Amerato et al. v. Registrar, Motor Vehicle Dealers Act

[Indexed as: Amerato v. Ontario (Registrar, Motor Vehicle Dealers Act)]

73 O.R. (3d) 386

[2004] O.J. No. 4409

Divisional Court File No. 333/04

Court File No. DC-04-005156-00

Ontario Superior Court of Justice,

Divisional Court

Gravely, Carnwath and Pitt JJ.

October 29, 2004

Administrative law -- Boards and tribunals -- Powers -- Registrants under Motor Vehicle Dealers Act may not waive right to hearing prior [page387] to revocation of registration in consent order issued by Licence Appeal Tribunal -- Where no hearing was held, consent order and revocation of registration were invalid -- Motor Vehicle Dealers Act, R.S.O. 1990, c. M.42, s. 7.

Under s. 7(1) of the Motor Vehicle Dealers Act, where the Registrar proposes to suspend or revoke a registration, the Registrar is required to serve notice of the proposal on the registrant. Section 7(2) provides that the registrant is entitled to a hearing by the Licence Appeal Tribunal. When the applicants received a Notice of Proposal under s. 7, they negotiated with the Registrar and a consent order was issued by the Licence Appeal Tribunal. The applicants subsequently received a Final Notice revoking their licences. They brought an application for judicial review of that decision.

Held, the application should be granted.

The right to a hearing, as mandated by s. 7 of the Act, is created in the interest of the public and cannot be waived by the Registrar nor by registrants. The Registrar is required to follow the provisions of s. 7 with meticulous care in order to suspend or revoke a licence. The waiver of a hearing in this case was invalid, as was the consent order made by the Tribunal and the Final Notice issued by the Registrar purporting to act under the authority of the order.

APPLICATION for judicial review of an order revoking applicants' registration as motor vehicle dealers.

Cases referred to Don Howson Chevrolet Oldsmobile Ltd. v. Ontario (Registrar of Motor Vehicle Dealers & Salesman) (1975), 1974 566 (ON SC), 6 O.R. (2d) 39, 51 D.L.R. (3d) 683 (Div. Ct.); Hassan v. Ontario (Registrar of Motor Vehicles), 2001 24153 (ON CA), [2001] O.J. No. 421, 8 M.V.R. (4th) 210 (C.A.); Wassilyn v. Ontario (Racing Commission) (1993), 10 Admin. L.R. (2d) 157, [1993] O.J. No. 564 (Gen. Div.) Statutes referred to Motor Vehicle Dealers Act, R.S.O. 1990, c. M.42, s. 7 Statutory Powers Procedure Act, R.S.O. 1990, c. S.22

Daniela Ruso, for applicants. Larry Banack, for respondent.

The judgment of the court was delivered by

[1] CARNWATH J.: -- The Motor Vehicle Dealers Act, R.S.O. 1990, c. M.42, provides that a licence issued under the Act cannot be revoked without granting the licensee a hearing. On April 30, 2004, the Registrar told the applicants their licences had been revoked. No hearing had been held.

[2] The issue on this application is whether a licensee under the Act can waive his right to a statutorily-mandated hearing in a consent order issued by the Licence Appeal Tribunal. I find such a consent to be invalid. [page388]

Background

[3] On May 7, 2002, the Registrar, Motor Vehicle Dealers Act, proposed to revoke the licences of the applicants by issuing a Notice of Proposal under s. 7 of the Motor Vehicle Dealers Act.

[4] Section 7(1) of the Act provides, as follows:

7(1) Where the Registrar proposes to refuse to grant or renew a registration or proposes to suspend or revoke a registration, the Registrar shall serve notice of the proposal, together with written reasons therefor, on the applicant or registrant.

[5] The Notice sent by the Registrar must state that the applicant or registrant is entitled to a hearing by the Licence Appeal Tribunal. Section 7(2) of the Act provides, as follows:

7(2) A notice under subsection (1) shall state that the applicant or registrant is entitled to a hearing by the Tribunal if the applicant or registrant mails or delivers, within fifteen days after service of the notice under subsection (1), notice in writing requiring a hearing to the Registrar and the Tribunal, and the applicant or registrant may so require a hearing.

[6] Upon receipt of the Proposal, counsel for the applicants then negotiated with the Registrar, which negotiations resulted in a consent order released September 5, 2002. The order was issued by the Licence Appeal Tribunal in which the Tribunal ordered that the proceedings in the matter were concluded and disposed of without a hearing on the basis of 24 terms set out in a Schedule "A" attached to the order. The 24th term of the order provided, as follows:

24. The applicants agree and acknowledge that should they breach any of the terms and conditions set out herein, in whole or in part, the Registrar is directed to and shall carry out the Proposal.

[7] On April 30, 2004, the applicants received a "Final Notice" signed by the Registrar telling the applicants that their licences had been revoked. The notice is recited to be pursuant to s. 7(3) of the Act. This section provides, as follows:

7(3) Where an applicant or registrant does not require a hearing by the Tribunal in accordance with subsection (2), the Registrar may carry out the proposal stated in the notice under subsection (1).

