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SUPREME COURT OF CANADA
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Citation: Association des courtiers et agents immobiliers du Québec v. Proprio Direct inc., [2008] 2 S.C.R. 195, 2008 SCC 32 |
Date: 20080530 Docket: 31664 |
Between:
Association des courtiers et agents immobiliers du Québec,
François Pigeon, in his capacity as Syndic of the ACAIQ, and
Discipline Committee of the Association des courtiers et agents immobiliers du Québec
Appellants
and
Proprio Direct inc.
Respondent
Official English Translation: Reasons of Deschamps J.
Coram: McLachlin C.J. and Bastarache, Binnie, LeBel, Deschamps, Fish, Abella, Charron and Rothstein JJ.
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Reasons for Judgment: (paras. 1 to 40)
Dissenting Reasons: (paras. 41 to80):
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Abella J. (McLachlin C.J. and Bastarache, Binnie, LeBel, Fish and Charron JJ. concurring)
Deschamps J. (Rothstein J. concurring) |
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Association des courtiers et agents immobiliers du Québec v. Proprio Direct inc., [2008] 2 S.C.R. 195, 2008 SCC 32
Association des courtiers et agents immobiliers du Québec,
François Pigeon, in his capacity as Syndic of the ACAIQ,
and Discipline Committee of the Association des courtiers et
agents immobiliers du Québec Appellants
v.
Proprio Direct inc. Respondent
Indexed as: Association des courtiers et agents immobiliers du Québec v. Proprio Direct inc.
Neutral citation: 2008 SCC 32.
File No.: 31664.
2008: January 30; 2008: May 30.
Present: McLachlin C.J. and Bastarache, Binnie, LeBel, Deschamps, Fish, Abella, Charron and Rothstein JJ.
on appeal from the court of appeal for quebec
Law of professions — Real estate brokers and agents — Compensation — Consumer protection — Written form of real estate brokerage contract prescribed by statute and regulations — Broker’s compensation tied to sale of property according to form prescribed by regulation — Parties agreeing to modification of form and compensation paid even though no sale taking place — Professional ethics complaint against broker — Discipline committee concluding that broker’s practice illegal — Whether real estate brokerage legislation authorizes payment of compensation in absence of sale — Whether seller may waive requirement that broker’s compensation be paid only after sale — Standard of review applicable to discipline committee’s decision — Real Estate Brokerage Act, R.S.Q., c. C‑73.1, ss. 43, 74(17), 155(5), (15) — Regulation respecting the application of the Real Estate Brokerage Act, R.R.Q., c. C‑73.1, r. 1, s. 26(2) — By‑law of the Association des courtiers et agents immobiliers du Québec, R.R.Q., c. C‑73.1, r. 2, ss. 85, 96 — Rules of professional ethics of the Association des courtiers et agents immobiliers du Québec, R.R.Q., c. C‑73.1, r. 5, s. 13.
Proprio Direct is a real estate broker in Quebec. Vendors were required to pay Proprio Direct a non‑refundable “membership fee” when they signed an exclusive brokerage contract, in addition to having to pay a commission if the property sold. Two vendors whose homes were not sold during the contract period complained to the Association des courtiers et agents immobiliers du Québec about this practice. The membership fee was $1,262.97 in the case of vendor F and $1,724.22 in the case of vendors G and P. The discipline committee accepted the syndic’s argument that Proprio Direct’s fee practices violated the Association’s rules, and that a non‑refundable fee, payable without a sale, contravened the requirements of the Real Estate Brokerage Act (“REBA”). The Court of Québec agreed with the discipline committee’s conclusion that the payment terms of an exclusive brokerage contract were mandatory and that a real estate broker or agent could not, therefore, receive any payment if there were no sale. The Court of Appeal set aside the decision. It acknowledged that REBA was a law of public order for consumer protection, but held that since it found that the provisions dealing with compensation at the time of sale were not mandatory, the parties were free to make their own contractual arrangements.
Held (Deschamps and Rothstein JJ. dissenting): The appeal should be allowed and the decisions of the discipline committee restored.
Per McLachlin C.J. and Bastarache, Binnie, LeBel, Fish, Abella and Charron JJ.: Reasonableness is the standard applicable to the discipline committee’s decision. What is at issue in this case is the interpretation by the committee, a body of experts, of its home statute. Ethics being at the core of the committee’s mandate, the question whether Proprio Direct breached standards of ethics by charging a stand‑alone, non‑refundable fee falls squarely within the committee’s specialized expertise and statutory responsibilities. [18-21]
The discipline committee’s conclusion that the provisions requiring a sale before a broker or agent becomes entitled to compensation are mandatory is reasonable. A plain reading of the legislation supports this view. Pursuant to s. 155(5) of REBA, the government decides which of the forms in REBA are mandatory, and the exclusive brokerage contract at issue here is designated to be a mandatory form by s. 26(2) of the Regulation respecting the application of the Real Estate Brokerage Act. While the Association is the body which proposes the content of mandatory forms, it is the government that decides what the actual content will be (s. 74(17) REBA). This content is then promulgated in the form of a regulation. Every exclusive brokerage contract “must” set out the “nature and manner of the broker’s compensation” (s. 35(9) REBA), including “any other particulars determined by government regulation” (s. 35(11)). Section 85(6) of the By‑law of the Association des courtiers et agents immobiliers du Québec is the regulation that contains those “particulars” about compensation, including that it is payable only in the event of a sale. Since those particulars are rendered part of Chapter III of REBA by virtue of s. 35(11), they cannot, pursuant to s. 43, be waived. [21‑23] [31‑32]
This interpretation is supported too by the fact that the purpose of REBA is to protect consumers. The Court of Appeal’s interpretive error was to view the legislation through the lens of freedom of contract and competition rather than through the vision of REBA as protective consumer legislation. The legislature has explicitly restricted the parties’ freedom of contract by making the language of the compensation clause a mandatory requirement of the contract. That language ties payment to sale. To allow easy modification of this requirement is to allow easy modification of the protection so clearly designed not to be eroded. Consumer protection trumps freedom of contract, not the other way around. [34] [38]
Per Deschamps and Rothstein JJ. (dissenting): There is nothing that warrants showing any deference whatsoever to the discipline committee’s decision. The committee has not been shown to have general expertise in statutory interpretation, and this case concerns a real right of appeal from its decisions. The issue, regardless of whether it is viewed from the narrower perspective of the mandatory particulars of the contract or from the broader perspective of a single model of practice for real estate brokers, entails more than a simple statutory interpretation that will affect only the parties. It is likely to affect the future of the brokerage profession in Quebec. The discipline committee held that the conclusion that the fees were illegal led, in law, to an inference that there was prejudice. The conclusion regarding prejudice cannot therefore be characterized as a finding of fact to which an appellate court should show deference. [66‑67] [70]
The legislature has expressly provided in REBA for a number of limits on brokers’ compensation. However, no particular manner of payment is required. Section 35 merely requires the parties to set out the selected manner of payment of compensation in their brokerage contract. If the legislature had intended that all the provisions of the form included in the By‑law of the Association constitute mandatory particulars of the contract, it would not have explicitly included specific provisions on mandatory particulars in REBA and would not have given the government the responsibility to determine, by the Regulation respecting the application of the Act, mandatory particulars in addition to those provided for in REBA. The only interpretation that gives meaning and a distinct scope to the different provisions is one to the effect that the Regulation respecting the application of the Act and the By‑law of the Association are distinct instruments that are addressing different subjects. REBA and the Regulation respecting the application of the Act set out the provisions that the contract is required to include, whereas the By‑law of the Association establishes the form from which the parties may depart as long as their agreement does not violate an otherwise mandatory provision. The provision concerning the broker’s compensation is not mandatory. The mandatory nature of the contract’s clauses derives not from the form but from ss. 32 to 43 of REBA, s. 27 of the Regulation respecting the application of the Act and the relevant provisions of the Civil Code of Québec. Moreover, if the form could not be modified, the legislature would not have approved the provisions of the By‑law of the Association allowing it to be modified: provision would not have been made for a possibility of modifying or adding to it. [49] [52] [57‑58] [63]
The Association is responsible for determining the content of the form, not for proposing it. The argument that the interpretation of the By‑law of the Association should be based on the government’s review of its content and, more specifically, on the difference between the October 1993 draft amendment and the approved version, is wrong. The requirement that a delegate’s regulation be approved does not substitute the government for the delegate. The Association’s power is based on s. 74(17) REBA, not s. 155(15). [55] [61‑62] [72-78]
Cases Cited
By Abella J.
