011 BCSC 1648 . [ 83 ] Masters Realty in turn seeks to recover the legal costs of these proceedings from Mr.

Rafieyan based on the specific agreement to that effect set out in the Independent Contractor Agreement, notwithstanding that the Small Claims Act precludes recovery of legal costs. Ms. Bradley relied on Vancouver Golf Club v. Staschuk , [2011] B.C.J. No. 2622, 2011 BCPC 426 as authority for her position. [ 84 ] In deciding the issues raised in this file, I have carefully considered the evidence, submissions, and authorities provided. [ 85 ] In respect of the unit that Mr.

Rafieyan contracted to purchase but was unable to complete, there was much dispute over the assignment and the reliability of the appraisal submitted by Mr. Rafieyan.

[ 86 ] Dealing with the appraisals, I am satisfied that the one prepared by Mr. Richard Seib of Intercity Appraisals Ltd. is an objective and impartial one prepared by a qualified and experienced appraiser who had no vested interest in the outcome. [ 87 ] The same cannot be said of the one produced by Mr. Rafieyan. He prepared it himself and he clearly had a vested interest in the outcome.

Merely because the undated, handwritten half page which he produced and identified as his appraisal and which appears to consist of a list of a number of units sold, but without any relevant details or any accompanying information as to when or how it was prepared, was certified by another licensed realtor, does not make it so. I note that there is nothing on that document to indicate who the realtor is, where he works, how long he has worked as a realtor, and what his experience and qualifications are in preparing appraisals.

In the circumstances, I do not have the same degree of confidence in that appraisal, if any, as I do not know on what basis he certified the appraisal, that is, whether he merely rubber-stamped the information presented to him by Mr. Rafieyan, or whether he conducted his own independent comparative analysis of the market and satisfied himself objectively that the information presented to him was accurate before signing his name to the document. For that matter, there is no evidence indicating that when he certified Mr.

Rafieyan's data as being accurate and a true account of the market value set out therein. [ 88 ] For those reasons, I prefer the appraisal presented by Mr. Seib and accept it over that of Mr. Rafieyan. Having so concluded, I am also satisfied the unit was sold at fair market value at the time resulting in a loss to Golden Ears Plaza Ltd. of the difference between the original purchase price and what it was eventually sold for. [ 89 ] As for the assignment, as noted by Mr. Jaffer, it was not an unconditional one.

It was conditional upon acceptance by the purchaser of the disclosure statements and amendments on or before September 30th. [ 90 ] Mr. Rafieyan may well consider that the pre-conditions for acceptance was not a significant obstacle but in my view it goes to the very foundation as to whether it was or was not a document that could have been acted upon as being complete. [ 91 ] I am of the opinion that it was not while the "subject to" clause remained outstanding. There is no evidence that it was ever removed. For that matter, I am not even sure it was presented to the developer based on Mr.

Sunderji's evidence that he never received it and more particularly in light of the email sent by Mr. Rafieyan to Ms. Norden on September 22nd, 2009 at 4:23 p.m. In that email relative to the unit he says the following: As to my unit, I have spoken to the developer and brought in an offer of 350K. I have the offer on hand now and I need the commission money to pay the buyer's agent otherwise cannot accept the offer as there is not enough funds in the deposit ($18,500 CAD) to both cover the discount they want and pay the commission. I asked the developer for an exception.

Apparently, they want to make maximum profit in these hard times which is quite unusual and harsh approach to this kind of a situation. My unit based on many objective CMA's done by a few colleague agents of mine is only worth 335K to 340K and we are bringing an offer 10K over that and they still aren't happy. This puts us in a very difficult situation whereby I cannot complete based on developer's strict agenda on pricing. I had a copy of the offer and it could still be revived.

All we need is $15,000 discount from the developer to make this purchase. [ 92 ] It is noteworthy that in that email there is nothing mentioned by way of confirmation that he had forwarded it to Ms. Norden, Mr. Karim, or Mr. Sunderji at an earlier time or date. Rather, the tenor of the email suggests that he had not. Based on what he wrote in that email, I am unable to conclude that he more probably than not had forwarded it. [ 93 ] With respect to Mr. Rafieyan's apparent consent to waive the balance of his commission for the sale of Unit 421, I find Mr. Sunderji's email to Mr.

