Law Times

Page 10 NOVeMBeR 2, 2015 • LaW TIMeS www.lawtimesnews.com FOCUS Oliveira v. Zareh Realtor vows to appeal judge's finding that he stole chattels BY YAMRI TADDESE Law Times n a case some lawyers are calling unusual, a Superior Court judge recently found a real estate agent had stolen household items from the house he was selling. The Oakville, Ont., home went on sale after the former mortgagor defaulted on his mortgage and committed sui- cide. High-end chattels like TVs, gym equipment, a piano, and framed pictures were still in the home when the buyers visited the home in the fall of 2009. If unclaimed by the owners by the closing date, the new own- ers were under the impression they'd received the house with the items intact. But on the day before closing, "they found that most of the chattels had been re- moved from the property only days before. They found dam- age to their f looring from the removal. The plaintiffs suspected that they were removed, not by the bank mortgagee, nor by the estate, but by the defendant real estate agent, Akbar Zareh. Mr. Zareh denied taking chattels but some years later admitted to re- moving some of the items," wrote Superior Court Justice Meredith Donohue in her recent ruling in Oliveira v. Zareh. "I find that he had no author- ity from the owner of the chat- tels, the estate, nor the posses- sory owner, the bank, to remove these chattels," she added. "He used his access as a real estate agent to take contents from the home. In the absence of any explanation or justifica- tion, such as colour of right, it appears on the evidence to be simply a theft." Gowling Laf leur Henderson LLP, which was handling the power of sale for the bank, had retained real estate co-ordinator Linda Sway, who in turn re- tained Zareh, the court noted. Real estate lawyer Jonathan Fine says the case is highly unusual and notes he has never encoun- tered anything like it. But there's nothing lawyers can do to stop situations like it, he says. "We're talking about some- one who stole things that weren't his, so do lawyers guard against that? I would say it would be un- usual because the whole system is based on trust of other profes- sionals. They [real estate agents] are regulated, they're profes- sionals. . . . They have written authorization. So from a prac- tical perspective, there's a limit to what a lawyer can do. There's also a cost limitation as well, so I'd say it would be unusual for any lawyer to do anything other than what they did in this case." According to the ruling, Bri- an McCluskey, a solicitor from Gowlings, granted permission for the mortgagor's widow to visit the property and take some of the paintings left in the house. When asked what should happen to the items left in the home, "His instructions were to leave it in the house," according to Donohue. "When he was advised the house had sold and the closing was to be November 19, he again instructed [the property man- agement company] to leave the remaining contents on site." The judge, who found Za- reh had taken more from the home than he admitted to, set the value of the removed items at $30,394 but ultimately dis- missed the applicants' claim as they never had an entitlement to the chattels. "The plaintiffs pled unlawful conversion," wrote Donohue. "The defendants correctly state that there is no action for conversion as the plaintiffs did not have ownership, a posses- sory right, or actual possession of the goods," she added. "In this situation, although the plaintiffs had every expec- tation that they would obtain ownership of these chattels, and the bank intended for the chat- tels to pass into their hands, title did not pass until November 19, 2009, on the day of closing at which time the chattels had al- ready been removed." The plaintiffs only held an expectancy in the property, Donohue noted. "They could only hope that the chattels they had seen in the house would be theirs at closing and that they then could take possession of those goods." Still, Donohue denounced the real estate agent and ordered counsel to send a copy of her ruling to the Real Estate Coun- cil of Ontario. "If occupiers move out and leave items for the next occupier it is wrong to suggest that real estate agents can help them- selves," she wrote. Despite dismissing the case against Zareh, the judge ordered $40,000 in costs against him and his company. "In this case the defendant lied and stole. His conduct was fraudulent. The tragedy of this case was that the proper action and proper parties were not be- fore the court. In ordering costs against the defendants, despite the Rule 49 offer and success in the litigation, I would not be running contrary to the general warning by the Court of Ap- peal in Niagara Structural Steel," wrote Donohue. "These facts and findings are unusual and are not of the com- mon type that would cause the general rule for Rule 49 costs or- der to be made. In addition I am exercising the court's discretion in sanctioning the conduct of the defendants. I, therefore, ex- ercise my discretion and award costs against the defendants on a partial indemnity basis in the amount of $40,000." Zareh says he's appealing the cost order as well as the word- ing of the judge's original ruling. The judge, he says, was ruling on a claim for damages, which she dismissed, and it wasn't her place to make "one-sided" comments about his behaviour. He says he won't comment on whether he denies wrongdoing. Real estate lawyer Andrew Fortis says he has never seen anything like the case. "The likelihood of this happening in an everyday scenario is very un- likely," he says. "What makes it so interesting is that in a normal purchase and sale, you put down the chattels that are included and the fix- tures that are excluded," he adds, noting the situation is different with a home that's on the market under a power of sale because the mortgage is tied to the land only and not the fixtures in the house. Buyers can only reasonably expect to find the chattels in- cluded in their contract as part of the sale, Fortis notes. "I don't think the agent found a loophole. I think the agent in this case fell into a loophole, figuring they [the buyers] know they didn't buy [the chattels]," says Fortis, adding that while the buyers in the case expected to find the chattels in the house, the items would have only been a windfall for them. "But I don't think for a mo- ment that that excuses the agent for what they did," he says. While the lawyers in this case couldn't have avoided the situ- ation, the case is a reminder of how important it is to meticu- lously include in the contract the chattels the buyers are get- ting as part of the sale, accord- ing to Fortis. "I've seen situations where sellers have switched things on buyers. I've heard a story where these people walked into [their new] house and instead of the washer and the dryer, there's a bucket and a hairdryer. When there was a complaint, the re- sponse was, 'Your agreement of purchase and sales said washer and dryer. There's your washer, there's your dryer. You didn't write down the model number and you certainly didn't write down the serial number.'" The key, then, is to draft the contract carefully. "The rule is this: If it's fixed to the house, it's included. If it's not fixed to the house, you have to ask to put it in. Imagine we take the house and put it upside down. Everything that falls you have to include in writing. Everything that sticks is automatically in- cluded." LT For any organization, purchasing goods and services ranks at the top of the "must-do-right" list. When done well, procurement processes will drive innovative solutions and achieve best value. Done poorly, supply chains are interrupted, costly litigation looms, and suppliers lose confidence in the organization's ability or willingness to purchase goods and services in an open, fair and transparent manner. Numerous court decisions provide a rich body of evidence detailing how good procurements can go badly, and the consequences when they do. COURSE LEADER Richard H. Shaban, Gerry Stobo, Ian J. Houston Borden Ladner Gervais LLP COURSE HIGHLIGHTS • New Developments in Procurement Law – Case Law Update • Drafting – Best Practices • New and Innovative Processes • Advanced, Comprehensive Case Study DATE & LOCATION October 27, 2015 St. Andrews Club and Conference Centre 150 King St West, 27th Floor, Toronto, ON M5H 1J9 Webinar also available. 6 TH ANNUAL NEW PROCUREMENT: CRITICAL ADVANCES FROM PROCESS TO PRACTICE Register online at www.lexpert.ca/cpdcentre For more information, please contact Lexpert® Events at 1-877-298-5868 E V E N T S DON'T MISS OUT! Untitled-1 1 2015-10-15 12:39 PM I Check out lawtimesnews.com for insight from our regular online columnists Monica Goyal discusses the latest gadgets and trends in legal technology in Bits & Bytes

• Cover