CITATION: GFL Environmental Inc. v. Registrar of Motor Vehicles, 2014 ONSC 2728
DIVISIONAL COURT FILE NO.: 203/14
DATE: 20140501
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
GFL ENVIRONMENTAL INC. and GFL EXCAVATING CORP.
Applicants
– and –
REGISTRAR OF MOTOR VEHICLES
Respondent
David Crocker and Laura K. Bisset, for the Applicants
Sandra Nishikawa and Judith Parker, for the Respondent
HEARD: April 30, 2014
PERELL, J.
REASONS FOR DECISION
A. INTRODUCTION
[1] The Applicants, GFL Environmental Inc. and GFL Excavating Corp. are operators of commercial motor vehicles whose safety is rated by the Registrar of Motor Vehicles. On January 16, 2014, the Registrar advised them that he proposed to downgrade their safety ratings from “Satisfactory” to “Conditional.” After the Applicants responded with written submissions, on April 10, 2014, the Registrar went ahead and changed and publically published the new rating. The Applicants have brought an Application for Judicial Review of the Registrar’s decision and now bring a motion for a mandatory injunction or for a stay of the Registrar’s decision. A stay would have the practical effect of restoring the Applicants’ previous “Satisfactory” rating.
[2] For the reasons that follow, I dismiss the motion.
B. FACTUAL AND PROCEDURAL BACKGROUND
[3] GFL Environmental is a waste management company that operates across Canada. In Ontario, it has a fleet of almost 700 vehicles. GFL Environmental operates with a Commercial Vehicle Operator’s Registration.
[4] GFL Excavating is a corporation offering excavation services, and it too has a fleet of vehicles. GFL Excavating operates with a Commercial Vehicle Operator’s Registration.
[5] Pursuant to s. 16(2) of the Highway Traffic Act,[^1] a corporation or individual that is responsible for the operation of a commercial motor vehicle in Ontario must hold a valid Commercial Vehicle Operator’s Registration (“CVOR”) certificate issued by the Registrar of the Ontario Ministry of Transportation
[6] Under s. 17.1(1) of the Act, the Registrar of Motor Vehicles is required to assign a safety rating to every operator in accordance with the regulations made under the Act. Under Ont. Reg. 424/97 (Commercial Vehicle Operators), there are five safety ratings: (1) Excellent; (2) Satisfactory; (3) Satisfactory Unaudited; (4) Conditional; and (5) Unsatisfactory. These ratings are part of the CVOR System.
[7] To fulfill the duty to assign a safety rating, the Registrar must also keep a safety record of the performance of each operator as required by s. 205(1)(c)(iii.1) of the Highway Traffic Act. The contents of the safety record are determined by s. 5 of O. Reg. 424/97. The safety record includes information related to inspections of its vehicles by government inspectors, convictions for offences committed by the operator or its drivers, and collisions in which the operator’s vehicles were involved.
[8] The safety rating is based on a metric that gauges safety performance by assigning points by reference to the operator’s collision record, conviction record, and inspection record over the immediately prior 24 month period. The inspection points are adjusted depending upon the number of inspections.
[9] Since 2010, the collision points and the conviction points are adjusted depending upon the operator’s kilometres travelled per month. In this regard, Ont. Reg. 424/97 requires an operator to report total kilometres travelled by the fleet operated by the operator in each of Ontario, Canada outside Ontario, and outside Canada. Previously, the safety rating calculation was determined on the basis of the number of trucks an operator had on the road.
[10] Under s. 16.1 (2) of Ont. Reg. 424/97, in assigning a safety rating, the Registrar may have regard to the safety record of a person related to the operator.
[11] Under the CVOR, an operator would normally be eligible for a “Satisfactory” rating if it has maintained an on-road performance level of 70% or less of its overall CVOR threshold, and the carrier has been audited and received a passing score.
[12] An operator would be considered for a “Conditional” rating if the carrier or a person or company related to the carrier has an on-road performance level which exceeds 70% of its overall CVOR threshold, or if the carrier or related entity fails its facility audit.
[13] It may be noted that the vast majority of Ontario’s nearly 55,000 CVOR holders have overall violation rates of 70% or less. 95.6% of CVOR holders have safety ratings equal to or below 35%. Only 0.6% of operators have an overall violation rate of over 70%.
