Registrar, Motor Vehicles Act v. Jacobs [Indexed as: Ontario (Registrar, Motor Vehicle Act) v. Jacobs]
69 O.R. (3d) 462
[2004] O.J. No. 189
Court File No. 639/01
Ontario Superior Court of Justice
Divisional Court
O'Driscoll, Archie Campbell and Lane JJ.
January 22, 2004
Administrative law -- Boards and tribunals -- Ontario Licence Appeal Tribunal -- Registrar under Motor Vehicle Dealers Act proposing to refuse used car salesman's re-application for registration on basis of his cumulative past misconduct, including criminal fraud convictions -- Ontario Licence Appeal Tribunal denying proposal and restoring salesman's registration -- Registrar's appeal allowed -- Tribunal erring in accepting salesman's denial of criminal intent or fault and his claim that his convictions resulted from bad paperwork and dishonest employee -- Tribunal permitting salesman to relitigate issue of criminal intent which had been decided in salesman's criminal trial -- Tribunal being entitled to take fresh look at circumstances leading to criminal charges but only for purpose of mitigation and not for purpose of relitigation.
The respondent's registration as a motor vehicle dealer and salesman was revoked on the basis that his cumulative past conduct afforded grounds to believe that he would not carry on business in accordance with the law. When the respondent re- applied for registration as a salesman, the Registrar under the Motor Vehicle Dealers Act, R.S.O. 1990, c. M.42 proposed to refuse the application because of the respondent's cumulative past misconduct, including Criminal Code, R.S.C. 1985, c. C-46 fraud convictions for odometer misrepresentation. The Ontario Licence Appeal Tribunal denied the proposal and ordered the respondent restored to registration as a salesman. The Tribunal accepted the respondent's position that his criminal fraud convictions resulted from bad paperwork and a dishonest employee for whom the respondent "accepted responsibility", an argument which the respondent had raised unsuccessfully in his criminal defence. The Tribunal reviewed the fraud evidence in a "new light" and accepted the respondent's innocent explanation, which the criminal court had rejected. The Registrar appealed.
Held, the appeal should be allowed.
The Tribunal was fully entitled to look at the circumstances giving rise to the criminal charges in the context of mitigation of the fraud, but not for the purpose of relitigation. The "new light" in which the Tribunal reviewed the fraud evidence involved the proposition that the fraudulent transactions were not the respondent's fault. This proposition necessarily involved a relitigation of the respondent's fraudulent intent, an essential ingredient of the criminal fraud conviction. At no point in the Tribunal's proceedings did the respondent acknowledge any fraudulent intent in the transactions that led to his convictions. Although the Tribunal noted the Registrar's argument that criminal convictions should be accepted on their face, it failed to give effect to this principle. The Tribunal seemed to think that its acceptance of the respondent's evidence could wash away the criminally fraudulent nature of his conduct towards his customers. In going behind the criminal conviction and allowing the respondent to relitigate his criminal intent, the Tribunal erred fundamentally. The Tribunal also erred fundamentally in failing to distinguish between bad business practice and intentional criminal fraud, and in treating the respondent's deliberate frauds on his trusting customers as if they were mistakes to be corrected through better business practices. Once the Tribunal improperly took criminal intent off the table, it destroyed [page464] a major element of the Registrar's position. But for the error, the result would necessarily have been different.
Because the Tribunal made extensive findings of fact, the appeal court was in as good a position as the Tribunal to make the decision that should have been made by the Tribunal but for its error. The controlling principle in this case was the promotion of integrity and honesty in the motor vehicle sales industry. The need to protect the public from dishonest salesmen like the respondent required that the Registrar's proposal be upheld.
APPEAL from a decision of the Ontario Licence Appeal Tribunal.
Cases referred to Ontario (Minister of Community and Social Services) v. Ontario Public Service Employees Union (O.P.S.E.U.), 2003 SCC 64, [2003] S.C.J. No. 65 (QL), 311 N.R. 189; Service Employees' International Union, Local No. 333 v. Nipawin District Staff Nurses Association (1973), 1973 191 (SCC), [1975] 1 S.C.R. 382, [1974] 1 W.W.R. 653, 41 D.L.R. (3d) 6, 73 C.L.L.C. Â14,193; Toronto (City) v. Canadian Union of Public Employees (C.U.P.E.), Local 79, [2003] 3 S.C.R. 77, 2003 SCC 63, 311 N.R. 201, 17 C.R. (6th) 276, 232 D.L.R. (4th) 385, [2003] S.C.J. No. 64 (QL), 179 O.A.C. 291, J.E. 2003-2108 Statutes referred to Courts of Justice Act, R.S.O. 1990, c. C.43, s. 134(1)(a) Criminal Code, R.S.C. 1985, c. C-46, s. 380(1)(b) Criminal Records Act, R.S.C. 1985, c. C-47, s. 4(a)(i) Licence Appeal Tribunal Act, 1999, S.O. 1999, c. 12, s. 11 Motor Vehicle Dealers Act, R.S.O. 1990, c. M.42, s. 8
Aviva R. Harari, for appellant. Malcolm Bennett, for respondent.
