How the Process of Decision-Making Might Affect the Result: The Example of a (Real Estate) Licence Appeal Tribunal Decision

An article in the real estate section of The Globe and Mail last Friday left me somewhat aghast at what appeared to be an outrageous denial of the Real Estate Council of Ontario’s (“RECO”) attempt to revoke the licence of one of its realtors. (This was no doubt what the writer, Shane Dingman, intended!) I checked out the actual Licence Appeal Tribunal (Safety, Licensing Appeals and Standards Tribunals Ontario) (“the Tribunal”) decision in Akbar Zarehhossainabadi, Kingsway Real Estate Ince. and Rouhollah Houshmand v. Registrar, Real Estate and Business Brokers Act 2002. The decision provides an informative example of how different ways of approaching a series of allegations might result in different outcomes, depending on whether one focuses on the particular facts of possibly relevant events or on whether one assesses the conduct of the individual involved throughout these events. Put another way, should an adjudicator address each allegation separately, reaching a conclusion related only to the that allegation, or should he or she consider common elements revealed by the allegations?

Here the real estate agent involved revealed common ways of responding to allegations of wrongdoing or to difficulties that might not in themselves have risen to the level of wrongdoing, but have shown dishonesty in different contexts. This is not a case of using past behaviour to support a finding of wrongdoing in the present, but rather of a pattern of behaviour found to have existed in the most recent allegation that has occurred over a period of years. And this is particular relevant when the issue is whether the agent is likely to behave with honesty and integrity in the future.

The Real Estate Council of Ontario sought to revoke the registrations of Akbar Zarehhossainabadi (who used Akbar Zareh in business) and Rouhollah Houshmand and of Kingsway Real Estate Inc. (of which Mr. Zareh is the president and sole shareholder), issuing a Notice of Proposal (“NOP”). (I am focused only on the decision relating to Mr. Zareh here.) Under the Real Estate and Business Brokers Act, 2002 (“the Act”), the Registrar is responsible for carrying out the duties imposed by the Act, including not granting or renewing registration where an applicant for registration does not meet the requirements under the statute. If the registrar issues a Notice of Proposal not to grant or renew a registration, the applicant may, under section 14, appeal to the Tribunal, which may order the registrar to carry out the NOP or “substitute its opinion for that of the registrar”; the Tribunal may attach conditions to the registration or in lieu of revocation.

(Under section 19(4) of the Act, in the case of a complaint that the broker has breached the code of ethics established by the Minister of Consumer and Business Services, the registrar may refer the matter to the discipline committee. The Minister has established a Code of Ethics, which regulates a broker’s conduct towards his or her clients, but in some cases towards “any [or every] person”. For example, section 3 requires the broker to” treat every person the registrant deals with in the course of a trade in real estate fairly, honestly and with integrity”, but the focus of the Code is on the broker’s relationship with clients. It was not at issue here.)

Section 10 of the Act provides in part 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,

(i) having regard to the applicant’s financial position or the financial position of an interested person in respect of the applicant, the applicant cannot reasonably be expected to be financially responsible in the conduct of business,

(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, or

(iii) the applicant or an employee or agent of the applicant makes a false statement or provides a false statement in an application for registration or for renewal of registration….

Analogous provisions apply if the applicant is a corporation.

Mr. Zareh has been registered with RECO since 1989; this is the first time RECO has brought disciplinary action against him. The immediate incident was Mr. Zareh’s removal from a home for which he was the listing agent, of several items, allegedly without permission. The registrar also raised several events that arose during Mr. Zareh’s career, some going back several years. The Tribunal addressed each of these incidents separately, finding that they were not relevant, some because they had already been addressed, or were explained away by Mr. Zareh. However, Mr. Zareh’s response to these aspects of his behaviour reveals a course of conduct that raises serious questions about whether he would “carry on business in accordance with law and with integrity and honesty”.

In or around November 2009, Mr. Zareh removed various items, including a piano, gym equipment, large pieces of furniture and other things, from a house sold through a power of sale. The purchasers, who had wanted these items had been told they could have them if the items were still in the house at closing, since at that point, they would have been “abandoned”. The day before closing, the purchasers found the items missing and contacted Mr. Zareh who claimed not to know where the items were; he admitted taking some of the items only later. The purchasers filed a complaint with RECO in February 2010, but were told that it could not be involved in a contractual dispute (later determined to be incorrect). The purchasers sued Mr. Zareh and Kingsway for unlawful conversion.

