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REAL ESTATE COUNCIL OF BRITISH COLUMBIA DISCIPLINE DECISION

In the matter of the Real Estate Services Act

  S.B.C. 2004 ch. 42

AND in the matter of a Consent Order pursuant to Section 41 of the Real Estate Services Act

 

Respondents:  James Ashley Henry and Macdonald Realty Okanagan South Ltd.

Files:  11-364, 11-414, 12-212, 13-124

Date of Consent Order:  February 6, 2014

Issue: Macdonald Realty Okanagan South Ltd., Osoyoos, (the “Brokerage”) and James Ashley Henry, currently associate broker, Norwich Real Estate Services Inc. dba Re/Max Kelowna, Kelowna, entered into a Consent Order with the Council that, while Mr. Henry was licensed as a managing broker of the Brokerage; and that while Mr. Henry was previously licensed as a managing broker with each of Mountain Strata Management Ltd., Osoyoos; 494888 B.C. Ltd. dba Strata Pro Property Management Services, Osoyoos, and British Columbia Strata Management Inc., Osoyoos, they committed professional misconduct within the meaning of section 35(1)(a) of the Real Estate Services Act in that Mr. Henry contravened section 35(1)(d) and 35(1)(e) of the Real Estate Services Act by failing to meet his managing broker responsibilities within the meaning of section 6(2) of the Real Estate Services Act and sections 3-1(1) and 3-1(3) of the Council Rules in that:

(a) Mr. Henry failed to provide and failed to ensure that the Brokerage provided information and documentation to the Council, for the purposes of conducting the Office and Records Inspection, conducted on September 16, 17 and 18, 2013, despite being requested to do so by the Council, contrary to sections 35(1)(e) and 37(4) of the Real Estate Services Act and section 2-19 of the Council Rules;

(b) Mr. Henry failed to respond and failed to ensure that the Brokerage, and British Columbia Strata Management Inc. and Mountain Strata Management Ltd., as appropriate, responded to inquiries by the Council following Office and Records Inspection Reports conducted on September 15, 2011 and on October 11 and 12, 2011, contrary to sections 35(1)(e) and 37(4) of the Real Estate Services Act and section 2-19 of the Council Rules;

(c) Mr. Henry failed to respond and failed to ensure that the Brokerage responded to the August 30, 2013 letter from the Council requesting the Brokerage explain the exceptions set out in the Brokerage’s 2013 Accountant’s Report and to outline its plans to discharge its current liabilities in the coming year; such that the Brokerage would become solvent as defined in section 7-8 of the Council Rules, contrary to section 37(4) of the Real Estate Services Act and section 2-19 of the Council Rules;

(d) Mr. Henry failed to ensure that the Brokerage disclosed to the external accountant, for the purposes of preparing the Accountant’s Report Filings for the Brokerage fiscal year ended March 31, 2013 (the “Accountant’s Report”), four accounts held at the xxx bank, even though the account ledgers of all such accounts indicated activity during the relevant period of time, contrary to section 7-7(4) of the Council Rules; 

(e) the Brokerage failed to maintain, and Mr. Henry failed to ensure that the Brokerage maintained proper books, accounts and other records, including each of the Brokerage’s operating, trust, pooled trust, commission trust, and general operating accounts; and Mr. Henry failed to ensure that BC Strata Management Inc. maintained proper books and records, relating to the wind-up of BC Strata Management Inc. and/or the amalgamation of BC Strata Management Inc. with the Brokerage, contrary to section 25 of the Real Estate Services Act and sections 7-4(3), 7-9(2), 7-9(6), 8-1, 8-2 and 8-3 of the Council Rules;

(f) the Brokerage improperly, and/or Mr. Henry failed to ensure the Brokerage properly, paid funds out of the pooled rental trust account, causing a negative balance of approximately $1,800.00 in the pooled rental trust account as at July 31, 2013; failed to take immediate steps to eliminate the negative balance; and failed to notify the Council of the negative balance, contrary to section 30 of the Real Estate Services Act and section 7-5 of the Council Rules;

(g) Mr. Henry failed to ensure that the Brokerage correctly deposited funds into the proper Brokerage trust account and thereby commingled trust funds with general ledger funds or other funds, contrary to section 27 of the Real Estate Services Act and section 7-9 of the Council Rules;

(h) Mr. Henry failed to ensure that the Brokerage notified the Council that the Brokerage would be maintaining trust accounts at two financial institutions, following the wind-up of BC Strata Management Inc. and/or the amalgamation of BC Strata Management Inc. with the Brokerage, contrary to section 2-22(f) of the Council Rules; 

