CITATION: Shahnematollah-Yazde v. Registrar, Motor Vehicle Dealers Act, 2002, 2026 ONSC 4586

DIVISIONAL COURT FILE NO.: DC-25-00000533-0000

DATE: 20260811

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

D.L. Corbett, Matheson and Mew JJ.

BETWEEN:

HUSSEIN SHAHNEMATOLLAH-YAZDE and PREMIUM CARS WHOLESALE LTD.

Appellants

(Respondents by Cross-Appeal)

– and –

REGISTRAR, MOTOR VEHICLE DEALERS ACT, 2002

Respondent

(Appellant by Cross-Appeal)

Symon Zucker, for the Appellants (Respondents by Cross-Appeal)

Jean Iu and Rishi Nageshar, for the Respondent (Appellant by Cross-Appeal)

HEARD at Toronto: 26 May 2026

MEW J.

Reasons for DECISION

[1] This is an appeal, and a cross-appeal, from the amended decision of the Licence Appeal Tribunal (“LAT” or the “Tribunal”) dated 26 June 2025, reported at 2025 CanLII 55798 (ON LAT) (the “Decision”), and from the LAT's related decision dismissing a stay of that Decision pending this appeal, dated 1 December 2025.

[2] The Tribunal found that the past conduct of the appellant Hussein Shahnematollah-Yazde (“Hussein”) afforded reasonable grounds for belief that he, and the appellant Premium Cars Wholesale Ltd. (“Premium”), would not carry on business in accordance with the law and with integrity and honesty, within the meaning of ss. 6(1)(a)(ii) and 6(1)(d)(iii) of the Motor Vehicle Dealers Act, 2002, S.O. 2002, c. 20, Sched. B (the “Act”), and that the appellants had breached conditions of their registration within the meaning of s. 6(1)(f) of the Act. Rather than revoke the appellants' registrations, as the Registrar had proposed, the Tribunal directed that the Registrar attach conditions to those registrations: an eight-month suspension and a remedial-course requirement for Hussein, and a two-year prohibition on lien registration and on out-of-province vehicle registration for Premium.

[3] For the reasons that follow, I would dismiss the appeal insofar as it challenges the Tribunal's findings on liability. I would allow the appeal in part with respect to penalty, and vary the sanctions imposed on both appellants to the period of suspension that has already been completed, without disturbing the requirement that Hussein complete remedial coursework, which he has since done. I would dismiss the cross-appeal in its entirety.

BACKGROUND

[4] Premium is a registered motor vehicle dealer; Hussein is a registered motor vehicle salesperson and an officer and director of Premium. On 10 July 2024, the Registrar, Motor Vehicle Dealers Act, 2002 (the “Registrar”) issued a Notice of Proposal (the “NOP”) to revoke both registrations, alleging misconduct in respect of two vehicle transactions and breaches of conditions attached to the appellants' registrations in 2003, 2009, and 2014. The appellants appealed the NOP to the Tribunal.

[5] The first transaction concerned a 2014 Dodge Ram truck (the “truck”), owned by an individual referred to in the record as Lars Bjorn Hetland (“LH”), who was at the relevant time incapacitated. LH's brother, Jason Hetland (“Jason”), listed the truck for sale at LH's spouse's request. Hussein, on behalf of Premium, agreed to purchase the truck for $19,500 and transferred approximately $15,000 toward the price in three instalments in May 2022. The truck was never delivered. A document purporting to be a bill of sale, naming LH as vendor, was subsequently used to register the truck's ownership, and a lien, in Ontario and Alberta respectively, in Premium's name.

[6] The second transaction concerned a 2021 Cadillac Escalade (the “SUV”). The Tribunal found that an individual referred to in the record as Sepid stole paperwork relating to a proposed, but not completed, purchase of the SUV from Hussein's office, and used his familiarity with Service Ontario staff to register the SUV to Premium without the appellants' knowledge or involvement.