A. CAMPBELL J.: --
The Appeal
The Appeal
1This is an appeal from the Ontario Licence Appeal Tribunal (Tribunal), dated September 5, 2001 and now reported: [2001] O.L.A.T.D. No. 341. The Registrar under the Motor Vehicle Dealers Act, R.S.O. 1990, c. M.42 ("MVDA") proposed in 1998 to revoke Mr. Jacobs' registration as a dealer and salesperson because of odometer misrepresentation. The Tribunal upheld the proposal and directed Mr. Jacobs' registrations to be revoked on the grounds that his cumulative past conduct afforded grounds to believe that he would not carry on business in accordance with the law. The Divisional Court upheld the Tribunal's decision but invited Mr. Jacobs to apply for re- registration. In 2000, Mr. Jacobs applied for re- registration as a salesman. The Registrar proposed to refuse the application because of Mr. Jacobs' cumulative past misconduct including Criminal Code, R.S.C. 1985, c. C-46 fraud [page465] convictions for odometer misrepresentation. The Tribunal denied the Registrar's proposal and ordered Mr. Jacobs restored to registration as a salesman [See Note 1 at end of document]. The Registrar appeals to this court.
The Issues
The Issues
2At the core of the appeal is the Tribunal's analysis of Mr. Jacobs' Criminal Code fraud convictions. The Tribunal accepted Mr. Jacobs' position that his criminal fraud convictions resulted from bad paperwork and a dishonest employee, for whom Mr. Jacobs "accepted responsibility". The Tribunal reviewed the fraud evidence in a "new light" and accepted his innocent explanation which the criminal court had rejected.
3The issues are:
(1) Whether the Tribunal wrongly relitigated Mr. Jacobs' Criminal Code fraud convictions.
(2) Whether the result, but for such error, would necessarily have been different.
(3) Whether the general deference owed by this court to the Tribunal insulates it from judicial intervention in this case. [page466]
The Criminal Charges
The Criminal Charges
4The respondent Mr. Jacobs, then a registered motor vehicle dealer and salesman, was charged on February 20, 1998, with six counts of fraud over $5,000, contrary to s. 380(1)(b) of the Criminal Code, in respect of car sales in the summer of 1997.
5The gravamen of each charge was that Mr. Jacobs falsely represented vehicle odometer readings as true when he knew that the readings were false and thereby misrepresented the true value of the vehicle.
Registration Revoked
Registration Revoked
6The Registrar, on February 26, 1998, proposed to revoke the respondent's registration as a motor vehicle dealer and salesperson:
The Registrar bases his proposal upon paragraph 5(1)(b) of the Act on the grounds that the past conduct of the Applicant affords reasonable grounds for belief that he will not carry on business in accordance with law and with integrity and honesty.
The grounds for the Registrar's proposal are:
The applicant used the services of an unregistered salesperson namely Michael Alpy from June 5, 1997 to October 21, 1997.
Books and records reviewed by the Investigator on behalf of Registrar on November 12, 1997 revealed odometers for vehicles had been tampered with.
The Applicant is charged with six counts of fraud over $5,000 contrary to the Criminal Code of Canada for representing odometer readings on vehicles as true while knowing the odometer to be false and thereby misrepresenting the true value of the vehicle.
The Applicant was charged in 1995 by the RCMP for odometer tampering. The charge was withdrawn after a cash settlement was paid by the Applicant.
7The Tribunal hearing took place on July 23, 1998, while the criminal charges were still pending.
8The Tribunal reviewed in detail a number of odometer misrepresentations by Mr. Jacob in respect of vehicles not covered by the pending criminal charges [See Note 2 at end of document]. [page467]
9As for the pending criminal charges, the Tribunal said this:
- . . . The fact that criminal charges have been laid is not relevant per se, however, the facts underlying some of the pending charges are relevant and the Tribunal is entitled to consider these facts relating to the past conduct of the Applicant.
10As for the seriousness of odometer tampering and misrepresentation, the Tribunal said this:
- Counsel for the Applicant argued that the Applicant had made full restitution in many cases and that the financial sacrifices made by the Applicant are evidence of the Applicant carrying on business with honesty and integrity thereby protecting the public interest. However, I disagree. Although restitution is evidence of positive conduct of the Applicant, this does not exonerate him from the serious offence of non-disclosure of odometer readings. Odometer tampering is a grave and serious offence by a dealer and the Tribunal must rule in favour of protecting the public. Many consumers base their assessment of value on the odometer readings and must rely and trust the dealer to disclose any known odometer readings. The Applicant made restitution when he was caught misrepresenting the odometers. The concern and intent of the legislation is to protect the innocent consumers who do not have knowledge of possible misrepresentations.
Sales by Unregistered Salesperson
Sales by Unregistered Salesperson
The fact that Michael Alpy made sales on behalf of the Applicant during the period from June 5, 1997 to October 21, 1997 was not challenged. The Act is clear. A salesperson must be registered to sell on behalf of a particular registered motor vehicle dealer.
