Licence Tribunal

Appeal d'appel en Tribunal matière de permis

DATE: 2011-03-24

FILE: 6083/MVDA

CASE NAME: 6083 v. Registrar, Motor Vehicle Dealers Act, 2002

An Appeal From a Notice of Proposal by the Registrar, Motor Vehicle Dealers Act, 2002, S.O. 2002, c. 30, Sch. B

Astra Motors Inc. and Paul Zbigniew Jadwidzic Applicants

-and-

Registrar, Motor Vehicle Dealers Act, 2002 Respondent

REASONS FOR DECISION AND ORDER

ADJUDICATOR: Harinder S. Gahir, Vice-Chair

APPEARANCES:

For the Applicants: Justin M. Jakubiak, Counsel

For the Respondent: Angela A. La Viola, Counsel

Heard in Toronto: November 1 and 2, 2010 and February 24 and 25, 2011

REASONS FOR DECISION AND ORDER

BACKGROUND

This is a hearing before the Licence Appeal Tribunal (the “Tribunal”) arising out of a Notice of Proposal issued by the Registrar, Motor Vehicle Dealers Act 2002 (the “Registrar” and the “Act” respectively). The Notice of Proposal dated May 6, 2010 and Notice of Further and Other Particulars dated August 6, 2010 proposed to revoke the registration of Astra Motors Inc ( “Astra”), as a dealer and registration of Zbigniew Jadwidzic (the “Applicant” and collectively with Astra “Applicants”) as a salesperson under the Act.

FACTS

The Registrar bases his Proposal under section 9.

The Registrar gave the following reasons for his Proposal:

The intention and objective of the Act is to protect the public interest. In doing so, the Act prohibits the making of false statements in an application for registration or renewal and requires that Registrants be financially responsible in conduct of business and that they carry on business in accordance with the law and with integrity and honesty. Astra Motors Inc. and Paul (a.ka.Pawel) Zbigniew Jadwidzic’s past conduct is inconsistent with the intentions and objective of the Act, and therefore warrants disentitlement to registration under the Act.

In support of his Proposal the Registrar furnished the following particulars:

1. Paul (a.k.a. Pawel) Zbigniew Jadwidzic (“Zadwidzic) is currently registered as a motor vehicle salesperson and was registered under the Act on or about October 3, 1997.

2. Astra Motors Inc. (the “dealer”) is currently registered as a motor vehicle dealer and was originally registered on or about December 20, 2000. The registration of the Dealer is subject to terms and conditions. Attached hereto as Schedule “A” is copy of same.

3. At all material times, Jadwidzic was the directing mind of the Dealer.

4. On or about October 26, 2009, the Dealer was convicted of two counts of Fraud Over $5,000.

5. The Dealer’s conduct which resulted in two convictions for Fraud Over $5,000, was industry specific and involves the re-vinning of motor vehicles sold by the Dealer.

6. The Dealer is a registered Motor Vehicle Inspecton Station (MVIS) with the Ministry of Transportation.

7. The Dealer has received seven warning letters from the Ministry of Transportation with respect to its MVIS registration and failure to comply with provisions of the Highway Traffic Act and regulations.

8. On the short-form business application for registration submitted to the Registrar on or about November 10, 2008, Section A, question 1 (a) ask:

“Are there any charges pending or has the applicant been found guilty or convicted under any law?”

The Dealer’s answer was “no”.

9. Charges in reference to the convictions referred to in paragraph 4 were laid against the Dealer on or about October 22, 2008.

10. The Dealer and Jadwidzic have failed to comply with the Act, in particular section 6.

Further Particulars:

1. On or about October 22, 2008, Astra Motors and Paul Jadwidzic were charged with a number of Criminal Code Offences as a result of the execution of a search warrant on the premises of Astra Motors as part of the Ottawa police Services (“OPS”) investigation.

2. The OPS attended at the premises of Astra Motors on September 18, 2008 during their initial investigation. During their search of the property on September 24, 2008, it was noted that the specific vehicles parts which were being sought for this search warrant had been removed.

3. Investigators attended the premises and seized various stolen vehicle parts. The particulars are as follows:

(a) A rear frame section of a pickup truck was identified and seized. As a result of a CPIC check, it was revealed that the truck was reported stolen to OPS. This information resulted in a charge of possession of stolen property over $5,000.00.

