Association des courtiers et agents immobiliers du Québec v. Proprio Direct inc.

Association des courtiers et agents immobiliers du Québec v. Proprio Direct inc.
Collection
Supreme Court Judgments
Date
2008-05-30
Neutral citation
2008 SCC 32
Report
[2008] 2 SCR 195
Case number
31664
Judges
McLachlin, Beverley; Bastarache, Michel; Binnie, William Ian Corneil; LeBel, Louis; Deschamps, Marie; Fish, Morris J.; Abella, Rosalie Silberman; Charron, Louise; Rothstein, Marshall
On appeal from
Quebec
Subjects
Professional law
Notes
SCC Case Information: 31664
Decision Content
SUPREME COURT OF CANADA
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.
Reasons for Judgment:
(paras. 1 to 40)
Dissenting Reasons:
(paras. 41 to80):
Abella J. (McLachlin C.J. and Bastarache, Binnie, LeBel, Fish and Charron JJ. concurring)
Deschamps J. (Rothstein J. concurring)
______________________________
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