In this case, the past conduct of the Applicant clearly involves disregard for the law. The Applicant was charged in 1994 for misrepresenting the true odometer reading and since then has not taken steps to conduct his business in accordance with the law. The cumulative effect of the Applicant's past conduct affords reasonable grounds for belief that he will not carry on business in accordance with the law.
11The Tribunal, after the hearing on July 23, 1998, ordered on August 27, 1998, the revocation of Mr. Jacobs' registration as a motor vehicle dealer and salesperson.
12Mr. Jacobs appealed the revocations to the Divisional Court (Gravely, Matlow and Marchand JJ.), which dismissed the appeal on November 23, 2000, but stayed the coming into force of the order for 60 days to permit him to apply for re- registration:
We are not satisfied the Tribunal was in error. There was ample evidence to allow it to reach the conclusion it did. Nor was the penalty over severe. Integrity of odometer readings is fundamental to the proper functioning of a motor vehicle dealer and the appeal by both appellants must be dismissed.
The evidence is that Mr. Jacobs has made sincere efforts to reform his business practices. He no longer employs the sales person who was involved in at least some of the odometer tampering. He no longer deals in T.M.U. vehicles and has not re-offended. He may then wish to reapply [page468] for registration. To allow him to do so or take whatever steps may be necessary to reorganize his business affairs we propose to temporarily stay the Tribunal decision.
The appeal is dismissed. The decision of the Tribunal is stayed for a period of 60 days.
Costs are fixed at $1500.
Criminal Convictions
Criminal Convictions
13Meanwhile the criminal charges, pending at the time Mr. Jacobs' licence was revoked, were tried on June 4, 1999. The charges were indictable. Mr. Jacobs elected to be tried in the Ontario Court of Justice by a Provincial Judge without a jury. There were six counts in the criminal information. The matter proceeded before the Honourable Mr. Justice F.S. Fisher. The Crown at the outset withdrew counts 2 and 3. The trial proceeded on counts 1, 4, 5, and 6. Mr. Jacobs testified on his own behalf. He was acquitted of two counts and convicted on two counts of fraud by selling vehicles knowing the odometer readings to be false [See Note 3 at end of document]. The charges on which he was convicted are these [at paras. 4-5]:
John Robert Jacobs on or about the 22nd day of September 1997, at the Township of Wellesley in the said Region did by deceit, falsehood or other fraudulent means defraud Wayne Gauvin of monies the sum of $12,912.00 more or less, by selling Wayne Gauvin a 1990 Chev 1500 pickup truck and representing the odometer reading on that vehicle to be true, while knowing the odometer reading to be false and thereby misrepresenting the true value of the vehicle contrary to Section 380(1)(b) of the Criminal Code of Canada.
And further that
John Robert Jacobs on or about the 26th day of August 1997, at the Township of Wellesley in the said Region did by deceit, falsehood or other fraudulent means defraud Sera Rully of monies the sum of $13,000.00 more or less, by selling Sera Rully a 1990 GMC pickup truck and representing the odometer reading of that vehicle to be true, while knowing the odometer reading to [page469] be false and thereby misrepresenting the true value of the vehicle contrary to Section 380(1)(b) of the Criminal Code of Canada.
14He was sentenced on each count to a 12-month suspended sentence, concurrent with community service.
15The Criminal Records Act [See Note 4 at end of document] provides that before an application for pardon may be considered, a period of five years must elapse after the expiration according to law of a sentence (including any period of probation) for an offence prosecuted by indictment. It appears that Mr. Jacobs may apply for a pardon in June 2005.
16The Court of Appeal, on March 31, 2000, dismissed his appeal against conviction.
17The charges and convictions were against Mr. Jacobs personally, not against his corporate dealership or his employees. The criminal liability alleged and found against him was personal, not vicarious. The offences include the elements that:
Mr. Jacobs knew the odometer readings were untrue, and
Mr. Jacobs intentionally misrepresented the value of the vehicles and defrauded the purchasers.
18There is no room in these convictions for the suggestion, accepted by the Tribunal, that he was the victim of bad paperwork or a dishonest employee. Were that the case, he could not, in law, have been convicted, personally, of fraud. The convictions represent a finding beyond a reasonable doubt that he personally knew the odometer readings were false and that he intentionally defrauded his trusting customers.
The Registrar's Opposition to Re-Registration
The Registrar's Opposition to Re-Registration
19Mr. Jacobs applied to re-register as a salesman but not as a dealer. His dealership was owned by his wife, who works part-time in a grocery store. The Registrar proposed to refuse re-registration on the basis that his past conduct was inconsistent with the integrity and honesty required by the statute:
The intention and objective of the Act is to protect the public interest. The requirements of the Act include that Registrants be financially responsible in the conduct of business and that Registrants carry on business in accordance with the law and with integrity and honesty. The Applicant's past conduct is inconsistent with the intention and objective of the Act, and therefore warrants disentitlement to registration under the Act. Therefore, the Registrar is unwilling to [register] John Robert Jacobs as a motor vehicle salesperson.
(The word "register" is omitted in the original) [page470]
20The formal notice recited the previous history of the matter, including the criminal conviction.
