Licence Tribunal
Appeal d'appel en
Tribunal matière de permis
FILE: 7886/CVOR
CASE NAME: 7886 v. Registrar of Motor Vehicles
Appeal under Section 50(1) of the Highway Traffic Act, R.S.O. 1990, c. H.8, from an Order of the Registrar of Motor Vehicles Pursuant to Section 47(1) to Cancel the Commercial Vehicle Operators’ Registration Certificate and to Seize the Plate Portion of all Permits Issued
2043875 Ontario Inc. and 1339233 Ontario Inc. Applicants
-and-
Registrar of Motor Vehicles Respondent
REASONS FOR DECISION AND ORDER
ADJUDICATOR: Mary Ann Spencer, Member
APPEARANCES:
For the Applicants: Karamjit Gill, Agent
For the Respondent: Patrick Moore, Counsel
Heard in Toronto: May 9 and May 22, 2013
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 an order of the Registrar of Motor Vehicles (the “Registrar”) issued on January 25, 2013 pursuant to section 47(1) to cancel a Commercial Vehicle Operators Registration (“CVOR”) certificate and to seize the plate portion of any permits issued.
In addition to the Applicants, the Order of Cancellation and Seizure was issued to Guru Trust Xpress Ltd. Only 2043875 Ontario Inc. and 1339233 Ontario Inc. are appealing the Order, Guru Trust Express Ltd. having surrendered its CVOR certificate to the Registrar.
In summary, the grounds for the Order of Cancellation and Seizure are that the Registrar, having considered both the Applicants’ safety records and the safety record of a person related to the Applicants, has reason to believe the Applicants will not operate safely.
The hearing commenced on May 9, 2013. After giving his testimony, the Agent for the Applicants indicated he wished to enter previously undisclosed documents into evidence. After he was provided the opportunity to review the documents, Counsel for the Registrar requested an adjournment to permit the Registrar adequate time to review and respond to the new information. The Agent for the Applicants did not object to the adjournment and the Tribunal therefore adjourned the hearing to May 22, 2013.
EVIDENCE AND FACTS
Registrar’s Evidence
The evidence of the Registrar comprised a documents produced by the Ministry of Transportation and the testimony of Ministry of Transportation employees Daniel Ramer and Marc Lavallee.
The following is a summary of the relevant evidence:
Daniel Ramer is employed as a Carrier Safety Rating Administrator with the Ministry of Transportation. His responsibilities include monitoring the safety records of CVOR certificate holders, conducting interviews with certificate holders to address safety records and preparing action plans for the consideration of the Deputy Registrar.
Mr. Ramer testified about the responsibilities of a CVOR certificate holder which are set out in the Public Guideline issued by the Ministry of Transportation (Exhibit 4, Tab 27) and include, among others, employing qualified and licensed drivers and monitoring their safety performance, including their hours of service; resolving driver safety issues; keeping vehicles in good, safe condition at all times; ensuring load security; and keeping required records. Mr. Ramer explained that hours of service with respect to drivers refers to the number of hours they are permitted to work and the rest hours they are required to have and indicated that violations in this respect concern the Ministry because tired drivers are a potential safety issue. He also explained that a carrier is expected to have some type of disciplinary program in place to resolve driver safety issues, for example, to ensure that pre-trip inspections are conducted.
A carrier’s performance is recorded and assessed over a two year rolling window and is expressed as an overall safety violation percentage. Every carrier receives one of five safety ratings: Excellent, Satisfactory, Satisfactory–Unaudited, Conditional and Unsatisfactory. To determine the safety violation percentage, information such as fleet size and kilometers travelled provided by the carrier with its annual renewals is used to establish threshold levels against which performance is assessed. The CVOR system assigns points to carriers for collisions, convictions and inspections which are weighted to determine the overall safety violation rate. Collisions and convictions each form 40% of the record with inspection findings comprising 20%.
Mr. Ramer explained how points are assigned. For example, if there are improprieties such as driver fatigue involved in a collision, points would be assigned. Pre-determined points assigned for convictions are set out in the Conviction Code Table which lists offences under the Act and indicates whether a conviction is administrative or safety related. Only safety related convictions are assigned points. With respect to inspections, Mr. Ramer indicated that points are only assigned for “out of service” findings, that is either mechanical defects such as brakes being out of alignment or issues with the driver which result in the vehicle being pulled from the road until the defect is corrected.
At pre-determined percentage levels, the Ministry intervenes or considers sanctions which can include suspension, cancellation or fleet limitation. Mr. Ramer testified that generally warning letters are issued at 35%, a request for a facility audit is triggered at 50%, at 80% an interview is requested and at 100%, cancellation is recommended and the carrier is invited to a “Show Cause” meeting with the Deputy Registrar. Mr. Ramer explained that the purpose of intervention is to ensure carrier compliance and that 80% of companies improve following Ministry intervention.
The Ministry produces two types of reports or CVOR abstracts which contain information about a carrier’s safety performance. For a $5.00 fee, a carrier can obtain a copy of a Level II CVOR abstract by contacting the Ministry which advises carriers to do so to monitor their performance. If a carrier believes there are errors on the record, the Ministry will check and make corrections as necessary.
Mr. Ramer testified that as of March 31, 2012, only .4% of carriers or 224 of 54,093 had violation rates exceeding 85% (Exhibit 4, Tab 28). Not all companies with a violation rate greater than 85% are cancelled. A suspension order might be considered. In making this determination, the Ministry would look at both the time a carrier had been in business as well as the total kilometers it had travelled.
