Appropriate Methods For Research And Consultation

Running head: BUSI 112
BUSI 112
Name of the Student
Name of the University
Author Note

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Part A
1(a) In the mentioned case, the Power of attorney created in favor of Bob creates the
principal-agent relationship between Bob and his mother, where Bob’s mother is the principal
and Bob is the agent. However, the power of attorney created in favor of Bob imposes
restrictive authority or power on Bob to decide on the property, financial decisions on behalf
of his mother. Therefore, Bob’s needs to ensure beforehand whether the power of attorneys
gave him the authority to purchase a condominium for his mother.
b) In the present case, the doctrine of apparent authority is applicable regarding Mark’s
conduct, as he was the agent of the Cushioned Comfort Company and there exists a principal-
agent relationship between Mark and the Cushion Comfort Company. Further, Mark has the
business cards and contracts authorized by the company, which would make a third party to
believe he had the requisite authority to perform on behalf of the Cushioned Comfort.
Therefore, Cushioned Comfort is bound to perform the contract entered by Mark with Bob.
c) According to the rule of Agency Law, the real estate agent Willie Wunder owe some
professional liability towards their client. The agent has a fiduciary relationship with Bob, by
virtue of which he owes a fiduciary duty towards Bob (Brant Investments Ltd. v. KeepRite
Inc.)1. Further, he has a duty of care towards Bob which can be accomplished by informing
him about every minute details of the property in issue. Further, Wunder has a duty to inspect
the property and inform Bob about visible defects of the property (Krawchuck v. Scherbak et
al.)2. Furthermore, Wunder must ensure a standard of care in discharging his duties and his
1 Brant Investments Ltd. v. KeepRite Inc. (1987), 1987 CarswellOnt 135 (1987) O.J. No. 574, (Ont. H.C.) at
para. 81.
2 Krawchuk v. Scherbak et. al, 2011 ONCA 352 at para. 125.

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conduct is measured comparing the conduct of a reasonably careful person in the same
profession (Vokey v. Edwards)3.
From the facts of the case, it is evident that Wunder has failed to inform Bob about
the leakage in the condo. Therefore, can be held liable for providing wrong advice, if the
advice is based on ignorant positions, or if the agent or broker has failed to adopt appropriate
methods for research, investigation or consultation (Davenport v. Stakiw)4.
d) In the present case, Bob’s mother case set aside the contract with Mr. Walker on the
ground of unconscionable transactions. Further, there exists unequal bargaining regarding the
price between the two parties of the contract. Furthermore, Bob’s mother was an old lady and
had difficulty in hearing and seeing. In addition to this, she has no idea about the current real
estate values as Mr. Walker was. Therefore, the onus of showing the fairness of the contract
is on Mr. Walker (Dixon v. the United States). He also needs to prove that, Bob’s mother
entered into the contract for sale by her willful conduct (Bailey v. the United States). Failure
to which court can ask to set aside the contract. The doctrine of undue influence is also
applicable in this case, as Mr. Walker by virtue of his understanding of the market price was
in a dominant position in the disputed contract. Furthermore, Bob’s mother’s less knowledge
about the market standard is an influential factor in this case. In the case of Lloyds Bank Ltd v
Bundy5, it has been held that undue influence has been recognized as one of the classes of
unequal bargaining power.
e) Condos are usually regulated by the House Owner's Association. In the present case, Bob
can rent out his mother’s condo. In such a case, her mother will be the landlord. However,
before renting the condo Bob needs to ensure the following things that his mother owns all
important documents relating to the Condo. Further, he must obtain the No objection
3 Vokey v. Edwards, 1999 CarswellOnt 1440, (1999) O.J. No. 1706 (Ont. Sup. Ct.) at para. 71
4 Davenport v. Stakiw, 2007 CanLII 6911 (Ont. Sup. Ct.)
5 Lloyds Bank Ltd v Bundy [1974] EWCA 8

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certificate from the HOA. He also needs to ensure that the prospective tenant is not restricted
under the HOA rules. Further, he needs to prepare a document on behalf of his mother which
contains all important guidelines about the rent, common area usage and insurance coverage
of the condo.
A residential tenancy is regulated by a tenancy agreement, which must comprise of
the essential covenants, such as the obligations of the Tenant and the Landlords. On the other
hand, the contract for a commercial tenancy is generally considered as a lease, which must
contain a detailed description of the premises, the reason for it being rented, the amount of
rent, description of the parties, and all other substantial terms of the contract.
Bob upon giving notice to the notice can ask him or her to vacate the building for
reasons such as, violating condominiums by-laws or causing damage to the common property
and areas of the condominium.
2(a)(i) Assumption of a mortgage can arise in respect of a property, which already has an
existing mortgage in its favor. However, the liability of the original borrower regarding the
mortgage depends on the existing covenants of the mortgage that whether the purchaser
assuming the mortgage should pay in case of default by the original owner.
2(a)(ii) Novation of a mortgage over a property can arise when the new purchaser agrees to
take the responsibility of the mortgage. In such a case, the bank releases the old mortgagor
and the new purchaser steps into the shoes of the original mortgagor. Further, the new
purchaser acquires all the liabilities of the old mortgagor in respect of the mortgage over the
property.
2(b) Collateral mortgage: A collateral mortgage is a loan protected against the property of
the borrower through a written notice of indebtedness. The advantages of collateral mortgage
are the flexible provision to borrow money at any time, and further, there is no need to