The trial judge found that Mr. Zareh, his son and Mr. Houshmand took the items worth $30,000 from the home. The trial judge stated succinctly, “I found Mr. Zareh’s evidence not to be credible. I found him to be deceitful and to state a number of untruths.” In the words of the Licence Appeal Tribunal, the trial judge “made adverse, and at times, scathing, credibility findings against Mr. Zareh”. Mr. Zareh changed his evidence several times, stated that certain incidents had occurred for which he had no evidence and that he had received permission to take the piano, but did not call that person to substantiate it. He did not provide information he was expected to provide and an undertaking he signed may have been a “fabrication”. The judge held that there was no unlawful conversion because the purchasers did not have ownership of the goods (although he did imply a claim on another ground might have succeeded); however, he did describe Mr. Zareh’s removal of the items “[i]n the absence of any explanation or justification, such as colour of right, [as appearing] on the evidence to be simply a theft”.

The trial judge would have awarded punitive damages had the purchaser’s claim succeeded, saying “His actions deserve denunciation, and other agents should be deterred from acting in such a manner which abuses the trust they are given when allowed access to properties.” However, the judge did subsequently order Mr. Zareh to pay $40,000 in costs, having described the actions of Mr. Zareh (and the other defendants) “both in the action itself and in the litigation” as “fraudulent”.

The Tribunal explained that the manager of registration at RECO saw a copy of the trial decision when it was issued in 2015 and was “dismayed” that no action had been taken when the purchasers initially complained and that it had been misunderstood as a contractual matter. Rather, the manager believed “the incident spoke quite directly to issues of honesty and integrity and compliance with the law”. It was then that the registrar issued the NOP, subsequently amended in October 2016.

At the Tribunal hearing, Mr. Zareh maintained again that he had permission to remove the piano, but again brought no evidence to support that. He also disagreed with the trial decision’s listing of items he may have removed, saying another agent may have taken them. The Tribunal described Mr. Zareh’s testimony on this point as “less than compelling” and found that he “has, without question, minimized his responsibility in this incident”. Apparently, Mr. Zareh testified that “he has learned a lesson and this is something that he would never do again; he made a bad decision”.

With respect to the removal of the items from the house, the Tribunal held that

Mr. Zareh’s conduct in relation to this incident in 2009 (including, for example, that he was not honest with the purchasers when they asked about the missing items), and in and around the time of the civil trial in 2015 reflects a lack of integrity and honesty. He did not acquit himself at all well — and while now acknowledging that taking the items was a ‘bad decision’ , he compounded its impact by his less than forthright conduct and honesty at the trial.

The question for the Tribunal was whether this incident leads to the conclusion that Mr. Zareh “will not carry on business in accordance with law and with integrity and honesty from which consequences should flow, and if so, what that consequence is appropriate in the circumstances”. The Tribunal referred to the Court of Appeal’s 2013 decision in Ontario (Alcohol and Gaming Commission of Ontario) v. 751809 Ontario Inc. (Famous Flesh Gordon’s) in which the court “emphasized that any and all past or present conduct can and should be considered. The Tribunal must consider the whole of an appellant’s conduct, including recent conduct.”

Acknowledging that consumer protection is a “primary focus” of RECO, something that the manager of registration had been particularly concerned about, the Tribunal pointed out that this was the only consumer harm incident raised by the registrar over the period Mr. Zareh had been registered. The registrar noted that this was one of several incidents leading to the conclusion that Mr. Zareh would not act in accordance with the Act’s standards and revocation was therefore appropriate, but the Tribunal was not persuaded that these other incidents supported that position and made the decision only on the conduct related to the removal of chattels. The Tribunal decided in relation to the removal of chattels that, while Mr. Zareh’s conduct “reflects a lack of integrity and honesty”, revocation is not the only remedy available and that it is not appropriate.

Without going into great detail, it is important to note how the Tribunal responds to the other events the registrar raised in support of revocation and the impact on the final decision. These issues are CRA arrears, providing false statements in applications for registration renewal, operating a mortgage brokerage, CRTC Notice of Violation and a sexual assault conviction.