Karim sent on November 11th, 2009 at 0230:08 somewhat disturbing. In it, he clearly stated that his position was that the "outside realtor", that is, Mr. Rafieyan, should not get the commission owed to him of roughly $2,900 without specifying the reason. [ 94 ] In my view, the use of the words "outside realtor" to describe Mr. Rafieyan is somewhat telling in the circumstances. Why should Mr. Rafieyan not get the balance of his commission if the sale to Mr.

Savioshi who was introduced to the developer by him was completed? [ 95 ] In fact, there was a contractual obligation as a result of the agreement to that effect entered into between Golden Ears Plaza Ltd. and Mr. Rafieyan. [ 96 ] What is the legal basis upon which Golden Ears Plaza Ltd. felt it could renege on that agreement such that Mr. Rafieyan would not receive what he was entitled to? As noted above, the waiver was set out in the email sent by Mr. Rafieyan to Mr. Karim at 9:57 a.m. on November 11th which was followed up by an email from Mr. Karim reporting to Mr.

Sunderji at 0441:07 on the following morning of November 12th that he had the necessary confirmation from the outside realtor. [ 97 ] What representations and what disclosures were made to the former for his willingness to forfeit his commission, particularly in light of the fact that he was not receiving any benefit from it? It seems to me from the evidence that the only basis for it was that "he shouldn't get" as decided by Mr. Sunderji and it would seem that Mr. Karim sought to obtain the waiver from Mr. Rafieyan on that basis.

The real intent behind their scheme was to apply that amount as credit towards the purchase price thereby enabling Mr. Savioshi to complete the purchase. [ 98 ] I am not persuaded that there was this disclosure of their real purpose behind the waiver presented to Mr. Rafieyan such that it could be said his waiver was an informed one in the circumstances.

As a result, I do not think that it can be said that his was a full consent with knowledge of all the circumstances. [ 99 ] In light of my conclusions as set out above, I am satisfied that the developer sold Unit No. 323 at fair market value which was a lesser amount than what Mr. Rafieyan had contracted to purchase it for. As he was unable to complete on his purchase it is not disputed he has forfeited his deposit of $18,495 on that unit.

[ 100 ] As well, based on the above, I find that he is obligated to compensate the developer for the difference between the amount he contracted to purchase it for and what it was ultimately sold for, that is, $22,400 plus interest and costs as calculated by the claimant. [ 101 ] If the final amount exceeds the monetary limit of this Court, the amount will be fixed at $25,000. That amount will be offset by the amount of the deposit. [ 102 ] In addition, it was conceded by the claimant that the defendant is entitled to receive his commission or the balance of it for the sale of Unit No. 113 which is $3,114.43.

That amount will also be applied towards the remaining balance on the claim which leaves an outstanding amount owed by the defendant to the claimant of $3,390.57. [ 103 ] However, for the reasons noted above, I am not persuaded that Mr. Rafieyan's consent to forfeit his commission from the sale of Unit No. 421 was an informed one based on full disclosure of all the facts. There was a hint of subterfuge as reflected in the contents of the email exchange I have referred to above. In the circumstances, I have concluded that it was open to Mr.

Rafieyan to withdraw his consent once the true situation was known to him as he has done. As a result, he is entitled to be paid the balance of the commission from the sale of the unit to Mr. Savioshi. That amount will also be applied towards the remaining balance owing by the defendant to the claimant. [ 104 ] With respect to the return of the commissions advanced on the sale of the units that were not completed, Mr. Rafieyan has conceded that and there will accordingly be judgment for that amount which was calculated at $12,108.06.