In December, 2012, Mr. Ramer prepared a Safety Record Review (Exhibit 4, Tab 2) with respect to the two Applicants and Guru Trust Xpress Ltd. The Safety Record Review contained information on all three companies because Ministry information indicated they were affiliated. The corporate officer of 2043875 is Raghbir Singh Mundi. The corporate officer of 1339233 Ontario Inc. is the Applicants’ Agent, Karamjit Singh Gill, who is Mr. Mundi’s son-in-law. 2043875 Ontario Inc. and 1339233 Ontario Inc. also use the same corporate address at 47 Ice Field Road, Brampton. The corporate officer listed on the records of the Ministry for Guru Trust Xpress Ltd. is Swaran Singh, however the Ministry has been informed that Mr. Singh sold the company to Gurpeet Gill, Karamjit Gill’s wife.
For the period ending October 29, 2012, the overall safety violation rate of 2043875 Ontario Inc. was 137.25%. Mr. Ramer also prepared a second analysis of the company’s performance for the approximate six month period following a facility audit in May of 2012. This analysis produced a safety violation rate of 120.38%. Mr. Ramer testified that his review of inspection reports indicated that the company’s out of service rate was 40%.
The Safety Record Review indicates that the CVOR certificate for 2043875 Ontario Inc. was issued on April 19, 2004. Warning letters were issued by the Ministry on October 13, 2004, October 13, 2006 and October 13, 2011 and Conditional safety ratings were assigned. Mr. Ramer explained that this meant that the company’s overall safety violation rate exceeded 70%. At the time of the preparation of the Safety Record Review, 2043875 Ontario Inc. also had $1,610.00 in outstanding fines of which $1,120.00 were in default (Exhibit 4, Tab 12). Mr. Ramer conducted a subsequent check of the ICON (Integrated Court Offences Network) reports from the Ontario Court of Justice on May 6, 2012 which indicated that the outstanding fines then totalled more than $7,000.00, which included a fine of $5,000 under section 84 of the Act for operating a vehicle in an unsafe condition.
The May 11, 2012 facility audit (Exhibit 4, Tab 7) indicated an overall compliance rate of 70.31% but the company failed the audit because of its out of service rate of 40.88%. As part of the facility audit, drivers are reviewed. In this case, one driver was noted as unqualified and only one scored over 75%. One of the eight drivers reviewed, D.A., shows a series of violations of hours of service and three, including D.A., show multiple findings of falsification of records.
The notes of the inspector who conducted the facility audit indicate he made multiple attempts to contact listed corporate officer Mr. Mundi on April 13, 2012 with respect to the audit. The number on record for 2043875 Ontario Inc. was not in service; however the number on record for 1339233 Ontario Inc. was answered as “GTX” although the inspector was told that Mr. Mundi was not available and to call back later. The inspector eventually was contacted by Gagan Padda who identified himself as representing GTX. At a later meeting held at Baltech Trucking Solutions, Mr. Padda advised that he was a consultant to the operator. Mr. Padda advised the inspector that 1339233 Ontario Inc. was not in operation. The inspector’s notes highlight the affiliation between 2043875 Ontario Inc. and Guru Trust Express Ltd., noting they had common drivers and vehicles; Mr. Padda worked for both; they had common operational addresses and a common yard at 98 Healey Rd., Bolton; and the fact that 2043875 Ontario Inc. and Guru Trust Xpress were both operating as “GTX”.
Mr. Ramer explained the CVOR summary for 2043875 Ontario Inc. dated November 29, 2012 which shows the overall safety violation of 137.25% with convictions contributing 104.48% of that total. He highlighted that of the 30 convictions on the record, 27 were assigned points and that 18 of the 45 recorded inspections produced “out of service” violations such as leaking brake lines or lights not functioning. A summary of the inspection issues indicates a total of 103 findings, with 43 relating to brakes, 17 to drivers’ hours of service and 10 to lighting (Exhibit 4, Tab 10). Mr. Ramer highlighted a number of the detailed inspection reports (Exhibit 4, Tab 11) including five findings on November 8, 2012 relating to driver hours of service; a trailer being placed out of service on October 26, 2012 because more than 50% of the brakes were past the adjustment level; a June 26, 2012 inspection where the driver was not carrying the required documentation and major defects were found in brakes and a tire; and, a further inspection on June 27, 2012 where the same driver involved on June 26, 2012 was found still to be driving with the major defects. Mr. Ramer stated that his conclusion on review of the inspection reports was that drivers could not be conducting pre-trip inspections nor were repairs being made when defects were found.
On February 21, 2012, the Ministry sent a letter to 2043875 Ontario Inc. advising that its safety rating would be changed to Conditional (Exhibit 4, Tab 6). Mr. Ramer testified that violations continued after this letter was sent. Referring to the CVOR abstract, he highlighted that on March 6, 2012, driver V.D. was convicted of speeding and driving while his licence was suspended. An inspection on March 10, 2012 resulted in two convictions for driver G.B. for failure to perform a pre trip inspection and for improper brake performance. Mr. Ramer then stated that issues also continued after the May 11, 2012 facility audit and highlighted inspections on May 19, 2012 where three “out of service” violations relating to brake lines were found; on June 12, 2012 where an “out of service” violation was found relating to a seal leaking on a wheel bearing hub; on June 16, 2012 where findings resulted in a later conviction of the operator for failing to ensure the driver forwarded logs to the operator as required; and, on July 15, 2012, where two convictions resulted from driver H.A. failing to carry inspection reports or to use a seat belt. Mr. Ramer summarized the findings by stating that the Ministry saw no decrease in issues after the facility audit.
