COURT FILE NO.: 05-DV-001095

DATE: 2005-12-02

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

RE: Savcho Zahariev o/a Janex v. Registrar, Motor Vehicle Dealers Act

BEFORE: Brockenshire, McLean and Heeney JJ.

COUNSEL: Hank Witteveen, for the Applicant

A. Michael Rothe, for the Respondent

HEARD: November 30, 2005 at Ottawa

E N D O R S E M E N T

[1] This an appeal of an order of the License Appeal Tribunal (the “Tribunal”) dated March 30, 2005, which confirmed the Registrar’s proposal to revoke the Appellant’s registration as a motor vehicle dealer. The order of the Tribunal was made pursuant to s. 7(4) of the Motor Vehicle Dealers Act, R.S.O. 1990 c. M.42.

[2] The central issue is whether the Vice-Chair applied the wrong legal test in arriving at his decision.

[3] In his decision, he stated that the test to be applied was enunciated in Brenner v. The Registrar of Motor Vehicle Dealers and Salesmen, [1983] O.J. No. 1017 (Div. Ct.). He paraphrased the test as follows at page 10 of his decision:

As set out in the Brenner case, the Tribunal should only direct the Registrar not to carry out the proposal to revoke if it concludes the Registrar was in error in concluding that this is the case.

[4] After reviewing the evidence, he clearly incorporated that test in arriving at his decision, as the following passage at page 11 indicates:

Based on the facts set out above the Tribunal is not satisfied that the Registrar was in error in deciding that the past conduct of the Applicant provided reasonable grounds to believe that the Applicant would not carry on business with integrity, honesty and in accordance with law.

[5] The Vice-Chair appears to have been referring to the following passage in Brenner, at pg. 3:

The effect of s. 7(4) is that the Tribunal should only have refused to direct the Registrar to carry out his proposal if it thought the Registrar was in error in concluding that the past conduct of the applicant afforded reasonable grounds for belief that he would not carry on business in accordance with law and with integrity and honesty.

[6] However, the court in Brenner went on to state the applicable test at pg. 4:

The proper question at the rehearing remains, however, whether 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. Unless the Tribunal can find that it does not, the Tribunal should not order the Registrar to refrain from carrying out his proposal.

[7] The distinction between the two passages is significant. The question that the Tribunal must ask itself is not whether the Registrar was wrong. Instead, the Tribunal is required to make an independent decision as to whether the criteria for depriving the Applicant of his license have been proven, showing no deference to the initial decision of the Registrar.

[8] This accords with the wording of s. 7(4) of the Act, which reads as follows:

Where an applicant or registrant requires a hearing by the Tribunal in accordance with subsection (2), the Tribunal shall appoint a time for and hold the hearing and, on the application of the Registrar at the hearing, may by order direct the Registrar to carry out the Registrar’s proposal or refrain from carrying it out and to take such action as the Tribunal considers the Registrar ought to take in accordance with this Act and the regulations, and for such purposes the Tribunal may substitute its opinion for that of the Registrar.

[9] Counsel for the Tribunal concedes that this section requires a de novo hearing before the Tribunal. At that hearing, the Tribunal would be called upon to make a fresh determination of the factual issue set out in s. 5(1)(b) as to whether “the past conduct of the applicant affords reasonable grounds for belief that the applicant will not carry on business in accordance with law and with integrity and honesty”.

[10] This court, in Registrar, Motor Vehicle Dealers Act v. Shine Car Sales (2003), 2003 11437 (ON SCDC), 40 M.V.R. (4th) 86 (Ont. Div. Ct.), pointed out that Brenner “must be read carefully”. It went on to state the following, at para. 9:

It does not establish a rule that the Registrar must be shown to be wrong in having concluded that there was reason to doubt that the registrant would carry on business appropriately. [emphasis added]

[11] The court elaborated further on this point at para. 10:

It should be clearly understood that the Tribunal owes no deference to the Registar’s opinion. The Registrar is the investigator. The Registrar is not a trier of fact whose opinion is based upon a hearing and so entitled to deference.

[12] The Vice-Chair, in the passage quoted above at para. 4, clearly based his decision on a conclusion that the Registrar was not in error. In so doing, he asked himself a question that this court in Shine had expressly stated was improper. This is, in our view, an error of law.

[13] Before determining the impact of that error, it is necessary to establish the appropriate standard of review, based on the functional and pragmatic approach enunciated in Pushpanathan v. Canada (Minister of Citizenship and Immigration), 1998 778 (SCC), [1998] 1 S.C.R. 982.

[14] The first consideration is the presence or absence of a privative clause or statutory right of appeal. In this case, the parties agree that there is no privative clause. In fact, there is an unrestricted right of appeal to this court, which points to the lowest standard of review of correctness.

[15] The second consideration is the expertise of the tribunal relative to that of the reviewing court on the issue in question. Here the issue is the statutory interpretation of s. 7(4) of the Act, where the expertise of this court is presumptively superior to that of the tribunal.

[16] The third consideration is the purpose of the legislation and the provision in particular. The general purpose of the Act is to regulate motor vehicle dealers for the protection of the public. The specific provisions under consideration involve factual determinations as to whether reasonable grounds exist that the applicant will not carry on his business with honesty and integrity and in accordance with the law. No special expertise is called upon to deal with such issues. This court deals with the assessment of the honesty and integrity of the people who appear before it on a daily basis.

[17] Finally, the court must consider the nature of the question. The question is, as noted above, a pure question of law, which calls for the lowest standard of deference to the tribunal.

[18] We conclude, based on the above analysis, that the standard of review is correctness.

[19] Since we have already determined that the Vice-Chair erred in law in the legal test that formed the basis of his decision, the appeal is allowed and the decision of March 30, 2005 is quashed. The matter is remitted for rehearing before a differently constituted Tribunal.

[20] Costs are awarded to the Applicant fixed at $3,000 plus disbursements and GST.

Mr. Justice J. Brockenshire

Mr. Justice H. McLean

Mr. Justice T. Heeney

DATE: December 2nd, 2005