Licence Appeal Tribunal

DATE: 2012-04-11

FILE: 6948/MVDA

CASE NAME: 6948 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 - to Revoke Registration

Emil R. Paloma Applicant

-and-

Registrar, Motor Vehicle Dealers Act 2002 Respondent

AMENDED REASONS FOR DECISION AND ORDER

ADJUDICATOR: Richard Macklin, Vice-Chair

APPEARANCES:

For the Applicant: Pradeep Chand, Counsel

For the Respondent: Yovanka McBean, Agent

Heard in Toronto: March 22, 2012

REASONS FOR DECISION AND ORDER

BACKGROUND

By Notice of Proposal, dated September 6, 2011, the Registrar, Motor Vehicles Act, 2002 (the “Registrar” and “Act”, respectively), seeks to revoke the Applicant’s conditional registration as a car salesman. The Applicant appealed to the Licence Appeal Tribunal (“Tribunal”). There is no dispute that the Applicant committed serious errors in judgment in disclosing his criminal record in “dribs and drabs”. The dilatory disclosure was contrary to his obligations under the Act and his registration conditions. The question for the Tribunal is whether the Applicant should, nonetheless, continue to be registered and thus be given a second chance.

FACTS

The Applicant is 31 years old and has been employed in the motor vehicle sales and service business for seven years. He began his employment with his latest employer, Don Valley Volkswagen Ltd. (“DVVW”), in 2006 as a service consultant. In and around 2009, he was encouraged to transfer to the sales division. In July 2010, the Applicant completed an application with the Registrar for a salesperson’s licence. Section E of the standard form application poses the following question and follow-up inquiry:

6. Have you ever been found guilty or convicted of an offence under any law, or are there any charges pending?

[] Yes [] No

If “yes,” please provide the circumstances and particulars surrounding each. Make sure to include those cases where a conditional, absolute discharge or pardon has been ordered/granted. [Emphasis in original]

To his credit, the Applicant answered “Yes” to the question. Unfortunately, he did not provide any particulars of the Criminal Code of Canada convictions that had been made against him. Thus began the ordeal that brought the parties before the Tribunal.

Following an exchange of correspondence in May 2010, between the Registrar and DVVW, it was determined that the process for obtaining the official record of the Applicant’s criminal convictions was taking too long. As this delay was through no fault of the Applicant, it was agreed that a conditional registration would be considered. As a pre-condition to the conditional registration, the Applicant was instructed to provide a written explanation of the nature of the criminal matters referred to in his application. He also undertook, as part of conditions to registration, to provide the Registrar with a copy of his official criminal record, upon receipt.

To that end, the Applicant prepared a letter dated September 29, 2010, describing an assault conviction from 2004 that resulted in a conditional discharge. He also stated in that letter:

On my application I did check off that I have been arrested before in the past. This is my disclosure of that one and only incident…

This is the only record I have. [Emphasis added]

The Applicant, based in part on the disclosure in the September 29, 2010 letter, was granted a conditional salesperson licence on September 30, 2010. The key registration conditions, for the purpose of this hearing, were:

1. The Registrant agrees to provide the Registrar with their original Criminal Record or Security Clearance Report (the "Report") immediately after having received it from their local police. Without limiting the generality of the foregoing, the Registrar acknowledges and understands the Report will be provided no later than 90 days after entering into these terms and conditions. The Registrant accepts full responsibility for providing their Report to OMVIC. The Registrar further confirms the Report will be a current report which is no more than 90 days old…

2. The Registrant understands that the Registrar is relying on the accuracy and completeness of all documents, statements or information provided by the Registrant in support of the Registrant's application for registration. The Registrant confirms that all documents, information or statements provided to the Registrar are true to the best of the Registrant's knowledge and belief and that the Registrant has given full answers to all questions and requests made by the Registrar in connection with the Registrant's application.

3. The Registrant acknowledges that the Registrar may take further administrative action, including a proposal to revoke its registration, arising from any matters that have occurred, or may occur, related to honesty and integrity or financial position…

Some time in December, 2010, the Applicant received an RCMP criminal record check that disclosed additional convictions in 2008 for uttering threats of death and possession of a weapon. The Applicant had been sentenced on these convictions, in February 2008, to a six-month conditional sentence and 12 months of probation. The Applicant did not notify his employer or the Registrar that he had received this official criminal record check or of its contents.

On May 12, 2011, the Registrar notified DVVW, by e-mail, that it had not received the Applicant’s criminal record check and that the record should be obtained and forwarded to the Registrar within 72 hours. The Applicant was shown a copy of that e-mail and determined that he would now deliver the criminal record check to the Registrar. On receipt of the criminal record check, the Registrar notified DVVW, by e-mail dated May 17, 2011, that there was a material discrepancy between the criminal record check and the previously disclosed information regarding the Applicant’s criminal convictions. The Registrar asked for a written explanation within five business days.