On January 7, 2013, Karamjit Gill and Gagan Padda attended a Show Cause meeting at the Ministry of Transportation at which Mr. Ramer was in attendance (Exhibit 4, Tab 22). At that meeting, Mr. Gill indicated that approximately a month before the meeting, an individual named Kevin from his insurance company had trained his drivers on completion of log books and on pre-trip inspections. Mr. Ramer testified that he contacted the insurance company to confirm Kevin’s role and was informed by e-mail that the company employed no such individual (Exhibit 4, Tab 25). He further testified that he attempted to but was unable to identify anyone who had done the training.
At the Show Cause meeting, a Safety Management Plan for 2043875 Ontario Inc. was provided by its representatives. Mr. Ramer testified that the plan was weak in the Ministry’s assessment and no proof was provided to indicate that the driver training outlined in it had taken place. He stated that the plan included an indication that safety consultant Jagroop Bal would work with drivers to ensure they understood hours of service requirements.
Exhibit 5 is a Level II CVOR abstract for 2043875 Ontario Inc. dated April 19, 2013. Exhibit 6 comprises detailed inspection reports. The CVOR abstract indicates the overall safety violation rate of the company is 172.07% with convictions contributing 129.44% and inspections contributing 29.87% of the total. Mr. Ramer highlighted issues which have been found at inspections conducted in 2013 after the Show Cause Meeting. These included brake issues on January 8th; hours of service, lighting and brake issues on January 11th; hours of service, lighting, and load security issues on February 4th; hours of service issues on February 8th; brake issues on February 13th; issues with hours of service, tires, brakes on February 27th; issues on February 16th; brake and tire issues on March 6th; hours of service and insurance issues on March 21st; and, an insurance issue on April 17th. Mr. Ramer testified that with two exceptions, all of the issues highlighted resulted in the trailer or driver being placed out of service and that in his opinion, the inspection results indicated that company had not been successful in “any way, shape or form” in improving its safety record.
The CVOR certificate of 1339233 Ontario Inc. was issued on May 28, 2002. The certificate expired on April 5, 2011 and is no longer renewable. Mr. Ramer testified that he does not believe the company is currently in operation. 1339233 Ontario Inc. had been the subject of a Notice of Suspension on May 12, 2008 (Exhibit 4, Tab 13). Mr. Ramer noted that the Safety Record Review conducted in May, 2008 showed the company had an overall safety violation rate of 171.1%. At that time, the Applicants’ Agent, Mr. Gill, was the president, director and shareholder of the company. Following review of a safety action plan, the Ministry set aside the Notice on July 10, 2008 subject to performance conditions.
On September 15, 2010, a facility audit of 1339233 Ontario Inc. was conducted which the company failed due to hours of service issues. (Exhibit 4, Tab 14). Mr. Ramer highlighted that the inspector’s notes indicate the inspector dealt with Mr. Padda, the same individual who represented 2043875 Ontario Inc. at its facility audit. Mr. Ramer also noted that the report indicates Mr. Gill informed the inspector that the company had stopped operating because of insurance problems. The report includes the inspector’s notation that 1339233 Ontario Inc.’s plates had expired at the end of July 2010 and that its trucks had been plated to 2043875 Ontario Inc.
Mr. Ramer testified that Guru Trust Xpress Ltd. had been issued warning letters with respect to its safety performance on December 19, 2005 (Exhibit 4, Tab 15) and December 15, 2011 (Exhibit 4, Tab 16). When a facility audit was conducted on April 23, 2012 (Exhibit 4, Tab 17), the inspector learned from Gagan Padda that Guru Trust Xpress Ltd. had been sold in November 2011 to Gurpreet Gill, the wife of Karamjit Gill and that the company was being dispatched by 2042875 Ontario Inc. o/a GTX Transport. The notes in the facility audit report further indicate that Guru Trust Xpress Ltd. is affiliated with both 1339233 Ontario Inc. and 2043875 Ontario Inc. based on the family relationship among the corporate officers and directors, their location at the same address, the employment of Mr. Padda as safety consultant for both Guru Trust Xpress and 2043875 Ontario Inc. and the use by all three companies of the corporate logo “GTX Transport”. Mr. Ramer indicated that the operation of companies under different names and CVOR registrations can be a tactic employed to reduce the violation rate of a single company.
Mr. Ramer testified that the CVOR report dated November 30, 2012 for Guru Trust Xpress Ltd. (Exhibit 4, Tab 18) indicates an overall safety violation rate of 93.8% and an “out of service” rate of 46.43%. He highlighted inspection reports (Exhibit 4, Tab 19), which indicate issues included lighting, brake adjustment and insecure loads at the July 21, 2012 inspection, brake adjustment issues at the June 20, 2012 inspection and an inoperable brake at the June 5, 2012 inspection.
Mr. Ramer also testified that when Guru Trust Xpress was asked to attend a Show Cause meeting at the Ministry, the Ministry received a letter dated January 4, 2012 authorizing Karamjit Gill to act on the company’s behalf (Exhibit 4, Tab 21). He noted that this letter was signed by Swaran Singh notwithstanding the fact that he no longer was a corporate officer. On January 7, 2012, Mr. Singh voluntarily terminated the CVOR registration of the company (Exhibit 4, Tab 25).