(b) A centre frame section of a pickup truck was identified and seized. As a result of a CPIC check, it was revealed that the truck was reported stolen at Gatineau police Service. This information resulted in a charge of possession of stolen property over $5,000.00

(c) A Honda S2000 donor vehicle bearing a true VIN (deleted) and an Oldsmobile Bravada donor vehicle bearing true VIN (deleted) (“2000 Oldsmobile Bravada”). This information resulted in a charge of possession of stolen property over $5,000.00.

(d) The 2000 Oldsmobile Bravada was subsequently identified as being a fraudulently registered vehicle with the ministry of Transportation (“MTO”) using fraudulent documents. This information resulted in a charge of uttering forged documents.

(e) The 2000 Oldsmobile bravado was subsequently sold by Astra Motors to a consumer when in fact it was a 1998 oldsmobile. The public VIN plate and Federal Certification label had been removed from the 2000 Oldsmobile Bravada. This information resulted in a charge of fraud over $5,000.00.

THE LAW

The Act states in part as follows:

Prohibition

4.(1) No person shall,

(a) act as a motor vehicle dealer unless the person is registered as a motor vehicle dealer under this Act; or

(b) act as a salesperson unless he or she is registered as a salesperson.

Name and place of business

(2) A motor vehicle dealer shall not,

(a) carry on business in a name other than the name in which the motor vehicle dealer is registered; or

(b) invite the public to deal in a place other than the place that is authorized in the registration of the motor vehicle dealer.

Unregistered salesperson

(3) A motor vehicle dealer shall not retain the services of a salesperson unless the salesperson is registered in that capacity.

Supply to unregistered person

(4) A motor vehicle dealer shall not supply motor vehicles to another motor vehicle dealer for the purpose of trading in motor vehicles unless the other motor vehicle dealer is registered in that capacity.

Salespersons

(5) A salesperson shall not trade a motor vehicle on behalf of a motor vehicle dealer unless the salesperson is registered to that dealer.

Regarding the right to registration, the Act states:

Registration

6. (1) An applicant that meets the prescribed requirements is entitled to registration or renewal of registration by the registrar unless,

(a) the applicant is not a corporation and,

(i) having regard to the applicant’s financial position or the financial position of an interested person in respect of the applicant, the applicant cannot reasonably be expected to be financially responsible in the conduct of business,

(ii) the past conduct of the applicant or of an interested person in respect 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, or

(iii) the applicant or an employee or agent of the applicant makes a false statement or provides a false statement in an application for registration or for renewal of registration;

(b),(c) REPEALED: 2004, c. 19, s. 16 (5).

(d) the applicant is a corporation and,

(i) having regard to its financial position or the financial position of an interested person in respect of the corporation, the applicant cannot reasonably be expected to be financially responsible in the conduct of its business,

(ii) having regard to the financial position of its officers or directors or an interested person in respect of its officers or directors, the applicant cannot reasonably be expected to be financially responsible in the conduct of its business,

(iii) the past conduct of its officers or directors or of an interested person in respect of its officers or directors or of an interested person in respect of the corporation affords reasonable grounds for belief that its business will not be carried on in accordance with the law and with integrity and honesty, or

(iv) an officer or director of the corporation makes a false statement or provides a false statement in an application for registration or for renewal of registration;

(e) the applicant or an interested person in respect of the applicant is carrying on activities that are, or will be if the applicant is registered, in contravention of this Act or the regulations, other than the code of ethics established under section 43;

(f) the applicant is in breach of a condition of the registration; or

(g) the applicant fails to comply with a request made by the registrar under subsection (1.1).

Request for information

(1.1) The registrar may request an applicant for registration or renewal of registration to provide to the registrar, in the form and within the time period specified by the registrar,

(a) information specified by the registrar that is relevant to the decision to be made by the registrar as to whether or not to grant the registration or renewal;

(b) verification, by affidavit or otherwise, of any information described in clause (a) that the applicant is providing or has provided to the registrar.

Refusal to register, etc.

8. (1) Subject to section 9, the registrar may refuse to register an applicant or may suspend or revoke a registration or refuse to renew a registration if, in his or her opinion, the applicant or registrant is not entitled to registration under section 6.

Conditions

(2) Subject to section 9, the registrar may,

(a) approve the registration or renewal of a registration on such conditions as he or she considers appropriate; and

(b) at any time apply to a registration such conditions as he or she considers appropriate.

Notice re: refusal, suspension, etc.

9. (1) The registrar shall notify an applicant or registrant in writing if he or she proposes to,

(a) refuse under subsection 8 (1) to grant or renew a registration;

(b) suspend or revoke a registration; or

(c) apply conditions to a registration or renewal to which the applicant or registrant has not consented.