Referred to: Pigeon v. Daigneault, [2003] R.J.Q. 1090; Pigeon v. Proprio Direct inc., J.E. 2003‑1780, SOQUIJ AZ‑50192600; Dunsmuir v. New Brunswick, [2008] 1 S.C.R. 190, 2008 SCC 9; Moreau‑Bérubé v. New Brunswick (Judicial Council), [2002] 1 S.C.R. 249, 2002 SCC 11; Dr. Q v. College of Physicians and Surgeons of British Columbia, [2003] 1 S.C.R. 226, 2003 SCC 19; Law Society of New Brunswick v. Ryan, [2003] 1 S.C.R. 247, 2003 SCC 20; Pushpanathan v. Canada (Minister of Citizenship and Immigration), [1998] 1 S.C.R. 982.
By Deschamps J. (dissenting)
Chambre immobilière du Grand Montréal v. Association des courtiers et agents immobiliers du Québec, [2007] R.J.Q. 504; Pigeon v. Proprio Direct inc., J.E. 2003‑1780, SOQUIJ AZ‑50192600; Pigeon v. Daigneault, [2003] R.J.Q. 1090.
Statutes and Regulations Cited
By‑law of the Association des courtiers et agents immobiliers du Québec, R.R.Q., c. C‑73.1, r. 2, ss. 85, 91 to 100.
Civil Code of Québec, S.Q. 1991, c. 64, arts. 1384, 2098.
Professional Code, R.S.Q., c. C‑26, ss. 164 to 177.1.
Real Estate Brokerage Act, R.S.Q., c. C‑73.1, ss. 32 to 43, 66, 74(17), 136, 155(5), (15).
Regulation respecting the application of the Real Estate Brokerage Act, R.R.Q., c. C‑73.1, r. 1, s. 26(2), 27.
Rules of professional ethics of the Association des courtiers et agents immobiliers du Québec, R.R.Q., c. C‑73.1, r. 5, s. 13.
Authors Cited
Barsalou, Claude. Le contrat de courtage immobilier: vente d’un immeuble résidentiel de moins de cinq logements. Montréal: Wilson & Lafleur, 1996.
Garant, Patrice. Précis de droit des administrations publiques, 4e éd. Cowansville, Qué.: Yvon Blais, 2005.
L’Heureux, Nicole. Droit de la consommation, 5e éd. Cowansville, Qué.: Yvon Blais, 2000.
Mullan, David J. Administrative Law, 3rd ed. Scarborough, Ont.: Carswell, 1996.
Ziegel, Jacob S. “The Future of Canadian Consumerism” (1973), 51 Can. Bar Rev. 191.
APPEAL from a judgment of the Quebec Court of Appeal (Doyon, Bich and Côté JJ.A.), [2006] R.J.Q. 1762, [2006] Q.J. No. 7477 (QL), 2006 CarswellQue 14258, 2006 QCCA 978, dismissing a decision of Renaud J.C.Q., [2004] Q.J. No. 7420 (QL), 2004 CarswellQue 2121. Appeal allowed, Deschamps and Rothstein JJ. dissenting.
Marc Gaucher and Jean‑François Savoie, for the appellants.
Pierre‑André Côté and Marc Simard, for the respondent.
The judgment of McLachlin C.J. and Bastarache, Binnie, LeBel, Fish, Abella and Charron JJ. was delivered by
[1] Abella J. — The dispute in this appeal arises out of the interpretation of legislation designed to protect consumers engaged in buying or selling real estate. The specific issue is whether real estate brokers and agents in Quebec are permitted to charge vendors a fee even if the property is not sold.
BACKGROUND
[2] The Real Estate Brokerage Act, R.S.Q., c. C‑73.1 (“REBA”), regulates the real estate brokerage profession in Quebec. REBA sets out the powers and duties of the Association des courtiers et agents immobiliers du Québec (the Association of Real Estate Brokers and Agents of Quebec). The role of the Association, set out in s. 66 of REBA, is to protect the public from breaches of ethical standards by members of the real estate profession:
66. The primary role of the Association is to ensure the protection of the public by the enforcement of rules of professional ethics and the professional inspection of its members, and in particular by seeing to it that its members pursue their activities in accordance with the Act and the regulations. . . .
[3] The Association consists of a board of directors, a professional inspection committee, a syndic, and a discipline committee. It maintains a register of all its members. A person cannot be a real estate agent or broker unless he or she holds a certificate issued by the Association.
[4] The Rules of professional ethics of the Association des courtiers et agents immobiliers du Québec, R.R.Q., c. C-73.1, r. 5, are enforced through the office of a syndic, who is also responsible for ensuring that real estate brokers adhere to the REBA and its regulations. The syndic is appointed by the board of directors. If he or she has grounds to believe that a member of the Association has committed an offence under REBA or the regulations, the syndic can undertake an investigation.
[5] Proprio Direct is a real estate broker in Quebec. Vendors were required to pay Proprio Direct a non-refundable “membership fee” when they signed an Exclusive Brokerage Contract, in addition to having to pay a commission if the property sold. Two vendors whose homes were not sold during the contract period complained to the Association about this practice.
[6] As a result of an investigation, the syndic concluded that the complaints about Proprio Direct warranted a hearing before the Association’s discipline committee. The syndic alleged that Proprio Direct’s practice of charging a fee whether or not the property was sold, was prohibited by REBA. It was, therefore, contrary to s. 13 of the Association’s Rules:
13. A member shall not participate in any act or practice in real estate matters which may be illegal or which may cause prejudice to the public or to the profession.
[7] The joint statement of facts submitted to the discipline committee by the parties confirmed that two vendors of residential property had signed Exclusive Brokerage Contracts agreeing to pay Proprio Direct not only a non-refundable membership fee, but also a commission in the form of a percentage of the final selling price of the property. The membership fee was $1,262.97 in the case of the vendor Huguette Filiatrault whose home was listed for $99,900, and $1,724.22 in the case of Laurent Girouard and Diane Paquin whose home was listed for $169,900. In addition, both contracts provided for a commission in the event of sale. Neither property sold while the listing agreement was in force and neither membership fee was returned.
[8] The majority of Proprio Direct’s clients paid these non-refundable fees when the brokerage contracts were signed. There was also a “sale-guaranteed-or-money-back” option in the contracts, but it was only available if the client paid double the “membership fee”.
[9] The discipline committee accepted the syndic’s argument that Proprio Direct’s fee practices violated the Association’s Rules, and that a non-refundable fee, payable without a sale, contravened the requirements of REBA. In its opinion, labelling the non-refundable payment a “membership fee” was [translation] “deceptive and represented an abuse of power” over consumers. The purpose of the Exclusive Brokerage Contract was to permit the vendor to benefit from the services of an agent or broker with a view to a sale. The discipline committee concluded that if Proprio Direct wanted to offer a different kind of service, it should not hold itself out as a real estate broker or agent.
[10] In support of its conclusion that a sale was a statutory precondition to the receipt of compensation by a real estate agent or broker, the discipline committee noted that in October 1993, the board of directors of the Association had proposed amendments to the government which would have permitted payment to brokers and agents whether or not a sale took place. The government rejected this proposal in the revised regulation which came into force in January 1994. This rejection, the discipline committee concluded, demonstrated that the legislature’s intention was to link a real estate broker’s entitlement to compensation with a sale.
[11] Proprio Direct’s non-refundable payment practices were, as a result, found by the discipline committee to be illegal and to cause prejudice to the public.