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acquire extra cost in the event of refinancing. The disadvantages for collateral mortgages are,
in cases of renewal of mortgage or the event of a change of the mortgagor, there is a
requirement to pay extra money.
Blanket mortgage: A blanket mortgage is a mortgage that is used by the investors,
commercial property owners to secure the finance to purchase multiple properties at a time or
to unite the existing mortgages into a single mortgage. The advantage of a Blanket mortgage
is that it saves time and it is a hassle-free mortgage process. Further through these mortgage
processes, several mortgages can be consolidated into a single mortgage. The disadvantages
of blanket mortgage are, it is costlier than other loan and a single property cannot be subject
to sell which is existing in a group of properties. It is necessary to create a clause of a partial
lease in cases of the blanket mortgage.
Vendor takes back mortgage: In case of a vendor take back mortgage, the buyer can
successfully purchase a property beyond his bank-determined monetary limit,
simultaneously, the seller can sale his property effectively. In the case of mortgage through
vendor take back, there exists a primary source of funding to secure the mortgage. Therefore,
this mortgage can be regarded as a secondary lien over the property. The advantages of a
vendor take back mortgages is through this method property can be sold in a fast way, further
extra income can be generated from the interest of the property and it can reduce the amount
of taxes on capital gains. One of the most disadvantageous positions of a vendor take back
mortgage is it is a time-consuming process and the seller cannot sell the property in case of
immediate need of money.

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Part B:
Case 1: Wemyss v. Moldenhauer, 2003 CanLII 19103 (ON SC)
Facts:
Mr. Wemyss was interested in purchasing a home in Markham. He took the advice of John
Moldenhauer a sales representative of Sutton Fox Realty Inc. regarding the property and he
failed to advise him about a visible defect in the water system of the property which caused a
loss of $50,000.00 as deposited for the purchase of the property. Later Mr. Moldenhauer
accepted his failure of fiduciary liability and agreed to pay $50,000.00 deposit money to Mr.
Wemyss but latterly denied the same in court6.
Aspect:
The court found Mr. Wemyss guilty of breach of fiduciary duty and negligence and held him
liable for damages.
Breach:
As a sales representative, Mr. Moldenhauer has the fiduciary duty to protect the interest of
Mr. Wemyss with the reasonable and standard duty of failure to comply with the same caused
breach of duty in his part.
Disciplinary committee:
CREA (Canadian Real Estate Association) can hold a disciplinary hearing and examine
evidence of a breach of fiduciary duty and negligence available against Mr. Moldenhauer.
Stare decisis:
The court applied the provision of Winsham Fabrik Canada Ltd. v. Re/Max All Stars Realty
Inc.,7 which stated the application of stare decisis doctrine in determining the number of
damages in cases of negligence.
6 Wemyss v. Moldenhauer, 2003 CanLII 19103 (ON SC)
7 Winsham Fabrik Canada Ltd. v. Re/Max All Stars Realty Inc., [2001] O.J. No. 1478 (S.C.J.)

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Legislation/Regulation:
Mr. Moldenhauer can be held liable under criminal, civil as well as provincial legislation deal
with real estate disputes for the breach of duties.
Case 2: Malpass v. Morrison, 2004 CanLII 36076 (ON SC)
Facts:
Mr. James and Mrs. Eila Morrison asked for indemnification from a suit brought by Margaret
Jean Malpass on the ground that David Nelson who was their real estate agent failed to
comply with the principles of fiduciary duty to advise them to meet their requirement in
purchasing a house located at 61 Berkshire which was owned by Margaret Jean Malpass8.
Aspect:
The court found Mr. Nelson guilty of breach of fiduciary duty and negligence and held him
liable for damages. Therefore, Morrison's are liable for the sum of $50,800.00 as damages
plus (a) legal fees, $3,852.54, (b) moving expenses $2,530.37 (c) return of a deposit of
$5,000.00.
Breach:
As a sales representative, Mr. Nelson has the fiduciary duty to protect the interest of James
and Eila Morrison with the reasonable and standard duty of failure to comply with the same
caused breach of duty in his part.
Disciplinary committee:
CREA (Canadian Real Estate Association) can hold a disciplinary hearing and examine
evidence of a breach of fiduciary duty and negligence available against Mr. Nelson.
Stare decisis:
8 Malpass v. Morrison, 2004 CanLII 36076 (ON SC)

