Licence Appeal Tribunal

DATE: 2012-09-04

FILE: 7352/MVDA

CASE NAME: 7352 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 Refuse and Revoke Registrations

Mark Karolinski, Mark Karolinski and Alexandr Karolinski o/a Silicia, DMR Group Inc. -and- Registrar, Motor Vehicle Dealers Act, 2002 Respondent

ORDER

ADJUDICATOR: Alex McCauley Member

APPEARANCES:

For the Applicant: Ariel A. Niyazov, Counsel

For the Respondent: Michael Rothe, Counsel

Heard by teleconference: August 29, 2012

ORDER

This is a third pre-hearing in the matter of the Notice of Proposal by the Registrar, Motor Vehicle Dealers Act, 2002 (the "Registrar") to refuse and revoke the registration of the Applicants, Mark Karolinski, Mark Karolinski and Alexandr Karolinski o/a Silicia, DMR Group Inc.

The parties have agreed on terms and conditions which would permit the registration of the Applicants under the Motor Vehicle Dealers Act, 2002, and are requesting the Tribunal to issue a consent order without a hearing pursuant to section 4.1 of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22.

The Tribunal has reviewed the settlement signed by the Applicants and the Registrar, which is filed and attached to this Order as Schedule "A";

Accordingly and on consent of the parties, the Tribunal orders that the proceedings in this matter are concluded and disposed of without a hearing on the basis of the terms set out in Schedule "A," which are incorporated into and made part of this Order.

LICENCE APPEAL TRIBUNAL

Alex McCauley-Member

Released: September 04, 2012

SCHEDULE "A"

TO: Licence Appeal Tribunal 20 Dundas Street West, Suite 530 (5th Floor) Toronto, ON M5G 2C2

FROM: The Registrar Motor Vehicle Dealers Act, 2002 Ontario Motor Vehicle Industry Council 789 Don Mills Road, Suite 800 Toronto, Ontario M3C 1T5

AND FROM: DMR Auto Group Inc. 11352 Yonge St., Unit 1 Richmond Hill, ON L4S 1K9

AND FROM: Mark Karolinski & Alexandr Karolinski o/a Silicia 11352 Yonge St., Unit 1 Richmond Hill, ON L4S 1K9

AND FROM: Mark Karolinski c/o 11352 Yonge St., Unit 1 Richmond Hill, ON L4S 1K9

Pursuant to subsection 6(2) of the Motor Vehicle Dealers Act, 2002 DMR Auto Group Inc. ("the Applicant"), Mark Karolinski & Alexandr Karolinski o/a Silicia ("the Dealer"), Mark Karolinski ("Karolinski") and the Registrar, Motor Vehicle Dealers Act, 2002, ("the Registrar"), in accordance with section 4.1 of the Statutory Powers Procedure Act, do hereby waive the requirements of a hearing and consent to an Order of the Licence Appeal Tribunal based upon the following terms and conditions:

1. The Applicant and the Dealer agree not to operate outside the restrictions of their respective classes of registration.

2. The Applicant and the Dealer will ensure that all personnel, agents, assignees or anyone acting on behalf of the Applicant and the Dealer to buy, sell or lease motor vehicles shall be registered as a salesperson to the Applicant and the Dealer respectively.

3. The Applicant and the Dealer further acknowledge that the restrictions concerning the activities of salespersons referred to in these Terms and Conditions applies to the trade of motor vehicles which includes buying, selling and leasing on behalf of the Applicant or Dealer. "Buying, selling and leasing" refers to showing a vehicle to a prospective purchaser or lessee, or any form of negotiation concerning the purchase sale or lease of a motor vehicle and is not limited to the signing of contracts (see "trade" as defined in the Act). This further includes attendance at auction on behalf of the Applicant or Dealer and positions commonly referred to as Sales Manager, Finance and Insurance Manager, Branch Manager, Business Manager, General Manager or any individual who has supervisory authority over salespersons, signing authority or who may be defined as a "person-in-charge" of the Applicant or Dealer.

4. The Applicant, the Dealer and Karolinski will not conduct any trades with anyone who is in the business of buying, selling or leasing motor vehicles without first confirming that the person is registered as a dealer under the Act.

5. Karolinski will ensure that all advertisements placed by or on behalf of the Applicant or the Dealer will comply with section 36 of Ontario Regulation 333/08 as well as OMVIC's Standards of Business Practice, 2010 as applicable.

6. The Applicant, the Dealer and Karolinski acknowledge and understand that their registrations will not be used to buy, sell or lease motor vehicles where they know, or ought to know, the purchase, sale or lease of those vehicles will facilitate an illegal or unethical practice.