The Applicant was provided an extension of time within which to respond and did so by letter dated May 25, 2011. In that letter, he acknowledged the 2008 convictions and stated that; “[he] was under the impression that because the end result was a conditional one … it would not show”. He apologized to the Registrar but, in the process of making the disclosure on the 2008 charges, implied that the “weapon” in question was a baseball bat when, in fact, the weapon conviction was for possessing an “imitation firearm”.

OTHER EVIDENCE

The Applicant acknowledged in his testimony that he had made a serious error in judgment in respect of the non-disclosure of his criminal history. Indeed, he conceded that the Registrar had made out a case of reasonable grounds for a belief that he would not carry on business with integrity and honesty, that he had made a false statement in the registration process and had breached a condition of his registration. He further stated, however, that he has found a home at DVVW, worked hard and successfully in his job as a salesperson and that, accordingly, revocation would be an unreasonable order.

The Applicant’s immediate supervisor, and DVVW’s general and business managers all testified on his behalf. The sum of their evidence was that the Applicant is an exemplary salesperson, is integral to DVVW’s operations and operates as a salesperson with great honesty and integrity. Each of these DVVW witnesses indicated that they had no concern regarding the Applicant’s ability to comply with the salesperson’s code of ethics mandated under Ontario Regulation 332/08 (ss. 3-5). These witnesses further testified that if the Applicant’s registration was continued, even on a conditional basis, there would be a sales job open for him at DVVW. It is of note that in providing this character evidence, the DVVW witnesses had no more than a vague idea of what the Applicant had done wrong regarding the non-disclosure of his criminal convictions and no idea what those criminal convictions related to.

The Registrar called Deputy Registrar Mary-Jane South as a witness. Ms. South testified generally about the proceedings relevant to the Applicant’s licensing and outlined the concerns of the Registrar respecting any continued registration of the Applicant. Submissions to the same effect were made by the Registrar’s representative in opening and closing argument.

THE LAW

The pertinent provisions of the Act are as follows:

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; …

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

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; …

Hearing

(5) If a hearing is requested, the Tribunal shall hold a hearing and may by order direct the registrar to carry out the registrar's proposal or substitute its opinion for that of the registrar and the Tribunal may attach conditions to its order or to a registration.

ANALYSIS

The Registrar submits that the facts in this case reflect an ongoing plan by the Applicant to keep the full particulars of his criminal record from the regulator. The Registrar further submits that the Applicant’s misdeeds are neither isolated nor explainable. In essence, the Applicant committed six misdeeds over a ten month process and these misdeeds amount to violations of ss. 6(1)(a)(ii)(iii) and (f) of the Act. Specifically:

i) The Applicant did not fully complete question 6 of his registration application;

ii) The Applicant prepared a false explanation letter regarding the “yes” answer to question 6. In that letter, he not only omitted 2008 criminal convictions but in addition, was emphatic that the 2004 convictions were his “one and only incident” and “the only record [he had]”;

iii) Condition one of the Applicant’s registration required him to provide the Registrar with his official criminal record “immediately after having received it from the local police”. The Applicant, by his own admission, received a copy of his official criminal record in December 2010 but did not forward it to the Registrar until May 2011;

iv) Condition one of the Applicant’s registration required him to provide the Registrar with his official criminal record - at the latest – within 90 days of September 30, 2010. As noted above, the Applicant did not forward the record until May 2011;

v) Condition one of the Applicant’s registration required him to provide the Registrar with an official criminal record that is no more than 90 days old. The record provided to the Registrar is dated November 5, 2010 and was not delivered to the Registrar until May 2011; and

vi) The Applicant continued to be less than forthright, even at the point where the discrepancy regarding the criminal record disclosure had been identified by the Registrar and “all eyes were on him”. In his letter to the Registrar dated May 25, 2011, the Applicant mentioned that he was found with a “baseball bat in [his] passenger seat”. The conviction, however, related to possession of an imitation firearm, not a baseball bat.

The Registrar submits that the application for registration is the first opportunity he has to assess the honesty of an Applicant and that this Applicant abjectly failed that test. The convictions themselves are not the basis for seeking revocation. Revocation is sought because the Applicant’s failure to disclose material facts reflects adversely on his ability to function in an industry that is founded on forthrightness in disclosure to customers. The Registrar points out that even today, the Applicant’s version of events does not hold water. The Applicant stated that he only disclosed what he thought might appear on a police check. The wording of question six, however, which the Applicant stated he understood, is clear and does not allow for “splitting hairs” over what might or might not appear on a police check. All charges and convictions must be disclosed. The Registrar takes no comfort from the third-party character evidence, as none of those witnesses had been told what criminal offences were involved in this case or been provided with more than a vague reference as to what it was that has brought the Applicant before the Tribunal. The Registrar also points out that the conditional registration in this case was signed by the dealer and that the dealer has failed in its responsibility to monitor the Applicant. The dealer ought to have ensured that the criminal record check was delivered to the Registrar in a prompt fashion. Finally, the Registrar opposes an order for further conditions, in lieu of revocation. The Applicant patently breached his conditions at first instance. More conditions are not the answer.