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The court applied the provision of Raso v. Dionisi9 which stated that the agent must be able
to prove that the principal has entered into a sales agreement relying upon the investigation
report of the agent regarding a property.
Legislation/Regulation:
Mr. Nelson can be held liable under criminal, civil as well as provincial legislation deal with
real estate disputes for the breach of duties.
Case 3: Oskar v. Chee et al, 2012 ONSC 1545 (CanLII)
Facts:
The plaintiff Oskar United Group Inc. contacted Peter Kin Ho Chee the real estate agent for
the purchase and planning of a property owned by David Bachly and/or Marilyn Bachly.
However, it has been found out that the Bachly’s were not interested to sell the property. The
plaintiff held Chee liable for breach of fiduciary duty10.
Aspect:
The court found Mr. Chee guilty of breach of fiduciary duty and the Ontario Court of Appeal
ordered punitive damages in favor of the plaintiff.
Breach:
As a sales representative, Mr. Chee has the fiduciary duty to protect the interest of the
plaintiff, further he deceived them by making them believe that negotiation is going on with
the owners regarding the property. Therefore, Chee can be held guilty of a breach.
Disciplinary committee:
CREA (Canadian Real Estate Association) can hold a disciplinary hearing and examine
evidence of a breach of fiduciary duty and negligence available against Mr. Chee
Stare decisis:
9 Raso v. Dionisi (1993), 1993 CanLII 8664 (ON CA), 12 O.R. (3d) 580
10 Oskar v. Chee et al, 2012 ONSC 1545 (CanLII)

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The court applied the provision of Raso Hill v. Church of Scientology of Toronto11 which
held that Punitive damages can be awarded in cases where the defendant’s misconduct is
malicious and oppressive which disturbed the court’s sense of decency.
Legislation/Regulation:
Mr. Chee can be held liable under criminal, civil as well as provincial legislation deal with
real estate disputes for the breach of duties.
1(b) All the cases involved a breach of fiduciary duty and negligence in complying with the
duty of care by the real estate agent and in all cases, monetary damages have been awarded as
remedies. Differences can be seen in awarding the number of damages.
1(c) Vicarious liability includes such cases where the employer and employee both can be
held equally liable in cases of breach.
In the first case, the plaintiff sued the agent and broker but in the 2nd and 3rd cases,
only the broker has been sued. But in the case of inexperienced professionals working for a
broker firm, the broker firm will be liable vicariously under common law.
Part B
2)
11 Raso Hill v. Church of Scientology of Toronto (1995), 1995 CanLII 59 (SCC), 126 D.L.R. (4th) 129 (S.C.C.)
at p. 185

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1) LANDING HOLDINGS LIMITED and LANDING PROPERTIES LIMITED,
Address: Suite 400 - 375 Water Street, Vancouver, BC, V6B 5C6
2) DOMAIN HOLDINGS INC.
Address: Suite 635/645, 375 Water Street, Vancouver, BC, V6B 5C6
3) The leased premises shall consist of approximately 5,342 square feet of Rentable Area
(subject to final measurement in accordance with this Lease) located at Suite 400,
sixth floor, 375 Water Street, Vancouver, BC V6B 5C6 which is shown outlined in
black on Schedule "A" but does not include the exterior faces of any adjoining
corridors, outside walls or roof
4) 16th July 2007.
5) 5 years lease (16th July 2007 to 31st Aug 2012)
6) The Landlord at the expiration of the Term upon the Tenant's written request
delivered to the Landlord not later than six (6) months and not earlier than eight (8)
months before the expiration of the Term, grant to the Tenant one renewal lease of the
Premises for a term of five (5)years upon performance of all the terms, covenants,
agreements and provisos contained in this Lease.
7) The tenant must give written notice of such renewal to Landlord not later than 6
months and no earlier than 8 months before the expiration of the then-current Lease
Term.
8) Neither the Tenant nor anyone on the Tenant's behalf or claiming under the Tenant
shall register this Lease or any assignment or sublease of this Lease or any document
evidencing any interest of the Tenant in the Lease or the Premises, against the Lands
or any part thereof and the Landlord shall not be obligated to deliver this Lease in
registrable form. If requested by the Landlord, the Tenant shall at its expense register
this Lease in the New Westminster/Vancouver Land Title Office.