Content of notice

(2) The notice of proposal shall set out the reasons for the proposed action and shall state that the applicant or registrant is entitled to a hearing by the Tribunal if the applicant or registrant mails or delivers, within 15 days after service of the notice, a written request for a hearing to the registrar and to the Tribunal.

ISSUES

The issues that this Tribunal has to decide are:

1. Whether or not the Applicants’ registration should be revoked due to making false statements in business applications for renewal of Astra’s registration, and

2. Whether or not the past conduct of the Applicants affords reasonable grounds for belief that the Applicants will not carry on business in accordance with law and with integrity and honesty.

EVIDENCE

The parties submitted various documents that the Tribunal marked as Exhibits:

1. Notice of Proposal

2. Notice of Appeal

3. Respondent’s Book of Documents

4. Applicant’s Book of Documents

5. Registrar’s Further Particulars

6. Applicant’s Reply to Further Particulars

7. Respondent’s Book of Documents Volume 2

8. Site sketch of Applicants’ business premises

9. Curriculum Vitae of Douglas John Moir

10. Rebuilt file of Honda S2000

11. Applicants’ Supplementary Book of Documents

The summary of the evidence and testimony of the witnesses is as follows:

Detective Andrew Pidcock

Detective Pidcock is the lead investigator on this file. He has been employed with Ottawa Police (the “OPS”) for the past 11 years and has been working on an assignment in the Organized Auto Theft Unit for the past four years. On September 18, 2009 Mr. Pidcock and Sergeant Gardner conducted a site visit of Astra for a garage register compliance check. They observed various vehicles and parts on the east side of the yard and compared those with the ones listed in the garage register. They observed a black Honda that was disassembled and had missing components. The Public Vehicle Identification Number (the “VIN”) was removed from the shell and section of firewall¹ was cut out. Detective Pidcock testified that every vehicle has a public 17 digit VIN. The Federal Certification is on the driver’s side and will have date of manufacture and VIN. The Public VIN is located on the dash area.

Detective Pidcock located a grease marker number written on the black Honda shell that indicated the US auction company’s information. He contacted the auction company and obtained the VIN of the black Honda. A check of this VIN on the police database revealed this VIN was registered to a yellow 2002 Honda S2000 that Astra had sold to its customer in December 2006.

The second suspected vehicle part was a GMC pickup rear passenger door. He noted the theft recovery sticker on the door, queried on the theft recovery company’s web site that gave him the VIN for the vehicle to which the door belonged. This vehicle was reported stolen to the Grenville OPP in January 2007.

As a result of the above discoveries, Detective Pidcock wanted to seize the black Honda shell and the GMC door and wanted to search for associated documents of vehicles parts. He obtained a search warrant. On September 24, 2008 Detective Pidcock, Sergeant Steve Gardner and Douglas Moir, an Investigator with Insurance Bureau of Canada, attended Asta to execute the search warrant. The black Honda shell and GMC pickup door and other vehicle parts they were interested in were missing. The Applicant’s father told them that he dispersed the material while cleaning the yard. The team identified and seized other vehicle parts including:

• a rear frame section of a pickup truck that belonged to a VIN which was reported stolen to OPP in January 2007.

• A centre frame section of another pickup truck. A CPIC check of this part revealed that it belonged to a pickup truck that was reported stolen to the Gatineau Police Service in August 2008².

Detective Pidcock further testified that on October 7, 2008 Ottawa Police conducted an examination on the Honda S2000³ having the public VIN (deleted). The Police found this vehicle had multiple VINs; the public VIN that was welded on this vehicle belonged to the black Honda. He contacted the auction company from whom Astra had purchased the yellow and black Hondas.

Thereafter, he contacted the Registrar of Imported Vehicles to get custom documentation. He wanted to check the branding of these vehicles. Detective Pitcock testified that he found out that Astra had imported a yellow Honda as “a parts only” vehicle and a black Honda as a salvage vehicle. He further testified that once the vehicle is branded as parts only it cannot be put on the road. Salvage vehicles can be put on the road after taking certain steps, including structural inspection to ensure its structural integrity. Detective Pidcock’s concern was that the consumer was driving a Honda S2000 that was never supposed to be on the road.

Under cross-examination, Detective Pidcock testified that the business location of Astra is a large and deep lot. The building is closer to the road and there were several businesses on the site on the day of execution of the search warrant. Behind the building there were lots of cars parked on the property. Detective Pidcock did not recall any fence on the surrounding of the property. He further testified that he did not ask Astra whether those stolen parts belonged to them nor did he recall asking the other businesses on the premises regarding stolen parts.

