IN THE MATTER OF THE REAL ESTATE SERVICES ACT S.B.C. 2004, c. 42 AND IN THE MATTER OF JASON RUSSEL MIDDLETON CONSENT ORDER

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1 File # RESPONDENT: IN THE MATTER OF THE REAL ESTATE SERVICES ACT S.B.C. 2004, c. 42 AND IN THE MATTER OF JASON RUSSEL MIDDLETON CONSENT ORDER Jason Russel Middleton, Managing Broker, Cornerstone Properties Ltd. DATE OF REVIEW MEETING: June 23, 2014 DATE OF CONSENT ORDER: July 11, 2014 CONSENT ORDER REVIEW COMMITTEE: M. Cowe S. McGougan, Chair S. Lynch J. Pearson ALSO PRESENT: PROCEEDINGS: R.O. Fawcett, Executive Officer G. Thiele, Director, Legal Services D. Berger, Legal Counsel for the Real Estate Council On June 23, 2014 the Consent Order Review Committee (the Committee ) resolved to accept the Agreed Statement of Facts, Proposed Acceptance of Findings and Waiver ( ASF ) submitted by Jason Russel Middleton. WHEREAS the ASF, a copy of which is attached hereto, has been executed by Jason Russel Middleton and on behalf of the Council; NOW THEREFORE, the Committee having made the findings proposed in the attached ASF, and in particular having found that Jason Russel Middleton committed professional misconduct within the meaning of section 35(1)(a) of the Real Estate Services Act, orders that Jason Russel Middleton:

2 Jason Russel Middleton Page 2 1. be reprimanded; 2. pay a discipline penalty to the Council in the amount of $2, within ninety (90) days of the date of this Order; 3. at his own expense, register for and successfully complete the Real Estate Trading Services Remedial Education Course as provided by the Real Estate Division, Sauder School of Business at the University of British Columbia in the time period as directed by the Council; and 4. pay enforcement expenses of this Consent Order to the Council in the amount $1, within sixty (60) days from the date of this Order. If Jason Russel Middleton fails to comply with any term of this Order, the Council may suspend or cancel his licence without further notice to him, pursuant to sections 43(3) and 43(4) of the Real Estate Services Act. Dated this 11 th day of July, 2014 at the City of Vancouver, British Columbia. ON BEHALF OF THE CONSENT ORDER REVIEW COMMITTEE Attch. S. McGougan S. McGougan, Chair Consent Order Review Committee

3 Jason Russel Middleton Page 3 File # IN THE MATTER OF THE REAL ESTATE SERVICES ACT S.B.C. 2004, c. 42 IN THE MATTER OF JASON RUSSEL MIDDLETON (099160) AGREED STATEMENT OF FACTS, PROPOSED ACCEPTANCE OF FINDINGS AND WAIVER The following agreement has been reached between Jason Russel Middleton ( Mr. Middleton ) and the Real Estate Council of British Columbia (the Council ). A. Mr. Middleton hereby consents to an Order to be made pursuant to sections 41 and 43 of the Real Estate Services Act that he be reprimanded, and that he pay a discipline penalty to the Council in the amount of $2, within ninety (90) days from the date of the order herein. Mr. Middleton consents to an Order that, at his own expense, register for and successfully complete the Broker s Remedial Education Course as provided by the Real Estate Division, Sauder School of Business at the University of British Columbia within the time period as directed by the Council, and pay enforcement expenses of this Consent Order to the Council in the amount of $1, within sixty (60) days from the date of the Order herein. Mr. Middleton further consents to an Order that if he fails to comply with any of the terms of the Order set out above, a Discipline Hearing Committee may suspend or cancel his licence without further notice to him pursuant to section 43(3) and 43(4) of the Real Estate Services Act. B. As a basis for this Order, Mr. Middleton acknowledges and agrees that the facts set forth herein are correct: 1. Mr. Middleton was at all relevant times licensed as a managing broker with Cornerstone Properties Ltd ( Cornerstone ). 2. Mr. Middleton s licensing history is as follows: Start Date End Date Licensing History Licence Level Licence Category 06/12/2005 Present Cornerstone Properties Ltd. Managing Broker Trading, Rental, Strata

