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A real estate sold sign is shown outside a house in Vancouver, Tuesday, Jan.3, 2017.

Jonathan Hayward/THE CANADIAN PRESS

British Columbia's superintendent of real estate is taking the province's industry regulator to court, demanding the body begin disciplinary proceedings against a realtor accused of misconduct.

The judicial review could serve as a test case of the superintendent's enhanced powers to regulate the Real Estate Council of B.C. The superintendent's oversight of the council was expanded in 2016 amid complaints about infrequent discipline of real estate agents and limited fines for improper behaviour.

Superintendent Michael Noseworthy, a former real estate lawyer, filed a petition in B.C. Supreme Court on Monday, asking a judge to force the council, which he oversees under provincial legislation, to begin disciplinary proceedings over the alleged misconduct of a realtor in McBride, a village in the Kootenays on the boundary with Alberta.

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Mr. Noseworthy states in the claim that he was contacted by a couple last March who alleged the realtor messed up a deal on a piece of farmland but the council's complaints committee decided against pursuing any disciplinary action against the agent. The superintendent reviewed the applicable materials and determined it was in the public interest to direct the council to revisit its decision to drop the complaint.

He then wrote a letter to the chair of the council on June 8, 2017, directing the body to issue a notice of discipline hearing into the alleged misconduct, according to the lawsuit. Two months later, Erin Seeley, the executive officer of the council, replied, stating that she was refusing to follow the superintendent's order, according to the lawsuit.

She claimed the council was functus officio – a common-law doctrine that means it had fulfilled its statutory duty and, as such, had no further ability to revisit the decision, according to the lawsuit.

A lawyer for the superintendent responded a week later, saying the council had misapplied this doctrine and that if the legislation governing his oversight powers was interpreted that way, it would "render the legislation meaningless."

However, a lawyer for the real estate council replied two days later, insisting the body had carefully considered the points raised by the superintendent's lawyer: "The council respectfully disagrees with your client's analysis and its position is unchanged."

This lawsuit will be useful for the superintendent to get clarity on his ability to direct – "not suggest, not hint but direct" – the operations of the council, according to Ron Usher, a lawyer and member of the independent panel that guided the province's overhaul of its real estate regulations in 2016.

"The superintendent is basically saying 'Yes, you can trot out your Latin and that's terrific, but I say I have got clear statutory authority," Mr. Usher said.

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A spokeswoman for the B.C. Real Estate Council said on Wednesday that it intends to file its response to the petition in the next few weeks. In an e-mailed statement, Marilee Peters said the council is looking forward to the court deciding whether the superintendent can compel it to call a disciplinary hearing if the council has already made its decision on the case.

The superintendent issued a new statement saying he went to court to ensure the public and realtors have confidence in the integrity of the council's disciplinary process and that, despite the legal challenge, his office still has a strong working relationship with the regulatory agency.

The Real Estate Council of B.C.'s decade of self-regulation, which gave the body full control over licensing, regulation and discipline, was ended in 2016 by former premier Christy Clark after The Globe and Mail revealed widespread problems in the industry.

The body was restructured to ensure that the majority of members come from outside of real estate, whereas in the past, just three of 17 members were from outside the sector.

Statistic Canada released data showing that foreign ownership in Toronto and Vancouver are less than five per cent.
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