[7] Following a hearing spanning ten days in March and April 2025, the Tribunal released its Decision on 9 June 2025, amended on 26 June 2025 to correct typographical errors.

THE DECISION UNDER APPEAL

[8] In respect of the truck, the Tribunal found that it was not established that Jason had the legal authority to convey his brother's vehicle, and that the appellants had no evidence in their possession from which they could reasonably have accepted a representation that he did. The Tribunal found it unnecessary to decide whether a meeting took place between Jason and the appellants' Alberta agent, or whether Jason in fact signed the bill of sale, because — even accepting the appellants' account of events in its entirety — the appellants knew that the bill of sale had not been executed by the truck's registered owner. On that basis, the Tribunal found that the appellants “knowingly and improperly registered a bill of sale in Ontario that they knew or ought to have known to be invalid,” and concluded that this afforded reasonable grounds for belief under ss. 6(1)(a)(ii) and (d)(iii) of the Act. The Tribunal also found that the appellants held a legitimate financial interest in the truck once the funds were advanced, and rejected the suggestion that the appellants had attempted to defraud Jason.

[9] In relation to the SUV, the Tribunal accepted Sepid's evidence that he alone was responsible for the fraudulent registration, and found that the Registrar had not established that the appellants violated the Act in relation to that transaction.

[10] The Tribunal found the appellants in breach of conditions requiring them to maintain accurate books and records (attached to their registration in 2003 and in a 2009 consent order), a finding that flowed from the same circumstances as the bill-of-sale finding. It found no breach of the remaining conditions alleged, for want of evidence.

[11] Having made these findings, the Tribunal concluded that the public interest could be adequately protected by attaching conditions to the appellants' registrations rather than by revocation, having regard among other things to the absence of any prior lien or registration irregularities, the isolated nature of the incident, and the consequences that revocation would have for Premium's employees. It ordered an eight-month suspension of Hussein's registration and a direction that he complete remedial coursework, and it prohibited Premium, for two years, from registering liens on any vehicle in Canada or from registering out-of-province vehicles unless located in Ontario at the time of registration.

[12] Beyond this general discussion, the Decision does not explain why an eight-month suspension, specifically, or a two-year, all-Canada restriction on lien registration, specifically, was the appropriate response to the misconduct found.

[13] The appellants sought a stay of the Decision pending this appeal. The stay was refused on 1 December 2025, primarily for want of evidence of irreparable harm and because of the delay in bringing the motion; as a result, the sanctions took effect, and it is common ground that Hussein has since undergone the eight-month suspension and completed the required remedial course.

ISSUES

[14] The appeal raises the following issues:

a. whether the Tribunal erred in law or breached the appellants' right to procedural fairness by resting its finding of misconduct on Jason's authority to convey the truck, in declining to resolve the conflicting evidence as to whether a meeting took place between Jason and the appellants' agent and whether Jason signed the bill of sale; and

b. whether the Tribunal erred in imposing the sanctions it imposed — in particular the two-year, all-Canada prohibition on lien registration — without reasons connecting those sanctions to the misconduct found.

[15] The cross-appeal raises the issue of whether the Tribunal erred in declining to revoke the appellants' registrations, in declining to suspend Premium's registration and hold it accountable for Hussein's conduct as its director, in having regard to the effect of revocation on Premium's employees, and in concluding that conditions could adequately address misconduct involving dishonesty.

STANDARD OF REVIEW

[16] This is a statutory appeal under s. 11(1) of the Licence Appeal Tribunal Act, 1999, S.O. 1999, c. 12, Sched. G, to which appellate standards of review apply: Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65. Questions of law are reviewed for correctness; questions of fact, and questions of mixed fact and law absent an extricable legal error, are reviewed for palpable and overriding error: Housen v. Nikolaisen, 2002 SCC 33. Where, as here, a tribunal's reasons do not permit a sanction to be connected to the misconduct found, the resulting penalty decision is not owed the deference that reasoned findings would otherwise attract.

