Licence Tribunal

Appeal d'appel en

Tribunal matière de permis

DATE:

2012-07-11

FILE:

7337/CVOR & 7481/CVOR

CASE NAME:

7337 and 7481 v. Registrar of Motor Vehicles

Appeal under Section 50(1) of the Highway Traffic Act, R.S.O. 1990, c. H.8, from Orders of the Registrar of Motor Vehicles pursuant to 47 to suspend a Commercial Vehicle Operators Registration Certificate and pursuant to Section 17 to refuse to Issue a Commercial Vehicle Operator’s Registration Certificate

759408 Ontario Inc. o/a MMG Contracting and MMG Development Inc.

Applicants

-and-

Registrar of Motor Vehicles

Respondent

REASONS FOR DECISION AND ORDER

ADJUDICATOR:

D. Gregory Flude, Chair

APPEARANCES:

For the Applicants:

Mark Reynolds, Agent

For the Respondent:

Patrick S. Moore, Counsel

Heard in Toronto:

July 5, 2012

REASONS FOR DECISION AND ORDER

The Applicants appeal to this Tribunal under section 50(1) of the Highway Traffic Act, R.S.O. 1990, c. H.8 (the “Act”), from two orders of the Registrar of Motor Vehicles (the “Registrar”): the first issued on December 16, 2011 pursuant to section 17(1) to refuse to issue a Commercial Vehicle Operator’s Registration (“CVOR”) certificate and the second pursuant to section 47 (1) of the Act.

The Registrar seeks to suspend 759408 Ontario Inc. (“759”) and to seize the plate portion of the permits of vehicles owned by 759 and MMG Development Inc. (“MMG”) for a period of 30 days and thereafter until outstanding fines have been paid. He also seeks to refuse to issue a CVOR to MMG on the basis that the sole shareholder and officer of MMG is a related person to 759 and, based on 759’s safety record, the Registrar has reason to believe that MMG will not operate a commercial motor vehicle safely or in accordance with the Act, the regulations and other laws relating to highway safety. The Tribunal also heard evidence with respect to two other related CVORs, those issued to 615188 Ontario Ltd. (“615”) and Antonio Genco.

The Tribunal heard from two witnesses, Jim Kirchner, a Carrier Safety Rating Administrator in the Registrar’s office and Antonio Genco, an officer of 615 and 759 and a previous holder of a CVOR in his own name.

There is no dispute with respect to the underlying facts. Mr. Kirchner testified concerning the CVOR system and intervention levels. He stated that operators such as the appellants are required to hold a CVOR certificate issued by the Registrar of Motor Vehicles in order to operate their commercial trucking business legally in the province. The Registrar keeps safety performance records for CVOR certificate holders, with the contents prescribed by s. 5 of O. Reg. 424/97. A carrier is evaluated on the basis of a number of events, including collisions, driver and carrier convictions, safety inspections and detentions, and the results of facility audits.

The violation rate (“VR”) is a percentage rate based on events in the past 24 months. It involves the assignment of point values to events such as collisions, inspections and convictions for offences under the Act. Calculations compare point totals with thresholds appropriate to the distance traveled by an operator’s fleet, resulting in an overall violation rate expressed as a percentage. A higher percentage denotes a worse safety record.

The CVOR safety performance system is an automated system. At a 35% violation rate, a warning letter is normally sent. At a 50% violation rate, a request for a facility audit may be triggered. When the violation rate reaches 85%, an interview is requested. If a CVOR certificate holder’s violation rate rises to 100% or higher, the Registrar considers whether to impose a cancellation or a suspension. However, the CVOR Guideline also states that “chronic non-compliance” may lead to sanctions (regardless of whether that rate is 100% or more). At present 95.5% of operators have a violation rate of 35% or less, while only 0.4% of operators had a violation rate of 85% or more. The intervention system appears to be effective as 80% of operators improve their safety record after receiving a warning letter.

759 had a troubled birth arising out of the fact that both 615 and Antonio Genco had unpaid fines. 759 apparently came about because of a division of assets between Antonio Genco and his spouse, Karen Genco and appears to have started operating in 1995. Initially, 759 operated using 615’s CVOR. 615 continued to have its own vehicles, but in his evidence, Mr. Genco indicated that for a number of years, he has concentrated on operating heavy equipment and Mrs. Genco took over the trucks. In 1999, 759 applied for a CVOR and, after a false start, made a complete application in May 2000. Initially, the Registrar refused to issue a registration but subsequently, following a show cause meeting on September 20, 2000, decided to issue a temporary CVOR with terms attached. The terms required 759 to pass a facility audit, maintain acceptable on road performance and pay any outstanding fines.