7. The Applicant, the Dealer and Karolinski will comply with OMVIC's Code of Ethics [Ontario Regulation 332/08] and Standards of Business Practice, 2010 as may be amended from time to time.

8. The Applicant, the Dealer and Karolinski agree they will not be involved with the buying, selling or leasing of motor vehicles without the benefit of registration.

9. The Applicant and the Dealer will ensure that all personnel, agents, assignees or anyone acting on behalf of the Applicant or the Dealer are informed concerning the Terms and Conditions contained in this document to the extent necessary to ensure compliance with these Terms and Conditions.

Books and Records

10. The Applicant and the Dealer agree to maintain a garage register in accordance with the Highway Traffic Act and section 57 of Ontario Regulation 333/08 and will maintain all books and records as required by the Act at the Applicant and/or Dealer's registered premises as applicable. The Applicant and the Dealer further agree to provide free access to books and records of the Applicant and the Dealer, as the case may be, to any authorized representative of the Registrar.

11. The Applicant and the Dealer will ensure that any vehicles sold are registered in the name of the purchaser in the records of the Ministry of Transportation before releasing the vehicle to the purchaser.

12. The Applicant and the Dealer will not purchase a vehicle without ensuring the vehicle is registered to the seller in the records of the Ministry of Transportation.

13. The Applicant and the Dealer agree to register all vehicles purchased within 6 days in accordance with the Highway Traffic Act.

14. The Applicant and the Dealer agree that, in the event their books and records are lost, stolen or destroyed in whole or in part, they shall advise the Registrar, in writing, within 5 days of the event in accordance with section 55 of Ontario Regulation 333/08, and shall include all relevant documentation including, but not limited to, police reports, insurance claims, affidavits, etc. The Applicant and the Dealer further agree to make all reasonable efforts to reconstitute the lost, stolen or damaged records.

15. The Applicant and the Dealer agree, prior to the removal of any records from the registered premises of the Applicant or the Dealer, to obtain a receipt including the recipient's name, address, phone number, description of records taken, time of return and signature of recipient. The Applicant and the Dealer further agree to make said receipt available to any representative of the Registrar, upon request.

16. The Applicant and the Dealer shall maintain books and records, which accurately record the nature of transactions involving the purchase, sale or lease of a motor vehicle. The Applicant and the Dealer will not be involved in the creation of books and records, which are misleading as to the nature of a transaction involving the purchase, sale or lease of a motor vehicle.

Premises

17. The Applicant and the Dealer agree to maintain a sign at the Applicant and the Dealer's respective registered premise that is visible to the public.

18. The Applicant and the Dealer agree to operate exclusively from the location approved by the Registrar. The Applicant and the Dealer further agree to apply for the Registrar's approval, by way of prior written notice, of any change in location.

19. The Applicant, the Dealer and Karolinski agree not to invite the public to deal at a place other than the Applicant and the Dealer's respective approved locations.

20. The Applicant and the Dealer will have a phone number that is publicly listed with the Dealer's registered name and address.

Disclosure

21. The Applicant and the Dealer agree that they are under a positive obligation to disclose, in writing on the bill of sale, all material facts about the vehicles they sell or leases to their customers, whether or not the Applicant or the Dealer agrees with the disclosure and whether or not the vehicle has been branded through the Ministry of Transportation. Material facts include, but are not limited to, disclosure of salvage, previous salvage, accidented and repaired, frame damage, theft recovery, unibody damage, previous taxi cab, previous police car, previous daily rental, insurance write-off and any other material fact which, in the Registrar's opinion, may affect one's decision to purchase or lease the vehicle. In the case of damaged vehicles, the Applicant and the Dealer further agree to disclose as much detail as possible with respect to the nature and severity of the damage. The Applicant and the Dealer agree to make reasonable efforts to research the history of the Applicant's and the Dealer's respective vehicles prior to sale to ensure all material facts are disclosed.

22. The Applicant and the Dealer agree that, should any information come to light, which the Registrar deems to be a material fact concerning a vehicle the Applicant or the Dealer has sold, the Applicant and/or the Dealer will comply with all reasonable requests made by the Registrar to provide compensation to the purchaser, whether or not the Applicant/the Dealer agrees with the disclosure and whether or not the vehicle has been branded through the Ministry of Transportation.

23. The Applicant, the Dealer and Karolinski agree that all contracts for trades will comply with sections 40 to 45 of Ontario Regulation 333/08 as applicable.

24. The Applicant and the Dealer agree to accept full responsibility for the quality of any repairs or alterations to a motor vehicle that are completed by the Applicant's or the Dealer's personnel, agents, assignees, affiliated repair facilities or anyone acting on behalf of the Applicant or the Dealer.