[12] At a subsequent hearing to consider the appropriate sanction, the committee concluded that the need for a deterrent to other members of the profession meant that a reprimand alone would not have been appropriate. It acknowledged, however, that Proprio Direct had, as a result of the discipline committee’s decision, incurred reorganization costs and reimbursed clients who had paid membership fees. In light of these efforts, the committee was of the opinion that the imposition of a minimal fine of $600 for each of the two complaints would be a sufficient sanction.
[13] Proprio Direct sought judicial review. Renaud J.C.Q. applied the standard of reasonableness to the decisions of the discipline committee ([2004] Q.J. No. 7420 (QL)). He observed that REBA was adopted by the legislature to ensure the protection of consumers. He acknowledged that while some of the provisions in an Exclusive Brokerage Contract could be amended under REBA, they could not be modified in such a way as to [TRANSLATION] “stray in substance from the obligations” contained in the mandatory forms. He agreed with the discipline committee’s conclusion that the payment terms of an Exclusive Brokerage Contract were mandatory and that a real estate broker or agent could not, therefore, receive any payment if there was no sale. He also agreed with the discipline committee’s sanction.
[14] The Court of Appeal overturned the decision ([2006] R.J.Q. 1762, 2006 QCCA 978), applying a correctness standard to whether the provisions at issue were mandatory, and reasonableness to whether the practices could cause prejudice to the public. It did not consider the payment terms of REBA to be mandatory and was, accordingly, unanimously of the view that the legislation did not preclude payment in the absence of a sale. It also disagreed with Renaud J.C.Q.’s conclusion that only minor changes that do not change the essential nature of the contract could be made, concluding instead that parties should be able to modify any terms of the contract not explicitly expressed in the legislation to be mandatory. The government’s rejection of the Association’s proposed amendment in 1993 did not lead the Court of Appeal to conclude that the legislature sought to link compensation to a sale.
[15] The Court of Appeal acknowledged that REBA was a law of public order for consumer protection, but held that since it found that the provisions dealing with compensation at the time of sale were not mandatory, the parties were free to make their own contractual arrangements. Laws and regulations, it concluded, should be interpreted consistently with the dual liberties of free competition and freedom of contract. In the Court of Appeal’s view, these constitute [TRANSLATION] “the foundation of our society’s economic organization” (para. 73). Absent an explicit prohibition, therefore, the legislature must be presumed not to have intended to interfere with either the parties’ freedom of contract or the principle of free competition.
[16] It was irrelevant that the services offered to vendors were not those normally offered by a broker. Proprio Direct’s contractual practices, while different from industry practices, were not unlawful. As a result, they did not cause prejudice to the public.
ANALYSIS
[17] The purpose of REBA is to protect consumers. As s. 66 states, the “primary role” of the Association is the protection of the public from breaches of ethical norms by members of the real estate profession.
[18] Upholding these ethics is at the core of the discipline committee’s mandate and the Quebec Court of Appeal has consistently applied a reasonableness standard to its decisions under REBA. This deferential degree of scrutiny was articulated in Pigeon v. Daigneault, [2003] R.J.Q. 1090, by Chamberland J.A., and in Pigeon v. Proprio Direct inc., J.E. 2003-1780, SOQUIJ AZ-50192600, by Dalphond J.A. In the first of these cases, as in this case, no privative clause existed. Chamberland J.A. explained that, despite the absence of this protection, the expertise of the committee dictated a deferential standard of review:
[TRANSLATION] . . . even though the Act provides for a right of appeal from the discipline committee’s decisions, the expertise of the committee, the purpose of the Act and the nature of the issue all favour greater deference than under the standard of correctness. The appropriate standard of review is therefore reasonableness . . . . [para. 36]
[19] Dalphond J.A. amplified the rationale for deferring to the committee’s expertise in the second case which, by virtue of a slightly different legislative scheme, had a form of privative clause:
[translation] Regarding the expertise of the discipline committee, as my colleague Chamberland J.A. pointed out in François Pigeon v. Stéphane Daigneault, . . . it is not in doubt. The majority of the committee’s members come from the real estate brokerage field (s. 131 of the Act) and have an intimate knowledge of that sector of economic activity. The legislature thus intended to establish a peer justice system, as it was aware that on questions of ethics, the expected standards of conduct are generally better defined by people who work in the same sector and can gauge both the interests of the public and the constraints of the specific economic sector (Pearlman v. Manitoba Law Society, [1991] 2 S.C.R. 869). On the other hand, a judge of the Civil Division of the Court of Quebec . . . cannot claim to have special expertise in the area of professional discipline, and this is even more true in matters relating to real estate brokerage. This second factor once again favours some deference as regards the interpretation of the standards of conduct applicable to brokers and the imposition of appropriate penalties. [Emphasis added; para. 27.]
[20] The decision under appeal in this case is a departure from that deferential approach. In my view, with respect, the standard of review applied in the earlier cases by Dalphond and Chamberland JJ.A. is to be preferred and is in greater compliance with Dunsmuir v. New Brunswick, [2008] 1 S.C.R. 190, 2008 SCC 9 (at paras. 54 and 55). In particular, the presence or absence of a privative clause, while relevant, is not determinative (Dunsmuir, at para. 52).
[21] That is at issue here is the interpretation by the discipline committee, a body of experts, of its home statute (Dunsmuir, at para. 54; see also Moreau-Bérubé v. New Brunswick (Judicial Council), [2002] 1 S.C.R. 249, 2002 SCC 11; Dr. Q v. College of Physicians and Surgeons of British Columbia, [2003] 1 S.C.R. 226, 2003 SCC 19; Law Society of New Brunswick v. Ryan, [2003] 1 S.C.R. 247, 2003 SCC 20; Pushpanathan v. Canada (Minister of Citizenship and Immigration), [1998] 1 S.C.R. 982, at para. 32). The legislature assigned authority to the Association, through the experience and expertise of its discipline committee, to apply — and necessarily interpret — the statutory mandate of protecting the public and determining what falls beyond the ethical continuum for members of the Association. The question whether Proprio Direct breached those standards by charging a stand-alone, non-refundable fee falls squarely within this specialized expertise and the Association’s statutory responsibilities. I see nothing unreasonable in the discipline committee’s conclusion that the provisions requiring a sale before a broker or agent is entitled to compensation, are mandatory.
[22] A plain reading of the legislation supports this view. Pursuant to s. 155(5) of REBA (the relevant legislative provisions are set out in the Appendix), the government decides which of the forms in REBA are mandatory:
155. The Government may, by regulation, determine . . .
(5) the forms whose form is mandatory;
[23] The Exclusive Brokerage Contract at issue in this case is designated to be a mandatory form by s. 26(2) of the Regulation respecting the application of the Real Estate Brokerage Act, R.R.Q., c. C-73.1, r. 1 (“Regulation”):
26. The forms whose form is mandatory [include]
. . .
(2) the form entitled “Exclusive Brokerage Contract — Sale of a Chiefly Residential Immovable” in respect of an immovable referred to in section 32 of the Act;
This means that an Exclusive Brokerage Contract must be in a mandatory form.
[24] The content of mandatory forms is proposed by the board of directors of the Association, and is subject to government approval. The government is thereby the ultimate author of the by-law. This is set out in s. 74(17) of REBA:
74. The board of directors must determine, by by-law subject to government approval
. . .
(17) the content, form and use of the mandatory forms designated by government regulation;
[25] The provisions setting out what an Exclusive Brokerage Contract must contain are found in Chapter III of REBA. Chapter III, consisting of ss. 32 to 43, is headed by the words: Rules Relating to Certain Real Estate Brokerage Contracts. Section 43, the last section, states that no individual can waive the rights set out in Chapter III:
43. No natural person may, by special agreement, waive the rights conferred on him by this chapter.
[26] Section 32 states that Chapter III applies to every contract in which a broker acts as an intermediary for the sale, lease or exchange of residential property containing fewer than five dwellings.
[27] Section 35 sets out what every contract must include. According to s. 35(9), every contract must include the “nature and manner of payment of the broker’s compensation”. Section 35(11) states that the contract must contain “any other particulars determined by government regulation”.