In response, the Applicant has, as noted above, acknowledged “liability” and concedes breaches of ss. 6(1)(a)(ii)(iii) and (f) of the Act. His submission, made in various ways, is that he deserves one more chance and that his conduct, although bad, does not warrant the most extreme order in the Registrar’s arsenal. He says he did not deliberately intend to deceive the Registrar and indeed, did not keep his criminal history a complete secret. The criminal record was going to eventually make its way to the Registrar; the Applicant was merely having difficulty handling that eventuality. The Applicant is prepared to submit to any condition that can be reasonably complied with including regular reporting of police criminal checks and alerting the Registrar, immediately, of any criminal or quasi criminal charges.

Neither party disputes the sanctity of the registration process or the need of an Applicant to be forthright. If an Applicant withholds vital information from his or her regulator, there is reason to believe he or she may do so in his or her dealings with customers (see Ullah (Re), [2008] O.L.A.T.D. No. 429 at p. 8 (Q.L.)). Yet, in Pouraziz (Re), [2011] O.L.A.T.D. No. 252, a failure to disclose a criminal record resulted in an order that fell short of separating the Applicant from a position as a salesperson. Conditions, including a 90-day suspension, were ordered instead. It appears the Tribunal in Pouraziz, was swayed by its finding that the Applicant did not intend to deceive the Registrar (see p. 6 of the decision).

CONCLUSION

In the circumstances of this case, the Tribunal is prepared to give the Applicant another chance. The circumstances surrounding the Applicant's initial and continued non-disclosure are suspicious. The non-disclosure in this case, however, although serious, does not rise to the level of seriousness that one finds in the cases where revocation or a refusal to register is the result (see 102265 Ontario Inc. v. OMVIC, [2004] O.J. No. 900 (Div.Ct.) – Applicant had already been the subject of a proposal that was settled by way of consent order that was subsequently breached; Petersen (Re), [2010] O.L.A.T.D. No. 146 – Applicant stole from customer and failed to disclose the charges related thereto; Abouassali (Re), [2011] O.L.A.T.D. No. 113 – Applicant had long history of incidents with the motor vehicle industry and the law; Smith v. Registrar MVDA, 2011 ONSC 829 (Div.Ct.) – Applicant guilty of serious misconduct that arose directly out of his work as a motor vehicle sales person).

In sum, the Applicant concedes that the Registrar has made out its case under s.6(1)(a)(ii) and (iii) and (f) of the Act. Accordingly, the Tribunal so finds. Notwithstanding these findings, the Tribunal is of the view that the public can be sufficiently protected by the ordering of a suspension and other conditions, as set out below. The suspension is intended to have a deterrent effect on the applicant such that he will understand that his actions have consequences and thus comply with his regulatory obligations in the future. The suspension is also intended to have a “general deterrence” effect on other applicants. The conditions set out below are tailored to the applicant’s peculiar circumstances and are intended to, as best as can be, ensure that any future “run in” with the law of the applicant comes to the attention of the Registrar.

Moreover, although this decision does not tie the hands of a subsequent Tribunal, the Applicant should be made aware that if the Registrar makes out its case in a future proposal, the order imposed on the Applicant may be more severe than the one being applied here.

ORDER

Pursuant to the authority vested in it under the provisions of the Act, the Tribunal directs that the Registrar not carry out the Notice of Proposal but continue the Applicant's registration, subject to the following conditions, which conditions shall be in addition to the conditions that he entered into on September 30, 2010:

1. That the registration of the Applicant will be suspended for a period of one hundred and twenty (120) days from the date of the release of these reasons;

2. That the Applicant advise the Registrar and his sponsoring dealer in writing, within five business days, of any charges that he is facing under any Federal legislation or any Provincial legislation where the charge would fall under Part III of the Provincial Offences Act, R.S.O. 1990, c. P.33;

3. That the Applicant advise the Registrar and his sponsoring dealer in writing if he is charged, subsequent to the release of these reasons, with any charge of the nature described in paragraph 2 above. Such advice shall disclose the full extent of those charges and be delivered to the Registrar and his sponsoring dealer within five business days of the date of charge;

4. That the Applicant provide the Registrar with an updated RCMP criminal record report on or before September 30, 2012. The report is to be a current report, no more than thirty (30) days old. Any further criminal record disclosure conditions can be imposed by the Registrar at the time of renewal of registration – if a renewal occurs and the further conditions are deemed necessary by the Registrar; and

5. That the Applicant fully and promptly co-operate with any inquiry made by the Registrar, in respect of any charges, findings or convictions related to the Applicant regarding any charge of the nature described in paragraph 2 above.

LICENCE APPEAL TRIBUNAL

Richard Macklin Vice-Chair

Released: April 11, 2012