The Tribunal Proceedings
The Tribunal Proceedings
21The Tribunal, on June 22, 2001, heard Mr. Jacobs' appeal from the Registrar's proposal. The issue before the Tribunal was whether the Registrar acted reasonably in finding that Mr. Jacobs, due to his past conduct, should be refused to be registered as a motor vehicle salesperson.
22Mr. Jacobs' application for re-registration, dated January 17, 2001, involved the same arguments he had unsuccessfully raised in his criminal defence. He blamed the first count of his criminal conviction on his salesman and on a non-working odometer; he blamed the second count of his criminal conviction on bad paperwork. He never acknowledged his criminal intent.
23The position of Mr. Jacobs before the Tribunal was the same: that the conduct for which he was convicted resulted from the actions of a salesperson, an odometer that was not properly working and an industry practice of marking invoices "TMU" (true mileage unknown). The burden of the submissions is that the frauds were not Mr. Jacobs' fault:
- Counsel stated that one has to look at the factual basis for the convictions. In one instance it was the doing of the salesperson. The Applicant never had any dealings with the wronged customer, but the Applicant is responsible for the actions of his employee. In the other case, the odometer was not working properly and the true odometer readings was not known. It was a matter of the need for full and complete disclosure. At the time of this occurrence in 1997, there was still a practice among motor vehicle dealers to put TMU on the invoice and have the customer initial it. In this case, the customer of the Applicant did not put initials beside the TMU.
24Mr. Jacobs' position was not that there were circumstances that mitigated his intentional criminal fraud, which he never acknowledged, but that the fraud was the doing of the salesman, a faulty odometer, bad industry practice and bad paperwork. To quote his submissions:
- Though Mr. Jacobs has industry specific convictions, the witnesses at the criminal court put a new light on the circumstances of the problems. Divisional Court felt Mr. Jacobs had reformed. Mr. Jacobs has taken courses and put into place different systems.
25The Tribunal was fully entitled to look at the circumstances giving rise to the criminal charges. It could do so for the purpose of mitigation, but not for the purpose of relitigation. This "new light" submission, were it an account of mitigating circumstances, would be perfectly valid. But it is clear from the [page471] proceedings as a whole that the "new light" involved the proposition that the fraudulent transactions were not Mr. Jacobs' fault. This proposition necessarily involves a relitigation of Mr. Jacobs' fraudulent intent, an essential ingredient of the criminal fraud conviction.
26The essence of this position was put by Mr. Bennett in his Tribunal cross-examination of the Director of Compliance [See Note 5 at end of document]:
Q. What I'm suggesting is it may well be that Mr. Jacobs wasn't even aware of the situation if in fact they were transactions conducted by employees?
27Mr. Jacobs in his tribunal evidence painted his criminal convictions as the result of innocent carelessness, not intentional fraud:
. . . I bought vehicles from other dealers with odometer problems and I didn't check them out properly and that's how I got into trouble. [See Note 6 at end of document]
28Mr. Bennett in his closing submissions to the Tribunal argued that the criminal convictions were the result of an innocent oversight [See Note 7 at end of document]:
. . . yes, he had a sales person that didn't make proper disclosure. He is responsible for that. Yes there was an oversight in not having a purchaser make the proper initials on a contract. He pays the price for that. He goes through the criminal process.
29Mr. Jacobs' position before the Tribunal was thus a direct attack on the finding of the criminal court that the impugned transactions involved fraudulent intent on his part.
30The Tribunal noted the following evidence from Mr. Jacobs in support of his position that the fraud conviction resulted from bad business practice and a dishonest salesman:
Mr. Jacobs stated that he terminated the employment of Mr. Alpy. He discovered that Mr. Alpy had been misrepresenting himself to the customers. Mr. Alpy was selling accident repair cars but that fact was not on the customer's bill of sale, only on the dealership's copy of the bill of sale.
Regarding his purchase of a 1990 Chev from Parkrow Auto Sales, Mr. Jacobs noticed that the odometer was not working so it was agreed between them to put TMU on the wholesale bill. Mr. Alpy dealt with the customer who bought this car, and Mr. Alpy did not get that customer's initials beside the TMU insertion. The customer thought he was getting a vehicle with a certain amount of mileage. Mr. Jacobs was convicted on this count. [page472]
Regarding the purchase of a 1990 Sierra GMC from Parkrow Auto Sales, Mr. Jacobs stated that the wholesale bill has TMU on it. The invoice from Ingersoll Motors to Parkrow has a mileage figure with TMU beside it. Mr. Jacobs did not know about that mileage figure as it was not on his wholesale agreement with Parkrow. That car was sold to a customer with a lower mileage and with no insertion of TMU nor did the customer initial the mileage. Another copy of the retail bill of sale for that vehicle does have TMU beside the mileage, but the customer had not initialled it.
Mr. Jacobs stated that the industry was struggling with what to do with these situations and even Mr. Wagner, an investigator with OMVIC, could not advise him on the use of TMU. Now OMVIC has a code of conduct. That happened in December, 2000. OMVIC is trying to clean up the industry and now dealerships and salespeople must be more careful with their paperwork and have more history on a vehicle.
Mr. Jacobs testified that since that time there has been no other charges against him. The charges and ultimately the convictions have cost him money and drained him emotionally. He has a large mortgage on the Queen Bush Road property, and he owed money to his family and other creditors.