[28] Section 155(15) of REBA gives the government the authority to determine, by regulation, what particulars, in addition to those set out in s. 35, must be included in an Exclusive Brokerage Contract. Those “particulars” have been delineated by the government through the passage of s. 85 of the By-law of the Association des courtiers et agents immobiliers du Québec, R.R.Q., c. C-73.1, r. 2 (“By-Law”). Section 85 states that the mandatory Exclusive Brokerage Contract referred to in s. 26(2) of the Regulation shall contain certain provisions. Most pertinently, those found in s. 85(6) deal with compensation for real estate agents and brokers:
85. . . .
The seller shall pay to the broker . . . upon the signing of the act of sale, compensation of:
percent ( __ %) of the sale price provided for in section (indicate the number of the contract provision establishing the sale price) or of another sale price to which the seller agrees in writing; . . .
(1) where a promise to purchase conforming to the conditions of sale set out in this brokerage contract (and in any amendments thereto) is submitted to the seller during the term of this contract and in fact leads to the sale of the immovable; or
(2) where an agreement concerning the sale of the immovable is concluded during the term of this contract, whether through the broker or not, and in fact leads to the sale of the immovable; or
(3) where a sale takes place, within 180 days following the expiry date of this contract, with a person who was interested in the immovable during the term of this contract, unless, during that period, the seller concluded with another real estate broker a contract stipulated to be exclusive for the sale of the immovable.
Nothing stipulated in [this] section . . . shall be interpreted as restricting the broker's right to obtain, where applicable, payment of any sums of money that may be due to him as compensation or damages under the ordinary rules of ordinary law, particularly, but without limiting the generality of the foregoing, where a sale does not take place because the seller voluntarily blocks it or otherwise voluntarily prevents the free performance of this contract.
[29] This provision unequivocally ties compensation to sale. The only exception to this requirement is also clearly stipulated — a breach of contract by the vendor.
[30] Sections 91 to 100 of the By-Law express how amendments are made. Sections 99 and 100 state that the holder of a real estate certificate shall use specified mandatory forms if they wish to amend the Exclusive Brokerage Contract. None of these forms derogate from compensation being linked to sale. I do not, with respect, share the Court of Appeal’s view that ss. 91 to 100 and, in particular s. 96 of the By-Law, permit the parties to change any mandatory term which ties compensation to sale. Parts of the mandatory form are blank and anticipate personalized terms. They are, in my view, the only parts of the form real estate agents are entitled to change or strike out.
[31] This closes the circle. Exclusive Brokerage Contracts must be in mandatory form (s. 26(2) of the Regulation). While the Association is the body which proposes the content of mandatory forms, it is the government that decides what the actual content will be (s. 74(17) of REBA). This content is then promulgated in the form of a regulation and published in the Gazette officielle du Québec. Without this promulgation, the Association’s proposals have no legal force.
[32] Every Exclusive Brokerage Contract “must set out . . . the nature and manner of payment of the broker’s compensation” (s. 35(9) of REBA), including “any other particulars determined by government regulation” (s. 35(11) of REBA). Section 85(6) of the By-Law is the regulation that contains those “particulars” about compensation, including that it is payable only in the event of a sale. Those particulars are thereby rendered by s. 35(11) to be part of Chapter III and cannot, pursuant to s. 43, be waived. That means that the right not to have to pay compensation unless there is a sale, cannot be waived.
[33] The government does not merely rubber-stamp the suggestions from the Association. In fact, the Association’s proposed content of the By-Law in 1993 was that there be compensation whether or not a sale took place. It submitted the following amendments for the government’s approval:
5. REMUNERATION
5.1 The VENDOR shall pay the BROKER, [including for residential property], a remuneration of:
______ per cent (__ %) of the sale price, or, if there is no sale, the [asking price] . . .
This was reviewed and modified by the legislature later that same year. The government rejected the phrase “if there is no sale” proposed by the Association. Instead, it used the words “upon the signing of the act of sale” and “in fact leads to the sale of the immovable” (s. 85(6) of the By-Law). This not only reinforces the fact that the regulation emanates from the government, it also confirms the intention, as clearly stated in the statute — that vendors need only pay compensation to brokers when a sale of the property occurs.
[34] This interpretation is supported too by the fact that the purpose of REBA is to protect consumers. The Court of Appeal’s interpretive error, with respect, was to view the legislation through the lens of freedom of contract and competition, rather than through the vision of REBA as protective consumer legislation.
[35] Professor Nicole L’Heureux explained why the principle of freedom of contract generally yields to that of consumer protection in Droit de la consommation (5th ed. 2000), at p. 18:
[TRANSLATION] Thus, because of the particular circumstances the consumer faces when entering into a contract in the marketplace, consumer protection law tempers the principles of freedom of contract and individual autonomy that should, theoretically in civil law, ensure contractual fairness. Since the parties are not on an equal footing, contractual equilibrium must be restored by a special legal mechanism that establishes a departure from the foundational postulate of the civil law theory of contract. In pursuit of this objective, the court does more than simply interpret the contract or apply a statutory provision. It has the discretion to assess the entire transaction and apply the criterion of contractual imbalance.
[36] Professor Jacob Ziegel elaborated on the realities underlying the goals for consumer protection legislation:
First, a disparity of bargaining power between the supplier of goods or services and the consumer to whom they are being offered; secondly, a growing and frequently total disparity of knowledge concerning the characteristics and technical components of the goods or services; and, thirdly, a no less striking disparity of resources between the two sides, whether that disparity reflects itself in a consumer’s difficulty to obtain redress unaided for a legitimate grievance or in a supplier’s ability to absorb the cost of a defective product as part of his general overhead as compared to the consumer to whom its malfunctioning may represent the loss of a considerable capital investment.
(“The Future of Canadian Consumerism” (1973), 51 Can. Bar Rev. 191, at p. 193)
[37] It would contradict the consumer protection goals at the heart of REBA if the consistent use of the words “must”, “shall” and “mandatory” to describe the requisite content of Exclusive Brokerage Contracts could be amended cavalierly by private agreement. Section 43 confirms, on the contrary, that the legislature’s intention was that this content not be waived. This makes it unnecessary to determine whether and how to apply the waiver principles of public order, which would be engaged only if the language itself was not mandatory.
[38] The legislature has explicitly restricted the parties’ freedom of contract by making the language of the compensation clause a mandatory requirement of the contract. That language ties payment to sale. To allow easy modification of this requirement is to allow easy modification of the protection so clearly designed not to be eroded. Consumer protection trumps freedom of contract, not the other way around.
[39] The discipline committee was therefore entitled to find that Proprio Direct’s non-refundable membership fees were not permitted by the statutory scheme, and to conclude that such practices could cause prejudice to the public or the profession.
[40] I would therefore allow the appeal with costs throughout.
English version of the reasons of Deschamps and Rothstein JJ. delivered by
[41] Deschamps J. (dissenting) — This appeal concerns the scope of the regulatory authority of the appellant Association des courtiers et agents immobiliers du Québec (“Association”). I conclude that the Association has the power to establish the content of certain forms but not to set the terms of an agreement between a real estate broker and his or her client, the seller. More specifically, the legislature did not delegate to the Association the power to determine what the broker and the client can agree on as regards the manner of payment of the broker’s compensation. For this reason, I am of the opinion that it was not open to the discipline committee to conclude that the respondent, Proprio Direct, had committed a breach of professional ethics in agreeing with its clients on the payment of membership fees. I agree with the conclusion of the Court of Appeal ([2006] R.J.Q. 1762) and would dismiss the appeal.
[42] The Association is putting the services offered by Proprio Direct on trial under the guise of a professional ethics complaint. It will therefore be necessary to discuss, at least summarily, how Proprio Direct’s practices differ from those of most Quebec brokers.
[43] When it appeared before the Association’s discipline committee, Proprio Direct had been a real estate broker for many years. It had developed a range of services. At the relevant times, the services it offered enabled owners wanting to do so to sell their property on their own, hence the name Proprio Direct. In addition, upon payment of a non-refundable membership fee, a property owner could benefit from advertising and from the multiple listing service. For the same limited services, the owner also had the option of paying a higher fee that would be refundable if the property was not sold during the contract term. It was also possible for an owner to retain the services of an agent in the usual way.
