



COURT OF APPEAL FOR ONTARIO

CITATION:
Baxter v. Ontario
    (Real Estate and Business Brokers Act Registrar), 2012 ONCA 543

DATE: 20120820

DOCKET: C54783

Simmons, Blair and LaForme JJ.A.

BETWEEN

Timothy Baxter and T. Baxter Real Estate Ltd.

Applicants (Respondents)

and

Registrar,
Real Estate and Business Brokers
    Act, 2002

Respondent (Appellant)

Robert A. Maxwell and George P. Drametu, for the
    appellant

Carolyn R. Brandow, for the respondent

Heard: May 28, 2012

On appeal from the order of the Divisional Court (Justices
    Kent and Aston; Justice Matlow, dissenting), dated July 12, 2011, with reasons
    reported at 2011 ONSC 2497, 282 O.A.C. 201, dismissing an appeal from the order
    of Vice-Chair Elizabeth L. Sproule of the Licence Appeal Tribunal, dated
    January 25, 2010.

Simmons
    J.A.:

(1)

Introduction

[1]

The Registrar under the
Real Estate and Business Brokers Act, 2002
,
    S.O. 2002, c. 30, sch. C, is responsible for determining whether real estate
    brokers and brokerages are entitled to registration, or to a renewal of their
    registration, under the Act. Where the Registrar proposes to revoke a
    registration, he or she is required to give notice to the registrant, and the
    registrant is entitled to a hearing before the Licence Appeal Tribunal. On the
    hearing, the Tribunal proceeds
de novo
and does not defer to the
    Registrars opinion.

[2]

In this case, the Registrar proposed to revoke the registrations of a
    brokerage firm and the broker who was the principal of the brokerage firm under
    ss. 10(1)(a)(ii) and 10(1)(d)(iii) of the Act, because of their involvement in
    several transactions that resulted in mortgage fraud.

[3]

Specifically, the broker and his firm acted for an individual who
    purchased several properties and then relisted them within a short period at
    significantly inflated prices. As a result of these transactions, mortgagees
    advanced funds based on the inflated prices, and eventually suffered losses.

[4]

Following a hearing, the Licence Appeal Tribunal approved the proposal
    by the Registrar to revoke the registration of the brokerage firm, but directed
    the Registrar not to carry out his proposal to revoke the registration of the
    broker who was the principal of the brokerage firm.

[5]

The Registrar appealed the decision of the Tribunal concerning the registration
    of the broker to the Divisional Court. A majority of the Divisional Court
    upheld the Tribunals decision.

[6]

The Registrar raises multiple issues on appeal to this court. The main
    issues are: (i) whether the Divisional Court erred in failing to find that the
    Tribunal erred in its statement and application of the test for revocation
    under s. 10; (ii) whether the Divisional Court erred in failing to find that
    the Tribunal applied an incorrect standard of proof; (iii) whether the
    Divisional Court erred in failing to find that the Tribunal erred in its
    findings of fact.

(2)

Background

(i)

The
    Registrars Proposal and the Brokers Response

[7]

Timothy Baxter is a registered broker under the Act. Prior to the
    Licence Appeal Tribunals decision, he was also the principal of the registered
    brokerage firm, T. Baxter Real Estate Ltd. (Baxter Real Estate).

[8]

In 2008, the Registrar proposed to revoke the registrations of Mr.
    Baxter and Baxter Real Estate under the Act.

[9]

The Registrar alleged that Mr. Baxter and Baxter Real Estate acted on
    the purchase of several properties for business associates, and then knowingly
    assisted in re-listing these properties at greatly inflated prices. At least
    two consumers complained that they were harmed and various mortgage lenders
    reported losses.

[10]

Relying
    on these allegations, the Registrar claimed that Mr. Baxter was no longer
    entitled to registration because, under s. 10(1)(b)(ii) of the Act, [t]he past
    conduct of Baxter afford[ed] reasonable grounds for belief that he [would] not
    carry on business in accordance with law and with integrity and honesty.