4 Jason Russel Middleton Page 4 12/08/ /12/2005 Cornerstone Properties Ltd. Managing Broker Trading, Rental 11/06/ /08/2003 Cornerstone Properties Ltd. 31/07/ /06/2002 Cornerstone Properties Ltd. 11/06/ /07/2000 Cornerstone Properties Ltd. Secondary Licensing History Associate Broker Representative Representative Trading, Rental Trading, Rental Rental 30/06/ /05/2011 Cornerstone Properties Ltd. (Saan) (X029355) Managing Broker Trading, Rental 3. Cornerstone began providing strata management services to a strata complex in Victoria consisting of 145 strata lots on May 1, On or about November 17, 1999 the strata complex held an extraordinary general meeting and approved a special resolution relating to the remediation work as a result of water ingress into the units of the complex. The Strata Council was authorized to commence legal proceedings in respect of water ingress and it was given the discretion to: distribute settlement proceeds among those owners who contributed toward the reconstruction fund in an amount proportionate to their original contribution as compared with the total amount of the reconstruction fund. 5. In 2005 the Strata Corporation decided to refund $1,722, in settlement funds to the owners in accordance with the special resolution. 6. In 2005 all of these funds were distributed to persons entitled to the money except for $486, on account of distributions payable to forty-two (42) owners. That money was not paid into court and remained in a trust account that Cornerstone retained for the complex. That money was not expressly earmarked as money due to the unknown forty-two (42) owners. 7. Between 2005 and 2009 a further sum of $149, was received by the Strata Corporation as result of the litigation. That money was placed in the same trust account and co-mingled with the $486, In 2009 the Strata Corporation decided to distribute all of the money held in trust that had been received on account of the remediation litigation which

5 Jason Russel Middleton Page 5 totaled $636,266.54, which was made up of the balance of $486, left over in 2005 and the recently received sum of $149, The 2009 distribution was made based on unit entitlement. The co-mingling was not recognized and neither the Strata Corporation nor Cornerstone then realized that only $149, ought to have been distributed in 2009 and the $486, ought to have remained for the said forty-two (42) owners. 10. However not all of the $636, was distributed in 2009; the sum of $205, remained in the trust account of the solicitor for the Strata Corporation, who was retained to deal with the issue of payment out of the remaining trust money. 11. As a result of the distribution in 2009 several owners received larger payouts than to which they were entitled and there were insufficient funds to pay out the remaining unknown strata lot owners who had not yet received their share of the settlement proceeds. The overpayment was in the amount of $281, Mr. Middleton admits that the shortcoming of Cornerstone was in not identifying the $486, left over from the 2005 distribution and comingling it with the sum of $149, received in Mr. Middleton states that this has been rectified by setting up of separate trust accounts for different trust monies and implementing a procedure for creating a written record about the character and purpose of funds on deposit. MITIGATING FACTORS 14. Cornerstone self reported this problem to the Council when it became aware of what had happened and was not trying to hide anything and was being transparent to the Council and its clients. 15. Mr. Middleton states that the strata complex in question is still a client of Cornerstone and is understanding as to what had happened. 16. Mr. Middleton states that there was a hole in their procedures which was contributed to by a turnover in staff. He states that Cornerstone has now closed that hole with new procedures of having a separate bank account and monthly financial statements for each special levy so that this problem cannot happen again. Disciplinary Record with the Council 17. Mr. Middleton entered into a Consent Order with the Council dated January 10, 2008 where he admitted that he committed professional misconduct within the meaning of section 35(1)(a) of the Real Estate Services Act in that he failed to ensure that a former representative of Cornerstone did not engage in activities