[44] Proprio Direct’s distinctive practices caused friction. For example, the Greater Montréal Real Estate Board took the position that because an owner could choose to sell his or her own property, the offer of sale was ineligible for its multiple listing service. On that occasion, the Association sided with Proprio Direct and successfully argued that the parties could modify the form’s non-mandatory terms: Chambre immobilière du Grand Montréal v. Association des courtiers et agents immobiliers du Québec, [2007] R.J.Q. 504 (C.A.), at paras. 6 and 63.
[45] In my view, the same reasoning applies in the case at bar. Indeed, I find it surprising that the Association endorsed this principle in the dispute between Proprio Direct and the Greater Montréal Real Estate Board but is now supporting the opposite position. The recourse to an ethics complaint is even more surprising, given that, according to submissions made at the discipline committee’s hearing on the penalty, Proprio Direct’s distinctive practice of agreeing on the payment of non-refundable membership fees had been adopted at least seven years earlier.
[46] I will begin by discussing the Association’s argument that the parties cannot depart from the terms of the form, after which I will consider the level of deference owed to the discipline committee in light, in particular, of the right of appeal provided for in the Real Estate Brokerage Act, R.S.Q., c. C-73.1 (“Act”). I will conclude by commenting on an argument emphasized by the discipline committee and by my colleague Abella J.
1. Source of the Mandatory Nature of Certain Particulars of the Brokerage Contract
[47] Chapter III of the Act (ss. 32 to 43) sets out the rules applicable to real estate brokerage contracts between natural persons and brokers for the sale, lease or exchange of residential immovables containing fewer than five dwellings. Section 43 reads as follows, in language that is normally used to indicate that a provision is mandatory:
43. No natural person may, by special agreement, waive the rights conferred on him by this chapter.
[48] Section 35 sets out what the contract must contain. Paragraph 9 is particularly relevant here:
35. The contract must set out
. . .
(9) the nature and manner of payment of the broker’s compensation;
Section 38 limits the cases in which the parties may agree that the broker will be compensated after the contract has expired. Section 39 provides that the contract must specify that the broker is required to submit every promise to purchase, lease or exchange the property to the natural person. Section 41 states that a broker may claim no compensation following the cancellation of a contract in accordance with s. 40 unless a sale that meets the conditions specified in s. 38 occurs.
[49] Thus, the legislature has expressly provided in the Act for a number of limits on brokers’ compensation. However, no particular manner of payment is required. Section 35 merely requires the parties to “set out” the selected manner of payment of compensation in their brokerage contract.
[50] A real estate brokerage contract to which Chapter III of the Act applies is also subject to the Civil Code of Québec, S.Q. 1991, c. 64 (“C.C.Q.”). It is a contract for services within the meaning of art. 2098 C.C.Q., and a consumer contract as defined in art. 1384 C.C.Q. As a consumer contract, it must conform to the rules concerning abusive, external, illegible or incomprehensible clauses and, like all other contracts, to the rules of public order.
[51] None of the parties in the case at bar are arguing that the contract is inconsistent with Chapter III of the Act or the C.C.Q. The Association contends that the contract is unlawful because the agreed-on clause on membership fees is inconsistent with the brokerage contract form, which provides that the broker’s compensation is not to be paid until the time of sale. More specifically, the Association’s reasoning is as follows: since it has been given the responsibility under s. 74(17) of the Act to determine, by by-law, the content of the mandatory form, and since the parties are required to use the form provided for in the By-law of the Association des courtiers et agents immobiliers du Québec, R.R.Q., c. C-73.1, r. 2 (“By-law of the Association”), it follows that the form’s provisions are mandatory clauses of the contract. In my view, this is a false syllogism.
[52] First, absent a provision to the effect that the form’s provisions are mandatory, the parties could modify them as long as they complied with the minimum requirements set out in the Act, the Regulation respecting the application of the Real Estate Brokerage Act, R.R.Q., c. C-73.1, r. 1 (“Regulation respecting the application of the Act”), and the C.C.Q. Second, if the legislature had intended that all the form’s provisions constitute mandatory particulars of the contract, it would not have explicitly included specific provisions on mandatory particulars in the Act and would not have given the government the responsibility to determine, by regulation, mandatory particulars in addition to those provided for in the Act. It would not have made sense to draft the Act like this. Moreover, if the form could not be modified, the legislature would not have approved the provisions of the By-law of the Association allowing it to be modified. The only interpretation that gives meaning and a distinct scope to the different provisions is one to the effect that the Regulation respecting the application of the Act and the By-law of the Association are distinct instruments that are addressing different subjects: the mandatory particulars of the contract, on the one hand, and the content of the mandatory form, on the other. The use of the word “mandatory” in the two regulations does not mean that the content of the form is mandatory. What is mandatory is the use of the form. This interpretation follows from the very words of the Act and the regulations.
[53] The Act distinguishes the contract — that is, the agreement between the broker and the property owner — from the form the parties must use. Chapter III of the Act provides that the contract must contain certain mandatory particulars, while s. 155(15) states that the government may, by regulation, determine the other particulars to be included in the contract referred to in s. 35. Section 155(15) reads as follows:
155. The Government may, by regulation, determine
. . .
(15) the other particulars which must be included in a contract referred to in section 35;
The government exercised this power in making the Regulation respecting the application of the Act, which sets out, in s. 27, these mandatory particulars of the contract. Section 27 provides that the contract must contain the declarations made by the seller and state the obligations of the seller (the word “vendeur” was erroneously rendered as “buyer” in the English version of the regulation) and those of the real estate broker.* The Regulation respecting the application of the Act does not establish the manner of payment of compensation. Thus, it is clear that the clause in issue is inconsistent with neither Chapter III of the Act nor the Regulation respecting the application of the Act made by the government.
[54] At the same time, s. 155(5) of the Act provides that the government may, by regulation, determine the forms whose form is mandatory.
155. The Government may, by regulation, determine
. . .
(5) the forms whose form is mandatory;
The Regulation respecting the application of the Act provides, in s. 26(2), that the exclusive brokerage contract form is one whose “form is mandatory”.
[55] Section 74(17) of the Act provides that the Association must determine, by by-law, the content of the mandatory forms, which the Association did in making the By-law of the Association. This is not, as my colleague Abella J. maintains (at paras. 24 and 31), a case in which the Association’s mandate is to “propose” the content of the form to the government, which will then decide on it, but one in which the Association must determine the content of the form subject to approval by the government, which acts as a simple review body. Section 74(17) reads as follows:
74. The board of directors must determine, by by-law subject to government approval
. . .
(17) the content, form and use of the mandatory forms designated by government regulation;
[56] If the legislature had intended that all the provisions of the forms be mandatory, it would not have dealt with the contract and the form separately and would not have provided for two separate delegations. It made its intentions clear by leaving it up to the government to determine the mandatory particulars of the contract, and to the Association to determine the content of the form. Two separate regulations were adopted: one deals with mandatory particulars, while the other deals with the form. To conclude that the By-law of the Association establishes the mandatory particulars of the contract, it would be necessary to disregard the government’s power to make regulations regarding the mandatory particulars of the contract and the fact that the Association — not the government — has the obligation to determine the content of the form. The areas of authority are distinct, and the Association’s power is limited to determining the content of the form.
[57] There is no basis in the above-mentioned provisions for concluding that the form is anything other than what the word “form” generally implies. The legislature did not confuse the contract with the form. The form is the document the parties use to draft the terms of the contract. If a contract’s clause is mandatory, it is not because the clause reproduces the form’s provision. Rather, its mandatory nature derives from ss. 32 to 43 of the Act, s. 27 of the Regulation respecting the application of the Act and the relevant provisions of the C.C.Q.