[11]

In
    relation to Baxter Real Estate, the Registrar claimed that it was no longer
    entitled to registration because, under s. 10(1)(d)(iii) of the Act the past
    conduct of Baxter, its sole officer and director, afford[ed] reasonable grounds
    for the belief that its business [would] not be carried on in accordance with
    the law and with integrity and honesty.

[12]

In
    response to the Registrar's allegations, Mr. Baxter denied any knowledge of
    any suspicious business activity or conduct that [he or his brokerage] knew or
    ought to have known was improper, unethical, or illegal.

(ii)

The
    Hearing before the Tribunal

[13]

Evidence
    at the hearing revealed that Mr. Baxter and Baxter Real Estate acted on nine or
    ten transactions between April of 2004 and November of 2007, in which a client
    purchased properties and then flipped them at inflated prices within a short
    period of time.

[14]

The
    transactions all followed a similar pattern. Mr. Baxter received instructions
    by e-mail from a Mr. Alton concerning properties that Mr. Alton was interested
    in buying. Usually, Mr. Baxter did not view these properties with Mr. Alton.
    After a property was acquired, Mr. Alton provided instructions by e-mail or telephone,
    first regarding the relisting price, and then regarding the purchaser and the
    sale price. In all cases, the properties were relisted for amounts
    substantially more than the initial purchase price  more than double in a
    number of cases  within a very short period of time. In most instances, but
    not all, the ultimate purchasers were associates of Mr. Alton.

[15]

Baxter
    Real Estate represented all parties in these transactions but no Baxter Real
    Estate representatives met with the parties, provided any market analysis or
    inspected the properties. Mr. Baxter was instructed not to put signs on the
    properties and not to show them to any buyer found by Mr. Alton  which all the
    buyers appear to have been. Mr. Baxter merely prepared the paperwork and
    provided it to Mr. Alton for the parties to sign.

[16]

In
    his defence, Mr. Baxter claimed that Mr. Alton was a sophisticated investor who
    was inflexible in his demands. He also noted that all re-sales were
    conditional on financing and that he expected the appraisers would do their
    job. Finally, he relied on the fact that, in each case, he disclosed in the
    relevant documentation that he had not physically shown the property to the
    buyer.

(iii)

The Tribunals Decision

[17]

The
    Tribunal found that Mr. Baxter had been cooperative with the investigation by
    the Real Estate Council of Ontario and that the facts were not in issue.
    Rather, the real issue was how to characterize Mr. Baxter's conduct. The
    Tribunal summarized its conclusions as follows:

In summary, the Tribunal finds that Mr. Baxter knew that all
    the properties, (reviewed in these proceedings), that he helped Mr. A. sell
    were sold at inflated prices. He knew that sometimes they were being
    transferred to related parties and should have known that the MLS listings and
    agreements of purchase and sale he was producing did not accurately represent
    the value of the properties involved and that they could be used to
    misrepresent the value of the properties to mortgage lenders. The Tribunal also
    finds that in some instances Mr. Baxter did not know whether the purchasers
    were related. Yet he did not alter his conduct and provide them with any
    services notwithstanding Baxter Realty's representations to do so. He had early
    warnings by his own clients conduct and by other parties that should have
    raised his suspicions but he chose to ignore them all.



Having considered all the evidence the Tribunal finds that Mr.
    Baxter's conduct has fallen well short of the standard expected of a broker.
    Even if he is given every benefit of the doubt and his claim of ignorance is
    accepted, his demonstrated level of understanding of an agent's duties and
    responsibilities to the parties of a trade in real estate has caused the
    Tribunal to have serious doubts as to whether Baxter Realty, under Mr. Baxter's
    direction, would carry on business with honesty and integrity in accordance
    with the law.

