DeJesus v. Sharif, (2010) 284 B.C.A.C. 243 (CA)

• Judge: Finch, C.J.B.C., Prowse and D. Smith, JJ.A.
• Court: Court of Appeal (British Columbia)
• Case Date: January 21, 2010
• Jurisdiction: British Columbia
• Citations: (2010), 284 B.C.A.C. 243 (CA);2010 BCCA 121

DeJesus v. Sharif (2010), 284 B.C.A.C. 243 (CA);

    481 W.A.C. 243

MLB headnote and full text

Temp. Cite: [2010] B.C.A.C. TBEd. MR.038

Florente DeJesus and Elizabeth DeJesus (respondents/cross-appellants/plaintiffs) v. Omar Sharif (appellant/cross-respondent/defendant)

(CA036424; 2010 BCCA 121)

Indexed As: DeJesus v. Sharif

British Columbia Court of Appeal

Finch, C.J.B.C., Prowse and D. Smith, JJ.A.

March 10, 2010.

Summary:

The defendant real estate agent sold his own property to the plaintiffs in November 2005 for $895,000, while purporting to act as a dual agent for himself and the plaintiffs. The plaintiffs sued the defendant for breach of fiduciary duty. The trial judge allowed the action, finding that the defendant breached his fiduciary obligations by not disclosing material information, in particular the price he purchased the property for in May 2005 and the property's fair market value. The trial judge ordered the defendant to pay damages of $135,000. The defendant appealed. The plaintiffs cross-appealed.

The British Columbia Court of Appeal dismissed the appeal and cross-appeal.

Brokers - Topic 3026

Duties of broker to principal - General principles - Duty of disclosure - [See third Brokers - Topic 3152 ].

Brokers - Topic 3028

Duties of broker to principal - General principles - Duty respecting conflicts of interest - [See third Brokers - Topic 3152 ].

Brokers - Topic 3030

Duties of broker to principal - General principles - Dual agency - Requirements of - [See third Brokers - Topic 3152 ].

Brokers - Topic 3152

Duties of broker to principal - Real estate brokers - Fiduciary duty - The defendant real estate agent sold his own property to the plaintiffs, while purporting to act as a dual agent for himself and the plaintiffs - The plaintiffs sued the defendant for breach of fiduciary duty - The trial judge allowed the action, finding that the defendant breached his fiduciary obligations by not disclosing material information, in particular the price he purchased the property for and the property's fair market value - The defendant appealed - The British Columbia Court of Appeal held that the trial judge applied the correct legal test in concluding that the defendant owed a fiduciary duty - The trial judge correctly recognized that there was a presumption in law that a real estate agent was a fiduciary, and that the onus was on the defendant to rebut that presumption - To rebut that presumption the defendant had to demonstrate that the relationship was not one of reliance, trust, and confidence - See paragraphs 52 to 54.

Brokers - Topic 3152

Duties of broker to principal - Real estate brokers - Fiduciary duty - The defendant real estate agent sold his own property to the plaintiffs in November 2005 for $895,000, while purporting to act as a dual agent for himself and the plaintiffs - The plaintiffs sued the defendant for breach of fiduciary duty - The trial judge allowed the action, finding that the defendant breached his fiduciary obligations by not disclosing material information, in particular the price he purchased the property for in May 2005 ($423,000) and the property's fair market value ($760,000) - The trial judge found that the defendant was "well aware" that the female plaintiff reposed trust in him to provide good advice and information to her in regard to real estate with rental income potential - She felt confident that he would not take advantage of her, and that she relied heavily on his knowledge of real estate, values, income potential and financing - The defendant knew the plaintiffs' financial means and their need to rely on him for financing, and that the plaintiffs were thereby vulnerable - The defendant also knew that one plaintiff frequently referred to him as her "guardian angel", which was indicative of her obvious trust, confidence and reliance on him - The British Columbia Court of Appeal dismissed the defendant's appeal - The record was capable of supporting the conclusion that the plaintiffs relied upon and placed trust and confidence in the defendant - See paragraphs 55 and 56.

Brokers - Topic 3152

Duties of broker to principal - Real estate brokers - Fiduciary duty - The defendant real estate agent sold his own property to the plaintiffs, while purporting to act as a dual agent for himself and the plaintiffs - The plaintiffs sued the defendant for breach of fiduciary duty - The trial judge allowed the action, finding that the defendant breached his fiduciary obligations by not disclosing material information, in particular the price he purchased the property for and the property's fair market value - The defendant appealed - He argued that the trial judge erred in his treatment of a Limited Dual Agency Agreement signed by the parties - He argued that the agreement limited his duties to the plaintiffs and that an addendum to the agreement constituted an explicit waiver by the plaintiffs to independent advice and representation - The British Columbia Court of Appeal rejected the argument - In usual circumstances, a dual agency agreement was an agreement entered into when a real estate agent acted for both the vendor and the purchaser - In such circumstances, there were inherent conflicts of interest for the agent, who was fixed with obligations to two principals - The dual agency agreement limited such fiduciary obligations so that such arrangements were possible - A limited dual agency agreement was inconsistent and incompatible with the circumstances of this case - Where the agent was also a principal, the limitations in the dual agency agreement were inapplicable and could not be given effect - The fiduciary obligations of a real estate agent, and in particular one who was selling property to his principal, remained in place - In any event, while the agreement limited the duty of disclosure, it did not limit the duty to disclose the property's fair market value which was not excluded from disclosure by the dual agency agreement - Further, the defendant's fiduciary duties arose when the price was being negotiated - The agreement and addendum were signed after the price had been negotiated - See paragraphs 57 to 78.

