Homelife Glenayre Realty v. F. V. Real Estate Bd. Date:, 2013 BCPC 198

Citation: Homelife Glenayre Realty v. F. V. Real Estate Bd. Date: 20130725 2013 BCPC 0198 File Nos: 21289 and 21460 Registry: Abbotsford IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: HOMELIFE GLENAYRE REALTY COMPANY LTD. CLAIMANT AND: FRASER VALLEY REAL ESTATE BOARD DEFENDANT RULING ON APPLICATION OF THE HONOURABLE JUDGE K. D. SKILNICK Appearing for the Claimant: W. Browne Counsel for the Defendants: D. R. Bennett Place of Hearing: Abbotsford , B.C. Date of Hearing: July 24, 2013 Date of Judgment: July 25, 2013

Introduction [ 1 ] The Claimant Homelife Glenayre Realty Company Ltd. has commenced two separate actions against the Defendant Fraser Valley Real Estate Board. There are three applications before the court in connection with these two actions: (

a) The Defendant applies for an order pursuant to Rules 7(14)(

i) and 16(6)(

o) of the Small Claims Rules dismissing the two claims because this court lack the jurisdiction to hear them and because the second action constitutes an abuse of the process of this court. (

b) The Defendant seeks an order of costs against the Defendant under Rule 20(5) of the Small Claims Rules with respect of the second action. (

c) In the event that the Defendant is successful in showing that this court lacks the jurisdiction to hear these claims, the Claimant seeks an order under Rule 7.1 of the Small Claims Rules transferring these actions to the Supreme Court. [ 2 ] The Claimant has commenced two separate actions against the Defendant, both of which concern the relationship between the parties arising out of the Claimant’s membership in the Defendant society.

A settlement conference was held in court file 21289 and the matter was adjourned by the settlement conference judge for the hearing of the Defendant’s application to dismiss the claim. Very shortly after the settlement conference, the Claimant commenced the second action. [ 3 ] The Defendant argues that this court does not have jurisdiction to hear these claims because they are claims which essentially allege that the Defendant society has breached its constitution and bylaws. The Defendant argues that, under

section 85 of the Society Act, an action founded on a breach of or non-compliance with a society’s constitution or bylaws must be brought in the Supreme Court of British Columbia. The Society Act defines “court” as being the Supreme Court. The Claimant argues that these actions allege breaches of contract and therefore

section 85 of the Society Act does not apply. [ 4 ] The Defendant also argues that the two claims relate to the same subject matter and therefore the bringing of the second action constitutes an abuse of the process of this court. The Defendant says that by bringing the second claim after being told to get legal advice on the wisdom of the first claim, the Claimant has commenced a claim that has no reasonable basis for success. The Claimant says that these are distinct claims. Substance of the Claims [ 5 ] On January 4, 2013 the Claimant filed its claim in action no. 21289 against the Defendant.

The Claim alleged that the Defendant had “suspended and threatened to suspend” the Claimant’s realtors for their failure to complete a mandatory education program. It complained that the Defendant had not disclosed significant fee increases in the cost of those programs, and refused to try and resolve this dispute through alternate dispute resolution or mediation. It also accused the Defendant’s staff of “fabricating facts” and “conspiring to cover up misconduct.” This claim alleged that in doing this, the Defendant was in breach of its contract with the Claimant.

The Claim alleges that in suspending the Claimant’s members, the Defendant is not complying with its bylaws, and that the punishment meted out is harsh and unjust. The Claim alleges a denial of procedural fairness. The Claimant alleges in the Claim that the Defendant has damaged the Claimant’s reputation and ability to conduct its business as the result of the Defendant’s breach of certain portions of the bylaws. [ 6 ] The Claim in action 21460 was filed on May 30, 2013. It alleges a breach of contract on the part of the Defendant.

It alleges that the contract between the parties is “stated and governed in the constitution, bylaws and rules” of the Defendant and alleges that the Defendant has broken the contact “by not providing all the services agreed to and in providing services in a damaging way, intentionally to harm” the Claimant. It alleges that the Defendant enforced its bylaws against the Claimant but not against other offenders.