Financial Responsibility

25. The Applicant and the Dealer will comply with all federal, provincial and municipal tax obligations. Without limiting the generality of the foregoing, the Applicant and the Dealer will ensure all required filings are current and submitted with required payments. All taxes collected are deemed to be trust funds and will not be used for any other purpose other than remittances to the federal, provincial and municipal government.

26. The Applicant and the Dealer agree to maintain a bank account in accordance with section 59 of Ontario Regulation 333/08.

27. The Applicant and the Dealer agree to maintain a trust account, in respect of any deposits made in excess of $10,000.00 or any funds in relation to motor vehicles sold on consignment, if applicable.

28. The Applicant and the Dealer further agree that should a trust account be opened, they shall maintain their trust account in accordance with section 58 of Ontario Regulation 333/08 under the Motor Vehicle Dealers Act, 2002.

29. The Applicant and the Dealer agree that should a trust account be opened, the Applicant and the Dealer shall provide written confirmation to the Registrar that a trust account has been established in the Applicant's or the Dealer's name at their respective financial/banking institutions within 5 days of establishing same.

30. The Applicant and the Dealer further agree to notify the Registrar of their bank account information, including the name and address of the financial institution, the account number and the signing officers on the accounts and to ensure that all financial transactions of the Applicant and the Dealer are processed through these accounts.

31. The Applicant and the Dealer agree that if any claim is made to, and paid by, the Motor Vehicle Dealers Compensation Fund, the Applicant or the Dealer shall pay or make arrangements to pay the Fund within 10-days of being notified that the Applicant or the Dealer is in default with the Fund, if applicable.

32. The Applicant and the Dealer agree to provide the Registrar with written notice of any new sources of financing or guarantors for either dealership within 10 days of having arranged for, or received, the financing, whichever comes first. This does not apply where the Applicant or the Dealer has applied on their own account and has obtained financing from a corporation registered under the Loan and Trust Corporations Act, the Bank Act or from a credit union or league to which the Credit Unions and Caisses Popularies Act, 1994, as amended from time to time, applies.

33. The Applicant, the Dealer and Karolinski confirm that ALEXANDR KAROLINSKI and ROUSLAN DANILENKOV will not be financing the dealership, either directly or indirectly. The Applicant, the Dealer and Karolinski will make reasonable efforts to determine the source of financing received to ensure compliance with these Terms and Conditions.

Other

34. Without limiting the generality of the foregoing, the Applicant, the Dealer and Karolinski will not knowingly involve ALEXANDR KAROLINSKI or ROUSLAN DANILENKOV in the operation of the dealership without the prior written consent of the Registrar. This includes, but is not limited to, any administrative, supervisory, management or customer service responsibilities.

35. The Dealer will not knowingly purchase or lease vehicles from, or sell or lease vehicles to, ALEXANDR KAROLINSKI or ROUSLAN DANILENKOV or any companies affiliated with ALEXANDR KAROLINSKI or ROUSLAN DANILENKOV without confirming with the Registrar that they are registered as salespersons and/or dealers under the Act or acting on behalf of a dealer who is registered under the Act.

36. The Applicant, the Dealer and Karolinski understand that the Registrar is relying on the accuracy and completeness of all documents, statements or information provided by them in support of their applications for registration. The Applicant, the Dealer and Karolinski confirm that all documents, information or statements provided to the Registrar are true to the best of the Applicant's, the Dealer's, and Karolinski's knowledge and belief and that the Applicant, the Dealer and Karolinski have given full answers to all questions and requests made by the Registrar in connection with their applications.

37. The Applicant, the Dealer and Karolinski acknowledge that the Registrar may take further administrative action in the form of a proposal to revoke their registrations, arising from any matters that have occurred or may occur related to honesty, integrity, financial position and/or compliance with these terms and conditions.

38. The Applicant, the Dealer and Karolinski acknowledge that they have taken the time to carefully review these terms and conditions, and, by signing and initialling, acknowledge that they understands their significance and agree to abide by them.

Mark Karolinski's Initials: _____

39. The Applicant, the Dealer and Karolinski hereby consent to an Order of the Licence Appeal Tribunal, which will include the terms and conditions set out herein.

40. The Applicant, the Dealer and Karolinski hereby acknowledge that they have obtained or have had the opportunity to obtain independent legal advice with respect to their consent to the terms and conditions set out in this document.

Signed in the City of this day of 2012.

Mark Karolinski (signature)

DMR Auto Group Inc. I have the authority to bind the corporation.

Mark Karolinski & Alexandr Karolinski o/a Silicia I have the authority to bind the partnership.

Mark Karolinski (signature)

These Terms and Conditions are accepted by the Registrar, Motor Vehicle Dealers Act, 2002.

Date:

Carl Compton Registrar