6 Jason Russel Middleton Page 6 which required licensing contrary to section 6(2) of the Real Estate Services Act and section 3-1(1) of the Council Rules. 18. Mr. Middleton was reprimanded and was required to pay enforcement expenses in the amount of $ jointly and severally with Cornerstone within sixty (60) days from the date of the Order herein. 19. Mr. Middleton further entered into a Consent Order with the Council dated September 26, 2013 when he admitted he committed professional misconduct within the meaning of section 35(1)(a) of the Real Estate Services Act in that he: (a) contravened section 3-3(1)(a) of the Council Rules in that he failed to act in the best interest of the client by preparing a letter of termination to the client on February 24, 2012 terminating the services of the brokerage effective March 31, 2012, and that the brokerage would be taking the April 2012 strata management fees in the month of March 2012 and failed to ensure that this letter of termination was not delivered to the client until March 27, 2012; and (b) contravened section 3-4 of the Council Rules in that he failed to ensure that there was a proper amendment to the brokerage s written services agreement signed by the client reflecting the date and terms of the termination of the brokerage strata management services and the fees to be paid to the brokerage which resulted in a dispute between the client and the brokerage as to the termination date and the withdrawal of fees in the brokerage trust account. 20. Mr. Middleton was reprimanded, and was required to successfully complete the Strata Management Remedial Education Course. Further, he was required to pay a discipline penalty to the Council jointly and severally with Cornerstone in the amount of $1, within ninety (90) days of the date of the Order herein. Mr. Middleton was also required to pay enforcement expenses to the Council in the amount of $1, jointly and severally with Cornerstone. C. Proposed Acceptance of Findings and Waiver 1. Based on the Agreed Statement of Facts as outlined herein, and without making any admissions of liability, Jason Russel Middleton is prepared to accept the following findings if made against him by the Council s Consent Order Review Committee: (a) Jason Russel Middleton, as managing broker for Cornerstone Properties Ltd. committed professional misconduct within the meaning of section 35(1)(a) of the Real Estate Services Act by contravening section 6(2) of the Real Estate Services Act and section 3-1(1) [managing broker responsibilities] of the Council Rules in that he:

7 Jason Russel Middleton Page 7 (i) permitted the brokerage to be in contravention of section 25 of the Real Estate Services Act and section 7-5(1) of the Council Rules by failing to maintain proper books and records and making payments from a trust account that resulted in an over payment of distribution funds to some strata lot owners, and insufficient funds to pay out the remaining strata lot owners that had not yet received their share of the settlement proceeds. 2. Mr. Middleton hereby waives his right to appeal pursuant to section 54 of the Real Estate Services Act. 3. Mr. Middleton acknowledges that he has a right to seek independent legal advice before signing this Agreed Statement of Facts, Proposed Acceptance of Findings and Waiver. 4. Mr. Middleton acknowledges and is aware that the Council will publish the Consent Order and penalty herein in its Report from Council newsletter, on the Council s website, and on CanLII, a website for legal research. 5. Mr. Middleton acknowledges and is aware that the Superintendent of Real Estate has the right, pursuant to section 54 of the Real Estate Services Act, to appeal any decision of the Council, including this Agreed Statement of Facts, Proposed Acceptance of Findings, and Waiver and Consent Order. 6. The Agreed Statement of Facts and Proposed Acceptance of Findings contained herein are made for the sole purpose of resolving a complaint being considered by the Council and for that purpose only. Such agreed statement of facts and proposed acceptance of findings cannot be used in any other proceeding of any kind. David P. Berger David P. Berger, Senior Legal Counsel Real Estate Council of British Columbia As to Part B only (Agreed Statement of Facts) Dated 29th day of May, 2014 Jason Russel Middleton Jason Russel Middleton As to Parts A, B, and C, (proposed penalty, Agreed Statement of Facts, Proposed Acceptance of Findings and Waiver) Dated 28 day of May, 2014

8 Jason Russel Middleton Page 8 REAL ESTATE COUNCIL OF BRITISH COLUMBIA In The Matter of the Real Estate Services Act S.B.C. 2004, c. 427 And In the Matter of JASON RUSSEL MIDDLETON CORRIGENDUM TO CONSENT ORDER ISSUED July 11, 2014 The Consent Order Review Committee ordered that Jason Russel Middleton: 1. be reprimanded; 2. pay a discipline penalty to the Council in the amount of $2, within ninety (90) days; 3. at his own expense, register for and successfully complete the Real Estate Trading Services Remedial Education Course as provided by the Real Estate Division, Sauder School of Business at the University of British Columbia in the time period as directed by the Council; and 4. pay enforcement expenses to the Council in the amount of $1, within sixty (60) days of the date of the Order. It should read: 1. be reprimanded; 2. pay a discipline penalty to the Council in the amount of $2, within ninety (90) days; 3. at his own expense, register for and successfully complete the Broker s Remedial Education Course as provided by the Real Estate Division, Sauder School of Business at the University of British Columbia in the time period as directed by the Council; and 4. pay enforcement expenses to the Council in the amount of $1, within sixty (60) days of the date of the Order. Dated this 18 th day of August, 2014 For the Real Estate Council of British Columbia S. McGougan S. McGougan CHAIR