[14] The use of the kilometric measure in the safety rating has been controversial. The Ontario Waste Management Association (of which the Applicants are members) and the Local Operators Coalition of Ontario have objected to this measure because it has a negative effect on fleets that travel short routes.
[15] The mathematical effect of the kilometric measure is that operators with shorter routes but similar incidents of accidents and convictions to operators with longer routes have worse safety ratings and are less likely to satisfy the criteria for a “Satisfactory” safety rating.
[16] Under s. 17.1 of the Act, when the Registrar proposes to assign a safety rating to an operator, the Registrar is required to notify the operator of the proposed change. The operator may provide written submissions within 30 days showing cause why the Registrar should not assign the proposed safety rating. After the 30-day period for submissions has expired, the Registrar is required to assign the proposed safety rating or a different rating. There is no appeal from a Registrar’s decision to set a safety rating.
[17] Section s. 17.1 of the Act states:
Safety ratings, commercial motor vehicle operators
17.1 (1) The Registrar shall assign a safety rating to every operator in accordance with the regulations.
Notice of rating to operator
(2) Where the Registrar proposes to assign a safety rating to an operator for the first time or to change an operator’s safety rating, he or she shall notify the operator of the proposed rating by regular mail sent to the operator’s latest address appearing on the records of the Ministry.
Same
(3) A notice under subsection (2) shall be deemed to have been received on the fifth day after it was mailed unless the person to whom notice is given establishes that the person did not, acting in good faith, through absence, accident, illness or other cause beyond the person’s control, receive the notice.
Operator may dispute first or changed rating
(4) An operator may, within 30 days after being notified under subsection (2), submit to the Registrar documents, records and written submissions that may show cause why the Registrar should not assign the proposed safety rating to the operator.
Registrar to confirm or change safety rating
(5) Upon the expiration of the 30-day period referred to in subsection (4) and consideration of any documents, records and submissions submitted under that subsection, the Registrar shall assign to the operator the proposed safety rating or a different rating.
Written hearing
(6) Despite the Statutory Powers Procedure Act, the Registrar shall consider the matter under subsection (5) by means of a written hearing unless the Registrar agrees to an oral or electronic hearing.
Parties, privacy
(7) The Registrar and the operator whose safety rating is under dispute are the only parties to the hearing and, unless they otherwise agree, the hearing shall be closed to the public.
No appeal
(8) The safety rating assigned by the Registrar is final and binding and there is no appeal therefrom.
Available to the public
(9) The Registrar shall make the safety ratings of operators available to the public in the manner that the Registrar considers appropriate.
Protection from personal liability
(10) No action or other proceeding for damages shall be instituted against the Registrar or any employee of the Ministry for any act done in good faith in the execution or intended execution of a duty under this section or for any alleged neglect or default in the execution in good faith of a duty under this section.
Crown not relieved of liability
(11) Despite subsections 5 (2) and (4) of the Proceedings Against the Crown Act, subsection (10) does not relieve the Crown of liability in respect of a tort committed by a person mentioned in subsection (10) to which it would otherwise be subject.
[18] In July 2013, GFL Environmental’s overall violation rate rose above 70%. This condition persisted throughout September and October. In October 2013, Ministry staff conducted an analysis of the carrier, and determined that a proposal to downgrade the safety rating was warranted.
[19] On January 16, 2014, the Registrar by letter advised the Applicants that he proposed to downgrade their safety rating from “Satisfactory” to “Conditional.” At that time, GFL Environmental’s safety violation rate was 74.59%. GFL Excavating’s safety violation rate was 43.59%. The letter stated:
Section 17.1(1) of the Highway Traffic Act (HTA) requires the Registrar of Motor Vehicles to assign a safety rating to every commercial vehicle using Ontario’s roadways. In accordance with this Section and based on your safety record, I have proposed the following safety rating for your operation: CONDITIONAL
The Registrar may also propose the same safety rating to an entity or entities with which your operation is affiliated. The affiliate is GFL EXCAVATING CORP.
You and your affiliate may have information, currently not available to the Registrar that should be considered before the proposed rating is assigned, including information by written submission within 30 days, that provides reasons why the Registrar should not assign the proposed rating. All enquiries and submissions should be forwarded to the Carrier Safety Rating Administrator mentioned below.
