The Disciplinary Power of Real Estate Boards and Associations #505

Aug 15, 2018

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Brian Taylor
Norton Rose Fulbright LLP

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A REALTOR®'s conduct is subject to review by a variety of bodies. As agents, their conduct is subject to review by the courts where it is alleged that conduct was negligent, breached contractual requirements or was in breach of their fiduciary duties. As licensees, their conduct is subject to review by the Real Estate Council of BC where it is alleged that conduct was in breach of the Real Estate Services Act or the Real Estate Development and Marketing Act and their accompanying Rules and Regulations.

The third and less often discussed bodies of review are the real estate boards and associations to which REALTORS® belong. Those boards and associations adopt rules, regulations and Codes of Ethics to which each REALTOR® agrees to comply as a condition of membership. These rules, regulations and codes set out standards of conduct to be followed by the members. Complaints between members regarding alleged breaches are investigated and adjudicated internally by members of the boards and associations in accordance with procedures agreed to by the members and set out in the bylaws.

A recent case1 highlighted the process used by one board and the court's review of that process. In this case, two REALTORS® were members of the same real estate board. As a condition of membership in that board, they had both agreed to abide by the bylaws, rules, regulations and Code of Ethics of the board. Within these, the board had laid out an extensive and comprehensive discipline process.

One REALTOR® lodged a complaint against the other, claiming the actions of the other were in breach of the Code of Ethics. The complaint was first reviewed by an investigative panel, which concluded that a breach had occurred. The investigative panel, as per the board's procedures, offered the REALTOR® two disciplinary choices: consent to the findings of the investigative panel or request a hearing. The REALTOR® chose the latter. As per the board's procedures, a hearing panel, which did not contain any members from the investigative panel, was struck and a hearing was held. The hearing panel concluded, on the evidence presented at the hearing, that a breach had occurred and assessed punishment in accordance with the board's bylaws, rules and regulations. The REALTOR® complained but an internal appeal panel, made up of different members, upheld the original decision.

The REALTOR® sought relief from the courts, claiming procedural unfairness had occurred. The court found that that the board had followed its own regulations and that the REALTOR® had received adequate notice and a fair opportunity to be heard before an unbiased panel and the court dismissed the proceedings. In doing so, the judge noted that the matter before her dealt only with the process followed and not the merits of the decision by the hearing panel. The judge accepted that the decision makers did not act in bad faith and that voluntarily incorporated associations are entitled to determine their own procedures.

The REALTOR® appealed the judge's decision and that appeal was dismissed by the BC Court of Appeal. On many of the arguments raised by the appellant, the Court of Appeal adopted a deferential standard toward the board and its procedures. It stated that "the Board has recognized the importance of procedural fairness in the Regulations governing discipline and to which the members have agreed to be bound. As a general proposition, those regulations exemplify a high and rigorous standard of procedural fairness. As the judge found, and I agree, the fundamental requirements of procedural fairness were met in this case, whatever minor errors may have occurred."2

While this decision dealt only with the bylaws, rules and regulations of one real estate board, the bylaws, rules and regulations of the other boards in BC are similar. This decision confirms that where those bylaws, rules and regulations have been adopted by the members who have agreed to abide by them, and when they provide members a fair opportunity to be heard before an unbiased panel, the courts are unlikely to intervene. As such, REALTORS® should be cognizant of the bylaws, rules and regulations of their board and the consequences for breaching them.

Brian Taylor
Norton Rose Fulbright LLP

  1. Redekop v. Okanagan Mainline Real Estate Board, 2018 BCCA 226.
  2. Redekop v. Okanagan Mainline Real Estate Board, 2018 BCCA 226, at para. 81.

Legally Speaking is published monthly. Real estate boards, real estate associations and REALTORS® may reprint this content, provided that credit is given to BCREA by including the following statement: "Copyright British Columbia Real Estate Association. Reprinted with permission." BCREA makes no guarantees as to the accuracy or completeness of this information or the currency of legal information.

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