Mr. Zareh was in arrears to the CRA for over $500,000 as of November 2013 (he had owed taxes in 2002 and then in November 2013). (One document related to the arrears referred to the arrears as “a judgement”, although it is not clear if Mr. Zareh saw this document.) He had not advised RECO about the arrears. He said that he was paying $4,000 to the CRA monthly and was “in the process of hiring a tax expert to help him with the situation”, someone he did hire in May 2016. He provided this information to RECO, but none subsequently. However, the Tribunal pointed out that RECO had not indicated that the information was deficient. As of the Tribunal hearing, Mr. Zareh was current in his filings, according to the accountant he had hired, who had also structured income from Kingsway and payments to the CRA.

Mr. Zareh explained that the tax liability arose because of an accounting error when he sold a franchise, but he “provided no documentation to support this assertion, and [his accountant] appeared to have no knowledge of this…(though not his accountant at the relevant time)”. Despite his tax problems, the Tribunal found there was no evidence that Mr. Zareh “has not been financially responsible in the conduct of business”. Therefore the tax problems did not lead to the conclusion that Mr. Zareh would not carry on business with integrity and honesty or in conformity with the law.

The registrar also expressed concern about the financial viability of Kingsway. Evidence showed that Kingsway had a decline in the number of staff from 771 in October 2018 to 130 employees in March 2019. The accountant gave a letter to Mr. Zareh’s lawyer dated February 2019 relating to the transfer, arranged by contract, of Kingsway employees to another brokerage, part of a plan to liquidate Mr. Zareh’s assets to pay the CRA. The accountant apparently did not testify, the contract was not produced and neither Mr. Zareh nor the accountant had previously referred to it, although the accountant had referred in re-examination to comments from Mr. Zareh about making arrangements with partner businesses. The Tribunal rejected the registrar’s submission that the decline in employees goes to concern about financial viability, giving the documents “little weight”,

But more importantly, questions that both documents [RECO certificates showing the number of employees on each relevant date] may raise about how Mr. Zaerh chooses to re-structure the business going forward to respond to this tax situation, absent evidence that it reveals a lack of financially [sic] responsibility or suggests an inability to act in accordance with the law and with integrity and honesty are beyond the scope of this hearing.

In completing the form for renewal of his licence in 2003, 2005 and 2007, Mr. Zareh responded “no” to the question, “Are there any unpaid judgments outstanding against you?”, despite the CRA debt. He had disclosed personal bankruptcy in 2001 and sexual assault charges in 2005. The question was changed to add “unpaid debts” in 2011; however, Mr. Zareh also answered “no” in 2011, 2013 and 2015. Mr. Zareh testified he did not know he had to disclose the CRA debt and “did not make the statement knowing it to be false”. Two things turned in Mr. Zareh’s favour on this issue, in the Tribunal’s view. One is that the relevant question was changed to include in December 2016 a reference to “CRA Requirements to Pay and garnishments”, leading the Tribunal to conclude “that it was previously not clear to registrants that a CRA debt was captured by that question” and that Mr. Zareh did disclose other information.

Even here, however, Mr. Zareh’s conduct is questionable. He did disclose the personal bankruptcy, but in cross-examination he said he did not actually complete the process of becoming bankrupt. This was not the case; “he did go through with a bankruptcy and was discharged in October 1994”. On this point, the Tribunal finds that Mr. Zareh’s testimony “may be confused”, and given the passage of time, that “[i]t is not unreasonable that [Mr. Zareh’s] memory … may have been weak….” In any event, the bankruptcy did not trouble RECO at the time and to suggest “that the 1994 bankruptcy indicates a continued pattern of financial irresponsibility is unfair”.

In November 2011, Kingsway Capital Investment Ltd. (“Kingsway Capital”) was incorporated with Mr. Zareh and Mr. Houshmand as directors and officers and it applied for a mortgage brokerage licence, which was granted in December 2011 and surrendered in October 2012. The registrar took the position that being a real estate broker and operating a mortgage brokerage posed potential for conflicts of interest and thus RECO needs to know about such a situation. Mr. Zareh did not inform RECO about Kingsway Capital. He answered — correctly — that he was not or would not be engaged in any other business when he completed his May 2011 application for renewal, but he did not subsequently update that answer. In August 2014, Mr. Zareh incorporated Kingsway Elite and it was licenced as a mortgage brokerage from October 2014 to March 2016. He did not disclose this or amend the form. Since he did disclose that he was operating a real estate coaching business as of March 2016, the Tribunal found that “he did not make a decision to conceal the mortgage brokerage”. Mr. Zareth said he did not disclose it because it was not active and he was not himself engaged or employed in brokering mortgages. Thus