31Mr. Jacobs, in the evidence here summarized, gave the Tribunal the same explanation for the fraudulent transactions that he had unsuccessfully given at his criminal trial. The only new element was the suggestion that Mr. Alpy was a bad apple.
32Conspicuously absent from the Tribunal's factual analysis is any appreciation that the impugned transactions necessarily involved fraudulent intent by Mr. Jacobs. One cannot read the Tribunal's reasons as a whole without concluding that it considered Mr. Jacobs the innocent victim, not the guilty perpetrator, of the criminal frauds of which he was convicted.
33At no point in the Tribunal's proceedings did Mr. Jacobs acknowledge any fraudulent intent in the transactions that led to his convictions. He continued to pass off his criminal conduct before the Tribunal a sad, yet personally blameless, series of mistakes caused by problems with which the industry was struggling. It is one thing to accept responsibility, express remorse and point to rehabilitation. It is another thing to deny guilt in face of a criminal conviction. It is one thing to point to mitigating factors. It is another thing to deny the criminal intent underlying a fraud conviction and to pass oneself off as the victim of a bad employee and widespread industry problems.
34Although the Tribunal noted the Registrar's argument that criminal convictions should be accepted on their face, it failed to give effect to this principle. The Tribunal, although it referred to this principle, seemed to think that its acceptance of Mr. Jacobs' evidence could wash away the criminally fraudulent nature of his conduct towards his customers. [page473]
35The Tribunal noted the argument by counsel for Mr. Jacobs, referred to above that:
- Though Mr. Jacobs has serious industry specific convictions, the witnesses at the criminal court put a new light on the circumstances of the problems. Divisional Court felt Mr. Jacobs had reformed. Mr. Jacobs has taken courses and put into place different systems.
36It was the Tribunal's acceptance of this "new light" argument that drew it, as noted below, into fundamental error.
37The Tribunal in its conclusionary findings said:
- . . . Though the applicant has mentioned that these incidents also involved a dishonest employee and improper paperwork, he has not denied that ultimately he, as the employer and as the motor vehicle dealer, is responsible for these breaches of trust to the car buying public.
38This is the language of vicarious liability, the same argument suggested by counsel in this court as the basis for the criminal conviction. The Tribunal, although it did not use the word "vicarious", accepted the argument, made by Mr. Jacobs' counsel to the Tribunal and to this court, that the basis for his criminal conviction was his responsibility for the bad conduct of his employee combined with bad paperwork and business practice. This is of course inconsistent with the personal criminal intent which was an essential ingredient of Mr. Jacobs' convictions.
39The Tribunal referred favourably more than once to the fact that Mr. Jacobs "accepted responsibility" for the actions of his dishonest salesman. The Tribunal seemed impressed by this apparently forthright and gallant gesture. In fact, Mr. Jacobs did the opposite. By blaming the salesman for his own fraud, Mr. Jacobs denied, instead of accepting, his own criminal responsibility.
40The Tribunal heard evidence about and placed great reliance on Mr. Jacobs' improved business practices. This evidence included the testimony of a family friend who said Mr. Jacobs had learned from his mistakes after putting his faith in the wrong people, including Mr. Alpy. This is a convenient place to note that Mr. Alpy was a Crown witness at Mr. Jacobs' criminal trial. The respondent, despite his current leitmotif that Mr. Alpy was the real villain, made no such suggestion at the criminal trial through Mr. Alpy's cross-examination or the respondent's own testimony.
41The Tribunal, on September 5, 2001, allowed Mr. Jacobs' appeal and directed the Registrar to register him as a salesperson on condition that he take a course, find a mentor, and submit financial documentation to the Registrar monthly for a year. [page474]
The Tribunal's Decision Analyzed
The Tribunal's Decision Analyzed
42The classic defence of every fraudsman in court is that he was honest, but careless with paperwork and victimized by dishonest associates. Sometimes the defence works and sometimes it does not. In this case, the criminal court did not buy the defence but the Tribunal did. In allowing Mr. Jacobs to relitigate his criminal intent, the Tribunal erred fundamentally.
43The Tribunal emphasized that Mr. Jacobs had improved his business practices since the charges were laid against him in February 1998. This was the basis on which it rejected the Registrar's proposal to refuse Mr. Jacobs re-registration as a salesman. This reflects the Tribunal's faulty underlying premise that the criminal convictions resulted from bad business practices and not from Mr. Jacobs' intentional fraud.
44The Tribunal said [at para. 77]:
It is always difficult to determine how long someone should be penalized for past mistakes.
45The word "mistake" is contextual. It can refer to an acknowledged crime committed under extenuating circumstances, such as a youthful conviction for joyriding. It is clear, however, from the overall context of the reasons that the Tribunal, in the "new light" of its reinterpretation of the criminal evidence, considered the criminal conviction to be the result of an innocent mistake based on bad industry practices and not the result of Mr. Jacobs' intentional fraud. The Tribunal throughout its reasons treated Mr. Jacobs as the innocent victim, not the wilful perpetrator of the frauds of which he was convicted.
