Kelowna couples duped in real estate scam try and fail to sue realtor

A Kelowna realtor unwittingly caught up in an elaborate scam to sell a Big White condo for an unknown fraudster has avoided being held liable.

BC Supreme Court Justice Elin Sigurdson said that Royal LePage Kelowna realtor Gary Turner had followed the correct protocols and that the repercussions from the attempted fraud were not his fault.

The genuine sellers and the buyers of the condo sued the realtor and his agency, arguing they were liable and they could have done more to prevent the attempted fraud.

However, Justice Sigurdson didn’t agree.

“The wrongdoing and its fallout were… not the fault of Mr. Turner or Royal LePage Kelowna Realty,” Justice Sigurdson said in a March 25 decision. “This very unfortunate situation was caused by fraudulent individuals whose email impersonation caused mischief and harm to innocent people.”

The case dates back to 2020, when Turner was referred to Luke and Kim McNally, who lived in South Africa but owned a three-bedroom condo at Big White.

Over email, the McNally’s told Turner they wanted to put their condo on the market, and Turner listed the property for $699,000. The realtor requested the McNally’s identification.

However, although the email came from the McNally’s genuine email account, it was sent by an unknown fraudster impersonating the real owners.

Messages went back and forth, and the fraudster requested to use a different email, which Turner didn’t think much about, as clients often changed from work to personal email addresses.

At the same time, Russell and Anne Marie Kirby were looking to buy a condo at Big White and came across the McNally’s listing.

They’d sold their current Big White condo and put an offer in on the McNally’s.

“This first offer was not accepted by the fraudsters,” the judge said.

A second offer was made for $580,000 with different conditions, and the fraudsters agreed.

While this was taking place, Turner had requested identification on several occasions from the fraudsters.

He received fake passports with genuine photos of the McNally’s, although the photos were from decades earlier. One was from an ID document from about 1990.

The fake South African passports had the correct ID numbers and birthdates on them, but the passport numbers weren’t correct.

As the sale was ticking through, a conveyancing lawyer the fraudsters had hired dropped out because she was not able to verify their identity. 

Turner emailed the McNally’s at their original email address to let them know.

At this point, the real McNallys found out someone had tried to sell their condo.

The decision says the RCMP were told, but the fraudsters were never identified, and it was never determined how the fraudsters gained access to the McNallys’ email and their information.

Both the McNallys and the Kirbys then sued the realtor, arguing that they owed a duty of care and that he was liable for negligent misrepresentation.

The case went to a two-week trial where numerous experts testified, and each step of the transaction was scrutinized.

“The plaintiffs’ case merits considerable sympathy: the events before me are the stuff of nightmares,” Justice Sigurdson said.

“The intrusion and trickery committed by the fraudsters was an invasion of privacy, an attempt at a significant theft, and their actions resulted in harms ranging in seriousness from inconvenience to lost time and expenses, to lost opportunity cost in the value of property, to psychological disruption.

“These events and their effects have been understandably extremely distressing for everyone involved.”

The Justice noted that the fraudsters knew obscure details about the McNally’s.

After parsing through the evidence, the justice found the realtor had followed the correct steps.

The Justice said that a realtor has to verify a seller’s identity anytime before the completion of the sale.

“The evidence before me demonstrates that at the time of the critical events in this case, email impersonation fraud in real estate transactions was not a known risk or generally heard of by the brokerages or the industry,” the Justice said.

“While the steps required today to meet the standard of care are likely different because of risks the industry now understands, it is not appropriate to apply those standards if they were not applicable at the time.”

The Justice reiterated that while they were unsuccessful, the McNallys and the Kirbys did nothing wrong.

“They were unknowing victims of email impersonators who aimed to profit or cause mischief or both. Because of the fraudsters’ conduct the Kirbys and the McNallys endured a very stressful experience and suffered from it,” the Justice said.

The buyers and the sellers were left to pay the realtor’s legal costs.