While your submission is under consideration, your current safety rating and the safety rating of your affiliate will remain in effect. If you chose not to dispute the proposed rating, the ratings will be assigned and will be available to the public as part of each Commercial Vehicle Operator Record. Please note that a Conditional Safety Rating is applied to an operator’s record for a minimum of six months.
[20] On February 6, 2014, GFL Environmental and GFL Excavating made written submissions as to why a “Conditional” rating should not be assigned. They explained that a downgrading of their rating would have serious financial consequences and that they had undertaken numerous measures to improve their safety performance. They listed the numerous safety improvements. The letter, however, did not challenge the Ministry’s calculations of the violation rate, or raise any issues as to the methodology used by the Ministry, including the effect of the kilometric measure. No objection was raised to the fact that the Registrar might change the safety rating of GFL Excavating.
[21] On April 10, 2014, the Registrar advised GFL Environmental and GFL Excavating that their safety rating had been changed to “Conditional”. That day, Patrick Mallen, a Deputy Registrar, wrote to Mr. Dovigi, who is the President and CEO of GFL Environmental and the President of GFL Extracting, to communicate the decision to carry out the proposal to downgrade both GFL Environmental and GFL Excavating to a safety rating of “Conditional.”
[22] In his letter, Mr. Mallen addressed the statutory requirement to propose a rating of “Conditional” for operators who do not meet the criteria for a rating of “Satisfactory”. He noted that GFL Environmental’s overall violation rate was 73.5% and upon further analysis, the rate had increased to 79.31% due to additional events appearing on the safety record in the intervening period. Mr. Mallen noted the submissions of Mr. Dovigi about the planned improvements, and encouraged this course of action.
[23] On April 17, 2014, Mr. Dovigi wrote the Registrar with a number of enclosures setting out in more detail the steps taken by GFL Environmental to improve its safety record, as well as an explanation as to why the operator believed its safety record had been poor in the past, and why this poor performance would not be repeated. Mr. Dovigi raised for the first time the issue of the use of kilometric travel as a factor in the safety rating.
[24] Mr. Dovigi corresponded with the Registrar by email on April 22, 2014 and April 25, 2014, asking the Registrar to reconsider the “Conditional” safety rating.
[25] On April 28, 2014, the Registrar sent a reply to Mr. Dovigi explaining that the April 10, 2014 decision was final, but that in any event, the submissions made after April 10, 2014 would not have changed the result.
[26] On April 28, 2014, the Applicants brought an Application for Judicial Review to quash the Registrar’s decision and for an order assigning the safety rating “Satisfactory” to GFL Environmental and to GFL Excavating or in the alternative requiring the Registrar to conduct a new hearing. The Application was supported by an affidavit from Mr. Dovigi.
[27] The Applicants’ grounds for Judicial Review are set out in in paragraphs (s) and (t) of the Notice of Application as follows:
(s) The Registrar’s decision to assign a Conditional safety rating to GFL and GFL Ex was ultra vires because
(i) The Registrar failed to consider a relevant factor, that is the disproportionate negative impact of the use of kilometric travel as the measure of risk exposure for GFL’s fleet, which is a fleet that does not travel far as a local operator providing [services] in an urban environment; and
(ii) The Registrar misinterpreted and misapplied the Act in downgrading GFL’s and GFL Ex’s safety rating. The Registrar failed to consider GFL Ex’s safety record in assigning a Conditional safety rating to GFL Ex, which he is statutorily mandated to do;
(t) Whereas the Registrar owed a duty of procedural fairness to the Applicants, the Registrar denied the Applicants procedural fairness by:
(i) Fettering his judgment by treating the CVOR Guideline as binding upon him and excluding other valid and relevant reasons for the exercise of his discretion; and
(ii) Failing to give adequate reasons for his decision to assign a Conditional safety rating to GFL and GFL Ex;
[28] The same day that the Application for Judicial Review was commenced, GFL Environmental and GFL Excavating brought a motion for an Order requiring the Registrar to reverse his decision and to change the safety rating of GFL Environmental and GFL Excavating from “Conditional” back to “Satisfactory” until the Application for Judicial Review can be heard by a full panel of the Divisional Court.