Tab 14 of Exhibit 5 has the notes of the show cause meeting relating to 759’s CVOR registration. The notes show that Mrs. Genco, in her role as president of 759, acknowledged that she was responsible for any fines incurred by 615 after 1995. She felt that it was unfair that she should be responsible for her husband’s fines as a condition of receiving her CVOR. It appears to have been agreed that 759 would pay half of 615’s fines in the amount of $1,120.00 as a condition of registration. Mrs. Genco’s position is interesting given Mr. Kirchner’s evidence that corporate records indicate that she was a Vice-President of 615 from May 4, 1989.

By January 23, 2002 the Registrar was sufficiently impressed with the safety record of 759 to rescind its previous Notice of Suspension and Seizure and issue an unrestricted CVOR. It is worthy of note that the Rescind Order addresses the ongoing problem of unpaid fines and provides a list of the outstanding fines.

Beginning in September 2000 759 has had a varied safety record. It failed a Facility Audit on December 21, 2000. At the end of its first year of operation, on September 19, 2001, it received a warning letter. Notwithstanding the failed Facility Audit and the warning letter, the Registrar still issued the Rescind Order on January 24, 2002. On May 20, 2004 another warning letter was issued followed by a third on October 22, 2007 and a fourth on February 17, 2011. It was assigned a conditional safety rating on October 6, 2008 indicating a VR in excess of 70% returning to a satisfactory safety rating on May 19, 2009. It returned to a conditional safety rating status on August 31, 2009. By November 13, 2011, the overall VR had risen to an abysmal 119.9% and it continued to rise to a level of 136.3% on July 3, 2012. During this same period it passed facility audits on June 27, 2005, November 20, 2008 and June 14, 2010.

There appear to be some recurring themes to 759’s problems. Driver convictions remain high. Tire and brake problems recur as grounds for removing vehicles from the road because of out of service defects. There have also been a number of collisions, three on the current record by one driver who has now been terminated. There remain outstanding fines. A list of these fines, some dating back to 1991, was entered as Exhibit 7. The current total is over $1,700.00 for the three CVORs. This state of affairs exists despite persistent reminders from the Registrar that a failure to pay outstanding fines would lead to proceedings to revoke the CVOR.

Against this backdrop, MMG applied for the issuance of a CVOR. The sole shareholder and officer of MMG is Michelle Maria Genco. Of interest to the Registrar is the fact that 759 operates as MMG Contracting and that Michelle Genco lives at the same address as that given for 759. She is a student studying business and engineering. It is the Registrar’s view that MMG, 759, 615 and Antonio Genco are so closely related that the safety record of one is, in essence, the safety record of each of them. Based on that safety record, the Registrar seeks to deny MMG a CVOR.

MMG has one truck, purchased and put into service in June, 2011. It is currently leased to 759 and operates under the 759 CVOR. Antonio Genco testified that the truck is driven by a former 759 driver whom he considered to be very reliable. Because of the driver’s seniority, he has his pick of jobs currently available to 759. MMG invoices 759 each month for lease costs and is paid accordingly. The truck is also insured under 759’s fleet insurance policy.

It would not be unfair to say that the testimony of Antonio Genco was unfocussed and rambling. Notwithstanding this, it was possible to glean the important facts he wished to put before the Tribunal. The overriding fact that informed his testimony was his recent and extensive illness that had him bed-ridden for many years and resulted in him being hospitalized. In relating to time in his evidence, events seem to fall into two categories, pre and post-illness. It appears that he became ill sometime in 2007. While he recalls events before 2007 with some clarity, his sense of when they happened is extremely vague. The Tribunal has the benefit of the exhibits to create a time reference for events.