The Position of the Parties

[8] The applicants say the Registrar had no jurisdiction to revoke the registrations without issuing a new Proposal to Revoke Registration under the Act and that the order of the Licence Appeal Tribunal authorizing the revocation of the applicants' registration was ultra vires and of no force and effect. [page389]

[9] The Registrar submits the consent order was lawfully and properly made exactly as contemplated by the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22 and the Motor Vehicle Dealers Act. The Registrar notes the applicants had the benefit of independent legal advice before inviting the Tribunal to issue its order. The order preserved the applicants' registrations - but only so long as the applicants complied with certain conditions. The applicants agreed - and the Licence Appeal Tribunal directed - that the consequence of a breach of the order was the automatic revocation of the registrations.

Analysis

[10] As long ago as the early 1970s, this court dealt with the current s. 7 of the Act. A Divisional Court panel, composed of Houlden, Henry and Thompson JJ., dealt with a matter where the Registrar proposed that the registration of the appellant as a motor vehicle dealer be suspended for a period of 90 days. The Registrar, by agreement of counsel for both parties, did not give written reasons as required by s. 7(1) of the Act. Houlden J. held that the giving of written reasons appears to be a condition precedent to the hearing before the Tribunal which counsel cannot waive. Written reasons not having been given, on this ground alone, the appeal might be allowed.

[11] Henry J. found that the notice served by the Registrar on the registrant, together with the reasons for his proposal, are the foundation for all proceedings which follow. Thus, proper compliance by the Registrar with s. 7(1) of the Act went to the jurisdiction of the Tribunal to hear the matter. He concluded by finding that if the reasons had not been given in accordance with s. 7(1), the foundation of the proceedings was lacking and any further hearing that took place before the Tribunal was a nullity.

[12] Thompson J. is reported as follows [at p. 48 O.R.]:

Whatever the agreement of counsel may have been, I, like my brethen, consider that reasons of the Registrar in conformity with s. 7 of the Motor Vehicle Dealers Act are a condition precedent to the jurisdiction of the Tribunal to hold a hearing.

He then went on to hold [at p. 48 O.R.]:

I repeat, that my view is the provisions of the statute requiring reasons to be given by the Registrar in the notice to the registrant or the applicant is a condition precedent and I will further state that I am of the opinion that that condition or the conditions provided by that provision of the statute may not be waived by the parties; the Act is for the benefit of the public and I think that the reasons of the Registrar or the reasons the Registrar proposes to give are essential to the whole proceedings and that their presence cannot be waived. [page390]

Don Howson Chevrolet Oldsmobile Ltd. v. Ontario (Registrar of Motor Vehicle Dealers & Salesman) (1975), 1974 566 (ON SC), 6 O.R. (2d) 39, 51 D.L.R. (3d) 683 (Div. Ct.)

[13] In 1993, Rosenberg J. heard a matter involving one Mr. Wassilyn and the Ontario Racing Commission. Mr. Wassilyn had had his racing licence suspended by the Commission for five years for race-fixing and applied for judicial review. In return for his dropping that application, the Commission, through its lawyer, agreed to reinstate his licence. It then failed to live up to that commitment. The applicant applied for judicial review in the nature of mandamus to compel the reinstatement of his licence and Rosenberg J. dismissed his application. He found that the rule requiring the Commission to hold a hearing was for the benefit of the public at large and not for the benefit either of the Commission or the applicant. It was his view that the rule could only be waived through proper process by the legislature on the public's behalf, but not by the Commission. He found that the Commission was required to hold a hearing regardless of the consent agreement reached by the Commission and the applicant (Wassilyn v. Ontario (Racing Commission) (1993), 10 Admin. L.R. (2d) 157, [1993] O.J. No. 564 (Gen. Div.)).

[14] Finally, in 2001, the Ontario Court of Appeal considered a judgment of this court which had found that the Registrar's refusal to process an application denied the applicant procedural fairness. A Divisional Court directed the Registrar to deal with the respondent's application in accordance with s. 7 of the Act, which offers the possibility of a hearing to a rejected applicant by what is now known as the Licence Appeal Tribunal. The Court of Appeal confirmed the Divisional Court's decision (Hassan v. Ontario (Registrar of Motor Vehicles), 2001 24153 (ON CA), [2001] O.J. No. 421, 8 M.V.R. (4th) 210 (C.A.)).

[15] I find the right to have a hearing, as mandated by s. 7(1), is created in the interest of the public and cannot be waived by the Registrar nor by the applicant. The above-cited cases make it clear that to suspend a licence requires the Registrar to follow the provisions of s. 7(1) with meticulous care. The waiver of any prospective hearing was invalid, as was the consent order made by the Tribunal and the "Final Notice" issued by the Registrar purporting to act under the authority of the order.

[16] The application is granted. Should the Registrar wish to suspend or revoke the applicants' registration, the Registrar must serve notice of the Proposal, together with written reasons therefor, on the applicants. The notice shall state that the applicants are entitled to a hearing by the Tribunal if the applicants mail or deliver within 15 days after service of the notice under [page391] subsection (1), Notice in Writing Requiring a Hearing, to the Registrar and the Tribunal.

[17] Costs to the applicants on a partial indemnity basis fixed at $7,500, inclusive of fees and disbursements, plus GST, payable within 30 days.

Application granted.