[o]ne can question whether Mr. Zareh ought to have been more discerning or careful when answering questions on the application form, especially as a broker of record who must sign off on applications of real estate agents within his brokerage, but that is not the question before me.” (emphasis added)

The question on the form “asks whether he was engaged or employed in the business” and he was not. As of December 2016, the question now also refers to “whether the applicant is registered or licensed in any other business”. In this case, the Tribunal found Mr. Zareh did not make a false statement and “[n]ondisclosure was in the nature of an ‘honest mistake'”.

In February 2016, the CRTC issued a notice of violation against Kingsway Real Estate because real estate agents acting on behalf of Kingsway over a period of about two years initiated telemarketing calls to people on the “do not call lists”; the penalty was $70,000, which Kingsway paid. Mr. Zareh did not know which agents were responsible and said that there were issues with the tele-listing service used by Kingsway then (and now). It seems RECO would not have taken action against Kingsway or Mr. Zareh in relation to this had they known about it, and did not now submit it should have been disclosed. The Tribunal explained, “[w]hile not minimizing that a violation was imposed nor Mr. Zareh’s oversight role as a broker of record, there is a distinction that can be drawn between issues of integrity and honesty and the exigencies of doing business with approximately 700 agents within the umbrella of Kingsway”.

The final issue does not relate to financial matters, but to sexual assault. In 2009, Mr. Zareth was charged and convicted of sexual assault against a former employee and was given a suspended sentence with probation for one year. He advised RECO of both the charge and conviction. The registrar imposed conditions, which he satisfied. A criminal conviction does not automatically lead to revocation and the only reason RECO now had concern with the sexual assault is how the trial judge framed Mr. Zareh’s removal of items from the house, as a “theft”. The registrar was also concerned with how Mr. Zareh addressed this matter in his testimony before the Tribunal, a view the Tribunal did not share:

It is true that Mr. Zareh did exhibit an apparent lack of insight and diminished the breach of trust issues which was highlighted in the sexual assault matter by his statement that he was not the victim’s direct boss. However, Mr. Zareh did not resile from the fact that the behavior was not just inappropriate, but resulted in his conviction for sexual assault. The seriousness of the incident cannot be diminished by saying it was a long time ago, but at the same time, it was reported at the material times and the Registrar determined that conditions were appropriate. No further disciplinary action was taken. There is no indication of any similar or repeat incident subsequent to 2009 nor any evidence before me to suggest that this issue in 2009 is predictive of future behavior. It is not unreasonable that Mr. Zareh would conclude that with respect to this incident, no further action would be taken.

As the Tribunal says, the sexual assault conviction is being used “to buttress an allegation of past conduct issues, almost a decade later”. It was dealt with and conditions imposed; furthermore, there was no suggestion then that it related to acting in accordance with law and with honesty and integrity. Accordingly, the Tribunal concluded that “the sexual assault conviction (and his testimony regarding it at the hearing), viewed on its own does not give rise to a reasonable ground to believe that Mr. Zareh will not carry on business in accordance with law and with integrity and honesty nor does it, at this point in time, serve to buttress the allegation arising from the theft issue.”

In summary, the Tribunal found that the “theft incident” and Mr. Zareh’s conduct during the trial indicate a lack of integrity and honesty, but that the other incidents do not, even taken together. This is especially because of the passage of time since some of these events make it unreasonable to rely on them with respect to future conduct, especially since the registrar did not take action at the time. The Tribunal therefore imposed conditions, which imposition is

appropriate to respond to issues highlighted in this decision and to emphasize to Mr. Zareh the seriousness with which RECO and this Tribunal regard his conduct in 2009 and at the civil trial in 2015 as well as the need to be diligent in completion of forms and providing information required by RECO both on his own behalf and for those agents working at Kingsway.