Mr. Genco and his wife Karen split up in the pre-2007 period. The settlement of their assets resulted in Mr. Genco taking over 615 and retaining the heavy equipment and Karen Genco taking over the truck fleet. She formed 759 to operate the trucks and applied for a CVOR. The documents indicate that this split occurred in and around 1995. 615 operated with a CVOR for some time but, some time after 1995, ceased to operate. The documents suggest that this occurred in and around 2000 when 759 got a CVOR. Prior to that date 759’s truck were operating under 615’s CVOR. The fact that 615 had outstanding fines and that this was discussed in 2000 with the Registrar suggests this time frame.

According to Mr. Genco, he had no involvement with the day to day operation of 759 until January, 2012. He worked at his heavy equipment business but, through that business, he was able to source haulage contracts for 759. He had no involvement with training, maintenance and testing of drivers. His cousin road tested drivers for 759 and Mrs. Genco handled driver paperwork. Should MMG be given a CVOR, he would fulfill the same function to it as he previously provided to 759 and assist his daughter in building up her business through referring to her good, promptly paying customers.

Mr. Genco lived separately from his wife while they were split up. They reconciled. It appears the reconciliation may have been around the time of the onset of his illness. Suffice it to say that, on November 24, 2008, he was made a Vice-President of 759. He remained bedridden for some time thereafter, but he would discuss issues relating to 759 with his wife. One such issue was the termination of a driver who had had four collisions, three on the current record, each his fault. Mr. Genco stated that when 759 received a letter from the OPP enclosing a letter from another road user detailing this driver’s on road behaviour, he advised Mrs. Genco to terminate him.

Starting in and around the Show Cause meeting with the Deputy Registrar on January 25, 2012, Mr. Genco has become more involved in the operation of 759. He road tests drivers now. He stated that he is very strict. He has initiated monthly drivers’ meetings where safety issues are discussed and the company mechanic demonstrates how to properly perform a daily circle check on a truck. He has looked for but has not yet arranged for specific safety training seminars; one course offered by Local 183 of the drivers’ union and one course offered by his insurers.

Driver discipline is now better delineated. After a second infraction, a driver receives a two day suspension. The policy does not address the consequences of subsequent infractions. Drivers are also required to have the company’s mechanic check the truck each week to ensure that it is road worthy. There have been results. Of 9 recent inspections, only one out of service defect was found.

Mr. Genco asked Mrs. Genco to make sure that all outstanding fines were paid. Up to the date of the hearing, Mr. Genco was of the view that they had been paid. It surprised him to see fines still outstanding, but he indicated that approximately $3000.00 had been paid and it was 759’s intention to pay the balance. It seems that the court records may not have identified the correct entity that was subject to the fine. Armed with Exhibit 7, Mr. Genco intends to ensure the balance of the fines is paid.

With respect to MMG, Mr. Genco asserted that his only role, and the role of his wife, would be to assist the growth of MMG by transferring business to it as his daughter gains experience and as Mr, and Mrs. Genco engineer their retirement. Having said that, he was asked where his daughter was and why was she not at the hearing. He answered that she was home: “Looking after the dogs.” The Tribunal notes that she was also not at the January 20, 2012 Show Cause meeting.

THE LAW

Pursuant to s. 47(1) of the ACT, the Registrar may suspend or cancel the plate portion of a permit or a CVOR certificate on a number of grounds:

(47. (1) Subject to section 47.1, the Registrar may suspend or cancel,

(a) the plate portion of a permit as defined in Part II; or

(c) a CVOR certificate,

on the grounds of,

(f) the Registrar having reason to believe, having regard to the safety record of the holder or of a person related to the holder, and any other information that the Registrar considers relevant, that the holder will not operate a commercial motor vehicle safely or in accordance with this Act, the regulations and other laws relating to highway safety

Interpretation

(2.1) Subsection 17 (4) applies, with necessary modifications, for the purpose of determining who are related persons under clause (1) (f).

The Registrar pursuant to s. 17 may also refuse to issue a CVOR

17. (1) The Registrar shall issue a CVOR certificate to and renew a CVOR certificate of every person who applies for the certificate or renewal in the form approved by the Minister and meets the requirements of this Act and the regulations.

Terms and conditions

(1.1) The Registrar may issue a CVOR certificate subject to any terms and conditions that the Registrar considers appropriate.

Refusal to issue

(2) The Registrar may refuse to issue a CVOR certificate to an applicant if the Registrar has reason to believe, having regard to the applicant’s safety record and any other information that the Registrar considers relevant, that the applicant will not operate a commercial motor vehicle safely or in accordance with this Act, the regulations and other laws relating to highway safety.