[18]

Concerning
    Baxter Real Estate, the Tribunal rejected a suggestion that consumers could be
    adequately protected if the operations of the brokerage were supervised by
    another responsible experienced registrant. The Tribunal stated that because
    the brokerage is responsible for the conduct of its brokers and salespersons,
    [t]here must be clarity as to who consumers can hold accountable and there
    must be certainty that the brokerage is being directed by a knowledgeable,
    competent, diligent, honest individual.

[19]

The
    Tribunal concluded that Mr. Baxter's conduct had demonstrated if not a lack of
    honesty and integrity, then such a lack of understanding, or indifference, as
    to how Baxter Realty  should conduct itself, so as to provide reasonable
    grounds for the belief that Baxter Realty [would] not carry on business with
    honesty and integrity and in accordance with the law. Thus, the Tribunal
    determined that Baxter Realtys licence should be revoked.

[20]

Concerning
    Mr. Baxter the Tribunal stated:

As stated above, the Tribunal finds that Mr. Baxter's failure
    to perform the duties expected of a registrant  demonstrates a serious lack of
    understanding of, and in some instances arguably wilful indifference to, the
    duties and obligations of a registrant. In coming to this conclusion the
    tribunal has given Mr. Baxter the benefit of any doubt. Although his conduct
    raises serious concern, in the Tribunals opinion it is not sufficient grounds
    to conclude that Mr. Baxter will not carry on business with honesty and
    integrity and in accordance with the law.

[21]

The
    Tribunal noted that Mr. Baxter had operated in the industry without incident
    for many years. However it said that given his conduct in the recent events
    it [was] clear that he require[d] further education and guidance regarding the
    roles and responsibilities of a registrant and the changing issues facing the
    real estate industry. In the words of the Tribunal, [r]egistration as a
    broker subject to [various conditions], including supervision and educational
    requirements would therefore be appropriate.

(iv)

The Reasons of the Majority of the
    Divisional Court

[22]

The
    majority of the Divisional Court began by noting that there were conflicting
    decisions of the court concerning whether the Tribunal has jurisdiction to
    impose conditions on a persons licence where it finds that person to  be
    entitled to registration under s. 10(1) of the Act. The majority indicated
    that the issue was canvassed with counsel and that the court proceeded on the
    understanding that they would not need to address the conflicting authorities,
    because neither Mr. Baxter nor Baxter Real Estate were challenging the
    Tribunal's authority to attach conditions to Mr. Baxter's registration.

[23]

The
    majority set out the standard of review as correctness on questions of general
    law that are not aspects of the core function of the Tribunal, and
    reasonableness on questions of mixed fact and law, discretion, policy and the
    interpretation of sections 10, 13, and 14 of the
Real Estate and Business
    Brokers Act
.

[24]

The
    majority rejected the Registrar's argument that, by using the words every
    benefit of the doubt and benefit of any doubt in its reasons, the Tribunal
    held the Registrar to a higher, quasi-criminal standard of proof rather than
    the correct, balance of probabilities, civil standard. In the majoritys
    view, when considered in context, the impugned language was used only in
    reference to a credibility consideration rather than a standard of proof
    consideration.

[25]

Concerning
    the Registrar's contention that, given the Tribunal's findings and observations
    concerning Mr. Baxter's credibility and knowledge, it was unreasonable for the
    Tribunal to fail to find that Mr. Baxter
knowingly
participated in a
    mortgage fraud scheme, the majority first observed that wilful blindness and
    recklessness can constitute imputed knowledge. The majority went on to opine
    that it was unnecessary for the Tribunal to label or categorize [Mr.] Baxters
    state of mind. In the majoritys view [t]he germane issue was how to assess
    and weigh his culpability or misconduct in drawing any conclusions about how he
    would conduct himself in the future.

[26]

The
    majority noted multiple findings by the Tribunal concerning Mr. Baxter's state
    of mind. For example, the Tribunals statements: (i) it is difficult to
    understand how an experienced real estate agent would not be suspicious; (ii)
    [c]learly Mr. Baxter would have known that the listing prices were a gross
    exaggeration; (iii) [h]e had early warnings  that should have raised his
    suspicions but he chose to ignore them all; and, other similar statements.