(i) the Brokerage provided, and/or Mr. Henry permitted the Brokerage to provide strata management services without either a written service agreement that was in compliance with the Council Rules, or a waiver of such requirement, contrary to sections 5-1(1), 5-1(2), 5-1(4)(a),(e) and (g) and 5-1(5.1) of the Council Rules; 

(j) the Brokerage failed to act, and/or Mr. Henry failed to ensure that the Brokerage acted only in accordance with the lawful instruction of the Brokerage’s clients and only within the scope of authority given by the Brokerage’s clients, in that the Brokerage’s instructions pursuant to the written service agreements with clients differed from the Brokerage’s practices in respect of the signing authorities on strata accounts held at various financial institutions, contrary to sections 3-3(1)(b) and 3-3(1)(c) of the Council Rules;

(k) the Brokerage provided real estate services, and/or Mr. Henry permitted the Brokerage to provide real estate services through an individual that was not licensed in relation to the Brokerage, and published real estate advertising that contained a false or misleading statement or misrepresentation concerning the provision of real estate services, when the Brokerage failed to remove numerous listings on a website maintained by the Brokerage that were attributable to a licensee that was no longer licensed with the Brokerage, contrary to section 7(5)(a) of the Real Estate Services Act and section 4-7 of the Council Rules;

(l) Mr. Henry permitted the Brokerage to cause a financial institution to pay interest on the pooled rental trust account to the Real Estate Foundation, with the interest on the funds should have accrued in the manner set out in the Residential Tenancy Act, contrary to section 29 of the Real Estate Services Act;

(m) Mr. Henry failed to ensure that BC Strata Management Inc. provided to the Council the financial statements for trust accounts as disclosed in BC Strata Management Inc.’s Winding Up Report dated June 12, 2013 despite requests from the Council to do so; and failed to ensure that Mountain Strata Management Ltd. and BC Strata Management Inc. disclosed all trust accounts operated by those brokerages, to the Council in their respective Winding-Up Reports dated November 21, 2012 and June 12, 2013 respectively, contrary to section 8-11 of the Council Rules and section 4-11 of the Real Estate Services Act Bylaws;

(n) Mr. Henry failed to review, date and initial the monthly reconciliations and the monthly trust asset and liability reconciliations for the Brokerage’s trust and general accounts, contrary to section 7-4(2) of the Council Rules;

(o) Mr. Henry failed to ensure that BC Strata Management Inc. had a current written service agreement or waiver of such agreement, with various strata clients of BC Strata Management Inc. that were signed by the client and authorized by BC Strata Management Inc., setting out all terms and conditions of the agreement, prior to commencing the provision of real estate services, contrary to sections 5-1(1), 5-1(2) and 5-1(3) of the Council Rules; and

(p) Mr. Henry failed to ensure that all contingency reserve and special levy trust accounts of BC Strata Management Inc. provided that the signatures of at least two of the individuals identified in section 7-9(6) of the Council Rules were required prior to withdrawing any funds from those accounts, contrary to section 7-9(6) of the Council Rules.

Result: James Ashley Henry was subject to an Order of a discipline committee that: (a) his managing broker’s licence be suspended and he will not be licensed as a managing broker in any category for a period of four (4) years from February 15, 2014 to February 15, 2018 (“Suspension Period”).  Upon the completion of the Suspension Period, and prior to the Council accepting an application for re-licensing from Mr. Henry as a managing broker, Mr. Henry must successfully complete the Broker’s Business Planning and Financial Management Licensing Course and Examination.  During the Suspension Period, Mr. Henry is immediately eligible to be licensed as an associate broker or representative;  and (b) all outstanding  discipline penalties and enforcement expenses previously ordered by the Council will be paid in monthly installments until Mr. Henry’s renewal date of June 28, 2014, at which time the remaining outstanding discipline penalties and enforcement expenses must be paid in full or Mr. Henry’s licence will be suspended immediately until such payment has been made in full. 

Result: Macdonald Realty Okanagan South Ltd. was subject to an Order of a discipline committed that it and any branch offices will wind up on or before February 15, 2014.  If the Brokerage’s Winding Up Report is not submitted in a form satisfactory to the Council by February 15, 2014, the licence of Macdonald Realty Okanagan South Ltd. will be cancelled immediately.

Result: James Ashley Henry and Macdonald Realty Okanagan South Ltd. were subject to an Order of a discipline committee that they be jointly and severally liable to pay enforcement expenses to the Council in the amount of $1,250.00.

Result: P: March 17, 2014