Sergeant Steven Gardner

Sergeant Gardner has been a member of Ottawa police for 25 years. Currently he is supervisor of West District Break & Enter Squad. In the past he had served as a supervisor of auto theft Squad. He is a member of International Association of Auto Theft Investigators and for the past few years he has been on its Board of Directors. He participated in a yearly training conference of the organization in auto theft and courses run by Canadian Police Association. In the past he has been accepted as qualified as an expert witness by the Superior Court on four separate investigations. Registrar’s Counsel confirmed that Sergeant Gardner would not give expert evidence, although he provided information to relate his background.

Sergeant Gardner testified with respect to his involvement in inspection and execution of the search warrant at Astra. He corroborated Detective Pidcock’s testimony.

Sergeant Gardner was the supervisor of the execution of the search warrant that was conducted on September 24, 2008 at t Astra. On September 24, 2008 he found that all vehicles parts he was looking for at Astra were removed in between September 18 and September 24, 2008. He testified that the Applicant’s father indicated to him that he had been taking parts vehicles for scrap to an Ottawa facility. Sergeant Gardner testified that a Red Bravada that was registered to a woman in Ottawa was on the property with a sale sign. He recovered a public VIN plate from its tool box, which did not belong to any stolen vehicle. Upon being asked what was the most concerning information with respect to his involvement in this matter, Sergeant Gardner testified that the missing VIN numbers were of most concern since those are used to identify the vehicle. In his experience the VIN plates are removed and replaced on different vehicles to disguise stolen vehicles and circumvent the Highway Traffic Act. While testifying he stressed that one cannot change an original VIN as it is like a finger print or birth certificate to a vehicle. The only case in which a VIN may be replaced is when a vehicle is rebuilt from parts belonging to a vehicle other than the rebuilt one. In that situation, one needs to apply to the Insurance Bureau of Canada and the Ministry of Transportation to get a new VIN.

Under cross examination Sergeant Gardner testified that no stolen parts were found inside the garage or in any of the rebuilt vehicles. He further testified that he did not ask the Applicants, during his initial visit on September 18, 2008, not to remove any vehicle parts from the property.

Douglas Moir

Mr. Moir is a special agent and investigator with Insurance Bureau of Canada. Applicant’s counsel agreed Mr. Moir was qualified to give expert testimony. Mr. Moir attended Astra to assist Ottawa Police to execute the search warrant. On September 24, 2008 he checked a large number of vehicles that were parked east of the building, moving to the south of the property. He also corroborated the testimony of Detective Pidcock.

Mr. Moir had visited Astra subsequent to the execution of the search warrant. He went to Astra on April 14, 2009 on the request of the Insurance Bureau of Canada to re VIN replacement tags.

Under cross examination, Mr. Moir testified that he was not sure as to where the Astra’s property ended. He further testified that, subsequent to the above events, he has been dealing with Astra to assign a new VIN to rebuilt vehicles and that the Applicant had asked him appropriate questions in this regard.

Dan Ventura

Mr. Vantura has been a Vehicle Branding Officer with Ontario Ministry of Transportation since June 2003. He oversees the program and audits rebuilt files submitted to Ministry for accuracy and completeness.

Mr. Vantura testified that Ministry of Transportation had in March 2003 implemented a branding program in Ontario to promote road safety and consumer protection. The program identifies the branding status of severely damaged vehicles on their ownership documents. This program allows the consumers to make an informed decision, when a vehicle was a total loss. Ontario Requires that branded or imported vehicles can go back on the road after structural inspection. Under Regulation 611, a branded vehicle has to be rebuilt to its pre-accident condition. Explaining the process to put the branded vehicle on the road, Mr. Vantura testified that the person seeking to put the vehicle on the road needs to meet strict criteria. The requirements are documented in Regulation 611The applicants need to send to the Ministry a “rebuilt file” consisting of parts audit form, bills for the parts used, the VIN of the donor vehicle, the VIN of rebuilt vehicle, an estimate of total loss, the name of the owner, photos of the vehicle showing damage, and information that frame is within the manufacturer’s specification.

Referring to Exhibit 10 which is the “rebuilt file” of the Honda S2000, Mr. Vantura testified that Rebuilt Vehicle Audit Form on page 19 tells the story as to how the vehicle was rebuilt. The right hand column shows a VIN that pertains to parts obtained from donor vehicle. This VIN number shows that side quarter panels, doors, hatches, seats, dashboard and body roof were taken out of the yellow Honda with VIN ending with 4864. He further testified that the Rebuilt Vehicle Audit Form shows if those parts were used to rebuild the black Honda. However, he testified that it was the yellow vehicle which Astra had rebuilt. He confirmed that he did not do a physical inspection of the rebuilt Honda S2000. Mr. Vantura further testified that in fact the Applicant took the dash from the black Honda and put it in the yellow vehicle. Then he cut the firewall of the black vehicle and welded it onto the yellow vehicle. By changing the VIN the Applicants changed the identity of the yellow vehicle.