Applicants’ Evidence
Karamjit Gill testified on behalf of the Applicants. He stated that he does not dispute the past issues with 2043875 Ontario Inc. but that its safety record had not deteriorated in the last quarter of 2012 but rather, had improved. Mr. Gill stated that the records of the Ministry of Transportation with respect to kilometers travelled are incorrect and therefore the safety violation rate is too high. Mr. Gill suggested the company is running 3,000,000 kilometres a year. He further testified that he had fired two drivers since January. Mr. Gill then indicated that he wished to enter as exhibits a number of IFTA (International Fuel Tax Agreement) Quarterly Tax Returns submitted to the Ministry of Finance which would demonstrate that the kilometers travelled were higher than those in the Ministry’s CVOR system. Because these reports had not been disclosed to the Registrar, the parties agreed to an adjournment of the hearing to enable the Registrar to review the information.
On resumption of the hearing on May 22, 2013, with consent of the parties, two IFTA Quarterly Returns filed by 2043875 Ontario Inc. for the period July 1 to September 30, 2012 dated October 3, 2012 and January 16, 2013 and an IFTA Quarterly Return for the period October 1, 2012 to December 31, 2012 dated January 18, 2013 were entered into evidence as Exhibit 7. On consent, the same IFTA quarterly tax returns obtained by the Registrar from the Ministry of Finance were entered as Exhibit 8. Mr. Gill then indicated that he wished to provide no further testimony.
On cross examination, Mr. Gill stated that he is responsible for the management of 2043875 Ontario Inc. Gagan Padda works as the company’s safety manager. Mr. Halik, who accompanied Mr. Gill to the hearing as an advisor, is the company’s accountant. Mr. Gill stated that Mr. Mundi does some work on a part time basis for the company but its management is under Mr. Gill’s control.
Mr. Gill testified that 2043875 Ontario Inc. hauls fresh and frozen produce on routes to the mid west and southwestern United States. He indicated that approximately 35% of its business is represented by routes to Indianapolis and Chicago. In the third week of January, 2013, the company changed to shorter routes. Asked if its mileage had decreased, Mr. Gill responded that it had at the end of January. He clarified his earlier remarks stating that the company used to do more long-haul routes but now does almost 50 to 60% of its business in Ontario.
Referring to the IFTA report submitted to the Ministry of Finance on October 3, 2012 (the “original third quarter”), Mr. Gill agreed it reported the company had driven a total of 314,455 kilometers during the three month reporting period and agreed that based on this document, the company would be driving approximately 1.2 million kilometers annually. Mr. Gill agreed that this figure corresponded to the numbers on the Ministry’s records but then stated that the number was incorrect because during the fourth quarter of 2012, the company drove 898,439 kilometres.
Mr. Moore asked Mr. Gill if he agreed that attached to the third quarter report was a notice of assessment prepared by the Ministry of Finance for the second quarter of 2012 which indicated 319,561 kilometers driven during the period of which 68,183, or approximately 21%, were driven in Canada. Similarly, Mr. Moore asked Mr. Gill if the notice of assessment dated December 7, 2012 for the third quarter original report indicated a total of 314,455 kilometers driven of which 64,618 or approximately 20.5% of the total were driven in Canada. Mr. Gill acknowledged the totals. Mr. Moore then asked if the third quarter report submitted on January 16, 2013 (the “amended third quarter”) showed a total of 662,656 kilometers driven. Mr. Gill responded that when he looked at the record, he realized the travel was higher than originally reported to the Ministry and he then went through the paperwork and submitted the amended report.
With respect to the report submitted for the fourth quarter of 2012, Mr. Moore asked Mr. Gill if the total kilometers driven of 898,439 meant that the company’s business had increased from approximately 300,000 kilometers in the second quarter to approximately 900,000 in the fourth quarter. Mr. Gill replied “yes”.
Mr. Gill stated that the person who was doing the IFTA returns had not been doing his job. This individual, “Raj”, had been hired by Mr. Mundi only to do fuel tax. At the time the original third quarter report was filed, Mr. Gill was not actively working for the company, stating he was “busy” and had been away for three months, returning in January, 2013. When asked how Raj made a mistake given his numbers were so precise, Mr. Gill stated that when they went through the papers, they discovered it was wrong and said the “guy wasn’t looking at the proper mileage”. Asked if all the reported numbers were incorrect, Mr. Gill said he saw it was incorrect on the “Canadian side”. Asked if he checked all the numbers, Mr. Gill said ‘yes’. Mr. Gill stated he did not know how the mistake occurred. Mr. Moore then asked Mr. Gill to confirm that the American numbers had not changed. Mr. Gill responded that he only paid attention to the Canadian mileage and that the U.S. mileage might still be incorrect and then stated that the U.S. numbers still need to be updated. Asked why he had not yet done so, Mr. Gill repeated that it was “a mistake over there” and “we have to change it”.
Mr. Moore asked if Mr. Halik had been involved in the preparation of the reports. Mr. Gill responded that Mr. Halik formerly only worked part time and that the tax reports had never been shown to the accountant and again stated it was “a mistake over there”. Only Mr. Gill and Mr. Padda worked to amend the third quarter IFTA report. Asked why he submitted an amended report to the Ministry of Finance even though the U.S. figures had not been updated, Mr. Gill then said he had noticed it after the report had been submitted.