[29] The Applicants submit that they will suffer irreparable harm if an interlocutory injunction or a stay is not granted because: (a) GFL Environmental will be disqualified from obtaining new municipal contracts; (b) GFL Environmental will be in default in its contractual obligations to current municipal clients; (c) the Applicants will suffer reputational harm; and (d) the Applicants will face increased insurance and financing costs.
[30] In his affidavit, Mr. Dovigi provides some examples of how the Applicants would suffer irreparable harm. For example, he deposed that GFL Environmental was in the process of tendering for a contract with the Regional Municipality of Peel, which would be the largest municipal waste collection contract in North America, but would be disqualified from submitting a bid if its safety rating was “Conditional.”
[31] The Applicants submit that if they suffer damages, they are precluded from obtaining compensation from the Registrar who is immunized from suit under the Highway Traffic Act. They submit that in these circumstances, the harm they will suffer is genuinely irreparable.
C. DISCUSSION AND ANALYSIS
[32] Relying on s. 14 of the Proceedings Against the Crown Act,[^2] the Registrar submits that injunctive relief is not available against the Registrar; however, the Registrar concedes that a stay would be available if the Applicants satisfied the test for a stay (and for an interlocutory injunction) established by the Supreme Court of Canada in RJR-MacDonald Inc. v. Canada (Attorney General).[^3]
[33] The Registrar then argues that all of the three pronged test for a stay is unsatisfied because: (1) the Applicants have not demonstrated that there is a serious issue to be tried in their Judicial Review Application and a fortiori they have not satisfied the higher standard of showing a strong prima facie case, which may be the standard because the Applicants are seeking a mandatory order from a public authority;[^4] (2) the Applicants have not shown that they would suffer irreparable harm if a stay was not granted; and (3) assuming that the Applicants’ would suffer irreparable harm, the balance of convenience does not favour granting a stay.
[34] For the Registrar to succeed in resisting the Applicants’ motion for a stay, it is sufficient if he shows that the Applicants fail on one or more prongs of the RJR-MacDonald test.
[35] In my opinion, although the Applicants may suffer irreparable harm if a stay is not granted and it turned out that their Application for Judicial Review was successful, the Applicants fail on the first and the third prongs of the RJR-MacDonald test.
[36] In other words: (1) the Applicants’ Application for Judicial Review appears to be without merit; and (2) assuming irreparable harm, the balance of convenience favours not interfering with the regulatory decision of the Registrar. Indeed, in my opinion, in circumstances where public safety is the factor that is being balanced against the financial interests of the Applicants, the balance of convenience favours the Registrar.
[37] I do not see how it can be said as a matter of fact or as a matter of law that in assigning a “Conditional” safety rating the Registrar was acting outside his or her statutory authority. Using the kilometric measure was within the Registrar’s authority and is envisioned by the regulations under the Act.
[38] And, as I pointed out during argument, just because that kilometric measure makes it harder for operators within an urban setting to satisfy safety standards is not necessarily a bad thing and indeed it may be a good thing. I only need to point out the recent tragic events of the Lac-Mégantic derailment to make the point that there may be wisdom and no unfairness in imposing higher standards for carriers operating in an urban setting. In any event, I see no error of law or ultra vires acts by the Registrar in having regard to the established guidelines for determining a safety rating.
[39] I see no merit to the argument that the Registrar fettered his or her discretion by employing guidelines and then asking for submissions about factors that might change the exercise of discretion.
[40] In the case at bar, the Registrar did not fetter his discretion in rejecting the submissions of the Applicants. He simply was not persuaded by those submissions in circumstances where the evidence showed a substantial deviation from acceptable safety standards.
[41] As a matter of Judicial Review, if the Registrar made an error, it would be measured by the standard of reasonableness and not correctness. In the case at bar, it cannot be said that the Registrar’s decision was unreasonable nor was it unreasonable for the Registrar to not be persuaded by the Applicants’ assurances that they were now compliant with safety standards.
[42] I see no merit to the argument that the Registrar misinterpreted his constituting and empowering statute by attributing the same “Conditional” safety rating to GFL Excavating as attributed to its associated company, GFL Environmental. The Registrar gave notice that this could occur and, as noted above, under s. 16.1 (2) of Ont. Reg. 424/97, in assigning a safety rating, the Registrar may have regard to the safety record of a person related to the operator.