46Although the Tribunal was fully entitled to look at the circumstances giving rise to the criminal charges for the purpose of mitigation, it was not entitled to do so for the purpose of relitigation.
47In failing to distinguish between bad business practice and intentional criminal fraud, and in treating Mr. Jacobs' deliberate frauds on his trusting customers as if they were mistakes to be corrected through better business practices, the Tribunal erred fundamentally.
48By going behind the criminal conviction, and accepting Mr. Jacobs' explanation which was contrary to the findings of the criminal court, the Tribunal erred fundamentally in permitting and accepting a relitigation of the essential elements of the criminal conviction. [page475]
The Arguments in this Court
The Arguments in this Court
49The underlying argument of counsel for the appellant Registrar was that the Tribunal erred in failing to treat the criminal convictions as if they were criminal convictions.
50The underlying argument of counsel for Mr. Jacobs is that the Tribunal properly accepted his evidence about the circumstances underlying the criminal convictions. Counsel for the respondent repeatedly pointed to Mr. Jacobs' explanation before the Tribunal that the criminal conviction stemmed simply from mistakes and lack of clarity as to business practices.
51Counsel stressed that in one of the convictions the customer never met Mr. Jacobs but dealt exclusively with the salesman. In support of this, he relied, before this court and the Tribunal, on portions of the criminal trial transcript. It was part of this submission that the 1998 CRAT Tribunal did not have available to it the evidence at the criminal trial showing that one of the victims had no personal contact with Mr. Jacobs. This of course makes no difference to Mr. Jacobs' criminal liability.
52The court repeatedly asked counsel for Mr. Jacobs how there could be a criminal conviction if there was, as asserted by Mr. Jacobs and his counsel, no personal fraud by Mr. Jacobs but simply bad business practice and reliance on a dishonest salesman.
53Mr. Bennett replied repeatedly that he was not at the criminal trial, was not then counsel for Mr. Jacobs, and, therefore, could not help the court at all with the basis for the criminal conviction. He said he could only suggest that Mr. Jacobs was convicted on the basis that he was responsible for the fraud of his salesman. That submission made no sense because criminal liability for fraud is personal and not vicarious.
54As a result of this confusion, and because of the contradictory submissions as to the basis for the criminal conviction, and because the Tribunal and Mr. Jacobs' counsel relied so heavily on the purportedly vicarious basis of the fraud, we directed counsel as follows:
We are of the view that before we can properly dispose of this appeal we require to be provided with:
All the material before the Court of Appeal on the appeal of Mr. Jacobs from his criminal convictions i.e. transcript, reasons for conviction, appeal book, factums and reasons of the Court of Appeal.
In addition to the above material, we require written submissions from each counsel on the question: "has the Tribunal in its reasons, dated Sept 5, 2001, allowed a collateral attack on the June 4, 1999 convictions?" [page476]
55Mr. Bennett then informed the court that he had been counsel for Mr. Jacobs on the criminal appeal and that he did not think the reasons of the Court of Appeal were very extensive.
56We reserved judgment pending receipt of the Court of Appeal material and the written submissions of counsel.
The Further Material
The Further Material
57The further material consists of the complete Court of Appeal record, including the trial transcript and reasons for judgment, the Crown factum and Mr. Bennett's factum, and the brief endorsement of the Court of Appeal (Laskin, Moldaver and MacPherson JJ.A.) upholding the criminal convictions.
58Mr. Bennett's factum in the criminal appeal asserts the exculpatory arguments which were rejected by the trial judge and the Court of Appeal but were accepted by the Tribunal.
59The court's endorsement reads as follows:
This is an unreasonable verdict appeal. In our view the trial judge could reasonably conclude that the appellant was a party to the deceit of Gauvin and directly responsible for the fraud on Rully-Gervais. The appeal is therefore dismissed.
60Nothing in the trial proceedings or the Court of Appeal record or endorsement suggests that Mr. Jacobs was convicted because of bad business practice or vicarious responsibility for employee fraud.
61A review of the trial and Court of Appeal record demonstrates that the Tribunal accepted the very defence that was rejected by the trial judge and the Court of Appeal.
The Further Submissions
The Further Submissions
62The Registrar repeated its position, taken before the Tribunal and the court, that Jacobs should not be permitted to relitigate his criminal convictions.
63The respondent took the position that the tribunal hearing "was not a proceeding that had been initiated for the purposes of challenging the criminal conviction" and that the onus was on Jacobs to satisfy the Tribunal pursuant to s. 8 of the MVDA that there had been a material change in circumstances or new or other evidence to support the application.
64The respondent submitted that:
At no time did Jacobs challenge the criminal conviction and, on the contrary, fully accepted personal responsibility.
The hearing did not involve in any way a relitigating of the facts and circumstances of the criminal convictions. [page477]
65Neither of these submissions is supported by the record. Despite the respondent's insistence that he did not attempt to relitigate the basis of his criminal convictions, that is exactly what he did.
66The respondent further submitted that:
The Tribunal properly considered that there was a material change in circumstances in the applicant's alteration of his business practices.