[27]

The
    majority concluded that the Tribunal went as far as it needed to go in its
    conclusions on Mr. Baxters state of mind. The Registrar's argument was
    effectively a request for the Divisional Court to substitute its own view of
    the evidence for that of the Tribunal.

[28]

The
    majority also rejected the Registrar's arguments that it was improper for the
    Tribunal to have regard to mitigating circumstances in its s. 10 analysis and
    that the Tribunal's reasons were inadequate for meaningful appellate review.

[29]

Finally,
    the majority concluded that the Tribunal understood the test under s. 10 of the
    Act and properly applied that test in its reasons.

(3)

Subsections
    10(1)(a)(ii) and 10(1)(d)(iii) of the Act

[30]

Subsections
    10(1)(a)(ii) and 10(1)(d)(iii) of the Act read as follows:

10 (1) An applicant that meets the
    prescribed requirements is entitled to registration or renewal of registration
    by the registrar unless,

(a) the
    applicant is not a corporation and,



(ii) the
    past conduct of the applicant or of an interested person in respect of the
    applicant affords reasonable grounds for belief that the applicant will not
    carry on business in accordance with law and with integrity and honesty



(d) the applicant
    is a corporation and,



(iii) the
    past conduct of its officers or directors or of an interested person in respect
    of its officers or directors or of an interested person in respect of the
    corporation affords reasonable grounds for belief that its business will not be
    carried on in accordance with the law and with integrity and honesty.

(4)

Discussion

[31]

The
    parties do not take issue with the Divisional Courts statement of the standard
    of review applicable in this case.

(i)

Did the Divisional Court err in failing to find that the Tribunal erred
    in its statement and application of the test for entitlement to registration
    under s. 10 of the Act?

[32]

The
    Registrar raises several arguments under this heading. First, the Registrar
    submits that the Tribunal erred in its statement of the test for entitlement to
    registration under s. 10 of the Act.

[33]

I
    recognize that in, at least three places in its reasons, the Tribunal misstated
    the test under s. 10 as being whether Mr. Baxters conduct affords reasonable
    grounds to conclude that he and/or Baxter Real Estate would not carry out on
    business in accordance with law and with integrity and honesty. The proper test
    is whether the conduct affords reasonable grounds to believe that they would
    not do so. However, the Tribunal stated the test under s. 10 correctly when
    setting out the issue in the case and in several other places during the course
    of its reasons.

[34]

As
    the Registrar points out in his factum, because the test under s. 10 involves
    predicting future conduct based on past conduct, it is impossible on a
    practical level to arrive at conclusions about future conduct. Instead, one
    can only form beliefs.

[35]

Reading
    the Tribunals reasons fairly and as a whole, in my view, it is apparent that
    the Tribunal was using the word conclude in a vernacular sense and treating
    it as a synonym for believe. Therefore, I am not persuaded that the
    Tribunals misstatement of the test constitutes reversible error.

[36]

The
    Registrar also argues that, after finding Baxter Real Estate was not entitled
    to registration, it was an error for the Tribunal to determine that Mr. Baxter
    was entitled to registration based on identical facts and the same legal test.

[37]

I
    do not accept this submission because, in my view, the issues presented by the
    legal test are different when applied to a broker and a brokerage.

[38]

Mr.
    Baxter is a broker; Baxter Real Estate is a brokerage. As pointed out by the
    Registrar, a brokerage has additional responsibilities under the Act, such as
    for accounting and supervision of salespersons, beyond those possessed by a
    broker.

[39]

When
    applied to Mr. Baxter, the legal test under s. 10(1)(a)(ii) of the Act is
    whether
his
past conduct affords reasonable grounds to believe that
he
will not carry on business as a broker appropriately. When applied to Baxter
    Real Estate, the legal test under s. 10(1)(d)(iii) of the Act is whether the
    past conduct of
its officers and directors
affords reasonable grounds
    for belief that
its business
as a brokerage will not be carried on
    appropriately. Because a brokerage has greater responsibilities than a broker
    under the Act, the term business as it appears in s. 10 has a broader scope in
    relation to a brokerage than it does in relation to a broker.

