Law Times

Law Times • January 13, 2014 Page 11 FOCUS Competition Bureau continues court battle against TREB BY MARG. BRUINEMAN For Law Times T he Competition Bureau is charging that consumers don't have fair access to the real estate market and is challenging the country's largest real estate board at the Federal Court of Appeal. "What had our concerns were basically a set of rules," says Richard Bilodeau, assistant deputy commissioner of the civil matters branch of the Competition Bureau. In response, the Competition Bureau has launched an action alleging that limited access to the Toronto Real Estate Board's multiple listing service restricts consumer choice and innovation. In particular, it has concerns about restrictions on virtual office web sites. The bureau maintains that not allowing the public to access information is an abuse of the board's dominant position and, therefore, anti-competitive. "It imposed an obligation to provide a service even if the consumer didn't want it," says Bilodeau. "Right now, that information is in the hands of the agent. . . . It really doesn't put the consumer in control." The Competition Tribunal didn't agree, however. It rejected the bureau's request to make the board relax those rules. It found the board doesn't compete with real estate agents and has no negative effect on the consumer. It allowed the board to continue with its policy on virtual office web sites. For its part, the board says it's increasing access and competition while safeguarding the privacy rights of consumers. "The tribunal's decision was the right decision," said then-president Ann Hannah in a press release. "TREB and its members will continue to offer the highest possible quality real estate service without sacrificing the privacy rights of consumers." James Musgrove of McMillan LLP's competition and antitrust practice group says the decision may have been short but was significant. And, he adds, the fact that challenges to the activities of trade associations are unlikely to succeed under the abuse-of-dominance provision is consistent with existing jurisprudence. "The issue with the TREB case . . . [is] the section simply didn't apply with the conduct they were wanting to challenge," says Musgrove, who presented a paper on the decision to the Canadian Bar Association's competition law conference. The bureau has asked the Federal Court of Appeal to review that decision. It argues the three-member tribunal's decision stemmed from a narrow interpretation of s. 79 of the Competition Act. The result, it adds, opens the door for trade associations to develop rules aimed at preventing or eliminating potential new forms of competition. It's asking the court to return the case to the tribunal, set aside the costs awarded to the board, and force it to pay the costs of the appeal. In its motion to appeal, the bureau said the tribunal erred in relying on the appeal court's 2006 decision in Canada (Commissioner of Competition) v. Canada Pipe Co. Ltd. in which it held that the dominant firm must compete with those harmed by the practice of anticompetitive acts. That decision, it adds, didn't consider the impact of the legislation on an incorporated industry "whose conduct has an intended negative effect on the web site, realtor.ca. competitors of its members. Two years ago, the board began "The tribunal erred in law by disoffering a virtual office web site to missing the commissioner's applicaits members allowing clients to tion relying solely on the statement view certain information about that TREB did not itself compete in properties listed for sale. It operthe market, without making any findates through an electronic conings with respect to TREB's control nection over the Internet between of residential real estate brokerage the virtual office web site and the services, its restrictions on the access listing service. But the virtual ofto land and use of MLS data, and the fice web site can also contain thirdsubstantial lessening or prevention of party data about things such as competition in the supply of such serschools in the area, public transit, vices to consumers." and local businesses. The commissioner maintains that In its memorandum of fact and by blocking its members and others law filed with the Federal Court of in the Greater Toronto Area from Appeal, the board says it excludes accessing Internet-based real estate certain information after deliberinformation, the board is preventing them from competing effectively. Its The fact that challenges to the activities of trade ating on privacy and regulatory rules, the commissioner of competi- associations are unlikely to succeed under the issues. "Although the National Astion states in its memorandum of fact abuse-of-dominance provision is consistent with sociation of Realtors had settled a similar lawsuit by the U.S. Departand law, prohibit members from dis- existing jurisprudence, says James Musgrove. ment of Justice, the terms of that seminating key historical sales information through secure channels known as virtual office settlement had to be modified in light of Canadian laws." web sites and, as a result, deny buyers and sellers greater It also cites a 2009 privacy commissioner's determination that although the purchase price of real estate is available choice, better services, and lower prices. The board counters that the abuse-of-dominance on a public registry, it constitutes personal information provisions of the Competition Act apply only to firms within the scope of the Personal Information Protection that compete in the market. Although its members par- and Electronics Document Act. But the bureau's interest in the real estate market and ticipate in the residential real estate market, it doesn't and isn't in competition with its members. It argues the com- the listing service goes further. It began with a challenge to missioner's interpretation is inconsistent with the statu- the Canadian Real Estate Association. In 2010, it reached tory scheme for abuse of dominance and the bureau's a consent agreement with the association after accusing the national organization of imposing anti-competitive own enforcement guidelines. What the board does for its members is provide ac- rules upon real estate agents listing residential properties. cess to technological tools, including the listing service. The agreement loosened the rules by giving consumers While it isn't available to the general public, active real who wanted to sell their homes without a broker greater LT estate listing information is available through the related access to the listing service. Buyer 'implicitly assumed the risk' Continued from page 10 the vendor held onto the funds. On March 30, 2012, the buyer launched an action for, among other things, rescission, damages, and a mandatory injunction for the return of the purchase price. The vendor counterclaimed for damages for breach of contract. Justice Carole Brown concluded it wouldn't be fair to force the purchaser to proceed with the purchase where there was uncertainty regarding the property's zoning and permitted use. On appeal, Strathy found the buyer, by apparently ignoring the advice of his solicitor and signing the agreement without any condition as to zoning, had "implicitly assumed the risk that the zoning would not permit his contemplated use." In other words, the decision confirmed the caveat emptor principle that Cadman hopes to defend at the Supreme Court. In a post on McCarthy Tétrault LLP's blog Canadian Appeals Monitor, litigation lawyer Kate Findlay reflected on Lee and the Salmon Arm case. She wrote: "As a vendor, any representations made should be truthful and careful attention should be paid to any warranties provided. On the other hand, purchasers are not permitted to act blindly and should investigate a property fully before completing a transaction." If land contains rental properties, there may well be zoning or planning restrictions on future commercial or residential developments. Under 2006 changes to s. 111 of the City of Toronto Act, any site with six or more rental units on the whole development site falls under a strict regime partly aimed at preserving the rental housing stock. The change, outlined in Chapter 667 of the Toronto municipal code, allows the city to regulate residential housing demolition and conversion. Landowners can be mandated to take certain actions, such as replacing all of the rentals as part of any development. The rules can also force landowners to maintain "affordable" rents for a period of 10 years or more or to sacrifice the right to convert those units to condos for 25 years. LT REACH ONE OF THE LARGEST LEGAL AND BUSINESS MARKETS IN CANADA! ENCHANCE YOUR LISTING TODAY! Get noticed by the lawyers, judges, corporate counsel, finance professionals and other blue chip cilents and prospects who find the contacts they need for Canadian legal expertise at canadianlawlist.com with an annual Gold or Silver Enhanced listing package. With more than 264,000 page views and 60,000 unique visitors monthly canadianlawlist.com captures your market. FOR MORE INFORMATION CONTACT Colleen Austin T: 416.649.9327 | E: colleen.austin@thomsonreuters.com AVAILABLE ONLINE AND IN PRINT Untitled-1 1 www.canadianlawlist.com www.lawtimesnews.com 14-01-08 9:11 AM

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