[58] The analysis of these two distinct delegations of power suffices to refute the Association’s argument, but there is more. The argument that the form cannot be changed or that it is mandatory is contradicted by the very words of the By-law of the Association. Section 93 of this regulation specifies the size of the font to be used in order “to easily distinguish the text of any addition or amendment from the mandatory content of the form”. Thus, this regulation itself provides for the possibility of modifying, adding to or completing the terms of the form. Similarly, s. 96 provides that any “additions or amendments” must pertain only to the object of the terms and conditions of the form. Finally, s. 100 refers to a schedule entitled “Annex G — General” for incorporating terms and conditions that are added to those provided for in the form. If the content of the form were mandatory, provision would not have been made for a possibility of modifying or adding to it.
[59] All these provisions clearly show that when this regulation was made, the Association understood that its authority was limited to determining the form and content of the form and that it did not have the authority to establish the terms of a contract between a broker and his or her client, the natural person referred to in s. 32 of the Act.
[60] It can also be seen from the form that while several clauses are mandatory in nature because they relate to Chapter III of the Act, to the provisions of the C.C.Q. on illegible clauses or to professional ethics, others clearly cannot be characterized as mandatory. The modifications that are possible transcend the examples of terms relating to advance notice of showings or to curtain rods, blinds or electrical installations, which the form includes in the sale. For instance, the form states that costs relating to the repayment of a secured debt must be borne by the seller where they are not to be paid by the buyer. I find it hard to imagine that a third party could be barred from assuming the payment of such costs, or that the form could not be modified to reflect the terms of an agreement between the buyer and the seller. All in all, I see nothing sacrosanct in the indication in the form that the seller is, upon the signing of the act of sale, to pay the broker compensation in an amount that is left blank. The possibility of modifying this indication was accepted as long ago as 1996 by Claude Barsalou, one of Quebec’s few authorities on real estate brokerage:
[translation] In our view, it would be open to the client to waive, subject to the above comments on the conditions of that waiver, the mandatory content determined by by-law with respect to “the nature and manner of payment of the broker’s compensation” and, more generally, the content relating to the particulars required in s. 35 of the new Act. The power to determine, by by-law, the content of the mandatory forms is not set out in the provisions whose terms cannot be waived by the client. Moreover, the legislature has made it clear that the prohibition against a client’s waiver of his or her rights by special agreement applies only to the rights set out in ss. 32 to 43 of the new Act.
(Le contrat de courtage immobilier: vente d’un immeuble résidentiel de moins de cinq logements (1996), at pp. 115-16)
[61] The Regulation respecting the application of the Act and the By-law of the Association do not close the circle, as Abella J. writes. There are two problems that result in what I believe can only be unfortunate confusion. First, my colleague concludes (at para. 28) that s. 155(15) of the Act is the provision that conferred the authority to make the By-law of the Association, whereas the provision that actually did so is s. 74(17). As I mentioned above, s. 155(15) of the Act authorizes the government — not the Association — to determine the mandatory particulars of a contract, and the government exercised this power by making the Regulation respecting the application of the Act, not the By-law of the Association.
[62] Second, my colleague maintains (at paras. 24 and 31) that the government’s approval of the By-law of the Association makes it a government regulation. This assertion is contrary to what is now recognized as a basic rule of public law. By definition, every regulation is “delegated legislation”, regardless of whether the delegate is the government or an administrative body. Where the legislature provides that the government must approve a delegate’s regulation, it creates a review mechanism but does not substitute the government for the delegate (P. Garant, Précis de droit des administrations publiques (4th ed. 2005), at pp. 152, 153, 154 and 189; see also D. J. Mullan, Administrative Law (3rd ed. 1996), at paras. 501 and 504). The fact that the government had to approve the By-law of the Association does not, as my colleague suggests, transform the form into a contract. The content of the Association’s form is not determined by the government, and the By-law of the Association is not a regulation that determines the “particulars which must be included in a contract” (s. 155(15)).
[63] The Act and the two regulations are distinct: the Act and the Regulation respecting the application of the Act set out the provisions that the contract is required to include, whereas the By-law of the Association establishes the form from which the parties may depart as long as their agreement does not violate an otherwise mandatory provision. The provision concerning the broker’s compensation is not mandatory.
[64] The Association is seeking, by means of its complaint, to regulate the practices of brokers and impose the monolithic model endorsed by most Quebec brokers, who find the new model disturbing in several respects. The new model clearly has a disruptive effect on their practices and also has an impact on prices. In an active market, it is easy to imagine that a large number of property owners might find it advantageous to have access to a marketing network without having to pay a generous commission. This model may not suit everyone, but in my view the legislature did not give the Association the authority to prohibit any given manner of payment of compensation.
[65] Furthermore, the manner of payment of compensation proposed by Proprio Direct does not appear to have troubled the Association as an ethical issue until now. The Association has not taken action in the past even though Proprio Direct has been operating for many years, and it even successfully defended Proprio Direct in court. It is therefore somewhat surprising that the Association now contends that Proprio Direct’s practice is illegal and may cause prejudice to the public. There is no evidence in the record that supports this position. This brings me to the assessment of the level of deference owed to the discipline committee.
2. Level of Deference Owed to the Discipline Committee
[66] Much of the argument in the Court of Appeal and in this Court concerned the deference owed to the discipline committee. In my view, it is hard to evade the issue, which, with respect, cannot be resolved by echoing the conclusion reached by the Court of Appeal in two other cases: Pigeon v. Proprio Direct inc., J.E. 2003-1780, SOQUIJ AZ-50192600, and Pigeon v. Daigneault, [2003] R.J.Q. 1090. In the first of these cases, the appeal concerned a different statute and was limited by a privative clause, whereas in the second, the issue concerned the appropriateness of the penalty. In the case at bar, s. 136 of the Act provides for an appeal as of right from any decision of the discipline committee, in accordance with ss. 164 to 177.1 of the Professional Code, R.S.Q., c. C-26. Section 175 of the Code reads as follows:
175. The tribunal may confirm, alter or quash any decision submitted to it and render the decision which it considers should have been rendered in first instance. It may, in particular, substitute any other penalty prescribed by the first paragraph of section 156 for a penalty imposed by the committee on discipline if, in its opinion, that penalty should have been imposed in first instance.
This case therefore concerns a right of appeal in respect of which the legislature authorizes the court to render any decision that it considers should have been rendered. Although the Act the discipline committee had to apply was its constituting statute, the committee’s particular expertise is limited to disciplinary matters. It has not been shown to have general expertise in statutory interpretation.
[67] Furthermore, the issue in this case entails more than a simple statutory interpretation that will affect only the parties. It can be viewed from two different perspectives. The first is a narrower one: Does the Association have the authority to determine the mandatory particulars of an exclusive brokerage contract? The second is broader: Can the Association impose a single model of practice on Quebec’s real estate brokers? Regardless of which perspective is adopted, the issue is an important one. It is likely to affect the future of the brokerage profession in Quebec. In summary, I see nothing to warrant showing any deference whatsoever to the discipline committee’s decision.
[68] The Court of Appeal, taking the same approach as the discipline committee, split the issue into two components: the first was the question of law and the second the question of prejudice to the public. This approach is linked to the wording of the provision of the Rules of professional ethics of the Association des courtiers et agents immobiliers du Québec, R.R.Q., c. C-73.1, r. 5, on which the syndic relied. Since Proprio Direct’s practices were not prohibited by an express provision, the syndic had to rely on a very general provision of the Rules, namely s. 13, which reads as follows:
13. A member shall not participate in any act or practice in real estate matters which may be illegal or which may cause prejudice to the public or to the profession.
[69] When assessing prejudice, a decision maker must usually consider the facts. Questions of fact always call for great deference, whether on appeal or on judicial review. In the instant case, however, all the discipline committee did was to find the act to be illegal and to infer from this that Proprio Direct’s business practice entailed a risk of prejudice. The following is what it said regarding prejudice:
[translation] The remaining question is whether the risk of prejudice or of an illegal act is proven in light of the parties’ admissions.