Mr. Moore asked how the company had gone through what he described as “incredible growth” going from 319,561 kilometres in the second quarter of 2012 to 662,656 in the third quarter and 898,439 in the fourth quarter. Mr. Gill stated that it was not growth but a reporting mistake and that the reports still were not accurate because the U.S. figures were incorrect. Asked why he had waited until May to correct the numbers if he agreed it was important to provide accurate information, Mr. Gill repeated that “it is important”.
Mr. Moore asked Mr. Gill if he agreed with the information on the CVOR Application for 2043875 Ontario Inc. signed by Mr. Mundi on October 14, 2011 (Exhibit 9b). This indicates that the kilometers travelled between July 1, 2010 and June 30, 2011 were 685,548 in the U.S. and 306,795 in Canada, and estimates the kilometers to be travelled in 2012 at 700,000 in the U.S. and 230,000 in Canada. Mr. Gill indicated he disagreed with the report stating “I have no idea how they calculate it”. He then stated he was not working for the company when the application was filed but was “back home, doing a couple of things”.
Mr. Moore also asked Mr. Gill if he agreed that the CVOR application dated November 14, 2012 (Exhibit 9a), also signed by Mr. Mundi, shows 23 trucks in operation for the period October 1, 2011 to September 30, 2012 and total kilometers driven in Canada as 330,288 and total U.S. kilometers as 973,837, with Canadian kilometers therefore representing approximately 25% of the total. Mr. Moore then asked if the totals on this report corresponded to those in the Level II CVOR abstract produced by the Ministry on November 29, 2011 (Exhibit 4, Tab 9). Mr. Gill agreed that they were correct to September, 2012 and that they corresponded to those on the Ministry report. He then stated that the company is now operating approximately 15 trucks and does more than 50% of its mileage in Canada.
Asked if Mr. Gill agreed that the mileage on the CVOR Abstract and the application submitted by Mr. Mundi was correct, Mr. Gill responded that he believed it was low and that it was produced before he himself was actively working for the company. Asked if it made sense that mileage would be lower now if the company was operating fewer trucks, Mr. Gill responded “I don’t see it. The way I see it, it is incorrect”. Mr. Gill also stated that the estimates of 331,000 Canadian kilometers and 975,000 U.S, kilometers for the period October 1, 2012 to September 30, 2013 included on the November 14, 2012 application are incorrect. Asked why they are all wrong, Mr. Gill stated that he could not comment, that he was not there and he would have to speak to Mr. Mundi. He then stated that kilometers started to decrease in January but that the company was still running a few long haul trips and estimated that the reduction in the first quarter of 2013 would be ten to fifteen percent.
Mr. Moore then asked Mr. Gill if Mr. Mundi still worked for the company and Mr. Gill responded that he did on a part time basis. Mr. Moore pointed out that Mr. Mundi’s signature on the report signed on October 14, 2011 is significantly different from that on the reports signed November 14, 2012 and January 16, 2013 (Exhibit 9c) and Mr. Gill agreed that they were different.
The CVOR application signed January 16, 2013 indicates that actual kilometers driven in the fourth quarter of 2012 were 533,822 in Canada and 364,619 in the U.S. The estimates for the period January 1, 2013 to December 31, 2013 are 548,770 Canadian kilometers and 375,640 U.S. kilometers. Mr. Gill stated that the estimate for the fourth quarter of 2012 was done after they had looked at the records and that the estimate for the year is also incorrect and is only an estimate for the first quarter of the year. Asked how he could be projecting more kilometers for the first quarter of 2013 than the fourth quarter of 2012 when he had earlier stated that the company had started to do more short haul routes in January, Mr. Gill stated that at the time he completed the report, he thought more would be done. Asked how the kilometers could increase when the company was operating with fewer trucks, Mr. Gill stated that all trucks were not on the road in the past.
Mr. Gill indicated that he completed the amended third quarter report working with Mr. Padda. Asked if the individual who completed the previous reports had a business, Mr. Gill responded “I have no idea” and that the amended report was the first one he had completed. Asked if Mr. Mundi checks the forms he signs, Mr. Gill stated that “we have to explain to him”.
Mr. Moore asked Mr. Gill if he realized that the Notice of Cancellation and Seizure was serious and that 2043875 Ontario Inc.’s violation rate was high. Mr. Gill stated that he did. Mr. Moore then asked if he knew that Canadian kilometers were important to the calculation of the overall violation rate and he said “not really, another guy told us, another guy from Baltech.” Mr. Gill denied that he provided false information on kilometers travelled to IFTA and the Ministry in order to improve the company’s safety violation rate.
Mr. Gill indicated that the company shifted to short haul trips in January of 2013 because of fuel expenses, among other reasons, and stated that he has two trucks, that make runs to Montreal approximately twice a week. Asked how the percent of total kilometers travelled in Canada increased so significantly when trips are mostly to the Canadian/U.S. border, Mr. Gill repeated that the company also drives to Montreal.
Registrar’s Reply Evidence
At the conclusion of the cross-examination of Mr. Gill, Mr. Moore called Ministry of Transportation auditor Marc Lavallee as a rebuttal witness. Mr. Lavallee conducts audits of CVOR certificate holders by verifying records such as log books, time records and maintenance logs.