The Claim alleges a denial of natural justice and unethical conduct in the manner that the Defendant conducted itself in the exercise of its bylaws. [ 7 ] In submissions, the Claimant relied on a membership agreement it had signed with the Defendant which provides that the Claimant has “entered into a contract with” the Defendant.

What the Clamant failed to point out (and what the Defendant noted in reply) is that in the same paragraph, the Claimant has agreed not to sue the Defendant for damages. [ 8 ] At this stage, this court can not rule on the merits of the Claims, and must only decide if the Claims are within the jurisdiction of the Provincial Court of British Columbia. It is clear however is that the contract which the Claimant founds these Claims on is the bylaws of the Defendant society.

The Claimant admits this in its written submission in which it refers to the bylaws as the “contracted rules” which the Defendant is in breach of. Does this Court have jurisdiction to rule on this dispute? [ 9 ] The Defendant argues that this dispute must be heard in the Supreme Court of British Columbia because

section 85 of the Society Act gives that court the jurisdiction to intervene in the affairs of a society. The Society Act defines “court” as meaning the Supreme Court of this province.

Section 85 reads as follows: 85

(1) Despite anything in this Act, if an omission, defect, error or irregularity occurs in the conduct of the affairs of a society by which (

a) a breach of this Act occurs, (

b) there is default in compliance with the constitution or bylaws of the society, or (

c) proceedings at, or in connection with, a general meeting, a meeting of the directors of the society or an assembly purporting to be

such a meeting are rendered ineffective, the court may (

d) either of its own motion or on the application of an interested person, make an order (

i) to rectify or cause to be rectified or to negate or modify or cause to be modified the consequences in law of the omission, defect, error or irregularity, or (ii) to validate

an act, matter or thing rendered or alleged to have been rendered invalid by or as a result of the omission, defect, error or irregularity, and (

e) give the ancillary or consequential directions it considers necessary.

(2) The court must, before making an order, consider the effect of it on the society and its directors, officers, members and creditors.

(3) An order made under subsection (1) does not prejudice the rights of a third party who has acquired those rights for valuable consideration without notice of the omission, defect, error or irregularity cured by the order. [ 10 ] The Defendant argues that these are actions which allege that the Defendant society has conducted itself in such a manner that it has failed to comply with its constitution or bylaws and if that is proven to be the case, it is only the Supreme Court which can rectify this. [ 11 ] The Claimant argues that the Defendant is using

section 85 to make proceedings more costly. It also argues that

section 85 only speaks to correction of procedural matters, but does not offer a remedy to an aggrieved party where the unlawful actions of a society have caused damages. The Claimant is correct in its assertion that often societies are parties to small claims litigation, although in almost all cases, the other party to the litigation is not someone who is a member of the society. [ 12 ] In the bulk of reported cases concerning

section 85, the

section is most often used to remedy a defect of the nature that the type the Claimant suggests in its argument: technical or procedural matters, rather than substantive ones. For example: (

a) In Re Gitxan Treaty Society 2013 BSCS 974, the court used

section 85 to remedy a defect in the bylaws of a society pertaining to quorum. (

b) In Grewal v. Guru Nanak Gurdwara Society 2012 BCCA 430 , the issue was whether the method of giving notice of a general meeting of the society was adequate or not. (

c) In Lion’s Gate B’nai Brith Society v. B’nai Brith Canada 2011 BCSC 1450 ,

section 85 was used to determine who the elected members of a society were. (

d) In Fink v. Shalom Branch #178 Building Society 2011 BCSC 1120 , the court reviewed the issue of whether or not a member of a society was properly expelled from membership. (

e) In Kwantlen University College Students Association v. Canadian Federation of Students 2011 BCCA 133 ,

section 85 was used to remedy a society’s refusal to allow an elected member of its executive committee to sit on the committee. (

f) In Vitre v. St. Peter’s Estonian Evangelical Lutheran Church 2010 BCSC 296 , the court considered the

section in light of an application by the plaintiff to have the annual meeting of the society postponed until his membership application could be determined. (

g) In Samra v. Guru Nanak Gurdwara Society 2007 BCSC 882 , the issue was whether or not certain applications for membership in a society should have been accepted or rejected, which in turn affected the outcome of an election. [ 13 ] In all of these cases, the court had to interpret

section 85 in order to determine whether or not some technical aspect of the society’s bylaws was properly followed, such as whether or not a particular membership was valid, or whether a meeting was properly constituted. I would note however that the Fink decision held that

section 85 applies to the issue of suspension of membership, which is one of the Claimant’s complaints in these actions. [ 14 ]