[40]

The
    Tribunal demonstrated that it was alive to this distinction when it said the
    following:

The brokerage is the agent and a separate legal entity,
    responsible for the conduct of its brokers and salespersons, supervision does
    not change this. There must be clarity as to who consumers can hold accountable
    and there must be certainty that the brokerage is being directed by a
    knowledgeable, competent, diligent, honest individual. The Tribunal concludes
    that Mr. Baxter's conduct has demonstrated, if not a lack of honesty and
    integrity, then such a lack of understanding, or indifference, as to how Baxter
    Realty, as an agent should conduct itself, so as to provide reasonable grounds
    for the belief that Baxter Realty will not carry on business with honesty and
    integrity and in accordance with the law.

[41]

In
    my view, because a brokerage has greater responsibilities, it was open to the
    Tribunal to find that Mr. Baxters past conduct supported a finding that Baxter
    Realty was not entitled to registration under s. 10, even though it did not
    reach the same conclusion with regard to Mr. Baxter, himself.

[42]

The
    Registrar also argues that the Tribunal erred in law by making its
    determination of Mr. Baxters continuing entitlement to registration contingent
    on conditions without making a threshold determination that Mr. Baxter was not
    entitled to registration under s. 10(1)(a)(ii) of the Act.

[43]

I
    do not accept this argument. In its reasons, the Tribunal stated:

Although his conduct raises serious concern, in the Tribunals
    opinion it is not sufficient grounds to conclude that Mr. Baxter will not carry
    on business with honesty and integrity and in accordance with the law.

[44]

Although
    the Tribunal imposed conditions on Mr. Baxters registration, it did not indicate
    that its finding that Mr. Baxters past conduct had not met the threshold under
    s. 10(1)(a)(ii) for deregistration was contingent on those conditions.

[45]

As
    the majority of the Divisional Court noted, Mr. Baxter did not cross-appeal to
    the Divisional Court. It was, thus, unnecessary for the Divisional Court
    determine whether the Tribunal had jurisdiction to impose conditions in the
    absence of a threshold determination under s. 10(1)(a)(ii) that Mr. Baxter was
    not entitled to registration. Similarly, it is unnecessary that we make such a
    determination.

[46]

Therefore,
    the Registrars request that this court resolve, what the Registrar submits are,
    conflicting authorities from the Divisional Court on this point must await
    another case.


(ii)

Did the
    Divisional Court err in failing to find that the Tribunal erred in its
    application of the standard of proof?

[47]

The
    Registrar argues that two passages in the Tribunals reasons demonstrate that
    the Tribunal held the Registrar to a higher, quasi-criminal, standard of proof
    than the applicable standard of proof namely, on a balance of probabilities.
    The two impugned passages read as follows:

Having considered all the evidence the Tribunal finds that Mr.
    Baxter's conduct has fallen well short of the standard expected of a broker.
Even
    if he is given every benefit of the doubt and his claim of ignorance is
    accepted
, his demonstrated level of understanding of an agent's duties and
    responsibilities to the parties of a trade in real estate has caused the
    Tribunal to have serious doubt as to whether Baxter Realty, under Mr. Baxter's
    direction, would carry on business with honesty and integrity in accordance
    with the law.



As stated above, the Tribunal finds that Mr. Baxter's failure
    to perform the duties expected of a registrar, in the series of transactions
    focused on, demonstrates a serious lack of understanding of, and in some
    instances arguably wilful indifference to, the duties and obligations of a
    registrant.
In coming to this conclusion the Tribunal has given Mr. Baxter
    the benefit of any doubt
. Although his conduct raises serious concern, in
    the Tribunal's opinion it is not sufficient grounds to conclude that Mr. Baxter
    will not carry on business with honesty and integrity and in accordance with
    the law. [Emphasis added.]