Same

(3) The Registrar may refuse to issue a CVOR certificate to an applicant if the applicant is related to,

(a) a person whose CVOR certificate has been cancelled, is or has been under suspension or is or has been subject to a fleet limitation;

(b) a person whose CVOR certificate suspension, cancellation or fleet limitation is under appeal; or

(c) a person who the Registrar has reason to believe, having regard to the person’s safety record and any other information that the Registrar considers relevant, will not operate a commercial motor vehicle safely or in accordance with this Act, the regulations and other laws relating to highway safety.

(4) An applicant is related to a person for the purpose of subsection (3) if,

(a) the applicant and the person are related individuals;

(b) either the applicant or the person is a partner of the other or was a partner of the other or they have or have had partners in common;

(c) either the applicant or the person, directly or indirectly, controls or controlled or manages or managed the other; or

(d) the applicant and the person have or have had common officers or directors or they are or have been controlled, directly or indirectly, by the same shareholders.

ANALYSIS

There is no doubt that 759 has descended to a level where its on road safety provides reason to believe that it will not operate a commercial motor vehicle safely. At the time of the Show Cause meeting on January 20, its VR was 119.9%. It had joined that notorious 0.2% of the 55,000 trucking companies in Ontario that have broken the 100% VR limit. In light of the Registrar’s concerns expressed at that meeting, the Tribunal would have expected to see a lower VR five and a half months later, at the hearing. Instead, the VR had jumped to 136.3% as of July 3rd.

The raw VR number may not tell the whole story. Exhibit 6 is a CVOR Abstract dated July 3, 2012. A close inspection shows that since the meeting on January 20, 759 has incurred points arising out of two incidents only, one conviction for speeding and one out of service defect. A similar period in 2011 shows 6 incidents where points were recorded against the VR. The Tribunal can conclude that the efforts made by Mr. Genco are starting to show some results. Given how poor the VR currently is, the Tribunal must consider whether it is necessary, to protect that public in general and users of the highway in particular, that 759’s CVOR be revoked,or will a suspension suffice to bring home to 759 that it is not acceptable to operate in the manner in which it has been.

The Tribunal accepts Mr. Genco’s evidence that 759 had intended to pay the outstanding fines and that the difficulties were administrative. It is of note that 759 negotiated an agreement in 2000 to pay only half of the earlier fines on the basis that 759 was unrelated to 615 or Mr. Genco. Clearly that situation changed with the addition of Mr. Genco as Vice-President in 2008 and his full reintegration into operations in 2012. The fines are a debt to the Crown to bring home the seriousness of impugned behaviour. They must be paid. Exhibit 6 should resolve any outstanding administrative issues.

The Tribunal is satisfied that MMG is a related person to 759. The absence of Michelle Genco from the hearing, her failure to appear at the Show Cause meeting and MMG’s representation at both of these proceedings supports the view that Mr. and Mrs. Genco are actually the controlling interests with respect to MMG. Weight is given to this conclusion because of Ms Genco’s current full-time studies. She is simply not on hand to run the business. She resides with her parents and operates her only truck under 759’s umbrella. The Tribunal can have no confidence that once she gets a CVOR she will disassociate herself completely from the obvious benefits of operating in concert with parents. No evidence was put before the Tribunal to support such a finding.

In reliance on the case of Lake Erie Iron and Metal OLSAB decision released August 25, 1999, the Registrar urged on the Tribunal the position that it could revoke 759’s CVOR rather than suspend for 30 days as the Registrar initially suggested. The Tribunal’s authority to impose a greater penalty than that sought by a Registrar was recently upheld by the Divisional Court in the case of Johal v. Board of Funeral Services, [2011 ONSC 7525](https://www.minicounsel.ca/odc/2011/7525). Dambrot J. reviewed the powers of the Tribunal under broadly similar wording to the Tribunal’s powers under the Act as follows:

18Counsel agree that the appeal before the LAT was a hearing de novo. We concur. Section 14(9) of the FDEA, which applies with the modifications necessary to an appeal to the Tribunal by virtue of s.18(2) of the FDEA, empowers the Tribunal, after conducting a hearing, to order the Discipline Committee to take such action as the Tribunal considers the Discipline Committee ought to take and may “substitute its opinion for that of” the Discipline Committee.