Section 85 is predicated on the occurrence of “an omission, defect, error or irregularity” which “occurs in the conduct of the affairs of a society” from which there results a breach of the Society Act, non-compliance with the bylaws of constitution of the society or something that takes place at a meeting of the society which is invalid. It is in those cases the Supreme Court may remedy the matter in the ways that the

section contemplates. [ 15 ] In the Claims now before the court, the Claimant alleges that the Defendant is in breach of its contract with the Claimant, the contract being the constitution and bylaws of the Defendant society. Specifically, it is the suspension of the Claimant’s membership by the Defendant which the Claimant alleges was not done in compliance with the bylaws of the Defendant Society, and from which any economic loss flows. Deciding this question requires a determination of whether or not the Defendant has conducted itself in breach of its constitution and bylaws. This is precisely the situation that the legislature has contemplated in

section 85 of the Society Act. No matter how the Claimant labels or dresses up its claims, it must first be found that the Defendant has not complied with its constitution and bylaws before it can be said to be in breach of the “contract” as the Claimant refers to them. If the Defendant has played by the rules as set out in the constitution and bylaws, then the Claimant has no remedy, no matter how unfair the result, because it too has agreed to play by those rules.

But if there has been an “omission, defect, error or irregularity” on the part of the Defendant that has led to a breach of the constitution or bylaws (which the Claimant calls the “contract”), then the law requires that the issue is one which must be decided by the Supreme Court, according to

section 85 of the Society Act.

[ 16 ] I find that the Defendant’s

interpretation of

section 85 is the correct one, and the subject matters of these two claims are ones which are within the jurisdiction of the Supreme Court of British Columbia and outside of the jurisdiction of this court. [ 17 ] I also find that the second claim is a repetition of the matters alleged in the first claim. It has been held by this court in Bank of Montreal v. Smith [1993] B.C.J. No. 2741 (B.C. Prov. Ct.) that the bringing of a second claim for the same relief after the first one has been adjudicated on constitutes an abuse of the process of the court.

In this case the first action had not yet been decided and the settlement conference judge had not directed the issue of its dismissal for consideration. However both parties have proceeded in their submissions as if the issue of the court’s jurisdiction pertained to both actions. [ 18 ] I am ruling on the issue of whether or not the court has jurisdiction in respect of both actions because doing so is in keeping with the purpose of the Small Claims Act as set out in

section 2 of the Act, which is to have claims resolved “in a just, speedy, inexpensive and simple manner.” Accordingly I find that both claims are ones for which this court lacks jurisdiction. Application for Costs under Rule 20(5) [ 19 ] The Defendant seeks costs of up to $2500 pursuant to Rule 20(5) of the Small Claims Rules. That provision reads as follows:

(5) A judge may order a party to pay the other party up to 10% of the amount claimed or the value of the claim or counterclaim if the party made a claim, counterclaim or reply and proceeded through trial with no reasonable basis for success. (Emphasis added). [ 20 ] This rule allows an award of these punitive costs where the claim has proceeded through trial with no reasonable chance of success. In reviewing the jurisprudence concerning this rule, costs under this

section have been allowed only where the matter has proceeded to trial. The phrase “proceeded through trial” has not been interpreted to include situations where the claim has been dismissed prior to trial. Because this issue has now been determined prior to trial, the Defendant may not be awarded these costs. Can these actions be transferred to the Supreme Court? [ 21 ] The Claimant has asked that if the Defendant is successful in its argument that this court lacks the jurisdiction to hear these claims, then these actions should be transferred to the Supreme Court.