ANALYSIS

(a) Liability: The Bill of Sale and Jason's Authority

[17] The appellants say the Tribunal erred by deciding the case on the basis of an issue — Jason's authority to convey the truck — that was not pleaded in the NOP and was first raised by the Vice-Chair during closing submissions, and that this amounted to a denial of procedural fairness. I do not accept this characterisation of the record. The NOP itself alleged, in essence, that the bill of sale was false because it had not been signed by LH, the registered owner, who was hospitalized at the relevant time. The identity and authority of whoever did purport to convey the truck on LH's behalf was accordingly inherent in the allegation the appellants had to meet from the outset; it was not a new issue introduced only in argument. That the parties, and the Tribunal, may for most of the hearing have proceeded on a shared assumption that Jason had authority to sell does not convert the eventual scrutiny of that assumption into an unpleaded ground of decision.

[18] Nor do I accept that the Tribunal erred in law by declining to resolve whether the meeting between Jason and the appellants' Alberta agent took place, or whether Jason signed the bill of sale. The Tribunal was entitled to resolve the appeal on the narrower and dispositive basis that, even taking the appellants' account of these events at its highest, the appellants knew that the bill of sale had not been executed by the truck's registered owner, and had no documentation from which they could reasonably have accepted Jason's representation that he had authority to convey it on his brother's behalf.

[19] Section 22 of the Sale of Goods Act, R.S.O. 1990, c. S.1, permits a sale by a person other than the owner where that person acts with the owner's authority or consent, but it was open to the Tribunal to find that the appellants had no reasonable basis to conclude that this condition was met, and that they proceeded to register the transfer regardless.

[20] A tribunal is not required to make a finding of credibility between competing witnesses where the case may properly be decided on a footing that is favourable to the party whose witnesses are disbelieved; that is what occurred here.

[21] I would accordingly not interfere with the Tribunal's finding that the appellants' past conduct in this respect afforded reasonable grounds for belief, within the meaning of ss. 6(1)(a)(ii) and (d)(iii) of the Act, that they would not carry on business in accordance with the law and with integrity and honesty.

(b) The SUV Finding

[22] Neither party takes serious issue on this appeal with the Tribunal's finding that the appellants were not responsible for the fraudulent registration of the SUV. That finding rested on the Tribunal's acceptance of the perpetrator's own evidence that he acted alone, using his familiarity with Service Ontario staff to register the vehicle without the appellants' knowledge. This was a finding of fact open to the Tribunal on the record, and no palpable and overriding error has been shown. I would not disturb it.

(c) Penalty

[23] I agree with the appellants that the Decision does not adequately explain the sanctions imposed. Paragraphs 100 to 109 of the Decision address, in general terms, why conditions rather than revocation would adequately protect the public interest, but nowhere in the Decision does it explain why an eight-month suspension of Hussein's registration, as opposed to some shorter or longer period, follows from the misconduct found, nor why Premium should be barred for two years, across the whole of Canada, from registering any lien on any vehicle, when there is no finding that Premium filed, or was complicit in filing, a false lien. The lien at issue was filed in connection with the truck in which the Tribunal itself found the appellants held a legitimate financial interest; the Decision contains no finding that the lien itself, as opposed to the registration of ownership underlying it, was unlawful. Reasons of this generality do not permit meaningful appellate scrutiny of whether the specific sanctions chosen were a proportionate response to the specific misconduct found.

[24] Further, the Tribunal’s reasons conflict. The LAT found, for the individual appellant, that there must be a sanction against him for his breach of the public trust in registering the bill of sale, but also found that it was an isolated event under most unusual circumstances and a momentary lapse of judgment that is unlikely to reoccur.

[25] I accord the penalty decision no deference. Reviewing the question of penalty afresh on the record as it stands, I would observe that the Tribunal made no finding that the appellants knew, at the time they registered the transfer, that Jason lacked authority to convey the truck; to the contrary, the Tribunal found that both the Registrar and the appellants proceeded throughout on the understanding that he had such authority, and that the appellants remain out the $15,000 they advanced, having never received the truck.