Mr. Lavallee testified that he had just completed an audit of 2043875 Ontario Inc. to verify the kilometers actually driven by the company’s vehicles. He dealt with Mr. Padda and requested to see annual inspections for the last two years, drivers’ log books and trip envelops for the last six months and fuel purchase records for the last six months. He did not receive the fuel purchase records; he was informed they were kept elsewhere. He did check driver trip envelops which record mileage by jurisdiction, and log books for the months of January, February and March 2013.
Mr. Lavallee confirmed that 2043875 Ontario Inc. has nineteen vehicles with active plates, of which four have been inactive since January 2013 according to Mr. Padda.
Mr. Lavallee received records for only ten drivers. Eight of the drivers did the same route, typically through Windsor to the U.S. Midwest along Highway 401. He also noted an occasional trip to Trenton east along Highway 401. He saw no trips to Montreal. One driver went to British Columbia and came back through the United States. Mr. Lavallee concluded that he would not expect the company to accumulate a large number of Canadian kilometers based on his assessment of the routes driven.
Mr. Lavallee testified that not all drivers were completing trip envelops. He was able to ascertain kilometers driven in Ontario by gathering full data for a driver for three months and then using log books to verify. He concluded that for the period January 1 to March 31, 2013, ten drivers drove a total of 117,936 kilometers in Ontario. He then stated that with the addition of what he described as a “generous” further 50,000 kilometers for those drivers whose log books he did not have, he estimated the total kilometers driven for thirteen drivers would be 167,936 Ontario kilometers. Asked his assessment of the estimate of 392,360 Ontario kilometers the company reported in its January 16, 2013 CVOR application (Exhibit 9c), Mr. Lavallee stated that it would be “extremely high” based on his audit. He further testified that he believed the estimate of the kilometers in other Canadian jurisdictions was also high and that the estimate of the U.S. kilometers was low given the majority of the company’s travel is in the U.S. He stated that the Ontario kilometers should be lower than the American kilometers.
Mr. Moore also recalled Mr. Ramer to testify. Mr. Ramer stated that the original kilometer totals submitted by the company for the third quarter of 2012 were in line with all previous reports. He indicated that he does not accept the amended third quarter document as a true reflection of the kilometers travelled in Canada given the very large increase it reports. Asked if the company could have made an error, Mr. Ramer stated that it was possible but that he had experience with companies inflating Canadian kilometers travelled in order to lower violation rates. To verify, he checked all the company’s inspection reports and noted that the inspections primarily took place at inspection sites on Highway 401. He noted that travel in northern Ontario could increase Ontario kilometers travelled but that there were no northern Ontario inspections in the last eight months. Asked when MTO learned of the amended figures for the third quarter, Mr. Ramer stated that it was when Mr. Gill produced the amended reports on the first day of the hearing. He then noted that at the Show Cause meeting in January, he told Mr. Gill that if the company wished to revise the kilometers travelled, IFTA reports would need to be submitted.
Mr. Ramer testified that based on the revised kilometric totals for the third and fourth quarters of 2012, he calculated that 2043875 Ontario Inc’s overall safety violation rate would be 122.28% (Exhibit 10). Asked how this would change the Ministry’s view of the company’s performance, Mr. Ramer stated that it would not.
THE LAW
The statutory authority for the actions of the Registrar and the jurisdiction of the Tribunal are set out in the Highway Traffic Act (the Act), as follows:
Suspension and cancellation of licence, etc., general
- (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;
(2.1) Subsection 17 (4) applies, with necessary modifications, for the purpose of determining who are related persons under clause (1) (f).
Related Person
17.(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.
Power to seize number plates
(8.1) If the plate portion of a permit is suspended or cancelled under clause (1) (a), the Registrar may order that the plate portion of the permit or the number plates issued in connection with the plate portion of the permit be seized and any police officer or officer appointed for carrying out this Act may seize the plate portion of the permit and the number plates and deliver them to the Ministry.
Definitions, “commercial motor vehicle” etc.
(9) For the purposes of this section and section 47.1,
“commercial motor vehicle,” “operator” and “safety record” have the same meanings as in subsection 16 (1)..
Notice of proposed action, s. 47
47.1 (1) Before taking any action under clause 47 (1) (a) or (c) or subsection 47 (2), the Registrar shall notify the person whose plate portion of a permit or CVOR certificate is to be affected of his or her proposed action.
- (1) Every person aggrieved by a decision of the Minister made under subsection 32 (5) for which there is a right of appeal pursuant to a regulation made under clause 32 (14) (n) or a decision of the Registrar under section 17 or 47 may appeal the decision to the Tribunal.
Powers of Tribunal
(2) The Tribunal may confirm, modify or set aside the decision of the Minister or Registrar.
ISSUE
The issues before the Tribunal are first, whether there is reason to believe, having regard to the safety record of the Applicant or of a person related to the Applicant, that the Applicant will not operate a commercial motor vehicle safely or in accordance with the Act, the regulations and other laws relating to highway safety and, second, if there is such reason, what order the Tribunal should make.
ANALYSIS
There are two Applicants in this case: 2043875 Ontario Inc. and 1339233 Ontario Inc. The Tribunal notes that CVOR certificate number 141-731-719 of 1339233 Ontario Inc. has expired and is not renewable.
The evidence clearly indicates that 2043875 Ontario Inc. and 1339233 Ontario Inc. are “related persons” as defined in section 17(4) of the Act. Further, these two companies are also related to Guru Trust Xpress Ltd., the third company named in the Registrar’s Cancellation and Seizure Order dated January 25, 2013. Guru Trust Xpress Ltd. is not a party to this appeal having voluntarily surrendered its CVOR certificate to the Registrar.