According to admission No. 17, the facts described . . . were consistent with the respondent’s business plan in effect at the time the two above-mentioned contracts were signed. According to admission No. 18, the two immovables were not sold through the respondent, but it is alleged in admission No. 19 that the respondent kept the sums of $1,262.97 and $1,724.22.
In the committee’s view, these facts suffice to establish a risk of prejudice if this practice is provided for in the respondent’s business plan.
[70] It is clear from these comments that the discipline committee did not assess the facts with respect to the question of prejudice. Its conclusion was based exclusively on the collection of membership fees, which it considered to be illegal. The discipline committee did not ask whether it might be to the sellers’ advantage to receive, in exchange for refundable or non-refundable membership fees, services other than the full range of services usually offered by brokers. Rather, it held that since, as a matter of law, it considered the fees to be illegal, it had to infer, also as a matter of law, that there was prejudice. In the circumstances, the conclusion regarding prejudice cannot be characterized as a finding of fact to which an appellate court should show deference.
[71] However, even if the standard of reasonableness had been applied to the question of prejudice, the erroneous conclusion on illegality would have led me to conclude that the discipline committee’s decision based on prejudice was unreasonable.
3. Argument Accepted by the Discipline Committee
[72] One of the arguments made by the Association appears to have so captured the attention of the discipline committee as to constitute the principal basis for its decision. My colleague Abella J. also relies on it. The Association’s argument was that the prohibition against any compensation without a sale was supported by the legislative history of the By-law of the Association. The discipline committee adopted this interpretation and expressed the opinion that the scheme of the Act [translation] “appears clearly from an analysis of two documents published in the Gazette officielle du Québec, the first on October 20, 1993, and the second on December 29, 1993”. These two documents are the draft By-law of the Association submitted by the Association, and the By-law of the Association as approved by the government. With respect, no support for the discipline committee’s comments can be found in the two versions of this regulation.
[73] The discipline committee, mistakenly in my opinion, viewed the October 1993 draft By-law of the Association as an attempt by the Association to seek approval for a brokerage contract that would provide generally for the payment of commissions regardless of whether a sale has occurred. It would have been surprising if the Association had made such a proposal, and it is readily apparent that the Association was not really proposing that brokers should be paid in all cases where the property was not sold. The passage quoted by the discipline committee — and reproduced in the majority’s reasons — is incomplete.
[74] In fact, two relevant draft regulations were published in the Gazette officielle du Québec on October 20, 1993. One was the Regulation respecting the application of the Act, which set out numerous particulars to be inserted into the brokerage contract, including the broker’s compensation. The other was the By-law of the Association, which set out a brokerage contract form. This form included a detailed clause that also concerned the broker’s remuneration; according to it, the broker would be paid in two circumstances where there was no sale. These circumstances were as follows:
d) in the event of a wilful act by the VENDOR intended to prevent the free execution of this contract, or
e) in the event the VENDOR should not respect his obligations.
The Association was not, therefore, proposing that the broker should receive compensation regardless of whether a sale occurred, as the discipline committee inferred. Rather, its intention was to ensure that the broker would be compensated should the seller default on his or her obligations.
[75] The final versions of the two regulations were published on December 29, 1993. In its final form, the Regulation respecting the application of the Act includes no mandatory particulars concerning the manner of payment of compensation. As for the brokerage contract form set out in the By-law of the Association, it is based directly on the text of the October 1993 version of the draft Regulation respecting the application of the Act. In the provision dealing with compensation, the circumstances entitling a broker to compensation where a sale does not take place owing to the seller’s fault are framed more restrictively.
[76] The difference between the two provisions is apparent, but it does not support an assertion that the model proposed by Proprio Direct was rejected by the legislature. In all the versions proposed by the Association, compensation was payable upon signature of the act of sale. This is unsurprising, since that was the usual practice at the time the draft regulations were submitted. The clause in the October 1993 draft By-law of the Association was poorly drafted, however. It tended to favour brokers by lightening their burden of proof where sellers failed to perform their obligations. The final wording places the onus on the broker to prove fault on the seller’s part. In none of the contemplated situations did the government take into account the case of a broker offering marketing services like those of Proprio Direct.
[77] If any intention can be discerned from a comparison of the provisions of October and December 1993, it is that the government had the power under s. 155(15) of the Act to determine the manner of payment of the broker’s compensation and chose not to do so in the final version of the Regulation respecting the application of the Act, although this topic had been dealt with in its draft regulation. The manner of payment of compensation is not dictated by the Regulation respecting the application of the Act. Thus, the government gave no indication that it intended to impose a single model of practice. Instead, it has left it to the parties to agree on a means of payment of compensation that suits them, in accordance with the services provided for in the contract. The undeniable purpose of the Act is to protect natural persons who do business with real estate brokers or agents. However, by leaving it to the government to determine the mandatory particulars of the brokerage contract and giving the Association the responsibility to determine the content of the form, the legislature has allowed for some flexibility, and this flexibility is recognized even in the By-law of the Association.
[78] Thus, the conclusion I draw from these draft regulations is diametrically opposed to that of the discipline committee. My conclusion is based on a review of the provisions as a whole — not of a short excerpt — and on a comparison of the Regulation respecting the application of the Act and the By-law of the Association.
[79] I therefore find not only that the draft regulations on which the discipline committee relied do not support its conclusion, but also that they do support Proprio Direct’s position.
[80] For these reasons, I would have dismissed the appeal.
APPENDIX
Real Estate Brokerage Act, R.S.Q., c. C-73.1
CHAPTER III
RULES RELATING TO CERTAIN REAL ESTATE BROKERAGE CONTRACTS
32. This chapter applies to every contract between a natural person and a broker under which the broker undertakes to act as intermediary for the sale, leasing or exchange
(1) of part or all of a chiefly residential immovable containing less than five dwellings;
(2) of a fraction of a chiefly residential immovable subject to an agreement or declaration under articles 1009 to 1109 of the Civil Code.
33. The contract is formed when both parties have signed it.
34. The broker must give a duplicate of the contract, in paper form, to the natural person who signed it.
The natural person is bound to perform his obligations only from the time he is in possession of a duplicate of the contract.
35. The contract must set out
(1) the name and address of the parties in legible script;
(2) the date of the contract and the address of the place where it was signed;
(3) the nature of the transaction involved;
(4) the cadastral designation of the immovable property involved and the address of any building erected thereon, if any;
(5) if such is the case, its irrevocability;
(6) if such is the case, its exclusivity;
(7) the date and time of its expiry;
(8) the price of sale, exchange, or, as the case may be, leasing of the immovable property;
(9) the nature and manner of payment of the broker's compensation;
(10) where applicable, any obligation on the part of the broker to send the particulars of the contract to a multiple listing service or a similar service of a real estate board or of any other agency for the purpose of distributing them to members subscribing to such a service;
(11) any other particulars determined by government regulation.
36. Where there is no stipulation as to the date and time of expiry of the contract, the contract shall expire 30 days after being concluded.
37. No contract may contain a stipulation for automatic renewal.
38. Any agreement binding a natural person, for a fixed period after the expiry of the contract, to compensate the broker even if the sale, leasing or exchange of an immovable property is effected after such expiry, is without effect.
The first paragraph does not apply if the agreement provides that compensation is due where
(1) the contract is exclusive;
(2) the sale, leasing or exchange is made with a person who became interested in the immovable property while the contract was in force;
(3) the transaction occurs not more than 180 days after the date of expiry of the contract and during that period, the natural person did not enter into an exclusive contract for the sale, leasing or exchange of the immovable property with another broker.
39. The contract must specify that the broker has an obligation to submit to the natural person every promise to purchase, lease or exchange the immovable property in question.
40. Notwithstanding any stipulation to the contrary, the natural person may, at his own discretion, cancel the contract within the three days which follow the day on which he receives a duplicate of the contract signed by both parties, unless a waiver is written in its entirety by the person and signed.
The contract is cancelled by operation of law from the sending or giving of a written notice to the broker.
41. The broker may claim no compensation following the cancellation of a contract in accordance with section 40, unless a sale, leasing or exchange which meets the conditions specified in section 38 occurs.