That is based on the following advances that were made: $3,301.29 on Unit No. 103; $2,996.54 on Unit No. 323; $3,874.64 on Unit No. 411; and $2,935.59 on Unit No. 223. [ 105 ] The remaining issue is whether the monies owed by the defendant to the claimant is recoverable from the corporate defendant, Masters Realty, as the commissions were forwarded to the company. They in turn paid out the amounts to Mr. Rafieyan after deducting the monthly expenses pursuant to an agreement with the realtor. Based on the evidence, I am satisfied that they did so acting in good faith. [ 106 ] As noted earlier, Mr.

Jaffer relies on the provisions of the Real Estate Services Act to support his argument, while Ms. Bradley relies on the principles set out in Khullar , supra , while agreeing that Masters Realty was a brokerage within the definition set out in the Real Estate Services Act . It is also not in dispute that Mr.

Rafieyan was a licensee under the provisions of that Act during the relevant time and continues to be so. [ 107 ] Section 27(1) of that Act requires that a licensee engaged by a brokerage to promptly pay to the brokerage all money held or received from for or on behalf of a principal in relation to real estate services whether or not the remuneration has already been earned. As a result, it was clearly incumbent on Mr. Rafieyan to ensure that any remuneration he received by way of commissions whether earned or advanced was delivered to the brokerage as has been done in this case.

The brokerage, in this case, Masters Realty, was required to place that money into a brokerage trust account under s. 27(2) which clearly indicates that such money was to be held in trust.

Section 30 lists when money paid into a brokerage trust account could be withdrawn, and s. 31(

c) stipulates that it could be withdrawn under s. 31. Section 31(1) provides: 31

(1) Money in a brokerage trust account that is intended as remuneration for a licensee may be withdrawn from the account when it has been earned as determined in accordance with the rules. [ 108 ] Rules are defined under s. 1 of the Act as: "... rules made by the real estate council under

section 86". The Real Estate Council Rules , Division 3 (Commissions and other Remunerations) s. 5-15(1) states: 5-15

(1) Money in a brokerage trust account that is intended as remuneration for a licensee is to be considered earned, for the purpose of authorizing withdrawal under section 31(1) ... of the Act, in the circumstances described in this section. [ 109 ] It then proceeds to list when money may be withdrawn and those instances when the brokerage holds the money as a stakeholder under s. 28 of the Act which does not apply to the circumstances in the case at bar. [ 110 ]

Section 5-15(4) however applies to those situations when money is held by the brokerage other than as a stakeholder. It provides that it may be withdrawn: (

a) subject to paragraph (b), in accordance with the service agreement or other agreement under which the applicable real estate services are provided, or (

b) at a time otherwise agreed to in writing by the client. [ 111 ] In the case at bar, the agreement between the developer and the selling agent, Mr. Rafieyan, stipulated that any commission paid in advance was deemed to have been earned upon the successful completion of the transaction. In the event the purchaser failed to complete, the selling realtor was required to repay any commissions advanced pursuant to such transaction. [ 112 ] It would thus seem from the above that on the face of it Masters Realty withdrew the advanced commissions from their trust account prior to those monies having been earned by Mr.

Rafieyan and would accordingly appear to have done so in contravention of the Act and accompanying Rules. However, does the Act and the Rules apply to the circumstances in this case in light of the Independent Contractor Agreement signed by Mr. Rafieyan with Masters Realty?

[ 113 ] Ms. Bradley has argued that it is not. Khullar, supra, dealt with this situation in which a licensed realtor, Mr. Lee, had entered into a contract with the Khullars for the sale of his home to them for a specified price. He then breached his contract and sold his property to a third party. The consequence of the loss to the Khullars was that they ended up having to buy a house at a higher price because the market conditions had changed upwards. They brought an action against Mr. Lee for breach of contract and also sought to recover from New Star Realty Ltd. with whom Mr.

Lee was under contract as a listing agent. The plaintiffs took the position much like in the case at bar that New Star Realty was vicariously liable for the actions of Mr. Lee. [ 114 ] After considering the Real Estate Services Act , Wong J. concluded in paras. 99 to 102 as follows: [99] Mr. Lee's relationship with New Star Realty was as an independent contractor operating as a licensed realtor listed with the office of New Star Realty. He was not an employee. [100] The imposition of vicarious liability is a concept foreign to the law of contract.