The principal of 2043875 Ontario Inc. is Raghbir Mundi. The Applicants’ Agent, Karamjit Gill, is its operations manager. Mr. Mundi is Mr. Gill’s father-in-law. Mr. Gill is the principal of 1339233 Ontario Inc. The corporate record indicates that Swaran Singh is the president of Guru Trust Xpress Ltd. On January 4, 2013, Mr. Singh provided a written authorization for Mr. Gill to act on behalf of the company in all matters relating to the Ministry of Transportation. However, the Ministry facility audit of the company conducted on April 23, 2012 (Exhibit 4, Tab 17) indicates that Gagan Padda, the safety consultant for the company, advised that the company had been purchased by Gurpreet Gill, the wife of Karamjit Gill. Mr. Padda is also the safety consultant for 2043875 Ontario Inc. All three companies operate as GTX. All three companies share the corporate address of 47 Ice Field Rd., Brampton. Mr. Gill does not deny the affiliation of the companies.
The evidence indicates that 2043875 Ontario Inc., the only company of the three named in the Registrar’s Order which is currently operating, has an overall safety rating of “Unsatisfactory” (Exhibit 3, Tab 1). The company has a history of safety issues. The CVOR certificate was issued to 22043875 Ontario Inc. on April 19, 2004. It received its first warning letter from the Ministry of Transportation on October 13, 2004. Further warning letters were issued on October 13, 2006 and October 13, 2011 and in each case, Conditional Safety ratings were assigned.
Ministry statistics as of March 31, 2012 indicate that only .2% of all CVOR certificate holders have safety violation rates that exceed 100% (Exhibit 4, Tab 28). The Safety Record Review of 2043875 Ontario Inc. conducted by Mr. Ramer (Exhibit 4, Tab 2) indicates its overall safety violation rate was 137.25% for the period October 30, 2010 to October 29, 2012. Convictions contributed 104.48% of that total. Of 30 convictions on the record, 27 were assigned points. Eighteen of 45 inspections produced out of service violations such as leaking brake lines or lights not functioning. A summary of the inspection issues indicates a total of 103 findings, with 43 relating to brakes, 17 to drivers’ hours of service and 10 to lighting (Exhibit 4, Tab 10).
Mr. Ramer also calculated the company’s safety violation rate as 120.38% for the period May 11, 2012 to October 29, 2012, the period immediately following a facility audit which the company failed due to an “out of service” percentage of 40.88. Mr. Ramer highlighted inspections on May 19, 2012, June 12, 2012 and June 16, 2012, all of which had “out of service” findings and stated that the Ministry saw no decrease in issues after the facility audit. Further, the company’s safety violation rate continued to increase after Mr. Gill attended the Show Cause meeting at the Ministry on January 7, 2013. The Level II CVOR abstract dated April 19, 2013 (Exhibit 5) indicates the overall safety violation rate of the company at 172.07% and the evidence indicated that issues with brakes, lighting and drivers’ hours of service continued.
Mr. Gill did not refute the safety record of 2043875 Ontario Inc. Rather, he testified that the Ministry had erred in calculating the company’s overall safety violation rate because it used too low a number for the company’s Canadian kilometers driven. During his testimony on May 9, 2013, Mr. Gill produced previously undisclosed copies of an amended 2012 third quarter and a 2012 fourth quarter IFTA report (Exhibit 7) and asserted that the safety record is incorrect because the actual number of kilometers travelled in Canada is significantly higher than that on record at the Ministry of Transportation.
The kilometers travelled used in calculations on CVOR reports produced by the Ministry of Transportation are based on information provided by carriers. Exhibit 9 shows that on October 14, 2011, the information submitted by 2043875 Ontario Inc. indicated actual kilometers travelled in Canada and in the United States for the twelve month period ended June 30, 2011 were 306,795 and 685,548 respectively. The information filed on November 14, 2012 showed the actual kilometers travelled for the twelve month period ended September 30, 2012 at 330,288 in Canada and 973,837 in the U.S., an annual total of approximately 1,300,000. Approximately the same number was projected for the commensurate period in 2013. On January 16, 2013, 2043875 Ontario Inc. filed a further application which indicates the actual kilometers travelled for the three month period ended December 31, 2012 at 533,822 in Canada and 364,617 in the U.S., a total of 898,439, or approximately 70% of the annual total the company projected only two months earlier. Although the report indicates it is for a twelve month period, Mr. Gill testified that the projection of 1,306,000 kilometers in the report is in fact for a three month period. This would mean the company had in effect quadrupled its historical kilometers driven.
The IFTA returns submitted by Mr. Gill (Exhibit 7) show that the initial return filed for the third quarter of 2012 reported a total of 314,455 kilometers travelled, of which 64,588 were in Canada and 249,867 were in the United States. The amended third quarter return reported a total of 412,789 kilometers travelled in Canada and 249,867 in the United States. Mr. Gill testified he amended the report personally after he discovered an error. The fourth quarter report indicates further growth to a total of 898,439 kilometers driven.
A significant amount of time at this hearing was spent in cross examination of Mr. Gill with respect to the IFTA reports. Mr. Gill’s responses to questions were both vague and evasive. Asked both how the error in the original submission was discovered and how it was made, he indicated that he had not “been there” and that someone outside of the company was responsible for preparing the returns. He testified that his accountant Mr. Halik did not look at tax submissions to the Ministry of Finance but they were done offsite by an individual whose first name only could be recalled. In terms of finding the error, he stated that he discovered it by looking over paperwork.