19In this case the LAT heard evidence that was not heard by the Discipline Committee and made its own findings of fact. As a result it was free and indeed was required to impose the penalty that it considered appropriate. While no doubt it was entitled to take into consideration the penalty imposed by the Discipline Committee, it was not obliged to treat it as the maximum penalty that it could impose, particularly where it heard evidence that was not before the Committee or where, as here, it concluded that the Committee had made an error in principle in imposing penalty. Given the LAT’s authority to impose the penalty it determines to be appropriate, a cross-appeal is not required to permit the LAT to impose an appropriate penalty in excess of the penalty imposed by the Discipline Committee. Finally on this point, we note that the appellant was put on notice in the course of the hearing before the Tribunal that it was open to the Tribunal to impose revocation as a penalty.

20We are also of the view that in imposing a penalty, the LAT was entitled to take into consideration the circumstances of the appellant and of the appellant’s misconduct revealed in the admissible evidence, whether or not those circumstances fall within the strict confines of the allegations in the Notice of Hearing. In this case the allegations related to the signing of six false reports. But, the appellant’s continued dishonesty in involving others in her employ in the effort to conceal her misconduct from the Funeral Board, the Discipline Committee and the LAT and her fabricated testimony before the Discipline Committee and the LAT, were all matters inextricably interwoven with the misconduct alleged and properly taken into consideration when the LAT imposed penalty. Additionally, it is beyond doubt that the potential consequences to others flowing from the making of the false reports, and the risk posed to the public as a result of the dishonesty disclosed by these acts were proper considerations in determining the appropriate penalty. Finally, it was open to the Tribunal to take the appellant’s continued dishonesty into account in determining the extent to which the appellant had achieved or could achieve professional rehabilitation. This is not a case of simply treating an appellant’s denial of alleged misconduct as an aggravating factor in imposing penalty, which is not permissible.

In the current case, the Tribunal has heard evidence that the VR of 759 continued to deteriorate following the January 20, 2012 Show Cause meeting. Against this fact, the Tribunal has noted the increased involvement of Antonio Genco in the operations of the company and the marked improvement resulting therefrom. The Tribunal also notes that the evidence against the former entities operated by Mr. Genco, his sole proprietorship and 615, is that they ran afoul of the Registrar for non-payment of fines and not for safety related issues.

On careful review the Tribunal has decided that a 30 day suspension is appropriate. The Applicants’ submission, that no suspension is warranted on the current record, or, at most a seven day suspension, ignores the serious danger to other road users that persistent maintenance problems, poor driving practices and collisions between large commercial vehicles and passenger cars pose. Indeed, for the Tribunal, on these facts, the choice was squarely between a 30 day suspension and revocation. To this extent, 759 may be said to have dodged a bullet. It is only because of the Tribunal’s view that Mr. Genco has shown evidence that the operation has begun to turn around that it has arrived at this conclusion. Should there not be a marked improvement in 759’s on road performance, it is likely that it will find itself before this Tribunal again and it may not achieve as favourable a result.

ORDER

With respect to the statutory test for relatedness, it cannot be denied that 759 and 615 are related entities since they have common officers, Antonio Genco and Karen Genco. This reasoning also applies to the CVOR issued to Antonio Genco. The Tribunal has found that MMG is a related person to 759 based on control, directly or indirectly,by Mr. and Mrs. Genco.

Accordingly, pursuant to the provisions of s. 50 of the Act, the Tribunal orders the Registrar to carry out the Suspension and Seizure Order dated March 26, 2012 with respect to CVORs numbered 120-286-053 issued to 759408 Ontario Inc., 083-938-396 issued to 615188 Ontario Ltd. and 070-440-778 issued to Antonio Genco and to seize the plate portion of any permit issued to MMG Development Inc. RIN 170-771-988 for a period of 30 days and thereafter until all outstanding fines are paid. The 30 day suspension is to commence on a date to be set by the Registrar.

Further, the Tribunal orders the Registrar to refuse to issue a Commercial Vehicle Operator’s Registration Certificate to MMG Development Inc. as set out in the Refusal to issue a Commercial Vehicle Operator’s Registration Certificate dated April 4, 2012.