[48]

I
    agree with the majority of the Divisional Court that the impugned passages do
    not reflect the Tribunal's application of the standard of proof.

[49]

In
    the first passage, the Tribunal was saying that even if it had accepted Mr.
    Baxters claim of complete ignorance, it would still find that Baxter Realty's
    registration should be revoked. In other words, even if the Tribunal had not
    found Mr. Baxter both wilfully blind and reckless, the Tribunal would still
    have approved the Registrars proposal to revoke Baxter Realtys registration.

[50]

It
    is true that the second passage could have been articulated much more clearly.
    Considered in the context of the Registrars claim that Mr. Baxter was a
    knowing participant in a fraudulent scheme, arguably this passage suggests that
    the Tribunal required the Registrar to prove the relevant claims on, at least,
    a quasi-criminal standard. However, I do not accept that such an interpretation
    of this passage is the correct one.

[51]

Read
    fairly, in my view, the Tribunal was simply saying that, in coming to its
    conclusion that Mr. Baxter had demonstrated a serious lack of understanding of
    his duties and wilful blindness, the Tribunal had given Mr. Baxter every benefit
    of the doubt. Accordingly, I do not read this passage as saying that the
    Tribunal held the Registrar to a quasi-criminal standard of proof in
    establishing the allegations against Mr. Baxter.

(iii)

Did the Divisional Court err
    in failing to find that the Tribunal erred in its findings of fact?

[52]

The
    Registrar advances three interrelated arguments concerning the Tribunal's
    findings of fact. First, the Registrar says the Tribunal erred by making what
    appear to be equivocal findings of fact. Second, the Registrar argues that the
    Tribunal erred by failing to make clear findings about Mr. Baxter's state of
    knowledge in relation to the mortgage fraud. Third, the Registrar argues that the
    Tribunals reasons are inadequate for meaningful appellate review.

[53]

I
    do not agree with the Registrars arguments. In my view, the Tribunals reasons
    are not equivocal and do, in fact, make a finding as to Mr. Baxters state of knowledge
    regarding the fraud. The reasons indicate that the Tribunal was satisfied that
    Mr. Baxter was wilfully blind and reckless  and therefore had imputed
    knowledge of the mortgage fraud; however, the Tribunal was not satisfied that Mr.
    Baxter actually turned his mind to the fraud. Further, the reasons indicate that
    the Tribunal was satisfied that the primary cause of the appellants misconduct
    was his failure to appreciate the full scope of his duties, rather than
    dishonesty
per se
. Finally, while I agree that portions of the Tribunals
    reasons could have been clearer, when read as a whole and in context, I am
    satisfied that the Tribunals reasons are adequate for the purposes of
    appellate review.

(a)

The Tribunals
    findings are not equivocal

[54]

I
    disagree with the Registrar that the Tribunals reasons are internally
    contradictory.

[55]

Many
    passages in the Tribunal's reasons make it clear that the Tribunal was
    satisfied that Mr. Baxter was both wilfully blind and reckless. The following
    portion of the Tribunals summary is sufficient to illustrate the point:

In summary, the Tribunal finds that Mr. Baxter
knew
that
all the properties
, (reviewed in these proceedings), that he
    helped Mr. A sell
were sold at inflated prices
. He
knew
that
    sometimes
they were being transferred to related parties
and
should
    have known
that
the MLS listings and agreements of purchase and sale
he was producing
did not accurately represent the value
of the
    properties involved
and that they could be used to misrepresent the value
    the properties to mortgage lenders
. The Tribunal also finds that in some
    instances Mr. Baxter did not know whether the purchasers were related. Yet he
    did not alter his conduct and provide them with any services notwithstanding
    Baxter Realty's representations [
sic
] to do so.
He had early warnings
    by his own clients conduct and by other parties that should have raised his
    suspicions but he chose to ignore them all.
[Emphasis added.]