Testifying about Astra’s Motor Vehicle Inspection Station type 6 (the “MVIS”) license Mr. Vantura testified that this license allows the station to do structural repair of vehicles and issue structural inspection certificates to vehicles. Referring to Exhibit 3 Tab 13, Mr. Vantura testified that Astra got seven warning letters from the date of its license in January 2003 till the date of the hearing. He further testified that the warning letter speaks to the file that is missing documents or non-compliance issues. In some instances Astra did not send proper documents and the Ministry issued warning letters.

Under cross examination, Mr. Vantura testified that “a parts only” car in US is branded as not repairable in Ontario. He further testified that seven warning letters issued to Astra with respect to its MVIS license are not sufficient to revoke the license. “There are worse guys whom we want to chase” he testified. He further testified, “we don’t look at charges or warning letters, we are looking for compliance”. He insisted, “5 to 7 warning letters since 2003 is at the lower end”. He further testified that there is no evidence that Honda S2000 did not comply with Regulation 611. He went on to testify that it is common knowledge that you do not detach a VIN. He confirmed that there is no written document from his office with respect to VIN change.

Carey Smith

Mr. Smith is OMVIC’s Director of Investigations. He testified that OMVIC is a delegated authority to administer the Act that is consumer protection legislation.

He referred the Tribunal to the Applicants’ original registration, which was under terms and conditions⁴. He insisted that it was kind of probation.

Under cross-examination Mr. Smith testified that he did not have evidence that the Applicant did not sign the business application⁵ other than on the indicated date. He agreed that the withdrawal of charge is not an indication of guilt or innocence.

He agreed to the suggestion that there were no stolen parts found on the Honda S2000 or the Oldmobile Bravada. He also agreed to the suggestion that there were no consumer complaints against Astra; nor was Astra on OMVIC radar before the execution of the search warrant. He testified that OMVIC’s concern is that Astra was convicted of two counts of fraud over $5,000.00 which is by definition a demonstration of dishonesty. He further emphasized that the very nature of the conviction is indicative of dishonesty and lack of integrity and that the conviction is industry related.

Mr. Smith insisted that the Applicant has been in business for a long time and should have been familiar with the Regulations, and lack of that knowledge, he insisted, is willful blindness or shows a lack of honesty and integrity.

Mr. Smith testified that he is not aware of the conduct of the Applicants since 2006 that would concern the Registrar.

Applicant’s Witness # 1.

Applicant’s witness is an Ottawa lawyer. He met the Applicant and his family through one of their customers. He had bought a vehicle from Astra about three years ago and a second vehicle six months ago. He testified that he came to the hearing voluntarily and at his own expense. In the past he did a little bit of corporate work for Astra.

In his opinion, the Applicant and his family are good people. They worked hard to learn English and settled themselves in Canada. He further testified that they are devoted people who work hard and made sure their children went to university. He is impressed with the family.

He went on to testify that upon learning about the charges he felt badfor them because he did not see where they went wrong. Their business suffered because of the charges. After analyzing the situation with them he came to the conclusion that they made mistakes which were errors of law.

Paul Jadwidzic

The Applicant Paul Jadwidzic is a university graduate. He completed a B.A. in economics with a minor in business in 2005. He established an auto business with his father in 1997 out of a small unit. Astra’s present building is approximately 10,000.00 square feet on a five to six acres lot that his parents own. His parents have other tenants in the building that are: an auto garage repair shop and a roofing company.

Astra is a family business to buy and sell used vehicles and run a body shop. The Applicant is responsible for sale, purchase and repairs. His father is a licensed auto body repairman, and looks after the body shop. The Applicant’s mother does secretarial work and his brother is an apprentice mechanic.

Testifying about the issues that brought him before the Tribunal, he referred to Exhibit 4 Tab 3, the document titled as “S2000 Project” which outlines the process by which the Honda S2000 was rebuilt. He testified that the import papers of the yellow car indicated it as a parts car and the black one was indicated as salvage. He insisted that it was only for custom purposes and did not reflect the true branding of the car.