Equity - Topic 1482

Equitable principles respecting relief - Clean hands doctrine - Application of - The defendant real estate agent sold his own property to the plaintiffs, while purporting to act as a dual agent for himself and the plaintiffs - The plaintiffs sued the defendant for breach of fiduciary duty - The trial judge allowed the action, finding that the defendant breached his fiduciary obligations by not disclosing material information, in particular the price he purchased the property for and the property's fair market value - The defendant appealed, arguing that the trial judge failed to take into account the fact that a plaintiff brought her claim with "unclean hands" and was, therefore, not entitled to equitable relief - The trial judge found that the female plaintiff had forged a letter to a mortgage lender concerning the source of funds for the purchase of the property in order to mislead the lender and influence the amount of mortgage, that the information was false and that she deliberately lied about under oath at discovery - She also provided false and misleading data about the property in a subsequent LS listing of the property - The British Columbia Court of Appeal rejected the defendant's argument - None of the conduct described was sufficient to bar the plaintiff from equitable relief - The plaintiff's claim to equitable relief was established without reliance on her misconduct - All of her misconduct was outside of their fiduciary relationship at issue - The transaction at issue in these proceedings was the purchase and sale of the property and the interaction within that context of the parties in their fiduciary relationship - See paragraphs 79 to 88.

Equity - Topic 3606

Fiduciary or confidential relationships - General principles - What constitutes a fiduciary relationship - [See first and second Brokers - Topic 3152 ].

Equity - Topic 3655

Fiduciary or confidential relationships - Breach of fiduciary relationship - Damages - The defendant real estate agent sold his own property to the plaintiffs in November 2005 for $895,000, while purporting to act as a dual agent for himself and the plaintiffs - The plaintiffs sued the defendant for breach of fiduciary duty - The trial judge allowed the action, finding that the defendant breached his fiduciary obligations by not disclosing material information, in particular the price he purchased the property for in May 2005 ($423,000) and the property's fair market value ($760,000) - The trial judge awarded the plaintiffs damages of $135,000 - The plaintiffs argued in a cross-appeal that the trial judge erred by not ordering the defendant to disgorge the entirety of his profit of $438,000, being the difference between the price he paid for the property and the price he sold it for - The British Columbia Court of Appeal rejected the argument - The issue was the "profit" the defendant derived from the breach of his fiduciary duty - The defendant's breach permitted him to obtain more than fair market value from the plaintiffs - Damages reflecting the difference between the sale price and the fair market value adequately served both the prophylactic and restitutionary purposes of the remedy - The trial judge could not be said to have erred in his conclusion on this issue - See paragraphs 89 to 100.

Equity - Topic 3718

Fiduciary or confidential relationships - Commercial relationships - Broker and principal - [See all Brokers - Topic 3152 ].

Cases Noticed:

Guerin v. Canada, [1984] 2 S.C.R. 335; 55 N.R. 161, refd to. [para. 52].

Baillie et al. v. Charman et al. (1992), 17 B.C.A.C. 13; 29 W.A.C. 13; 70 B.C.L.R.(2d) 388 (C.A.), refd to. [para. 53].

Lee Estate v. Royal Pacific Realty Corp. et al., [2003] B.C.T.C. 911; 2003 BCSC 911, refd to. [para. 53].

Grimshaw v. Progroup Realty Ltd. et al., 2004 CarswellBC 2355 (S.C.), affd. [2004] B.C.A.C. Uned. 185; 2004 BCCA 523, refd to. [para. 64].

Summit Staging Ltd. v. 596373 B.C. Ltd. et al., [2008] B.C.T.C. Uned. A61; 2008 BCSC 198, refd to. [para. 65].

3464920 Canada Inc. v. Strother et al. (2007), 363 N.R. 123; 241 B.C.A.C. 108; 399 W.A.C. 108; 2007 SCC 24, refd to. [para. 96].

Authors and Works Noticed:

Ellis, Mark Vincent, Fiduciary Duties in Canada (2009) (Looseleaf), p. 20-38 [para. 84].

Foster, William F., Real Estate Agency Law in Canada (2nd Ed. 1994), pp. 227 [para. 60]; 244, 245 [para. 61].

Foster, William F., Dual Agency: Its Implications for the Real Estate Brokerage Industry, Meredith Memorial Lectures, Current Problems in Real Estate (1989), p. 76 [para. 62].

Maddaugh, Peter D., and McCamus, John D., The Law of Restitution (2nd Ed. 2004) (2009 Looseleaf), p. 27:64 [para. 98].

Snell's Equity (30th Ed. 2000), p. 32 [para. 85].

Spry, Ian C.F., The Principles of Equitable Remedies: Specific Performance, Injunctions, Rectification and Equitable Damages (6th Ed. 2000), pp. 169, 170 [para. 86].

Counsel:

M.S. Menkes, for the appellant/cross-respondent;

A. Davis and K. Anderson, for the respondents/cross-appellants.

This appeal and cross-appeal were heard in Vancouver, British Columbia, on January 21, 2010, by Finch, C.J.B.C., Prowse and D. Smith, JJ.A., of the British Columbia Court of Appeal. The decision of the court was delivered on March 10, 2010, when the following opinions were filed:

Finch, C.J.B.C. (D. Smith, J.A., concurring) - see paragraphs 1 to 100;

Prowse, J.A. - see paragraph 101.