[26] On this record, an eight-month suspension sits at the high end of any reasonable range of sanction for what the Tribunal itself characterised as an isolated incident by parties with an otherwise long regulatory history. Similarly, in the absence of any finding that Premium filed or was complicit in filing an unlawful lien, a two-year, nationwide prohibition on lien registration is not supported by the findings made.

[27] It would serve no purpose to remit the question of penalty for fresh determination. The stay of the Decision having been refused, Hussein has already undergone the eight-month suspension in full, and I am advised that he has completed the remedial coursework directed by the Registrar. I would not disturb that requirement, which is not challenged on this appeal and which the appellants do not resist. I would vary the sanctions imposed on both appellants to time completed as of the date of these reasons.

(d) The Cross-Appeal

[28] The Registrar cross-appeals on the basis that the Tribunal ought to have revoked the appellants' registrations outright, ought to have suspended Premium's registration and held it accountable for Hussein's conduct as its director, erred in having regard to the effect of revocation on Premium's employees, and erred in concluding that conditions could adequately address misconduct involving dishonesty.

[29] Given the conclusion I have reached on penalty — that the sanctions actually imposed already sat at the high end of, if not beyond, what the record supports — there is no basis on this record to instead substitute the most severe sanction available, outright revocation of both registrations. The same reasoning disposes of the Registrar's submission that Premium's registration should separately have been suspended to hold it accountable for Hussein's conduct: on the findings made, the sanctions as varied already reflect the misconduct established against both appellants.

[30] I do not accept the Registrar's submission that it was an error of law for the Tribunal to have regard to the effect of revocation on Premium's employees. The Tribunal was engaged in an evaluative exercise — weighing whether the public interest required outright disentitlement or could be protected through conditions — and the practical consequences of the available sanctions for third parties were a relevant, if not determinative, consideration in that exercise. I do not read the authorities the Registrar relies on as establishing a rule that such considerations may never be weighed; nor need this be decided definitively, since the point does not affect the disposition I would reach in any event.

[31] Finally, given the variation I would make to the sanctions imposed, it is unnecessary to decide, in the abstract, whether conditions of registration could never suffice to address misconduct involving dishonesty. On the findings actually made in this case — which do not establish that the appellants knew Jason lacked authority to convey the truck, and which absolve the appellants of responsibility for the SUV transaction entirely — the sanctions as varied adequately reflect the misconduct established and adequately protect the public interest. I would dismiss the cross-appeal.

DISPOSITION

[32] The appeal is dismissed insofar as it challenges the Tribunal's findings of liability under ss. 6(1)(a)(ii), (d)(iii), and 6(1)(f) of the Act. The appeal is allowed in part with respect to penalty, and the sanctions imposed on Hussein and on Premium are varied to the time completed as of the date of these reasons, without disturbing the requirement that Hussein complete remedial coursework, which he has since done. I would dismiss the cross-appeal in its entirety.

COSTS

[33] The parties agreed that the amount payable to the successful party would be $25,000, all inclusive. Given the appellants' complete success on the cross-appeal and their partial success on the main appeal, I would award costs of $25,000 to the appellants, payable by the respondent.

_______________________________

Mew J.

I agree _______________________________

D.L. Corbett J.

I agree _______________________________

Matheson J.

Released: 11 August 2026

CITATION: Shahnematollah-Yazde v. Registrar, Motor Vehicle Dealers Act, 2002, 2026 ONSC 4586

DIVISIONAL COURT FILE NO.: DC-25-00000533-0000

DATE: 20260811

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

D.L. Corbett, Matheson and Mew JJ.

BETWEEN:

HUSSEIN SHAHNEMATOLLAH-YAZDE and PREMIUM CARS WHOLESALE LTD.

Appellants

(Respondents by Cross-Appeal)

– and –

REGISTRAR, MOTOR VEHICLE DEALERS ACT, 2002

Respondent

(Appellant by Cross-Appeal)

REASONS FOR DECISION

MEW J.

Released: 11 August 2026