The Applicant insisted that the yellow Honda was a salvaged vehicle and capable of rebuilding. He referred the Tribunal to Exhibit 11, Tab D, which is a salvage certificate for the yellow Honda that he used for parts. He insisted that page 3 of Tab D is an insurance estimate, which the auction company had given to the Applicant to rebuild the yellow Honda and page 10 shows the branding of the yellow Honda as Salvage.

He further testified that the black car was hit on the right side with damage to the firewall. He removed the firewall, cut the VIN from the firewall and replaced it with the VIN from the other car. He testified that if he knew what he knows today, he would not have touched the VIN. He went on to testify that after the police involvement, and subsequent dealing with lawyers, he came to know that the VIN changes were not acceptable. The Applicant recently retained the services of a former Ministery of Transportation officer to know his obligations with respect to rebuilding.

The Applicant testified that he has learned lessons from his ordeal. Astra had sold the Honda S2000 in 2008 for $16,000.00. Upon becoming aware of the issue surrounding the VIN plate, he purchased the vehicle back in 2008 for a price of $28,000.00⁶ as the customer had spent some money to upgrade the vehicle. Since the Ministry did not allow the change inVIN forthis vehicle, Astra scrapped the Honda S2000. He further testified that Astra purchased back Oldsmobile Brabada for $4,000.00.

The Applicant testified that Astra still rebuilds vehicles but did not have any further issues with law enforcement or the Ministry.

Under cross-examination, the Applicant testified that he was not aware that he was not supposed to touch a VIN plate. He partly blamed the lack of newsletters or other information from the Ministry which would explain the process of rebuilding a vehicle. Testifying about his mistakes, he insisted that now he has learned his lessons.

“We know we did something wrong and that was horrible.” The amount of money he spent, including the money Astra gave back to two customers is considerable

Testifying about the stolen parts, he denied any ownership, knowledge or the possession of such parts. He testified that that the Police had told them that stolen parts were at the back of the property. He further testified that the police team had instructed them to stay in the office area at the time of search warrant. He further testified that a lot of auto parts including wheels, stereos and other parts were stolen from their property. Someone had stolen a truck from their property on July15, 2010. In order to minimize thefts and trespassing the Applicant has installed security cameras and is in the process of completing the installation of a fence on the property.

Application of Law to Facts

The governing legislation is a consumer protection legislation that regulates the retail sales of motor vehicles in Ontario. The legislation requires that people involved in this industry be registered under the Act. While the Act gives an entitlement to registration, it also allows the Registrar to revoke registration on the specified grounds. Those grounds are set forth in section 6 of the Act. The registrant is informed of the refusal by the issuance of a Notice of Proposal. An appeal from the Registrar’s Proposal lies with the Tribunal.

The Registrar initially registered Astra as a dealer and Applicant as a salesperson under the Act in December 2000. Astra is also a registered Motor Vehicle Inspection Station Type 6 (the “MVIS”) under the Ontario Highway Traffic Act. The Applicants’ primary business is purchasing accident damaged cars from auctions in Canada and the United States for repair and resale.

The Applicants’ trouble started in September 2008, when the auto theft section of Ottawa Police Services (the “OPS”) investigated Astra. The investigation was part of an ongoing project to ensure dealers comply with section 60 of the Ontario Highway Traffic Act. Section 60(1) requires that every person who buys, sells, wrecks or deals in second hand motor vehicles keeps a complete record of each vehicle bought, sold or wrecked to enable ready identification.

As a result of the investigation the Ottawa Police ServicesP, on October 27, 2008, charged the Applicant, his brother and parents with:

i) two counts of fraud over $5,000.00 contrary to section 380(1)(a) of the Criminal Code,

ii) two counts of uttering forged documents contrary to section 368(1)(a) of the Criminal Code of Canada, and

iii) three counts of possession of stolen property over $5,000.00 contrary to section 355(a) of the Criminal Code of Canada.

In October 2009, Astra pled guilty to two counts of fraud with respect to the sale of a Honda S2000 and Oldsmobile Bravada. Astra had re-built both vehicles, improperly changed VIN plates and obtained registration. The prosecution had dropped the remaining charges against the Applicant and his family members as a part of a plea bargain.

The above information became the basis of the Proposal. Specifically, the Registrar relied upon:

1. the above charges and guilty pleas,

2. the Applicant’s failure to disclose the above charges in an application to renew Astra’s licence submitted to the Registrar on November 10, 2008,⁷ and

3. Astra, in the capacity of a licensed MVIS, having received seven warning letters from the Ministry because of its failure to comply with provisions of Highway Traffic Act and regulations.