[43] The Applicants would have it that for the Registrar to have regard to the associated company’s safety record, the Registrar may only use the associated company’s safety record to bolster the safety record of the company whose safety record is being reconsidered. In other words, there cannot be any downgrading by association under the regulatory scheme. However, having regard to the public safety aspects of the regulatory scheme, I see no basis for this restrictive reading of the regulation.
[44] Further, I see no serious issue to be tried that the Applicants were denied procedural fairness. They were given notice of the case that they had to meet, and they were given an opportunity to respond. The Registrar followed the procedure required by the statute. The reasons were adequate and were open for Judicial Review.
[45] I also agree with the Registrar’s argument that the Applicants cannot complain and seek Judicial Review based on submissions that were not made to the Registrar before he released his decision in April.
[46] Turning to the matter of the balance of convenience, in RJR-MacDonald, the Supreme Court accepted that public authorities will suffer irreparable harm if their regulatory authority is interfered with and that thus in cases involving a public authority, it will be necessary to balance the irreparable harm suffered by the party seeking a stay with the inevitable irreparable harm suffered by the public authority. Thus, the Supreme Court stated at para. 71 of its judgment:
In the case of a public authority, the onus of demonstrating irreparable harm to the public interest is less than that of a private applicant. This is partly a function of the nature of the public authority and partly a function of the action sought to be enjoined. The test will nearly always be satisfied simply upon proof that the authority is charged with the duty of promoting or protecting the public interest and upon some indication that the impugned legislation, regulation, or activity was undertaken pursuant to that responsibility. Once these minimal requirements have been met, the court should in most cases assume that irreparable harm to the public interest would result from the restraint of that action.
[47] In several cases, the Divisional Court has held that the public interest in safe highways outweighs any pecuniary harm that would ensue if a stay were not granted.[^5]
[48] In matters of public safety the balance of convenience favours not granting a stay. In the case at bar the balance of convenience favours not granting a mandatory order directing the Registrar to restore a “Satisfactory” safety rating when the evidence establishes that there were reasons to downgrade that rating to “Conditional”.
D. CONCLUSION
[49] For the above reasons, the motion is dismissed.
[50] If the parties cannot agree about the matter of costs, they may make submissions in writing beginning with the Registrar’s submissions within 20 days of the release of these Reasons for Decision followed by the Applicants’ submissions within a further 20 days.
Perell, J.
Released: May 1, 2014
CITATION: GFL Environmental Inc. v. Registrar of Motor Vehicles, 2014 ONSC 2728
DIVISIONAL COURT FILE NO.: 203/14
DATE: 20140501
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
GFL ENVIRONMENTAL INC. and GFL EXCAVATING CORP.
Applicants
– and –
REGISTRAR OF MOTOR VEHICLES
Respondent
REASONS FOR DECISION
PERELL J.
Released: May 1, 2014
[^1]: R.S.O. 1990, c. H.8. [^2]: R.S.O. 1990, c. P.27. [^3]: 1994 117 (SCC), [1994] 1 S.C.R. 311. [^4]: Metz v. Saskatchewan Board of Education of the Prairie Valley School Division No. 208, 2007 SKQB 269, [2007] S.J. No. 454 at para. 22 (Sask Q.B.). [^5]: H & B Transportation Ltd. v. Ontario (Registrar of Motor Vehicles), [2004] O.J. No. 5431 at para. 6 (Div. Ct.); 1445913 Ontario Inc. v. Ontario (Deputy Registrar of Motor Vehicles), 2008 CarswellOnt 7990 at para. 31 (Div. Ct.) aff’d 3394603 Canada Incorporated, operating as Harman Transport and 1445913 Ontario Incorporated o/a HGC v. Registrar of Motor Vehicles, [2008] O.J. No. 5173 (Div. Ct.); 1648291 Ontario Inc. v. Ontario (Ministry of Transportation), [2005] O.J. No. 5977 (Div. Ct.) at para. 6. See also Arctic Grocers (c.o.b. Mid Town Market) v. Northwest Territories, [2011] N.W.T.J. No. 14 at paras. 9-11 (S.C.).