42. No contract may be cancelled on the sole ground that one of its provisions contravenes this chapter.
43. No natural person may, by special agreement, waive the rights conferred on him by this chapter.
66. The primary role of the Association is to ensure the protection of the public by the enforcement of rules of professional ethics and the professional inspection of its members, and in particular by seeing to it that its members pursue their activities in accordance with the Act and the regulations.
It may also dispense continuing education courses to its members and award the titles referred to in section 76.
74. The board of directors must determine, by by-law subject to government approval
. . .
(17) the content, form and use of the mandatory forms designated by government regulation;
. . .
136. An appeal lies to the Court of Québec from decisions of the discipline committee, in accordance with sections 164 to 177.1 of the Professional Code (chapter C-26), adapted as required.
155. The Government may, by regulation, determine
. . .
(5) the forms whose form is mandatory;
. . .
(15) the other particulars which must be included in a contract referred to in section 35;
. . .
Regulation respecting the application of the Real Estate Brokerage Act, R.R.Q., c. C-73.1, r. 1
26. The forms whose form is mandatory are
. . .
(2) the form entitled “Exclusive Brokerage Contract — Sale of a Chiefly Residential Immovable” in respect of an immovable referred to in section 32 of the Act;
. . .
By-law of the Association des courtiers et agents immobiliers du Québec, R.R.Q., c. 73.1, r. 2
85. In addition to the particulars provided for in Chapter III of the Act and those provided for in Chapter IV of the Regulation respecting the application of the Real Estate Brokerage Act, the form entitled “Exclusive Brokerage Contract — Sale of a Chiefly Residential Immovable”, provided for in subparagraph 2 of the first paragraph of section 26 of the Regulation respecting the application of the Real Estate Brokerage Act and applying to an exclusive brokerage contract between a natural person and a broker under which the broker undertakes to act as an intermediary for the sale of
(1) part or all of a chiefly residential immovable containing less than 5 dwellings; or
(2) a fraction of a chiefly residential immovable that is the subject of a declaration of co-ownership provided for in articles 1038 to 1109 of the Civil Code of Québec;
shall contain the following provisions:
(1) concerning its object and term:
“Object and term of contract
The seller retains the services of the real estate broker to act as an exclusive intermediary for the sale of the immovable covered by this brokerage contract.
This contract terminates at 11:59 p.m. on.”;
. . .
(6) concerning the real estate broker's compensation:
“Real estate broker’s compensation
The seller shall pay to the broker, in the cases provided for in 1, 2 and 3 of this section, upon the signing of the act of sale, compensation of:
percent ( ___ %) of the sale price provided for in section (indicate the number of the contract provision establishing the sale price) or of another sale price to which the seller agrees in writing: or ____ dollars ($ ___):
(1) where a promise to purchase conforming to the conditions of sale set out in this brokerage contract (and in any amendments thereto) is submitted to the seller during the term of this contract and in fact leads to the sale of the immovable; or
(2) where an agreement concerning the sale of the immovable is concluded during the term of this contract, whether through the broker or not, and in fact leads to the sale of the immovable; or
(3) where a sale takes place, within 180 days following the expiry date of this contract, with a person who was interested in the immovable during the term of this contract, unless, during that period, the seller concluded with another real estate broker a contract stipulated to be exclusive for the sale of the immovable.
Nothing stipulated in section (indicate the number of the contract provision containing the text provided for in the first paragraph of this paragraph) shall be interpreted as restricting the broker's right to obtain, where applicable, payment of any sums of money that may be due to him as compensation or damages under the ordinary rules of ordinary law, particularly, but without limiting the generality of the foregoing, where a sale does not take place because the seller voluntarily blocks it or otherwise voluntarily prevents the free performance of this contract.
. . .
91. The holder of a real estate broker's or agent's certificate shall complete a mandatory form clearly and legibly, by hand or using a typewriter, a computer system or a printing system.
The certificate holder shall not use any abbreviation incomprehensible to the parties or leave any ambiguity as to whether certain terms and conditions in the form apply.
92. Where the holder of a real estate broker's or agent's certificate completes a mandatory form by hand, he shall use ink and shall write neatly to facilitate reading.
93. Where the holder of a real estate broker's or agent's certificate completes a mandatory form using a typewriter, a computer system or a printing system, he shall use at least 10-point type that is different from the type used for the mandatory content, so as to enable the parties to easily distinguish the text of any addition or amendment from the mandatory content of the form.
94. Where the holder of a real estate broker's or agent's certificate uses the mandatory form entitled “Annex A — Immovable”, “Annex G — General”, “Counter-Proposal to a Promise to Purchase” or “Amendments and Notice of Fulfilment of Conditions”, he shall indicate, in the space reserved for that purpose, the number of the mandatory form entitled “Exclusive Brokerage Contract — Sale of a Chiefly Residential Immovable”, “Non-Exclusive Brokerage Contract — Sale of a Chiefly Residential Immovable” or “Promise to Purchase”, as the case may be, to which reference is made.
95. Where the holder of a real estate broker's or agent's certificate strikes out an entry on a mandatory form, he shall have the strikeout initialled by the parties before they sign at the bottom of the form.
96. The additions or amendments that the holder of a real estate broker's or agent's certificate may make to a mandatory form shall pertain only to the object of the terms and conditions of that form.
97. The holder of a real estate broker's or agent's certificate shall, before having a mandatory form that he has completed signed, allow the parties to take cognizance of the terms and conditions of the form and, before the form is signed, provide all the explanations and answers to questions that the parties may ask.
98. The holder of a real estate broker's or agent's certificate shall not add anything to, amend or strike out anything from a mandatory form after the parties have signed at the bottom of the form.
99. The holder of a real estate broker's or agent's certificate shall use the mandatory form entitled “Amendments and Notice of Fulfilment of Conditions” where the parties wish to amend a mandatory form entitled “Exclusive Brokerage Contract — Sale of a Chiefly Residential Immovable”, “Non-Exclusive Brokerage Contract — Sale of a Chiefly Residential Immovable” or “Promise to Purchase” that they have already signed.
100. The holder of a real estate broker's or agent's certificate shall use the mandatory form entitled “Annex G — General” only to complete the terms and conditions of a mandatory form entitled “Exclusive Brokerage Contract — Sale of a Chiefly Residential Immovable”, “Non-Exclusive Brokerage Contract — Sale of a Chiefly Residential Immovable” or “Promise to Purchase”.
The certificate holder shall not use the form entitled “Annex G — General” to make an amendment to a mandatory form entitled “Exclusive Brokerage Contract — Sale of a Chiefly Residential Immovable”, “Non-Exclusive Brokerage Contract — Sale of a Chiefly Residential Immovable” or “Promise to Purchase” that the parties have already signed.
Rules of professional ethics of the Association des courtiers et agents immobiliers du Québec, R.R.Q., c. C-73.1, r. 5
13. A member shall not participate in any act or practice in real estate matters which may be illegal or which may cause prejudice to the public or to the profession.
Appeal allowed with costs, Deschamps and Rothstein JJ. dissenting.
Solicitors for the appellants: Petit Beaudoin Gaucher, Québec.
Solicitors for the respondent: Bélanger, Sauvé, Montréal.
* Particulars in brokerage contracts referred to in Chapter III of the Act
27. In addition to the particulars provided for in Chapter III of the Real Estate Brokerage Act (R.S.Q., c. C-73.1), an exclusive or non-exclusive brokerage contract between a natural person and a real estate broker under which the broker undertakes to act as an intermediary for the sale of an immovable referred to in section 32 of the Act shall
(1) contain the declarations made by the seller;
(2) state the obligations of the buyer; and
(3) state the obligations of the real estate broker.
Such contract shall contain the text of section 40 of the Real Estate Brokerage Act (R.S.Q., c. C-73.1), above the signatures of the parties.
Such contract shall, at the end, bear the signature of the real estate broker or of his affiliated real estate agent or broker, as well as the signature of each owner of the immovable to be sold and, where applicable, an intervention by the spouse of each such owner to the effect that he or she agrees to or concurs in the contract.