When asked why only Canadian kilometer numbers had changed on the amended IFTA third quarter report, Mr. Gill said that the U.S. numbers were incorrect. However, he could provide no explanation as to why he had not yet submitted an amendment of the U.S. numbers to the Ministry of Finance. He produced no answer when asked how his business had increased so dramatically in the third and fourth quarters of 2012, other than to repeat that the Ministry numbers were incorrect. Finally, asked why the projections for 2013 were so large given the reported number of trucks was reduced, and given his previous testimony that as of January 2013, the company’s business had shifted to short haul routes, he responded that the reports had been filed before he realized business would change.
The Tribunal notes that the timing of the submission of both the CVOR application to the Ministry of Finance and the amended third quarter report to the Ministry of Finance is somewhat suspect given the reports were filed on January 16, 2013, only nine days after Mr. Gill attended a Show Cause meeting at the Ministry of Transportation at which Mr. Ramer testified he advised Mr. Gill that the Ministry would require IFTA reports in order to change its records of kilometers travelled.
Marc Lavallee provided compelling evidence with respect to the actual kilometers driven in Ontario by 2043875 Ontario Inc. Mr. Lavallee testified that he conducted an audit of the company. While all records were not available, he indicated he used a “generous” number to account for the records he did not have. He concluded that the number of kilometers driven in Canada in the first quarter of 2013 was 167,936 or less than half of the estimate reported on the company’s January application to the Ministry. Mr. Lavallee also testified that the majority of the company’s runs were to the United States using Highway 401 as the route to Windsor. Mr. Lavallee concluded that the number of kilometers travelled in Canada should be far less than those travelled in the United States, and not more as reported by the company in the amended reports it submitted on January 16, 2013.
Finally, Mr. Ramer testified that after the disclosure of the IFTA reports at this hearing, he reviewed inspection reports for the last eight months to determine where the company was driving. He concluded that the revised number of kilometers reported in Canada did not correspond to the fact that the inspections primarily took place on the Highway 401 route from the GTA to the Windsor border which suggests the company was primarily driving short distances in Canada.
Having considered all the evidence with respect to the amended third and the fourth quarter IFTA reports submitted to the Ministry of Finance and the January application submitted to the Ministry of Transportation, the Tribunal has concluded that they deliberately misrepresent the actual kilometers travelled by 2043875 Ontario Inc. and that the overall safety violation rates calculated by the Ministry of Transportation based on previously submitted numbers are correct. Further, the Tribunal notes that Mr. Ramer testified that even if the Ministry accepted the amended numbers, that 2043875 Ontario Inc.’s overall safety violation rate would still be an unacceptable 122.28%.
The Tribunal also notes that 2043875 Ontario Inc. had outstanding fines totaling $1,610.00 of which $1,120 were in default at the time of the Safety Record Review and that Mr. Ramer’s subsequent check on May 6, 2012 indicated that the balance of outstanding fines had then escalated to more than $7,000.00.
Based on its unacceptable safety performance, the Tribunal finds, on balance of probabilities, that there is reason to believe that 2043875 Ontario Inc. will not operate a commercial motor vehicle safely or in accordance with the Act, its regulations and other laws relating to highway safety. Given the Tribunal has found that 2043875 Ontario Inc. and 1339233 Ontario Inc. are “related persons” as defined in section 17(4) of the Act, the Tribunal does not need to address the safety record of 1339233 Ontario Inc. However, the Tribunal notes that the evidence indicates that the safety record of 1339233 Ontario Inc. was also very poor while it was operating under the management of Mr. Gill. When the Safety Record Review was conducted in May, 2008, the company’s overall safety violation rate was 171.1%. Further, it failed the facility audit conducted on September 15, 2010 due to issues with drivers’ hours of service, the same reason 2043875 Ontario Inc. failed its facility audit.
The Tribunal has carefully considered the appropriate action to order the Registrar to take. The evidence indicates that after receiving the Registrar’s February 21, 2012 letter advising its safety rating would be changed to Conditional, 2043875 Ontario Inc. continued to amass violations. Similarly, violations continued to be found at inspections after the May 11, 2012 facility audit. Given the opportunity to attend a Show Cause meeting on January 7, 2013, Mr. Gill provided information that training had been performed by an employee of his insurance company whom the insurance company later confirmed did not exist. In April, 2013, the company’s safety violation rate had increased to 172.07%. Rather than take proactive action to address safety issues to reduce the violation rate, Mr. Gill reported an increased amount of Canadian kilometric travel to both the Ministries of Finance and Transportation, an increase which the history of the company, Mr. Gill’s testimony, and Mr. Lavallee’s audit, did not support. The Tribunal concludes that Mr. Gill has little respect for safety regulations and that any action other than cancellation of CVOR certificates would have little impact on the safety performance of the companies which he controls and/or manages.
ORDER
Pursuant to the provisions of section 50(2) of the Act, the Tribunal orders the Registrar to carry out the Cancellation and Seizure Order dated January 25, 2013 and to cancel CVOR certificate 148-436-230 issued to 2043875 Ontario Inc. and CVOR certificate 141-731-719 issued to 1339233 Ontario Inc. and to seize the plate portions of all commercial vehicles and trailers registered in their names.
LICENCE APPEAL TRIBUNAL
Mary Ann Spencer, Member
Released on: May 30, 2012