Rule 7.1 of the Small Claims Rules allows such an order to be made, but only if the court is satisfied that the monetary outcome of the claim may exceed $25,000. Rule 7.1 (1) of the Small Claims Rules reads as follows: Transfer of claim to Supreme Court

(1) If satisfied that the monetary outcome of a claim (not including interest and expenses) may exceed $25 000, a judge must transfer the claim to the Supreme Court (

a) on application at any time, or (

b) on the judge’s own motion at the settlement conference or trial. [ 22 ] This rule suggests that a court must grant an application to transfer a claim to the Supreme Court provided that it is satisfied that the claim may exceed $25,000 if successful. The mandatory direction to transfer the file follows only after the threshold has been met, which requires the judge to first be satisfied that the claim may be worth more than $25,000. [ 23 ] In Rosenthal v. Burchell [1999] BCJ No. 633 (B.C. Prov. Ct.) the Honourable Judge Bruce (now Madam Justice Bruce of the B.C.

Supreme Court) held that the claim may be transferred where the reasonable possibility exists that the claim may exceed $25,000. (At the time of this decision, the limit was $10,000). The onus of proof to show this rests with the applicant. She wrote: 14 It is also apparent that at this stage in the proceedings it is not incumbent upon the applicant to establish, on the balance of probabilities, that the claim will exceed $10,000.

It is sufficient for the applicant to prove there is at least a prima facie case that the monetary outcome will exceed the jurisdiction of the Court. [ 24 ] Fairness dictates that the claim be decided on its merits in the proper forum.

Unfortunately, the rule does not contemplate the transfer of a matter to the Supreme Court for reasons of jurisdiction, but only for reasons of the dollar value of the claim. (This is something that may be worthy of consideration in any future revisions to the Small Claims Rules. ) The Claimant’s application must be decided on the issue of whether or not the Claimant, if successful, could receive a judgement in excess of $25,000. [ 25 ] In the claims, the Claimant has alleged a number of wrongs on the part of the Defendant, but does not spell out specifically what damage has been suffered, other than to claim $25,000 damages for “member oppression, breach of constitution and bylaws and breach of contract.” There is an assertion that the Defendant’s actions “caused fees to be paid to the Real Estate Council by” the Claimant, but the claim does not spell out how this resulted in $25,000 worth of damages.

There is nothing spelled out in the claims which supports the conclusion that the Claimant has suffered damages in excess of $25,000. [ 26 ] The Defendant makes the argument that if this court lacks the jurisdiction to hear this claim, it also lacks the jurisdiction to make any order other than for dismissal of the claim, because doing otherwise presumes the existence of a valid claim.

An extension of the Defendant’s argument would suggest that this is why Rule 7.1 only allows the transfer of claims to the Supreme Court when damages may exceed $25,000 but not (expressly) where this court lacks jurisdiction to hear the claim for some reason. In the former case, the court can keep jurisdiction as long as the Claimant abandons the excess. In the latter case the court can not make any ruling on the merits

other than to rule that it lacks jurisdiction to hear the claim and to dismiss it. [ 27 ] Whether or not this

interpretation of Rule 7.1 is correct, I find that the Claimant has not established, on the balance of probabilities, that if it is successful at trial, damages will exceed $25,000. Therefore, I am unable to grant the application to transfer these claims to the Supreme Court. Order [ 28 ] In the end result, both Claims will be dismissed on the grounds that this court lacks the jurisdiction to hear them because

section 85 of the Society Act gives exclusive jurisdiction over their subject matter to the Supreme Court of British Columbia. It should be clearly stated that this is not a ruling on the merits of the claims and nothing in this order should be interpreted as any sort of prohibition against the Claimant seeking its remedy in the Supreme Court. The Claimant alleged that a limitation period prevented it from bringing these claims in Supreme Court, but the Defendant disagrees that there is any bar from starting fresh in Supreme Court. I make no finding on any limitation issue. [ 29 ] For the foregoing reasons the Claims in court files 21289 and 21460 are dismissed pursuant to Rile 7(14)(

i) and Rule 16(6) (o).The Defendant is entitled to its costs under Rule 20(2), but not under Rule 20(5). Costs are allowed for filing fees and service fees. [ 30 ] The Claimant’s application to transfer these files to the Supreme Court pursuant to Rule 7.1 is refused. Dated at the City of Abbotsford, in the Province of British Columbia this 25 th day of July, 2013. ______________________________________ The Honourable Judge K. D. Skilnick