[56]

A
    significant part of the problem which the Registrar points to in its argument arises
    from the sections in which the Tribunal set out its dispositions in relation to
    Baxter Real Estate, and Mr. Baxter, respectively. I have already quoted from
    these sections, in part, above. Read superficially, the portions of these
    passages emphasized below potentially contradict the Tribunal's earlier
    findings of wilful blindness and recklessness:

Having considered all the evidence the Tribunal finds that Mr.
    Baxter's conduct has fallen well short of the standard expected of a broker.
Even
    if he is given every benefit of the doubt and his claim of ignorance is
    accepted, his demonstrated level of understanding of an agent's duties and
    responsibilities
to the parties of a trade in real estate
has caused
    the Tribunal to have serious doubt
as to whether Baxter Realty, under Mr.
    Baxter's direction, would carry on business with honesty and integrity in
    accordance with the law.



The Tribunal concludes that Mr. Baxter's conduct has
    demonstrated,
if not a lack of honesty and integrity, then such a lack of
    understanding, or indifference, as to how Baxter Realty, as an agent should
    conduct itself
, so as to provide reasonable grounds for the belief that
    Baxter Realty will not carry on business with honesty and integrity and in
    accordance with the law.



As stated above, the Tribunal finds that
Mr. Baxter's
    failure to perform the duties
expected of a registrant, in the series of
    transactions focused on,
demonstrates a serious lack of understanding of,
    and in some instances arguably wilful indifference
to, the duties and
    obligations of a registrant. In coming to this conclusion the Tribunal has
    given Mr. Baxter the benefit of any doubt. Although his conduct raises serious
    concern, in the Tribunal's opinion it is not sufficient grounds to conclude
    that Mr. Baxter will not carry on business with honesty and integrity and in
    accordance with the law.

[57]

However, in
    my view, interpreting these passages as contradictory to the Tribunals
    findings of wilful blindness and recklessness is not a fair reading of these
    sections in the context of the reasons as a whole. As I have said already, in
    my opinion, the first quoted paragraph simply reflects a determination by the
    Tribunal that, even if Mr. Baxter's claim of complete ignorance was accepted,
    Baxter Real Estate's registration should be revoked. As for the second and
    third paragraphs, I read them as poorly worded findings that  although Mr.
    Baxter had failed in his duties and, in doing so, had been wilfully blind  a
    primary cause of Mr. Baxters professional failings was his serious lack of
    understanding of his duties.

(b)

The Tribunals
    reasons do include a finding as to Mr. Baxters knowledge or lack of knowledge
    of fraud

[58]

The
    Registrar also argues that the Tribunal erred in failing to find, or to explain
    why it did not find, that Mr. Baxter was a knowing participant in the fraud,
    and, in any event, in failing to conclude that Mr. Baxters past conduct
    afforded reasonable grounds to believe that he would not carry on business in
    accordance with law and with integrity and honesty.

[59]

I
    do not accept these arguments. In my view, it is clear that, although the
    Tribunal found that Mr. Baxter was both wilfully blind and reckless, the
    Tribunal was not satisfied that he actually turned his mind to the presence of
    fraud. I have already reviewed the portions of the Tribunals reasons that
    demonstrate its findings of wilful blindness and recklessness.

[60]

In
    my view, it is implicit in its reasons that the Tribunal was not satisfied that
    Mr. Baxter recognized the presence of fraud given that: (i) the Tribunal did
    not make a finding that Mr. Baxter actually recognized the presence of fraud;
    and, (ii) its finding that a primary cause of Mr. Baxters misconduct was his
    serious lack of understanding of his duties.