Mr. Zareh had satisfied the conditions imposed after the conviction for sexual assault and he was not deceitful about the reporting requirements. RECO can “readily do checks” on him and “Mr. Zareh should now be acutely aware [that] failing to strictly comply with any regulatory or licence requirement will likely bring swift action by the Registrar”. Accordingly, the Tribunal ordered Mr. Zareh to enroll in the Ethics in Business Practice Course offered by the Real Estate Institute of Canada and provide proof of completion by December 2019; he is to notify the registrar of complaints against him and notify the registrar, of any change of information in any application he has filed. This last (as the Tribunal states), is required by Regulation 567/05 under the Act and the reporting of certain other changes are required under the Act. As for complaints, RECO will know about complaints that have been filed with them, but it is possible that a client or other relevant person might make a complaint directly to Mr. Zareh and he will have to report those. The Tribunal does not specify whether any kind of complaint falls, minimal and casual or significant and purposeful, within this order.

The Tribunal took a particular approach to assessing the various events at issue in this case, treating for the most part each as a separate incident, despite quoting the Court of Appeal that “the whole” of a party’s conduct should be considered, and concluding that only one — the so-called “theft” — justified RECO’s concern about Mr. Zareh’s future conduct. One might disagree with the Tribunal’s conclusion that even the one incident warranted only the imposition of conditions. However, apart from that, it is worth considering another way of assessing Mr. Zareh’s conduct.

In each case, the Tribunal accepted the excuse or explanation offered by Mr. Zareh to diminish the impact of the conduct, even if also being critical of some aspect of his testimony or behaviour. With respect to the CRA debt, he did not know he had to advise RECO (this is somewhat supported by the change in the application form to include explicit reference to the CRA); the Tribunal gave little weigh to a letter from Mr. Zareh’s accountant provided to Mr. Zareh’s lawyer, but did not pay much attention, either, to the timing of the letter’s appearance, which raised questions, or to reliance on a contract that was never produced into evidence (how Mr. Zareh might restructure his business to pay his CRA debt was none of the Tribunal’s business); the Tribunal dismissed other failures to disclose businesses particularly susceptible to conflict with a real estate brokerage because Mr. Zareh did disclose a more innocuous business and while he might have been more “discerning or careful” in completing the forms, this is irrelevant, the failure to disclose “an honest mistake”; and while Mr. Zareh “did exhibit an apparent lack of insight and diminished the breach of trust issue” related to the sexual assault, he “did not resile from the fact that behavior was not just inappropriate, but resulted in his conviction for sexual assault”.

The Tribunal accepts Mr. Zareh was dishonest. What the Tribunal fails to do is to link his conduct or attitude in the removal incident to his conduct or attitude exhibited in relation to the other events, to identify the thread that weaves through these incidents from the sexual assault to the removal of the chattels. Put another way, it fails to apprecate that the way he conducted himself in the removal event itself, the trial and the hearing did not occur only in that instance, but throughout, albeit in slightly different ways, in previous questionable circumstances.

In relation to the sexual assault, he lacked insight and did not understand the breach of trust involved, even as late as the Tribunal hearing. As far as the tax arrears, he made several assertions or reference to documents without supporting evidence or produced documents that raised question of timing and without the opportunity for cross-examination. The Tribunal dismisses inaccurate testimony about his bankruptcy as poor memory given the passage of time and this might in fact be the case, but in the context of the other excuses and misrepresentations, it adds to the pattern. The failures to disclose significant circumstance on his application forms are “an honest mistake” or simply lacking in care.

Each of these explanations might well make sense when seen in isolation, but together they suggest a failure in Mr. Zareh to appreciate the significance of his actions and his own role in them. And when dealing with the removal of the chattels, these failures loom large, making his conduct in that case more a reflection of a general tendency than something unusual. Tracking his response to these various events, or to most of them, suggests that the Tribunal’s decision should have been to direct the registrar to carry out the NOP, since his “past conduct … affords reasonable grounds for belief that he will not carry on business in accordance with law and with integrity and honesty”, pursuant to section 10 of the Act. If Mr. Zareh does not know that taking chattels without permission is theft and that dishonesty is wrong, it is unlikely that he will learn either from a business ethics course, however good the course.

But perhaps I should let Mr. Zareh have the last word, as reported in The Globe and Mail: he is “all with [the registrar], there are a lot of bad apples and they have to be removed.” Other representatives, he says, “do a lot of unethical things, and 80 per cent of them never get caught – they are still in the business. We have to clean up our industry to protect the public.”


  1. Different ways of approaching any subject more often than not always affects the results. One can be taken as a whole or in part and then conclusion will be based on how the subject was addressed.