The Registrar fettered his discretion by "imposing an arbitrary penalty for suspension before allowing a re- application for licensing".
These two latter arguments will be addressed below.
Analysis
Analysis
67The Supreme Court of Canada in Toronto (City) v. Canadian Union of Public Employees (C.U.P.E.), Local 79, [2003] 3 S.C.R. 77, 2003 SCC 63 and in Ontario (Minister of Community and Social Services) v. Ontario Public Service Employees Union (O.P.S.E.U.), 2003 SCC 64, [2003] S.C.J. No. 65 (QL) refused to permit those convicted of criminal offences to relitigate their guilt before administrative tribunals. Jacobs' attempt to put his criminal conviction in a "new light", although more subtle than the outright "it never happened" denials in those cases, involves a relitigation of the essential ingredient of fraudulent intent found by the criminal court.
68In those cases, the Tribunal relitigated the actus reus of the offence. In this case, the Tribunal relitigated the mens rea of the offence. In this case, as in those cases, the convicted person attempted in an administrative proceeding to relitigate an essential element of a criminal conviction. This case thus attracts the same mischief as those cases and must therefore attract the same result. There was no fresh evidence and no evidence of unfairness at the criminal trial. The Tribunal in this case relitigated the essential element of the criminal conviction and decided to view Mr. Jacobs' conduct in a "new light" based on its reinterpretation of the criminal evidence. That is exactly what the Supreme Court of Canada has prohibited.
69It was fully open to the Tribunal to consider any factors which, in its view, mitigated the fraud. It was not open to the Tribunal to relitigate the matter and to let Mr. Jacobs pass off his criminal fraud as an innocent mistake. The effect of its error was to undermine entirely the criminal conviction which was one of the evidentiary cornerstones of the Registrar's proposal to refuse registration. The Tribunal thus undermined not only the case for the Registrar but also the integrity of the criminal process and [page478] the integrity of the system by which pardons may be granted to those convicted of criminal offences.
70By relitigating criminal intent, the Tribunal instituted an inquiry upon which it had no business to embark and thus erred jurisdictionally [See Note 8 at end of document].
71Did this error necessarily affect the result? The entire basis of the Registrar's proposal had to do with Jacobs' pattern of odometer fraud, of which his criminal conviction was significant evidence. Once the appeal Tribunal improperly took criminal intent off the table, it improperly destroyed a major element of the Registrar's position.
72It might be argued that the Tribunal's emphasis on the applicant's improved business practices would have led to the same result even without the Tribunal's fundamental error. Because the Tribunal's emphasis on improved business practice flows directly from its error in thinking the criminal conviction was the result of bad business practice and not fraudulent intent, this argument cannot stand.
73But for the error, the result would necessarily have been different.
74As for the standard of review, which neither counsel addressed, this is an appeal and not an application for judicial review. There is no privative clause. The statute [See Note 9 at end of document] provides that a party to a proceeding before the Tribunal may appeal from its decision or order to the Divisional Court in accordance with the rules of court. The appeal is wide open. The Tribunal has a measure of general expertise in business practice matters, as does the Registrar with whom it disagreed. Nothing in the Tribunal's reasons for judgment suggests that the decision turned on any such expertise. As for the nature and elements of criminal fraud, the court has more expertise than the Tribunal. The decision turned on the Tribunal's fundamentally erroneous analysis of the criminal conviction.
75The decision turned, in the end, on the Tribunal's view that the criminal conviction required a "fresh look" which convinced it that the conviction was based on bad business practice rather than criminal fraud. Even if the standard of review is "reasonableness simpliciter" and not correctness, the Tribunal [page479] erred so fundamentally, indeed jurisdictionally, in its treatment of the criminal conviction as to put itself beyond the generous measure of deference accorded to such bodies.
76The decision must, therefore, be set aside.
Remedy
Remedy
77The Tribunal made extensive findings of fact on every aspect of the question, whether the Registrar acted reasonably in finding that Mr. Jacobs, due to his past conduct, should be refused to be registered as a motor vehicle salesperson. The Tribunal made extensive reference to the industry policy considerations that govern questions of revocation and re- registration.
78There is therefore no need to refer the matter back to the Tribunal for further findings of fact or expressions of regulatory policy. The Courts of Justice Act, R.S.O. 1990, c. C.43 [See Note 10 at end of document] provides that the court may make any decision that ought to have been made by the Tribunal. Because the Tribunal's findings of fact and statements of policy are so extensive, the court is in as good a position as the Tribunal to make the decision that should have been made by the Tribunal but for its error.
79Because the Registrar argued before the Tribunal that at least two years should pass before a re-application under s. 8 should be considered, the respondent argues that the Registrar fettered his discretion. The Registrar's original decision, however, reflects the relevant statutory principles. In any event, the appeal is not from the Registrar's argument before the Tribunal, but from the reasonableness of his original decision having regard to all the circumstances. Although the Registrar did not investigate and consider the respondent's business improvements, the court has benefit of the Tribunal's extensive findings of fact on this issue. There was ample evidence to support the Registrar's decision and there is nothing in the evidence before the Tribunal, properly considered, to suggest that the Registrar was wrong in the result of his proposal.