[61]

As
    I read the Tribunals reasons, its explanation for concluding that Mr. Baxter
    did not recognize the presence of fraud was grounded in, among other things, the
    facts that Mr. Baxter was completely co-operative with the investigation, that
    he made no effort to mislead the investigators, and that he had 31 years of
    involvement in the industry with no complaints of prior fraudulent conduct. The
    Tribunal relied on the same factors in concluding there were not sufficient
    grounds to find that Mr. Baxter would not carry on business in accordance with
    law and with integrity and honesty. The Tribunal made the following
    observations, juxtaposing the facts of this case to those in
Khetani (Re)
,
    [2006] O.L.A.T.D. No. 473, where the registrants licence was, in fact, revoked:

It has been emphasized and the Tribunal accepts, that Mr. Baxter
    has been completely co-operative with RECO in its investigations. He made full
    disclosure and there was no attempt to falsify documents or mislead RECO in any
    way. Also, that there have been no prior complaints against Mr. Baxter and he
    has never been convicted of a crime. As stated he has been in the industry 31
    years.

...

In [
Khetani (Re)
], the Tribunal found that the
    registrant knew she was involving herself in a series of questionable
    transactions, even if she might not have understood the full extent of the
    fraud, and by not performing the essential services that a realtor provides she
    prlayer a role in the fraudulent transactions. Where the facts differ from the
    present case is that the registrant Khetani bore false witness to signatures
    and her testimony was not found to be credible. The Tribunal found this to be
    evidence of her honesty and integrity. Notwithstanding that Mr. Baxter has
    significantly failed to properly carry out his duties as a registrant over a
    series of transactions, there is no evidence, as in the
Khetani
case,
    of falsified documents or false testimony.

...

Although his conduct raises serious concern, in the Tribunals
    opinion it is not sufficient grounds to conclude that Mr. Baxter will not carry
    on business with honesty and integrity and in accordance with the law. Mr.
    Baxter has operated in the industry without incident for many years. However,
    given his conduct in the recent events it is clear that he requires further
    education and guidance regarding the roles and responsibilities of a registrant
    and the changing issues facing the real estate industry.

[62]

While the factors
    on which the Tribunal relied may not have persuaded other triers of fact, in my
    view, it was open to the Tribunal to rely on these facts in both declining to find
    that Mr. Baxter was a knowing participant in the fraud, and concluding that a
    primary cause of Mr. Baxters misconduct was his serious lack of
    understanding of his duties.

[63]

The
    assessment under s. 10(1)(a)(ii) involves making a prediction about future
    behaviour based on past conduct. It required the Tribunal to consider, not only
    Mr. Baxters revocation-related past misconduct, but also his past conduct, in
    general. In my view, particularly in the light of the Tribunals finding that a
    primary cause of Mr. Baxters misconduct was his lack of understanding of his
    duties, it was open to the Tribunal  even in the face of findings of wilful
    blindness and recklessness to find that Mr. Baxters past conduct did not
    afford reasonable grounds to believe he would not carry on the business of a
    broker in accordance with law and with integrity and honesty in the future.

[64]

I
    also note that the assessment under s. 10 is within the scope of the Tribunals
    core competency.
Like the majority of the Divisional
    Court, the Registrars argument on this point ultimately strikes me as a
    request to substitute our view of the evidence for that of the Tribunal. That
    is not this courts role on appellate review.

(c)

The
    Tribunals reasons are not insufficient

[65]

Finally,
    despite the Registrars arguments on sufficiency, I am satisfied that, on the
    whole, the Tribunals reasons are sufficient.

[66]

As noted
    above, I agree that some sections of the Tribunals reasons could have been
    clearer. However, when read as a whole and in context, I am satisfied that the
    Tribunals reasons are adequate for the purposes of appellate review.

(5)

Disposition

[67]

Based
    on the foregoing reasons, the appeal is dismissed.

[68]

If
    so advised, the parties may make brief written submissions concerning costs. The respondent may make submissions within 14 days
    and the appellant within 21 days, following the release of these reasons.

Janet
    Simmons J.A.

I agree
    R.A. Blair J.A.

I agree
    H.S. LaForme J.A.

Released: R.A.B. August 20, 2012