Issue No. 1.

Whether or not the Applicants’ registration should be revoked due to making false statements in business applications for renewal of Astra’s registration, and

The Registrar alleged that the Astra did not disclose the criminal charges on the business application for renewal of the licence⁸. Section A, question 1(a) asks:

“Are there any charges pending or has the applicant been found guilty or convicted under any law?”

The Applicant answered “no”. The Applicant signed the application on October 21, 2008 and the OMVIC received it on November 10, 2008⁹. The Applicants were charged on October 22, 2008¹⁰. The Registrar did not allege or adduce any evidence that the Applicant was deceptive in putting the date on signature on the application. Neither party adduced evidence as to the date the Applicant had mailed this application. Mr. Smith, under cross-examination, testified that he did not have any evidence that the Applicant had signed the Application other than the date indicated on the Application. In the absence of evidence that the Applicant provided false information on the date of providing the Application to the Registrar, the Tribunal finds that this ground does not provide basis of revocation of registration.

Issue No. 2

Whether or not the past conduct of the Applicants affords reasonable grounds for belief that the Applicants will not carry on business in accordance with law and with integrity and honesty.

In order to decide this issue, the Tribunal will analyse the evidence surrounding Astra’s MVIS license, criminal charges, and guilty plea.

MVIS Licence

Apart from the Dealer’s registration under the Act, Astra is also a licensed Motor Vehicle Inspection Station (MVIS) under the Highway Traffic Act, with the Applicant’s father being the licensed mechanic. The station received seven warning letters from the date of its registration in January 2003¹¹. Registrar’s witness, Dan Ventura, a Vehicle Branding Officer with the Ministry of Transportation testified that those warning letters are considered at a lower end of the spectrum. He had further testified that these warning letters were not sufficient to revoke the Applicant’s license. Moreover, the Ministry has not taken any steps to revoke or discipline the MVIS or its licensed mechanic with respect to these warning letters, and Tribunal does not find these warning letters add more weight to the argument to revoke Applicants’ registration under the Act.

Criminal charges

The Ottawa Police Services in October 2008 charged the Applicant and his family members under sections 380(1)(a), 368(1)(a) and 355(a) of the Criminal Code of Canada. The charges flowed from sale of Honda S2000 and Oldsbobile Bravada. Astra had rebuilt these vehicles and improperly changed the VIN of the vehicles, improperly obtained inspection certificates, and alleged possessed stolen vehicle parts. These stolen vehicle parts were located on the property where the Astra Motors is located. Applicant had testified that his parents own the property that is on a five to six acres lot. The property had three other tenants including another automobile shop¹². The property has six bays and more than half of the property is parking and open storage of parts and vehicles. As a part of a plea bargain, the Crown had withdrawn all the charges pertaining to the possession of stolen vehicle parts.¹³

Although the withdrawal of charges does not prove the guilt or innocence of the Applicant, the Tribunal finds that circumstances of parts being on the lot, and two vehicles structures without VIN plates, raised suspicion. But in the Tribunal’s view, there must be some direct evidence that the Applicant had possession, i.e. he had knowledge and control or was wilfully blind to the presence of stolen property. The Applicant did not admit nor did the evidence prove, that Applicants possessed or owned those parts. The Applicant testified that at the time of the execution of the search warrant, the Police search team asked him and his family members to stay in the office area while they searched the yard. The Registrar’s witness, Sergeant Gardner, testified that none of the stolen vehicle parts were found inside the Applicant’s garage nor they were listed in the garage register. Moreover, Detective Pidcock testified that he did not ask the Applicant if the stolen parts belonged to him; nor did he recall asking the other businesses on the property if those parts belonged to the other tenants. The Tribunal finds that, on balance of probabilities, the evidence is insufficient to connect the Applicants with the stolen property.

Astra’s guilty plea

The Tribunal notes that Astra pled guilty to two charges under section 380(1)(a) of the Criminal Code. These charges were laid with respect to rebuilding the Honda S2000 and Oldsmobile Bravada, changing the VINs and selling these vehicles. The Registrar alleges that the Applicants rebuilt theHonda S2000 out of the yellow Honda that was branded as a parts-only vehicle and switched its VIN with the black Honda to change the identity of yellow Honda and to make it registration worthy. The basis of the Registrar’s belief that Astra listed the yellow Honda as a “parts-only” vehicle in the custom forms and same was listed on the auction company’s website. The Applicant testified that the basis of such a declaration was only for customs purposes and did not reflect the true brand of the vehicle. He insisted that both vehicles were capable of rebuilding. He referred the Tribunal to the insurance estimate certificate¹⁴ that he testified the auction company had provided, to show the repair estimates. He also referred the Tribunal to the branding certificate of the yellow Honda, showing it branded as “salvage”¹⁵.