Contract law would generally say that vicarious liability cannot be imposed for a breach of contract because the vicarious party has no privity. Absent any privity to the contract, the company cannot be held liable for subsequent breach by another party to that contract.

Absent an employee-employer relationship of agency, I have not been referred to any authority holding a non privy to a contract vicariously liable for a breach of contract. [101] The law of vicarious liability only applies to employers for tort claims against employees committed within the scope of their employment. [102] Cases on vicarious liability do not support imposing liability for the torts of an independent contractor.

If a real estate agent in an independent contractor, as in this case, liability for his wrongs will not attach to the realty company who employed him. [ 115 ] It seems to me that the facts in the case at bar fall within the parameters of the principles stated by Wong J. and as I am bound by his decision, it follows that the liability arising out of Mr. Rafieyan's breach of contract cannot attach to Masters Realty.

As a result, I conclude that the claim against the corporate defendant must be dismissed and I accordingly do so. [ 116 ] The remaining issue is whether Masters Realty can recover its legal fees from Mr. Rafieyan which were occurred in defending the claim based on s. 7 of the Independent Contractor Agreement which provides for indemnification in certain circumstances. That

section provides among other things that: 7.

Contractor agrees to indemnify, defend, and hold broker harmless from and against and to reimburse them for damages, loss or liability for which any of them are held liable or which they reasonably incur in connection with any claims including reasonable lawyers' fees, court costs, and litigation expenses. [ 117 ] The corporate defendant relies on this indemnification clause in seeking to recover legal costs notwithstanding that the Small Claims Act and the Rules preclude the recovery of such fees. [ 118 ] This issue was addressed by Woods P.C.J. in Vancouver Golf Club , supra .

He raised the issue in the following way in para. 62: [62] The Club seeks to recover $11,461.08 in legal fees. It does so on the basis of an express contractual right found in the promissory note [signed by the defendant]. [ 119 ] The situation facing this Court is very similar in that there was a specific agreement to that effect in the Contract described above.

In concluding that the claimant was entitled to recover its legal fees as a result of the contract, Judge Woods wrote in para. 63: [63] Were it not found in the promissory note, were there not to be a contractual entitlement, of course under the Small Claims Act and Rules solicitor and own client fees would not be recoverable. But on the authority of MacLean Distribution v.

Miles , 2007 BCPC 98 , contractual claims for legal fees and expenses are recoverable in the Small Claims Division of the Provincial Court and so, as to there being a basis in law upon which the claim can be asserted, the Club is on solid ground. [ 120 ] In my view, that approach is applicable to the case at bar and I am satisfied that Masters Realty is entitled pursuant to its agreement with the defendant to recover its legal costs from him.

As to the amount claimed, I know that counsel for Masters Realty was actively engaged throughout the proceedings in filing a brief of documents and authorities, the time spent in court examining her witness and cross-examining other witness when appropriate over the course of the trial which lasted several days and in making submissions. [ 121 ] The legal costs that were incurred included trial preparation and attendant expenses and disbursements, including correspondence and reporting to the client.

Upon taking into account all these factors, I have not been persuaded that the amount sought is unreasonable in the circumstances. As a result, there will be judgment against the personal defendant in favour of the corporate defendant for $9,793.60. [ 122 ] In

summary, the claimant's claim against Mr. Rafieyan is allowed for the difference between the Contract of Purchase and Sale price and the amount Unit No. 323 was sold for. The claim for the repayment of the advance in commissions for sales that were not completed is granted.

[ 123 ] The claim by Mr. Rafieyan against Golden Ears Plaza Ltd. for the payment of the balance of his commission for the sale of Unit No. 421 is allowed. [ 124 ] The claim against Masters Realty is dismissed while the claim by them against Mr. Rafieyan for legal costs is allowed. (ORAL REASONS FOR JUDGMENT CONCLUDED)