80In the end result, the only controlling differences between the Registrar and the Tribunal are that:
The Registrar took the criminal convictions at face value as evidence of dishonesty and the Tribunal did not, and
The Tribunal, erroneously thinking the criminal conviction flowed from bad business practices and not fraudulent intent, erroneously concluded that Mr. Jacobs' improved business practices overcame the problem posed by the criminal conviction. [page480]
81While Mr. Jacobs' improved business practices cannot, in this court, be given the same weight mistakenly accorded them by the Tribunal by reason of its error, that improvement cannot be ignored and must be given appropriate weight. The evidence of improved business practices would weigh heavily in favour of reinstatement if accompanied by some evidence of repentance or remorse by Mr. Jacobs, some acceptance that there is a difference between fraudulent and honest conduct, and some insight into his fraudulent behaviour.
82The problem here is that the latter evidence is missing. Mr. Jacobs' unrepentant insistence that his criminal fraud was nothing more than bad business practice shows that he still fails to appreciate the difference between fraudulent conduct and honest conduct. That failure does not bode well for future customers of this convicted fraudsman.
83Mr. Jacobs is a fraudulent, unpardoned and unrepentant used car salesman who failed to pass off his defence to the criminal court but succeeded in doing so before the Tribunal. As a result, he has been able, with the exception of about 10 1/2 months between 1998 and 2002, to continue in business ever since he intentionally defrauded his trusting customers in the summer of 1997.
84The controlling principle in this case must be the promotion of integrity and honesty in the motor vehicle sales industry. The need to protect the public from dishonest salesmen like Mr. Jacobs, who fail to appreciate the difference between fraudulent conduct and honest conduct, requires that the Registrar's proposal be upheld.
Order
Order
85An order will therefore go:
(1) Setting aside the Tribunal's decision,
(2) restoring the Registrar's decision, and
(3) directing the Registrar to carry out the proposal to refuse registration to the respondent.
Costs
Costs
86Counsel may exchange and submit written submissions on entitlement to and quantum of costs.
Appeal allowed. [page481]
Notes
Note 1: Chronology:
93 Oct 4 Jacobs registered as motor vehicle dealer and salesperson.
97 Jul/Aug Impugned motor vehicle transactions.
98 Feb 20 Jacobs charged with six counts of fraud over $5,000 Criminal Code, s. 380(1)(b).
98 Feb 26 Registrar moves to revoke Jacobs' registration.
98 Jul 23 Commercial Registration Appeal Tribunal (Tribunal) hearing.
98 Aug 27 Tribunal decision directs Registrar to carry out his proposal to revoke Jacobs' registration.
99 Jun 4 Jacobs convicted of two Criminal Code fraud counts: 12 months' suspended sentence plus community service.
00 Mar 31 Court of Appeal dismisses Jacobs' criminal appeal.
00 Nov 23 Divisional Court dismisses Jacobs' revocation appeal, extends stay, invites re-application for registration.
01 Jan 17 Jacobs applies for re-registration as a salesman.
01 Feb 1 Registrar proposes to deny re-registration.
01 Jun 22 Tribunal hears Jacobs' appeal.
01 Sep 5 Tribunal allows Jacobs' appeal.
Note 2: These vehicles included a 1994 Ford truck, a 1991 Dodge Spirit, and a 1990 Chev. Other odometer problems included a 1995 criminal charge of defrauding Remesh Mehta of $10,209 by selling him a 1990 Honda Accord while misrepresenting the true odometer reading. The charges were withdrawn due to a cash settlement with Mr. Mehta through the Community Justice Initiatives Programme. Mr. Mehta made the settlement instead of proceeding with the criminal charges because he was in a tight financial spot at the time.
Note 3:
Count 1 Defraud Kevin Webb 1994 Sonoma pickup truck. Acquitted "reluctantly".
Count 2 Defraud Joanna Bowers 1991 Dodge Spirit. Withdrawn: "records a mess".
Count 3 Defraud Sheila Lorentz 1993 (?) pickup truck. Withdrawn: defence counsel acted for Lorentz.
Count 4 Defraud Wayne Gauvin 1990 Chev pickup truck. Convicted.
Count 5 Defraud Sera Rully 1990 GMC pickup truck. Convicted.
Count 6 Defraud public. Omnibus charge. Acquitted: "too vague".
Note 4: R.S.C. 1985, c. C-47, s. 4(a)(i).
Note 5: Transcript of Tribunal proceedings, v. 1, p. 67.
Note 6: Transcript of Tribunal proceedings, v. 2, p. 155.
Note 7: Transcript of Tribunal proceedings, v. 3, p. 240.
Note 8: It is jurisdictional error to embark upon an inquiry not remitted to the Tribunal. Service Employees' International Union, Local No. 333 v. Nipawin District Staff Nurses Associ- ation (1973), 1973 191 (SCC), [1975] 1 S.C.R. 382, 41 D.L.r. (3d) 6, per Dickson J. at pp. 388-89 S.C.R.
Note 9: Licence Appeal Tribunal Act, 1999, S.O. 1999, c. 12, Sched. G., s. 11.
Note 10: Section 134(1)(a).