The Applicant also testified that he rebuilt the black Honda with most of the body parts belonging to the yellow Honda. Based on the salvage certificate of the yellow Honda the Tribunal finds that the yellow Honda was branded salvage and worthy of rebuilding. The Tribunal finds that the Applicant rebuilt the Honda S2000 from major parts obtained from the black and yellow Hondas. The appropriate step for the Applicant to take was to get a new VIN from the Insurance Bureau of Canada. He did not get a new VIN. The rebuilt Honda had some parts showing VIN plates of the yellow Honda and some parts showing VIN of the black Honda. Similarly, Astra pled guilty to fraud over $5,000.00 with respect to sale of the Olsmobile Bravada due to change of its VIN plate. This change of VIN concealed the true identity of the vehicles¹⁶.

Section 60(3) of Ontario Highway Traffic Act says:

“No person shall deface or remove the manufacturer’s vehicle identification number or identifying mark from a motor vehicle or from the engine thereof or from a bicycle or from a trailer that has a gross weight exceeding 1,360 kilograms”.

The Applicants violated this section and violated the Ontario Branding Program. The Tribunal agrees with the testimony of Detective Gardner that the only case a person can replace the VIN is with the approval of the Insurance Bureau of Canada, that assigns a new VIN for a rebuilt vehicle. The adherence to this approval process is important to prevent vehicle identity theft and trafficking in vehicles. The Tribunal appreciates Mr. Smith’s concerns, with respect to Astra’s guilty plea and the resulting industry related fraud convictions. On the face of the industry related fraud convictions, one cannot imagine OMVIC allowing the dealer to continue with its business.

In view of the above convictions, normally the Tribunal would have no sympathy with someone who engaged in improper business practices and the licence would be revoked

But after analyzing the evidence, the Tribunal finds that there are number of mitigating factors in favor of the Applicant that tilt the balance in the Applicants’ favor, which include:

(a) The Applicant not only cooperated with the police at the time of execution of a search warrant in September 2008, but he accepted responsibility for his conduct.

(b) It has been over two years since he and his family members were charged and since this date there has been no further violations of the Act. Although this is not a significant period of time from the date of the charges, itt is still a positive factor,

(c) Astra pled guilty and paid the fine in the criminal courts and Applicants had expressed remorse at the hearing.

(d) The Sentencing Judge made a positive finding about the business conduct of the Applicant and his family¹⁷.”

(e) the Applicants have otherwise unblemished business record.

(f) Most importantly, and this is what turned this case completely:

i) upon becoming aware of the issues, the Applicant and his family took steps to improve business practices. The Applicant and his brother took educational courses, retained services of an expert and learned from the Ministry of Transportation and Insurance Bureau of Canada about their obligations in conduct of their business,

ii) the Applicant forthwith spent about $66,000.00 to purchase back and settle issues with customers of both vehicles in question, causing no financial loss to its customer.

Due to the foregoing, on balance, the Tribunal is not persuaded that the Applicant’s past conduct afford reasonable grounds for belief that it will not carry on business in accordance with the law and with integrity and honesty.

ORDER

Pursuant to the authority vested in it under the provisions of the Act, the Tribunal directs the Registrar not carry out the Proposal.

LICENCE APPEAL TRIBUNAL

_________________________

Harinder S. Gahir, Vice-Chair

Released: March 24, 2011

Footnotes

1. 1It is a steel wall between the engine compartment and interior of the cabin
2. 2Exhibit 7, Tab 2, page 15
3. 3Vehicle Astra had rebuilt using parts of black Honda and yellow Honda
4. 4Exhibit 3, Tab 2
5. 5Exhibit 3, tab 4
6. 6Exhibit 11: Tab G
7. 7Exhibit 3, Tab 4
8. 8Exhibit 3, Tab 4
9. 9Exhibit 3, Tab 4
10. 10The Proposal inaccurately described the date of charges as September 24, 2008. The Registrar’s Counsel corrected this information during the hearing.
11. 11Exhibit 3, Tab13
12. 12Exhibit 8
13. 13Exhibit 3 Tab 9
14. 14Exhibit 11 Tab D page 3 and 4
15. 15Exhibit 11, Tab D, page 6 to 10
16. 16Exhibit 3, Tab 8
17. 17Exhibit 3, Tab 8, page 9