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9) For the first Lease Year of 2007-2008 in the Initial Lease Term Tenant shall pay base
rent in the annual sum of $9,125.92 , in 2008-2009 annual sum of $9,571.08 , in
2009-2010 annual sum of $10,016.25, in 2010-2011 annual sum of $10,461.42, in
2011-2012 annual sum of $10,906.58.
10) Tenant shall pay its proportionate share of all real property taxes and assessments,
insurance, common area maintenance and repairs and utilities associated with its
tenancy.
11) Tenant pays for repairs and improvements except structural and other specific defects
mentioned in Article 1(g) (i).
12) Landlord covenants with Tenant that upon paying the rent and performing the terms,
covenants, and agreements in this Lease set forth, Tenant shall, at all times during the
term or any extension of the term hereof, be entitled peacefully and quietly to have,
hold, and enjoy the leased premises. Tenancy type
The lease is a 5-year fixed-term tenancy and tenant has the right to extend the term of
the lease for three consecutive 1-year renewal options by giving not later than 180
calendar days before the expiration of the current lease term.
13) This lease is a net lease as defined in Article (3) (3.9) and the tenant is responsible to
pay all operating expenses proportionally the tenant’s square footage of the leased
premises.
14) No security deposit as mentioned in Article 6.
15) The lease may not be assigned or sublet all or any portion of the leased premises
during the Lease Term without Landlord’s prior written approval as mentioned in
Article 5(5.1)
16) Landlord’s obligation in respect of the property is,

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 Let the tenant enjoy the peaceful possession of the property.
 Not to deny any rights of the tenant created by the lease.
 The implied obligation that the premises must be in such a condition that can
be used by a human.
 Payment of a proportionate amount of tax as described in the lease agreement
17) Tenant’s obligations are,
 Pay basic rent and other expenses to the landlord as defined in the agreement
 Keep the leased premises in good condition,
 Repair specific fixtures of the premises as set out in the agreement,
 The tenant has implied obligation that the tenant will deliver the leased
premises as they were found upon lease expiry
18) The tenancy shall be terminated at the end of the lease on Aug 31, 2012. The tenant
can also terminate the lease upon giving notice to the landlord within 5 days of the
last date of the lease period about his or her intention.
19) No such damages or performance can be claimed by the tenant.
20) The remedies of the Landlord in this Lease are cumulative and are in addition to any
remedies of the Landlord at law or in equity12.
21) Advantage:
 The tenant has the benefit to fix a longer-term lease.
 The tenant can keep overhead if the operating expenses can be kept at a lower
level.
Disadvantage
12 sites.google.com. "Commercial Lease Agreement (British Columbia) - Canada Lease &
Tenancy". Sites.Google.Com, 2020, https://sites.google.com/site/canadaleaseagreements/british-
colombia/agreement-samples/commercial-lease-agreement-british-columbia.

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 The tenant has to follow a covenant even if the lease turns out to be a wrong
one in future
 The tenant has to bear a higher overhead if the expenses are at a higher level.
My advice will be it can be considered as a reasonable commercial lease and can be
beneficial for business purposes considering the location.
Reference:
Brant Investments Ltd. v. KeepRite Inc. (1987), 1987 CarswellOnt 135 (1987) O.J. No. 574,
(Ont. H.C.) at para. 81.
Davenport v. Stakiw, 2007 CanLII 6911 (Ont. Sup. Ct.)

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Krawchuk v. Scherbak et. al, 2011 ONCA 352 at para. 125.
Lloyds Bank Ltd v Bundy [1974] EWCA 8
Malpass v. Morrison, 2004 CanLII 36076 (ON SC)
Oskar v. Chee et al, 2012 ONSC 1545 (CanLII)
Raso Hill v. Church of Scientology of Toronto (1995), 1995 CanLII 59 (SCC), 126 D.L.R.
(4th) 129 (S.C.C.) at p. 185
Raso v. Dionisi (1993), 1993 CanLII 8664 (ON CA), 12 O.R. (3d) 580
sites.google.com. "Commercial Lease Agreement (British Columbia) - Canada Lease &
Tenancy". Sites.Google.Com, 2020,
https://sites.google.com/site/canadaleaseagreements/british-colombia/agreement-samples/
commercial-lease-agreement-british-columbia.
Vokey v. Edwards, 1999 CarswellOnt 1440, (1999) O.J. No. 1706 (Ont. Sup. Ct.) at para. 71
Wemyss v. Moldenhauer, 2003 CanLII 19103 (ON SC)
Winsham Fabrik Canada Ltd. v. Re/Max All Stars Realty Inc., [2001] O.J. No. 1478 (S.C.J.)